UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



☑

~~SECURITIES AND EXCHANGE COMMISSION~~

~~WASHINGTON, D.C. 20549~~

~~___________________________~~

For the quarterly period ended December 31, ~~2017~~

For the transition period from ~~_________~~ to ~~___________~~

Commission file number 333-211719

(a Delaware corporation)

I.R.S. No. 81-2587835

~~50 E. RiverCenter Boulevard~~

~~Covington, Kentucky 41011~~

8145 Blazer Drive

Wilmington, Delaware19808

Telephone Number ~~(859) 815-3333~~

Large Accelerated Filerþ

Non-Accelerated Filero

Emerging Growth Companyo

☑

At December 31, ~~2017,~~2021, there were ~~62,228,812~~56,923,767 shares of Registrant’s Common Stock outstanding.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

Three months ended
December 31
(In millions except per share data - unaudited) 2017
2016
Sales $ 842
$ 704
Cost of sales 613
515
Gross profit 229
189

Selling, general and administrative expense 171
157
Research and development expense 21
20
Equity and other income 2
3
Operating income 39
15

Net interest and other financing expense 31
122
Other net periodic benefit income —
2
Net loss on divestitures 1
1
Income (loss) from continuing operations before income taxes 7
(106 )
Income tax expense (benefit) - Note I 14
(41 )
Loss from continuing operations (7 ) (65 )
Income from discontinued operations (net of tax) - Note D

3
75
Net income (loss) (4 ) 10
Net income attributable to noncontrolling interest (a)
—
11
Net loss attributable to Ashland $ (4 ) $ (1 )

PER SHARE DATA
Basic earnings per share - Note L

Loss from continuing operations
$ (0.12 ) $ (1.05 )
Income from discontinued operations attributable to Ashland 0.05
1.04
Net loss attributable to Ashland $ (0.07 ) $ (0.01 )

Diluted earnings per share - Note L

Loss from continuing operations

$ (0.12 ) $ (1.05 )
Income from discontinued operations attributable to Ashland 0.05
1.04
Net loss attributable to Ashland $ (0.07 ) $ (0.01 )

COMPREHENSIVE INCOME (LOSS)
Net income (loss) $ (4 ) $ 10
Other comprehensive income (loss), net of tax - Note M
Unrealized translation gain (loss) 3
(146 )
Net change in available-for-sale securities 8
—
Pension and postretirement obligation adjustment —
(1 )
Other comprehensive income (loss) 11
(147 )
Comprehensive income (loss) $ 7
$ (137 )
Comprehensive income attributable to noncontrolling interest —
10
Comprehensive income (loss) attributable to Ashland $ 7
$ (147 )


	Three months ended
	December 31
(In millions except per share data - unaudited)	2021			2020
Sales	$	512		$	468
Cost of sales		351			321
Gross profit		161			147

Selling, general and administrative expense		82			101
Research and development expense		13			13
Intangibles amortization expense		24			21
Equity and other income		0			5
Operating income		42			17

Net interest and other expense (income)		5			(7	)
Net income on acquisitions and divestitures		0			14
Income from continuing operations before income taxes		37			38
Income tax expense (benefit)		5			(5	)
Income from continuing operations		32			43
Income from discontinued operations (net of income taxes) - Note C		16			13
Net income	$	48		$	56

PER SHARE DATA
Basic earnings per share - Note M
Income from continuing operations	$	0.56		$	0.71
Income from discontinued operations		0.29			0.22
Net income	$	0.85		$	0.93

Diluted earnings per share - Note M
Income from continuing operations	$	0.55		$	0.70
Income from discontinued operations		0.28			0.22
Net income	$	0.83		$	0.92

COMPREHENSIVE INCOME
Net income	$	48		$	56
Other comprehensive income, net of tax
Unrealized translation gain (loss)		(17	)		48
Unrealized loss on commodity hedges		(3	)		0
Other comprehensive income (loss) - Note N		(20	)		48
Comprehensive income	$	28		$	104

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


(In millions - unaudited)	December 31 2021		September 30 2021
ASSETS
Current assets
Cash and cash equivalents	$	194	$	210
Accounts receivable (a) - Note H		340		369
Inventories - Note F		530		473
Other assets		66		68
Current assets held for sale - Note B		604		597
Total current assets		1,734		1,717
Noncurrent assets
Property, plant and equipment
Cost		3,070		3,066
Accumulated depreciation		1,669		1,639
Net property, plant and equipment		1,401		1,427
Goodwill - Note G		1,411		1,430
Intangibles - Note G		1,068		1,099
Operating lease assets, net - Note I		117		124
Restricted investments - Note E		390		384
Asbestos insurance receivable (b) - Note L		132		134
Deferred income taxes		30		30
Other assets		266		267
Total noncurrent assets		4,815		4,895
Total assets	$	6,549	$	6,612

LIABILITIES AND EQUITY
Current liabilities
Short-term debt - Note H	$	376	$	365
Current portion of long-term debt - Note H		13		9
Trade and other payables		236		236
Accrued expenses and other liabilities		214		251
Current operating lease obligations - Note I		22		23
Current liabilities held for sale - Note B		47		50
Total current liabilities		908		934
Noncurrent liabilities
Long-term debt - Note H		1,580		1,596
Asbestos litigation reserve - Note L		472		490
Deferred income taxes		238		237
Employee benefit obligations - Note K		145		144
Operating lease obligations - Note I		104		110
Other liabilities		339		349
Total noncurrent liabilities		2,878		2,926
Commitments and contingencies - Note L
Stockholders’ equity - Note N		2,763		2,752

Total liabilities and stockholders' equity	$	6,549	$	6,612

(a)

Accounts receivable includes an allowance for credit losses of $2 million at both December 31, 2021 and September 30, 2021.

Asbestos insurance receivable includes an allowance for credit losses of $3 million at both December 31, 2021 and September 30, 2021.

Accounts receivable (a)

~~Accounts receivable includes an allowance for doubtful accounts of $9 million at~~ ~~December 31, 2017~~ ~~and~~ ~~September 30, 2017~~.

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES

~~STATEMENT~~

STATEMENTS OF CONDENSED CONSOLIDATED ~~EQUITY~~

CASH FLOWS


	Three months ended
	December 31
(In millions - unaudited)	2021			2020
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS
Net income	$	48		$	56
Income from discontinued operations (net of income taxes)		(16	)		(13	)
Adjustments to reconcile income from continuing operations to
cash flows from operating activities:
Depreciation and amortization		60			59
Original issue discount and debt issuance costs amortization		1			1
Deferred income taxes		3			(5	)
Gain from sales of property and equipment		—			(4	)
Stock based compensation expense		4			4
Income from restricted investments		(13	)		(23	)
Income on acquisitions and divestitures		—			(14	)
Impairments		—			9
Pension contributions		(1	)		(2	)
Change in operating assets and liabilities (a)		(72	)		13
Total cash flows provided by operating activities from continuing operations		14			81
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES FROM CONTINUING OPERATIONS
Additions to property, plant and equipment		(15	)		(30	)
Proceeds from disposal of property, plant and equipment		1			5
Proceeds from sale or restructuring of operations		—			14
Net purchase of funds restricted for specific transactions		—			(1	)
Reimbursements from restricted investments		7			8
Proceeds from sale of securities		4			42
Purchases of securities		(4	)		(42	)
Total cash flows used by investing activities from continuing operations		(7	)		(4	)
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES FROM CONTINUING OPERATIONS
Proceeds from (repayment of) short-term debt		11			(187	)
Cash dividends paid		(17	)		(17	)
Stock based compensation employee withholding taxes paid in cash		(5	)		(3	)
Total cash flows used by financing activities from continuing operations		(11	)		(207	)
CASH USED BY CONTINUING OPERATIONS		(4	)		(130	)
Cash provided (used) by discontinued operations
Operating cash flows		(8	)		11
Investing cash flows		(1	)		(3	)
Total cash provided by discontinued operations		(9	)		8
Effect of currency exchange rate changes on cash and cash equivalents		(3	)		3
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(16	)		(119	)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		210			454
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	194		$	335

(a)

Excludes changes resulting from operations acquired, sold or held for sale.

Common shares issued under stock incentive and other plans (b)

At ~~December 31, 2017~~ and September 30, 2017, the after-tax accumulated other comprehensive loss attributable to Ashland of $211 million and $222 million, respectively, was comprised of net unrealized translation losses of $243 million and $246 million, respectively, net unrealized gains on available-for-sale securities of $29 million and $21 million, respectively, and unrecognized prior service credits as a result of certain employee benefit plan amendments of $3 million for each period.

~~Common shares issued were 111,400 for the~~ ~~three~~ ~~months ended~~ ~~December 31, 2017~~.

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES

~~STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS~~

Change in operating assets and liabilities (a)

~~SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A–SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and Securities and Exchange Commission (SEC) regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Additionally, certain prior period data, primarily related to discontinued operations, have been reclassified in the Consolidated Financial Statements and accompanying notes to conform to the current period presentation, as further described in this section. These statements omit certain information and footnote disclosures required for complete annual financial statements and, therefore, should be read in conjunction with ~~Ashland’s~~Ashland Global Holdings Inc. and consolidated subsidiaries (Ashland) Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017~~.2021. Results of operations for the period ended December 31, ~~2017~~2021 are not necessarily indicative of the expected results for the remaining quarters in the fiscal year.

On ~~May 12, 2017,~~August 31, 2021, Ashland ~~completed~~announced that it had signed a definitive agreement to sell substantially all of the ~~distribution~~assets and liabilities of its ~~remaining 170 million shares of common stock of Valvoline Inc. which represented approximately 83% of the total outstanding shares of Valvoline Inc.'s common stock.~~Performance Adhesives segment to Arkema, a French société anonyme. This ~~separation from Valvoline represented~~expected divestiture represents a strategic shift in Ashland's business and qualified as a discontinued operation. ~~Accordingly, Valvoline's~~As a result, the assets, liabilities, operating results and cash flows ~~for the three months ended December 31, 2016~~related to Performance Adhesives have been classified as discontinued operations for all periods presented within the ~~Condensed~~ Consolidated Financial Statements. See ~~Note~~Notes B and C for additional information on this expected divestiture.

As a result of classifying the ~~separation~~Performance Adhesives reporting segment as a discontinued operation, Ashland is now comprised of ~~Valvoline Inc.~~

~~Subsequent to completing the separation from Valvoline Inc., Ashland's operations are managed within~~ the following ~~three~~ reportable segments: Life Sciences, Personal Care (formerly Personal Care and Household), Specialty ~~Ingredients, Composites~~Additives and Intermediates (formerly Intermediates and ~~Solvents.~~Solvents). Unallocated and Other includes corporate governance activities and certain legacy matters. For additional information, see Note Q.

Use of estimates, risks and uncertainties

Ashland’s results are affected by domestic and international economic, political, legislative, regulatory and legal actions. Economic conditions, such as recessionary trends, inflation, interest and monetary exchange rates, government fiscal policies and changes in the prices of certain key raw materials, can have a significant effect on operations. While Ashland maintains reserves for anticipated liabilities and carries various levels of insurance, Ashland could be affected by civil, criminal, regulatory or administrative actions, claims or proceedings relating to asbestos, environmental remediation or other matters.

New accounting ~~standards~~

pronouncements

A description of new U.S. GAAP accounting standards issued or adopted during the current year is required in interim financial reporting. A detailed listing of new accounting standards relevant to Ashland is included in the Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017. The following~~2021. There were no new standards ~~relevant to Ashland~~that were either issued or adopted in the current ~~period, or~~fiscal year that will ~~become effective~~have a material impact on Ashland's consolidated financial statements.

NOTE B– DIVESTITURES

Performance Adhesives

On August 31, 2021, Ashland announced that it had signed a definitive agreement to sell substantially all of the assets and liabilities of its Performance Adhesives segment in a ~~subsequent period.~~

~~In May 2014,~~transaction valued at $1.65 billion.

The transaction is expected to close prior to the FASB issued accounting guidance outlining a single comprehensive five step model for entities to use in accounting for revenue arising from contracts with customers (ASC 606 Revenue from Contracts with Customers). The new guidance supersedes most current revenue recognition guidance, in an

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE A~~–~~SIGNIFICANT ACCOUNTING POLICIES (continued)~~

effort to converge the revenue recognition principles within U.S. GAAP. This new guidance also requires entities to disclose certain quantitative and qualitative information regarding the nature, amount, timing and uncertainty of qualifying revenue and cash flows arising from contracts with customers. Entities have the option of using a full retrospective or a modified retrospective approach to adopt the new guidance. Ashland has identified an implementation team that is currently evaluating the impactend of the ~~new~~March 31, 2022 quarter, contingent on certain customary regulatory approvals, standard onclosing conditions and completion of required employee information and consultation processes. Upon the ~~Condensed Consolidated Financial Statements and the adoption method options available as well as the overall impact the new guidance will have on the organization. The assessment process consists~~closing of ~~categorizing Ashland’s revenue streams and reviewing the current internal accounting policies and practices~~this transaction, Ashland expects to determine potential differences that would result from applying the requirements of the new standard to revenue contracts. Additional discussions and meetings with each revenue stream team have occurred to solicit input, identify potential impacts and appropriate changes to Ashland’s business processes, systems and controls to support the revenue recognition and disclosure requirements under the new standard. Based on various preliminary assessments conducted to date, Ashland has identified agreements with distributors and customers that are subject to rebate and incentive programs that could contain elements of material rights and/or variable consideration. Ashland does not currently believe that these elements would result inrecognize a material change to how revenue would be recognized for these agreements. Ashland currently intends to adopt this standard using the modified retrospective approach and does not believe the impact will be material to the Condensed Consolidated Financial Statements but does expect there to be significant additional disclosuresgain within the ~~Notes to Condensed Consolidated Financial Statements. This guidance becomes effective for Ashland on October 1, 2018.~~

In March 2017, the FASB issued accounting guidance that will change how employers who sponsor defined benefit pension and/or postretirement benefit plans present the net periodic benefit cost in the StatementStatements of Consolidated Comprehensive Income (Loss). ~~This guidance requires employers to present the service cost component of net periodic benefit cost~~

Since this transaction represents a strategic shift in the same caption within the Statement of Consolidated Comprehensive Income (Loss) as other employee compensation costs from services rendered during the period. All other components of the net periodic benefit cost will be presented separately outside ofAshland’s business and had a major effect on Ashland’s operations and financial results, the operating income caption. This guidance must be applied retrospectively. Ashland elected to early adopt this guidance on October 1, 2017, which resulted in a reclassification of $2 million in income from the selling, generalresults and administrative expense and cost of sales captions to the other net periodic benefit income caption in the Statement of Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2016. The components of net periodic benefits income (costs) reclassified primarily relate to interest cost, expected return on assets, curtailments, settlements and actuarial gains and losses. Ashland did not have to adjust the classification of service cost since it previously was recorded within the caption required by the new guidance. See Note J for additional information on net periodic benefit costs.

~~In March 2016, the FASB issued new accounting guidance for certain aspects of share-based payments to employees. This guidance requires all excess tax benefits and tax deficiencies~~cash flows related to ~~share-based payments to be recognized~~Performance Adhesives have been reflected as ~~income tax expense~~discontinued operations in the Statements of Consolidated Comprehensive Income (Loss) ~~instead of additional paid-in capital,~~ and changes the classification of excess tax benefits from a financing activity to an operating activity within the Statements of Condensed Consolidated Cash Flows. This guidance also allows entities to make an accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, this guidance increases the amount an employer can withhold to cover income taxes on awards and still qualify for equity classification and requires that cash paid by an employer when directly withholding shares for tax-withholding purposes be classified as a financing activity within the Statements of Condensed Consolidated Cash Flows. The guidance became effective for Ashland and was adopted on October 1, 2017. The guidance specifically related to the Statements of Consolidated Comprehensive Income (Loss) was adopted prospectively while the guidance related to the Statements of Condensed Consolidated Cash Flows, ~~was adopted retrospectively, as required by~~while the ~~guidance.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE A~~–~~SIGNIFICANT ACCOUNTING POLICIES (continued)~~

~~Upon adoption, the overall impact on Ashland's Condensed Consolidated Financial Statements was not significant.~~

~~NOTE B– VALVOLINE~~

~~Ashland Separation of Valvoline~~

~~On September 22, 2015, Ashland announced~~assets and liabilities that ~~the Board of Directors approved proceeding with a plan~~are to separate Ashland into two independent, publicly traded companies comprising of the new Ashland (now known as Ashland Global Holdings Inc.) and Valvoline Inc. The initial step of the separation, the initial public offering (IPO) of Valvoline Inc., closed on September 28, 2016. As discussed furtherbe sold have been classified within the Final Separation section of this Note, Ashland completed the distribution of its remaining shares in Valvoline Inc. on May 12, 2017. The new Ashland is a premier global leader in providing specialty chemical solutions to customers in a wide range of consumer and industrial markets. Key markets and applications include pharmaceutical, personal care, food and beverage, architectural coatings, adhesives, automotive, construction and energy.

After completing the IPO on September 28, 2016 and before the distribution of its remaining shares on May 12, 2017, Ashland owned 170 million shares of Valvoline Inc.’s common stock which represented approximately 83% of the total outstanding shares of Valvoline Inc.’s common stock. As a result, Ashland continued to consolidate Valvoline within the Condensed Consolidated Financial Statements up until the distribution of the remaining shares. The resulting outside stockholders’ interests in Valvoline Inc., which was approximately 17%, was presented separately as a noncontrolling interest within Ashland’s equity in the Condensed Consolidated Balance Sheets ~~up until the distribution of the remaining shares. The amount of consolidated net income attributable to these minority holders is presented as~~under a ~~separate caption on the Statement of Consolidated Comprehensive Income (Loss)~~held for sale designation. See Note C for the ~~three months ended December 31, 2016.~~

~~Final Separation~~

~~Ashland completed the distribution~~results of its remaining 170 million shares of common stock of Valvoline Inc. as a pro rata dividend on shares of Ashland common stock outstanding at the close of business on the record date of May 5, 2017. Based on the shares of Ashland common stock outstanding as of May 5, 2017, the record dateoperations for the distribution, each share of Ashland common stock received 2.745338 shares of Valvoline common stock in the distribution. The distribution was recorded at the carrying amount of Valvoline Inc.'s net assets which was a deficit of $187 million as of May 12, 2017, as follows:

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE B – VALVOLINE (continued)~~

May 12
(In millions) 2017
ASSETS
Current assets
Cash 179
Accounts receivable, net 385
Inventories 153
Other current assets 24
Total current assets 741
Noncurrent assets
Net property, plant and equipment 357
Goodwill 329
Equity and other unconsolidated investments 31
Deferred income taxes 391
Other noncurrent assets 93
Total noncurrent assets 1,201
Total assets $ 1,942
LIABILITIES AND EQUITY
Current liabilities
Short-term debt 75
Current portion of long-term debt 16
Trade and other payables 353
Other current liabilities 34
Total current liabilities 478
Noncurrent liabilities
Long-term debt 662
Employee benefit obligations 826
Other long-term liabilities 163
Total noncurrent liabilities 1,651
Total liabilities $ 2,129
Net deficit $ (187 )

A Tax Matters Agreement between Ashland and Valvoline Inc. governs the rights and obligations after the separation regarding certain income taxes and other taxes, including certain tax liabilities and benefits, attributes, returns and contests.

~~Discontinued Operations Assessment~~

~~Valvoline met the criteria to qualify as a discontinued operation and accordingly, its operating results and cash flows~~Performance Adhesives for ~~the three months ended December 31, 2016 have been classified as discontinued operations within the Condensed Consolidated Financial Statements. See Note D for more information.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE B – VALVOLINE (continued)~~

~~Costs of transaction~~

~~Ashland recognized separation~~all periods presented.

Certain indirect corporate costs ~~of $6 million and $28 million for the three months ended December 31, 2017 and 2016, respectively. Of these amounts, $6 million of separation costs directly related to Valvoline and were~~ included ~~within the discontinued operations caption of the Statement of Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2016. Otherwise, separation costs are recorded~~ within the selling, general and administrative expense caption of the Statements of Consolidated Comprehensive Income (Loss).

~~NOTE C– ACQUISITIONS~~

~~On May 17, 2017,~~ that were previously allocated to the Performance Adhesives segment do not qualify for classification within discontinued operations and are now reported as selling, general and administrative expense within continuing operations on a consolidated basis and within the Unallocated and other segment. These costs were $4 million for both the three months ended December 31, 2021 and 2020, respectively.

Subsequent to the completion of the sale, Ashland expects to provide certain transition services to Arkema for a fee. While the transition services are expected to vary in duration depending upon the type of service provided, Ashland does not expect these transition services will be significant.

Other manufacturing facility sales

During the three months ended December 31, 2020, Ashland completed ~~its acquisition~~the sale of ~~the stock of Pharmachem Laboratories, Inc. (Pharmachem),~~ a ~~leading provider of quality ingredients to~~Specialty Additives facility, the global health and wellness industries and high-value differentiated products to fragrance and flavor houses. With annual revenues of approximately $300 million and 14 manufacturing facilities in the United States and Mexico, New Jersey-based Pharmachem develops, manufactures and supplies custom and branded nutritional and fragrance products. Ashland has included Pharmachem within the Specialty Ingredients reporting segment.

~~Purchase price allocation~~

~~The acquisition was recorded by Ashland using the purchase method of accounting in accordance with applicable U.S. GAAP whereby the total purchase price was allocated to tangible and intangible~~ assets and liabilities ~~acquired based on respective fair values.~~

~~The all-cash purchase price~~ of ~~Pharmachem was $680~~which were classified as held for sale as of September 30, 2020. Net proceeds received from the sale were approximately $14 million ~~which included working capital adjustments of approximately $20 million. The following table summarizes~~in the ~~current preliminary values of the assets acquired and liabilities assumed at the date of acquisition.~~

At
May 17, 2017
Preliminary purchase price allocation (in millions) As Adjusted
Assets:
Accounts receivable 52
Inventory 74
Other current assets 4
Intangible assets 330
Goodwill 287
Property, plant and equipment 97
Other noncurrent assets 20
Liabilities:
Accounts payable (32 )
Deferred tax - net (138 )
Other noncurrent liabilities (14 )
Total purchase price $ 680

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE C – ACQUISITIONS (continued)~~

~~As of~~ December 31, ~~2017,~~2020 quarter ($20 million in total including a deposit received in fiscal year 2020). Ashland recognized a pre-tax gain of $14 million recorded within the ~~purchase price allocation for the acquisition was preliminary. Adjustments to the current fair value estimates~~Net income on acquisitions and divestitures caption in the ~~above table may occur as the process conducted for various valuations and assessments, including certain tangible and intangible assets, are finalized. Goodwill was calculated as the excess~~Statements of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The factors contributing to the recognition of goodwill were based on strategic benefits that are expected to be realized from the acquisition. None of the goodwill is expected to be deductible for income tax purposes.Consolidated Comprehensive Income (Loss).

~~Intangible assets identified~~

The purchase price allocation included $330 million of certain definite-lived intangible assets which are being amortized over the estimated useful life in proportion to the economic benefits consumed. The determination of the useful lives is based upon various industry studies, historical acquisition experience, economic factors, and future cash flows of the combined company. In addition, Ashland reviewed certain technological trends and also considered the relative stability in the current Pharmachem customer base.

~~The following details the total intangible assets identified as of May 17, 2017.~~

Weighted-average
amortization period
Intangible asset type (in millions) Value
(years)
Trademarks and trade names $ 26
15
Intellectual property 68
22
Customer and supplier relationships 236
20
Total $ 330

NOTE ~~D –~~C– DISCONTINUED OPERATIONS

~~In previous periods,~~

Ashland has divested certain businesses that have qualified as discontinued operations. The operating results from these divested businesses and subsequent adjustments related to ongoing assessments of certain retained liabilities and tax items have been recorded within the discontinued operations caption in the Statements of Consolidated Comprehensive Income (Loss) for all periods ~~presented and are discussed further within this note.~~

As previously discussed in Notes A and B, Ashland completed the distribution of its remaining 170 million shares of common stock of Valvoline Inc. on May 12, 2017. Ashland determined that the Valvoline separation qualified as a discontinued operation, in accordance with U.S. GAAP, since it represents a strategic shift for Ashland and has a major effect on Ashland's operations and financial results. Accordingly, Valvoline's operating results and cash flows for the three months ended December 31, 2016 have been classified as discontinued operations within the Condensed Consolidated Financial Statements.

Components of amounts reflected in the Statements of Consolidated Comprehensive Income (Loss) related to discontinued operations are presented in the following table for the three months ended December 31, ~~2017~~2021 and ~~2016~~.2020.


	Three months ended
	December 31
(In millions)	2021			2020
Income (loss) from discontinued operations (net of tax)
Performance Adhesives	$	17		$	18
Distribution		(1	)		(1	)
Gain (loss) on disposal of discontinued operations (net of taxes)
Composites/Marl facility		0			(4	)
	$	16		$	13

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE D – DISCONTINUED OPERATIONS (continued)~~

Three months ended
December 31
(In millions) 2017
2016
Income from discontinued operations (net of tax)
Valvoline $ 3
$ 75
Total income from discontinued operations (net of tax) $ 3
$ 75

The following table presents a reconciliation of the ~~historically reported~~ captions within Ashland's Statements of Consolidated Comprehensive Income (Loss) for the income (loss) from discontinued operations attributable to ~~Valvoline~~Performance Adhesives for the three months ended December 31, ~~2016.~~

2021 and 2020.


	Three months ended
	December 31
(In millions)	2021			2020
Income (loss) from discontinued operations attributable to Performance Adhesives
Sales	$	96		$	84
Cost of sales		(67	)		(53	)
Selling, general and administrative expense		(5	)		(5	)
Research and development expense		(2	)		(2	)
Pretax income of discontinued operations		22			24
Income tax expense		(5	)		(6	)
Income from discontinued operations	$	17		$	18

Three months ended
(In millions) December 31, 2016
Income from discontinued operations
attributable to Valvoline

Sales $ 489
Cost of sales (293 )
Selling, general and administrative expense (82 )
Research and development expense (3 )
Equity and other income 9
Operating income of discontinued operations 120
Net interest and other financing expense (10 )
Pretax income of discontinued operations 110
Income tax expense (35 )
Income from discontinued operations $ 75

NOTE D – RESTRUCTURING ACTIVITIES

Company-wide restructuring activities

Ashland periodically implements company-wide restructuring programs related to acquisitions, divestitures and other cost reduction programs in order to enhance profitability through streamlined operations and an improved overall cost structure.

