[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents Ashland Global Holdings Inc.'s unaudited condensed consolidated financial statements and related disclosures [ITEM 1. FINANCIAL STATEMENTS](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Ashland Global Holdings Inc.'s unaudited condensed consolidated financial statements and detailed notes on accounting policies, divestitures, and segment performance [Statements of Consolidated Comprehensive Income (Loss)](index=2&type=section&id=Statements%20of%20Consolidated%20Comprehensive%20Income%20(Loss)) The Statements of Consolidated Comprehensive Income (Loss) provide a snapshot of Ashland's financial performance for the three and nine months ended June 30, 2019 and 2018, detailing sales, gross profit, operating income, net income, and comprehensive income, along with per-share data **Consolidated Comprehensive Income (Loss) Highlights (Millions USD, except per share data):** | Metric | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Sales | $641 | $668 | $1,884 | $1,922 | | Gross profit | $207 | $229 | $557 | $632 | | Operating income | $43 | $30 | $80 | $98 | | Net income | $66 | $36 | $94 | $104 | | Basic earnings per share | $1.06 | $0.57 | $1.50 | $1.67 | | Diluted earnings per share | $1.05 | $0.56 | $1.50 | $1.64 | | Comprehensive income (loss) | $69 | $(102) | $51 | $26 | [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets present Ashland's financial position as of June 30, 2019, and September 30, 2018, detailing assets, liabilities, and equity, highlighting changes in current assets held for sale and overall asset and equity levels **Consolidated Balance Sheet Highlights (Millions USD):** | Metric | June 30, 2019 | September 30, 2018 | | :-------------------------------- | :------------ | :----------------- | | Cash and cash equivalents | $132 | $294 | | Accounts receivable (net) | $507 | $522 | | Inventories | $595 | $596 | | Current assets held for sale | $756 | $240 | | Total current assets | $2,037 | $1,712 | | Total noncurrent assets | $5,888 | $6,547 | | **Total assets** | **$7,925** | **$8,259** | | Short-term debt | $332 | $254 | | Total current liabilities | $1,007 | $1,076 | | Long-term debt | $2,275 | $2,275 | | Total noncurrent liabilities | $3,701 | $3,777 | | **Total liabilities and stockholders' equity** | **$7,925** | **$8,259** | | Stockholders' equity | $3,217 | $3,406 | [Statement of Consolidated Equity](index=4&type=section&id=Statement%20of%20Consolidated%20Equity) The Statement of Consolidated Equity details the changes in stockholders' equity for the nine months ended June 30, 2019, reflecting the impact of net income, dividends, stock repurchases, and adjustments from new accounting pronouncements and other comprehensive income/loss **Consolidated Equity Activity (Millions USD):** | Metric | Balance at September 30, 2018 | Nine months ended June 30, 2019 | | :-------------------------------- | :---------------------------- | :------------------------------ | | Total Equity (beginning) | $3,406 | $3,406 | | Adoption of new accounting pronouncements | $0 | $0 | | Net income | $94 | $94 | | Other comprehensive income (loss) | $(43) | $(43) | | Regular dividends | $(48) | $(48) | | Common shares issued | $8 | $8 | | Repurchase of common stock | $(200) | $(200) | | **Total Equity (ending)** | **$3,217** | **$3,217** | **Note:** The table above reflects the changes from the September 30, 2018 balance to the June 30, 2019 balance - At June 30, 2019, the after-tax accumulated other comprehensive loss attributable to Ashland was **$367 million**, primarily comprising net unrealized translation losses of **$365 million**[7](index=7&type=chunk) [Statements of Condensed Consolidated Cash Flows](index=5&type=section&id=Statements%20of%20Condensed%20Consolidated%20Cash%20Flows) The Statements of Condensed Consolidated Cash Flows outline the cash flows from operating, investing, and financing activities for the nine months ended June 30, 2019 and 2018, showing a net decrease in cash and cash equivalents for both periods **Consolidated Cash Flow Highlights (Millions USD):** | Activity | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Cash flows from operating activities (continuing operations) | $93 | $93 | | Cash flows from investing activities (continuing operations) | $(76) | $(120) | | Cash flows from financing activities (continuing operations) | $(183) | $(346) | | Cash provided (used) by discontinued operations | $6 | $(13) | | Effect of currency exchange rate changes on cash | $(2) | $2 | | **Increase (decrease) in cash and cash equivalents** | **$(162)** | **$(384)** | | Cash and cash equivalents - beginning of period | $294 | $566 | | **Cash and cash equivalents - end of period** | **$132** | **$182** | [Notes to Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering accounting policies, divestitures, and segment information [NOTE A – SIGNIFICANT ACCOUNTING POLICIES](index=6&type=section&id=NOTE%20A%20%E2%80%93%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the basis of presentation for the financial statements, the reclassification of the Composites and Marl facility as discontinued operations, the use of management estimates, and the adoption of new accounting pronouncements for revenue recognition (ASC 606), leases, and financial instruments, noting their impact on reporting - The Composites segment and Marl facility divestiture represents a strategic shift, leading to their classification as **discontinued operations** in the financial statements[13](index=13&type=chunk)[14](index=14&type=chunk) - Ashland adopted new revenue recognition guidance (ASC 606) using a modified retrospective approach, which had **no material impact** on the Condensed Consolidated Financial Statements but required additional disclosures[19](index=19&type=chunk)[21](index=21&type=chunk) - New lease accounting guidance, effective October 1, 2019, is expected to significantly affect Ashland's Condensed Consolidated Balance Sheet and disclosures by requiring recognition of lease assets and liabilities[22](index=22&type=chunk)[24](index=24&type=chunk) - The adoption of new accounting guidance for financial instruments resulted in a cumulative-effect adjustment to reclassify **$34 million** net after-tax unrealized gains on equity securities from AOCI to retained earnings, with future changes in fair value now recognized in net income[26](index=26&type=chunk) [NOTE B – DIVESTITURES](index=10&type=section&id=NOTE%20B%20%E2%80%93%20DIVESTITURES) This note details the definitive agreement to sell the Composites segment and Marl facility to INEOS Enterprises for an adjusted price of $1.015 billion, with net proceeds of approximately $0.9 billion expected to reduce debt. The Maleic business was initially excluded but later retained by Ashland. The transaction is expected to close by late summer 2019, with a pre-tax gain exceeding $400 million - Ashland signed a definitive agreement to sell its Composites segment and Marl facility to INEOS Enterprises for an adjusted price of **$1.015 billion**, with Ashland retaining the Maleic business[28](index=28&type=chunk)[30](index=30&type=chunk) - Net proceeds of approximately **$0.9 billion** are expected from the sale, primarily to be used for debt reduction and other corporate purposes[31](index=31&type=chunk) - Upon closing, expected by late summer, Ashland anticipates recognizing a pre-tax gain in excess of **$400 million**[32](index=32&type=chunk) **Assets and Liabilities Held for Sale (Millions USD):** | Category | June 