|
|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
|
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
|
|
|
|
|
|
||||||||||||
Three
months ended
|
Six
months ended
|
|||||||||||||||
March
31
|
March
31
|
|||||||||||||||
(In
millions except per share data - unaudited)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
REVENUES
|
||||||||||||||||
Sales
and operating revenues
|
$ |
1,915
|
$ |
1,786
|
$ |
3,717
|
$ |
3,472
|
||||||||
Equity
income
|
3
|
2
|
6
|
4
|
||||||||||||
Other
income
|
7
|
7
|
14
|
14
|
||||||||||||
1,925
|
1,795
|
3,737
|
3,490
|
|||||||||||||
COSTS
AND EXPENSES
|
||||||||||||||||
Cost
of sales and operating expenses
|
1,575
|
1,484
|
3,064
|
2,880
|
||||||||||||
Selling,
general and administrative expenses (a)
|
309
|
262
|
574
|
515
|
||||||||||||
1,884
|
1,746
|
3,638
|
3,395
|
|||||||||||||
OPERATING
INCOME
|
41
|
49
|
99
|
95
|
||||||||||||
Loss
on the MAP Transaction (b)
|
(4 | ) | (3 | ) | (4 | ) | (2 | ) | ||||||||
Net
interest and other financing income
|
9
|
9
|
25
|
20
|
||||||||||||
INCOME
FROM CONTINUING OPERATIONS
|
||||||||||||||||
BEFORE
INCOME TAXES
|
46
|
55
|
120
|
113
|
||||||||||||
Income
taxes
|
(15 | ) | (5 | ) | (36 | ) | (29 | ) | ||||||||
INCOME
FROM CONTINUING OPERATIONS
|
31
|
50
|
84
|
84
|
||||||||||||
Income
(loss) from discontinued operations (net of income taxes) (c)
|
18
|
(1 | ) |
14
|
30
|
|||||||||||
NET
INCOME
|
$ |
49
|
$ |
49
|
$ |
98
|
$ |
114
|
||||||||
BASIC
EARNINGS PER SHARE - Note H
|
||||||||||||||||
Income
from continuing operations
|
$ |
.49
|
$ |
.69
|
$ |
1.32
|
$ |
1.18
|
||||||||
Income
(loss) from discontinued operations
|
.29
|
(.01 | ) |
.23
|
.42
|
|||||||||||
Net
income
|
$ |
.78
|
$ |
.68
|
$ |
1.55
|
$ |
1.60
|
||||||||
DILUTED
EARNINGS PER SHARE - Note H
|
||||||||||||||||
Income
from continuing operations
|
$ |
.49
|
$ |
.68
|
$ |
1.30
|
$ |
1.16
|
||||||||
Income
(loss) from discontinued operations
|
.28
|
(.01 | ) |
.22
|
.41
|
|||||||||||
Net
income
|
$ |
.77
|
$ |
.67
|
$ |
1.52
|
$ |
1.57
|
||||||||
DIVIDENDS
PAID PER COMMON SHARE
|
$ |
.275
|
$ |
.275
|
$ |
.55
|
$ |
.55
|
||||||||
|
(a)
|
The
three and six months ended March 31, 2007 includes a $25 million
charge
for costs associated with Ashland’s voluntary severance
offer. See Note D of the Notes to Condensed Consolidated
Financial Statements for further
information.
|
(b)
|
“MAP
Transaction” refers to the June 30, 2005 transfer of Ashland’s 38%
interest in Marathon Ashland Petroleum LLC (MAP) and two other
businesses
to Marathon Oil Corporation. The loss for the periods presented
reflects adjustments in the recorded receivable for future estimated
tax
deductions related primarily to environmental and other postretirement
reserves.
|
(c)
|
The
three and six months ended March 31, 2007 includes income of $18
million
resulting from an increase in Ashland’s asbestos insurance
receivable. The prior periods primarily include after-tax
operating results of APAC (excluding previously allocated corporate
costs)
as a result of the sale of APAC to Oldcastle Materials, Inc. in
August
2006 for approximately $1.3
billion.