Fiscal 2020 and 2021 restructuring program

Ashland recorded severance income of $1 million and expense of $8 million during the three months ended December 31, 2021 and 2020, respectively, attributable to executive management changes and business management changes within the organization. As of December 31, 2021, the severance reserve associated with this transition was $3 million.

The following table details at December 31, 2021 and 2020, the amount of restructuring severance reserves related to this program. The severance reserves were primarily recorded within accrued expenses and other liabilities in the Condensed Consolidated Balance Sheet as of December 31, 2021 and 2020.


(In millions)	Severance costs
Balance at of September 30, 2021	$	6
Restructuring reserve		(1	)
Utilization (cash paid)		(2	)
Balance at December 31, 2021	$	3


(In millions)	Severance costs
Balance at of September 30, 2020	$	39
Restructuring reserve		8
Utilization (cash paid)		(11	)
Balance at December 31, 2020	$	36

NOTE E – FAIR VALUE MEASUREMENTS

As required by U.S. GAAP, Ashland uses applicable guidance for defining fair value, the initial recording and periodic remeasurement of certain assets and liabilities measured at fair value and related disclosures for instruments measured at fair value. Fair value accounting guidance establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement. The three levels within the fair value hierarchy are described as follows.

Level 1 – Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3 – Unobservable inputs for the asset or liability for which there is little, if any, market activity at the measurement date. Unobservable inputs reflect Ashland’s own assumptions about what market participants would use to price the asset or liability. The inputs are developed based on the best information available in the circumstances, which might include Ashland’s own financial data such as internally developed pricing

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE E – FAIR VALUE MEASUREMENTS (continued)~~

models, discounted cash flow methodologies, as well as instruments for which the fair value determination requires significant management judgment.

For assets that are measured using quoted prices in active markets (Level 1), the total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs. Assets and liabilities that are measured using significant other observable inputs (Level 2) are primarily valued by reference to quoted prices of similar assets or liabilities in active markets, adjusted for any terms specific to that asset or liability. For all other assets and liabilities for which unobservable inputs are used (Level 3), fair value is derived ~~through the use of~~using fair value models, such as a discounted cash flow model or other standard pricing models that Ashland deems reasonable.

The following table summarizes financial instruments subject to recurring fair value measurements as of December 31, ~~2017.~~

(a)

Included in restricted investments and $36 million within other current assets in the Condensed Consolidated Balance Sheets.

(In millions)
Carrying
value

Total
fair
value

Quoted prices
in active
markets for
identical
assets
Level 1

Significant
other
observable
inputs
Level 2

Significant
unobservable
inputs
Level 3

Assets
Cash and cash equivalents $ 601
$ 601
$ 601
$ —
$ —
Restricted investments (a)
345
345
345
—
—
Deferred compensation investments (b)
160
160
—
160
—
Investments of captive insurance company (b)
3
3
3
—
—
Foreign currency derivatives 4
4
—
4
—
Total assets at fair value $ 1,113
$ 1,113
$ 949
$ 164
$ —

Liabilities

Foreign currency derivatives $ 13
$ 13
$ —
$ 13
$ —

(b)

Includes $335 million related to the Asbestos trust and $91 million related to the Environmental trust.


~~(a)~~	~~Included in restricted investments is $30 million classified in the other current assets caption on the Condensed Consolidated Balance Sheets.~~


~~(b)~~	~~Included in other noncurrent assets in the Condensed Consolidated Balance Sheets.~~

(c)

Included in other noncurrent assets in the Condensed Consolidated Balance Sheets.

(d)

Included in accounts receivable in the Condensed Consolidated Balance Sheets.

(e)

Included in accrued expenses and other liabilities in the Condensed Consolidated Balance Sheets.

(a)

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE E – FAIR VALUE MEASUREMENTS (continued)~~

(In millions)
Carrying
value

Total
fair
value

Quoted prices
in active
markets for
identical
assets
Level 1

Significant
other
observable
inputs
Level 2

Significant
unobservable
inputs
Level 3

Assets

Cash and cash equivalents $ 566
$ 566
$ 566
$ —
$ —
Restricted investments (a)
332
332
332
—
—
Deferred compensation investments (b)
158
158
—
158
—
Investments of captive insurance company (b)
3
3
3
—
—
Foreign currency derivatives 2
2
—
2
—
Total assets at fair value $ 1,061
$ 1,061
$ 901
$ 160
$ —

Liabilities

Foreign currency derivatives $ 36
$ 36
$ —
$ 36
$ —

~~Restricted investments~~

~~During 2015, Ashland~~ and Hercules entered into a comprehensive settlement agreement related to certain insurance coverage for asbestos bodily injury claims with Underwriters at Lloyd’s, certain London Companies and Chartis (AIG) member companies, along with National Indemnity Company and Resolute Management, Inc., under which Ashland and Hercules received a total of $398$37 million (the January 2015 asbestos insurance settlement). Ashland placed $335 million of the settlement funds from the January 2015 asbestos insurance settlement into a renewable annual trust restricted for the purpose of paying ongoing and future litigation defense and claim settlement costs incurred in conjunction with asbestos claims. These funds were classified primarily as noncurrent restricted investment assets, with $30 million classified within other current assets in the Condensed Consolidated Balance ~~Sheets as of December 31, 2017~~Sheets.

(b)

Includes $333 million related to the Asbestos trust and ~~September 30, 2017.~~$88 million related to the Environmental trust.

During 2015, Ashland diversified the restricted investments received from the January 2015 asbestos insurance settlement into primarily equity and corporate bond mutual funds that are designated as available-for-sale securities, classified as Level 1 measurements within the fair value hierarchy. Available-for-sale securities are reported at fair value with unrealized gains and losses, net of related deferred income taxes, included(c)

Included in ~~the stockholders' equity section of~~other noncurrent assets in the Condensed Consolidated Balance ~~Sheets as a component of accumulated~~Sheets.

(d)

Included in accounts receivable in the Condensed Consolidated Balance Sheets.

(e)

Included in accrued expenses and other ~~comprehensive income (AOCI).~~ liabilities in the Condensed Consolidated Balance Sheets.


(In millions)	December 31 2021			September 30 2021
Original cost	$	335		$	335
Accumulated adjustments, net		37			(50	)
Adjusted cost, beginning of year (a)		372			285
Investment income (b)		8			12
Net unrealized gain (c)		53			49
Realized gains (c)		0			17
Funds restricted for specific transactions (d)		0			91
Disbursements		(7	)		(33	)
Fair value	$	426		$	421

(a)

The adjusted cost of the demand deposits includes accumulated investment income, realized gains, additional funds restricted for specific transactions and disbursements recorded in previous periods. The adjusted cost as of December 31, 2021 includes the $90 million funding to establish the environmental trust.

(b)

Investment income relates to the demand deposit and includes interest income as well as dividend income transferred from the equity and fixed income mutual funds.

(c)

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Presented under the original cost method.

(d)

~~NOTE E – FAIR VALUE MEASUREMENTS (continued)~~The September 30, 2021 period included $90 million to establish the environmental trust.

December 31
September 30
(In millions) 2017
2017
Original cost $ 335
$ 335
Accumulated adjustments, net (a)

(38 ) (24 )
Adjusted cost, beginning of year 297
311
Investment income (b)
2
9
Unrealized gain 45
35
Realized gain 1
2
Settlement funds 5
2
Disbursements (5 ) (27 )
Fair value $ 345
$ 332

The following table presents gross unrealized gains and losses for the restricted investment ~~available-for-sale~~ securities as of December 31, ~~2017~~2021 and September 30, ~~2017:~~2021:


			Gross		Gross
(In millions)	Adjusted Cost		Unrealized Gain		Unrealized Loss			Fair Value
As of December 31, 2021
Demand deposit	$	11	$	0	$	0		$	11
Equity mutual fund		139		51		0			190
Fixed income mutual fund		223		4		(2	)		225
Fair value	$	373	$	55	$	(2	)	$	426

As of September 30, 2021
Demand deposit	$	6	$	0	$	0		$	6
Equity mutual fund		143		44		(1	)		186
Fixed income mutual fund		223		7		(1	)		229
Fair value	$	372	$	51	$	(2	)	$	421

Gross
Gross

(In millions) Adjusted Cost
Unrealized Gain
Unrealized Loss
Fair Value
As of December 31, 2017
Demand Deposit $ 17
$ —
$ —
$ 17
Equity Mutual Fund 163
45
—
208
Corporate bond Mutual Fund 120
—
—
120
Fair value $ 300
$ 45
$ —
$ 345

As of September 30, 2017
Demand Deposit $ 9
$ —
$ —
$ 9
Equity Mutual Fund 168
34
—
202
Corporate bond Mutual Fund 120
1
—
121
Fair value $ 297
$ 35
$ —
$ 332

~~The unrealized gains and losses as~~ of December 31, 2017 and September 30, 2017 were recognized within AOCI. Ashland invests in highly-rated investment grade mutual funds. No other-than-temporary impairment was recognized in AOCI during the three months ended December 31, 2017 and 2016.

The following table presents the investment income, net gains and losses realized and disbursements related to the investments within the portfolio for the three months ended December 31, ~~2017~~2021 and ~~2016.~~

Three months ended
December 31
(In millions) 2017
2016
Investment income $ 2
$ 3
Realized gains 1
—
Disbursements (5 ) —

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE E – FAIR VALUE MEASUREMENTS (continued)~~

~~Deferred compensation investments~~

~~Deferred compensation investments consist~~Ashland determined that all gains and (losses) were related to investment securities with readily determinable fair values. Due to the accounting guidance adopted in the first quarter of ~~Level 2 measurements~~fiscal year 2019, the net unrealized gains and (losses) during fiscal September 30, 2019 and forward were recorded within the ~~fair value hierarchy which are comprised primarily of a guaranteed~~net interest ~~fund, a common stock index fund~~ and ~~an intermediate government bond fund. Gains and losses related to deferred compensation investments are immediately recognized within~~other expense caption in the Statements of Consolidated ~~Comprehensive~~ Income (Loss).

Ashland conducts business in a variety of foreign currencies. Accordingly, Ashland regularly uses foreign currency derivative instruments to manage exposure on certain transactions denominated in foreign currencies to curtail potential earnings volatility effects on certain assets and liabilities, including short-term inter-company loans, denominated in currencies other than Ashland’s functional currency of an entity. These derivative contracts generally require exchange of one foreign currency for another at a fixed rate at a future date and generally have maturities of less than twelve months. ~~All contracts are valued at fair value with net changes in fair value recorded within the selling, general and administrative expense caption.~~ The impacts of these contracts were largely offset by gains and losses resulting from the impact of changes in exchange rates on transactions denominated in non-functional currencies. The following table summarizes the net gains ~~and/or~~and losses recognized during the three months ended December 31, ~~2017~~2021 and ~~2016~~2020 within the Statements of Consolidated Comprehensive Income (Loss).


	Three months ended
	December 31
(In millions)	2021		2020
Foreign currency derivative gains	$	2	$	3

Three months ended
December 31
(In millions) 2017
2016
Foreign currency derivative loss $ (11 ) $ (8 )

The following table summarizes the fair values of the outstanding foreign currency derivatives as of December 31, ~~2017~~2021 and September 30, ~~2017~~2021 included in accounts receivable and accrued expenses and other liabilities of the Condensed Consolidated Balance Sheets.


	December 31		September 30
(In millions)	2021		2021
Foreign currency derivative assets	$	2	$	1
Notional contract values		252		150

Foreign currency derivative liabilities	$	1	$	2
Notional contract values		156		212

Commodity derivatives

To manage its exposure to the market price volatility of natural gas consumed by its US plants during the manufacturing process, Ashland regularly enters into forward contracts that are designated as cash flow hedges. Ashland recognized gains of $2 million and 0 during the three months ended December 31, 2021 and 2020, respectively, within the Statements of Consolidated Comprehensive Income (Loss).

The following table summarizes the fair values of the outstanding commodity derivatives as of December 31, 2021, and September 30, 2021 included in accounts receivable and accrued expenses and other liabilities of the Condensed Consolidated Balance Sheets.


	December 31		September 30
(In millions)	2021		2021
Commodity derivative assets	$	2	$	11
Notional contract values		5		6

Commodity derivative liabilities	$	1	$	—
Notional contract values		7		—

December 31
September 30
(In millions) 2017
2017
Foreign currency derivative assets $ 4
$ 2
Notional contract values 425
79

Foreign currency derivative liabilities $ 13
$ 36
Notional contract values 810
1,601

Other financial instruments

At December 31, ~~2017~~2021 and September 30, ~~2017,~~2021, Ashland's long-term debt (including the current portion and excluding debt issuance cost discounts) had a carrying value of ~~$2,614~~$1,610 million and ~~2,615~~$1,622 million, respectively, compared to a fair value of ~~$2,755~~$1,752 million and ~~$2,768~~$1,794 million, respectively. The fair values of long-term debt are based on quoted market prices or, if market prices are not available, the present values of the underlying cash flows discounted at Ashland’s incremental borrowing ~~rates, which are deemed to be Level 2 measurements within the fair value hierarchy.~~

rates.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

NOTE F – INVENTORIES

Inventories are carried at the lower of cost or ~~market.~~net realizable value. Inventories are primarily stated at cost using the weighted-average cost method. In addition, certain inventories are valued at cost using the last-in, first-out (LIFO) method.

The following table summarizes Ashland’s inventories as of the reported Condensed Consolidated Balance Sheet dates.


	December 31		September 30
(In millions)	2021		2021
Finished products	$	319	$	282
Raw materials, supplies and work in process		211		191
	$	530	$	473

December 31
September 30
(In millions) 2017
2017
Finished products $ 421
$ 390
Raw materials, supplies and work in process 256
245
LIFO reserves (3 ) (1 )
$ 674
$ 634

NOTE G – GOODWILL AND OTHER INTANGIBLES

Goodwill

~~Goodwill~~

Ashland ~~reviews~~tests goodwill and other indefinite-lived intangible assets for impairment annually oras of July 1 and when events and circumstances indicate an impairment may have occurred. ~~This annual assessment is performed as of July 1~~Ashland tests goodwill and ~~consists of Ashland determining each reporting unit’s current~~other indefinite-lived intangible assets for impairment by comparing the estimated fair value ~~compared~~of the reporting units (for goodwill) and other indefinite-lived intangible assets to ~~its current~~the related carrying value. ~~For~~If the carrying amount of a reporting unit or other indefinite-lived intangible asset exceeds its ~~July 1, 2017 assessment,~~estimated fair value, Ashland ~~determined that its~~records an impairment loss based on the difference between fair value and carrying amount, in the case of reporting units, ~~for~~not to exceed to the ~~allocation~~associated carrying amount of goodwill.

No indicators of impairment were identified in the three months ended December 31, 2021.

Ashland’s assessment of an impairment on any of these assets classified currently as having indefinite lives, including goodwill, ~~are its three reportable segments: Specialty Ingredients, Composites and Intermediates and Solvents. At~~could change in future periods if significant events happen and/or circumstances change that ~~time, Ashland determined no additional impairment existed.~~effect the previously mentioned assumptions such as: a significant change in projected business results, a divestiture decision, increase in Ashland’s weighted-average cost of capital rates, decrease in growth rates or assumptions, economic deterioration that is more severe or of a longer duration than anticipated, or another significant economic event.

The following is a progression of goodwill by reportable segment for the three months ended December 31, ~~2017.~~

2021.


	Life			Personal			Specialty
(In millions)	Sciences			Care (a)			Additives (a)			Intermediates (a)		Total
Balance at September 30, 2021	$	856		$	129		$	445		$	0	$	1,430
Currency translation		(12	)		(2	)		(5	)		0		(19	)
Balance at December 31, 2021	$	844		$	127		$	440		$	0	$	1,411

(a)

As of December 31, 2021 and September 30, 2021, there were accumulated impairments of $356 million, $174 million and $90 million related to the Personal Care, Specialty Additives and Intermediates reportable segments, respectively.

Specialty
Intermediates

(In millions) Ingredients
Composites
and Solvents
(a) Total
Balance as of September 30, 2017 $ 2,315
$ 150
$ —
$ 2,465
Currency translation adjustment 10
—
—
10
Balance as of December 31, 2017 $ 2,325
$ 150
$ —
$ 2,475


~~(a)~~	~~As of December 31, 2017, there was accumulated impairment of $171 million related to the Intermediates and Solvents reportable segment.~~

Other intangible assets

Intangible assets principally consist of trademarks and trade names, intellectual property and customer and supplier relationships. Intangible assets classified as finite are amortized on a straight-line basis over their estimated useful lives. The cost of trademarks and trade names is amortized principally over 3 to 25 years, intellectual property over 5 to 25 years, and customer and supplier relationships over 3 to 24 ~~years.~~

years.

Ashland annually reviews, as of July 1, indefinite-lived intangible assets for possible impairment or whenever events or changes in circumstances indicate that carrying amounts may not be recoverable.

No indicators of impairment were identified in the three months ended December 31, 2021.

Intangible assets were comprised of the following as of December 31, ~~2017~~2021 and September 30, ~~2017~~.2021.


	December 31, 2021
	Gross					Net
	carrying		Accumulated			carrying
(In millions)	amount		amortization			amount
Definite-lived intangibles
Trademarks and trade names	$	100	$	(34	)	$	66
Intellectual property		745		(504	)	��	241
Customer and supplier relationships		842		(359	)		483
Total definite-lived intangibles		1,687		(897	)		790

Indefinite-lived intangibles
Trademarks and trade names		278		—			278
Total intangible assets	$	1,965	$	(897	)	$	1,068


	September 30, 2021
	Gross					Net
	carrying		Accumulated			carrying
(In millions)	amount		amortization			amount
Definite-lived intangibles
Trademarks and trade names	$	101	$	(32	)	$	69
Intellectual property		750		(495	)		255
Customer and supplier relationships		849		(352	)		497
Total definite-lived intangibles		1,700		(879	)		821

Indefinite-lived intangibles
Trademarks and trade names		278		—			278
Total intangible assets	$	1,978	$	(879	)	$	1,099

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE G – GOODWILL AND OTHER INTANGIBLES (continued)~~

December 31, 2017
Gross
Net
carrying
Accumulated
carrying
(In millions) amount
amortization
amount
Definite-lived intangible assets
Trademarks and trade names $ 67
$ (22 ) $ 45
Intellectual property 758
(340 ) 418
Customer and supplier relationships 780
(246 ) 534
Total definite-lived intangible assets 1,605
(608 ) 997

Indefinite-lived intangible assets
Trademarks and trade names 301
—
301
Total intangible assets $ 1,906
$ (608 ) $ 1,298

September 30, 2017
Gross
Net
carrying
Accumulated
carrying
(In millions) amount
amortization
amount
Definite-lived intangible assets
Trademarks and trade names $ 67
$ (22 ) $ 45
Intellectual property 757
(326 ) 431
Customer and supplier relationships 777
(235 ) 542
Total definite-lived intangible assets 1,601
(583 ) 1,018

Indefinite-lived intangible assets
Trademarks and trade names 301
—
301
Total intangible assets $ 1,902
$ (583 ) $ 1,319

Amortization expense recognized on intangible assets was ~~$24~~$24 million and ~~$19~~$21 million for the three months ended December 31, ~~2017~~2021 and ~~2016,~~2020, respectively, and is included in the ~~selling, general and administrative~~intangibles amortization expense caption of the Statements of Consolidated Comprehensive Income (Loss). Estimated amortization expense for future periods is ~~$94~~$94 million in ~~2018~~2022 (includes three months actual and nine months estimated), ~~$90~~$93 million in ~~2019, $89~~2023, $80 million in ~~2020, $89~~2024, $78 million in ~~2021~~2025 and ~~$87~~$75 million in ~~2022. The amortization expense for future periods is an estimate.~~2026. Actual amounts may change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions and divestitures, potential impairment, accelerated amortization, or other events.

NOTE H – DEBT

AND OTHER FINANCING ACTIVITIES

The following table summarizes Ashland’s current and long-term debt as of the dates reported in the Condensed Consolidated Balance Sheets.


(In millions)	December 31, 2021			September 30, 2021
3.375% Senior Notes, due 2031	$	450		$	450
2.00% Senior Notes, due 2028 (Euro 500 million principal)		566			580
6.875% notes, due 2043		282			282
Term loan A		250			250
Accounts receivable securitizations		113			117
6.50% junior subordinated notes, due 2029		58			57
Revolving credit facility		240			225
Other (a)		10			9
Total debt		1,969			1,970
Short-term debt (includes current portion of long-term debt)		(389	)		(374	)
Long-term debt (less current portion)	$	1,580		$	1,596

(a)

Includes $17 million of debt issuance cost discounts as of both December 31, 2021 and September 30, 2021. Additionally, as of both December 31, 2021 and September 30, 2021, Other includes a European short-term loan facility with an outstanding balance $23 million.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE H – DEBT (continued)~~

December 31
September 30
(In millions) 2017
2017
4.750% notes, due 2022 $ 1,082
$ 1,082
Term Loan B, due 2024 597
599
6.875% notes, due 2043 376
376
Revolving Credit Facility 285
173
Term Loan A, due 2022 250
250
Term Loan A, due 2020 250
250
Accounts receivable securitization 64
56
6.50% junior subordinated notes, due 2029 51
51
Medium-term notes, due 2019, interest of 9.4% at December 31, 2017 5
5
Other (a)
(21 ) (23 )
Total debt 2,939
2,819
Short-term debt (includes current portion of long-term debt) (355 ) (235 )
Long-term debt (less current portion and debt issuance cost discounts) $ 2,584
$ 2,584


~~(a)~~	~~Other includes $24 million and $25 million of debt issuance cost discounts as of December 31, 2017 and September 30, 2017, respectively.~~

The scheduled aggregate maturities of long-term debt by year (including the current portion and excluding debt issuance costs) are as ~~follows: $5~~follows as of December 31, 2021: $9 million remaining in ~~2018, $11~~2022, $22 million in ~~2019, $269~~2023, $44 million in ~~2020, $56~~2024, $175 million in ~~2021~~2025 and ~~$1,279 million~~0 in ~~2022.~~

2026.

Accounts Receivable Facilities and Off-Balance Sheet Arrangements

U.S. Accounts Receivable Sales Program

Ashland ~~Financing Activities~~

~~2017 Credit Agreement~~

~~On May 17, 2017, in conjunction with the closing of the Pharmachem acquisition, Ashland~~continues to maintain its U.S. Accounts Receivable Sales Program entered into ~~a secured credit agreement (the 2017 Credit Agreement) with a group of lenders. The 2017 Credit Agreement provided~~during fiscal 2021. Ashland accounts for ~~(i) a $250 million three-year term loan A facility (the Three-Year TLA Facility), (ii) a $250 million five-year term loan A facility (the Five-Year TLA Facility and together with~~ the Three-Year TLA Facility, the TLA Facilities) and (iii) a $680 million five-year revolving credit facility (including a $125 million letter of credit sublimit) (the 2017 Revolving Credit Facility). Proceeds of borrowings under the TLA Facilities were used solelyreceivables transferred to finance the acquisition of Pharmachem, while the proceeds of the 2017 Revolving Credit Facility were used to finance, in part, the acquisition of Pharmachem, to refinance the 2015 Senior Credit Agreement and for general corporate purposes. On May 19, 2017,buyers as sales. Ashland ~~entered into Amendment No. 1 to the 2017 Credit Agreement, which increased the aggregate commitments under the 2017 Revolving Credit Facility from $680 million to $800 million.~~

~~At Ashland’s option, loans issued under the 2017 Credit Agreement bear interest at either LIBOR~~recognizes any gains or an alternate base rate, in each case plus the applicable interest rate margin. Loans bear interest at LIBOR plus 1.75% per annum, in the case of LIBOR borrowings, or at the alternate base rate plus 0.75%, in the alternative, through and including the date of delivery of a quarterly compliance certificate and thereafter the interest rate will fluctuate between LIBOR plus 1.375% per annum and LIBOR plus 2.500% per annum (or between the alternate base rate plus 0.375% per annum and the alternate base rate plus 1.500% per annum),losses based upon Ashland’s secured facilities ratings or the consolidated net leverage ratio (as defined in the 2017 Credit Agreement) (whichever yields a lower applicable interest rate margin) at such time. In addition, Ashland was required to pay fees of 0.25% per annum on the ~~daily unused amount~~excess of ~~the 2017 Revolving Credit Facility through~~proceeds received net of buyer’s discounts and including the date of delivery of a compliance certificate, and thereafter the fee rate will fluctuate between 0.175% and 0.40% per annum, based upon Ashland’s secured facilities rating or the consolidated net leverage ratio (whichever yields a lower applicable rate). The TLA Facilities may be prepaid at any time without

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE H – DEBT (continued)~~

premium. The Three-Year TLA Facility will not amortize and will be due on May 17, 2020. The Five-Year TLA Facility will not amortize in each of the first, second and third years and will amortize at a rate of 20% per annum in each of the fourth and fifth years (payable in equal quarterly installments), with the outstanding balance of the Five-Year TLA Facilityfees compared to ~~be paid on May 17, 2022.~~

On June 14, 2017, Ashland entered into Amendment No. 2 to the 2017 Credit Agreement, which provided for a new $600 million seven-year senior secured term loan B facility (the 2017 TLB Facility). At Ashland’s option, loans issued under the 2017 TLB Facility bear interest at either (x) LIBOR plus 2.00% per annum or (y) an alternate base rate plus 1.00% per annum. The 2017 TLB Facility may be prepaid at any time. The 2017 TLB Facility amortizes at a rate of 1.00% per annum (payable in equal quarterly installments) with the outstanding balance to be paid on May 17, 2024.

~~6.50% junior subordinated notes due 2029~~

In December 2016, Hercules LLC (Hercules) (formerly Hercules Incorporated), an indirect wholly-owned subsidiary of Ashland, repurchased, through a cash tender offer (the Tender Offer), $182 million of the aggregate principal par value amount of its 6.50% junior subordinated notes due 2029 (2029 notes) for an aggregate purchase price of $177 million. As a result of the Tender Offer, the carrying value of the ~~2029 notes was reduced by $90 million~~assets. Proceeds received, net of buyer’s discounts and fees, are recorded within the operating activities of the Statement of Condensed Consolidated Cash Flows. Losses on sale of assets, including related transaction expenses are recorded within the Net interest and other expense (income) caption of the Statement of Consolidated Comprehensive Income (Loss). Ashland regularly assesses its servicing obligations and records them as assets or liabilities when appropriate. Ashland also monitors its obligation with regards to the limited guarantee and records the resulting

guarantee liability when warranted. When applicable, Ashland discloses the amount of the receivable that serves as over-collateralization as a restricted asset.