30, 2019 | September 30, 2018 | | :------------------------------- | :------------ | :----------------- | | Current assets held for sale | $756 | $240 | | Noncurrent assets held for sale | $0 | $477 | | Current liabilities held for sale | $159 | $163 | | Noncurrent liabilities held for sale | $0 | $26 | [NOTE C – DISCONTINUED OPERATIONS](index=11&type=section&id=NOTE%20C%20%E2%80%93%20DISCONTINUED%20OPERATIONS) This note provides a breakdown of income from discontinued operations, primarily driven by the Composites/Marl facility divestiture and a significant pre-tax gain from a property sale related to the Distribution segment - The Composites segment and Marl facility operating results and cash flows are classified as **discontinued operations** due to their strategic shift and major effect on Ashland's financials[42](index=42&type=chunk) - A **$28 million** pre-tax gain was recorded during the three and nine months ended June 30, 2019, from a property sale directly related to Ashland's Distribution segment, which was sold in 2011[44](index=44&type=chunk) **Income from Discontinued Operations (Net of Tax, Millions USD):** | Category | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Composites/Marl facility | $24 | $25 | $77 | $74 | | Valvoline | $0 | $(7) | $1 | $1 | | Asbestos-related litigation | $0 | $9 | $0 | $12 | | Water Technologies | $0 | $0 | $1 | $(1) | | Distribution | $19 | $(2) | $18 | $(3) | | **Total** | **$43** | **$25** | **$97** | **$83** | **Composites/Marl Facility Discontinued Operations (Pretax, Millions USD):** | Metric | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Sales | $281 | $303 | $840 | $865 | | Pretax operating income | $44 | $36 | $125 | $102 | | Income from discontinued operations | $24 | $25 | $77 | $74 | [NOTE D – RESTRUCTURING ACTIVITIES](index=13&type=section&id=NOTE%20D%20%E2%80%93%20RESTRUCTURING%20ACTIVITIES) This note details Ashland's company-wide restructuring programs aimed at enhancing profitability through cost reduction, including severance costs, facility lease abandonment charges, and plant restructuring, with associated expenses and reserves - Additional severance expense of **$3 million** (three months) and **$7 million** (nine months) was incurred during fiscal 2019 for company-wide cost reduction programs, with a severance reserve of **$14 million** as of June 30, 2019[49](index=49&type=chunk) - Lease abandonment charges of **$8 million** were incurred during the nine months ended June 30, 2019, due to the exit from certain office facilities, with a reserve of **$8 million** for facility costs[50](index=50&type=chunk) - Specialty Ingredients incurred **$47 million** in restructuring charges during the nine months ended June 30, 2019, for a manufacturing facility cost reduction plan, including **$38 million** of accelerated depreciation and amortization[53](index=53&type=chunk) **Restructuring Reserves Activity (Millions USD):** | Category | Balance as of September 30, 2018 | Restructuring Reserve | Utilization (cash paid) | Balance as of June 30, 2019 | | :--------------- | :------------------------------- | :-------------------- | :---------------------- | :-------------------------- | | Severance costs | $36 | $7 | $(29) | $14 | | Facility costs | $7 | $8 | $(7) | $8 | | **Total** | **$43** | **$15** | **$(36)** | **$22** | [NOTE E – FAIR VALUE MEASUREMENTS](index=14&type=section&id=NOTE%20E%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENTS) This note explains Ashland's fair value hierarchy (Level 1, 2, 3) for financial instruments and summarizes recurring fair value measurements for assets and liabilities, including restricted investments and foreign currency derivatives, noting the impact of new accounting guidance on unrealized gains and losses - Ashland categorizes fair value measurements into three levels: **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - Due to new accounting guidance adopted in the current year, unrealized gains and losses on equity securities are now recognized in net income, rather than accumulated other comprehensive income (AOCI), impacting net income by **$6 million** (three months) and **$3 million** (nine months) ended June 30, 2019[26](index=26&type=chunk)[61](index=61&type=chunk) **Financial Instruments Subject to Recurring Fair Value Measurements (Millions USD):** | Asset/Liability | Carrying Value (June 30, 2019) | Total Fair Value (June 30, 2019) | Level 1 (June 30, 2019) | Level 2 (June 30, 2019) | Level 3 (June 30, 2019) | | :-------------------------------- | :------------------------------- | :------------------------------- | :---------------------- | :---------------------- | :---------------------- | | Cash and cash equivalents | $132 | $132 | $132 | $0 | $0 | | Restricted investments | $329 | $329 | $329 | $0 | $0 | | Deferred compensation investments | $168 | $168 | $0 | $168 | $0 | | Investment of captive insurance company | $4 | $4 | $4 | $0 | $0 | | Foreign currency derivatives (assets) | $3 | $3 | $0 | $3 | $0 | | **Total Assets at Fair Value** | **$636** | **$636** | **$465** | **$171** | **$0** | | Foreign currency derivatives (liabilities) | $3 | $3 | $0 | $3 | $0 | **Investment Portfolio Activity (Millions USD):** | Metric | June 30, 2019 | September 30, 2018 | | :------------------------------- | :------------ | :----------------- | | Adjusted cost, beginning of year | $288 | $297 | | Investment income | $7 | $8 | | Net unrealized gain | $31 | $54 | | Realized gains | $26 | $6 | | Fair value | $329 | $342 | **Note:** The table above summarizes the activity within the investment portfolio as of June 30, 2019 and September 30, 2018 [NOTE F – INVENTORIES](index=17&type=section&id=NOTE%20F%20%E2%80%93%20INVENTORIES) This note details the composition of Ashland's inventories, which are carried at the lower of cost or net realizable value, primarily using the weighted-average cost method, with certain inventories valued using the last-in, first-out (LIFO) method **Inventories (Millions USD):** | Category | June 30, 2019 | September 30, 2018 | | :-------------------------------- | :------------ | :----------------- | | Finished products | $374 | $381 | | Raw materials, supplies and work in process | $221 | $215 | | **Total** | **$595** | **$596** | [NOTE G – GOODWILL AND OTHER INTANGIBLES](index=18&type=section&id=NOTE%20G%20%E2%80%93%20GOODWILL%20AND%20OTHER%20INTANGIBLES) This note discusses Ashland's annual impairment review for goodwill and indefinite-lived intangible assets, and provides a detailed breakdown of intangible assets by type, gross carrying amount, accumulated amortization, and net carrying amount, along with estimated future amortization expense - Ashland reviews goodwill and indefinite-lived intangible assets for impairment annually as of July 1, or when events indicate impairment may have occurred[77](index=77&type=chunk) - Due to the expected divestiture of the Composites reporting unit, Ashland now has two remaining reporting units for goodwill allocation: **Specialty Ingredients** and **Intermediates and Solvents**[77](index=77&type=chunk) **Goodwill by Reportable Segment (Millions USD):** | Segment | Balance at September 30, 2018 | Currency Translation | Balance at June 30, 2019 | | :-------------------------- | :---------------------------- | :------------------- | :----------------------- | | Specialty Ingredients | $2,304 | $(19) | $2,285 | | Intermediates and Solvents | $0 | $0 | $0 | | **Total** | **$2,304** | **$(19)** | **$2,285** | **Intangible Assets (Millions USD):** | Category | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | | :-------------------------- | :-------------------- | :----------------------- | :------------------ | | **As of June 30, 2019** | | | | | Definite-lived intangibles | $1,538 | $(698) | $840 | | Indefinite-lived intangibles | $278 | $0 | $278 | | **Total** | **$1,816** | **$(698)** | **$1,118** | | **As of September 30, 2018** | | | | | Definite-lived intangibles | $1,546 | $(639) | $907 | | Indefinite-lived intangibles | $278 | $0 | $278 | | **Total** | **$1,824** | **$(639)** | **$1,185** | - Amortization expense recognized on intangible assets was **$22 million** for the three months and **$65 million** for the nine months ended June 30, 2019. Estimated amortization expense for future periods is **$86 million annually** from 2019 to 2023[84](index=84&type=chunk) [NOTE H – DEBT](index=19&type=section&id=NOTE%20H%20%E2%80%93%20DEBT) This note provides a summary of Ashland's current and long-term debt, including specific notes and term loans, details available borrowing capacity, and confirms compliance with all debt agreement covenants, highlighting the consolidated net leverage and interest coverage ratios **Current and Long-Term Debt (Millions USD):** | Debt Type | June 30, 2019 | September 30, 2018 | | :-------------------------------- | :------------ | :----------------- | | 4.750% notes, due 2022 | $1,083 | $1,083 | | Term Loan B, due 2024 | $588 | $593 | | 6.875% notes, due 2043 | $376 | $376 | | Term Loan A, due 2022 | $195 | $195 | | Accounts receivable securitizations | $214 | $195 | | 6.50% junior subordinated notes, due 2029 | $53 | $52 | | Revolving credit facility | $90 | $25 | | Other | $8 | $5 | | **Total debt** | **$2,607** | **$2,529** | | Short-term debt (includes current portion) | $(332) | $(254) | | **Long-term debt (less current portion)** | **$2,275** | **$2,275** | - The borrowing capacity remaining under the Revolving Credit Facility was **$661 million** at June 30, 2019, with total borrowing capacity of **$673 million**[88](index=88&type=chunk) - Ashland is in compliance with all debt agreement covenant restrictions, with a consolidated net leverage ratio of **3.6** (maximum 4.5) and an interest coverage ratio of **5.6** (minimum 3.0) at June 30, 2019[89](index=89&type=chunk)[90](index=90&type=chunk) [NOTE I – INCOME TAXES](index=20&type=section&id=NOTE%20I%20%E2%80%93%20INCOME%20TAXES) This note discusses the impact of the Tax Cuts and Jobs Act (Tax Act) on deferred taxes and foreign tax effects, Ashland's election regarding Global Intangible Low-Taxed Income (GILTI) tax rules, and the effective tax rates for the current and prior periods, highlighting the influence of discrete tax items - Ashland finalized its assessment of the Tax Act, resulting in net unfavorable tax adjustments of **$24 million** (three months ended December 31, 2018) and **$6 million** (three months ended June 30, 2019), primarily related to the one-time transition tax on foreign cash and unremitted earnings[90](index=90&type=chunk)[93](index=93&type=chunk) - Ashland elected to treat taxes due on future Global Intangible Low-Taxed Income (GILTI) exclusions as a **current period expense** when incurred[94](index=94&type=chunk) **Effective Tax Rates:** | Period | Effective Tax Rate | | :------------------------------- | :----------------- | | Three months ended June 30, 2019 | (5)% | | Nine months ended June 30, 2019 | 114% | | Three months ended June 30, 2018 | Not meaningful | | Nine months ended June 30, 2018 | (17)% | **Changes in Unrecognized Tax Benefits (Millions USD):** | Activity | Nine months ended June 30, 2019 | | :-------------------------------- | :------------------------------ | | Balance at October 1, 2018 | $164 | | Decreases related to prior years | $(3) | | Increases related to current year | $5 | | Lapse of statute of limitations | $(8) | | **Balance at June 30, 2019** | **$158** | [NOTE J – EMPLOYEE BENEFIT PLANS](index=22&type=section&id=NOTE%20J%20%E2%80%93%20EMPLOYEE%20BENEFIT%20PLANS) This note outlines Ashland's contributions to its pension plans, details a significant curtailment gain from a non-U.S. pension plan remeasurement, and presents the components of net periodic benefit costs for continuing operations - For the nine months ended June 30, 2019, Ashland contributed **$3 million** to its non-U.S. pension plans and **$1 million** to its U.S. pension plans, with an additional **$2 million** expected for non-U.S. plans during the remainder of 2019[100](index=100&type=chunk) - A non-U.S. pension plan settlement during the first quarter of fiscal 2019 resulted in an **$18 million curtailment gain**[101](index=101&type=chunk) **Components of Net Periodic Benefit Costs (Income) for Continuing Operations (Millions USD):** | Metric | Pension Benefits (2019) | Pension Benefits (2018) | Other Postretirement Benefits (2019) | Other Postretirement Benefits (2018) | | :-------------------------------- | :---------------------- | :---------------------- | :----------------------------------- | :----------------------------------- | | **Three months ended June 30** | | | | | | Total net periodic benefit costs | $1 | $2 | $1 | $1 | | **Nine months ended June 30** | | | | | | Total net periodic benefit costs (income) | $(14) | $4 | $2 | $2 | [NOTE K – LITIGATION, CLAIMS AND CONTINGENCIES](index=23&type=section&id=NOTE%20K%20%E2%80%93%20LITIGATION,%20CLAIMS%20AND%20CONTINGENCIES) This note details Ashland's asbestos-related litigation and environmental remediation obligations, including reserve estimates, insurance recoveries, and the inherent uncertainties in projecting future costs. It covers claims against Ashland and Hercules, as well as various environmental sites and legal proceedings - Ashland and Hercules face liabilities from claims alleging personal injury caused by **asbestos exposure**, with reserve estimates based on recent experience and epidemiological studies[105](index=105&type=chunk) - Ashland's asbestos reserve was **$360 million** at June 30, 2019 (up **$1 million** from the annual update), and Hercules' asbestos reserve was **$257 million** (down **$10 million** from the annual update)[109](index=109&type=chunk)[119](index=119&type=chunk) - Ashland's receivable for asbestos insurance recoveries was **$130 million** (Ashland) and **$49 million** (Hercules) at June 30, 2019[114](index=114&type=chunk)[123](index=123&type=chunk) - Environmental remediation reserves totaled **$192 million** at June 30, 2019, with an estimated upper end of the reasonably possible range of future costs as high as **$450 million**[129](index=129&type=chunk)[135](index=135&type=chunk) **Ashland Asbestos Claims Activity (Thousands):** | Metric | Nine months ended June 30, 2019 | Years ended September 30, 2018 | | :-------------------------- | :------------------------------ | :----------------------------- | | Open claims - beginning of year | 53 | 54 | | New claims filed | 2 | 2 | | Claims settled | (1) | (1) | | Claims dismissed | (1) | (2) | | **Open claims - end of period** | **53** | **53** | [NOTE L – EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY](index=28&type=section&id=NOTE%20L%20%E2%80%93%20EARNINGS%20PER%20SHARE%20AND%20STOCKHOLDERS'%20EQUITY) This note provides the computation of basic and diluted EPS from continuing operations, details the $1 billion stock repurchase program and recent accelerated share repurchase, outlines stockholder dividends, and reconciles changes in stockholders' equity, including components of other comprehensive income/loss and stock-based