Document_And_Entity_Informatio
Document And Entity Information (USD $) | 3 Months Ended |
Dec. 31, 2013 | |
Document and Entity Information [Abstract] | ' |
Entity Registrant Name | 'ASHLAND INC. |
Entity Central Index Key | '0001305014 |
Current Fiscal Year End Date | '--09-30 |
Entity Well-known Seasoned Issuer | 'Yes |
Entity Voluntary Filers | 'No |
Entity Current Reporting Status | 'Yes |
Entity Filer Category | 'Large Accelerated Filer |
Entity Public Float | $7,550,247,758 |
Entity Common Stock, Shares Outstanding | 77,805,521 |
Document Fiscal Year Focus | '2014 |
Document Fiscal Period Focus | 'Q1 |
Document Type | '10-Q |
Amendment Flag | 'false |
Document Period End Date | 31-Dec-13 |
STATEMENTS_OF_CONSOLIDATED_COM
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (unaudited) (USD $) | 3 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Statement of Comprehensive Income [Abstract] | ' | ' |
Sales | $1,868 | $1,869 |
Cost of sales | 1,333 | 1,332 |
Gross profit | 535 | 537 |
Selling, general and administrative expense | 343 | 343 |
Research and development expense | 36 | 32 |
Equity and other income | 23 | 14 |
Operating income | 179 | 176 |
Net interest and other financing expense | 42 | 44 |
Net gain on divestitures | 5 | 0 |
Income from continuing operations before income taxes | 142 | 132 |
Income tax expense - Note H | 31 | 30 |
Income from continuing operations | 111 | 102 |
Loss from discontinued operations (net of income taxes) - Note B | 1 | 1 |
Net income | 110 | 101 |
BASIC EARNINGS PER SHARE - Note K | ' | ' |
Income from continuing operations (in usd per share) | $1.44 | $1.29 |
Loss from discontinued operations (in usd per share) | $0.02 | $0.01 |
Net income (in usd per share) | $1.42 | $1.28 |
DILUTED EARNINGS PER SHARE - Note K | ' | ' |
Income from continuing operations (in usd per share) | $1.42 | $1.27 |
Loss from discontinued operations (in usd per share) | $0.02 | $0.01 |
Net income (in usd per share) | $1.40 | $1.26 |
DIVIDENDS PAID PER COMMON SHARE (in usd per share) | $0.34 | $0.23 |
COMPREHENSIVE INCOME (LOSS) | ' | ' |
Net income | 110 | 101 |
Other comprehensive (loss) income, net of tax - Note N | ' | ' |
Unrealized translation gain | 39 | 45 |
Pension and postretirement obligation adjustment | -4 | -4 |
Net change in interest rate hedges | 0 | 3 |
Other comprehensive income | 35 | 44 |
Comprehensive income | $145 | $145 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (USD $) | Dec. 31, 2013 | Sep. 30, 2013 | ||
In Millions, unless otherwise specified | ||||
CURRENT ASSETS | ' | ' | ||
Cash and cash equivalents | $295 | $346 | ||
Accounts receivable | 1,363 | [1] | 1,471 | [1] |
Inventories - Note E | 934 | 899 | ||
Deferred income taxes | 108 | 107 | ||
Other assets | 76 | 50 | ||
Total current assets | 2,776 | 2,873 | ||
PROPERTY, PLANT AND EQUIPMENT | ' | ' | ||
Cost | 4,826 | 4,765 | ||
Accumulated depreciation | 1,999 | 1,923 | ||
Net property, plant and equipment | 2,827 | 2,842 | ||
Goodwill - Note F | 3,377 | 3,366 | ||
Intangibles - Note F | 1,769 | 1,791 | ||
Asbestos insurance receivable (noncurrent portion) - Note J | 434 | 437 | ||
Equity and other unconsolidated investments | 220 | 218 | ||
Other assets | 580 | 561 | ||
Total noncurrent assets | 9,207 | 9,215 | ||
Total assets | 11,983 | 12,088 | ||
CURRENT LIABILITIES | ' | ' | ||
Short-term debt - Note G | 314 | 308 | ||
Current portion of long-term debt - Note G | 0 | 12 | ||
Trade and other payables | 750 | 885 | ||
Accrued expenses and other liabilities | 481 | 522 | ||
Total current liabilities | 1,545 | 1,727 | ||
NONCURRENT LIABILITIES | ' | ' | ||
Long-term debt (noncurrent portion) - Note G | 2,948 | 2,947 | ||
Employee benefit obligations - Note I | 1,161 | 1,174 | ||
Asbestos litigation reserve (noncurrent portion) - Note J | 722 | 735 | ||
Deferred income taxes | 394 | 401 | ||
Other liabilities | 548 | 551 | ||
Total noncurrent liabilities | 5,773 | 5,808 | ||
Stockholders' equity | 4,665 | 4,553 | ||
Total liabilities and stockholders' equity | $11,983 | $12,088 | ||
[1] | Accounts receivable includes an allowance for doubtful accounts of $17 million at December 31, 2013 and September 30, 2013. |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) (USD $) | Dec. 31, 2013 | Sep. 30, 2013 |
In Millions, unless otherwise specified | ||
CURRENT ASSETS | ' | ' |
Allowance for doubtful accounts | $17 | $17 |
STATEMENT_OF_CONSOLIDATED_STOC
STATEMENT OF CONSOLIDATED STOCKHOLDERS' EQUITY (unaudited) (USD $) | Total | Common stock [Member] | Paid-in capital [Member] | Retained earnings [Member] | Accumulated other comprehensive income [Member] | ||
In Millions | |||||||
Beginning Balance at Sep. 30, 2013 | $4,553 | $1 | $506 | $3,758 | $288 | [1] | |
Total comprehensive income | 145 | ' | ' | 110 | 35 | [1] | |
Regular dividends, $.34 per common share | -26 | ' | ' | -26 | ' | ||
Common shares issued under stock incentive and other plans | [2] | -7 | ' | -7 | ' | ' | |
Ending Balance at Dec. 31, 2013 | $4,665 | $1 | $499 | $3,842 | $323 | [1] | |
[1] | At December 31, 2013 and September 30, 2013, the after-tax accumulated other comprehensive income of $323 million and $288 million, respectively, was comprised of unrecognized prior service credits as a result of certain employee benefit plan amendments of $76 million and $80 million, respectively, and net unrealized translation gains of $247 million and $208 million, respectively. | ||||||
[2] | Common shares issued were 312,881 for the three months ended December 31, 2013. |
STATEMENT_OF_CONSOLIDATED_STOC1
STATEMENT OF CONSOLIDATED STOCKHOLDERS' EQUITY (unaudited) (Parenthetical) (USD $) | 3 Months Ended | |
In Millions, except Share data, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 |
Statement of Stockholders' Equity [Abstract] | ' | ' |
After-tax accumulated other comprehensive income | $323 | $288 |
Dividends on common stock | $0.34 | ' |
Unrecognized prior service credits | 76 | 80 |
Net unrealized translation gains | $247 | $208 |
Common shares issued (in shares) | 312,881 | ' |
STATEMENTS_OF_CONDENSED_CONSOL
STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS (unaudited) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | ||
CASH FLOWS (USED) PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS | ' | ' | ||
Net income | $110 | $101 | ||
Loss from discontinued operations (net of income taxes) | 1 | 1 | ||
Adjustments to reconcile income from continuing operations to cash flows from operating activities | ' | ' | ||
Depreciation and amortization | 105 | 107 | ||
Debt issuance cost amortization | 3 | 5 | ||
Deferred income taxes | -3 | -3 | ||
Equity income from affiliates | -6 | -5 | ||
Distributions from equity affiliates | 6 | 5 | ||
Gain from sale of property and equipment | 0 | -2 | ||
Stock based compensation expense | 8 | 9 | ||
Net gain on divestitures | -5 | 0 | ||
Change in operating assets and liabilities | -182 | [1] | -137 | [1] |
TOTAL CASH FLOWS (USED) PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS | 37 | 81 | ||
CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES FROM CONTINUING OPERATIONS | ' | ' | ||
Additions to property, plant and equipment | -52 | -51 | ||
Proceeds from disposal of property, plant and equipment | 1 | 2 | ||
Proceeds from sale of operations or equity investments | 5 | 0 | ||
TOTAL CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES FROM CONTINUING OPERATIONS | -46 | -49 | ||
CASH FLOWS (USED) PROVIDED BY FINANCING ACTIVITIES FROM CONTINUING OPERATIONS | ' | ' | ||
Repayment of long-term debt | -12 | -43 | ||
Proceeds from short-term debt | 6 | 5 | ||
Cash dividends paid | -26 | -18 | ||
Proceeds from exercise of stock options | 0 | 1 | ||
Excess tax benefits related to share-based payments | 3 | 2 | ||
TOTAL CASH FLOWS (USED) PROVIDED BY FINANCING ACTIVITIES FROM CONTINUING OPERATIONS | -29 | -53 | ||
CASH USED BY CONTINUING OPERATIONS | -38 | -21 | ||
Cash used by discontinued operations | ' | ' | ||
Operating cash flows | -12 | -16 | ||
Effect of currency exchange rate changes on cash and cash equivalents | -1 | 2 | ||
DECREASE IN CASH AND CASH EQUIVALENTS | -51 | -35 | ||
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | 346 | 523 | ||
CASH AND CASH EQUIVALENTS - END OF PERIOD | $295 | $488 | ||
[1] | Excludes changes resulting from operations acquired or sold. |
SIGNIFICANT_ACCOUNTING_POLICIE
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
SIGNIFICANT ACCOUNTING POLICIES | ' |
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 regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. These statements omit certain information and footnote disclosures required for complete annual financial statements and, therefore, should be read in conjunction with Ashland’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013. Results of operations for the period ended December 31, 2013 are not necessarily indicative of results to be expected for the year ending September 30, 2014. Certain prior period data has been reclassified in the Condensed Consolidated Financial Statements and accompanying footnotes to conform to current period presentation. | |
Ashland is composed of four reportable segments: Ashland Specialty Ingredients (Specialty Ingredients), Ashland Water Technologies (Water Technologies), Ashland Performance Materials (Performance Materials) and Ashland Consumer Markets (Consumer Markets). | |
Use of estimates, risks and uncertainties | |
The preparation of Ashland’s Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures of contingent assets and liabilities as well as qualifying subsequent events. Significant items that are subject to such estimates and assumptions include, but are not limited to, long-lived assets (including goodwill and intangible assets), employee benefit obligations, income taxes and liabilities and receivables associated with asbestos litigation and environmental remediation. 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. | |
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 | |
A description of new accounting standards issued and adopted during the current year is required in interim financial reporting. As of December 31, 2013, no new standards applicable to Ashland have been issued since Ashland’s most recent Form 10-K filing. A detailed listing of all new accounting standards relevant to Ashland is included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2013. The following standards became effective as of October 1, 2013. | |
In February 2013, the FASB issued accounting guidance related to the reporting of amounts reclassified out of accumulated other comprehensive income (ASC 220 Comprehensive Income). This guidance sets forth new disclosure requirements for items reclassified from accumulated other comprehensive income by requiring disclosures for both the changes in accumulated other comprehensive income by component and where the significant items reclassified from accumulated other comprehensive income are classified in the Statements of Consolidated Comprehensive Income. This guidance became effective for Ashland on October 1, 2013 and impacted Ashland’s disclosure of the reclassifications from accumulated other comprehensive income. | |