Ashland recognized a ~~$92~~loss of less then $1 million charge related to accelerated accretion of the recorded debt discount (compared to the total par value) and $5 million of a net gain related to the repayment of the debt. The charge and net gain are included in the net interest and other financing expense caption of the Statementswithin its Statement of Consolidated Comprehensive Income (Loss) for the three months ended December 31, ~~2016.~~

~~Open market repurchases of 4.750% notes due 2022 and 3.875% notes due 2018~~

During the three months ended December 31, 2016, Ashland executed open market repurchases of its 4.750% notes due 2022 (2022 notes) and its 3.875% notes due 2018 (2018 notes). As a result of these repurchases, the carrying values of the 2022 notes and 2018 notes were reduced by $36 million and $29 million, respectively. Ashland recognized a $2 million charge related to premiums paid in the open market repurchases and accelerated amortization of previously capitalized debt issuance costs, which is included in2021 within the net interest and other ~~financing~~ expense (income) caption associated with sales under the program. Ashland has recorded $100 million of sales at December 31, 2021 against the ~~Statements~~buyer’s limit, which was $100 million at December 31, 2021 compared to $113 million of ~~Consolidated Comprehensive Income (Loss)~~sales at September 30, 2021 against the buyer's limit, which was $125 million at September 30, 2021. Ashland transferred $143 million and $167 million in receivables to the special purpose entity (SPE) as of December 31, 2021 and September 30, 2021, respectively. Ashland recorded liabilities related to its service obligations and limited guarantee as of December 31, 2021 and September 30, 2021 of less than $1 million. As of December 31, 2021, the year-to-date gross cash proceeds received for receivables transferred and derecognized was $124 million, of which $137 million was collected, which includes collections from the sales in prior year transferred to the buyer. The difference of $13 million for receivables transferred and derecognized versus collected represents the impact of a reduction in sales volume during the current quarter, of which $3 million related to Performance Adhesives.

Foreign Accounts Receivable Securitization Facility

Ashland continues to maintain its Foreign 2018 Accounts Receivable Securitization Facility. Ashland accounts for the ~~three months ended~~Foreign 2018 Accounts Receivable Securitization Facility as secured borrowings, and the receivables sold pursuant to the facility are included in the Consolidated Balance Sheets as accounts receivable. At December 31, ~~2016.~~

~~Remaining~~2021 and September 30, 2021, the outstanding amount of accounts receivable transferred by Ashland was $138 million and $152 million, respectively, and there were $113 million and $117 million, respectively, of borrowings (denominated in multiple currencies) under the facility.

Available borrowing capacity

and liquidity

The borrowing capacity remaining under the ~~2017~~2020 Credit Agreement which included the $600 million Revolving Credit Facility was ~~$467~~$341 million due to an outstanding balance of ~~$285~~$240 million, as well as a reduction of ~~$48~~$19 million for letters of credit outstanding atas of December 31, ~~2017.~~2021. Ashland's total borrowing capacity at December 31, ~~2017~~2021 was ~~$498~~$341 million, which included ~~$31 million~~0 of available capacity from the ~~accounts receivable securitization facility.~~

foreign 2018 Accounts Receivable Securitization Facility.

Additionally, Ashland had 0 available liquidity under its current U.S. Accounts Receivable Sales Program as of December 31, 2021.

Covenants related to current Ashland debt agreements

Ashland's debt contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional subsidiary indebtedness, restrictions on subsidiary distributions, investments, mergers, sale of assets and restricted payments and other customary limitations. As of December 31, ~~2017,~~2021, Ashland is in compliance with all debt agreement covenant restrictions.

The maximum consolidated net leverage ratio permitted under Ashland's ~~most recent~~current credit agreement (the ~~2017~~2020 Credit Agreement) is ~~4.5.~~4.0. At December 31, ~~2017,~~2021, Ashland’s calculation of the consolidated net leverage ratio was ~~3.9.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE H – DEBT (continued)~~

3.1.

The minimum required consolidated interest coverage ratio under the ~~2017~~2020 Credit Agreement during its entire duration is ~~3.0.~~3.0. At December 31, ~~2017,~~2021, Ashland’s calculation of the interest coverage ratio was ~~4.6.~~9.4.

NOTE I – ~~INCOME TAXES~~

~~Tax Law Changes~~

~~The Tax Cuts~~LEASING ARRANGEMENTS

Ashland leases certain office buildings, transportation equipment, warehouses and ~~Jobs Act (Tax Act) was enacted on December 22, 2017. The Tax Act reduces~~storage facilities, and equipment. Substantially all of Ashland’s leases are operating leases or short-term leases. Real estate leases represented over 80% of the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. Attotal lease liability at December 31, ~~2017,~~2021 and September 30, 2021, respectively.

The components of lease cost recognized within the Statements of Consolidated Comprehensive Income (Loss) were as follows:


		Three months ended
		December 31
(In millions)	Location	2021		2020
Lease cost:
Operating lease cost	Selling, General & Administrative	$	3	$	3
Operating lease cost	Cost of Sales		4		4
Variable lease cost	Selling, General & Administrative		1		0
Variable lease cost	Cost of Sales		1		1
Short-term leases	Cost of Sales		1		1
Total lease cost		$	10	$	9

The following table summarizes Ashland’s lease assets and liabilities as presented in the Condensed Consolidated Balance Sheet:


(In millions)	December 31 2021		September 30 2021
Assets
Operating lease assets, net	$	117	$	124
Total lease assets	$	117	$	124

Liabilities
Current operating lease obligations	$	22	$	23
Non-current operating lease obligations		104		110
Total lease liabilities	$	126	$	133

Ashland often has options to renew lease terms for buildings and other assets. The exercise of lease renewal options are generally at Ashland’s sole discretion. In addition, certain lease arrangements may be terminated prior to their original expiration date at Ashland’s discretion. Ashland evaluates renewal and termination options at the lease commencement date to determine if it is reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease term for operating leases as of both December 31, 2021 and September 30, 2021 was approximately 15 years.

Residual value guarantees are not common within Ashland’s lease agreements nor are restrictions or covenants imposed by leases. Ashland has elected the practical expedient to combine lease and non-lease components. The discount rate implicit within the leases is generally not ~~completed~~determinable. Therefore, Ashland determines the ~~internal accounting assessment for~~discount rate based on its incremental borrowing rate. The incremental borrowing rate is determined using a buildup method resulting in an estimated range of secured borrowing rates matching the ~~tax effects of enactment~~lease term and the currency of the ~~Tax Act; however, Ashland determined a reasonable estimate~~jurisdiction in which lease payments are made, adjusted for impacts of ~~the effects on our existing deferred tax balances~~collateral. Consideration was given to Ashland’s own relevant debt issuances as well as debt instruments of comparable companies with similar credit characteristics. The weighted average discount rate used to measure operating lease liabilities as of December 31, 2021 and ~~the one-time transition tax. Ashland recognized a provisional amount~~September 30, 2021 was 2.8%, respectively. There are no leases that have not yet commenced but that create significant rights and obligations.

Right-of-use assets exchanged for new operating lease obligations was $1 million and $2 million for the three months ended December 31, ~~2017, which is~~2021 and 2020, respectively.

The following table provides cash paid for amounts included as a component of income tax expense from continuing operations. Ashland recorded net unfavorable tax adjustments of $16 million primarily related to deferred tax rate changes and a one-time transition tax assessed on foreign cash and unremitted earnings.

~~Provisional amounts - Deferred and other income tax assets and liabilities~~

~~Ashland remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse~~ in ~~the future, which is generally 21%. However, Ashland is still analyzing certain aspects of the Tax Act and refining certain calculations, which could potentially affect~~ the measurement of ~~these balances or potentially give rise to new deferred tax amounts.~~ operating lease liabilities:


	Three months ended
	December 31
(In millions)	2021		2020
Operating cash flows from operating leases	$	7	$	7

The ~~provisional amount recorded related to the remeasurement~~following table summarizes Ashland's maturities of ~~the deferred tax balance was a favorable tax adjustment~~lease liabilities as of ~~$126 million.~~

~~Provisional amounts - Foreign tax effects~~

~~The one-time transition tax is based on Ashland's total post-1986 earnings~~December 31, 2021 and profits (E&P) of foreign subsidiaries that were previously deferred from U.S. income taxes. Ashland recorded a provisional amount for this one-time transition tax liability of $142 million. Ashland has not yet completed its calculation of the total post-1986 E&P for these foreign subsidiaries. In addition, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when Ashland finalizes the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalize the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations. Ashland determined that the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities (i.e., basis difference in excess of that subject to the one-time transition tax) is not practicable at this time.September 30, 2021:


(In millions)	December 31 2021			September 30 2021
Remainder of 2022	$	32		$	39
2023		20			20
2024		16			16
2025		11			11
2026		9			9
Thereafter		77			78
Total lease payments		165			173
Less amount of lease payment representing interest		(39	)		(40	)
Total present value of lease payments	$	126		$	133

NOTE J – INCOME TAXES

Current fiscal year

Ashland’s effective tax rate in any interim period is subject to adjustments related to discrete items and the mix of domestic and foreign operating results. The overall effective tax rate was ~~200%~~13% for the three months ended December 31, ~~2017 and~~2021.

The currentquarter tax rate was ~~primarily~~ impacted by jurisdictional income mix, ~~and net unfavorable~~as well as $3 million from favorable tax discrete ~~adjustments of $16 million related to the Tax Act.~~

items.

Prior fiscal year

The overall effective tax ~~benefit~~ rate was ~~39%~~a benefit of 13% for the three months ended December 31, ~~2016 and~~2020. The quarter tax rate was primarily impacted by jurisdictional income ~~mix.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE I – INCOME TAXES (continued)~~

mix, as well as $13 million from favorable tax discrete items primarily related to the Specialty Additives facility sale.

Unrecognized tax benefits

Changes in unrecognized tax benefits are summarized as follows for the three months ended December 31, ~~2017.~~2021.


(In millions)
Balance at October 1, 2021	$	82
Increases related to positions taken in the current year		1
Lapse of statute of limitations		(1	)
Balance at December 31, 2021	$	82

(In millions)
Balance at October 1, 2017 $ 194
Increases related to positions taken on items from prior years 2
Increases related to positions taken in the current year 3
Balance at December 31, 2017 $ 199

From a combination of statute expirations and audit settlements in the next twelve months, Ashland expects a decrease in the amount accrued for uncertain tax positions of between ~~$22~~$6 million and ~~$32~~$16 million for continuing operations. It is reasonably possible that there could be other material changes to the amount of uncertain tax positions due to activities of the taxing authorities, settlement of audit issues or the reassessment of existing uncertain tax positions; however, Ashland is not able to estimate the impact of these items at this time.

NOTE JK - EMPLOYEE BENEFIT PLANS

Plan contributions

For the three months ended December 31, ~~2017,~~2021, Ashland contributed $2$1 million to its non-U.S. pension plans and ~~zero~~0 to its U.S. pension plans. Ashland expects to make additional contributions of approximately $5$4 million to its non-U.S. ~~plans~~ and $1less than $1 million to its U.S. pension plans during the remainder of ~~2018.~~

~~Plan Remeasurements~~

Effective January 1, 2017, Ashland discontinued certain post-employment health and life insurance benefits. The effect of these plan changes resulted in a remeasurement gain of $2 million recorded within the other net period benefit cost (income) caption on the Statement of Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2016.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE J – EMPLOYEE BENEFIT PLANS (continued)~~

fiscal 2022.

Components of net periodic benefit costs (income)

The following table details the components of pension and other postretirement benefit costs for continuing operations.


	Pension benefits						Other postretirement benefits
(In millions)	2021			2020			2021		2020
Three months ended December 31
Service cost	$	1		$	1		$	0	$	0
Interest cost		2			2			0		0
Expected return on plan assets		(2	)		(2	)		0		0
Total net periodic benefit costs	$	1		$	1		$	0	$	0

Other postretirement
Pension benefits benefits
(In millions) 2017
2016
2017
2016
Three months ended December 31
Service cost (a)
$ 2
$ 2
$ 1
$ —
Interest cost (b)
3
2
—
1
Expected return on plan assets (b)
(3 ) (3 ) —
—
Actuarial gain (b)
—
—
—
(2 )
Total net periodic benefit costs (income) $ 2
$ 1
$ 1
$ (1 )


~~(a)~~	Service cost was not impacted by new accounting guidance adopted in the current quarter and is therefore still classified within the selling, general and administrative expense and cost of sales captions on the Statements of Consolidated Comprehensive Income (Loss). See Note A for additional information.


~~(b)~~	These components are now classified within the other net periodic benefit income caption on the Statements of Consolidated Comprehensive Income (Loss) due to the adoption of new accounting guidance in the current quarter. See Note A for additional information.

For segment reporting purposes, service cost ~~for continuing operations~~ is proportionately allocated to each segment, excluding the Unallocated and other segment, ~~while all~~and is recorded within the selling, general and administrative expense and cost of sales captions on the Statements of Consolidated Comprehensive Loss (Income). All other ~~costs for continuing operations~~components are recorded within the other net periodic benefit income caption on the Statements of Consolidated Comprehensive ~~Income (Loss).~~Loss (Income), which netted to zero for the three months ended December 31, 2021 and 2020.

NOTE KL–LITIGATION, CLAIMS AND CONTINGENCIES

Asbestos litigation

Ashland ~~and Hercules have~~is subject to liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims result from indemnification obligations undertaken in 1990 in connection with the sale of Riley Stoker Corporation (Riley) and the acquisition of Hercules in November 2008. Although Riley, a former subsidiary, was neither a producer nor a manufacturer of asbestos, its industrial boilers contained some asbestos-containing components provided by other companies. Hercules, an indirect wholly-owned subsidiary of Ashland, has liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims typically arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products sold by one of Hercules’ former subsidiaries to a limited industrial market.

To assist in developing and annually updating independent reserve estimates for future asbestos claims and related costs given various assumptions for Ashland and Hercules asbestos claims, Ashland retained ~~Hamilton, Rabinovitz & Associates, Inc. (HR&A).~~third party actuarial experts Gnarus. The methodology used by ~~HR&A~~Gnarus to project future asbestos costs is based largely on recent experience, including claim-filing and settlement rates, disease mix, enacted legislation, open claims and litigation defense. The claim experience of Ashland and Hercules are separately compared to the results of previously conducted third party epidemiological studies estimating the number of people likely to develop asbestos-related diseases. Those studies were undertaken in connection with national analyses of the population expected to have been exposed to asbestos. Using that information, ~~HR&A~~Gnarus estimates a range of the number of future claims that may be filed, as well as the related costs that may be incurred in resolving those claims. Changes in asbestos-related liabilities and receivables are recorded on an after-tax basis within the discontinued operations caption in the Statements of Consolidated Comprehensive ~~Income.~~Income (Loss).

Ashland asbestos-related litigation

The claims alleging personal injury caused by exposure to asbestos asserted against Ashland result primarily from indemnification obligations undertaken in 1990 in connection with the sale of ~~Riley Stoker Corporation, a former subsidiary.~~Riley. The amount and timing of settlements and number of open claims can fluctuate from period to period. A summary of Ashland asbestos claims activity, excluding Hercules claims, follows.


	Three months ended
	December 31						Years ended September 30
(In thousands)	2021			2020			2021			2020			2019
Open claims - beginning of year		46			49			49			53			53
New claims filed		0			1			2			2			2
Claims settled		0			0			(1	)		(1	)		(1	)
Claims dismissed		(1	)		(1	)		(4	)		(5	)		(1	)
Open claims - end of period		45			49			46			49			53

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE K – LITIGATION, CLAIMS AND CONTINGENCIES (continued)~~

Three months ended
December 31 Years ended September 30
(In thousands) 2017
2016
2017
2016
2015
Open claims - beginning of period 54
57
57
60
65
New claims filed 1
—
2
2
2
Claims settled —
—
(1 ) —
—
Claims dismissed (1 ) (1 ) (4 ) (5 ) (7 )
Open claims - end of period 54
56
54
57
60

Ashland asbestos-related liability

Gnarus.

During the most recent annual update of this estimate completed during ~~the June 2017 quarter,~~fiscal year 2021, it was determined that the liability for Ashland asbestos-related claims should be increased by ~~$36~~$12 million. Total reserves for asbestos claims were ~~$409~~$307 million at December 31, ~~2017~~2021 compared to $~~419~~320 million at September 30, ~~2017~~.

2021.

A progression of activity in the asbestos reserve is presented in the following table.


	Three months ended
	December 31						Years ended September 30
(In millions)	2021			2020			2021			2020			2019
Asbestos reserve - beginning of year	$	320		$	335		$	335		$	352		$	380
Reserve adjustment		0			0			12			13			1
Amounts paid		(13	)		(10	)		(27	)		(30	)		(29	)
Asbestos reserve - end of period (a)	$	307		$	325		$	320		$	335		$	352

(a)

Included$29 million classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets as of December 31, 2021 and September 30, 2021.

Three months ended
December 31 Years ended September 30
(In millions) 2017
2016
2017
2016
2015
Asbestos reserve - beginning of period $ 419
$ 415
$ 415
$ 409
$ 438
Reserve adjustment —
—
36
37
—
Amounts paid (10 ) (9 ) (32 ) (31 ) (29 )
Asbestos reserve - end of period (a)
$ 409
$ 406
$ 419
$ 415
$ 409


~~(a)~~	~~Included $34 million classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets as of December 31, 2017 and September 30, 2017.~~

Ashland asbestos-related receivables

Ashland has insurance coverage for certain litigation defense and claim settlement costs incurred in connection with its asbestos claims, and coverage-in-place agreements exist with the insurance companies that provide substantially all of the coverage that will be accessed.

For the Ashland asbestos-related obligations, Ashland has estimated the value of probable insurance recoveries associated with its asbestos reserve based on management’s interpretations and estimates surrounding the available or applicable insurance coverage, including an assumption that all solvent insurance carriers remain solvent. ~~Substantially all~~A substantial portion of the estimated receivables from insurance companies are expected to be due from domestic ~~insurers, all of which are solvent.~~

insurers.

At December 31, ~~2017,~~2021, Ashland’s receivable for recoveries of litigation defense and claim settlement costs from insurers amounted to ~~$151~~$99 million (excluding the Hercules receivable for asbestos claims) compared to ~~$155~~$100 million at September 30, ~~2017.~~2021. During ~~the June 2017 quarter,~~fiscal year 2021, the annual update of the model used for purposes of valuing the asbestos reserve and its impact on valuation of future recoveries from insurers was completed. This model update resulted in a ~~$15~~$8 million increase in the receivable for probable insurance recoveries.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE K – LITIGATION, CLAIMS AND CONTINGENCIES (continued)~~

A progression of activity in the Ashland insurance receivable is presented in the following table.


	Three months ended
	December 31						Years ended September 30
(In millions)	2021			2020			2021			2020			2019
Insurance receivable - beginning of year	$	100		$	103		$	103		$	123		$	140
Receivable adjustment (a)		0			(2	)		6			1			(5	)
Insurance settlement		0			0			0			(10	)		0
Amounts collected		(1	)		(3	)		(9	)		(11	)		(12	)
Insurance receivable - end of period (b)	$	99		$	98		$	100		$	103		$	123

(a)

The three months ended December 31, 2020 includes a reserve adjustment of $2 million related to allowances for credit losses as a result of Ashland’s adoption of the new credit measurement standard. The total allowance for credit losses was $2 million as of December 31, 2021.

Three months ended
December 31 Years ended September 30
(In millions) 2017
2016
2017
2016
2015
Insurance receivable - beginning of period $ 155
$ 151
$ 151
$ 150
$ 402
Receivable adjustment —
—
15
16
(3 )
Insurance settlement —
—
(5 ) (4 ) (227 )
Amounts collected (4 ) (2 ) (6 ) (11 ) (22 )
Insurance receivable - end of period (a)
$ 151
$ 149
$ 155
$ 151
$ 150

(b)

Includes$12 million classified in accounts receivable on the Condensed Consolidated Balance Sheets as of December 31, 2021 and September 30, 2021.


~~(a)~~	~~Included $14 million classified in accounts receivable on the Condensed Consolidated Balance Sheets as of December 31, 2017 and September 30, 2017.~~

Hercules asbestos-related litigation

Hercules has liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims typically arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products which were sold by one of Hercules’ former subsidiaries to a limited industrial market. The amount and timing of settlements and number of open claims can fluctuate from period to period. A summary of Hercules’ asbestos claims activity follows.


	Three months ended
	December 31						Years ended September 30
(In thousands)	2021			2020			2021			2020			2019
Open claims - beginning of year		12			12			12			13			13
New claims filed		1			1			1			1			1
Claims dismissed		(1	)		(1	)		(1	)		(2	)		(1	)
Open claims - end of period		12			12			12			12			13

Three months ended
December 31
Years ended September 30
(In thousands) 2017
2016
2017
2016
2015
Open claims - beginning of period 12
15
15
20
21
New claims filed —
—
1
1
1
Claims dismissed —
—
(4 ) (6 ) (2 )
Open claims - end of period 12
15
12
15
20

Hercules asbestos-related liability

From the range of estimates, Ashland records the amount it believes to be the best estimate of future payments for litigation defense and claim settlement costs, which generally approximates the mid-point of the estimated range of exposure from model results. Ashland reviews this estimate, and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate 50-year model developed with the assistance of ~~HR&A.~~Gnarus. As a result of the most recent annual update of this estimate, completed during ~~the June 2017 quarter,~~fiscal year 2021, it was determined that the liability for Hercules asbestos-related claims should be increased by ~~$16~~$8 million. Total reserves for asbestos claims were ~~$315~~$211 million at December 31, ~~2017~~2021 compared to $~~323~~217 million at September 30, ~~2017~~.

2021.

A progression of activity in the asbestos reserve is presented in the following table.


	Three months ended
	December 31						Years ended September 30
(In millions)	2021			2020			2021			2020			2019
Asbestos reserve - beginning of year	$	217		$	229		$	229		$	252		$	282
Reserve adjustments		0			0			8			(3	)		(10	)
Amounts paid		(6	)		(5	)		(20	)		(20	)		(20	)
Asbestos reserve - end of period (a)	$	211		$	224		$	217		$	229		$	252

(a)

Included $17 million and $18 million classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets as of December 31, 2021 and September 30, 2021, respectively.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE K – LITIGATION, CLAIMS AND CONTINGENCIES (continued)~~

Three months ended
December 31 Years ended September 30
(In millions) 2017
2016
2017
2016
2015
Asbestos reserve - beginning of period $ 323
$ 321
$ 321
$ 311
$ 329
Reserve adjustment —
—
16
25
4
Amounts paid (8 ) (3 ) (14 ) (15 ) (22 )
Asbestos reserve - end of period (a) $ 315
$ 318
$ 323
$ 321
$ 311


~~(a)~~	~~Included $14 million classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets as of December 31, 2017 and September 30, 2017.~~

Hercules asbestos-related receivables

For the Hercules asbestos-related obligations, certain reimbursement obligations pursuant to coverage-in-place agreements with insurance carriers exist. ~~As a result, any increases in the asbestos reserve have been partially offset by probable insurance recoveries.~~ Ashland has estimated the value of probable insurance recoveries associated with its asbestos reserve based on management’s interpretations and estimates surrounding the available or applicable insurance coverage, including an assumption that all solvent insurance carriers remain solvent. The estimated receivable consists exclusively of solvent domestic insurers.

As of December 31, ~~2017~~2021, Ashland’s receivable for recoveries of litigation defense and ~~September 30, 2017, the receivables~~claims costs from insurers with respect to Hercules amounted to ~~$68~~$47 million. During ~~the June 2017 quarter,~~fiscal year 2021, the annual update of the model used for purposes of valuing the asbestos reserve and its impact on valuation of future recoveries from insurers was completed. This model update resulted in ~~a $5~~an increase of $2 million ~~increase~~ in the receivable for probable insurance recoveries.

A progression of activity in the Hercules insurance receivable is presented in the following table.


	Three months ended
	December 31					Years ended September 30
(In millions)	2021		2020			2021			2020			2019
Insurance receivable - beginning of year	$	47	$	47		$	47		$	49		$	54
Receivable adjustment (a)		0		(1	)		1			(2	)		(5	)
Amounts collected		0		0			(1	)		0			0
Insurance receivable - end of period (b)	$	47	$	46		$	47		$	47		$	49

(a)

The three months ended December 31, 2020 includes a reserve adjustment of $1 million related to allowances for credit losses as a result of Ashland’s adoption of the new credit measurement standard. The total allowance for credit losses was $1 million as of December 31, 2021.

Three months ended
December 31 Years ended September 30
(In millions) 2017
2016
2017
2016
2015
Insurance receivable - beginning of period $ 68
$ 63
$ 63
$ 56
$ 77
Receivable adjustment —
—
5
7
1
Insurance settlement —
—
—
—
(22 )
Insurance receivable - end of period $ 68
$ 63
$ 68
$ 63
$ 56
(b)

Includes$1 million classified in accounts receivable on the Condensed Consolidated Balance Sheets as of December 31, 2021 and September 30, 2021.

Asbestos litigation cost projection

Projecting future asbestos costs is subject to numerous variables that are extremely difficult to predict. In addition to the significant uncertainties surrounding the number of claims that might be received, other variables include the type and severity of the disease alleged by each claimant, the long latency period associated with asbestos exposure, mortality rates, dismissal rates, costs of medical treatment, the impact of bankruptcies of other companies that are co-defendants in claims, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, and the impact of potential changes in legislative or judicial standards. Furthermore, any predictions with respect to these variables are subject to even greater uncertainty as the projection period lengthens. ~~In light of~~Considering these inherent uncertainties, Ashland believes that the asbestos reserves for Ashland and Hercules represent the best estimate within a range of possible outcomes. As a part of the process to develop these estimates of future asbestos costs, a range of long-term cost models was developed. These models are based on national studies that predict the number of people likely to develop asbestos-related diseases and are heavily influenced by assumptions regarding long-term inflation rates for indemnity payments and legal defense costs, as well as other variables mentioned previously. Ashland has currently estimated in various models ranging from approximately 40 to 50 year periods that it is reasonably

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE K – LITIGATION, CLAIMS AND CONTINGENCIES (continued)~~

possible that total future litigation defense and claim settlement costs on an inflated and undiscounted basis could range as high as approximately ~~$660~~$482 million for the Ashland asbestos-related litigation (current reserve of ~~$409~~$307 million) and approximately ~~$510~~$334 million for the Hercules asbestos-related litigation (current reserve of ~~$315~~$211 million), depending on the combination of assumptions selected in the various models. If actual experience is worse than projected, relative to the number of claims filed, the severity of alleged disease associated with those claims or costs incurred to resolve those claims, or actuarial refinement or improvements to the assumptions used within these models are initiated, Ashland may need to further increase the estimates of the costs associated with asbestos claims and these increases could be material over time.