compensation plans **Basic and Diluted EPS from Continuing Operations (USD):** | Metric | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Basic EPS from continuing operations | $0.38 | $0.18 | $(0.05) | $0.33 | | Diluted EPS from continuing operations | $0.37 | $0.18 | $(0.05) | $0.32 | - Ashland's Board approved a **$1 billion** stock repurchase program in March 2018; **$800 million** remained available as of June 30, 2019, after a **$200 million** accelerated share repurchase in May 2019[140](index=140&type=chunk)[141](index=141&type=chunk) - The quarterly cash dividend increased by **10% to 27.5 cents per share** in May 2019, following an **11% increase to 25 cents per share** in fiscal 2018[142](index=142&type=chunk) **Summary of Stockholders' Equity (Millions USD):** | Metric | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Common stock and paid in capital (end of period) | $755 | $943 | $755 | $943 | | Retained earnings (end of period) | $2,830 | $2,756 | $2,830 | $2,756 | | Accumulated other comprehensive income (loss) (end of period) | $(368) | $(300) | $(368) | $(300) | | **Total Stockholders' Equity** | **$3,217** | **$3,399** | **$3,217** | **$3,399** | **Pre-Tax Stock-Based Compensation Expense (Continuing Operations, Millions USD):** | Category | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | SARs | $1 | $2 | $5 | $5 | | Nonvested stock awards | $6 | $6 | $16 | $17 | | Performance share awards | $(1) | $4 | $1 | $10 | | **Total** | **$6** | **$12** | **$22** | **$32** | [NOTE O – REVENUE](index=32&type=section&id=NOTE%20O%20%E2%80%93%20REVENUE) This note explains Ashland's revenue recognition policies under ASC 606, noting no material impact from its adoption, and provides a detailed disaggregation of revenue by segment, geographical region, and product category for the reported periods - Ashland recognizes revenue when performance obligations are satisfied, typically upon shipment or delivery of goods, with most contracts containing a **single performance obligation**[160](index=160&type=chunk)[162](index=162&type=chunk) - Trade receivables were **$472 million** as of June 30, 2019, a decrease from **$482 million** at September 30, 2018[166](index=166&type=chunk) **Sales by Geography (Continuing Operations, Millions USD):** | Geography | Specialty Ingredients (3M 2019) | Specialty Ingredients (3M 2018) | Intermediates and Solvents (3M 2019) | Intermediates and Solvents (3M 2018) | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------------- | :----------------------------------- | | North America | $246 | $253 | $15 | $14 | | Europe | $204 | $208 | $5 | $6 | | Asia Pacific | $117 | $121 | $7 | $9 | | Latin America & other | $46 | $56 | $1 | $1 | | **Total (3 months)** | **$613** | **$638** | **$28** | **$30** | | | | | | | | Geography | Specialty Ingredients (9M 2019) | Specialty Ingredients (9M 2018) | Intermediates and Solvents (9M 2019) | Intermediates and Solvents (9M 2018) | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------------- | :----------------------------------- | | North America | $712 | $733 | $42 | $42 | | Europe | $594 | $597 | $16 | $19 | | Asia Pacific | $348 | $339 | $20 | $23 | | Latin America & other | $149 | $165 | $3 | $4 | | **Total (9 months)** | **$1,803** | **$1,834** | **$81** | **$88** | **Sales by Product Category (Continuing Operations, Millions USD):** | Product Category | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 9 Months Ended June 30, 2019 | 9 Months Ended June 30, 2018 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | **Ashland Specialty Ingredients** | | | | | | Cellulosics | $219 | $223 | $633 | $616 | | Poly-vinyl pyrrolidones | $108 | $110 | $312 | $320 | | Adhesives | $88 | $90 | $259 | $259 | | Actives | $36 | $36 | $116 | $116 | | Vinyl ethers | $25 | $39 | $80 | $106 | | Pharmachem | $59 | $55 | $182 | $176 | | Other | $78 | $85 | $221 | $241 | | **Intermediates and Solvents** | | | | | | Derivatives | $22 | $25 | $67 | $73 | | Butanediol | $6 | $5 | $14 | $15 | | **Total Sales** | **$641** | **$668** | **$1,884** | **$1,922** | [NOTE P – REPORTABLE SEGMENT INFORMATION](index=35&type=section&id=NOTE%20P%20%E2%80%93%20REPORTABLE%20SEGMENT%20INFORMATION) This note describes Ashland's two reportable segments, Specialty Ingredients and Intermediates and Solvents, following the reclassification of the Composites segment and Marl facility to discontinued operations. It presents their sales and operating income, along with business descriptions and allocation methodologies - Ashland's operations are now managed under two reportable segments: **Specialty Ingredients** and **Intermediates and Solvents**, following the divestiture of the Composites segment and Marl facility[172](index=172&type=chunk) - Specialty Ingredients offers industry-leading products and solutions for consumer and industrial applications, while Intermediates and Solvents is a leading producer of **1,4 butanediol** and related derivatives[173](index=173&type=chunk)[174](index=174&type=chunk) **Sales and Operating Income by Reportable Segment (Millions USD):** | Metric | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | **Sales** | | | | | | Specialty Ingredients | $613 | $638 | $1,803 | $1,834 | | Intermediates and Solvents | $28 | $30 | $81 | $88 | | **Total Sales** | **$641** | **$668** | **$1,884** | **$1,922** | | **Operating Income (Loss)** | | | | | | Specialty Ingredients | $84 | $91 | $180 | $222 | | Intermediates and Solvents | $5 | $5 | $10 | $11 | | Unallocated and other | $(46) | $(66) | $(110) | $(135) | | **Total Operating Income** | **$43** | **$30** | **$80** | **$98** | [FORWARD-LOOKING STATEMENTS](index=37&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section provides a standard disclosure regarding forward-looking statements, outlining various risks and uncertainties that could cause actual results to differ materially from projections, including economic conditions, the impact of divestitures, substantial indebtedness, and legal proceedings - Forward-looking statements are based on Ashland's expectations and assumptions regarding future operating performance, financial condition, the economy, and other future events or circumstances[180](index=180&type=chunk) - Various risks and uncertainties, such as the effectiveness of cost elimination programs, the anticipated benefits from divestitures, substantial indebtedness, the ability to generate sufficient cash for stock repurchase plans, and legal proceedings, may cause actual results to differ materially from projections[180](index=180&type=chunk) [PART II – OTHER INFORMATION](index=38&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part provides management's discussion and analysis of financial condition, results of operations, market risks, controls, legal proceedings, and equity security sales [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=39&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes Ashland's financial condition and results, including business overview, key developments, segment performance, liquidity, and fiscal year 2019 outlook [BUSINESS OVERVIEW](index=39&type=section&id=BUSINESS%20OVERVIEW) Ashland is a premier global leader in specialty chemical solutions, with a significant portion of its sales generated outside North America. Its operations are managed through two reportable segments: Specialty Ingredients and Intermediates and Solvents - Ashland is a global leader in providing **specialty chemical solutions** to customers across various consumer and industrial