|
March
31
|
September
30
|
March
31
|
||||||||||
(In
millions - unaudited)
|
2007
|
2006
|
2006
|
|||||||||
ASSETS
|
||||||||||||
CURRENT
ASSETS
|
||||||||||||
Cash
and cash equivalents
|
$ |
584
|
$ |
1,820
|
$ |
476
|
||||||
Available-for-sale
securities
|
371
|
349
|
621
|
|||||||||
Accounts
receivable
|
1,497
|
1,441
|
1,315
|
|||||||||
Allowance
for doubtful accounts
|
(49 | ) | (40 | ) | (36 | ) | ||||||
Inventories
- Note F
|
576
|
532
|
494
|
|||||||||
Deferred
income taxes
|
86
|
93
|
74
|
|||||||||
Other
current assets
|
79
|
55
|
86
|
|||||||||
Current
assets of discontinued operations
|
-
|
-
|
439
|
|||||||||
3,144
|
4,250
|
3,469
|
||||||||||
INVESTMENTS
AND OTHER ASSETS
|
||||||||||||
Goodwill
and other intangibles - Note G
|
375
|
310
|
230
|
|||||||||
Asbestos
insurance receivable (noncurrent portion)
|
449
|
444
|
345
|
|||||||||
Deferred
income taxes
|
194
|
186
|
231
|
|||||||||
Other
noncurrent assets
|
438
|
450
|
469
|
|||||||||
Noncurrent
assets of discontinued operations
|
-
|
-
|
954
|
|||||||||
1,456
|
1,390
|
2,229
|
||||||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||||||
Cost
|
2,045
|
2,007
|
1,891
|
|||||||||
Accumulated
depreciation and amortization
|
(1,088 | ) | (1,057 | ) | (1,037 | ) | ||||||
957
|
950
|
854
|
||||||||||
$ |
5,557
|
$ |
6,590
|
$ |
6,552
|
|||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||||
CURRENT
LIABILITIES
|
||||||||||||
Current
portion of long-term debt
|
$ |
10
|
$ |
12
|
$ |
12
|
||||||
Trade
and other payables
|
1,143
|
1,302
|
1,083
|
|||||||||
Dividends
payable
|
-
|
674
|
-
|
|||||||||
Income
taxes
|
22
|
53
|
6
|
|||||||||
Current
liabilities of discontinued operations
|
-
|
-
|
211
|
|||||||||
1,175
|
2,041
|
1,312
|
||||||||||
NONCURRENT
LIABILITIES
|
||||||||||||
Long-term
debt (less current portion)
|
67
|
70
|
77
|
|||||||||
Employee
benefit obligations
|
318
|
313
|
404
|
|||||||||
Asbestos
litigation reserve (noncurrent portion)
|
569
|
585
|
500
|
|||||||||
Other
long-term liabilities and deferred credits
|
507
|
485
|
477
|
|||||||||
Noncurrent
liabilities of discontinued operations
|
-
|
-
|
88
|
|||||||||
1,461
|
1,453
|
1,546
|
||||||||||
STOCKHOLDERS’
EQUITY
|
2,921
|
3,096
|
3,694
|
|||||||||
$ |
5,557
|
$ |
6,590
|
$ |
6,552
|
|||||||
Accumulated
|
|||||||||||||||||||||
other
|
|||||||||||||||||||||
Common
|
Paid-in
|
Retained
|
comprehensive
|
||||||||||||||||||
(In
millions - unaudited)
|
stock
|
capital
|
earnings
|
loss
|
(a)
|
Total
|
|||||||||||||||
BALANCE
AT SEPTEMBER 30, 2005
|
$ |
1
|
$ |
605
|
$ |
3,251
|
$ | (118 | ) | $ |
3,739
|
||||||||||
Total
comprehensive income (b)
|
114
|
(5 | ) |
109
|
|||||||||||||||||
Cash
dividends, $.55 per common share
|
(40 | ) | (40 | ) | |||||||||||||||||
Issued
506,569 common shares under
|
|||||||||||||||||||||
stock
incentive and other plans (c)
|
24
|
24
|
|||||||||||||||||||
Repurchase
of 2,402,030 common shares
|
(138 | ) | (138 | ) | |||||||||||||||||
BALANCE
AT MARCH 31, 2006
|
$ |
1
|
$ |
491
|
$ |
3,325
|
$ | (123 | ) | $ |
3,694
|
||||||||||
BALANCE
AT SEPTEMBER 30, 2006
|
$ |
1
|
$ |
240
|
$ |
2,899
|
$ | (44 | ) | $ |