In December 2011, the FASB issued accounting guidance related to the offsetting of certain assets and liabilities on the balance sheet (ASC 210 Balance Sheet). The new guidance requires disclosures to provide information to help reconcile differences in the offsetting requirements under U.S. GAAP and IFRS. This guidance became effective for Ashland on October 1, 2013. The adoption of this guidance did not have a material impact on the Condensed Consolidated Financial Statements. |
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS | 3 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | |||||||
DISCONTINUED OPERATIONS | ' | |||||||
DISCONTINUED OPERATIONS | ||||||||
In previous periods, Ashland has divested certain businesses that have qualified as discontinued operations. The operating results from these divested businesses during the reporting periods 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 for all periods presented and are discussed further within this note. | ||||||||
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 of Ashland, and from businesses previously divested by Hercules, a wholly-owned subsidiary of Ashland that was acquired in 2009. Adjustments to the recorded litigation reserves and related insurance receivables are recorded within discontinued operations. See Note J for more information related to the adjustments on asbestos liabilities and receivables. | ||||||||
On March 31, 2011, Ashland completed the sale to Nexeo Solutions, LLC of substantially all of the assets and certain liabilities of its global distribution business which previously comprised the Ashland Distribution (Distribution) segment. Ashland determined that this sale qualifies as a discontinued operation, in accordance with U.S. GAAP, since Ashland does not have significant continuing involvement in the distribution business. Therefore, operating results and cash flows related to Distribution have been reflected as discontinued operations in the Statements of Consolidated Comprehensive Income and Statements of Condensed Consolidated Cash Flows. | ||||||||
Components of amounts reflected in the Statements of Consolidated Comprehensive Income related to discontinued operations are presented in the following table for the three months ended December 31, 2013 and 2012. | ||||||||
Three months ended | ||||||||
31-Dec | ||||||||
(In millions) | 2013 | 2012 | ||||||
Loss from discontinued operations (net of tax) | ||||||||
Distribution | $ | — | $ | 1 | ||||
Asbestos-related litigation | 1 | — | ||||||
Total loss from discontinued operations (net of tax) | $ | 1 | $ | 1 | ||||
RESTRUCTURING_ACTIVITIES
RESTRUCTURING ACTIVITIES | 3 Months Ended | |||||||||||
Dec. 31, 2013 | ||||||||||||
Restructuring and Related Activities [Abstract] | ' | |||||||||||
RESTRUCTURING ACTIVITIES | ' | |||||||||||
RESTRUCTURING ACTIVITIES | ||||||||||||
Ashland periodically implements corporate restructuring programs related to acquisitions, divestitures or other cost reduction programs in order to enhance profitability through streamlined operations and an improved overall cost structure for each business. | ||||||||||||
As of December 31, 2013 and 2012, the remaining restructuring reserves of $21 million and $33 million, respectively, related to expected future severance payments for previously announced programs from 2011 and expected future lease payments for a facility that was abandoned in 2012. | ||||||||||||
The following table summarizes the related activity in these reserves for the three months ended December 31, 2013 and 2012. The severance reserves are included in accrued expenses and other liabilities while facility costs reserves are primarily within other noncurrent liabilities in the Condensed Consolidated Balance Sheets. | ||||||||||||
Facility | ||||||||||||
(In millions) | Severance | costs | Total | |||||||||
Balance as of September 30, 2013 | $ | 17 | $ | 8 | $ | 25 | ||||||
Reserve adjustments | 1 | — | 1 | |||||||||
Utilization (cash paid or otherwise settled) | (4 | ) | (1 | ) | (5 | ) | ||||||
Balance at December 31, 2013 | $ | 14 | $ | 7 | $ | 21 | ||||||
Balance as of September 30, 2012 | $ | 29 | $ | 15 | $ | 44 | ||||||
Utilization (cash paid or otherwise settled) | (8 | ) | (3 | ) | (11 | ) | ||||||
Balance at December 31, 2012 | $ | 21 | $ | 12 | $ | 33 | ||||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||||||||
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. | ||||||||||||||||||||
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 (market approach), 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 fair value models, such as a discounted cash flow model or other standard pricing models that Ashland deems reasonable. | ||||||||||||||||||||
The following table summarizes financial asset instruments subject to recurring fair value measurements as of December 31, 2013. | ||||||||||||||||||||
(In millions) | Carrying | Total | Quoted prices | Significant | Significant | |||||||||||||||
value | fair | in active | other | unobservable | ||||||||||||||||
value | markets for | observable | inputs | |||||||||||||||||
identical | inputs | Level 3 | ||||||||||||||||||
assets | Level 2 | |||||||||||||||||||
Level 1 | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 295 | $ | 295 | $ | 295 | $ | — | $ | — | ||||||||||
Deferred compensation investments (a) | 186 | 186 | 50 | 136 | — | |||||||||||||||
Investments of captive insurance company (a) | 3 | 3 | 3 | — | — | |||||||||||||||
Foreign currency derivatives | 2 | 2 | — | 2 | — | |||||||||||||||
Total assets at fair value | $ | 486 | $ | 486 | $ | 348 | $ | 138 | $ | — | ||||||||||
Liabilities | ||||||||||||||||||||
Foreign currency derivatives | $ | 1 | $ | 1 | $ | — | $ | 1 | $ | — | ||||||||||
(a) | Included in other noncurrent assets in the Condensed Consolidated Balance Sheets. | |||||||||||||||||||
The following table summarizes financial asset instruments subject to recurring fair value measurements as of September 30, 2013. | ||||||||||||||||||||
(In millions) | Carrying | Total | Quoted prices | Significant | Significant | |||||||||||||||
value | fair | in active | other | unobservable | ||||||||||||||||
value | markets for | observable | inputs | |||||||||||||||||
identical | inputs | Level 3 | ||||||||||||||||||
assets | Level 2 | |||||||||||||||||||
Level 1 | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 346 | $ | 346 | $ | 346 | $ | — | $ | — | ||||||||||
Deferred compensation investments (a) | 181 | 181 | 50 | 131 | — | |||||||||||||||
Investments of captive insurance company (a) | 3 | 3 | 3 | — | — | |||||||||||||||
Foreign currency derivatives | 1 | 1 | — | 1 | — | |||||||||||||||
Total assets at fair value | $ | 531 | $ | 531 | $ | 399 | $ | 132 | $ | — | ||||||||||
(a) | Included in other noncurrent assets in the Condensed Consolidated Balance Sheets. | |||||||||||||||||||
Derivative and hedging activities | ||||||||||||||||||||
Currency hedges | ||||||||||||||||||||
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 of 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 marked-to-market 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 gains and losses recognized during the three months ended December 31, 2013 and 2012 within the Statements of Consolidated Comprehensive Income. | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
December 31 | ||||||||||||||||||||
(In millions) | 2013 | 2012 | ||||||||||||||||||
Foreign currency derivative gains | $ | 3 | $ | 1 | ||||||||||||||||
The following table summarizes the fair values of the outstanding foreign currency derivatives as of December 31, 2013 and September 30, 2013 included in other current assets and accrued expenses and other liabilities of the Condensed Consolidated Balance Sheets. | ||||||||||||||||||||
December 31 | September 30 | |||||||||||||||||||
(In millions) | 2013 | 2013 | ||||||||||||||||||
Foreign currency derivative assets | $ | 2 | $ | 1 | ||||||||||||||||
Notional contract values | 122 | 312 | ||||||||||||||||||
Foreign currency derivative liabilities (a) | $ | 1 | $ | — | ||||||||||||||||
Notional contract values | 130 | 246 | ||||||||||||||||||
(a) | Fair values of liabilities of $0 denote values less than $1 million. | |||||||||||||||||||
Interest rate hedges | ||||||||||||||||||||
During 2011, Ashland entered into interest rate swap agreements in order to manage the variable interest rate risk associated with term loans A and B that were borrowed in conjunction with the August 2011 acquisition of International Specialty Products Inc. (ISP). These instruments qualified for hedge accounting treatment and were designated as cash flow hedges whereby Ashland recorded these hedges at fair value, with the effective portion of the gain or loss reported as a component of accumulated other comprehensive income (AOCI) and subsequently recognized in the Statements of Consolidated Comprehensive Income when the hedged item affected net income. There was no hedge ineffectiveness with these instruments during the three months ended December 31, 2012. Ashland terminated the interest rate swap agreements in conjunction with the repayment of term loans A and B during the March 2013 quarter. | ||||||||||||||||||||
The fair value of Ashland’s interest rate swap assets and liabilities were calculated using standard pricing models. These models utilized inputs derived from observable market data such as interest rate spot rates and forward rates, and were deemed to be Level 2 measurements within the fair value hierarchy. Counterparties to these interest rate swap agreements were highly rated financial institutions which Ashland believed carry only a minimal risk of nonperformance. | ||||||||||||||||||||
During the three months ended December 31, 2012, Ashland reclassified a loss of $5 million from AOCI to the Statements of Consolidated Comprehensive Income. The loss reclassified to the Statements of Consolidated Comprehensive Income was recorded in the net interest and other financing expense caption. No change in the unrealized loss on interest rate hedges was recognized in AOCI occurred during the three months ended December 31, 2012. | ||||||||||||||||||||
Other financial instruments | ||||||||||||||||||||
At December 31, 2013 and September 30, 2013, Ashland’s long-term debt had a carrying value of $2,948 million and $2,959 million, respectively, compared to a fair value of $3,060 million and $3,003 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. |
INVENTORIES
INVENTORIES | 3 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
INVENTORIES | ' | |||||||
INVENTORIES | ||||||||
Inventories are carried at the lower of cost or market. Certain chemicals, plastics and lubricants are valued at cost using the last-in, first-out (LIFO) method. The remaining inventories are stated at cost using the weighted-average cost method or the first-in, first-out method. | ||||||||
During the three months ended December 31, 2012, the Specialty Ingredients business incurred a $31 million loss on straight guar, $28 million of which related to a lower of cost or market charge that was recognized within the cost of sales caption on the Statements of Consolidated Comprehensive Income. This charge was due to the identifiable market price of certain guar inventories, which fell below the cost of the product. | ||||||||
The following table summarizes Ashland’s inventories as of the reported Condensed Consolidated Balance Sheet dates. | ||||||||
December 31 | September 30 | |||||||
(In millions) | 2013 | 2013 | ||||||
Finished products | $ | 640 | $ | 610 | ||||
Raw materials, supplies and work in process | 311 | 310 | ||||||