markets in over 100 countries[183](index=183&type=chunk) - Sales generated outside of North America accounted for **59%** and **60%** for the three and nine months ended June 30, 2019, respectively[184](index=184&type=chunk) **Sales by Reportable Segment (% of Total Consolidated Sales):** | Segment | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Specialty Ingredients | 96% | 95% | 96% | 95% | | Intermediates and Solvents | 4% | 5% | 4% | 5% | | **Total** | **100%** | **100%** | **100%** | **100%** | [KEY DEVELOPMENTS](index=40&type=section&id=KEY%20DEVELOPMENTS) This section highlights key business results, updates on the Composites and Marl facility divestiture, progress on the company-wide cost reduction program, and details of the share repurchase program - Net income increased by **83% to $66 million** in the current quarter, with Adjusted EBITDA decreasing by **1% to $140 million**[187](index=187&type=chunk) - The Composites and Marl facility sale price was adjusted to **$1.015 billion**, with Ashland retaining the Maleic business. Net proceeds of approximately **$0.9 billion** are expected, primarily for debt reduction[190](index=190&type=chunk)[191](index=191&type=chunk) - Ashland's cost reduction program aims to eliminate **$120 million** in run-rate savings by the end of calendar year 2019, with **$85 million** in annualized run-rate savings captured as of June 30, 2019[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) - An accelerated share repurchase agreement for **$200 million** was entered in May 2019, resulting in an initial delivery of **2.2 million shares**. **$800 million** remains available under the **$1 billion** stock repurchase program[201](index=201&type=chunk)[202](index=202&type=chunk) [RESULTS OF OPERATIONS – CONSOLIDATED REVIEW](index=41&type=section&id=RESULTS%20OF%20OPERATIONS%20%E2%80%93%20CONSOLIDATED%20REVIEW) This section reviews Ashland's consolidated financial performance, including net income, operating income, non-GAAP measures, and a detailed analysis of comprehensive income statements [Use of non-GAAP measures](index=41&type=section&id=Use%20of%20non-GAAP%20measures) Ashland utilizes non-GAAP financial measures such as EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted diluted EPS, and Free cash flow to provide investors with a clearer understanding of ongoing operating performance by excluding certain non-cash charges, interest, taxes, and highly variable items. These measures are used internally for evaluation and comparability - Ashland uses non-GAAP measures like **EBITDA**, **Adjusted EBITDA**, and **Free cash flow** to help investors understand ongoing operating performance by presenting comparable financial results between periods, excluding certain non-cash charges, interest, taxes, and highly variable items[203](index=203&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) - These non-GAAP measures are considered supplemental and should not be construed as more significant than comparable U.S. GAAP measures, as they do not present all amounts associated with results determined in accordance with U.S. GAAP[211](index=211&type=chunk) [Consolidated Financial Performance](index=43&type=section&id=Consolidated%20Financial%20Performance) Ashland's consolidated financial performance for the three and nine months ended June 30, 2019, showed an increase in net income for the quarter but a decrease year-to-date, influenced by continuing and discontinued operations, as well as various operating and non-operating key items **Consolidated Net Income and EPS (Millions USD, except per share data):** | Metric | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income | $66 | $36 | $94 | $104 | | Diluted earnings per share | $1.05 | $0.56 | $1.50 | $1.64 | | Income from continuing operations | $23 | $11 | $(3) | $21 | | Income from discontinued operations | $43 | $25 | $97 | $83 | **Consolidated Operating Income (Millions USD):** | Metric | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Operating income | $43 | $30 | $80 | $98 | | Depreciation and amortization (excluding accelerated) | $62 | $65 | $186 | $196 | - Key items impacting operating income include restructuring, separation and other costs, accelerated depreciation, environmental reserve adjustments, tax indemnity expense, unplanned plant shutdowns, proxy costs, and a legal settlement[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk) - Non-operating key items include a **$18 million gain** on pension and other postretirement plan remeasurements (nine months 2019) and net losses on divestitures of **$3 million** (nine months 2019 and 2018)[230](index=230&type=chunk)[231](index=231&type=chunk) [EBITDA and Adjusted EBITDA Reconciliation](index=46&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Reconciliation) This section reconciles net income to EBITDA and Adjusted EBITDA, excluding certain key items, to provide a clearer, more comparable view of Ashland's ongoing operating performance for the three and nine months ended June 30, 2019 and 2018 **EBITDA and Adjusted EBITDA (Millions USD):** | Metric | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income | $66 | $36 | $94 | $104 | | Income tax expense (benefit) | $(1) | $(11) | $24 | $(3) | | Net interest and other expense | $21 | $28 | $73 | $78 | | Depreciation and amortization (a) | $62 | $65 | $186 | $196 | | **EBITDA** | **$148** | **$118** | **$377** | **$375** | | Income from discontinued operations (net of tax) | $(43) | $(25) | $(97) | $(83) | | Total key items included in EBITDA | $35 | $48 | $102 | $81 | | **Adjusted EBITDA** | **$140** | **$141** | **$382** | **$373** | (a) Excludes accelerated depreciation [Diluted EPS and Adjusted Diluted EPS Reconciliation](index=47&type=section&id=Diluted%20EPS%20and%20Adjusted%20Diluted%20EPS%20Reconciliation) This section reconciles diluted EPS from continuing operations to Adjusted diluted EPS by accounting for the after-tax effects of key items and tax-specific key items, providing a clearer view of Ashland's underlying business performance **Diluted EPS and Adjusted Diluted EPS from Continuing Operations (USD):** | Metric | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Diluted EPS from continuing operations (as reported) | $0.37 | $0.18 | $(0.05) | $0.32 | | Key items, after tax | $0.38 | $0.59 | $1.40 | $0.99 | | Tax specific key items | $0.02 | $0.00 | $0.38 | $0.16 | | **Adjusted diluted EPS from continuing operations (non-GAAP)** | **$0.77** | **$0.77** | **$1.73** | **$1.47** | [Statements of Consolidated Comprehensive Income (Loss) – Caption Review](index=47&type=section&id=Statements%20of%20Consolidated%20Comprehensive%20Income%20(Loss)%20%E2%80%93%20Caption%20Review) This section provides a detailed comparative analysis of changes in key income statement captions for the three and nine months ended June 30, 2019 and 2018 **Sales and Change Drivers (Millions USD):** | Metric | Three months ended June 30, 2019 | Change | Nine months ended June 30, 2019 | Change | | :-------------------------- | :------------------------------- | :----- | :------------------------------ | :----- | | Sales | $641 | $(27) | $1,884 | $(38) | | **Change Drivers (3 months)** | | | | | | Currency exchange | $(13) | | | | | Volume/product mix | $(12) | | | | | Pricing | $3 | | | | | Acquisitions and divestitures | $(5) | | | | | **Change Drivers (9 months)** | | | | | | Currency exchange | | | $(39) | | | Volume/product mix | | | $(14) | | | Pricing | | | $20 | | | Acquisitions and divestitures | | | $(5) | | **Cost of