3,096
|
||||||||||
Total
comprehensive income (b)
|
98
|
15
|
113
|
||||||||||||||||||
Cash
dividends, $.55 per common share
|
(1 | ) | (34 | ) | (35 | ) | |||||||||||||||
Issued
629,375 common shares under
|
|||||||||||||||||||||
stock
incentive and other plans (c)
|
35
|
35
|
|||||||||||||||||||
Repurchase
of 4,712,000 common shares
|
(267 | ) | (21 | ) | (288 | ) | |||||||||||||||
BALANCE
AT MARCH 31, 2007
|
$ |
1
|
$ |
7
|
$ |
2,942
|
$ | (29 | ) | $ |
2,921
|
||||||||||
(a)
|
At
March 31, 2007 and 2006, the accumulated other comprehensive loss
(after-tax) of $29 million for 2007 and $123 million for 2006 was
comprised of a minimum pension liability of $113 million for 2007
and $160
million for 2006, net unrealized translation gains of $85 million
for 2007
and $38 million for 2006, and net unrealized losses on cash flow
hedges of
$1 million for 2007 and $1 million for
2006.
|
(b)
|
Reconciliations
of net income to total comprehensive income
follow.
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
March
31
|
March
31
|
|||||||||||||||
(In
millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Net
income
|
$ |
49
|
$ |
49
|
$ |
98
|
$ |
114
|
||||||||
Unrealized
translation gains (losses)
|
4
|
6
|
13
|
(5 | ) | |||||||||||
Related
tax benefit
|
-
|
-
|
1
|
-
|
||||||||||||
Net
unrealized gains on cash flow hedges
|
-
|
1
|
1
|
-
|
||||||||||||
Net
unrealized losses on available-for-sale securities
|
-
|
(1 | ) |
-
|
-
|
|||||||||||
Total
comprehensive income
|
$ |
53
|
$ |
55
|
$ |
113
|
$ |
109
|
||||||||
(c) | Includes income tax benefits resulting from the exercise of stock options of $11 million and $4 million for the six months ended March 31, 2007 and 2006, respectively. |
|
||||||||
Six
months ended
March 31
|
||||||||
(In
millions - unaudited)
|
2007
|
2006
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING
OPERATIONS
|
||||||||
Net
Income
|
|
$ |
98
|
$ |
114
|
|||
Income
from discontinued operations (net of income taxes)
|
(14 | ) | (30 |
)
|
||||
Adjustments
to reconcile income from continuing operations to cash flows from
operating activities
|
||||||||
Depreciation
and amortization
|
57
|
52
|
||||||
Deferred
income taxes
|
(1 | ) |
22
|
|||||
Equity
income from affiliates
|
(6 | ) | (4 | ) | ||||
Distributions
from equity affiliates
|
3
|
2
|
||||||
Loss
on the MAP Transaction
|
4
|
2
|
||||||
Change
in operating assets and liabilities (a)
|
(223 | ) | (310 | ) | ||||
Other
items
|
(1 | ) |
-
|
|||||
(83 | ) | (152 | ) | |||||
CASH
FLOWS FROM FINANCING ACTIVITIES FROM CONTINUING
OPERATIONS
|
||||||||
Proceeds
from issuance of common stock
|
17
|
14
|
||||||
Excess
tax benefits related to share-based payments
|
8
|
4
|
||||||
Repayment
of long-term debt
|
(5 | ) | (5 | ) | ||||
Repurchase
of common stock
|
(288 | ) | (138 | ) | ||||
Cash
dividends paid
|
(709 | ) | (40 | ) | ||||
(977 | ) | (165 | ) | |||||
CASH
FLOWS FROM INVESTING ACTIVITIES FROM CONTINUING
OPERATIONS
|
||||||||
Additions
to property, plant and equipment
|
(66 | ) | (75 | ) | ||||
Purchase
of operations - net of cash acquired
|
(73 | ) | (3 | ) | ||||
Proceeds
from sale of operations