LIFO reserve | (17 | ) | (21 | ) | ||||
$ | 934 | $ | 899 | |||||
GOODWILL_AND_OTHER_INTANGIBLES
GOODWILL AND OTHER INTANGIBLES | 3 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||||||
GOODWILL AND OTHER INTANGIBLES | ' | |||||||||||||||||||
GOODWILL AND OTHER INTANGIBLES | ||||||||||||||||||||
Goodwill | ||||||||||||||||||||
In accordance with U.S. GAAP, Ashland reviews goodwill and indefinite-lived intangible assets for impairment annually and when events and circumstances indicate an impairment may have occurred. The annual assessment is performed as of July 1 and consists of Ashland determining each reporting unit’s current fair value compared to its current carrying value. For its July 1, 2013 assessment, Ashland determined that its reporting units for allocation of goodwill included the Specialty Ingredients, Water Technologies and Consumer Markets segments, and the Composites and Adhesives and Elastomers reporting units within the Performance Materials segment, and determined at that time that no impairment existed. | ||||||||||||||||||||
The following is a progression of goodwill by segment for the three months ended December 31, 2013. | ||||||||||||||||||||
Specialty | Water | Performance | Consumer | |||||||||||||||||
(In millions) | Ingredients | Technologies | Materials | (a) | Markets | Total | ||||||||||||||
Balance at September 30, 2013 | $ | 2,231 | $ | 657 | $ | 311 | $ | 167 | $ | 3,366 | ||||||||||
Other (b) | (6 | ) | — | — | — | (6 | ) | |||||||||||||
Currency translation adjustment | 17 | (2 | ) | 2 | — | 17 | ||||||||||||||
Balance at December 31, 2013 | $ | 2,242 | $ | 655 | $ | 313 | $ | 167 | $ | 3,377 | ||||||||||
(a) | Goodwill consisted of $10 million for the Elastomers reporting unit as of December 31, 2013 and September 30, 2013, as well as $303 million and $301 million for the Composites and Adhesives reporting unit as of December 31, 2013 and September 30, 2013, respectively. | |||||||||||||||||||
(b) | This entry represents an adjustment of certain items identified from the ISP and Hercules acquisitions that were reclassified on the Consolidated Balance Sheet. | |||||||||||||||||||
Other intangible assets | ||||||||||||||||||||
Other intangible assets principally consist of trademarks and trade names, intellectual property, customer relationships, in-process research and development (IPR&D) and sale contracts and those classified as finite are amortized on a straight-line basis over their estimated useful lives. The cost of definite-lived trademarks and trade names is amortized principally over 4 to 25 years, intellectual property over 5 to 20 years, customer relationships over 3 to 24 years and other intangibles over 2 to 50 years. | ||||||||||||||||||||
IPR&D and certain intangible assets within trademarks and trade names have been classified as indefinite-lived and had a balance of $495 million as of December 31, 2013 and September 30, 2013. In accordance with U.S. GAAP, Ashland annually reviews indefinite-lived intangible assets for possible impairment or whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. | ||||||||||||||||||||
Intangible assets were comprised of the following as of December 31, 2013 and September 30, 2013. | ||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Gross | Net | |||||||||||||||||||
carrying | Accumulated | carrying | ||||||||||||||||||
(In millions) | amount | amortization | amount | |||||||||||||||||
Trademarks and trade names | $ | 535 | $ | (47 | ) | $ | 488 | |||||||||||||
Intellectual property | 840 | (198 | ) | 642 | ||||||||||||||||
Customer relationships | 855 | (248 | ) | 607 | ||||||||||||||||
IPR&D | 32 | — | 32 | |||||||||||||||||
Total intangible assets | $ | 2,262 | $ | (493 | ) | $ | 1,769 | |||||||||||||
September 30, 2013 | ||||||||||||||||||||
Gross | Net | |||||||||||||||||||
carrying | Accumulated | carrying | ||||||||||||||||||
(In millions) | amount | amortization | amount | |||||||||||||||||
Trademarks and trade names | $ | 535 | $ | (46 | ) | $ | 489 | |||||||||||||
Intellectual property | 840 | (185 | ) | 655 | ||||||||||||||||
Customer relationships | 848 | (233 | ) | 615 | ||||||||||||||||
IPR&D | 32 | — | 32 | |||||||||||||||||
Total intangible assets | $ | 2,255 | $ | (464 | ) | $ | 1,791 | |||||||||||||
Amortization expense recognized on intangible assets was $29 million for the three months ended December 31, 2013 and 2012 and is primarily included in the selling, general and administrative expense caption of the Statements of Consolidated Comprehensive Income. Estimated amortization expense for future periods is $115 million in 2014 (includes three months actual and nine months estimated), $113 million in 2015, $112 million in 2016, $112 million in 2017 and $111 million in 2018. |
DEBT
DEBT | 3 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
DEBT | ' | |||||||
DEBT | ||||||||
The following table summarizes Ashland’s current and long-term debt as of the reported Condensed Consolidated Balance Sheet dates. | ||||||||
December 31 | September 30 | |||||||
(In millions) | 2013 | 2013 | ||||||
4.750% notes, due 2022 | $ | 1,120 | $ | 1,119 | ||||
3.875% notes, due 2018 | 700 | 700 | ||||||
3.000% notes, due 2016 | 600 | 600 | ||||||
6.875% notes, due 2043 | 376 | 376 | ||||||
Accounts receivable securitization | 275 | 270 | ||||||
6.50% junior subordinated notes, due 2029 | 132 | 131 | ||||||
Other international loans, interest at a weighted- | ||||||||
average rate of 6.5% at December 31, 2013 (1.2% to 10.4%) | 39 | 44 | ||||||
Medium-term notes, due 2015-2019, interest at a weighted- | ||||||||
average rate of 8.7% at December 31, 2013 (8.4% to 9.4%) | 14 | 14 | ||||||
Other | 6 | 13 | ||||||
Total debt | 3,262 | 3,267 | ||||||
Short-term debt | (314 | ) | (308 | ) | ||||
Current portion of long-term debt | — | (12 | ) | |||||
Long-term debt (less current portion) | $ | 2,948 | $ | 2,947 | ||||
The scheduled aggregate maturities of debt by year are as follows: $39 million remaining in 2014, $284 million in 2015, $600 million in 2016, none in 2017 and $700 million in 2018. The borrowing capacity remaining under the $1.2 billion senior unsecured revolving credit facility (the 2013 Senior Credit Facility) was $1,119 million, due to a reduction of $81 million for letters of credit outstanding at December 31, 2013. In total, Ashland’s total borrowing capacity was $1,171 million, which includes $52 million from the accounts receivable securitization facility. | ||||||||
Covenant restrictions | ||||||||
The 2013 Senior Credit Facility contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional indebtedness, further negative pledges, investments, mergers, sale of assets and restricted payments and other customary limitations. As of December 31, 2013, Ashland is in compliance with all debt agreement covenant restrictions. | ||||||||
Financial covenants | ||||||||
The maximum consolidated leverage ratio permitted under the 2013 Senior Credit Facility during its entire duration is 3.25. At December 31, 2013, Ashland’s calculation of the consolidated leverage ratio was 2.7, which is below the maximum consolidated leverage ratio of 3.25. | ||||||||
The minimum required consolidated interest coverage ratio under the 2013 Senior Credit Facility during its entire duration is 3.00. At December 31, 2013, Ashland’s calculation of the interest coverage ratio was 7.3, which exceeds the minimum required consolidated ratio of 3.00. |
INCOME_TAXES
INCOME TAXES | 3 Months Ended | |||
Dec. 31, 2013 | ||||
Income Tax Disclosure [Abstract] | ' | |||
INCOME TAXES | ' | |||
INCOME TAXES | ||||
Current fiscal year | ||||
Ashland’s estimated annual effective income tax rate used to determine income tax expense in interim financial reporting for the year ending September 30, 2014 is 25.0%. Ashland’s effective tax rate in any interim period is subject to adjustments related to discrete items and changes within foreign effective tax rates resulting from income or loss fluctuations. The overall effective tax rate was 21.8% for the three months ended December 31, 2013 and includes net favorable discrete items of $6 million primarily related to the release of a foreign valuation allowance and certain non-taxable pretax income amounts. | ||||
Prior fiscal year | ||||
Ashland’s estimated annual effective income tax rate used to determine income tax expense in interim financial reporting for the year ending September 30, 2013 was 29.2%. The overall effective tax rate was 22.7% for the three months ended December 31, 2012 and includes two net discrete tax benefit adjustments of $6 million and $4 million related to the reversal of an unrecognized tax benefit and a foreign income tax rate change, respectively. | ||||
Unrecognized tax benefits | ||||
Changes in unrecognized tax benefits are summarized as follows for the three months ended December 31, 2013. | ||||
(In millions) | ||||
Balance at October 1, 2013 | $ | 133 | ||
Increases related to positions taken in the current year | 5 | |||
Balance at December 31, 2013 | $ | 138 | ||
In the next twelve months, Ashland expects a decrease in the amount accrued for uncertain tax positions of up to $10 million for continuing operations and $2 million for discontinued operations, respectively, related primarily to statute of limitations expirations in various tax jurisdictions. 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. |
EMPLOYEE_BENEFIT_PLANS
EMPLOYEE BENEFIT PLANS | 3 Months Ended | |||||||||||||||
Dec. 31, 2013 | ||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ' | |||||||||||||||
EMPLOYEE BENEFIT PLANS | ' | |||||||||||||||
EMPLOYEE BENEFIT PLANS | ||||||||||||||||
For the three months ended December 31, 2013, Ashland contributed $7 million to its U.S. pension plans and $5 million to its non-U.S. pension plans. Ashland expects to make additional contributions to the U.S. plans of approximately $13 million and to the non-U.S. plans of approximately $16 million during the remainder of 2014. | ||||||||||||||||
The following table details the components of pension and other postretirement benefit costs. | ||||||||||||||||
Other postretirement | ||||||||||||||||
Pension benefits | benefits | |||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Three months ended December 31 | ||||||||||||||||
Service cost (a) (c) | $ | 11 | $ | 12 | $ | — | $ | 1 | ||||||||
Interest cost (b) | 49 | 44 | 2 | 2 | ||||||||||||
Expected return on plan assets (b) | (59 | ) | (59 | ) | — | — | ||||||||||
Amortization of prior service credit (b) | (1 | ) | (1 | ) | (5 | ) | (5 | ) | ||||||||
$ | — | $ | (4 | ) | $ | (3 | ) | $ | (2 | ) | ||||||
(a)For segment reporting purposes, cost is proportionately allocated to each business segment, excluding the Unallocated and other segment. | ||||||||||||||||
(b)For segment reporting purposes, cost is recorded within the Unallocated and other segment. | ||||||||||||||||
(c)Service cost and net pension benefit costs of $0 denote values less than $1 million. |
LITIGATION_CLAIMS_AND_CONTINGE
LITIGATION, CLAIMS AND CONTINGENCIES | 3 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||||||||||||||||||
LITIGATION, CLAIMS AND CONTINGENCIES | ' | |||||||||||||||||||
LITIGATION, CLAIMS AND CONTINGENCIES | ||||||||||||||||||||
Asbestos litigation | ||||||||||||||||||||