Environmental remediation and asset retirement obligations

Ashland is subject to various federal, state and local environmental laws and regulations that require environmental assessment or remediation efforts (collectively, environmental remediation) at multiple locations. At December 31, ~~2017~~,2021, such locations included ~~82 waste treatment or disposal~~80 sites where Ashland has been identified as a potentially responsible party under Superfund or similar state laws, ~~118~~112 current and former operating facilities (including certain operating facilities

conveyed as part of ~~the MAP Transaction)~~previous divestitures) and about 1,225 service station properties, of which 3617 are being actively remediated.

Ashland’s reserves for environmental remediation and related environmental litigation amounted to ~~$168~~$197 million at December 31, ~~2017~~2021 compared to ~~$163~~$207 million at September 30, ~~2017,~~2021, of which ~~$125~~$142 million at December 31, ~~2017~~2021 and ~~$121~~$152 million at September 30, ~~2017~~2021 were classified in other noncurrent liabilities on the Condensed Consolidated Balance Sheets. The remaining reserves were classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets.

The following table provides a reconciliation of the changes in the environmental remediation reserves during the three months ended December 31, ~~2017~~2021 and ~~2016~~.2020.


	Three months ended
	December 31
(In millions)	2021			2020
Reserve - beginning of period	$	207		$	200
Disbursements		(14	)		(10	)
Revised obligation estimates and accretion		4			5
Reserve - end of period	$	197		$	195

Three months ended
December 31
(In millions) 2017
2016
Reserve - beginning of period $ 163
$ 177
Disbursements (8 ) (7 )
Revised obligation estimates and accretion 13
4
Reserve - end of period $ 168
$ 174

The total reserves for environmental remediation reflect Ashland’s estimates of the most likely costs that will be incurred over an extended period to remediate identified conditions for which the costs are reasonably estimable, without regard to any third-party recoveries. Engineering studies, probability techniques, historical experience and other factors are used to identify and evaluate remediation alternatives and their related costs in determining the estimated reserves for environmental remediation. Ashland continues to discount certain environmental sites and regularly adjusts its reserves as environmental remediation continues. Ashland has estimated the value of its probable insurance recoveries associated with its environmental reserve based on management’s interpretations and estimates surrounding the available or applicable insurance coverage. At December 31, ~~2017~~2021 and September 30, ~~2017,~~2021, Ashland’s recorded receivable for these probable insurance recoveries was ~~$14~~$15 million and ~~$15~~$16 million, ~~respectively,~~ of which ~~$13 million and $14~~$13 million at December 31, ~~2017~~2021 andSeptember 30, ~~2017, respectively, were~~2021 was classified in other noncurrent assets on the Condensed Consolidated Balance Sheets.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE K – LITIGATION, CLAIMS AND CONTINGENCIES (continued)~~

Components of environmental remediation expense included within the selling, general and administrative expense caption of the Statements of Consolidated Comprehensive Income (Loss) are presented in the following table for the three ended December 31, 2021 and 2020.


	Three months ended
	December 31
(In millions)	2021		2020
Environmental expense	$	3	$	5
Legal expense		1		1
Total expense		4		6

Insurance receivable		0		(1	)
Total expense, net of receivable activity (a)	$	4	$	5

(a)

Net expense of $1 million for the three months ended December 31, ~~2017~~2021 and ~~2016~~2020, relates to divested businesses which qualified for treatment as discontinued operations for which certain environmental liabilities were retained by Ashland. These amounts are classified within the income from discontinued operations caption of the Statements of Consolidated Comprehensive Income (loss).

Three months ended
December 31
(In millions) 2017
2016
Environmental expense $ 12
$ 4
Accretion 1
—
Legal expense 1
2
Total expense 14
6

Insurance receivable (a)
—
—
Total expense, net of receivable activity $ 14
$ 6


~~(a)~~	~~Activity of $0 denotes value less than $1 million.~~

Environmental remediation reserves are subject to numerous inherent uncertainties that affect Ashland’s ability to estimate its share of the costs. Such uncertainties involve the nature and extent of contamination at each site, the extent of required cleanup efforts under existing environmental regulations, widely varying costs of alternate cleanup methods, changes in environmental regulations, the potential effect of continuing improvements in remediation technology, and the number and financial strength of other potentially responsible parties at multiparty sites. Although it is not possible to predict with certainty the ultimate costs of environmental remediation, Ashland currently estimates that the upper end of the reasonably possible range of future costs for identified sites could be as high as approximately ~~$412~~$465 million. The largest reserve for any site is ~~approximately 15%~~14% of the remediation reserve.

Other legal proceedings and claims

In addition to the matters described above, there are other various claims, lawsuits and administrative proceedings pending or threatened against Ashland and its current and former subsidiaries. Such actions are with respect to commercial matters, product liability, toxic tort liability, and other environmental matters, which seek remedies or damages, some of which are for substantial amounts. While Ashland cannot predict with certainty the outcome of such actions, it believes that adequate reserves have been recorded and losses already recognized with respect to such actions were immaterial as of December 31, ~~2017~~2021 and September 30, ~~2017~~.2021. There is a reasonable possibility that a loss exceeding amounts already recognized may be incurred related to these actions; however, Ashland believes that such potential losses were immaterial as of December 31, ~~2017~~.2021.

NOTE LM– EARNINGS PER SHARE

The following is the computation of basic and diluted earnings per share (EPS) from continuing operations attributable to Ashland. Stock appreciation rights (SARs), stock options and warrants available to purchase shares outstanding for each reporting period whose grant price was greater than the average market price of Ashland Common Stock for each applicable period were not included in the computation of income from continuing operations per diluted share because the effect of these instruments would be antidilutive. The total number of these shares outstanding was approximately ~~0.7~~1 million and ~~0.9~~2 million at December 31, ~~2017~~2021 and ~~2016,~~2020, respectively. Earnings per share is reported under the treasury stock method.


	Three months ended
	December 31
(In millions, except per share data)	2021		2020
Numerator
Numerator for basic and diluted EPS -
Income (loss) from continuing operations	$	32	$	43
Denominator
Denominator for basic EPS - Weighted- average common shares outstanding		57		60
Share based awards convertible to common shares		1		1
Denominator for diluted EPS - Adjusted weighted- average shares and assumed conversions		58		61
EPS from continuing operations
Basic	$	0.56	$	0.71
Diluted		0.55		0.70

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

NOTE L – ~~EARNINGS PER SHARE (continued)~~

Three months ended
December 31
(In millions except per share data) 2017
2016
Numerator
Numerator for basic and diluted EPS –
Loss from continuing operations $ (7 ) $ (65 )
Denominator

Denominator for basic EPS – Weighted-average

common shares outstanding 62
62
Share-based awards convertible to common shares (a)
—
—
Denominator for diluted EPS – Adjusted weighted-

average shares and assumed conversions 62
62

EPS from continuing operations attributable to Ashland
Basic $ (0.12 ) $ (1.05 )
Diluted (0.12 ) (1.05 )


~~(a)~~	As a result of the loss from continuing operations attributable to Ashland during the three months ended December 31, 2017 and 2016, the effect of the share-based awards convertible to common shares would be antidilutive. In accordance with U.S. GAAP, they have been excluded from the diluted EPS calculation.

~~NOTE M~~N– EQUITY ITEMS

~~Stock repurchase programs~~

~~In April 2015, Ashland's Board~~

Stockholder dividends

Dividends of Directors approved a $1 billion share repurchase authorization that was set to expire on December 31, 2017 (the 2015 stock repurchase program). This authorization allows for Ashland’s common shares to be repurchased in open market transactions, privately negotiated transactions or pursuant to one or more accelerated stock repurchase programs or Rule 10b5-1 plans.

During 2017, Ashland's Board of Directors extended the 2015 stock repurchase program indefinitely. As of December 31, 2017, $500 million of share repurchase authorization remains under the 2015 stock repurchase program.

~~Stockholder dividends~~

~~In May 2017, subsequent to the final distribution of Valvoline Inc.'s common stock, the Board of Directors of Ashland announced a quarterly cash dividend of 22.5~~30 cents per share ~~to eligible shareholders at record which was~~were paid ~~for quarterly dividends~~ in the first quarter of fiscal ~~2018~~2022 and ~~the third and fourth quarters of fiscal 2017. This represented a reduction from the previous quarterly dividend of 39~~27.5 cents per share ~~which was~~were paid ~~for quarterly dividends~~ in the first ~~and second quarters~~quarter of fiscal ~~2017.~~

2021.

Accumulated other comprehensive income (loss)

Components of other comprehensive income (loss) recorded in the Statements of Consolidated Comprehensive Income (Loss) are presented below, before tax and net of tax effects.


	2021								2020
(In millions)	Before tax			Tax (expense) benefit		Net of tax			Before tax		Tax (expense) benefit		Net of tax
Three months ended December 31
Other comprehensive income (loss)
Unrealized translation gain (loss)	$	(18	)	$	1	$	(17	)	$	48	$	0	$	48
Unrealized gain (loss) on commodity hedges		(4	)		1		(3	)		0		0		0
Total other comprehensive income (loss)	$	(22	)	$	2	$	(20	)	$	48	$	0	$	48

Summary of stockholders’ equity

A reconciliation of changes in stockholders’ equity are as follows:


	Three months ended
	December 31
(In millions)	2021			2020
Common stock and paid in capital
Balance, beginning of period	$	328		$	770
Common shares issued under stock incentive and other plans (a)		0			1
Balance, end of period		328			771
Retained earnings
Balance, beginning of period		2,796			2,649
Adoption of new accounting pronouncements		0			(2	)
Net income		48			56
Regular dividends		(17	)		(17	)
Balance, end of period		2,827			2,686
Accumulated other comprehensive income (loss)
Balance, beginning of period		(372	)		(383	)
Unrealized translation gain (loss)		(17	)		48
Unrealized loss on commodity hedges		(3	)		0
Balance, end of period		(392	)		(335	)
Total stockholders' equity	$	2,763		$	3,122
Cash dividends declared per common share	$	0.300		$	0.275

(a)

Common shares issued were 94,715 shares and 99,194 for the three months ended December 31, 2021 and 2020, respectively.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

NOTE ~~M – EQUITY ITEMS (continued)~~

2017 2016
Tax
Tax

Before
(expense)
Net of
Before
(expense)
Net of
(In millions) tax
benefit
tax
tax
benefit
tax
Three months ended December 31
Other comprehensive income (loss)
Unrealized translation gain (loss) $ 3
$ —
$ 3
$ (150 ) $ 4
$ (146 )
Pension and postretirement obligation adjustment:
Amortization of unrecognized prior service
credits included in net income (a)
—
—
—
(3 ) 2
(1 )
Net change in available-for-sale securities:
Unrealized gains during period 11
(2 ) 9
—
—
—
Reclassification adjustment for realized gains
included in net income (1 ) —
(1 ) —
—
—
Total other comprehensive income (loss) $ 13
$ (2 ) $ 11
$ (153 ) $ 6
$ (147 )


~~(a)~~	For the three months ended December 31, 2016, the amortization of unrecognized prior service credits was related to pension and other postretirement benefit plans that transferred to Valvoline and was classified in the discontinued operations caption on the Statements of Consolidated Comprehensive Income (Loss).

~~NOTE N~~O – STOCK INCENTIVE PLANS

Ashland has stock incentive plans under which key employees or directors are granted stock appreciation rights (SARs), performance awards or nonvested stock awards. Each program is typically a long-term incentive plan designed to link employee compensation with increased shareholder value or reward superior performance and encourage continued employment with Ashland. Ashland recognizes compensation expense for the grant date fair value of stock-based awards over the applicable vesting period.

The components of Ashland’s ~~pretax~~pre-tax stock-based compensation expense included in continuing operations are as follows:


	Three months ended
	December 31
(In millions)	2021 (a)		2020 (b)
SARs	$	0	$	1
Nonvested stock awards		4		2
Performance share awards		2		2
	$	6	$	5

(a)

Three months ended
December 31
(In millions)
2017 (a)

2016 (b)

SARs $ 1
$ 1
Nonvested stock awards 6
4
Performance awards 4
2
$ 11
$ 7


~~(a)~~	~~The three months ended December 31, 2017 included $2~~Included $2 million of expense related to cash-settled nonvested restricted stock awards ~~and $2 million of expense related to cash-settled performance units.~~


~~(b)~~	~~The three months ended December 31, 2016 included $1 million of expense related to cash-settled nonvested restricted stock awards and $1 million of expense related to cash-settled performance units.~~

~~SARs~~

SARs are granted to employees or directors at a price equal to the fair market value of the stock on the date of grant and typically become exercisable over periods of one to three years. Unexercised SARs lapse ten years and one month after the date of grant. SARs granted for the three months ended December 31, 2017 and 2016 were 470 thousand and 422 thousand, respectively. As of December 31, 2017, there was $13 million

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE N – STOCK INCENTIVE PLANS (continued)~~

of total unrecognized compensation costs related to SARs. That cost is expected to be recognized over a weighted-average period of 2.4 years. Ashland estimates the fair value of SARs granted using the Black-Scholes option-pricing model. This model requires several assumptions, which Ashland has developed and updates based on historical trends and current market observations. The accuracy of these assumptions is critical to the estimate of fair value for these equity instruments.

~~Nonvested stock awards~~

Nonvested stock awards are granted to employees or directors at a price equal to the fair market value of the stock on the date of grant and generally vest over a one-to-five-year period. However, such shares or units are subject to forfeiture upon termination of service before the vesting period ends. Only nonvested stock awards granted in the form of shares entitle employees or directors to vote the shares. Dividends on nonvested stock awards granted are in the form of additional units or shares of nonvested stock awards, which are subject to vesting and forfeiture provisions.

~~Stock-settled nonvested stock awards~~

Nonvested stock awards granted in the form of shares were 142 thousand and 81 thousand for the three months ended December 31, 2017 and 2016, respectively. As of December 31, 2017, there was $12 million of total unrecognized compensation costs related to these nonvested stock awards. That cost is expected to be recognized over a weighted-average period of 2.0 years.

~~Cash-settled nonvested stock awards~~

Certain nonvested stock awards are granted to employees and are settled in cash upon vesting. As of December 31, 2017, 220 thousand cash-settled nonvested stock awards were outstanding. The value of these cash-settled nonvested stock awards changes in connection with changes in the fair market value of the Ashland Common Stock. These awards generally vest over a period of three years. The expense recognized related to cash-settled nonvested stock awards was $2 million and $1 million during the three months ended December 31, ~~2017 and 2016, respectively.~~2021.

~~Executive performance incentive and retention program~~

(b)

During 2016, certain executives were granted performance-based restricted shares of Ashland in order to provide an incentive to remain employed in the period after the full separation. At December 31, 2017, there were 60 thousand shares outstanding in connection with these awards, which includes forfeitures and the cumulative value of forfeitable dividends. The expense recognition for these awards commenced upon completing the full separation of Valvoline which occurred on May 12, 2017, as discussed further in Note B, and resulted in $2Included $1 million of expense ~~for~~related to cash-settled nonvested restricted stock awards during the three months ended December 31, ~~2017. As~~2020.

NOTE P – REVENUE

Disaggregation of ~~December 31, 2017, there was $8 million of total unrecognized compensation costs related to~~revenue

Ashland disaggregates its revenue by segment and geographical region as Ashland believes these ~~awards.~~

~~Performance awards~~

Ashland sponsors a long-term incentive plan that awards performance shares/units to certain key employees that are primarily tied to Ashland’s overall financial performance relative to internal targets. Additionally, certain outstanding performance awards are tied to Ashland's overall financial performance relative tocategories best depict how management reviews the financial performance of ~~selected industry peer groups. Awards~~its operations. See the following tables for details. See Note Q for additional information.


Sales by geography
	Three months ended
	December 31
(In millions)	2021		2020
Life Sciences
North America	$	53	$	51
Europe		55		54
Asia Pacific		46		47
Latin America & other		16		18
	$	170	$	170

	Three months ended
	December 31
(In millions)	2021		2020
Personal Care
North America	$	41	$	41
Europe		57		46
Asia Pacific		32		21
Latin America & other		17		18
	$	147	$	126

	Three months ended
	December 31
(In millions)	2021		2020
Specialty Additives
North America	$	52	$	45
Europe		55		52
Asia Pacific		41		41
Latin America & other		8		9
	$	156	$	147

	Three months ended
	December 31
(In millions)	2021		2020
Intermediates
North America	$	32	$	21
Europe		10		4
Asia Pacific		9		7
Latin America & other		2		1
	$	53	$	33

Trade receivables

Trade receivables are ~~granted annually,~~defined as receivables arising from contracts with ~~each award covering a three-year vesting period.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE N – STOCK INCENTIVE PLANS (continued)~~

~~For awards granted in fiscal 2016, each performance share/unit is convertible to one share of Ashland Common Stock. These plans~~customers and are recorded ~~as a component of stockholders’ equity in~~within the accounts receivable caption within the Condensed Consolidated Balance Sheets. ~~Performance measures used to determine the actual number of performance shares issuable upon vesting include an equal weighting of~~ Ashland’s ~~total shareholder return (TSR) performance~~trade receivables were $288 million and ~~Ashland’s return on investment (ROI) performance~~$308 million as ~~compared to the internal targets. TSR relative to peers is considered a market condition while ROI is considered a performance condition under applicable U.S. GAAP.~~

For awards granted in fiscal 2017 and 2018, the performance measure used to determine the actual number of performance shares/units issuable upon vesting is the financial performance of Ashland compared to award targets. The financial performance award metric is considered a performance condition under applicable U.S. GAAP. Additionally, the actual number of performance shares/units issuable upon vesting can be potentially increased or decreased based on a TSR performance modifier relative to peers of Ashland. For awards granted in fiscal 2017, each performance unit will be settled in cash based on the fair value of Ashland common stock. For awards granted in fiscal 2018, each performance share/unit is convertible to one share of Ashland Common Stock.

Nonvested performance shares/units do not entitle employees to vote the shares or to receive any dividends thereon. Performance shares/units granted for the three months ended December 31, 2017 and 2016 were 101 thousand and 56 thousand, respectively. As of December 31, ~~2017, there was $17 million of total unrecognized compensation costs related~~2021 and September 30, 2021, respectively. See Note H for additional information on Ashland’s program to ~~performance shares/units. That cost is expected~~sell certain receivables on a revolving basis to ~~be recognized over a weighted-average period of 2.2 years.~~third party banks up to an aggregate purchase limit (U.S Accounts Receivable Sales Program).

NOTE OQ – REPORTABLE SEGMENT INFORMATION

Ashland determines its reportable segments based on how operations are managed internally for the products and services sold to customers, including how the results are reviewed by the chief operating decision maker, which includes determining resource allocation methodologies used for reportable segments. Operating income isand EBITDA are the primary ~~measure on the Statements~~measures of ~~Consolidated Comprehensive Income (Loss)~~performance that isare reviewed by the chief operating decision maker in assessing each reportable segment's financial performance. Ashland does not aggregate operating segments to arrive at these reportable segments.

Change in ~~Reportable Segments~~

~~Subsequent~~reportable segments

As previously described in Note B, Ashland announced that it had signed a definitive agreement on August 30, 2021 to ~~completing~~sell its Performance Adhesives segment. The operating results and cash flows for the ~~separation from Valvoline Inc. on May 12, 2017, Ashland's~~Performance Adhesives segment have been classified as discontinued operations ~~are managed by the chief operating decision maker~~ within the following three reportable segments: Specialty Ingredients, Composites and Intermediates and Solvents. As a result, the financial information for the new reportable segments (Composites and Intermediates and Solvents) has been disclosedConsolidated Financial Statements for all periods presented. ~~Prior~~As a result, Ashland's reportable segments included Life Sciences, Personal Care, Specialty Additives and Intermediates.

Unallocated and Other includes corporate governance activities and certain legacy matters. The historical segment information has been recast to conform to the ~~separation from Valvoline Inc., Composites and Intermediates and Solvents were reporting units included within the previous Ashland Performance Materials reportable segment.~~

current segment structure.

Reportable segment business descriptions

~~Specialty Ingredients~~

Life Sciences is ~~a global leader in cellulose ethers, vinyl pyrrolidones~~comprised of pharmaceuticals, nutrition, nutraceuticals, agricultural chemicals, advanced materials and ~~biofunctionals. It offers industry-leading~~fine chemicals. Pharmaceutical solutions include controlled release polymers, disintegrants, film coatings, solubilizers, and tablet binders. Nutrition solutions include for thickeners, stabilizers, emulsifiers and additives for enhancing mouthfeel, controlling moisture migration, reducing oil uptake and controlling color. Nutraceutical solutions include products ~~technologies~~for weight management, joint comfort, stomach and ~~resources for solving~~intestinal health, sports nutrition and general wellness, and provide custom formulation, toll processing and ~~product-performance challenges. Specialty Ingredients uses natural, synthetic~~particle engineering solutions. Customers include pharmaceutical, food, beverage, nutraceuticals and ~~semisynthetic polymers derived from cellulose ethers, vinyl pyrrolidones, acrylic polymers, polyester~~supplements manufacturers, hospitals and ~~polyurethane-based adhesives, and plant and seed extract. Specialty Ingredients’ end markets offer comprehensive and innovative solutions for today’s demanding consumer~~radiologists and industrial ~~applications. Key customers include: pharmaceutical companies; makers~~manufacturers.

Personal Care (formerly Personal Care & Household) is comprised of ~~personal~~biofunctionals, preservatives, skin care, ~~products, food~~sun care, oral care, hair care and beverages; makers of nutraceuticals and supplements; manufacturers of paint, coatings and construction materials; packaging and converting; and oilfield service companies. On May 17, 2017, Ashland completed its acquisition of the stock of Pharmachem, a leading provider of quality ingredients to

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE O – REPORTABLE SEGMENT INFORMATION (continued)~~

the global health and wellness industries and high-value differentiated products to fragrance and flavor houses. With 14 manufacturing facilities in the United States and Mexico, New Jersey-based Pharmachem develops, manufactures and supplies custom and branded nutritional and fragrance products. See Note C for more information.

~~Composites is a global leader in unsaturated polyester resins, vinyl ester resins and gelcoats. The Composites business manufactures and sells~~household. These businesses have a broad range of ~~general-purpose~~nature-based, biodegradable, and ~~high-performance grades~~performance ingredients for customer-driven solutions to help protect, renew, moisturize and revitalize skin and hair, and provide solutions for toothpastes, mouth washes and rinses, denture cleaning and care for teeth. Household supplies nature-derived rheology ingredients, biodegradable surface wetting agents, performance encapsulates, and specialty polymers for household, industrial and institutional cleaning products. Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies.

Specialty Additives is comprised of ~~unsaturated polyester~~rheology- and ~~vinyl ester resins, gelcoats~~performance-enhancing additives serving the coatings, construction, energy, automotive and ~~low-profile~~various industrial markets. Solutions include coatings additives for architectural paints, finishes and lacquers, cement- and gypsum- based dry mortars, ready-mixed joint compounds, synthetic plasters for commercial and residential construction, and specialty materials for industrial applications. Products include rheology modifiers (cellulosic and associative thickeners), foam control agents, surfactants and wetting agents, pH neutralizers, advanced ceramics used in catalytic converters, and environmental filters, ingredients that aid the ~~reinforced plastics industry. The products in~~manufacturing process of ceramic capacitors, plasma display panels and solar cells, ingredients for textile printing, thermoplastic metals and alloys for welding. Products help improve desired functional outcomes through rheology modification and control, water retention, workability, adhesive strength, binding power, film formation, deposition and suspension and emulsification. Customers include global paint manufacturers, electronics and automotive manufacturers, textile mills, the ~~Composites business provide an array of functional properties including corrosion resistance, fire retardance, ultraviolet resistance, water~~construction industry, and chemical resistance, high mechanical strength, impact and scratch resistance and high strength-to-weight ratios. Key end markets include transportation, construction, marine and infrastructure. In addition, the business manufactures and sells molten maleic anhydride for the manufacture of a variety of products such as unsaturated polyester resins, copolymers, lubricating oil additives, alkenyl succinic anhydrides, malic acid, fumaric acid and numerous derivative chemicals. Key markets include composites, personal care, dispersants and paper sizing.

welders.

Intermediates (formerly Intermediates and ~~Solvents~~Solvents) is ~~a leading producer~~comprised of the production of 1,4 butanediol (BDO) and related derivatives, including ~~tetrahydrofuran and~~ n-methylpyrrolidone. These products are used as chemical intermediates in the production of engineering polymers and polyurethanes, and as specialty process solvents in a wide array of applications including electronics, pharmaceuticals, water filtration membranes and more. Butanediol is also ~~supplied~~provided as a feedstock to ~~Ashland’s~~Life Sciences, Personal Care, and Specialty ~~Ingredients business~~Additives for use as a raw material.

Unallocated and Other generally includes items such as certain significant company-wide restructuring activities, ~~including internal separation~~corporate governance costs and legacy costs or ~~adjustments~~activities that relate to divested businesses that are no longer operated by Ashland.

Reportable segment results

Results of Ashland’s reportable segments are presented based on its management and internal accounting structure. The structure is specific to Ashland; therefore, the financial results of Ashland’s reportable segments are not necessarily comparable with similar information for other comparable companies. Ashland allocates all significant costs to its reportable segments except for certain significant company-wide restructuring activities, certain corporate governance costs and other costs or ~~adjustments~~activities that relate to former businesses that Ashland no longer operates. The service cost component of pension and other postretirement benefits costs is allocated to each reportable segment on a ratable basis; while the remaining components of pension and other postretirement benefits costs are recorded within the other net periodic benefit income caption on the Statements of Consolidated Comprehensive Income (Loss). Ashland refines its expense allocation methodologies to the reportable segments from time to time as internal accounting practices are improved, more refined information becomes available and the industry or market changes. Significant revisions to Ashland’s methodologies are adjusted for all segments on a retrospective basis.

The following table presents various financial information for each reportable segment for the three months ended December 31, ~~2017~~2021 and ~~2016.~~

(a)

Intersegment sales from Intermediates are accounted for at prices that approximate fair value. All other intersegment sales are accounted for at cost.

(b)

Includes a capital project impairment of $9 million for the three months ended December 20, 2020 relating to a long-term capital project plan change at a plant facility.