|
1
|
1
|
||||||
Purchases
of available-for-sale securities
|
(306 | ) | (549 | ) | ||||
Proceeds
from sales and maturities of available-for-sale securities
|
286
|
337
|
||||||
Other
- net
|
12
|
1
|
||||||
(146 | ) | (288 | ) | |||||
CASH
USED BY CONTINUING OPERATIONS
|
(1,206 | ) | (605 | ) | ||||
Cash
provided (used) by discontinued operations
|
||||||||
Operating
cash flows
|
(2 | ) |
132
|
|||||
Investing
cash flows
|
(28 | ) | (36 | ) | ||||
DECREASE
IN CASH AND CASH EQUIVALENTS
|
(1,236 | ) | (509 | ) | ||||
CASH
AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
1,820
|
985
|
||||||
CASH
AND CASH EQUIVALENTS - END OF PERIOD
|
$ |
584
|
$ |
476
|
||||
(a) | Excludes changes resulting from operations acquired or sold. |
|
|
|||||||||||||||
Three
months ended March 31
|
Six
months ended March 31
|
|||||||||||||||
(In
millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Revenues
from discontinued operations
|
||||||||||||||||
APAC
|
$ |
-
|
$ |
505
|
$ |
-
|
$ |
1,238
|
||||||||
Income
(loss) from discontinued operations (net of income
taxes)
|
||||||||||||||||
APAC
|
-
|
(1 | ) |
-
|
31
|
|||||||||||
Asbestos-related
litigation reserves and expenses
|
18
|
-
|
18
|
(1 | ) | |||||||||||
Loss
on disposal of discontinued operations (net of income
taxes)
|
||||||||||||||||
APAC
|
-
|
-
|
(4 | ) |
-
|
March
31
|
September
30
|
March
31
|
||||||||||
(In
millions)
|
2007
|
2006
|
2006
|
|||||||||
Chemicals
and plastics
|
$ |
568
|
$ |
540
|
$ |
486
|
||||||
Lubricants
|
89
|
84
|
88
|
|||||||||
Other
products and supplies
|
60
|
55
|
60
|
|||||||||
Excess
of replacement costs over LIFO carrying values
|
(141 | ) | (147 | ) | (140 | ) | ||||||
$ |
576
|
$ |
532
|
$ |
494
|
Performance
|
Water
|
||||||||||||||||||
(In
millions)
|
Materials
|
Distribution
|
Valvoline
|
Technologies
|
Total
|
||||||||||||||
Balance
at September 30, 2006
|
$ |
110
|
$ |
1
|
$ |
29
|
$ |
70
|
$ |
210
|
|||||||||
Acquisitions
|
49
|
-
|
1
|
(1 | ) |
49
|
|||||||||||||
Currency
translation adjustment
|
-
|
-
|
-
|
1
|
1
|
||||||||||||||
Balance
at March 31, 2007
|
$ |
159
|
$ |
1
|
$ |
30
|
$ |
70
|
$ |
260
|
|||||||||
2007
|
2006
|
||||||||||||||||||||||
Gross
|
Net
|
Gross
|
Net
|
||||||||||||||||||||
carrying
|
Accumulated
|
carrying
|
carrying
|
Accumulated
|
carrying
|
||||||||||||||||||
(In
millions)
|
amount
|
amortization
|
amount
|
amount
|
amortization
|
amount
|
|||||||||||||||||
Trademarks
and trade names
|
$ |
65
|
$ | (20 | ) | $ |
45
|
$ |
54
|
$ | (19 | ) | $ |
35
|
|||||||||
Intellectual
property
|
40
|
(7 | ) |
33
|
19
|
(4 | ) |
15
|
|||||||||||||||
Other
intangibles
|
49
|
(12 | ) |
37
|
23
|
(7 | ) |
16
|
|||||||||||||||
Total
intangible assets
|
$ |
154
|
$ | (39 | ) | $ |
115
|
$ |
96
|
$ | (30 | ) | $ |
66
|
|||||||||
Three
months ended March 31
|
Six
months ended March 31
|
|||||||||||||||
(In
millions except per share data)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Numerator
|
||||||||||||||||
Numerator
for basic and diluted EPS – Income
|
||||||||||||||||
from
continuing operations
|
$ |
31
|
$ |
50
|
$ |
84
|
$ |
84
|
||||||||
Denominator
|