Ashland and Hercules, a wholly-owned subsidiary of Ashland that was acquired in 2009, have liabilities from claims alleging personal injury caused by exposure to asbestos. To assist in developing and annually updating independent reserve estimates for future asbestos claims and related costs given various assumptions, Ashland retained Hamilton, Rabinovitz & Associates, Inc. (HR&A). The methodology used by HR&A 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 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 within the discontinued operations caption in the Statements of Consolidated Comprehensive Income. | ||||||||||||||||||||
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, a former subsidiary. The amount and timing of settlements and number of open claims can fluctuate significantly from period to period. A summary of Ashland asbestos claims activity, excluding those related to Hercules, follows. | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
December 31 | Years ended September 30 | |||||||||||||||||||
(In thousands) | 2013 | 2012 | 2013 | 2012 | 2011 | |||||||||||||||
Open claims - beginning of period | 65 | 66 | 66 | 72 | 83 | |||||||||||||||
New claims filed | 1 | 1 | 2 | 2 | 2 | |||||||||||||||
Claims settled | — | — | (1 | ) | (1 | ) | (1 | ) | ||||||||||||
Claims dismissed | — | (1 | ) | (2 | ) | (7 | ) | (12 | ) | |||||||||||
Open claims - end of period | 66 | 66 | 65 | 66 | 72 | |||||||||||||||
Ashland 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. As a result of the most recent annual update of this estimate, completed during the June 2013 quarter, it was determined that the liability for asbestos claims should be decreased by $28 million. Total reserves for asbestos claims were $455 million at December 31, 2013 compared to $463 million at September 30, 2013. | ||||||||||||||||||||
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) | 2013 | 2012 | 2013 | 2012 | 2011 | |||||||||||||||
Asbestos reserve - beginning of period | $ | 463 | $ | 522 | $ | 522 | $ | 543 | $ | 537 | ||||||||||
Reserve adjustment | — | — | (28 | ) | 11 | 41 | ||||||||||||||
Amounts paid | (8 | ) | (9 | ) | (31 | ) | (32 | ) | (35 | ) | ||||||||||
Asbestos reserve - end of period | $ | 455 | $ | 513 | $ | 463 | $ | 522 | $ | 543 | ||||||||||
Ashland asbestos-related receivables | ||||||||||||||||||||
Ashland has insurance coverage for most of the 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 most of the coverage currently being accessed. As a result, any increases in the asbestos reserve have been largely offset by probable insurance recoveries. The amounts not recoverable generally are due from insurers that are insolvent, rather than as a result of uninsured claims or the exhaustion of Ashland’s insurance coverage. | ||||||||||||||||||||
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. Approximately 65% of the estimated receivables from insurance companies are expected to be due from domestic insurers. Of the insurance companies rated by A. M. Best, all have a credit rating of B+ or higher as of December 31, 2013. The remainder of the insurance receivable is due from London insurance companies, which generally have lower credit quality ratings, and from Underwriters at Lloyd’s, whose insurance policy obligations have been transferred to a Berkshire Hathaway entity. Ashland discounts this piece of the receivable based upon the projected timing of the receipt of cash from those insurers unless likely settlement amounts can be determined. | ||||||||||||||||||||
In October 2012, Ashland initiated arbitration proceedings against Underwriters at Lloyd’s and certain Chartis (AIG member) companies seeking to enforce these insurers’ contractual obligations to provide indemnity for asbestos liabilities and defense costs under existing coverage-in-place agreements. In addition, Ashland has initiated a lawsuit in Kentucky state court against certain Berkshire Hathaway entities (National Indemnity Company and Resolute Management Inc.) on grounds that these Berkshire entities have wrongfully interfered with Underwriters’ and Chartis’ performance of their respective contractual obligations to provide asbestos coverage by directing the insurers to reduce and delay certain claim payments. While Ashland anticipates its position will be supported by the proceedings, an adverse resolution of these proceedings could have a significant effect on the timing of loss reimbursement and the amount of Ashland’s recorded insurance receivables from these insurers. | ||||||||||||||||||||
At December 31, 2013, Ashland’s receivable for recoveries of litigation defense and claim settlement costs from insurers amounted to $405 million, of which $91 million relates to costs previously paid. Receivables from insurers amounted to $408 million at September 30, 2013. During the June 2013 quarter, the annual update of the model used for purposes of valuing the asbestos reserve described above, and its impact on valuation of future recoveries from insurers, was completed. This model update resulted in a $3 million decrease in the receivable for probable insurance recoveries. | ||||||||||||||||||||
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) | 2013 | 2012 | 2013 | 2012 | 2011 | |||||||||||||||
Insurance receivable - beginning of period | $ | 408 | $ | 423 | $ | 423 | $ | 431 | $ | 421 | ||||||||||
Receivable adjustment | — | — | (3 | ) | 19 | 42 | ||||||||||||||
Amounts collected | (3 | ) | (4 | ) | (12 | ) | (27 | ) | (32 | ) | ||||||||||
Insurance receivable - end of period | $ | 405 | $ | 419 | $ | 408 | $ | 423 | $ | 431 | ||||||||||
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 significantly from period to period. A summary of Hercules’ asbestos claims activity follows. | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
December 31 | Years ended September 30 | |||||||||||||||||||
(In thousands) | 2013 | 2012 | 2013 | 2012 | 2011 | |||||||||||||||
Open claims - beginning of period | 21 | 21 | 21 | 21 | 20 | |||||||||||||||
New claims filed | — | — | 1 | 1 | 2 | |||||||||||||||
Claims dismissed | — | — | (1 | ) | (1 | ) | (1 | ) | ||||||||||||
Open claims - end of period | 21 | 21 | 21 | 21 | 21 | |||||||||||||||
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. As a result of the most recent annual update of this estimate, completed during the June 2013 quarter, it was determined that the liability for Hercules asbestos-related claims should be increased by $46 million. Total reserves for asbestos claims were $337 million at December 31, 2013 compared to $342 million at September 30, 2013. | ||||||||||||||||||||
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) | 2013 | 2012 | 2013 | 2012 | 2011 | |||||||||||||||
Asbestos reserve - beginning of period | $ | 342 | $ | 320 | $ | 320 | $ | 311 | $ | 375 | ||||||||||
Reserve adjustment | — | — | 46 | 30 | (48 | ) | ||||||||||||||
Amounts paid | (5 | ) | (9 | ) | (24 | ) | (21 | ) | (16 | ) | ||||||||||
Asbestos reserve - end of period | $ | 337 | $ | 311 | $ | 342 | $ | 320 | $ | 311 | ||||||||||
Hercules asbestos-related receivables | ||||||||||||||||||||
For the Hercules asbestos-related obligations, certain reimbursements 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 domestic insurers. Of the insurance companies rated by A. M. Best, all have a credit rating of B+ or higher as of December 31, 2013. | ||||||||||||||||||||
As of December 31, 2013 and September 30, 2013, the receivables from insurers amounted to $75 million. As previously mentioned, during the June 2013 quarter, 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 caused a $19 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) | 2013 | 2012 | 2013 | 2012 | 2011 | |||||||||||||||
Insurance receivable - beginning of period | $ | 75 | $ | 56 | $ | 56 | $ | 48 | $ | 68 | ||||||||||
Receivable adjustment | — | — | 19 | 9 | (20 | ) | ||||||||||||||
Amounts collected | — | (1 | ) | — | (1 | ) | — | |||||||||||||
Insurance receivable - end of period | $ | 75 | $ | 55 | $ | 75 | $ | 56 | $ | 48 | ||||||||||
Asbestos liability 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, 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 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 possible that total future litigation defense and claim settlement costs on an inflated and undiscounted basis could range as high as approximately $740 million for the Ashland asbestos-related litigation and approximately $640 million for the Hercules asbestos-related litigation (or approximately $1.4 billion in the aggregate), 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, 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, 2013, such locations included 80 waste treatment or disposal sites where Ashland has been identified as a potentially responsible party under Superfund or similar state laws, 145 current and former operating facilities (including certain operating facilities conveyed to Marathon Ashland Petroleum LLC (MAP) in 2005) and about 1,225 service station properties, of which 84 are being actively remediated. | ||||||||||||||||||||
Ashland’s reserves for environmental remediation amounted to $208 million at December 31, 2013 compared to $211 million at September 30, 2013, of which $167 million at December 31, 2013 and $171 million at September 30, 2013 were classified in other noncurrent liabilities on the Condensed Consolidated Balance Sheets. | ||||||||||||||||||||
The following table provides a reconciliation of the changes in the environmental contingencies and asset retirement obligations during the three months ended December 31, 2013 and 2012. | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
31-Dec | ||||||||||||||||||||
(In millions) | 2013 | 2012 | ||||||||||||||||||
Reserve - beginning of period | $ | 211 | $ | 228 | ||||||||||||||||
Disbursements, net of cost recoveries | (8 | ) | (12 | ) | ||||||||||||||||
Revised obligation estimates and accretion | 5 | 3 | ||||||||||||||||||
Foreign currency translation | — | 1 | ||||||||||||||||||
Reserve - end of period | $ | 208 | $ | 220 | ||||||||||||||||
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, 2013 and September 30, 2013, Ashland’s recorded receivable for these probable insurance recoveries was $26 million. | ||||||||||||||||||||
Components of environmental remediation expense included within the selling, general and administrative expense caption of the Statements of Consolidated Comprehensive Income are presented in the following table for the three months ended December 31, 2013 and 2012. | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
31-Dec | ||||||||||||||||||||
(In millions) | 2013 | 2012 | ||||||||||||||||||
Environmental expense | $ | 4 | $ | 2 | ||||||||||||||||
Accretion | 1 | 1 | ||||||||||||||||||
Total expense | 5 | 3 | ||||||||||||||||||
Insurance receivable | (1 | ) | (2 | ) | ||||||||||||||||
Total expense, net of receivable activity | $ | 4 | $ | 1 | ||||||||||||||||
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 $420 million. No individual remediation location is significant, as the largest reserve for any site is 12% or less of the remediation reserve. | ||||||||||||||||||||
Insurance settlement | ||||||||||||||||||||
In March 2011, a disruption in the supply of a key raw material for Ashland occurred at a supplier. For a period of time while the raw material was not available from this supplier, an alternative source was used, but at a higher cost to Ashland. The insurance settlement resulted in net gains of $22 million being recognized within the cost of sales caption of the Statements of Consolidated Comprehensive Income during the December 2012 quarter. | ||||||||||||||||||||