Sales and Gross Profit (Millions USD):** | Metric | Three months ended June 30, 2019 | Change | Nine months ended June 30, 2019 | Change | | :-------------------------- | :------------------------------- | :----- | :------------------------------ | :----- | | Cost of sales | $434 | $(5) | $1,327 | $37 | | Gross profit as a percent of sales | 32.3% | (2.0 pp) | 29.6% | (3.3 pp) | | **Change Drivers (3 months)** | | | | | | Production and raw material costs | $10 | | | | | Volume/product mix | $(6) | | | | | Currency exchange | $(6) | | | | | Acquisitions and divestitures | $(5) | | | | | **Change Drivers (9 months)** | | | | | | Accelerated depreciation | | | $38 | | | Severance and other restructuring costs | | | $10 | | | Production and raw material costs | | | $19 | | | Volume/product mix | | | $(5) | | | Currency exchange | | | $(20) | | | Acquisitions and divestitures | | | $(5) | | **Selling, General and Administrative Expense (SG&A) (Millions USD):** | Metric | Three months ended June 30, 2019 | Change | Nine months ended June 30, 2019 | Change | | :-------------------------- | :------------------------------- | :----- | :------------------------------ | :----- | | SG&A expense | $150 | $(31) | $429 | $(52) | | SG&A as % of sales | (3.7 pp decrease) | | (2.2 pp decrease) | | | **Key Drivers (3 months)** | | | | | | Net environmental-related expenses | $(17) | | | | | Restructuring, separation and other costs | $(12) | | | | | Tax indemnity costs | $(6) | | | | | Lower variable compensation | $(5) | | | | | Favorable currency exchange & cost savings | $(4) | | | | | **Key Drivers (9 months)** | | | | | | Net environmental-related expenses | | | $(24) | | | Restructuring, separation and other costs | | | $(42) | | | Tax indemnity costs | | | $(6) | | | Proxy costs | | | $(5) | | | Lower variable compensation | | | $(10) | | | Favorable currency exchange & cost savings | | | $(8) | | **Net Interest and Other Expense (Income) (Millions USD):** | Metric | Three months ended June 30, 2019 | Change | Nine months ended June 30, 2019 | Change | | :-------------------------------- | :------------------------------- | :----- | :------------------------------ | :----- | | Net interest and other expense (income) | $21 | $(7) | $73 | $(5) | | Interest expense | $28 | $(2) | $81 | $(7) | | Loss (income) from restricted investments | $(8) | $(6) | $(10) | $0 | **Income Tax Expense (Benefit) (Millions USD):** | Metric | Three months ended June 30, 2019 | Change | Nine months ended June 30, 2019 | Change | | :-------------------------------- | :------------------------------- | :----- | :------------------------------ | :----- | | Income tax expense (benefit) | $(1) | $10 | $24 | $27 | | Effective tax rate | (5)% | | 114% | | **Income (Loss) from Discontinued Operations (Net of Taxes, Millions USD):** | Metric | Three months ended June 30, 2019 | Change | Nine months ended June 30, 2019 | Change | | :-------------------------------- | :------------------------------- | :----- | :------------------------------ | :----- | | Total income (loss) from discontinued operations | $43 | $18 | $97 | $14 | | Composites/Marl facility | $24 | $(1) | $77 | $3 | | Distribution | $19 | $21 | $18 | $21 | **Other Comprehensive Income (Loss) (Net of Taxes, Millions USD):** | Metric | Three months ended June 30, 2019 | Change | Nine months ended June 30, 2019 | Change | | :-------------------------------- | :------------------------------- | :----- | :------------------------------ | :----- | | Total other comprehensive income (loss) | $3 | $141 | $(43) | $41 | | Unrealized translation gain (loss) | $3 | $143 | $(37) | $45 | | Pension and postretirement obligation adjustment | $0 | $0 | $(6) | $(6) | | Net change in investment securities | $0 | $(2) | $0 | $(4) | [RESULTS OF OPERATIONS – REPORTABLE SEGMENT REVIEW](index=55&type=section&id=RESULTS%20OF%20OPERATIONS%20%E2%80%93%20REPORTABLE%20SEGMENT%20REVIEW) This section reviews the financial performance of Ashland's two reportable segments: Specialty Ingredients and Intermediates and Solvents, along with the Unallocated and Other segment. It provides detailed sales, operating income, and EBITDA figures, highlighting key drivers and changes for each segment [Specialty Ingredients](index=56&type=section&id=Specialty%20Ingredients) The Specialty Ingredients segment experienced a decrease in sales and gross profit for both the three and nine months ended June 30, 2019, primarily due to unfavorable foreign currency, acquisitions/divestitures, and volume/product mix. Despite this, the Adjusted EBITDA margin remained flat year-to-date, supported by cost reduction programs - Sales decreased by **$25 million** (three months) and **$31 million** (nine months) due to unfavorable foreign currency exchange, acquisitions and divestitures, and volume/product mix, partially offset by improved product pricing[286](index=286&type=chunk)[292](index=292&type=chunk) - Gross profit decreased by **$22 million** (three months) and **$73 million** (nine months), with gross profit margin declining to **32.7%** (three months) and **30.0%** (nine months)[287](index=287&type=chunk)[288](index=288&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk) - Operating income totaled **$84 million** (three months) and **$180 million** (nine months). Adjusted EBITDA decreased **$9 million to $146 million** (three months) but remained **flat at $406 million** (nine months), with Adjusted EBITDA margin at **23.8%** (three months) and **22.5%** (nine months)[290](index=290&type=chunk)[296](index=296&type=chunk) **Specialty Ingredients Financials (Millions USD):** | Metric | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Sales | $613 | $638 | $1,803 | $1,834 | | Operating income | $84 | $91 | $180 | $222 | | Depreciation and amortization | $59 | $63 | $213 | $189 | | Adjusted EBITDA | $146 | $155 | $406 | $413 | | Adjusted EBITDA margin | 23.8% | 24.3% | 22.5% | 22.5% | [Intermediates and Solvents](index=58&type=section&id=Intermediates%20and%20Solvents) The Intermediates and Solvents segment experienced slight decreases in sales and operating income for the reported periods, primarily due to lower volumes and unfavorable foreign currency exchange, though gross profit margin remained stable for the quarter - Sales decreased **$2 million** (three months) and **$7 million** (nine months) primarily due to lower volume/product mix and unfavorable foreign currency exchange, partially offset by improved product pricing[301](index=301&type=chunk)[305](index=305&type=chunk) - Gross profit was **flat** for the three months, with gross profit margin remaining at **24.5%**, but decreased **$1 million** for the nine months, with gross profit margin declining to **21.0%**[302](index=302&type=chunk)[306](index=306&type=chunk) - Operating income was **$5 million** (three months) and **$10 million** (nine months). EBITDA remained **$8 million** (three months) but decreased **$2 million to $19 million** (nine months)[303](index=303&type=chunk)[307](index=307&type=chunk) **Intermediates and Solvents Financials (Millions USD):** | Metric | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Sales | $28 | $30 | $81 | $88 | | Operating income | $5 | $5 | $10 | $11 | | Depreciation and amortization | $3 | $3 | $9 | $10 | | EBITDA | $8 | $8 | $19 | $21 | | EBITDA margin | 28.6% | 26.7% | 23.5% | 23.9% | [Unallocated and Other](index=59&type=section&id=Unallocated%20and%20Other) The Unallocated and Other segment recorded expenses primarily driven by restructuring activities, including