||||||||||||||||
Denominator
for basic EPS – Weighted average
|
||||||||||||||||
common
shares outstanding
|
63
|
71
|
63
|
72
|
||||||||||||
Common
shares issuable upon exercise of stock options
|
||||||||||||||||
and
stock appreciation rights
|
1
|
1
|
1
|
1
|
||||||||||||
Denominator
for diluted EPS – Adjusted weighted
|
||||||||||||||||
average
shares and assumed conversions
|
64
|
72
|
64
|
73
|
||||||||||||
EPS
from continuing operations
|
||||||||||||||||
Basic
|
$ |
.49
|
$ |
.69
|
$ |
1.32
|
$ |
1.18
|
||||||||
Diluted
|
$ |
.49
|
$ |
.68
|
$ |
1.30
|
$ |
1.16
|
||||||||
Pension
benefits
|
Other
postretirement benefits
|
|||||||||||||||
(In
millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Three
months ended March 31
|
||||||||||||||||
Service
cost
|
$ |
10
|
$ |
15
|
$ |
1
|
$ |
2
|
||||||||
Interest
cost
|
24
|
20
|
3
|
4
|
||||||||||||
Expected
return on plan assets
|
(27 | ) | (24 | ) |
-
|
-
|
||||||||||
Amortization
of prior service credit
|
-
|
-
|
(1 | ) | (2 | ) | ||||||||||
Amortization
of net actuarial loss
|
7
|
10
|
-
|
-
|
||||||||||||
$ |
14
|
$ |
21
|
$ |
3
|
$ |
4
|
|||||||||
Six
months ended March 31
|
||||||||||||||||
Service
cost
|
$ |
19
|
$ |
30
|
$ |
2
|
$ |
4
|
||||||||
Interest
cost
|
43
|
41
|
6
|
7
|
||||||||||||
Expected
return on plan assets
|
(48 | ) | (50 | ) |
-
|
-
|
||||||||||
Amortization
of prior service credit
|
-
|
-
|
(2 | ) | (5 | ) | ||||||||||
Amortization
of net actuarial loss
|
12
|
21
|
-
|
1
|
||||||||||||
$ |
26
|
$ |
42
|
$ |
6
|
$ |
7
|
|||||||||
Six
months ended March 31
|
Years
ended September 30
|
|||||||||||||||||||
(In
thousands)
|
2007
|
2006
|
2006
|
2005
|
2004
|
|||||||||||||||
Open
claims - beginning of period
|
162
|
184
|
184
|
196
|
198
|
|||||||||||||||
New
claims filed
|
3
|
3
|
6
|
12
|
29
|
|||||||||||||||
Claims
settled
|
(1 | ) | (2 | ) | (3 | ) | (6 | ) | (7 | ) | ||||||||||
Claims
dismissed
|
(19 | ) | (11 | ) | (25 | ) | (18 | ) | (24 | ) | ||||||||||
Open
claims - end of period
|
145
|
174
|
162
|
184
|
196
|
|
||||||||||||||||||||
Six
months ended March 31
|
Years
ended September 30
|
|||||||||||||||||||
(In
millions)
|
2007
|
2006
|
2006
|
2005
|
2004
|
|||||||||||||||
Asbestos
reserve - beginning of period
|
$ |
635
|
$ |
571
|
$ |
571
|
$ |
618
|
$ |
610
|
||||||||||
Expense
incurred
|
-
|
-
|
104
|
-
|
59
|
|||||||||||||||
Amounts
paid
|
(16 | ) | (21 | ) | (40 | ) | (47 | ) | (51 | ) | ||||||||||
Asbestos
reserve - end of period
|
$ |
619
|
$ |
550
|
$ |
635
|
$ |
571
|
$ |
618
|
||||||||||
Three
months ended March 31
|
Six
months ended March 31
|
|||||||||||||||
(In
millions - unaudited)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
REVENUES
|
||||||||||||||||
Sales
and operating revenues
|
||||||||||||||||
Performance
Materials (a)
|
$ |
376
|
$ |
347
|
$ |
742
|
$ |
698
|
||||||||
Distribution
|
1,008
|
1,029
|
1,956
|
1,996
|
||||||||||||
Valvoline
|
382
|
353
|
734
|
663
|
||||||||||||
Water
Technologies (a)
|
190
|
100
|
368
|
197
|
||||||||||||
Intersegment
sales
|
||||||||||||||||
Performance
Materials (a)
|
(39 | ) | (37 | ) | (75 | ) | (69 | ) | ||||||||
Distribution
|