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, 2013 and September 30, 2013. 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, 2013. |
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 3 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
EARNINGS PER SHARE | ' | |||||||
EARNINGS PER SHARE | ||||||||
The following is the computation of basic and diluted earnings per share (EPS) from continuing operations. Stock options, SARs 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 0.6 million at December 31, 2013 and 2012. Earnings per share is reported under the treasury stock method. While certain non-vested stock awards granted prior to January 2010 qualify as participating securities, the effect on earnings per share calculated under the two class method is not significant. | ||||||||
Three months ended | ||||||||
31-Dec | ||||||||
(In millions except per share data) | 2013 | 2012 | ||||||
Numerator | ||||||||
Numerator for basic and diluted EPS – Income | ||||||||
from continuing operations | $ | 111 | $ | 102 | ||||
Denominator | ||||||||
Denominator for basic EPS – Weighted-average | ||||||||
common shares outstanding | 77 | 79 | ||||||
Share based awards convertible to common shares | 1 | 1 | ||||||
Denominator for diluted EPS – Adjusted weighted- | ||||||||
average shares and assumed conversions | 78 | 80 | ||||||
EPS from continuing operations | ||||||||
Basic | $ | 1.44 | $ | 1.29 | ||||
Diluted | 1.42 | 1.27 | ||||||
STOCKHOLDERS_EQUITY_ITEMS
STOCKHOLDERS' EQUITY ITEMS | 3 Months Ended | |||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||
Equity [Abstract] | ' | |||||||||||||||||||||||
STOCKHOLDERS' EQUITY ITEMS | ' | |||||||||||||||||||||||
STOCKHOLDERS’ EQUITY ITEMS | ||||||||||||||||||||||||
Capital stock | ||||||||||||||||||||||||
Ashland has the ability to make discretionary purchases of Ashland Common Stock on the open market, pursuant to a $600 million share repurchase authorization, approved by the Board of Directors of Ashland in May 2013, of which $450 million is still available at December 31, 2013. This authorization replaced Ashland’s previous $400 million share repurchase authorization, approved in March 2011, which had $329 million remaining as of December 31, 2012. During the three months ended December 31, 2013 and 2012, Ashland did not execute any share repurchases. | ||||||||||||||||||||||||
During the December 2013 quarter, the Board of Directors of Ashland announced and paid a quarterly cash dividend of 34 cents per share to eligible shareholders of record. This amount was paid for quarterly dividends in June and September of 2013 and was an increase from the quarterly dividend of 22.5 cents per share paid during the first and second quarters of 2013. | ||||||||||||||||||||||||
Accumulated other comprehensive income | ||||||||||||||||||||||||
Components of other comprehensive income recorded in the Statements of Consolidated Comprehensive Income are presented below, before tax and net of tax effects. | ||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||
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 | $ | 39 | $ | — | $ | 39 | $ | 45 | $ | — | $ | 45 | ||||||||||||
Pension and postretirement obligation adjustment: | ||||||||||||||||||||||||
Amortization of unrecognized prior service | ||||||||||||||||||||||||
credits included in net income (a) | (6 | ) | 2 | (4 | ) | (6 | ) | 2 | (4 | ) | ||||||||||||||
Net change in interest rate hedges: | ||||||||||||||||||||||||
Reclassification adjustment for losses | ||||||||||||||||||||||||
included in net income (b) | — | — | — | 5 | (2 | ) | 3 | |||||||||||||||||
Total other comprehensive income | $ | 33 | $ | 2 | $ | 35 | $ | 44 | $ | — | $ | 44 | ||||||||||||
(a) | Amortization of unrecognized prior service credits are included in the calculation of net periodic benefit costs for pension and other postretirement plans. Of the total amortization in each period, $2 million during the three months ended December 31, 2013 and 2012 was included in the cost of sales caption, and $4 million during the three months ended December 31, 2013 and 2012 was included in the selling, general and administrative expense caption. See Note I for further information. | |||||||||||||||||||||||
(b) | Losses from interest rate hedges are recorded in the net interest and other financing expense caption. See Note D for further information. |
STOCK_INCENTIVE_PLANS
STOCK INCENTIVE PLANS | 3 Months Ended |
Dec. 31, 2013 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
STOCK INCENTIVE PLANS | ' |
STOCK INCENTIVE PLANS | |
Ashland has stock incentive plans under which key employees or directors are granted stock-settled stock appreciation rights (SARs), performance share 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. Stock-based compensation expense was $8 million and $9 million for the three months ended December 31, 2013 and 2012, respectively, and is included in the selling, general and administrative expense caption of the Statements of Consolidated Comprehensive Income. | |
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, 2013 and 2012 were 0.4 million and 0.9 million, respectively. As of December 31, 2013, there was $29 million of total unrecognized compensation costs related to SARs. That cost is expected to be recognized over a weighted-average period of 2.2 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 are subject to forfeiture upon termination of service before the vesting period ends. Nonvested stock awards entitle employees or directors to vote the shares. Cash dividends are paid on nonvested stock awards granted prior to January 2010, while dividends on subsequent nonvested stock awards granted are in the form of additional shares of nonvested stock awards, which are subject to vesting and forfeiture provisions. Since January 2010, these instruments have been designated as non-participating securities under U.S. GAAP. Nonvested stock awards granted for the three months ended December 31, 2013 were 133,300, and none were granted for the three months ended December 31, 2012. As of December 31, 2013, there was $14 million of total unrecognized compensation costs related to nonvested stock awards. That cost is expected to be recognized over a weighted-average period of 2.0 years. | |
Performance shares | |
Ashland sponsors a long-term incentive plan that awards performance shares/units to certain key employees that are tied to Ashland’s overall financial performance relative to the financial performance of selected industry peer groups and/or internal targets. Awards are granted annually, with each award covering a three-year performance cycle. Each performance share/unit is convertible to one share of Ashland Common Stock. These plans are recorded as a component of stockholders’ equity in 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 and Ashland’s return on investment (ROI) performance as compared to the internal targets over the three-year performance cycle. TSR relative to peers is considered a market condition while ROI is considered a performance condition under applicable U.S. GAAP. 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, 2013 and 2012 were 0.1 million. As of December 31, 2013, there was $14 million of total unrecognized compensation costs related to performance shares/units. That cost is expected to be recognized over a weighted-average period of 2.2 years. |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 3 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Segment Reporting [Abstract] | ' | |||||||
SEGMENT INFORMATION | ' | |||||||
SEGMENT INFORMATION | ||||||||
Ashland’s businesses are managed along four reportable segments: Specialty Ingredients, Water Technologies, Performance Materials and Consumer Markets. | ||||||||
Specialty Ingredients offers industry-leading products, technologies and resources for solving formulation and product-performance challenges in key markets including personal and home care, pharmaceutical, food and beverage, coatings, construction, energy and other industries. Using natural, synthetic and semisynthetic polymers derived from plant and seed extract, cellulose ethers and vinyl pyrrolidones, Specialty Ingredients offers comprehensive and innovative solutions for today’s demanding consumer and industrial applications. | ||||||||
Water Technologies is a leading supplier of specialty chemicals and services to the pulp, paper, mining, food and beverage, power generation, refining, chemical processing, general manufacturing and municipal markets. It offers chemical and equipment technologies and services designed to help customers improve operational efficiencies, enhance product quality, protect plant assets and minimize environmental impact. | ||||||||
Performance Materials is a global leader helping customers create stronger, lighter, more resistant substitutes for traditional materials through higher performing, cost-efficient resin and adhesive technologies that improve the manufacturing, fabrication and design process. Applied industries include manufacturing, building and construction, packaging and converting. In addition, the Elastomers line of business provides high-quality styrene butadiene rubber primarily to the tire market. Performance Materials also provides metal casting consumables and design services for effective foundry management through its 50% ownership in the ASK Chemicals GmbH joint venture. | ||||||||
Consumer Markets delivers premium-branded automotive, commercial and industrial lubricants, automotive chemicals and car-care products. It operates and franchises approximately 900 Valvoline Instant Oil ChangeSM centers in the United States. It markets Valvoline™ lubricants and automotive chemicals; MaxLife™ lubricants for cars with higher mileage engines; NextGen™ motor oil, created with 50-percent recycled oil; SynPower™ synthetic motor oil; Eagle One™ and Car Brite™ automotive appearance products; and Zerex™ antifreeze. | ||||||||
Unallocated and Other generally includes items such as components of pension and other postretirement benefit plan expenses (excluding service costs, which are allocated to the business segments), certain significant company-wide restructuring activities and legacy costs or adjustments that relate to divested businesses that are no longer operated by Ashland. | ||||||||
Segment results | ||||||||
The following table presents various financial information for each segment for the three months ended December 31, 2013 and 2012. Results of Ashland’s business segments are presented based on its management structure and internal accounting practices. The structure and practices are specific to Ashland; therefore, the financial results of Ashland’s business segments are not necessarily comparable with similar information for other comparable companies. Ashland allocates all costs to its business segments except for certain significant company-wide restructuring activities, such as the restructuring plans described in Note C, and other costs or adjustments that generally relate to former businesses that Ashland no longer operates, as well as certain components of pension and other postretirement costs. 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 businesses change. Revisions to Ashland’s methodologies that are deemed insignificant are applied on a prospective basis. | ||||||||