stranded divestiture costs and company-wide cost reduction programs, as well as environmental expenses, tax indemnity costs, and proxy defense costs - Total expense for the Unallocated and Other segment was **$46 million** (three months) and **$110 million** (nine months) ended June 30, 2019[311](index=311&type=chunk) - Restructuring activities accounted for **$24 million** (three months) and **$77 million** (nine months), including stranded divestiture costs related to the Composites segment and Marl facility, and severance/lease abandonment costs from company-wide cost reduction programs[312](index=312&type=chunk)[315](index=315&type=chunk) - Other significant expenses include environmental expenses (**$16 million** for three months, **$22 million** for nine months), tax indemnity costs (**$6 million** for three and nine months), and proxy defense costs (**$5 million** for nine months)[315](index=315&type=chunk)[316](index=316&type=chunk) [FINANCIAL POSITION](index=60&type=section&id=FINANCIAL%20POSITION) This section analyzes Ashland's financial position, covering liquidity, capital resources (debt, credit ratings, and covenants), total equity changes, stock repurchase programs, stockholder dividends, and capital expenditures [Liquidity](index=60&type=section&id=Liquidity) Ashland's liquidity analysis shows a decrease in cash and cash equivalents, with operating cash flows remaining stable. Investing activities used less cash, while financing activities used more, primarily due to share repurchases. Total available liquidity decreased compared to the prior fiscal year-end - Cash and cash equivalents were **$132 million** at June 30, 2019, with **$118 million** held by foreign subsidiaries, which had no significant limitations on remittance[317](index=317&type=chunk) - Cash flows from operating activities from continuing operations amounted to **$93 million** for both the nine months ended June 30, 2019 and 2018[320](index=320&type=chunk)[321](index=321&type=chunk) - Cash used by investing activities from continuing operations was **$76 million** for the nine months ended June 30, 2019, compared to **$120 million** in the prior year, primarily due to property additions[320](index=320&type=chunk)[329](index=329&type=chunk) - Cash flows used by financing activities from continuing operations were **$183 million** for the nine months ended June 30, 2019, compared to **$346 million** in the prior year, including a **$200 million** outflow for the accelerated share repurchase program in 2019[320](index=320&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk) - Free cash flow was **$(10) million** for the nine months ended June 30, 2019, compared to **$6 million** in the prior year[338](index=338&type=chunk) - Total available liquidity, including cash and unused borrowing capacity, was **$805 million** at June 30, 2019, down from **$1,048 million** at September 30, 2018[341](index=341&type=chunk) [Capital Resources](index=64&type=section&id=Capital%20Resources) This section details Ashland's debt structure, credit ratings, and compliance with debt covenants, emphasizing the consolidated net leverage and interest coverage ratios as key financial health indicators **Ashland's Debt Summary (Millions USD):** | Metric | June 30, 2019 | September 30, 2018 | | :-------------------------------- | :------------ | :----------------- | | Short-term debt (includes current portion) | $332 | $254 | | Long-term debt (less current portion) | $2,275 | $2,275 | | **Total Debt** | **$2,607** | **$2,529** | - Debt as a percent of capital employed was **45%** at June 30, 2019, up from **43%** at September 30, 2018[345](index=345&type=chunk) - Ashland's corporate credit ratings are **BB with Standard & Poor's** and **Ba2 with Moody's Investor Services**, both with stable outlooks[346](index=346&type=chunk) - Ashland is in compliance with all debt agreement covenant restrictions, with a consolidated net leverage ratio of **3.6** (maximum 4.5) and an interest coverage ratio of **5.6** (minimum 3.0) at June 30, 2019[346](index=346&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk) [Total Equity](index=66&type=section&id=Total%20Equity) Total equity decreased by $189 million since September 30, 2018, primarily due to the accelerated share repurchase program, cash dividends, and deferred translation losses, partially offset by net income - Total equity decreased by **$189 million** to **$3,217 million** at June 30, 2019, from **$3,406 million** at September 30, 2018[352](index=352&type=chunk) - The decrease was primarily driven by **$200 million** from the accelerated share repurchase program, **$48 million** in cash dividends, and **$37 million** in deferred translation losses, partially offset by **$94 million** in net income[352](index=352&type=chunk) [Stock Repurchase Program](index=66&type=section&id=Stock%20Repurchase%20Program) Ashland's $1 billion stock repurchase program, approved in March 2018, had $800 million remaining available as of June 30, 2019, following a $200 million accelerated share repurchase in the third quarter - **$800 million** remained available for repurchase under the **$1 billion** stock repurchase program as of June 30, 2019, after the acquisition of **2.2 million shares** for **$200 million** during the third quarter[353](index=353&type=chunk) [Stockholder Dividends](index=66&type=section&id=Stockholder%20Dividends) In May 2019, Ashland's Board of Directors announced a quarterly cash dividend of 27.5 cents per share, representing a 10% increase over the previous quarter's dividend - The quarterly cash dividend increased to **27.5 cents per share** in May 2019, a **10% increase** over the previous quarter's dividend of **25 cents per share**[354](index=354&type=chunk) [Capital Expenditures](index=66&type=section&id=Capital%20Expenditures) Capital expenditures for the nine months ended June 30, 2019, increased to $103 million compared to $87 million in the prior year period **Capital Expenditures (Millions USD):** | Metric | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :-------------------------- | :------------------------------ | :------------------------------ | | Capital expenditures | $103 | $87 | [CRITICAL ACCOUNTING POLICIES](index=66&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) Ashland's critical accounting policies, which involve significant estimates and assumptions for long-lived assets, income taxes, and asbestos/environmental liabilities, remain consistent with those disclosed in the prior annual report, with no material changes to valuation techniques during the nine months ended June 30, 2019 - Critical accounting policies, involving significant estimates and assumptions for long-lived assets, income taxes, and asbestos/environmental liabilities, are **consistent with the FY2018 Annual Report on Form 10-K**, with no material changes to valuation techniques[356](index=356&type=chunk) [OUTLOOK](index=67&type=section&id=OUTLOOK) Ashland updated its financial outlook for fiscal year 2019, revising targets for Adjusted EBITDA, Adjusted diluted EPS, and Free cash flow, while reaffirming projections for depreciation & amortization, capital expenditures, and diluted share count **Updated FY 2019 Financial Outlook (Millions USD, except per share data):** | Metric | Prior FY 2019 Outlook | Updated FY 2019 Outlook | | :-------------------------- | :-------------------- | :---------------------- | | **Adjusted EBITDA** | | | | Specialty Ingredients | $585 - $610 million | $560 - $570 million | | Intermediates & Solvents | $20 - $30 million | $23 - $27 million | | Unallocated and other | ($45 - $55) million | ($50 - $55) million | | **Key Operating Metrics** | | | | Adjusted diluted EPS | $2.90 - $3.20 | $2.65 - $2.75 | | Free cash flow | ~$165 - $175 million | ~$100 - $110 million | | **Corporate Items** | | | | Depreciation & amortization | ~250 million | Reaffirmed | | Interest expense | $90 - $100 million | $95 - $100 million | | Effective tax rate | 14-16% | 10-12% | | Capital expenditures | ~$160 million | Reaffirmed | | Diluted share count | ~63 million | Reaffirmed | - For the fourth quarter of fiscal 2019, Ashland expects adjusted diluted earnings per share in the range of **$0.92-$1.02**, assuming an effective tax rate of **13%**[359](index=359&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=67&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Ashland's market risk exposure at June 30, 2019, is generally consistent with the types of market risk exposures previously presented in its Annual Report on Form 10-K for the fiscal year ended September 30, 2018 - Market risk exposure at June 30, 2019, is **consistent** with the types of market risk exposures presented in Ashland's Annual Report on Form 10-K for the fiscal year ended September 30, 2018[360](index=360&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=67&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Ashland's management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of June 30, 2019. No significant changes in internal control over financial reporting occurred during the period - Ashland's disclosure controls and procedures were evaluated and concluded to be **effective** as of June 30, 2019[361](index=361&type=chunk) - No **significant changes** in Ashland's internal control over financial reporting occurred during the nine months ended June 30, 2019[362](index=362&type=chunk) [ITEM 1. LEGAL PROCEEDINGS](index=68&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section describes Ashland's material legal proceedings, primarily focusing on asbestos-related litigation against Ashland and Hercules, and various environmental proceedings under CERCLA and RCRA, including specific sites like Hattiesburg, Mississippi, and the Lower Passaic River, New Jersey - Ashland and its indirect wholly-owned subsidiary, Hercules LLC, are subject to liabilities from **asbestos-related personal injury claims**, primarily due to indemnification obligations and former product sales[365](index=365&type=chunk)[366](index=366&type=chunk) - Ashland has been identified as a 'potentially responsible party' (PRP) at **80 waste treatment or disposal sites** under CERCLA and similar state laws, requiring environmental assessment or remediation efforts[368](index=368&type=chunk) - Specific environmental matters include a Notice of Violation at Hercules' Hattiesburg, Mississippi facility under RCRA and participation in the remedial investigation and feasibility study (RI/FS) for the Lower Passaic River, New Jersey[369](index=369&type=chunk)[371](index=371&type=chunk) - While some potential penalties for environmental matters may exceed **$100,000**, they are not expected to be material to Ashland[369](index=369&type=chunk)[372](index=372&type=chunk)[374](index=374&type=chunk) [ITEM 1A. RISK FACTORS](index=69&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section states that there were no material changes from the risk factors previously disclosed in Ashland's Annual Report on Form 10-K for the fiscal year ended September 30, 2018, during the period covered by this report - **No material changes** from the risk factors previously disclosed in Ashland's Annual Report on Form 10-K for the fiscal year ended September 30, 2018, were identified during the period covered by this report[375](index=375&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=70&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details Ashland's share repurchase activity during the three months ended June 30, 2019, under its $1 billion stock repurchase program, including an accelerated share repurchase agreement **Issuer Purchases of Equity Securities (Q3 Fiscal Periods):** | Period | Total Number of Shares Purchased | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Dollar Value of Shares Yet to Be Purchased Under the Plans or Programs (Millions USD) | | :-------------------------------- | :------------------------------- | :------------------------------------------------------------------------------- | :-------------------------------------------------------------------------------- | | April 1, 2019 to April 30, 2019 | — | — | $1,000 | | May 1, 2019 to May 31, 2019 | 2,236,546 | 2,236,546 | $800 | | June 1, 2019 to June 30, 2019 | — | — | $800 | | **Total** | **2,236,546** | **2,236,546** | **$800** | - In May 2019, Ashland entered into an accelerated share repurchase (ASR) agreement to purchase **$200 million** of its common stock, with **2,236,546 shares** initially delivered. **$800 million** remained available for repurchase under the **$1 billion** program as of June 30, 2019[377](index=377&type=chunk) [ITEM 6. EXHIBITS](index=71&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including amendments to purchase agreements, various deferred compensation and stock award agreements, and XBRL financial documents - Exhibits include the First Amendment to Stock and Asset Purchase Agreement (July 1, 2019), several deferred compensation and stock award agreements, and XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[379](index=379&type=chunk) [SIGNATURE](index=73&type=section&id=SIGNATURE) This section contains the official certification and signature for the submitted report [SIGNATURE](index=73&type=section&id=SIGNATURE) The report is signed by J. Kevin Willis, Senior Vice President and Chief Financial Officer of Ashland Global Holdings Inc., on July 31, 2019, certifying its submission - The report was signed by **J. Kevin Willis**, Senior Vice President and Chief Financial Officer of Ashland Global Holdings Inc., on **July 31, 2019**[383](index=383&type=chunk)

Ashland Global Holdings Inc. (NYSE:ASH) Q3 2019 Earnings Conference Call July 31, 2019 10:00 AM ET Company Participants Seth Mrozek - Director of Investor Relations Bill Wulfsohn - Chairman & Chief Executive Officer Kevin Willis - Senior Vice President & Chief Financial Officer Conference Call Participants Christopher Parkinson - Credit Suisse John Roberts - UBS Bhavesh Lodaya - BMO Capital David Begleiter - Deutsche Bank Jim Sheehan - SunTrust Mike Sison - KeyBanc Dan Rizzo - Jefferies Mike Harrison - Seap ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 333-211719 ASHLAND GLOBAL HOLDINGS INC. (a Delaware corporation) I.R.S. No. 81-2587835 50 E. RiverCenter Boulevard Covington, Kentuc ...

Ashland, Inc. (NYSE:ASH) Q2 2019 Earnings Conference Call May 1, 2019 9:00 AM ET Company Participants Seth Mrozek - Director of Investor Relations Bill Wulfsohn - Chairman & Chief Executive Officer Kevin Willis - Senior Vice President & Chief Financial Officer Conference Call Participants Christopher Parkinson - Credit Suisse John McNulty - BMO Capital Market David Begleiter - Deutsche Bank Mike Sison - KeyBanc Laurence Alexander - Jefferies Josh Spector - UBS Jeff Zekauskas - JP Morgan Mike Harrison - Seap ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2018 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 333-211719 ASHLAND GLOBAL HOLDINGS INC. (a Delaware corporation) I.R.S. No. 81-2587835 50 E. RiverCenter Boulevard Covington, Ken ...