(2 | ) | (5 | ) | (6 | ) | (11 | ) | ||||||||
Valvoline
|
-
|
(1 | ) | (1 | ) | (1 | ) | |||||||||
Water
Technologies (a)
|
-
|
-
|
(1 | ) | (1 | ) | ||||||||||
1,915
|
1,786
|
3,717
|
3,472
|
|||||||||||||
Equity
income
|
||||||||||||||||
Performance
Materials
(a)
|
3
|
3
|
5
|
5
|
||||||||||||
Valvoline
|
-
|
(1 | ) |
1
|
(1 | ) | ||||||||||
3
|
2
|
6
|
4
|
|||||||||||||
Other
income
|
||||||||||||||||
Performance
Materials (a)
|
2
|
1
|
3
|
1
|
||||||||||||
Distribution
|
1
|
1
|
2
|
2
|
||||||||||||
Valvoline
|
2
|
2
|
4
|
5
|
||||||||||||
Water
Technologies (a)
|
1
|
1
|
2
|
2
|
||||||||||||
Unallocated
and other
|
1
|
2
|
3
|
4
|
||||||||||||
7
|
7
|
14
|
14
|
|||||||||||||
$ |
1,925
|
$ |
1,795
|
$ |
3,737
|
$ |
3,490
|
|||||||||
OPERATING
INCOME
|
||||||||||||||||
Performance
Materials (a)
|
$ |
23
|
$ |
27
|
$ |
48
|
$ |
53
|
||||||||
Distribution
|
20
|
30
|
34
|
65
|
||||||||||||
Valvoline
|
22
|
2
|
40
|
3
|
||||||||||||
Water
Technologies (a)
|
6
|
(1 | ) |
12
|
-
|
|||||||||||
Unallocated
and other (b)
|
(30 | ) | (9 | ) | (35 | ) | (26 | ) | ||||||||
$ |
41
|
$ |
49
|
$ |
99
|
$ |
95
|
|||||||||
(a)
|
In
June 2006, Ashland redefined its reportable business segments as
it
continues to evolve into a diversified chemical
company. Performance Materials and Water Technologies, formerly
combined under Ashland Specialty Chemical, have now been separately
disclosed. Prior periods have been conformed to the current
period presentation.
|
(b)
|
The
current quarter includes a $25 million charge for costs associated
with
Ashland’s voluntary severance offer. In addition, corporate
costs previously allocated to APAC of $12 million for the three
months
ended March 31, 2006 and $22 million for the six months ended March
31,
2006 are included.
|
Three
months ended March 31
|
Six months
ended March 31
|
|||||||||||||||
(In
millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
PERFORMANCE
MATERIALS (a)
(b)
|
||||||||||||||||
Sales
per shipping day
|
$ |
5.9
|
$ |
5.4
|
$ |
5.9
|
$ |
5.6
|
||||||||
Pounds
sold per shipping day
|
4.7
|
4.5
|
4.8
|
4.9
|
||||||||||||
Gross
profit as a percent of sales
|
20.5 | % | 23.0 | % | 20.8 | % | 22.3 | % | ||||||||
DISTRIBUTION
(a)
|
||||||||||||||||
Sales
per shipping day
|
$ |
15.7
|
$ |
16.1
|
$ |
15.6
|
$ |
16.0
|
||||||||
Pounds
sold per shipping day
|
19.8
|
20.3
|
19.4
|
20.4
|
||||||||||||
Gross
profit as a percent of sales
|
9.0 | % | 9.6 | % | 8.8 | % | 9.9 | % | ||||||||
VALVOLINE
(a)
|
||||||||||||||||
Lubricant
sales (gallons)
|
41.8
|
44.2
|
80.4
|
82.7
|
||||||||||||
Premium
lubricants (percent of U.S. branded volumes)
|
23.3 | % | 24.3 | % | 22.5 | % | 23.7 | % | ||||||||
Gross
profit as a percent of sales
|
25.6 | % | 22.0 | % | 24.7 | % | 22.1 | % | ||||||||
WATER
TECHNOLOGIES (a)
(b)
|
||||||||||||||||
Sales
per shipping day
|
$ |
3.0
|
$ |
1.6
|
$ |
3.0
|
$ |
1.6
|
||||||||
Gross
profit as a percent of sales
|
38.8 | % | 47.2 | % | 39.5 | % | 47.9 | % | ||||||||
(a)
|
Sales
are defined as sales and operating revenues. Gross profit is
defined as sales and operating revenues, less cost of sales and
operating
expenses.