Three months ended | ||||||||
31-Dec | ||||||||
(In millions - unaudited) | 2013 | 2012 | ||||||
SALES | ||||||||
Specialty Ingredients | $ | 599 | $ | 622 | ||||
Water Technologies | 436 | 421 | ||||||
Performance Materials | 347 | 345 | ||||||
Consumer Markets | 486 | 481 | ||||||
$ | 1,868 | $ | 1,869 | |||||
OPERATING INCOME | ||||||||
Specialty Ingredients | $ | 45 | $ | 72 | ||||
Water Technologies | 27 | 17 | ||||||
Performance Materials | 20 | 13 | ||||||
Consumer Markets | 75 | 66 | ||||||
Unallocated and other | 12 | 8 | ||||||
$ | 179 | $ | 176 | |||||
SIGNIFICANT_ACCOUNTING_POLICIE1
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Basis of Presentation | ' |
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 regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. These statements omit certain information and footnote disclosures required for complete annual financial statements and, therefore, should be read in conjunction with Ashland’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013. Results of operations for the period ended December 31, 2013 are not necessarily indicative of results to be expected for the year ending September 30, 2014. Certain prior period data has been reclassified in the Condensed Consolidated Financial Statements and accompanying footnotes to conform to current period presentation. | |
Ashland is composed of four reportable segments: Ashland Specialty Ingredients (Specialty Ingredients), Ashland Water Technologies (Water Technologies), Ashland Performance Materials (Performance Materials) and Ashland Consumer Markets (Consumer Markets). | |
Use of Estimates, Risk and Uncertainties | ' |
Use of estimates, risks and uncertainties | |
The preparation of Ashland’s Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures of contingent assets and liabilities as well as qualifying subsequent events. Significant items that are subject to such estimates and assumptions include, but are not limited to, long-lived assets (including goodwill and intangible assets), employee benefit obligations, income taxes and liabilities and receivables associated with asbestos litigation and environmental remediation. 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. | |
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 | ' |
New accounting standards | |
A description of new accounting standards issued and adopted during the current year is required in interim financial reporting. As of December 31, 2013, no new standards applicable to Ashland have been issued since Ashland’s most recent Form 10-K filing. A detailed listing of all new accounting standards relevant to Ashland is included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2013. The following standards became effective as of October 1, 2013. | |
In February 2013, the FASB issued accounting guidance related to the reporting of amounts reclassified out of accumulated other comprehensive income (ASC 220 Comprehensive Income). This guidance sets forth new disclosure requirements for items reclassified from accumulated other comprehensive income by requiring disclosures for both the changes in accumulated other comprehensive income by component and where the significant items reclassified from accumulated other comprehensive income are classified in the Statements of Consolidated Comprehensive Income. This guidance became effective for Ashland on October 1, 2013 and impacted Ashland’s disclosure of the reclassifications from accumulated other comprehensive income. | |
In December 2011, the FASB issued accounting guidance related to the offsetting of certain assets and liabilities on the balance sheet (ASC 210 Balance Sheet). The new guidance requires disclosures to provide information to help reconcile differences in the offsetting requirements under U.S. GAAP and IFRS. This guidance became effective for Ashland on October 1, 2013. The adoption of this guidance did not have a material impact on the Condensed Consolidated Financial Statements. |
FAIR_VALUE_MEASUREMENTS_Polici
FAIR VALUE MEASUREMENTS (Policies) | 3 Months Ended |
Dec. 31, 2013 | |
Fair Value Disclosures [Abstract] | ' |
Fair Value of Financial Instruments Policy | ' |
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. | |
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 (market approach), 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 fair value models, such as a discounted cash flow model or other standard pricing models that Ashland deems reasonable. | |
Foreign Currency Derivative Policy | ' |
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 of 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 marked-to-market 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. | |
Interest Rate Swap Derivatives Policy | ' |
The fair value of Ashland’s interest rate swap assets and liabilities were calculated using standard pricing models. These models utilized inputs derived from observable market data such as interest rate spot rates and forward rates, and were deemed to be Level 2 measurements within the fair value hierarchy. Counterparties to these interest rate swap agreements were highly rated financial institutions which Ashland believed carry only a minimal risk of nonperformance. |
INVENTORIES_Policies
INVENTORIES (Policies) | 3 Months Ended |
Dec. 31, 2013 | |
Inventory Disclosure [Abstract] | ' |
Inventory Policy | ' |
Inventories are carried at the lower of cost or market. Certain chemicals, plastics and lubricants are valued at cost using the last-in, first-out (LIFO) method. The remaining inventories are stated at cost using the weighted-average cost method or the first-in, first-out method. |
GOODWILL_AND_OTHER_INTANGIBLES1
GOODWILL AND OTHER INTANGIBLES (Policies) | 3 Months Ended |
Dec. 31, 2013 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ' |
Goodwill and Indefinite-Lived Intangible Assets Policy | ' |
In accordance with U.S. GAAP, Ashland reviews goodwill and indefinite-lived intangible assets for impairment annually and when events and circumstances indicate an impairment may have occurred. The annual assessment is performed as of July 1 and consists of Ashland determining each reporting unit’s current fair value compared to its current carrying value. For its July 1, 2013 assessment, Ashland determined that its reporting units for allocation of goodwill included the Specialty Ingredients, Water Technologies and Consumer Markets segments, and the Composites and Adhesives and Elastomers reporting units within the Performance Materials segment | |
Finite-Lived Intangible Asset Policy | ' |
Other intangible assets principally consist of trademarks and trade names, intellectual property, customer relationships, in-process research and development (IPR&D) and sale contracts and those classified as finite are amortized on a straight-line basis over their estimated useful lives. The cost of definite-lived trademarks and trade names is amortized principally over 4 to 25 years, intellectual property over 5 to 20 years, customer relationships over 3 to 24 years and other intangibles over 2 to 50 years. |
LITIGATION_CLAIMS_AND_CONTINGE1
LITIGATION, CLAIMS AND CONTINGENCIES (Policies) | 3 Months Ended |
Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies Policy | ' |
Ashland and Hercules, a wholly-owned subsidiary of Ashland that was acquired in 2009, have liabilities from claims alleging personal injury caused by exposure to asbestos. To assist in developing and annually updating independent reserve estimates for future asbestos claims and related costs given various assumptions, Ashland retained Hamilton, Rabinovitz & Associates, Inc. (HR&A). The methodology used by HR&A 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 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 within the discontinued operations caption in the Statements of Consolidated Comprehensive Income. | |
Environmental Cost Policy | ' |
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. |
EARNINGS_PER_SHARE_Policies
EARNINGS PER SHARE (Policies) | 3 Months Ended |
Dec. 31, 2013 | |
Earnings Per Share [Abstract] | ' |
Earnings Per Share Policy | ' |
The following is the computation of basic and diluted earnings per share (EPS) from continuing operations. Stock options, SARs 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 0.6 million at December 31, 2013 and 2012. Earnings per share is reported under the treasury stock method. While certain non-vested stock awards granted prior to January 2010 qualify as participating securities, the effect on earnings per share calculated under the two class method is not significant. |
STOCK_INCENTIVE_PLANS_Policies
STOCK INCENTIVE PLANS (Policies) (Policies) | 3 Months Ended |
Dec. 31, 2013 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Stock Incentive Plan Policy | ' |
Ashland has stock incentive plans under which key employees or directors are granted stock-settled stock appreciation rights (SARs), performance share 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. |
DISCONTINUED_OPERATIONS_Tables
DISCONTINUED OPERATIONS (Tables) | 3 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | |||||||
Components of Amounts in the Statements of Consolidated Income Related To Discontinued Operations | ' | |||||||
Components of amounts reflected in the Statements of Consolidated Comprehensive Income related to discontinued operations are presented in the following table for the three months ended December 31, 2013 and 2012. | ||||||||
Three months ended | ||||||||
31-Dec | ||||||||
(In millions) | 2013 | 2012 | ||||||
Loss from discontinued operations (net of tax) | ||||||||
Distribution | $ | — | $ | 1 | ||||
Asbestos-related litigation | 1 | — | ||||||
Total loss from discontinued operations (net of tax) | $ | 1 | $ | 1 | ||||
RESTRUCTURING_ACTIVITIES_Table
RESTRUCTURING ACTIVITIES (Tables) | 3 Months Ended | |||||||||||
Dec. 31, 2013 | ||||||||||||
Restructuring and Related Activities [Abstract] | ' | |||||||||||
Restructuring Cost and Reserve | ' | |||||||||||
The following table summarizes the related activity in these reserves for the three months ended December 31, 2013 and 2012. The severance reserves are included in accrued expenses and other liabilities while facility costs reserves are primarily within other noncurrent liabilities in the Condensed Consolidated Balance Sheets. | ||||||||||||
Facility | ||||||||||||
(In millions) | Severance | costs | Total | |||||||||
Balance as of September 30, 2013 | $ | 17 | $ | 8 | $ | 25 | ||||||
Reserve adjustments | 1 | — | 1 | |||||||||
Utilization (cash paid or otherwise settled) | (4 | ) | (1 | ) | (5 | ) | ||||||
Balance at December 31, 2013 | $ | 14 | $ | 7 | $ | 21 | ||||||
Balance as of September 30, 2012 | $ | 29 | $ | 15 | $ | 44 | ||||||
Utilization (cash paid or otherwise settled) | (8 | ) | (3 | ) | (11 | ) | ||||||
Balance at December 31, 2012 | $ | 21 | $ | 12 | $ | 33 | ||||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||||||
Fair Value of Asset Instruments | ' | |||||||||||||||||||
The following table summarizes financial asset instruments subject to recurring fair value measurements as of December 31, 2013. | ||||||||||||||||||||
(In millions) | Carrying | Total | Quoted prices | Significant | Significant | |||||||||||||||
value | fair | in active | other | unobservable | ||||||||||||||||
value | markets for | observable | inputs | |||||||||||||||||