(c)

Excludes income (loss) from discontinued operations, other net periodic benefit income (expense) and net income (loss) on divestitures. See the Statement of Consolidated Comprehensive Income (Loss) for applicable amounts excluded.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE O – REPORTABLE SEGMENT INFORMATION (continued)~~

Three months ended
December 31
(In millions - unaudited) 2017
2016
SALES
Specialty Ingredients $ 550
$ 482
Composites 218
165
Intermediates and Solvents 74
57
$ 842
$ 704
OPERATING INCOME (LOSS)

Specialty Ingredients $ 42
$ 40
Composites 18
15
Intermediates and Solvents 8
(7 )
Unallocated and other (29 ) (33 )
$ 39
$ 15

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements including, without limitation, statements made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operation” (MD&A), within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Ashland has identified some of these forward-looking statements with words such as “anticipates,” “believes,” “expects,” “estimates,” “is likely,” “predicts,” “projects,” “forecasts,” “objectives,” “may,” “will,” “should,” “plans” and “intends” and the negative of these words or other comparable terminology. ~~In addition,~~ Ashland may from time to time make forward-looking statements in its ~~annual reports,~~Annual Report to Shareholders, quarterlyreports and other filings with the Securities and Exchange Commission (SEC), news releases and other written and oral communications. These forward-looking statements are based on Ashland’s expectations and assumptions, as of the date such statements are made, regarding Ashland’s future operating performance and financial condition and expected effects of the COVID-19 pandemic on Ashland’s business, as well as the economy and other future events or circumstances. Ashland’s expectations and assumptions include, without limitation, those mentioned within the MD&A, internal forecasts and analyses of current and future market conditions and trends, management plans and strategies, operating efficiencies, cost savings and economic conditions (such as prices, supply and demand, cost of raw materials, and the ability to recover raw-material cost increases through price increases), and risks and uncertainties associated with the following: the impact of acquisitions and/or divestitures Ashland has made or may make, including the acquisition of ~~Pharmachem~~Schülke & Mayr’s personal care business and the sale of the Performance Adhesive business (including the possibility that Ashland may not realize the anticipated benefits from such transactions); Ashland’s substantial indebtedness (including the possibility that such indebtedness and related restrictive covenants may adversely affect Ashland’s future cash flows, results of operations, financial condition and its ability to repay debt); execution risks associated with Ashland’s growth strategies; the ~~potential that Ashland does not realize all~~competitive nature of ~~the expected benefits of the separation of its Valvoline~~Ashland’s business; ~~the potential that the Tax Cuts and Jobs Act enacted on December 22, 2017 will have a negative impact on Ashland’s financial results, and~~ severe weather, natural disasters, public health crises (including the COVID-19 pandemic), cyber events and legal proceedings and claims (including product recalls, environmental and asbestos matters)~~. Various risks~~; the effects of the COVID-19 pandemic on the geographies in which Ashland operates, the end markets Ashland serves and ~~uncertainties may cause actual results to differ materially from those stated, projected or implied by any forward-looking statements, including,~~on Ashland’s supply chain and customers; and without limitation, risks and uncertainties affecting Ashland that are contained in “Use of estimates, risks and uncertainties” in Note A of Notes to Consolidated Financial Statements and in Item 1A in its most recent Form 10-K filed with the SEC, which is available on Ashland’s website at http://investor.ashland.com or on the SEC’s website at http://www.sec.gov. Various risks and uncertainties may cause actual results to differ materially from those stated, projected or implied by any forward-looking statements. The extent and duration of the COVID-19 pandemic on our business and operations is uncertain. Factors that influence the impact on our business and operations include the duration and extent of the pandemic, the extent of imposed or recommended containment and mitigation measures, and the general economic consequences of the pandemic. Ashland believes its expectations and assumptions are reasonable, but there can be no assurance that the expectations reflected herein will be achieved. Unless legally required, Ashland undertakes no obligation to update any forward-looking statements made in this Form 10-Q whether as a result of new information, future events or otherwise. Information on Ashland’s website is not incorporated into or a part of this Form 10-Q.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and the accompanying Notes to Condensed Consolidated Financial Statements herein.

Ashland is a premier ~~global leader in providing~~ specialty ~~chemical solutions to~~additives and materials company with a conscious and proactive mindset for sustainability. The Company serves customers in a wide range of consumer and industrial markets, including adhesives, architectural coatings, construction, energy, food and beverage, nutraceuticals, personal care and pharmaceutical. With approximately ~~6,500~~4,100 (3,800 excluding Performance Adhesives) employees worldwide, Ashland serves customers in more than 100 countries.

Ashland’s sales generated outside of North America were ~~60%~~68% for both the three months ended December 31, ~~2017~~2021 and ~~2016.~~2020. Sales by region expressed as a percentage of total consolidated sales for the three months ended December 31 were as follows:

Three months ended
December 31
Sales by Geography 2017
2016
North America (a)
40 % 40 %
Europe 34 % 31 %
Asia Pacific 18 % 20 %
Latin America & other 8 % 9 %
100 % 100 %

~~(a)~~Ashland includes only U.S. and Canada in its North America designation.

~~Subsequent~~

On August 31, 2021, Ashland announced its agreement with Arkema, a French société anonyme, to ~~completing~~sell the ~~separation~~Performance Adhesive business for the sum of $1.65 billion. The transaction is expected to close by the March 2022 quarter end, subject to closing conditions. Ashland expects net proceeds from ~~Valvoline Inc.,~~the sale to be approximately $1.2 to $1.3 billion, with the aim of using the proceeds to invest in the growth of its other reportable core businesses as well as to optimize its balance sheet through debt reductions or utilization of unused authorized share repurchase program amounts. The expected divestiture represents a strategic shift in Ashland's ~~businesses are managed~~business and qualifies as a discontinued operation. As a result, the assets, liabilities, operating results and cash flows related to Performance Adhesives have been classified as discontinued operations for all periods presented within the ~~following three~~Consolidated Financial Statements.

As a result, Ashland’s reportable ~~segments:~~segments include Life Sciences, Personal Care (formerly Personal Care & Household), Specialty ~~Ingredients, Composites~~Additives and Intermediates (formerly Intermediates and ~~Solvents. For further descriptions of each reportable segment, see “Results of Operations – Reportable Segment Review” beginning on page 45.~~

Solvents). Unallocated and Other includes corporate governance activities and certain legacy matters. The contribution to sales by each reportable segment expressed as a percentage of total consolidated sales for the three months ended December 31 ~~were~~was as follows:

$50 million of incremental COGS productivity savings

~~ASHLAND GLOBAL HOLDINGS INC. AND~~

As of December 31, 2021, Ashland has substantially achieved all of its target run-rate cost savings under these initiatives.

RESULTS OF OPERATIONS – CONSOLIDATED ~~SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

~~KEY DEVELOPMENTS~~

~~Business results~~

•

Discontinued operations, which are reported net of taxes, resulted in income of $16 million and $13 million during the three months ended December 31, 2021 and 2020, respectively.

•

Income from continuing operations, which excludes results from discontinued operations, amounted to income of $32 million and $43 million for the three months ended December 31, 2021 and 2020, respectively.

•

The effective income tax rates were an expense of 13% and a benefit of 13% for the three months ended December 31, 2021 and 2020, respectively, and were significantly impacted by certain tax discrete items in both the current and prior year quarters.

•

Ashland incurred pretax net interest and other expense (income) of $5 million and income of $7 million for the three months ended December 31, 2021 and 2020, respectively. This includes gains of $4 million and $18 million on restricted investments, respectively, for the current and prior year quarters.

•

Net income on acquisitions and divestitures totaled income $14 million for the three months ended December 31, 2020.

•

Operating income was $42 million and $17 million for the three months ended December 31, 2021 and 2020, respectively.

•

Restructuring, separation and other costs – Ashland periodically implements company-wide cost reduction programs related to acquisitions, divestitures and other cost reduction programs in order to enhance profitability through streamlined operations and an improved overall cost structure. Ashland often incurs severance, facility and integration costs associated with these programs. As a result of these activities, Ashland recorded expenses in the current and prior year quarters. See Note D in the Notes to Condensed Consolidated Financial Statements for further information on the restructuring activities.

•

During the three months ended December 31, 2020, Ashland incurred an impairment charge associated with a long-term capital project plan change at a plant facility.

•

Environmental reserve adjustments – Ashland is subject to various federal, state and local environmental laws and regulations that require environmental assessment or remediation efforts (collectively environmental remediation) at multiple locations. As a result of these activities, Ashland recorded adjustments during the current and prior year quarters to its environmental liabilities and receivables related to operating facilities and previously divested businesses or non-operational sites. See Note L of the Notes to Condensed Consolidated Financial Statements for more information.

•

Net income on acquisitions and divestitures – Ashland recorded income of $14 million during the three months ended December 31, 2020 related to the sale of a Specialty Additives facility.

•

Expense of $1 million and $12 million comprised of key items for severance, lease abandonment and other restructuring costs during the three months ended December 31, 2021 and 2020, respectively;

•

$9 million related to a capital project impairment during the three months ended December 31, 2020;

•

$3 million and $4 million in net environmental-related expenses during the current and prior year period, respectively (see Note L for more information); and

•

$2 million increase in selling, general and administrative expense related to the Schülke acquisition.

~~The Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017. The Tax Act reduces the U.S. federal corporate tax rate from 35%~~$23 million included gains of $4 million compared to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. At December 31, 2017, Ashland has not completed the internal accounting assessment for the tax effects of enactment of the Tax Act; however, Ashland determined a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. Ashland recognized a provisional amount$18 million for the three months ended December 31, ~~2017, which~~2021 and 2020, respectively. See Note E for more information on the restricted investments.


	Three months ended December 31
(In millions)	2021			2020	Change
Net income on acquisitions and divestitures	$	—	$	14	$	(14	)

The activity in the prior year quarter relates to a a $14 million gain related to the sale of a Specialty Additives facility.


	Three months ended December 31
(In millions)	2021			2020			Change
Income tax expense (benefit)	$	5		$	(5	)	$	10
Effective tax rate		13	%		(13	)%

Ashland’s effective tax rate in any interim period is ~~included~~subject to adjustments related to discrete items and the mix of domestic and foreign operating results. The overall effective tax rate was 13% for the three months ended December 31, 2021 and was primarily impacted by jurisdictional income mix, as well as favorable discrete items of $3 million.

The overall effective tax rate was a ~~component~~benefit of 13% for the three months ended December 31, 2020 and was primarily impacted by jurisdictional income ~~tax expense from continuing operations. Ashland recorded net unfavorable tax adjustments~~mix, as well as favorable discrete items of ~~$16~~$13 million primarily related to ~~deferred~~the sale of a Specialty Additives facility.

Adjusted income tax expense (benefit)

Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income and/or operating income which Ashland believes do not accurately reflect Ashland’s underlying business performance and trends. Tax specific key items are defined as the financial effects from tax specific financial transactions, tax law changes or other matters that fall within the definition of key items as previously described. The effective tax rate, ~~changes~~excluding key items, which is a non-GAAP measure, has been prepared to illustrate the ongoing tax effects of Ashland’s operations. Management believes investors and analysts use this financial measure in assessing Ashland's business performance and that presenting this non-GAAP measure on a ~~one-time transition~~consolidated basis assists investors in better understanding Ashland’s ongoing business performance and enhancing their ability to compare period-to-period financial results.

The effective tax ~~assessed~~rate during the three months ended December 31, 2021 and 2020 was significantly impacted by the following tax specific key items:

•

Restructuring and separation activity – Includes the impact from company-wide cost reduction programs, and the impact of the sale of a Specialty Additives facility.

The following table is a calculation of the effective tax rate, excluding these key items.


	Three months ended
	December 31
(In millions)	2021				2020
Income (loss) from continuing operations before income taxes	$	37		$	38
Key items (pre-tax) (a)		—			(7	)
Adjusted income from continuing operations
before income taxes	$	37		$	31

Income tax expense (benefit)	$	5		$	(5	)
Income tax rate adjustments:
Tax effect of key items		—			(3	)
Tax specific key items: (b)
Restructuring and separation activity		—			13
Total income tax rate adjustments		—			10
Adjusted income tax expense	$	5		$	5

Effective tax rate, excluding key items (Non-GAAP) (c)		13	%		17	%

(a)

See Adjusted EBITDA reconciliation table disclosed in this MD&A for a summary of the key items, before tax.

(b)

For additional information on the effect that these tax specific key items had on EPS, see the Adjusted Diluted EPS table disclosed in this MD&A.

(c)

Due to rounding conventions, the effective tax rate presented may not recalculate precisely based on the numbers disclosed within this table.


	Three months ended December 31
(In millions)	2021			2020			Change
Income (loss) from discontinued operation (net of taxes)
Performance Adhesives	$	17		$	18		$	(1	)
Distribution		(1	)		(1	)		—
Gain (loss) on disposal of discontinued operations (net of taxes)
Composites/Marl facility		—			(4	)		4
	$	16		$	13		$	3

The activity for Distribution and Composites/Marl facility during the current and prior year quarters was related to post-closing adjustments. The Composites/Marl Facility activity for the prior year quarter included post-closing purchase price dispute adjustments. The Performance Adhesives segment sales and pre-tax operating income included in discontinued operations were $96 million and $22 million, and $84 million and $24 million respectively, for the current and prior year quarter.

Other comprehensive income (loss)

A comparative analysis of the components of other comprehensive income is provided below for the three months ended December 31, 2021 and 2020.


	Three months ended December 31
(In millions)	2021			2020		Change
Other comprehensive income (loss) (net of taxes)
Unrealized translation gain (loss)	$	(17	)	$	48	$	(65	)
Unrealized gain (loss) on commodity hedges		(3	)		—		(3	)
	$	(20	)	$	48	$	(68	)

Total other comprehensive income (loss), net of tax, for the current quarter decreased $68 million compared to the prior year quarter primarily as a result of the following:

•

For the three months ended December 31, 2021, the change in unrealized gain (loss) from foreign ~~cash~~currency translation adjustments resulted in a loss of $17 million compared to a gain of $48 million for the three months ended December 31, 2020. The fluctuations in unrealized translation gains and ~~unremitted earnings.~~losses are primarily due to translating foreign subsidiary financial statements from local currencies to U.S. Dollars.

•

For the three months ended December 31, 2021, the change in commodity hedges is primarily due to the fluctuations of the market prices of the underlying commodities.

~~RESULTS OF OPERATIONS – CONSOLIDATED REVIEW~~

Use of non-GAAP measures

Ashland has included within this document the following non-GAAP measures, on both a consolidated and reportable segment basis, which are not defined within U.S. GAAP and do not purport to be alternatives to net income or cash flows from operating activities as a measure of operating performance or cash flows:

•

EBITDA -– net income (loss), plus income tax expense (benefit), net interest and other ~~financing~~ expenses, and depreciation and amortization.

•

Adjusted EBITDA -– EBITDA adjusted for noncontrolling interests, discontinued operations, net ~~gain~~income (loss) on acquisitions and divestitures, other income and (expense) and key items (including ~~the~~ remeasurement gains and losses related to pension and other postretirement plans).

•

Adjusted EBITDA margin -– Adjusted EBITDA ~~which can include pro forma adjustments,~~ divided by sales.

•

Adjusted diluted earnings per share (EPS) -– income (loss) from continuing operations, adjusted for key items, net of tax, divided by the average outstanding diluted shares for the applicable period.

•

Adjusted diluted earnings per share (EPS) excluding intangibles amortization expense – Adjusted earnings per share adjusted for intangibles amortization expense net of tax, divided by the average outstanding diluted shares for the applicable period.

•

Free cash flow -– operating cash flows less capital expenditures.

•

Ongoing free cash flow – operating cash flows less capital expenditures and certain other adjustments as applicable.

•

Ongoing free cash flow conversion – ongoing free cash flow divided by adjusted EBITDA.

Management believes the use of EBITDA and Adjusted EBITDA measures on a consolidated and reportable segment basis assists investors in understanding the ongoing operating performance by presenting comparable financial results between periods. Ashland believes that by removing the impact of depreciation and amortization and excluding certain non-cash charges, amounts spent on interest and taxes and certain other charges that are highly variable from year to year, EBITDA and Adjusted EBITDA provide Ashland’s investors with performance measures that reflect the impact to operations from trends in changes in sales, margin and

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

operating expenses, providing a perspective not immediately apparent from net income and operating income. The adjustments Ashland makes to derive the non-GAAP measures of EBITDA and Adjusted EBITDA exclude items which may cause short-term fluctuations in net income and operating income and which Ashland does not consider to be the fundamental attributes or primary drivers of its business. EBITDA and Adjusted EBITDA provide disclosure on the same basis as that used by Ashland’s management to evaluate financial performance on a consolidated and reportable segment basis and provide consistency in our financial reporting, facilitate internal and external comparisons of Ashland’s historical operating performance and its business units and provide continuity to investors for comparability purposes.

The Adjusted diluted EPS metric enables Ashland to demonstrate what effect key items have on an earnings per diluted share basis by taking income (loss) from continuing operations, adjusted for key items after tax that have been identified in the Adjusted EBITDA table, and dividing by the average outstanding diluted shares for the applicable period. Ashland’s management believes this presentation is helpful to illustrate how the key items have impacted this metric during the applicable period.

The Adjusted diluted EPS, excluding intangibles amortization expense metric enables Ashland to demonstrate the impact of non-cash intangibles amortization expense on EPS, in addition to the key items previously mentioned. Ashland’s management believes this presentation is helpful to illustrate how previous acquisitions impact applicable period results.

The free cash flow ~~metric enables~~metrics enable Ashland to provide a better indication of the ongoing cash being generated that is ultimately available for both debt and equity holders as well as other investment opportunities. Unlike cash flow provided by operating activities, free cash flow and ongoing free cash flow includes the impact of capital expenditures from continuing operations and other significant items impacting cash flow, providing a more complete picture of current and future cash generation. Free cash flow has certain limitations, including that it does not reflect adjustment for certain non-discretionary cash flows such as mandatory debt repayments. The amount of mandatory versus discretionary expenditures can vary significantly between periods.

Although Ashland ~~provides~~may provide forward-looking guidance for Adjusted EBITDA, Adjusted diluted EPS and ongoing free cash flow, Ashland is not reaffirming or providing forward-looking guidance for U.S. GAAP-reported financial measures or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP measure because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items that affect these metrics such as domestic and international economic, political, legislative, regulatory and legal actions. In addition, certain economic conditions, such as recessionary trends, inflation, interest and monetary exchange rates, government fiscal policies and changes in the prices of certain key raw materials, can have a significant effect on operations and are difficult to predict with certainty.

These non-GAAP measures should be considered supplemental in nature and should not be construed as more significant than comparable measures defined by U.S. GAAP. Limitations associated with the use of these non-GAAP measures include that these measures do not present all of the amounts associated with our results as determined in accordance with U.S. GAAP. The non-GAAP measures provided are used by Ashland management and may not be determined in a manner consistent with the methodologies used by other companies. EBITDA and Adjusted EBITDA provide a supplemental presentation of Ashland’s operating performance on a consolidated and reportable segment basis. Adjusted EBITDA generally includes adjustments for items that impact comparability between periods. In addition, certain financial covenants related to Ashland’s ~~2017~~2020 Credit Agreement are based on similar non-GAAP measures and are defined further in the sections that ~~reference~~refer to this metric.

~~In accordance with U.S. GAAP, Ashland recognizes actuarial gains~~

EBITDA and ~~losses for defined benefit pension and other postretirement benefit plans annually in the fourth quarter~~Adjusted EBITDA

EBITDA totaled income of each fiscal year and whenever a plan is determined to qualify for a remeasurement during a fiscal year. Actuarial gains and losses occur when actual experience differs from the estimates used to allocate the change in value of pension and other postretirement benefit plans to expense throughout the year or when assumptions change, as they may each year. Significant factors that can contribute to the recognition of actuarial gains and losses include changes in discount rates used to remeasure pension and other postretirement obligations on an annual basis or upon a qualifying remeasurement, differences between actual and expected returns on plan assets and other changes in actuarial assumptions, for example, the life expectancy of plan participants. Management believes Adjusted EBITDA,

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

which includes the expected return on pension plan assets yet excludes both the actual return on pension plan assets and the impact of actuarial gains and losses, provides investors with a meaningful supplemental presentation of Ashland’s operating performance (see the Adjusted EBITDA reconciliation table on page 41 for additional details on exact amounts included within this non-GAAP measure related to pension and other postretirement plans.) Management believes these actuarial gains and losses are primarily financing activities that are more reflective of changes in current conditions in global financial markets (and in particular interest rates) that are not directly related to the underlying business. For further information on the actuarial assumptions and plan assets referenced above, see Note M of the Notes to Consolidated Financial Statements within the 2017 Form 10-K.

~~Consolidated review~~

~~Net income~~

Ashland’s net income is primarily affected by results within operating income, net interest and other financing expense, income taxes, discontinued operations and other significant events or transactions that are unusual or nonrecurring.

~~Key financial results for the three months ended December 31, 2017 and 2016 included the following:~~

~~Ashland’s net loss attributable to Ashland amounted to $4~~$118 million and $1$103 million for the three months ended December 31, ~~2017~~2021 and ~~2016, respectively, or a loss of $0.07 and $0.01 diluted earnings per share, respectively.~~

Ashland’s net income attributable to noncontrolling interest amounted to $11 million for the three months ended December 31, 2016 and reflects the noncontrolling interest of Valvoline Inc. before the final separation occurred on May 12, 2017.

Discontinued operations, which are reported net of taxes, resulted in income of $3 million and $75 million during the three months ended December 31, 2017 and 2016, respectively. The activity within discontinued operations for the three months ended December 31, 2016 includes the operating results of Valvoline Inc.

~~Loss from continuing operations, which excludes results from discontinued operations, amounted to $7 million and $65 million for the three months ended December 31, 2017 and 2016, respectively.~~

The effective income tax rate was 200% and 39% for the three months ended December 31, 2017 and 2016, and was impacted by certain discrete items in both the current and prior year quarters. The current quarter rate was primarily impacted by income mix and net unfavorable tax discrete adjustments of $16 million related to the Tax Act.

Ashland incurred pretax net interest and other financing expense of $31 million and $122 million for the three months ended December 31, 2017 and 2016, respectively. The prior year quarter was impacted by $92 million of net charges associated with debt financing activity.

~~Operating income was $39 million and $15 million for the three months ended December 31, 2017 and 2016, respectively.~~

~~For further information on the items reported above, see the discussion in the comparative Statements of Consolidated Comprehensive Income caption review analysis.~~

~~Operating income~~

Operating income amounted to $39 million and $15 million for the three months ended December 31, 2017 and 2016, respectively. The current and prior year quarters' operating income included certain key items that were excluded to arrive at Adjusted EBITDA. These key items are summarized as follows:

•~~$11 million of environmental charges during the three months ended December 31, 2017;~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

•~~Separation, restructuring and other costs and accelerated depreciation include the following:~~


◦	~~$6 million and $22 million of costs related to the separation of Valvoline during the three months ended December 31, 2017 and 2016, respectively;~~


◦	~~$4 million of accelerated depreciation related to the planned closure of an office building during the three months ended December 31, 2017;~~


◦	~~$2 million of accelerated depreciation for the termination of a contract at a manufacturing facility during the three months ended December 31, 2017;~~


◦	~~$1 million of severance and other restructuring charges for the closure of a manufacturing plant during the three months ended December 31, 2017; and~~


◦	~~$1 million of integration costs related to the acquisition of Pharmachem for the three months ended December 31, 2017;~~

~~Remeasurement gain of $2 million associated with the discontinuation of certain post-employment health and life insurance benefits during the three months ended December 31, 2016; and~~

~~a $5 million charge for a legal reserve during the three months ended December 31, 2016.~~

Operating income for the three months ended December 31, 2017 and 2016 included depreciation and amortization of $73 million and $68 million, respectively (which excluded accelerated depreciation of $6 million for the three months ended December 31, 2017).

~~EBITDA and Adjusted EBITDA~~

~~EBITDA totaled $114 million and $159 million for the three months ended December 31, 2017 and 2016,~~2020, respectively. EBITDA and Adjusted EBITDA results in the table below have been prepared to illustrate the ongoing effects of Ashland’s operations, which exclude certain key items previously described. Management believes the use of such non-GAAP measures on a consolidated and reportable segment basis assists investors in understanding the ~~impact of Ashland's previous noncontrolling interest in Valvoline Inc.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Three months ended
December 31
(In millions) 2017
2016
Net income (loss) $ (4 ) $ 10
Income tax expense (benefit) 14
(41 )
Net interest and other financing expense 31
122
Depreciation and amortization (a)
73
68
EBITDA 114
159
Income from discontinued operations (net of tax) (3 ) (75 )
Environmental reserve adjustments 11
—
Separation, restructuring and other costs 8
22
Accelerated depreciation 6
—
Legal reserve —
5
Gain on post-employment plan remeasurement —
(2 )
Adjusted EBITDA (b)
$ 136
$ 109


~~(a)~~	~~Excludes $6 million of accelerated depreciation for the three months ended December 31, 2017.~~

ongoing operating performance by presenting the financial results between periods on a more comparable basis.


	Three months ended
	December 31
(In millions)	2021			2020
Net income (loss)	$	48		$	56
Income tax expense (benefit)		5			(5	)
Net interest and other expense (income)		5			(7	)
Depreciation and amortization		60			59
EBITDA		118			103
Income from discontinued operations (net of tax)		(16	)		(13	)
Key items included in EBITDA:
Restructuring, separation and other costs		1			12
Capital project impairment		—			9
Environmental reserve adjustments		3			4
Net gain on acquisitions and divestitures		—			(14	)
Total key items included in EBITDA		4			11
Adjusted EBITDA	$	106		$	101

Total key items included in EBITDA	$	4		$	11
Unrealized gain on securities		(4	)		(18	)
Total key items, before tax	$	—		$	(7	)

Diluted EPS and Adjusted Diluted EPS

The following table reflects the U.S. GAAP calculation for the income ~~(loss)~~ from continuing operations adjusted for the cumulative diluted EPS effect for key items after tax that have been identified in the Adjusted EBITDA table in the previous section. Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income and/or operating income which Ashland believes do not accurately reflect Ashland’s underlying business performance and trends. The Adjusted diluted EPS for the income ~~(loss)~~ from continuing operations in the following table has been prepared to illustrate the ongoing effects of Ashland’s ~~operations since management~~operations. Management believes ~~the~~investors and analysts use ofthis financial measure in assessing Ashland's business performance and that presenting this non-GAAP ~~measures~~measure on a consolidated ~~and reportable segment~~ basis assists investors in better understanding Ashland’s ongoing business performance and enhances their ability to compare period-to-period financial results.