|
(b) | In June 2006, Ashland redefined its reporting segments as it continues to evolve into a diversified chemical company. Performance Materials and Water Technologies, formerly combined under Ashland Specialty Chemical, have now been separately disclosed. Prior periods have been conformed to the current period presentation. |
|
(a)
|
As
of the end of the period covered by this quarterly report, Ashland,
under
the supervision and with the participation of its management, including
Ashland’s Chief Executive Officer and its Chief Financial Officer,
evaluated the effectiveness of Ashland’s disclosure controls and
procedures pursuant to Rule 13a-15(b) and 15d-15(b) promulgated
under the
Securities Exchange Act of 1934, as
amended. Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded that
the
disclosure controls and procedures were
effective.
|
|
(b)
|
During
the quarter ended March 31, 2007, as part of an ongoing SAP™ enterprise
resource planning (ERP) project, the ERP system was implemented
for the
U.S. operations of Performance Materials and Water
Technologies. Also, during the quarter ended December 31, 2006,
the ERP system was implemented for the U.S. operations of Valvoline
and
Distribution as well as certain corporate functions. Although
management believes internal controls have been maintained or enhanced
by
the ERP systems implemented during fiscal 2007, the controls in
the newly
upgraded environments have not been completely tested. As such,
there is a risk that deficiencies may exist and not yet be identified
that
could constitute significant deficiencies or in the aggregate,
a material
weakness. Management will be performing tests of controls
relating to the new SAP™ environment in these business units over the
course of fiscal 2007. Otherwise, there were no significant
changes in Ashland’s internal control over financial reporting, or in
other factors, that occurred during the period covered by this
quarterly
report that have materially affected, or are reasonably likely
to
materially affect, Ashland’s internal control over financial
reporting.
|
|
(a)
|
Exhibits
|
|
10
|
Amendment
No. 2 to Ashland Inc. Supplemental Early Retirement Plan for Certain
Employees.
|
|
12
|
Computation
of Ratio of Earnings to Fixed
Charges.
|
|
31.1
|
Certificate
of James J. O’Brien, Chief Executive Officer of Ashland pursuant to
Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certificate
of J. Marvin Quin, Chief Financial Officer of Ashland pursuant
to Section
302 of the Sarbanes-Oxley Act of
2002.
|
|
32
|
Certificate
of James J. O’Brien, Chief Executive Officer of Ashland, and J. Marvin
Quin, Chief Financial Officer of Ashland pursuant to Section 906
of the
Sarbanes-Oxley Act of 2002.
|
Ashland
Inc.
|
||
( Registrant)
|
||
Date:
May
9, 2007
|
/s/ J. Marvin Quin | |
J. Marvin Quin | ||
Senior Vice President and Chief Financial Officer | ||
(on behalf of the Registrant and as principal | ||
financial officer) |
Exhibit | ||
No. |
Description
|
|
10
|
Amendment
No. 2 to Ashland Inc. Supplemental Early Retirement Plan for Certain
Employees.
|
|
12
|
Computation
of Ratio of Earnings to Fixed
Charges.
|
|
31.1
|
Certificate
of James J. O’Brien, Chief Executive Officer of Ashland pursuant to
Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certificate
of J. Marvin Quin, Chief Financial Officer of Ashland pursuant
to Section
302 of the Sarbanes-Oxley Act of
2002.
|
|
32
|
Certificate
of James J. O’Brien, Chief Executive Officer of Ashland, and J. Marvin
Quin, Chief Financial Officer of Ashland pursuant to Section 906
of the
Sarbanes-Oxley Act of 2002.
|