identical | inputs | Level 3 | ||||||||||||||||||
assets | Level 2 | |||||||||||||||||||
Level 1 | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 295 | $ | 295 | $ | 295 | $ | — | $ | — | ||||||||||
Deferred compensation investments (a) | 186 | 186 | 50 | 136 | — | |||||||||||||||
Investments of captive insurance company (a) | 3 | 3 | 3 | — | — | |||||||||||||||
Foreign currency derivatives | 2 | 2 | — | 2 | — | |||||||||||||||
Total assets at fair value | $ | 486 | $ | 486 | $ | 348 | $ | 138 | $ | — | ||||||||||
Liabilities | ||||||||||||||||||||
Foreign currency derivatives | $ | 1 | $ | 1 | $ | — | $ | 1 | $ | — | ||||||||||
(a) | Included in other noncurrent assets in the Condensed Consolidated Balance Sheets. | |||||||||||||||||||
The following table summarizes financial asset instruments subject to recurring fair value measurements as of September 30, 2013. | ||||||||||||||||||||
(In millions) | Carrying | Total | Quoted prices | Significant | Significant | |||||||||||||||
value | fair | in active | other | unobservable | ||||||||||||||||
value | markets for | observable | inputs | |||||||||||||||||
identical | inputs | Level 3 | ||||||||||||||||||
assets | Level 2 | |||||||||||||||||||
Level 1 | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 346 | $ | 346 | $ | 346 | $ | — | $ | — | ||||||||||
Deferred compensation investments (a) | 181 | 181 | 50 | 131 | — | |||||||||||||||
Investments of captive insurance company (a) | 3 | 3 | 3 | — | — | |||||||||||||||
Foreign currency derivatives | 1 | 1 | — | 1 | — | |||||||||||||||
Total assets at fair value | $ | 531 | $ | 531 | $ | 399 | $ | 132 | $ | — | ||||||||||
(a) | Included in other noncurrent assets in the Condensed Consolidated Balance Sheets. | |||||||||||||||||||
Gains (Losses) Recognized from Foreign Currency Derivative | ' | |||||||||||||||||||
The following table summarizes the gains and losses recognized during the three months ended December 31, 2013 and 2012 within the Statements of Consolidated Comprehensive Income. | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
December 31 | ||||||||||||||||||||
(In millions) | 2013 | 2012 | ||||||||||||||||||
Foreign currency derivative gains | $ | 3 | $ | 1 | ||||||||||||||||
Fair Values of Outstanding Foreign Currency Derivatives | ' | |||||||||||||||||||
The following table summarizes the fair values of the outstanding foreign currency derivatives as of December 31, 2013 and September 30, 2013 included in other current assets and accrued expenses and other liabilities of the Condensed Consolidated Balance Sheets. | ||||||||||||||||||||
December 31 | September 30 | |||||||||||||||||||
(In millions) | 2013 | 2013 | ||||||||||||||||||
Foreign currency derivative assets | $ | 2 | $ | 1 | ||||||||||||||||
Notional contract values | 122 | 312 | ||||||||||||||||||
Foreign currency derivative liabilities (a) | $ | 1 | $ | — | ||||||||||||||||
Notional contract values | 130 | 246 | ||||||||||||||||||
(a) | Fair values of liabilities of $0 denote values less than $1 million. |
INVENTORIES_Tables
INVENTORIES (Tables) | 3 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Inventories | ' | |||||||
The following table summarizes Ashland’s inventories as of the reported Condensed Consolidated Balance Sheet dates. | ||||||||
December 31 | September 30 | |||||||
(In millions) | 2013 | 2013 | ||||||
Finished products | $ | 640 | $ | 610 | ||||
Raw materials, supplies and work in process | 311 | 310 | ||||||
LIFO reserve | (17 | ) | (21 | ) | ||||
$ | 934 | $ | 899 | |||||
GOODWILL_AND_OTHER_INTANGIBLES2
GOODWILL AND OTHER INTANGIBLES (Tables) | 3 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||||||
Goodwill by Segment | ' | |||||||||||||||||||
The following is a progression of goodwill by segment for the three months ended December 31, 2013. | ||||||||||||||||||||
Specialty | Water | Performance | Consumer | |||||||||||||||||
(In millions) | Ingredients | Technologies | Materials | (a) | Markets | Total | ||||||||||||||
Balance at September 30, 2013 | $ | 2,231 | $ | 657 | $ | 311 | $ | 167 | $ | 3,366 | ||||||||||
Other (b) | (6 | ) | — | — | — | (6 | ) | |||||||||||||
Currency translation adjustment | 17 | (2 | ) | 2 | — | 17 | ||||||||||||||
Balance at December 31, 2013 | $ | 2,242 | $ | 655 | $ | 313 | $ | 167 | $ | 3,377 | ||||||||||
(a) | Goodwill consisted of $10 million for the Elastomers reporting unit as of December 31, 2013 and September 30, 2013, as well as $303 million and $301 million for the Composites and Adhesives reporting unit as of December 31, 2013 and September 30, 2013, respectively. | |||||||||||||||||||
(b) | This entry represents an adjustment of certain items identified from the ISP and Hercules acquisitions that were reclassified on the Consolidated Balance Sheet. | |||||||||||||||||||
Intangible Assets | ' | |||||||||||||||||||
Intangible assets were comprised of the following as of December 31, 2013 and September 30, 2013. | ||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Gross | Net | |||||||||||||||||||
carrying | Accumulated | carrying | ||||||||||||||||||
(In millions) | amount | amortization | amount | |||||||||||||||||
Trademarks and trade names | $ | 535 | $ | (47 | ) | $ | 488 | |||||||||||||
Intellectual property | 840 | (198 | ) | 642 | ||||||||||||||||
Customer relationships | 855 | (248 | ) | 607 | ||||||||||||||||
IPR&D | 32 | — | 32 | |||||||||||||||||
Total intangible assets | $ | 2,262 | $ | (493 | ) | $ | 1,769 | |||||||||||||
September 30, 2013 | ||||||||||||||||||||
Gross | Net | |||||||||||||||||||
carrying | Accumulated | carrying | ||||||||||||||||||
(In millions) | amount | amortization | amount | |||||||||||||||||
Trademarks and trade names | $ | 535 | $ | (46 | ) | $ | 489 | |||||||||||||
Intellectual property | 840 | (185 | ) | 655 | ||||||||||||||||
Customer relationships | 848 | (233 | ) | 615 | ||||||||||||||||
IPR&D | 32 | — | 32 | |||||||||||||||||
Total intangible assets | $ | 2,255 | $ | (464 | ) | $ | 1,791 | |||||||||||||
DEBT_Tables
DEBT (Tables) | 3 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Summary of Debt | ' | |||||||
The following table summarizes Ashland’s current and long-term debt as of the reported Condensed Consolidated Balance Sheet dates. | ||||||||
December 31 | September 30 | |||||||
(In millions) | 2013 | 2013 | ||||||
4.750% notes, due 2022 | $ | 1,120 | $ | 1,119 | ||||
3.875% notes, due 2018 | 700 | 700 | ||||||
3.000% notes, due 2016 | 600 | 600 | ||||||
6.875% notes, due 2043 | 376 | 376 | ||||||
Accounts receivable securitization | 275 | 270 | ||||||
6.50% junior subordinated notes, due 2029 | 132 | 131 | ||||||
Other international loans, interest at a weighted- | ||||||||
average rate of 6.5% at December 31, 2013 (1.2% to 10.4%) | 39 | 44 | ||||||
Medium-term notes, due 2015-2019, interest at a weighted- | ||||||||
average rate of 8.7% at December 31, 2013 (8.4% to 9.4%) | 14 | 14 | ||||||
Other | 6 | 13 | ||||||
Total debt | 3,262 | 3,267 | ||||||
Short-term debt | (314 | ) | (308 | ) | ||||
Current portion of long-term debt | — | (12 | ) | |||||
Long-term debt (less current portion) | $ | 2,948 | $ | 2,947 | ||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 3 Months Ended | |||
Dec. 31, 2013 | ||||
Income Tax Disclosure [Abstract] | ' | |||
Summary of Changes in Unrecognized Tax Benefits | ' | |||
Changes in unrecognized tax benefits are summarized as follows for the three months ended December 31, 2013. | ||||
(In millions) | ||||
Balance at October 1, 2013 | $ | 133 | ||
Increases related to positions taken in the current year | 5 | |||
Balance at December 31, 2013 | $ | 138 | ||
EMPLOYEE_BENEFIT_PLANS_Tables
EMPLOYEE BENEFIT PLANS (Tables) | 3 Months Ended | |||||||||||||||
Dec. 31, 2013 | ||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ' | |||||||||||||||
Employee Benefit Plans | ' | |||||||||||||||
The following table details the components of pension and other postretirement benefit costs. | ||||||||||||||||
Other postretirement | ||||||||||||||||
Pension benefits | benefits | |||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Three months ended December 31 | ||||||||||||||||
Service cost (a) (c) | $ | 11 | $ | 12 | $ | — | $ | 1 | ||||||||
Interest cost (b) | 49 | 44 | 2 | 2 | ||||||||||||
Expected return on plan assets (b) | (59 | ) | (59 | ) | — | — | ||||||||||
Amortization of prior service credit (b) | (1 | ) | (1 | ) | (5 | ) | (5 | ) | ||||||||
$ | — | $ | (4 | ) | $ | (3 | ) | $ | (2 | ) | ||||||
(a)For segment reporting purposes, cost is proportionately allocated to each business segment, excluding the Unallocated and other segment. | ||||||||||||||||
(b)For segment reporting purposes, cost is recorded within the Unallocated and other segment. | ||||||||||||||||
(c)Service cost and net pension benefit costs of $0 denote values less than $1 million. |
LITIGATION_CLAIMS_AND_CONTINGE2
LITIGATION, CLAIMS AND CONTINGENCIES (Tables) | 3 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Loss Contingencies [Line Items] | ' | |||||||||||||||||||
Reconciliation of Changes in the Environmental Contingencies and Asset Retirement Obligations Reserve | ' | |||||||||||||||||||
The following table provides a reconciliation of the changes in the environmental contingencies and asset retirement obligations during the three months ended December 31, 2013 and 2012. | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
31-Dec | ||||||||||||||||||||
(In millions) | 2013 | 2012 | ||||||||||||||||||
Reserve - beginning of period | $ | 211 | $ | 228 | ||||||||||||||||
Disbursements, net of cost recoveries | (8 | ) | (12 | ) | ||||||||||||||||
Revised obligation estimates and accretion | 5 | 3 | ||||||||||||||||||
Foreign currency translation | — | 1 | ||||||||||||||||||
Reserve - end of period | $ | 208 | $ | 220 | ||||||||||||||||
Components of Environmental Remediation Expense | ' | |||||||||||||||||||
Components of environmental remediation expense included within the selling, general and administrative expense caption of the Statements of Consolidated Comprehensive Income are presented in the following table for the three months ended December 31, 2013 and 2012. | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
31-Dec | ||||||||||||||||||||
(In millions) | 2013 | 2012 | ||||||||||||||||||
Environmental expense | $ | 4 | $ | 2 | ||||||||||||||||
Accretion | 1 | 1 | ||||||||||||||||||
Total expense | 5 | 3 | ||||||||||||||||||
Insurance receivable | (1 | ) | (2 | ) | ||||||||||||||||
Total expense, net of receivable activity | $ | 4 | $ | 1 | ||||||||||||||||
Ashland [Member] | ' | |||||||||||||||||||
Loss Contingencies [Line Items] | ' | |||||||||||||||||||
Summary of Asbestos Claims Activity | ' | |||||||||||||||||||
A summary of Ashland asbestos claims activity, excluding those related to Hercules, follows. | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
December 31 | Years ended September 30 | |||||||||||||||||||
(In thousands) | 2013 | 2012 | 2013 | 2012 | 2011 | |||||||||||||||
Open claims - beginning of period | 65 | 66 | 66 | 72 | 83 | |||||||||||||||
New claims filed | 1 | 1 | 2 | 2 | 2 | |||||||||||||||
Claims settled | — | — | (1 | ) | (1 | ) | (1 | ) | ||||||||||||
Claims dismissed | — | (1 | ) | (2 | ) | (7 | ) | (12 | ) | |||||||||||
Open claims - end of period | 66 | 66 | 65 | 66 | 72 | |||||||||||||||
Progression of Activity in the Asbestos Reserve Accounts | ' | |||||||||||||||||||