	Three months ended
	December 31
	2021			2020
Diluted EPS from continuing operations (as reported)	$	0.55		$	0.70
Key items, before tax:
Restructuring, separation and other costs		0.02			0.18
Environmental reserve adjustments		0.05			0.06
Capital project impairment		—			0.16
Unrealized gain on securities		(0.07	)		(0.29	)
Net gain on acquisitions and divestitures		—			(0.23	)
Key items, before tax		—			(0.12	)
Tax effect of key items (a)		—			0.05
Key items, after tax		—			(0.07	)
Tax specific key items:
Restructuring and separation activity		—			(0.22	)
Tax specific key items (b)		—			(0.22	)
Total key items		—			(0.29	)
Adjusted diluted EPS from continuing operations (non-GAAP)	$	0.55		$	0.41
Amortization expense adjustment (net of tax) (c)	$	0.33		$	0.28
Adjusted diluted EPS from continuing operations (non-GAAP) excluding intangibles amortization expense	$	0.88		$	0.69

(a)

Represents the ~~ongoing operating performance by presenting~~diluted EPS impact from the ~~financial results between periods on a more comparable basis.~~

tax effect of the key items that are identified above.

Three months ended
December 31
2017
2016
Diluted EPS from continuing operations (as reported) $ (0.12 ) $ (1.05 )
Key items 0.54
1.19
Adjusted diluted EPS from continuing operations (non-GAAP) $ 0.42
$ 0.14

(b)

~~Statements~~Represents the diluted EPS impact from tax specific financial transactions, tax law changes or other matters that fall within the definition of ~~Consolidated Comprehensive Income – caption review~~

~~A comparative analysis~~key items. For additional explanation of these tax specific key items, see the income tax expense (benefit) discussion within the Statements of Consolidated Comprehensive Income by(Loss) caption ~~is provided as follows~~review section above.

(c)

Amortization expense adjustment (net of tax) tax rates were 20% and 21% for the three months ended December 31, ~~2017~~2021 and ~~2016.~~

2020, respectively.

Three months ended December 31
(In millions) 2017
2016
Change

Sales $ 842
$ 704
$ 138

~~The following table provides a reconciliation of the change in sales between the three months ended December 31, 2017 and 2016.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Three months ended
(In millions) December 31, 2017
Acquisitions and divestitures $ 63
Pricing 30
Currency exchange 20
Volume 18
Product mix 7
Change in sales $ 138

Sales for the current quarter increased $138 million compared to the prior year quarter. The acquisition of Pharmachem within the Specialty Ingredients reportable segment increased sales by $58 million, or 8%, while the net impact of other acquisitions and divestitures increased sales by $5 million. Improvements in pricing increased sales by $30 million, or 4%, while favorable foreign currency exchange increased sales by $20 million, or 3%. Higher volumes and changes in product mix increased sales by $18 million and $7 million, respectively.

Three months ended December 31
(In millions) 2017
2016
Change
Cost of sales $ 613
$ 515
$ 98
Gross profit as a percent of sales 27.2 % 26.8 %

Fluctuations in cost of sales are driven primarily by raw material prices, volume and changes in product mix, currency exchange, acquisitions and divestitures and other certain charges incurred as a result of changes or events within the businesses or restructuring activities. The following table provides a quantified reconciliation of the changes in cost of sales between the three months ended December 31, 2017 and 2016.

Three months ended
(In millions) December 31, 2017
Changes in:
Acquisitions and divestitures $ 50
Production costs 20
Currency exchange 15
Volume 8
Product mix 4
Severance and other restructuring costs 1
Change in cost of sales $ 98

Cost of sales for the current quarter increased $98 million compared to the prior year quarter. The Pharmachem acquisition increased cost of sales by $44 million, or 9%, while the net impact of other acquisitions and divestitures increased cost of sales by $6 million. Unfavorable production costs and foreign currency exchange increased cost of sales by $20 million, or 4%, and $15 million, or 3%, respectively. Higher volumes and changes in product mix increased cost of sales by $8 million and $4 million, respectively, while the current quarter also included $1 million of severance and other restructuring charges related to a plant closure.

Three months ended December 31
(In millions) 2017
2016
Change
Selling, general and administrative expense $ 171
$ 157
$ 14
As a percent of sales 20.3 % 22.3 %

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Selling, general and administrative expense for the current quarter increased $14 million compared to the prior year quarter with expenses as a percent of sales decreasing 2.0 percentage points. Key drivers of the fluctuation in selling, general and administrative expense compared to the prior year quarter were:

~~$10 million of incremental costs related to Pharmachem’s operations and $1 million of Pharmachem integration costs during the current quarter;~~

~~$14 million and $6 million in net environmental-related expenses during the current and prior year quarters, respectively;~~

~~an increase of $7 million due to higher employee-related costs in the current quarter;~~

~~an increase of $5 million due to unfavorable foreign currency exchange in the current quarter;~~

~~$4 million of accelerated depreciation related to the planned closure of an office building during the current quarter;~~

~~$6 million of costs related to the separation of Valvoline during the current quarter compared to $22 million in the prior year quarter; and~~

~~a $5 million charge for a legal reserve during the prior year quarter.~~

Three months ended December 31
(In millions) 2017
2016
Change
Research and development expense $ 21
$ 20
$ 1

~~Research and development expense remained relatively consistent with the prior year quarter.~~

Three months ended December 31
(In millions) 2017
2016
Change
Equity and other income

Equity income (a)
$ —
$ —
$ —
Other income 2
3
(1 )
$ 2
$ 3
$ (1 )


~~(a)~~	~~Activity of $0 denotes value less than $1 million.~~

~~Equity and other income remained relatively consistent with the prior year quarter.~~

Three months ended December 31
(In millions) 2017
2016
Change
Net interest and other financing expense (income)
Interest expense $ 34
$ 126
$ (92 )
Interest income (1 ) (1 ) —
Available-for-sale securities income (3 ) (3 ) —
Other financing costs 1
—
1
$ 31
$ 122
$ (91 )

Net interest and other financing expense decreased $91 million during the current quarter compared to the prior year quarter. The current quarter decrease in interest expense was primarily due to the prior year quarter including $92 million of accelerated accretion related to the December 2016 tender offer of the 2029 notes. Available-for-sale securities income of $3 million during both the current and the prior year quarters represents investment income and realized gains related to restricted investments discussed in Note E of the Notes to Condensed Consolidated Financial Statements.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Three months ended December 31
(In millions) 2017
2016
Change
Other net periodic benefit income $ —
$ 2
$ (2 )

~~The income in the prior year quarter primarily related to a $2 million gain on the remeasurement of certain post-employment health and life insurance benefit plans that were discontinued.~~

Three months ended December 31
(In millions) 2017
2016
Change
Net loss on divestitures $ 1
$ 1
$ —

~~The activity in the current and prior year quarters primarily related to post-closing adjustments for certain divestitures.~~

Three months ended December 31
(In millions) 2017
2016
Change
Income tax expense (benefit) $ 14
$ (41 ) $ 55
Effective tax rate 200 % 39 %

The overall effective tax expense rate was 200% for the three months ended December 31, 2017 and was primarily impacted by the current quarter income mix and net unfavorable tax discrete adjustments of $16 million related to the enactment of the Tax Act. These net unfavorable adjustments primarily included deferred tax rate changes and a one-time transition tax assessed on foreign cash and unremitted earnings.

~~The overall effective tax benefit rate was 39% for the three months ended December 31, 2016 and was primarily impacted by income mix.~~

Three months ended December 31
(In millions) 2017
2016
Change
Income from discontinued operations (net of tax)
Valvoline $ 3
$ 75
$ (72 )

As a result of the full separation of Valvoline Inc. on May 12, 2017, the operating results related to Valvoline Inc., including the operating results of the former Valvoline reportable segment, have been reflected as discontinued operations (net of tax) within the Statement of Consolidated Comprehensive Income (Loss). The activity within the current quarter represents subsequent adjustments that were made in conjunction with the Tax Matters Agreement. See Note B for more information on the Tax Matters Agreement. During the prior year quarter, Valvoline's sales and pre-tax operating income included in discontinued operations were $489 million and $120 million, respectively.

Three months ended December 31
(In millions) 2017
2016
Change
Net income attributable to noncontrolling interest $ —
$ 11
$ (11 )

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Since Ashland's ownership interest in Valvoline Inc. was approximately 83% until the final separation on May 12, 2017, the amount of net income attributable to the outside stockholders' approximately 17% noncontrolling interest in Valvoline Inc. is presented within this caption on the Statement of Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2016.

~~Other comprehensive income (loss)~~

~~A comparative analysis of the components of other comprehensive income (loss) is provided below for the three months ended December 31, 2017 and 2016.~~

Three months ended December 31
(In millions) 2017
2016
Change
Other comprehensive income (loss) (net of taxes)
Unrealized translation gain (loss) $ 3
$ (146 ) $ 149
Net change in available-for-sale securities 8
—
8
Pension and postretirement obligation adjustment —
(1 ) 1
$ 11
$ (147 ) $ 158

~~Total other comprehensive income, net of tax, for the current quarter increased $158 million compared to the prior year quarter as a result of the following components:~~

For the three months ended December 31, 2017, the change in unrealized gain (loss) from foreign currency translation adjustments was a gain of $3 million compared to a loss of $146 million for the three months ended December 31, 2016. The fluctuations in unrealized translation gains and losses are primarily due to translating foreign subsidiary financial statements from local currencies to U.S. Dollars.

~~Gains on available-for-sale securities related to restricted investments amounted to $8 million, net of tax, during the three months ended December 31, 2017.~~

Pension and postretirement obligation adjustment was $1 million for the three months ended December 31, 2016. This amount related to amortization of unrecognized prior services credits for pension and other postretirement benefit plans and was reclassified into net income during the prior year quarter.

RESULTS OF OPERATIONS – REPORTABLE SEGMENT REVIEW

~~Subsequent to completing the separation from Valvoline Inc. on May 12, 2017, Ashland's operations are managed within the following three~~

Ashland’s reportable ~~segments:~~segments include Life Sciences, Personal Care (formerly Personal Care and Household), Specialty ~~Ingredients, Composites~~Additives, and Intermediates (formerly Intermediates and ~~Solvents.~~

Solvents). Unallocated and Other includes corporate governance activities and certain legacy matters.

Results of Ashland’s reportable segments are presented based on its management and internal accounting structure. The structure is specific to Ashland; therefore, the financial results of Ashland’s reportable segments are not necessarily comparable with similar information for other ~~comparable~~ companies. Ashland allocates all significant costs to its reportable segments except for certain significant company-wide restructuring activities, certain corporate governance costs and other costs or ~~adjustments~~activities that relate to former businesses that Ashland no longer operates. The service cost component of pension and other postretirement benefits costs is allocated to each reportable segment on a ratable basis; while the remaining components of pension and other postretirement benefits costs are recorded within the other net periodic benefit income caption on the Statements of Consolidated Comprehensive Income (Loss). Ashland refines its expense allocation methodologies to the reportable segments from time to time as

internal accounting practices are improved, more refined information becomes available and the industry or market changes. Significant revisions to Ashland’s methodologies are adjusted for all segments on a retrospective basis.

The following table discloses sales, operating income, depreciation and amortization and EBITDA by reportable segment for the three months ended December 31, 2021 and 2020.


	Three months ended
	December 31
(In millions - unaudited)	2021			2020
SALES
Life Sciences	$	170		$	170
Personal Care		147			126
Specialty Additives		156			147
Intermediates		53			33
Intersegment sales (a)		(14	)		(8	)
	$	512		$	468
OPERATING INCOME (LOSS)
Life Sciences	$	21		$	29
Personal Care		15			15
Specialty Additives (b)		17			2
Intermediates		16			2
Unallocated and other		(27	)		(31	)
	$	42		$	17
DEPRECIATION EXPENSE
Life Sciences	$	8		$	9
Personal Care		9			10
Specialty Additives		16			16
Intermediates		3			3
	$	36		$	38
AMORTIZATION EXPENSE
Life Sciences	$	7		$	7
Personal Care		12			9
Specialty Additives		5			5
Intermediates		—			—
	$	24		$	21
EBITDA (c)
Life Sciences	$	36		$	45
Personal Care		36			34
Specialty Additives		38			23
Intermediates		19			5
Unallocated and other		(27	)		(31	)
	$	102		$	76

(a)

Intersegment sales from Intermediates are accounted for at prices that approximate fair value. All other intersegment sales are accounted for at cost.

(b)

Includes a capital project impairment of $9 million for the three months ended December 31, 2020 relating to a long-term capital project plan change at a plant facility.

(c)

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Life Sciences

Life Sciences is comprised of pharmaceuticals, nutrition, nutraceuticals, agricultural chemicals, advanced materials and fine chemicals. Pharmaceutical solutions include controlled release polymers, disintegrants, film coatings, solubilizers, and tablet binders. Nutrition solutions include thickeners, stabilizers, emulsifiers and additives for enhancing mouthfeel, controlling moisture migration, reducing oil uptake and controlling color. Nutraceutical solutions include products for weight management, joint comfort, stomach and intestinal health, sports nutrition and general wellness, and providing custom formulation, toll processing and particle engineering solutions. Customers include pharmaceutical, food, beverage, nutraceuticals and supplements manufacturers, hospitals and radiologists and industrial manufacturers.

December 2021 quarter compared to December 2020 quarter

Life Sciences’ sales remained consistent at $170 million in the current quarter. Favorable pricing increased sales by $3 million, while lower volume and unfavorable foreign currency decreased sales by $1 million and $2 million, respectively.

Operating income decreased $8 million to income of $21 million for the current quarter. Unfavorable price/mix, lower volume, unfavorable foreign currency and higher costs decreased operating income by $5 million, $1 million, $1 million and $1 million, respectively. Current quarter EBITDA decreased $9 million to $36 million. EBITDA margin decreased 5.3 percentage points in the current quarter to 21.2%.

EBITDA and Adjusted EBITDA reconciliation

The EBITDA and Adjusted EBITDA amounts presented within this business section are provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for each segment. Each of these non-GAAP measures is defined as follows: EBITDA (operating income ~~(loss)~~ plus depreciation and amortization), Adjusted EBITDA (EBITDA adjusted for key items, which may include pro forma effects for significant acquisitions or divestitures, as applicable), and Adjusted EBITDA margin (Adjusted EBITDA, which may include pro forma adjustments, divided by sales or sales adjusted for pro forma results). Ashland does not allocate items to each reportable segment below operating income, such as interest expense and income taxes. As a result, reportable segment EBITDA and Adjusted EBITDA are reconciled directly to operating income since it is the most directly comparable ~~caption to the~~ Statements of Consolidated Comprehensive ~~Income.~~

~~The following table discloses sales, operating income, depreciation and amortization and statistical operating information by reportable segment for the three months ended December 31, 2017 and 2016.~~

Three months ended
December 31
(In millions) 2017
2016
Sales
Specialty Ingredients $ 550
$ 482
Composites 218
165
Intermediates and Solvents 74
57
$ 842
$ 704
Operating income (loss)

Specialty Ingredients $ 42
$ 40
Composites 18
15
Intermediates and Solvents 8
(7 )
Unallocated and other (29 ) (33 )
$ 39
$ 15
Depreciation and amortization

Specialty Ingredients $ 62
$ 55
Composites 5
6
Intermediates and Solvents 8
7
Unallocated and other 4
—
$ 79
$ 68
Operating information

Specialty Ingredients

Sales per shipping day $ 9.0
$ 7.9
Metric tons sold (thousands) 73.0
72.6
Gross profit as a percent of sales (a)
31.5 % 32.0 %
Composites

Sales per shipping day $ 3.6
$ 2.7
Metric tons sold (thousands) 91.2
78.4
Gross profit as a percent of sales (a)
18.4 % 21.1 %
Intermediates and Solvents

Sales per shipping day $ 1.2
$ 0.9
Metric tons sold (thousands) 32.7
32.2
Gross profit as a percent of sales (a)
21.3 % (0.9 )%


~~(a)~~	~~Gross profit is defined as sales, less cost of sales divided by sales.~~

Sales by region expressed as a percentage of reportable segment sales for the three months ended December 31, 2017 and 2016 were as follows. Ashland includes only U.S. and Canada in its North American designation.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Three months ended December 31, 2017

Sales by Geography
Specialty Ingredients Composites Intermediates and Solvents
North America 41 % 45 % 21 %
Europe 30 % 34 % 59 %
Asia Pacific 19 % 14 % 17 %
Latin America & other 10 % 7 % 3 %
100 % 100 % 100 %

Three months ended December 31, 2016

Sales by Geography
Specialty Ingredients Composites Intermediates and Solvents
North America 39 % 48 % 23 %
Europe 29 % 28 % 57 %
Asia Pacific 22 % 16 % 17 %
Latin America & other 10 % 8 % 3 %
100 % 100 % 100 %

~~Specialty Ingredients~~

Specialty Ingredients is a global leader in cellulose ethers, vinyl pyrrolidones and biofunctionals. It offers industry-leading products, technologies and resources for solving formulation and product-performance challenges. Specialty Ingredients uses natural, synthetic and semisynthetic polymers derived from cellulose ethers, vinyl pyrrolidones, acrylic polymers, polyester and polyurethane-based adhesives, and plant and seed extract. Specialty Ingredients’ end markets offer comprehensive and innovative solutions for today’s demanding consumer and industrial applications. Key customers include: pharmaceutical companies; makers of personal care products, food and beverages; makers of nutraceuticals and supplements; manufacturers of paint, coatings and construction materials; packaging and converting; and oilfield service companies.

On May 17, 2017, Ashland completed its acquisition of the stock of Pharmachem, a leading provider of quality ingredients to the global health and wellness industries and high-value differentiated products to fragrance and flavor houses. With annual revenues of approximately $300 million and 14 manufacturing facilities in the United States and Mexico, New Jersey-based Pharmachem develops, manufactures and supplies custom and branded nutritional and fragrance products. See Note C within the Notes to Condensed Consolidated Financial Statements for more information.

~~Additionally, Ashland completed the transfer of its ownership interest in a consolidated joint venture during the third quarter of fiscal 2017.~~

~~December 2017 quarter compared to December 2016 quarter~~

Specialty Ingredients’ sales increased $68 million to $550 million in the current quarter. The acquisition of Pharmachem increased sales by $58 million, or 12%. Favorable foreign currency exchange increased sales by $10 million, while volume and mix combined to increase sales by $9 million. In addition, improved product pricing increased sales by $2 million. These increases were partially offset by a decrease of $11 million from divestitures which was primarily related to the transfer of ownership interest in a consolidated joint venture.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Gross profit during the current quarter increased $19 million compared to the prior year quarter. The acquisition of Pharmachem increased gross profit by $14 million while improved volume and mix combined to increase gross profit by $9 million. Favorable foreign currency exchange increased gross profit by $4 million. These increases were partially offset by the net impact of pricing and costs which decreased gross profit by $6 million and the joint venture divestiture which decreased gross profit by $2 million. In total, gross profit margin during the current quarter decreased 0.5 percentage points as compared to the prior year quarter to 31.5%.

Selling, general and administrative expenses (which include research and development expenses throughout the reportable segment discussion and analysis) increased $15 million in the current quarter as compared to the prior year quarter largely due to incremental costs of $10 million related to Pharmachem’s operations. The remaining increase in selling, general and administrative expenses was primarily due to higher employee-related costs and unfavorable foreign currency exchange. Equity and other income decreased $2 million compared to the prior year quarter.

Operating income totaled $42 million for the current quarter compared to $40 million in the prior year quarter. Current quarter EBITDA increased $7 million to $102 million, while Adjusted EBITDA increased $10 million to $105 million. Adjusted EBITDA margin decreased 0.6 percentage points in the current quarter to 19.1%.

~~EBITDA and Adjusted EBITDA reconciliation~~

Income (Loss) caption.

The following EBITDA presentation for the three months ended December 31, ~~2017~~2021 and ~~2016 below~~2020 is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Life Sciences. Life Sciences had no key items for the three months ended December 31, 2021 or 2020.


	Life Sciences
	Three months ended December 31
(In millions)	2021		2020
Operating income	$	21	$	29
Depreciation and amortization		15		16
EBITDA	$	36	$	45

Personal Care

Personal Care is comprised of biofunctionals, preservatives, skin care, sun care, oral care, hair care and household. These businesses have a broad range of nature-based, biodegradable, and performance-enhancing ingredients for customer-driven solutions to help protect, renew, moisturize and revitalize skin and hair, and provide solutions for toothpastes, mouth washes and rinses, denture cleaning and care for teeth. Household supplies nature-derived rheology ingredients, biodegradable surface wetting agents, performance encapsulates, and specialty polymers for household, industrial and institutional cleaning products. Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies. As previously disclosed, on April 30, 2021 Ashland completed the $312 million acquisition of the personal care business from Schülke.

December 2021 quarter compared to December 2020 quarter

Personal Care’ sales increased $21 million to $147 million in the current quarter. Favorable product pricing and volume/mix, including the impact of the Schülke acquisition, increased sales by $2 million and $21 million, respectively. Unfavorable currency exchange decreased sales by $2 million.

Operating income of $15 million remained consistent for the current quarter. Lower costs, favorable impact of the Schülke acquisition and higher volume increased operating income by $3 million, $3 million and $1 million, respectively. Unfavorable price/mix decreased operating income by $7 million. Current quarter EBITDA increased $2 million to $36 million. EBITDA margin decreased 2.5 percentage points in the current quarter to 24.5%.

EBITDA and Adjusted EBITDA reconciliation


	Personal Care
	Three months ended December 31
(In millions)	2021		2020
Operating income	$	15	$	15
Depreciation and amortization		21		19
EBITDA	$	36	$	34

Specialty Additives

Specialty Additives is comprised of rheology- and performance-enhancing additives serving the coatings, construction, energy, automotive and various industrial markets. Solutions include coatings additives for architectural paints, finishes and lacquers, cement- and gypsum- based dry mortars, ready-mixed joint compounds, synthetic plasters for commercial and residential construction, and specialty materials for industrial applications. Products include rheology modifiers (cellulosic and associative thickeners), foam-control agents, surfactants and wetting agents, pH neutralizers, advanced ceramics used in catalytic converters, and environmental filters, ingredients that aid the manufacturing process of ceramic capacitors, plasma display panels and solar cells, ingredients for textile printing, thermoplastic metals and alloys for welding. Products help improve desired functional outcomes through rheology modification and control, water retention, workability, adhesive strength, binding power, film formation, deposition and suspension and emulsification. Customers include global paint manufacturers, electronics and automotive manufacturers, textile mills, the construction industry, and welders.

December 2021 quarter compared to December 2020 quarter

Specialty Additives’ sales increased $9 million to $156 million in the current quarter. Favorable product pricing and volume/mix increased sales by $8 million and $2 million, respectively. Unfavorable currency exchange decreased sales by $1 million.

Operating income increased $15 million to income of $17 million for the current quarter. Lower costs, favorable volume, favorable pricing/mix, and a capital project impairment in the prior year quarter increased operating income by $4 million, $1 million, $1 million and $9 million, respectively. Current quarter EBITDA increased $15 million

to $38 million while Adjusted EBITDA increased $6 million to $38 million. Adjusted EBITDA margin increased 2.6 percentage points in the current quarter to 24.4%.

EBITDA and Adjusted EBITDA reconciliation

The following EBITDA presentation for the three months ended December 31, 2021 and 2020 is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Specialty ~~Ingredients. Adjusted EBITDA results have been prepared to illustrate the ongoing effects of Ashland's operations, which exclude certain key items.~~Additives. The key items within the current quarter relate to $2 million of accelerated depreciation for the termination of a contract at a manufacturing facility and $1 million of severance and other restructuring charges for the closure of a manufacturing plant. There were no unusual or key items that affected comparability for EBITDA during ~~the prior year quarter.~~

Three months ended
December 31
(In millions) 2017
2016
Operating income $ 42
$ 40
Depreciation and amortization (a)
60
55
EBITDA 102
95
Accelerated depreciation 2
—
Severance and other restructuring costs 1
—
Adjusted EBITDA $ 105
$ 95


~~(a)~~	~~Excludes $2 million of accelerated depreciation for the three months ended December 31, 2017.~~

~~Composites~~

Composites is a global leader in unsaturated polyester resins, vinyl ester resins and gelcoats. The Composites business manufactures and sells a broad range of general-purpose and high-performance grades of unsaturated polyester and vinyl ester resins, gelcoats and low-profile additives for the reinforced plastics industry. The products in the Composites business provide an array of functional properties including corrosion resistance, fire retardance, ultraviolet resistance, water and chemical resistance, high mechanical strength, impact and scratch resistance and high strength-to-weight ratios. Key end markets include transportation, construction, marine and infrastructure. In addition, the business manufactures and sells molten maleic anhydride for the manufacture of a variety of products such as unsaturated polyester resins, copolymers, lubricating oil additives,

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

~~alkenyl succinic anhydrides, malic acid, fumaric acid and numerous derivative chemicals. Key markets include composites, personal care, dispersants and paper sizing.~~

~~December 2017 quarter compared to December 2016 quarter~~

~~Composites’ sales increased~~$53 million to $218 million in the current quarter. Improved product pricing increased sales by $19 million, or 12%. The acquisition of an unsaturated polyester resins manufacturing facility in the third of quarter of fiscal 2017 increased sales by $16 million, or 10%. Improved volume and mix increased sales by $12 million, or 7%, as metric tons sold increased to 91.2 thousand in the current quarter, while favorable foreign currency exchange increased sales by $6 million, or 4%.

Gross profit increased $5 million in the current quarter compared to the prior year quarter. Changes in volume and mix combined to increase gross profit by $3 million, while the facility acquisition and favorable foreign currency exchange each increased gross profit by $1 million. The net effects of pricing and raw material increases did not impact gross profit in the current quarter. In total, gross profit margin decreased 2.7 percentage points as compared to the prior year quarter to 18.4%.

Selling, general and administrative expenses during the current quarter increased $3 million compared to the prior year quarter primarily due to higher employee-related costs and unfavorable foreign currency exchange. Equity and other income increased $1 million compared to the prior year quarter.

Operating income totaled $18 million in the current quarter compared to $15 million in the prior year quarter. EBITDA increased $2 million to $23 million in the current quarter, while EBITDA margin decreased 2.1 percentage points in the current quarter to 10.6%.

~~EBITDA and Adjusted EBITDA reconciliation~~

~~The following EBITDA presentation for~~ the three months ended December 31, ~~2017~~ ~~and~~ ~~2016~~ ~~below~~2020 related to a capital project impairment within Specialty Additives.


	Specialty Additives
	Three months ended December 31
(In millions)	2021		2020
Operating income	$	17	$	2
Depreciation and amortization		21		21
EBITDA		38		23
Capital project impairment		—		9
Adjusted EBITDA	$	38	$	32

Intermediates

Intermediates is ~~provided as a means to enhance~~comprised of the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Composites. There were no unusual or key items that affected comparability for EBITDA during the current and prior year quarters.

Three months ended
December 31
(In millions) 2017
2016
Operating income $ 18
$ 15
Depreciation and amortization 5
6
EBITDA $ 23
$ 21

~~Intermediates and Solvents~~

~~Intermediates and Solvents is a leading producer~~production of 1,4 butanediol (BDO) and related derivatives, including ~~tetrahydrofuran and~~ n-methylpyrrolidone. These products are used as chemical intermediates in the production of engineering polymers and polyurethanes, and as specialty process solvents in a wide array of applications including electronics, pharmaceuticals, water filtration membranes and more. Butanediol is also ~~supplied~~provided to ~~Ashland’s~~Life Sciences, Personal Care, and Specialty ~~Ingredients business~~Additives for use as a raw material.

December ~~2017~~2021 quarter compared to December ~~2016~~2020 quarter

~~Intermediates and Solvents’~~

Intermediates’ sales increased ~~$17~~$20 million to ~~$74~~$53 million in the current ~~quarter. Higher~~period primarily due to higher product ~~pricing~~pricing.

Operating income increased ~~sales by $9~~$14 million ~~while higher volumes and favorable foreign currency exchange each increased sales by $4 million.~~

~~Gross profit increased~~to $16 million ~~during~~for the current quarter. Price/mix increased operating income by $17 million and was partially offset by higher production costs which decreased operating income by $3 million. Current quarter ~~compared~~EBITDA increased $14 million to ~~the prior year quarter. Lower facility turn around costs~~$19 million.EBITDA margin increased 20.6 percentage points in the current quarter ~~resulted in an $8 million increase in gross profit as a result of a significant~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

~~planned plant shutdown that occurred in the prior year quarter. The net impact of pricing and costs increased gross profit by $7 million primarily due~~ to improvements in product pricing. Higher volumes contributed to a $1 million increase in gross profit. In total, gross profit margin increased 22.2 percentage points as compared to the prior year quarter to 21.3%35.8%.

~~Selling, general and administrative expenses increased by $1 million compared to the prior year quarter.~~

Operating income totaled $8 million in the current quarter as compared to a loss of $7 million in the prior year quarter. EBITDA and EBITDA margin in the current quarter increased to $16 million and 21.6%, respectively.

EBITDA and Adjusted EBITDA reconciliation

The following EBITDA presentation (as defined and described in the section above) for the three months ended December 31, ~~2017~~2021 and ~~2016~~2020 is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Intermediates. Intermediates ~~and Solvents. There were~~had no ~~unusual or~~ key items ~~that affected comparability~~ for ~~EBITDA during~~ the ~~current and prior year quarters.~~

Three months ended
December 31
(In millions) 2017
2016
Operating income (loss) $ 8
$ (7 )
Depreciation and amortization 8
7
EBITDA $ 16
$ —

three months ended December 31, 2021 or 2020.


	Intermediates
	Three months ended December 31
(In millions)	2021		2020
Operating income	$	16	$	2
Depreciation and amortization		3		3
EBITDA	$	19	$	5

Unallocated and other

The following table summarizes the key components of the Unallocated and other ~~segment's~~segment’s operating ~~loss~~income (loss) for the three ~~months~~ ended December 31, ~~2017~~2021 and ~~2016.~~

Three months ended
December 31
(In millions) 2017
2016
Restructuring activities (includes separation, severance, integration
and stranded divestiture costs) $ 14
$ 24
Environmental expense for divested businesses 13
4
Legal reserve —
5
Other expense 2
—
Total expense $ 29
$ 33

2020.


	Unallocated and Other
	Three months ended December 31
(In millions)	2021			2020
Restructuring activities	$	(5	)	$	(16	)
Environmental expenses		(3	)		(4	)
Other expenses (primarily governance and legacy expenses)		(19	)		(11	)
Total expense	$	(27	)	$	(31	)

December ~~2017~~2021 quarter compared to December ~~2016~~2020 quarter

Unallocated and other recorded expense of ~~$29~~$27 million and ~~$33~~$31 million for the three months ended December 31, ~~2017~~2021 and ~~2016,~~2020, respectively. The ~~unallocated items for the~~ current and prior year quarters included ~~charges~~expense of $5 million and $16 million, respectively, for restructuring activities mainly comprised of ~~$14 million~~severance, lease abandonment and ~~$24 million, respectively. Restructuring activities included $6 million and $22 million of~~other restructuring costs related to ~~the separation of Valvoline and stranded divestiture costs of $3 million and $2 million~~company-wide cost reduction programs during the current and prior year quarters, ~~respectively.~~ respectively, as well as stranded costs of $4 million for each period associated with the Performance Adhesives divestiture.

The current quarter ~~also included $4 million of accelerated depreciation related to the planned closure of an office building~~ and ~~$1 million of integration charges related to the acquisition of Pharmachem.~~

~~The remaining unallocated items during the current quarter primarily included $13 million for environmental-related expenses while the remaining items during the~~ prior year quarter ~~primarily~~ included $5$3 million ~~of expense for a legal reserve~~ and $4 million for environmental ~~reserve adjustments.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

~~FINANCIAL POSITION~~

~~Liquidity~~

~~Ashland had $601~~expenses, respectively.

Other expenses increase of $8 million is primarily a result of a gain of $4 million in the prior year quarter associated with excess corporate property sales as well as decreased transition services income associated with the Composites sale from INEOS in the current quarter.

FINANCIAL POSITION

Liquidity

Ashland believes that cash flow from operations, availability under existing credit facilities and arrangements, current cash and investment balances and the ability to obtain other financing, if necessary, will provide adequate cash ~~equivalents~~funds for Ashland’s foreseeable working capital needs, capital expenditures at existing facilities, dividend payments and debt service obligations. Ashland’s cash requirements are subject to change as business conditions warrant and opportunities arise. The timing and size of ~~December 31, 2017,~~any new business ventures or acquisitions that the Company may complete may also impact its cash requirements. For information regarding the impact of which $581 million was held by foreign subsidiaries and had no significant limitations that would prohibit remitting the funds to satisfy corporate obligations. In certain circumstances, if such amounts were repatriated to the United States, additional taxes might need to be accrued and paid dependingCOVID-19 on the ~~source of~~Company, including on its liquidity and capital resources, please see item 1A, in Ashland’s most recent Form 10-K filed with the earnings remitted. Ashland currently has no plans to repatriate any amounts for which additional taxes would need to be accrued. However, due to the recent Tax Act, Ashland will be reassessing this position in future quarters.

SEC.

Cash flows

Ashland’s cash flows from operating, investing and financing activities, as reflected in the Statements of Condensed Consolidated Cash Flows, are summarized as follows for the three months ended December 31, ~~2017~~2021 and ~~2016.~~

Three months ended
December 31
(In millions) 2017
2016
Cash provided (used) by:
Operating activities from continuing operations $ (24 ) $ (60 )
Investing activities from continuing operations (24 ) (31 )
Financing activities from continuing operations 99
(434 )
Discontinued operations (16 ) 50
Effect of currency exchange rate changes on cash and cash equivalents —
(9 )
Net increase (decrease) in cash and cash equivalents $ 35
$ (484 )

~~Operating activities~~

~~The following discloses the~~2020.


	Three months ended
	December 31
(In millions)	2021			2020
Cash provided (used) by:
Operating activities from continuing operations	$	14		$	81
Investing activities from continuing operations		(7	)		(4	)
Financing activities from continuing operations		(11	)		(207	)
Discontinued operations		(9	)		8
Effect of currency exchange rate changes on cash and cash equivalents		(3	)		3
Net decrease in cash and cash equivalents	$	(16	)	$	(119	)

Cash and cash ~~flows associated with Ashland’s operating activities for the three months ended December 31, 2017 and 2016.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Three months ended
December 31
(In millions) 2017
2016
Cash flows provided (used) by operating activities from continuing operations
Net income (loss) $ (4 ) $ 10
Income from discontinued operations (net of tax) (3 ) (75 )
Adjustments to reconcile income from continuing operations to

cash flows from operating activities

Depreciation and amortization 79
68
Original issue discount and debt issuance cost amortization 2
94
Deferred income taxes 8
2
Stock based compensation expense 7
5
Gain on early retirement of debt —
(3 )
Realized gain and investment income on available-for-sale securities (3 ) (3 )
Net loss on divestitures 1
1
Pension contributions (2 ) (1 )
Gain on post-employment plan remeasurement —
(2 )
Change in operating assets and liabilities (a)
(109 ) (156 )
Total cash flows used by operating activities from continuing operations $ (24 ) $ (60 )

~~(a)Excludes changes resulting from operations acquired or sold.~~

Cash flows used from operating activities from continuing operations, a major source of Ashland’s liquidity, amounted to cash inflows of $24 million and $60 million in the current and prior year quarters, respectively.

~~Operating Activities - Operating Assets and Liabilities~~

The cash results during each quarter are primarily driven by net income (loss), excluding discontinued operation results, adjusted for certain non-cash items including depreciation and amortization (including original issue discount and debt issuance cost amortization), as well as changes in working capital, which are fluctuations within accounts receivable, inventory, trade payables and accrued expenses. Ashland continues to emphasize working capital management as a high priority and focus.

~~Changes in net working capital accounted for outflows of $96 million and $71~~equivalents decreased $16 million for the three months ended December 31, ~~2017 and 2016, respectively, and were driven by the following:~~

Accounts receivable - There were cash inflows of $15 million and $9 million during the current and prior year quarters, respectively, which were primarily due to collections in excess of sales during the first quarter of each fiscal year.

~~Inventory - The current quarter had a cash outflow of $39 million~~2021 compared to a ~~cash inflow of $15~~$119 million ~~during the prior year quarter, which were primarily due to sales volumes and inventory management strategies.~~

Trade and other payables - There were cash outflows of $72 million and $95 million during the current and prior year quarters, respectively, which were primarily driven by seasonal fluctuations in trade payables and incentive compensation payouts from the prior year paid during the first quarter of each fiscal year. Additionally, the prior year quarter included the payment of certain Valvoline separation costs that were incurred in the preceding fiscal year.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

The remaining outflows within changes in operating assets and liabilities of $13 million and $85 million in the current and prior year quarters, respectively, relate primarily to adjustments to certain accruals and long term assets and liabilities as well as income taxes received and paid.

~~Operating Activities - Summary~~

Operating cash flows for the current quarter included a loss from continuing operations of $7 million, noncash adjustments of $79 million for depreciation and amortization and $2 million for debt issuance cost amortization.

Operating cash flows for the prior year quarter included a loss from continuing operations of $65 million and noncash adjustments of $68 million for depreciation and amortization and $94 million for original issue discount and debt issuance cost amortization, including $92 million of accelerated accretion related to the tender offer of the 2029 notes.

~~Investing activities~~

~~The following discloses the cash flows associated with Ashland’s investing activities~~decrease for the three months ended December 31, ~~2017 and 2016.~~

Three months ended
December 31
(In millions) 2017
2016
Cash flows provided (used) by investing activities from continuing operations
Additions to property, plant and equipment $ (24 ) $ (33 )
Proceeds from disposal of property, plant and equipment 1
—
Proceeds from sale of operations 1
—
Net purchase of funds restricted for specific transactions (5 ) (2 )
Reimbursements from restricted investments 5
—
Proceeds from sales of available-for-sale securities 5
—
Purchases of available-for-sale securities (5 ) —
Proceeds from the settlement of derivative instruments —
4
Payments for the settlement of derivative instruments (2 ) —
Total cash flows used by investing activities from continuing operations $ (24 ) $ (31 )

~~Cash used by investing activities was $24~~2020.

The $16 million and $31 million for the current and prior year quarters, respectively. The significant cash investing activities for the current quarter primarily related to cash outflows of $24 million for property additions compared to $33 million in the prior year quarter.

~~Financing activities~~

~~The following discloses the cash flows associated with Ashland’s financing activities~~decrease for the three months ended December 31, ~~2017~~2021 was primarily driven by payment of cash dividends of $17 million and ~~2016.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Three months ended
December 31
(In millions) 2017
2016
Cash flows provided (used) by financing activities from continuing operations
Repayment of long-term debt $ (2 ) $ (239 )
Premium on long-term debt repayment —
(5 )
Proceeds (repayment) from short-term debt 120
(154 )
Debt issuance costs —
(4 )
Cash dividends paid (14 ) (24 )
Stock based compensation employee withholding taxes paid in cash (5 ) (8 )
Total cash flows provided (used) by financing activities from continuing operations $ 99
$ (434 )

~~Cash flows generated~~additions to property, plant and equipment of $15 million offset by ~~financing activities was $99 million for the current quarter as compared to cash used of $434 million for the prior year quarter.~~

~~Significant cash financing activities for the current quarter included~~net proceeds from short-term debt ~~net~~of $11 million. Operating cash flows from continuing operations were inflows of ~~$120~~$14 million, ~~related to debt outstanding on the 2017 Revolving Credit Facility and the accounts receivable securitization. The current quarter included~~while discontinued operations cash ~~dividends paid of $0.225 per share, for a total of $14 million.~~

~~Significant cash financing activities for the prior year quarter included cash~~flows were outflows of ~~$239~~$9 million.

The $119 million related to the repayments of a portion of the 2029 notes, 2022 notes and 2018 notes. Additionally, the prior year quarter included short-term debt net repayments of $154 million, which was primarily related to the $150 million full repayment of a term loan held by a foreign subsidiary. The prior year quarter included cash dividends paid of $0.39 per share, for a total of $24 million.

~~The following discloses the cash flows associated with Ashland’s discontinued operations~~decrease for the three months ended December 31, ~~2017 and 2016.~~

Three months ended
December 31
(In millions) 2017
2016
Cash used by discontinued operations
Operating cash flows $ (16 ) $ 70
Investing cash flows —
(10 )
Financing cash flows —
(10 )
Total cash provided (used) by discontinued operations $ (16 ) $ 50

~~Cash flows for discontinued operations in the current quarter~~2020 was primarily ~~related to previously divested businesses, including net payments~~driven by repayment of ~~asbestos and environmental liabilities.~~

~~Cash flows for discontinued operations in the prior year quarter primarily relate to net cash inflows~~short-term debt of ~~$62~~$187 million ~~related to the activity~~offset by $81 million of ~~Valvoline Inc. The remaining~~operating cash flows ~~in the prior year quarter related to other previously divested businesses, including net payments of asbestos and environmental liabilities.~~

from continuing operations.

Free cash flow and other liquidity resources

The following represents Ashland’s calculation of free cash flow and ongoing free cash flows for the disclosed ~~quarters.~~periods. Free cash flow does not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments.


(In millions)	2021				2020
Total cash flows provided by operating activities from continuing operations	$	14		$	81
less:
Additions to property, plant and equipment		(15	)		(30	)
Free cash flows		(1	)		51
Cash (inflows) outflows from U.S. Accounts Receivable Sales Program (a)		10			—
Restructuring-related payments (b)		4			14
Environmental and related litigation payments (c)		13			9
Ongoing free cash flow	$	26		$	74

Adjusted EBITDA (d)		106			101

Ongoing free cash flow conversion (e)		25	%		73	%

(a)

Represents activity associated with the U.S. Accounts Receivable Sales Program impacting each period presented.

(b)

Restructuring payments incurred during each period.

(c)

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Represents cash outflows associated with environmental and related litigation payments which will be reimbursed by the environmental trust.

(d)

See adjusted EBITDA reconciliation.

Three months ended
December 31
(In millions) 2017
2016
Cash flows provided by operating activities from continuing operations $ (24 ) $ (60 )
Adjustments:

Additions to property, plant and equipment (24 ) (33 )
Free cash flows (a)
$ (48 ) $ (93 )

(e)

Ongoing free cash flow divided by Adjusted EBITDA.


~~(a)~~	~~Includes $23 million and $29 million of restructuring payments for the three months ended December 31, 2017 and 2016, respectively.~~

~~At December 31, 2017, working~~

Working capital (current assets minus current liabilities, excluding long-term debt due within one year) amounted to ~~$967~~$839 million ~~compared to $941~~and $792 million atas of December 31, 2021 and September 30, ~~2017.~~2021, respectively. The $47 million increase in working capital was the primary reason of the $48 million decline in ongoing free cash flows between periods primarily as a result of increased inventories to navigate supply-chain issues as well as cost inflation and reduced accrued expenses as a result of annual incentive program payouts. Liquid assets (cash, cash equivalents and accounts receivable) amounted to ~~119%~~62% and ~~122%~~65% of current liabilities at(excluding current liabilities held for sale) as of December 31, ~~2017~~2021 and September 30, ~~2017,~~2021, respectively.

The following summary reflects Ashland’s cash, ~~and~~ unused borrowing capacity and liquidity as of December 31, ~~2017~~2021 and September 30, ~~2017~~.

2021.


	December 31		September 30
(In millions)	2021		2021
Cash and investment securities
Cash and cash equivalents	$	194	$	210
Restricted investments (a)		426		421

Unused borrowing capacity and liquidity
Revolving credit facility		341		356
2018 accounts receivable securitization (foreign)		—		—
Accounts receivable sales program (U.S.)		—		12

(a)

Includes $335 million and $333 million related to the Asbestos trust and $91 million and $88 million related to the Environmental trust as of December 31, 2021 and September 30, 2021, respectively.

December 31
September 30
(In millions) 2017
2017
Cash and cash equivalents $ 601
$ 566

Unused borrowing capacity

2017 Revolving Credit Facility $ 467
$ 579
Accounts receivable securitization facility 31
35

The borrowing capacity remaining under the ~~2017 Revolving Credit Facility~~$600 million revolving credit facility was ~~$467~~$341 million due to an outstanding balance of ~~$285~~$240 million, as well as a reduction of ~~$48~~$19 million for letters of credit outstanding at December 31, ~~2017.~~2021. In total, Ashland’s available liquidity position, which includes cash, the revolving credit facility and ~~the~~foreign accounts receivable securitization facility, was ~~$1,099~~$535 million at December 31, ~~2017,~~2021, compared to ~~$1,180~~$566 million at September 30, ~~2017.~~

2021. Ashland had no available liquidity under the U.S. Accounts Receivable Sales Program as of December 31, 2021. Ashland also maintained $426 million of restricted investments to pay for future asbestos claims and environmental remediation and related litigation.

Capital resources

Debt

The following summary reflects Ashland’s debt as of December 31, ~~2017~~2021 and September 30, ~~2017~~.

2021.


	December 31		September 30
(In millions)	2021		2021
Short-term debt (includes current portion of long-term debt)	$	389	$	374
Long-term debt (less current portion and debt issuance cost discounts) (a)		1,580		1,596
Total debt	$	1,969	$	1,970

(a)

December 31
September 30
(In millions) 2017
2017
Short-term debt (includes current portion of long-term debt) $ 355
$ 235
Long-term debt (including current portion and debt issuance cost discounts) (a)
2,584
2,584
Total debt $ 2,939
$ 2,819

~~(a)~~Includes ~~$24 million and $25~~$17 million of debt issuance cost discounts as of December 31, ~~2017~~2021 and September 30, ~~2017,~~ 2021, respectively.

~~The current portion of long-term debt was $6 million at December 31, 2017.~~

Debt as a percent of capital employed was ~~46%~~42% at December 31, ~~2017~~2021 and ~~45%~~ at September 30, ~~2017.~~2021, respectively. At December 31, ~~2017,~~2021, Ashland’s total debt had an outstanding principal balance of ~~$3,015~~$2,025 million, discounts of ~~$52~~$39 million, and debt issuance costs of ~~$24~~$17 million. The scheduled aggregate maturities of long-term debt by year (including the current portion and excluding debt issuance costs) are as follows: ~~$5 million remaining in 2018, $11~~$9 million in ~~2019, $269~~2022, $22 million in ~~2020, $56~~2023, $44 million in ~~2021 and $1,279~~2024, $175 million in ~~2022.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

~~Financing Activities~~

~~2017 Credit Agreement~~

~~On May 17, 2017,~~2025 and zero in conjunction with the closing of the Pharmachem acquisition, Ashland entered into a secured credit agreement (the 2017 Credit Agreement) with a group of lenders. The 2017 Credit Agreement provided for (i) a $250 million three-year term loan A facility (the Three-Year TLA Facility), (ii) a $250 million five-year term loan A facility (the Five-Year TLA Facility and together with the Three-Year TLA Facility, the TLA Facilities) and (iii) a $680 million five-year revolving credit facility (including a $125 million letter of credit sublimit) (the 2017 Revolving Credit Facility). Proceeds of borrowings under the TLA Facilities were used solely to finance the acquisition of Pharmachem, while the proceeds of the 2017 Revolving Credit Facility were used to finance, in part, the acquisition of Pharmachem, to refinance the 2015 Senior Credit Agreement and for general corporate purposes. On May 19, 2017, Ashland entered into Amendment No. 1 to the 2017 Credit Agreement, which increased the aggregate commitments under the 2017 Revolving Credit Facility from $680 million to $800 million.

At Ashland’s option, loans issued under the 2017 Credit Agreement bear interest at either LIBOR or an alternate base rate, in each case plus the applicable interest rate margin. Loans bear interest at LIBOR plus 1.75% per annum, in the case of LIBOR borrowings, or at the alternate base rate plus 0.75%, in the alternative, through and including the date of delivery of a quarterly compliance certificate and thereafter the interest rate will fluctuate between LIBOR plus 1.375% per annum and LIBOR plus 2.500% per annum (or between the alternate base rate plus 0.375% per annum and the alternate base rate plus 1.500% per annum), based upon Ashland’s secured facilities ratings or the consolidated net leverage ratio (as defined in the 2017 Credit Agreement) (whichever yields a lower applicable interest rate margin) at such time. In addition, Ashland was required to pay fees of 0.25% per annum on the daily unused amount of the 2017 Revolving Credit Facility through and including the date of delivery of a compliance certificate, and thereafter the fee rate will fluctuate between 0.175% and 0.40% per annum, based upon Ashland’s secured facilities rating or the consolidated net leverage ratio (whichever yields a lower applicable rate). The TLA Facilities may be prepaid at any time without premium. The Three-Year TLA Facility will not amortize and will be due on May 17, 2020. The Five-Year TLA Facility will not amortize in each of the first, second and third years and will amortize at a rate of 20% per annum in each of the fourth and fifth years (payable in equal quarterly installments), with the outstanding balance of the Five-Year TLA Facility to be paid on May 17, 2022.

~~6.50% junior subordinated notes due 2029~~

In December 2016, Hercules LLC (Hercules) (formerly Hercules Incorporated), an indirect wholly-owned subsidiary of Ashland, repurchased, through a cash tender offer (the Tender Offer), $182 million of the aggregate principal par value amount of its 6.50% junior subordinated notes due 2029 (2029 notes) for an aggregate purchase price of $177 million. As a result of the Tender Offer, the carrying value of the 2029 notes was reduced by $90 million and Ashland recognized a $92 million charge related to accelerated accretion of the recorded debt discount (compared to the total par value) and $5 million of a net gain related to the repayment of the debt. The charge and net gain are included in the net interest and other financing expense caption of the Statements of Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2016.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

~~Open market repurchases of 4.750% notes due 2022 and 3.875% notes due 2018~~

2026.

Ashland credit ratings

Ashland’s corporate credit ~~rating with~~ratings remained unchanged at BB+ by Standard & Poor’s ~~is BB, while~~and Ba1 by Moody’s Investor ~~Services is Ba2.~~Services. As of December 31, 2021, both Moody’s Investor Services and Standard & Poor's ~~outlooks both~~outlook remained at stable. Subsequent changes to these ratings or outlook may have an effect on Ashland’s borrowing rate or ability to access capital markets in the future.

Ashland debt covenant restrictions

Ashland's ~~most recent~~current credit agreement (the ~~2017~~2020 Credit Agreement) contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional subsidiary indebtedness, restrictions on subsidiary distributions, investments, mergers, sale of assets and restricted payments and other customary limitations. As of December 31, ~~2017,~~2021, Ashland is in compliance with all debt agreement covenant restrictions under the ~~2017~~2020 Credit Agreement.

The maximum consolidated net leverage ratio permitted under the ~~2017~~2020 Credit Agreement is ~~4.5.~~4.0. The ~~2017~~2020 Credit Agreement defines the consolidated net leverage ratio as the ratio of consolidated indebtedness minus unrestricted cash and cash equivalents to consolidated EBITDA (Covenant Adjusted EBITDA) for any measurement period. In general, the ~~2017~~2020 Credit Agreement defines Covenant Adjusted EBITDA as net income plus consolidated interest charges, taxes, depreciation and amortization expense, fees and expenses related to capital market transactions and proposed or actual acquisitions and divestitures, restructuring and integration charges, noncash stock and equity compensation expense, and any other nonrecurring expenses or losses that do not represent a cash item in such period or any future period; less any noncash gains or other items increasing net income. The computation of Covenant Adjusted EBITDA differs from the calculation of EBITDA and Adjusted EBITDA, which have been reconciled ~~on page 41.~~above in the “consolidated review” section. In general, consolidated indebtedness includes debt plus all purchase money indebtedness, banker’s acceptances and bank guaranties, deferred purchase price of property or services, attributable indebtedness and guarantees.

At December 31, 2021, Ashland’s calculation of the consolidated net leverage ratio was 3.1.

The minimum required consolidated interest coverage ratio under the ~~2017~~2020 Credit Agreement is 3.0. The ~~2017~~2020 Credit Agreement defines the consolidated interest coverage ratio as the ratio of Covenant Adjusted EBITDA to consolidated interest charges for any measurement period.

At December 31, ~~2017, Ashland’s calculation of the consolidated net leverage ratio was 3.9, which is below the maximum consolidated ratio permitted under the 2017 Credit Agreement of 4.5. At December 31, 2017,~~2021, Ashland’s calculation of the consolidated interest coverage ratio was ~~4.6, which exceeds the minimum required consolidated ratio of 3.0.~~

~~The average~~9.4.

Any change in Covenant Adjusted EBITDA of $100 million would have an approximate ~~0.7x~~0.5x effect on the consolidated net leverage ratio and a ~~0.8x~~1.6x effect on the consolidated interest coverage ratio. The ~~average~~ change in consolidated indebtedness of $100 million would affect the consolidated leverage ratio by approximately 0.2x.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Additional capital resources

~~Cash projection~~

Ashland projects that cash flow from operations and other available financial resources such as cash on hand and revolving credit should be sufficient to meet investing and financing requirements to enable Ashland to comply with the covenants and other terms of its financing obligations. These projections are based on various assumptions that include, but are not limited to: operational results, capital expenditures, working capital needs and tax payments and receipts.

Total equity

Total equity ~~decreased $7~~increased by $11 million since September 30, ~~2017~~2021 to ~~$3,399~~$2,763 million at December 31, ~~2017.~~2021. The ~~decrease~~increase of $7$11 million was due to ~~cash~~net income of $48 million, offset by dividends of ~~$14~~$17 million, ~~and a net~~deferred translation loss of $4$17 million, ~~partially offset by an $8 million net increase in available-for-sale securities~~ and $3 million ~~related to~~of deferred ~~translation gains.~~

~~Stock repurchase program~~

~~In April 2015, Ashland's Board of Directors approved a $1 billion share repurchase authorization that was set to expire~~loss on December 31, 2017 (the 2015 stock repurchase program). This authorization allows for Ashland’s common shares to be repurchased in open market transactions, privately negotiated transactions or pursuant to one or more accelerated stock repurchase programs or Rule 10b5-1 plans.

commodity hedges.

Stockholder dividends

~~In May 2017, subsequent to the final distribution of Valvoline Inc.'s common stock, the Board of Directors of~~

Ashland ~~announced~~paid a ~~quarterly cash~~ dividend of ~~22.5~~30 cents per share ~~to eligible shareholders at record which was paid~~ for ~~quarterly dividends~~the first quarter of fiscal 2022 and 27.5 cents per share in the first quarter of fiscal 2018 and the third and fourth quarters of fiscal 2017. This represented a reduction from the previous quarterly dividend of 39 cents per share which was paid for quarterly dividends in the first and second quarters of fiscal 2017.

2021.

Capitalexpenditures

Capital expenditures were ~~$24~~$15 million for the three months ended December 31, ~~2017 and averaged approximately $217~~2021 compared to $30 million ~~during~~for the ~~last~~ three ~~fiscal years.~~

~~Contractual obligations and commitments~~

~~As a result of the Tax Act that was enacted during~~months ended December 2017, Ashland has currently estimated and identified that the one-time transition tax related to the new law is estimated to be approximately $160 million payable over eight years, with the first payment of approximately $13 million due during the first quarter of fiscal year 2019. Ashland will continue to reassess this estimate in future periods.

In addition, during January 2018, Ashland repatriated approximately $300 million in cash that was used to repay existing debt. There were no other significant changes to the contractual obligations table as presented at September 30, 2017.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

31, 2020.

CRITICAL ACCOUNTING POLICIES

The preparation of Ashland’s Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses, and the disclosures of contingent assets and liabilities. Significant items that are subject to such estimates and assumptions include, but are not limited to, long-lived assets (including goodwill and other intangible assets), income taxes, other liabilities and receivables associated with asbestos litigation and environmental remediation. These accounting policies are discussed in detail in “Management’s Discussion and Analysis – Critical Accounting Policies” in Ashland’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017~~.2021. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions. Management has reviewed the estimates affecting these items with the Audit Committee of Ashland’s Board of Directors. No material changes have been made to the valuation techniques during the three months ended December 31, ~~2017~~.

2021.

OUTLOOK

~~Fiscal Year 2018~~

Ashland ~~updated~~issued its ~~financial~~ outlook for fiscal ~~2018~~2022 in November 2021. This outlook has not changed and remains the same as shown in the table below.

Ashland's most recent forecast projects full-year Adjusted EBITDA below the midpoint of the range.



	~~Prior~~		FY ~~2018~~2022 Outlook	~~Updated FY 2018 Outlook~~
~~Adjusted EBITDA~~
~~Specialty Ingredients~~	~~$560 - $590 million~~	~~No change~~
~~Composites~~	~~$85 - $95 million~~	~~No change~~
~~Intermediates & Solvents~~	~~$40 - $50 million~~	~~No change~~
~~Unallocated and other~~	~~($35 - $45 million)~~	~~No change~~

Key Operating Metrics
~~Free cash flow~~ Sales	~~>$220 million~~	~~No change~~	$2.25 - $2.35 billion
Adjusted ~~diluted EPS~~EBITDA			$~~3.20~~550 - ~~$3.40~~	~~$2.90 - $3.10~~$570 million

~~Corporate Items~~
~~Depreciation & amortization~~	~~~$290 million~~	~~No change~~
~~Interest expense~~	~~$125 - $135 million~~	~~No change~~
~~Effective tax rate~~	~~8 - 13%~~	~~16 - 20%~~
~~Capital expenditures~~	~~$195 - $205 million~~	~~No change~~
~~Diluted share count~~	~~~64 million~~	~~No change~~

~~Second Quarter of 2018~~

~~For~~

Ashland is unable to reconcile forward-looking adjusted EBITDA to forward-looking net income, the ~~second quarter of fiscal 2018, Ashland expects Adjusted diluted EPS~~most closely comparable GAAP financial measure, because the information needed to ~~be in the range of $0.80-$0.90 per diluted share. This estimate assumes an effective tax rate of 18% based on the new U.S. tax legislation.~~

provide such reconciliation would require unreasonable efforts.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Ashland’s market risk exposure at December 31, ~~2017~~2021 is generally 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, ~~2017~~.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

2021.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures - 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 concluded that the disclosure controls and procedures were effective as of December 31, ~~2017.~~

2021.

Changes in Internal Control over Financial Reporting - During the three months ended December 31, ~~2017,~~2021, there were no significant changes in ~~Ashland’s~~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~~Ashland's internal control over financial reporting.

~~During the June 2017 quarter,~~

Ashland completed its purchase of ~~Pharmachem.~~Schülke in the quarter ended June 30, 2021. Although management believes appropriate internal controls and procedures have been maintained, ~~Pharmachem’s~~Schülke's controls and procedures for the recording, processing, and summarizing of financial information have not been fully evaluated by ~~Ashland’s~~Ashland's management as of December 31, ~~2017.~~2021. Ashland anticipates to have this assessment complete during Fiscal 2022. 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 related to ~~Pharmachem's businesses.~~

Schülke's business.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The following is a description of Ashland’s material legal proceedings.

Ashland’s threshold for disclosing material environmental legal proceedings involving a governmental authority where potential monetary sanctions are involved is $1 million.

Asbestos-Related Litigation

Ashland is subject to liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims result primarily from indemnification obligations undertaken in 1990 in connection with the sale of Riley Stoker Corporation (Riley), a former subsidiary. Although Riley was neither a producer nor a manufacturer of asbestos, its industrial boilers contained some asbestos-containing components provided by other companies.

Hercules LLC (formerly Hercules Incorporated), an indirect wholly-owned subsidiary of Ashland, is also subject to liabilities from asbestos-related personal injury lawsuits involving claims which typically arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products which were sold by one of Hercules’ former subsidiaries to a limited industrial market.

Ashland and Hercules are also defendants in lawsuits alleging exposure to asbestos at facilities formerly or presently owned or operated by Ashland or Hercules.

For additional detailed information regarding liabilities arising from asbestos-related litigation, see Note KL of Notes to Condensed Consolidated Financial Statements in this quarterly report on Form 10-Q.

Environmental Proceedings

(a) CERCLA and Similar State Law Sites - Under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state laws, Ashland and its subsidiaries may be subject to joint and several liability for cleanup costs in connection with alleged releases of hazardous substances at sites where it has been identified as a “potentially responsible party” (PRP). As of December 31, ~~2017,~~2021, Ashland and its subsidiaries have been identified as a PRP by U.S. federal and state authorities, or by private parties seeking contribution, for the cost of environmental investigation and/or cleanup at ~~82 waste treatment or disposal~~80 sites. These sites are currently subject to ongoing investigation and remedial activities, overseen by the United States Environmental Protection Agency (USEPA) or a state agency, in which Ashland or its subsidiaries are typically participating as a member of a PRP group. Generally, the types of relief sought include remediation of contaminated soil and/or groundwater, reimbursement for past costs of site cleanup and administrative oversight and/or long-term monitoring of environmental conditions at the sites. The ultimate costs are not predictable with assurance.

(b) ~~Hattiesburg, Mississippi Resource Conservation and Recovery Act Matter -~~ In November 2008, the Mississippi Department of Environmental Quality (MDEQ) issued a Notice of Violation to Hercules’ now-closed Hattiesburg, Mississippi manufacturing facility alleging that a process water impoundment basin at the facility had been operated as a hazardous waste storage and treatment facility without a permit in violation of the Resource Conservation and Recovery Act. In May 2011, the USEPA issued an inspection report from a September 2010 inspection with allegations similar to those of the MDEQ and promulgated an information request. Ashland has been working with the MDEQ and USEPA to settle this matter in the context of the shutdown and ongoing remediation of the Hattiesburg facility. The USEPA proposed a settlement penalty in excess of $100,000. While it is reasonable to believe that this matter will involve a penalty from the MDEQ and/or the USEPA exceeding $100,000, the potential penalty with respect to this enforcement matter should not be material to Ashland.

~~(c)~~ Lower Passaic River, New Jersey Matters - Ashland, through two formerly owned facilities, and ISP, through a now-closed facility, have been identified as PRPs, along with approximately 70 other companies (the Cooperating Parties Group or the CPG), in a May 2007 Administrative Order of Consent (AOC) with the USEPA. The parties are required to perform a remedial investigation and feasibility study (RI/FS) of the entire 17 miles of the Passaic River. In June 2007, the USEPA separately commenced a Focused Feasibility Study (FFS) as an interim measure. In accordance with the 2007 AOC, in June 2012 the CPG voluntarily entered into another AOC for an interim removal action focused solely at mile 10.9 of the Passaic River. The allocations for the 2007 AOC and the 2012 removal action are based on interim allocations, are immaterial and have been accrued. In April 2014, the USEPA released the FFS. The CPG

submitted the Draft RI/FS Report on April 30, 2015. The USEPA has released the FFS Record of Decision for the lower 8 miles and recently reached an agreement with ~~Occidental~~another chemical company to conduct and pay for the remedial design. ~~The~~This chemical company has sued Ashland, ISP and numerous other defendants to recover past and future costs pursuant to the CERCLA. Ashland, ISP and numerous other defendants have filed a Motion to Dismiss all of the claims. Ashland and ISP are participating in an USEPA ~~has advised that it will be working to secure similar agreements with other PRPs.~~allocation process. The release of the FFS Record of Decision, ~~did not have a material adverse impact on Ashland’s business and financial operations; however, there are a number of contingencies in~~ the ~~future that could possibly have a material impact including adverse rulings or verdicts, allocation~~current allocations proceedings and ~~related orders.~~

the lawsuit are not expected to be material to Ashland.

For additional information regarding environmental matters and reserves, see Note KL of Notes to Condensed Consolidated Financial Statements in this quarterly report on Form 10-Q.

Other Pending Legal Proceedings

In addition to the matters described above, there are other various claims, lawsuits and administrative proceedings pending or threatened against Ashland and its current and former subsidiaries. Such actions are with respect to commercial matters, product liability, toxic tort liability and other environmental matters which seek remedies or damages, some of which are for substantial amounts. While Ashland cannot predict with certainty the outcome of such actions, it believes that adequate reserves have been recorded and losses already recognized with respect to such actions were immaterial as of December 31, ~~2017.~~2021. There is a reasonable possibility that a loss exceeding amounts already recognized may be incurred related to these actions; however, Ashland believes that such potential losses were immaterial as of December 31, ~~2017.~~

2021.

ITEM 1A. RISK FACTORS

During the period covered by this report, 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, ~~2017.~~

2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Share~~

There was no share repurchase activity during the three months ended December 31, ~~2017 was as follows:~~

2021.


Issuer Purchases of Equity Securities
Q1 Fiscal Periods	Total Number of Shares Purchased		Average Price Paid Per Share, including commission		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Dollar Value of Shares that May Be Purchased Under the Plans or Programs (in millions) (a)
October 1, 2021 to October 31, 2021		—	$	—		—	$	350
November 1, 2021 to November 30, 2021		—		—		—		350
December 1, 2021 to December 31, 2021		—		—		—		350
Total		—				—	$	350

(a)

Issuer Purchases of Equity Securities
Q1 Fiscal Periods Total Number of Shares Purchased Average Price Paid Per Share, including commission Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)(a)
October 1, 2017 to October 31, 2017 —
$ —
—
$ 500
November 1, 2017 to November 30, 2017:

Employee Tax Withholdings 16,465
(b) 66.56
—
500
December 1, 2017 to December 31, 2017 —
—
—
500
Total.......................................................... 16,465
—
$ 500

~~(a)In April 2015, the Company's~~During March 2018, Ashland’s Board of Directors ~~authorized~~approved a ~~program to repurchase up to~~new $1 billion ofstock repurchase program, which replaced the ~~Company's~~previous stock ~~with the authorization expiring December 31, 2017. In September 2017, the Company's Board of Directors renewed the program for the remaining $500 million. The Company's share~~repurchase program. Ashland’s stock repurchase program does not obligate it to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 of the Exchange Act. As of December 31, ~~2017, $500~~2021, $350 million remains available for repurchase under this authorization.

~~(b)Shares withheld from employees to cover their withholding requirements for personal income taxes related to the vesting of restricted stock.~~

ITEM 6. EXHIBITS



(a) Exhibits

10.1* 3.1	~~Amendment No. 1 to the~~Amended and Restated By-Laws of Ashland Global Holdings Inc. ~~Non-Qualified Defined Contribution Plan~~

~~10.2~~	~~Ashland Global Holdings Inc. 2018 Omnibus Incentive Compensation Plan~~ (filed as Exhibit ~~10.1~~3.1 to ~~Ashland’s~~Ashland's Form 8-K filed on January ~~26, 2018~~27, 2022 (SEC File No. 333-211719), and incorporated by referenced herein by ~~reference).~~reference.

~~10.3~~ 10.1*	~~Form of Stock-Settled Restricted Stock Unit Award Agreement under~~Amendment to Supplemental Confirmation dated November 22, 2021 to the Master Confirmation - Uncollared Accelerated Share Repurchase, dated September 2, 2021, between Ashland Global Holdings Inc. ~~2018 Omnibus Incentive Compensation Plan (filed as Exhibit 10.2 to Ashland’s Form 8-K filed on January 26, 2018 (SEC File No. 333-211719),~~ and ~~incorporated herein by reference).~~JPMorgan Chase Bank, National Association.

~~10.4~~ 31.1*	Form of Restricted Stock Award Agreement under the Ashland Global Holdings Inc. 2018 Omnibus Incentive Compensation Plan (filed as Exhibit 10.3 to Ashland’s Form 8-K filed on January 26, 2018 (SEC File No. 333-211719), and incorporated herein by reference).

~~10.5~~	Form of Stock Appreciation Rights Award Agreement under the Ashland Global Holdings Inc. 2018 Omnibus Incentive Compensation Plan (filed as Exhibit 10.4 to Ashland’s Form 8-K filed on January 26, 2018 (SEC File No. 333-211719), and incorporated herein by reference).

~~10.6~~	Form of Performance Unit Award Agreement under the Ashland Global Holdings Inc. 2018 Omnibus Incentive Compensation Plan (filed as Exhibit 10.5 to Ashland’s Form 8-K filed on January 26, 2018 (SEC File No. 333-211719), and incorporated herein by reference).

~~10.7~~	Form of Cash-Settled Restricted Stock Unit Award Agreement under the Ashland Global Holdings Inc. 2018 Omnibus Incentive Compensation Plan (filed as Exhibit 10.6 to Ashland’s Form 8-K filed on January 26, 2018 (SEC File No. 333-211719), and incorporated herein by reference).

12*	~~Computation of Ratio of Earnings to Fixed Charges.~~

31.1*	Certificate of ~~William A. Wulfsohn,~~Guillermo Novo, Chief Executive Officer of Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*	Certificate of J. Kevin Willis, Chief Financial Officer of Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32*	Certificate of ~~William A. Wulfsohn,~~Guillermo Novo, Chief Executive Officer of Ashland, and J. Kevin Willis, Chief Financial Officer of Ashland pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**	Inline XBRL Instance Document.

101.SCH**	Inline XBRL Taxonomy Extension Schema Document.

101.CAL**	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF**	Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB**	Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE**	Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

*Filed herewith.

**Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Statements of Consolidated Comprehensive Income for the three months ended ~~December 31, 2017~~ ~~and~~ ~~December 31, 2016; (ii) Condensed Consolidated Balance Sheets at~~ ~~December 31, 2017~~ ~~and~~ ~~September 30, 2017; (iii) Statements of Consolidated Equity at~~ ~~December 31, 2017; (iv) Statements of Condensed Consolidated Cash Flows for the three months ended~~ ~~December 31, 2017~~ ~~and~~ ~~December 31, 2016; and (v) Notes to Condensed Consolidated Financial Statements.~~

^SM~~Service mark, Ashland or its subsidiaries, registered in various countries.~~

~~™ Trademark, Ashland or its subsidiaries, registered in various countries.~~


	*	Filed herewith.
	**	Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Statements of Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2021 and December 31, 2020; (ii) Condensed Consolidated Balance Sheets at December 31, 2021 and September 30, 2021; (iii) Statements of Condensed Consolidated Cash Flows for the three months ended December 31, 2021 and December 31, 2020; and (iv) Notes to Condensed Consolidated Financial Statements.
	SM	Service mark, Ashland or its subsidiaries, registered in various countries.
	™	Trademark, Ashland or its subsidiaries, registered in various countries.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		Ashland Global Holdings Inc.
		(Registrant)
~~January 30, 2018~~ February 3, 2022		/s/ J. Kevin Willis
		J. Kevin Willis
		Senior Vice President and Chief Financial Officer (on behalf of the Registrant and as principal financial officer)


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $.01 per share	ASH	New York Stock Exchange



Large Accelerated Filerþ	☑			Accelerated Filero		☐
Non-Accelerated Filero	☐			Smaller Reporting Companyo		☐
		~~(Do not check if a smaller reporting company.)~~	Emerging Growth Companyo		☐



	þ	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



(In millions - unaudited)	Common stock		Paid-in capital		Retained earnings			Accumulated other comprehensive income (loss)			(a)	Total
BALANCE AT SEPTEMBER 30, 2017	$	1	$	931	$	2,696		$	(222	)		$	3,406
Total comprehensive income (loss)
Net loss					(4		)					(4		)
Other comprehensive income								11				11
Regular dividends, $0.225 per common share					(14		)					(14		)
Common shares issued under stock incentive and other plans (b)			—									—
BALANCE AT DECEMBER 31, 2017	$	1	$	931	$	2,678		$	(211	)		$	3,399


~~(a)~~	~~Excludes changes resulting from operations acquired or sold.~~



	May 12
(In millions)	2017
ASSETS
Current assets
Cash	179
Accounts receivable, net	385
Inventories	153
Other current assets	24
Total current assets	741
Noncurrent assets
Net property, plant and equipment	357
Goodwill	329
Equity and other unconsolidated investments	31
Deferred income taxes	391
Other noncurrent assets	93
Total noncurrent assets	1,201
Total assets	$	1,942
LIABILITIES AND EQUITY
Current liabilities
Short-term debt	75
Current portion of long-term debt	16
Trade and other payables	353
Other current liabilities	34
Total current liabilities	478
Noncurrent liabilities
Long-term debt	662
Employee benefit obligations	826
Other long-term liabilities	163
Total noncurrent liabilities	1,651
Total liabilities	$	2,129
Net deficit	$	(187	)



	At
	May 17, 2017
Preliminary purchase price allocation (in millions)	As Adjusted
Assets:
Accounts receivable	52
Inventory	74
Other current assets	4
Intangible assets	330
Goodwill	287
Property, plant and equipment	97
Other noncurrent assets	20
Liabilities:
Accounts payable	(32		)
Deferred tax - net	(138		)
Other noncurrent liabilities	(14		)
Total purchase price	$	680



			Weighted-average
			amortization period
Intangible asset type (in millions)	Value		(years)
Trademarks and trade names	$	26	15
Intellectual property	68		22
Customer and supplier relationships	236		20
Total	$	330



	Three months ended
(In millions)	December 31, 2016
Income from discontinued operations
attributable to Valvoline
Sales	$	489
Cost of sales	(293		)
Selling, general and administrative expense	(82		)
Research and development expense	(3		)
Equity and other income	9
Operating income of discontinued operations	120
Net interest and other financing expense	(10		)
Pretax income of discontinued operations	110
Income tax expense	(35		)
Income from discontinued operations	$	75


	Carrying		Total fair		Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(In millions)	value		value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	194	$	194	$	194	$	0	$	0
Restricted investments (a) (b)		426		426		426		0		0
Investment of captive insurance company (c)		9		9		9		0		0
Foreign currency derivatives (d)		2		2		0		2		0
Commodity derivatives (d)		2		2		0		2		0
Total assets at fair value	$	633	$	633	$	629	$	4	$	0

Liabilities
Foreign currency derivatives (e)	$	1	$	1	$	0	$	1	$	0
Commodity derivatives (e)		1		1		0		1		0
Total liabilities at fair value	$	2	$	2	$	0	$	2	$	0



(In millions)	Carrying value		Total fair value		Quoted prices in active markets for identical assets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3
Assets
Cash and cash equivalents	$	601	$	601	$	601	$	—	$	—
Restricted investments (a)	345		345		345		—		—
Deferred compensation investments (b)	160		160		—		160		—
Investments of captive insurance company (b)	3		3		3		—		—
Foreign currency derivatives	4		4		—		4		—
Total assets at fair value	$	1,113	$	1,113	$	949	$	164	$	—

Liabilities
Foreign currency derivatives	$	13	$	13	$	—	$	13	$	—



~~(Mark One)~~


~~(a)~~	Included in restricted investments ~~is $30 million classified in the other current assets caption on the Condensed Consolidated Balance Sheets.~~


~~(a)~~	~~The accumulated adjustments include investment income, realized gains, disbursements and settlements recorded in previous periods.~~


~~(b)~~	~~Investment income for the demand deposit includes interest income as well as dividend income transferred from the equity and corporate bond mutual funds.~~



	December 31, 2017
	Gross					Net
	carrying		Accumulated			carrying
(In millions)	amount		amortization			amount
Definite-lived intangible assets
Trademarks and trade names	$	67	$	(22	)	$	45
Intellectual property	758		(340		)	418
Customer and supplier relationships	780		(246		)	534
Total definite-lived intangible assets	1,605		(608		)	997

Indefinite-lived intangible assets
Trademarks and trade names	301		—			301
Total intangible assets	$	1,906	$	(608	)	$	1,298



	September 30, 2017
	Gross					Net
	carrying		Accumulated			carrying
(In millions)	amount		amortization			amount
Definite-lived intangible assets
Trademarks and trade names	$	67	$	(22	)	$	45
Intellectual property	757		(326		)	431
Customer and supplier relationships	777		(235		)	542
Total definite-lived intangible assets	1,601		(583		)	1,018

Indefinite-lived intangible assets
Trademarks and trade names	301		—			301
Total intangible assets	$	1,902	$	(583	)	$	1,319



(In millions)
Balance at October 1, 2017	$	194
Increases related to positions taken on items from prior years	2
Increases related to positions taken in the current year	3
Balance at December 31, 2017	$	199



							Other postretirement
	Pension benefits						benefits
(In millions)	2017			2016			2017		2016
Three months ended December 31
Service cost (a)	$	2		$	2		$	1	$	—
Interest cost (b)	3			2			—		1
Expected return on plan assets (b)	(3		)	(3		)	—		—
Actuarial gain (b)	—			—			—		(2		)
Total net periodic benefit costs (income)	$	2		$	1		$	1	$	(1	)



	Three months ended
	December 31
(In millions except per share data)	2017			2016
Numerator
Numerator for basic and diluted EPS –
Loss from continuing operations	$	(7	)	$	(65	)
Denominator
Denominator for basic EPS – Weighted-average
common shares outstanding	62			62
Share-based awards convertible to common shares (a)	—			—
Denominator for diluted EPS – Adjusted weighted-
average shares and assumed conversions	62			62

EPS from continuing operations attributable to Ashland
Basic	$	(0.12	)	$	(1.05	)
Diluted	(0.12		)	(1.05		)



	2017									2016
				Tax									Tax
	Before			(expense)			Net of			Before			(expense)		Net of
(In millions)	tax			benefit			tax			tax			benefit		tax
Three months ended December 31
Other comprehensive income (loss)
Unrealized translation gain (loss)	$	3		$	—		$	3		$	(150	)	$	4	$	(146	)
Pension and postretirement obligation adjustment:
Amortization of unrecognized prior service
credits included in net income (a)	—			—			—			(3		)	2		(1		)
Net change in available-for-sale securities:
Unrealized gains during period	11			(2		)	9			—			—		—
Reclassification adjustment for realized gains
included in net income	(1		)	—			(1		)	—			—		—
Total other comprehensive income (loss)	$	13		$	(2	)	$	11		$	(153	)	$	6	$	(147	)


	Three months ended
	December 31
Sales by Reportable Segment	2021			2020
Life Sciences		33	%		36	%
Personal Care		29	%		27	%
Specialty Additives		30	%		32	%
Intermediates		8	%		5	%
		100	%		100	%



	Three months ended December 31, 2017
Sales by Geography	Specialty Ingredients		Composites		Intermediates and Solvents
North America	41	%	45	%	21	%
Europe	30	%	34	%	59	%
Asia Pacific	19	%	14	%	17	%
Latin America & other	10	%	7	%	3	%
	100	%	100	%	100	%



	Three months ended December 31, 2016
Sales by Geography	Specialty Ingredients		Composites		Intermediates and Solvents
North America	39	%	48	%	23	%
Europe	29	%	28	%	57	%
Asia Pacific	22	%	16	%	17	%
Latin America & other	10	%	8	%	3	%
	100	%	100	%	100	%



Issuer Purchases of Equity Securities
Q1 Fiscal Periods	Total Number of Shares Purchased		Average Price Paid Per Share, including commission		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)(a)
October 1, 2017 to October 31, 2017	—		$	—	—	$	500
November 1, 2017 to November 30, 2017:
Employee Tax Withholdings	16,465	(b)	66.56		—	500
December 1, 2017 to December 31, 2017	—		—		—	500
Total..........................................................	16,465				—	$	500