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) | 2013 | 2012 | 2013 | 2012 | 2011 | |||||||||||||||
Asbestos reserve - beginning of period | $ | 463 | $ | 522 | $ | 522 | $ | 543 | $ | 537 | ||||||||||
Reserve adjustment | — | — | (28 | ) | 11 | 41 | ||||||||||||||
Amounts paid | (8 | ) | (9 | ) | (31 | ) | (32 | ) | (35 | ) | ||||||||||
Asbestos reserve - end of period | $ | 455 | $ | 513 | $ | 463 | $ | 522 | $ | 543 | ||||||||||
Progression of Insurance Receivable | ' | |||||||||||||||||||
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) | 2013 | 2012 | 2013 | 2012 | 2011 | |||||||||||||||
Insurance receivable - beginning of period | $ | 408 | $ | 423 | $ | 423 | $ | 431 | $ | 421 | ||||||||||
Receivable adjustment | — | — | (3 | ) | 19 | 42 | ||||||||||||||
Amounts collected | (3 | ) | (4 | ) | (12 | ) | (27 | ) | (32 | ) | ||||||||||
Insurance receivable - end of period | $ | 405 | $ | 419 | $ | 408 | $ | 423 | $ | 431 | ||||||||||
Hercules [Member] | ' | |||||||||||||||||||
Loss Contingencies [Line Items] | ' | |||||||||||||||||||
Summary of Asbestos Claims Activity | ' | |||||||||||||||||||
A summary of Hercules’ asbestos claims activity follows. | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
December 31 | Years ended September 30 | |||||||||||||||||||
(In thousands) | 2013 | 2012 | 2013 | 2012 | 2011 | |||||||||||||||
Open claims - beginning of period | 21 | 21 | 21 | 21 | 20 | |||||||||||||||
New claims filed | — | — | 1 | 1 | 2 | |||||||||||||||
Claims dismissed | — | — | (1 | ) | (1 | ) | (1 | ) | ||||||||||||
Open claims - end of period | 21 | 21 | 21 | 21 | 21 | |||||||||||||||
Progression of Activity in the Asbestos Reserve Accounts | ' | |||||||||||||||||||
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) | 2013 | 2012 | 2013 | 2012 | 2011 | |||||||||||||||
Asbestos reserve - beginning of period | $ | 342 | $ | 320 | $ | 320 | $ | 311 | $ | 375 | ||||||||||
Reserve adjustment | — | — | 46 | 30 | (48 | ) | ||||||||||||||
Amounts paid | (5 | ) | (9 | ) | (24 | ) | (21 | ) | (16 | ) | ||||||||||
Asbestos reserve - end of period | $ | 337 | $ | 311 | $ | 342 | $ | 320 | $ | 311 | ||||||||||
Progression of Insurance Receivable | ' | |||||||||||||||||||
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) | 2013 | 2012 | 2013 | 2012 | 2011 | |||||||||||||||
Insurance receivable - beginning of period | $ | 75 | $ | 56 | $ | 56 | $ | 48 | $ | 68 | ||||||||||
Receivable adjustment | — | — | 19 | 9 | (20 | ) | ||||||||||||||
Amounts collected | — | (1 | ) | — | (1 | ) | — | |||||||||||||
Insurance receivable - end of period | $ | 75 | $ | 55 | $ | 75 | $ | 56 | $ | 48 | ||||||||||
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 3 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Computation of Basic and Diluted Earnings per Share | ' | |||||||
The following is the computation of basic and diluted earnings per share (EPS) from continuing operations. Stock options, SARs 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 0.6 million at December 31, 2013 and 2012. Earnings per share is reported under the treasury stock method. While certain non-vested stock awards granted prior to January 2010 qualify as participating securities, the effect on earnings per share calculated under the two class method is not significant. | ||||||||
Three months ended | ||||||||
31-Dec | ||||||||
(In millions except per share data) | 2013 | 2012 | ||||||
Numerator | ||||||||
Numerator for basic and diluted EPS – Income | ||||||||
from continuing operations | $ | 111 | $ | 102 | ||||
Denominator | ||||||||
Denominator for basic EPS – Weighted-average | ||||||||
common shares outstanding | 77 | 79 | ||||||
Share based awards convertible to common shares | 1 | 1 | ||||||
Denominator for diluted EPS – Adjusted weighted- | ||||||||
average shares and assumed conversions | 78 | 80 | ||||||
EPS from continuing operations | ||||||||
Basic | $ | 1.44 | $ | 1.29 | ||||
Diluted | 1.42 | 1.27 | ||||||
STOCKHOLDERS_EQUITY_ITEMS_Tabl
STOCKHOLDERS' EQUITY ITEMS (Tables) (Tables) | 3 Months Ended | |||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||
Equity [Abstract] | ' | |||||||||||||||||||||||
Schedule of Comprehensive Income (Loss) [Table Text Block] | ' | |||||||||||||||||||||||
Components of other comprehensive income recorded in the Statements of Consolidated Comprehensive Income are presented below, before tax and net of tax effects. | ||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||
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 | $ | 39 | $ | — | $ | 39 | $ | 45 | $ | — | $ | 45 | ||||||||||||
Pension and postretirement obligation adjustment: | ||||||||||||||||||||||||
Amortization of unrecognized prior service | ||||||||||||||||||||||||
credits included in net income (a) | (6 | ) | 2 | (4 | ) | (6 | ) | 2 | (4 | ) | ||||||||||||||
Net change in interest rate hedges: | ||||||||||||||||||||||||
Reclassification adjustment for losses | ||||||||||||||||||||||||
included in net income (b) | — | — | — | 5 | (2 | ) | 3 | |||||||||||||||||
Total other comprehensive income | $ | 33 | $ | 2 | $ | 35 | $ | 44 | $ | — | $ | 44 | ||||||||||||
(a) | Amortization of unrecognized prior service credits are included in the calculation of net periodic benefit costs for pension and other postretirement plans. Of the total amortization in each period, $2 million during the three months ended December 31, 2013 and 2012 was included in the cost of sales caption, and $4 million during the three months ended December 31, 2013 and 2012 was included in the selling, general and administrative expense caption. See Note I for further information. | |||||||||||||||||||||||
(b) | Losses from interest rate hedges are recorded in the net interest and other financing expense caption. See Note D for further information. |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 3 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Segment Reporting [Abstract] | ' | |||||||
Segment Information | ' | |||||||
The following table presents various financial information for each segment for the three months ended December 31, 2013 and 2012. Results of Ashland’s business segments are presented based on its management structure and internal accounting practices. The structure and practices are specific to Ashland; therefore, the financial results of Ashland’s business segments are not necessarily comparable with similar information for other comparable companies. Ashland allocates all costs to its business segments except for certain significant company-wide restructuring activities, such as the restructuring plans described in Note C, and other costs or adjustments that generally relate to former businesses that Ashland no longer operates, as well as certain components of pension and other postretirement costs. 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 businesses change. Revisions to Ashland’s methodologies that are deemed insignificant are applied on a prospective basis. | ||||||||
Three months ended | ||||||||
31-Dec | ||||||||
(In millions - unaudited) | 2013 | 2012 | ||||||
SALES | ||||||||
Specialty Ingredients | $ | 599 | $ | 622 | ||||
Water Technologies | 436 | 421 | ||||||
Performance Materials | 347 | 345 | ||||||
Consumer Markets | 486 | 481 | ||||||
$ | 1,868 | $ | 1,869 | |||||
OPERATING INCOME | ||||||||
Specialty Ingredients | $ | 45 | $ | 72 | ||||
Water Technologies | 27 | 17 | ||||||
Performance Materials | 20 | 13 | ||||||
Consumer Markets | 75 | 66 | ||||||
Unallocated and other | 12 | 8 | ||||||
$ | 179 | $ | 176 | |||||
SIGNIFICANT_ACCOUNTING_POLICIE2
SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended |
Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Number of reportable segments | 4 |
DISCONTINUED_OPERATIONS_Detail
DISCONTINUED OPERATIONS (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Discontinued Operations [Line Items] | ' | ' |
Loss from discontinued operations (net of tax) | $1 | $1 |
Distribution [Member] | ' | ' |
Discontinued Operations [Line Items] | ' | ' |
Loss from discontinued operations (net of tax) | 0 | 1 |
Asbestos [Member] | ' | ' |
Discontinued Operations [Line Items] | ' | ' |
Loss from discontinued operations (net of tax) | $1 | $0 |
RESTRUCTURING_ACTIVITIES_Detai
RESTRUCTURING ACTIVITIES (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Restructuring reserve [Roll Forward] | ' | ' |
Restructuring reserve balance, beginning of period | $25 | $44 |
Reserve adjustments | 1 | 1 |
Utilization (cash paid or otherwise settled) | -5 | -11 |
Restructuring reserve balance, end of period | 21 | 33 |
Severance [Member] | ' | ' |
Restructuring reserve [Roll Forward] | ' | ' |
Restructuring reserve balance, beginning of period | 17 | 29 |
Reserve adjustments | 1 | 1 |
Utilization (cash paid or otherwise settled) | -4 | -8 |
Restructuring reserve balance, end of period | 14 | 21 |
Facility Costs [Member] | ' | ' |
Restructuring reserve [Roll Forward] | ' | ' |
Restructuring reserve balance, beginning of period | 8 | 15 |
Reserve adjustments | 0 | 0 |
Utilization (cash paid or otherwise settled) | -1 | -3 |
Restructuring reserve balance, end of period | $7 | $12 |
FAIR_VALUE_MEASUREMENTS_Recurr
FAIR VALUE MEASUREMENTS (Recurring Basis) (Details) (Fair Value, Measurements, Recurring [Member], USD $) | Dec. 31, 2013 | Sep. 30, 2013 | ||
In Millions, unless otherwise specified | ||||
Carrying (Reported) Amount, Fair Value Disclosure [Member] | ' | ' | ||
Assets: | ' | ' | ||
Cash and cash equivalents | $295 | $346 | ||
Deferred compensation investments | 186 | [1] | 181 | [1] |
Investments of captive insurance company | 3 | [1] | 3 | [1] |
Foreign currency derivatives | 2 | 1 | ||
Total assets at fair value | 486 | 531 | ||
Liabilities: | ' | ' | ||
Foreign currency derivatives | 1 | 0 | ||
Estimate of Fair Value, Fair Value Disclosure [Member] | ' | ' | ||
Assets: | ' | ' | ||
Cash and cash equivalents | 295 | 346 | ||
Deferred compensation investments | 186 | [1] | 181 | [1] |
Investments of captive insurance company | 3 | [1] | 3 | [1] |
Foreign currency derivatives | 2 | 1 | ||
Total assets at fair value | 486 | 531 | ||
Liabilities: | ' | ' | ||
Foreign currency derivatives | 1 | 0 | ||
Fair Value, Inputs, Level 1 [Member] | ' | ' | ||
Assets: | ' | ' | ||
Cash and cash equivalents | 295 | 346 | ||
Deferred compensation investments | 50 | [1] | 50 | [1] |
Investments of captive insurance company | 3 | [1] | 3 | [1] |
Foreign currency derivatives | 0 | 0 | ||
Total assets at fair value | 348 | 399 | ||
Liabilities: | ' | ' | ||
Foreign currency derivatives | 0 | 0 | ||
Fair Value, Inputs, Level 2 [Member] | ' | ' | ||
Assets: | ' | ' | ||
Cash and cash equivalents | 0 | 0 | ||
Deferred compensation investments | 136 | [1] | 131 | [1] |
Investments of captive insurance company | 0 | [1] | 0 | [1] |
Foreign currency derivatives | 2 | 1 | ||
Total assets at fair value | 138 | 132 | ||
Liabilities: | ' | ' | ||
Foreign currency derivatives | 1 | 0 | ||
Fair Value, Inputs, Level 3 [Member] | ' | ' | ||
Assets: | ' | ' | ||
Cash and cash equivalents | 0 | 0 | ||
Deferred compensation investments | 0 | [1] | 0 | [1] |
Investments of captive insurance company | 0 | [1] | 0 | [1] |
Foreign currency derivatives | 0 | 0 | ||
Total assets at fair value | 0 | 0 | ||
Liabilities: | ' | ' | ||
Foreign currency derivatives | $0 | $0 | ||
[1] | Included in other noncurrent assets in the Condensed Consolidated Balance Sheets. |
FAIR_VALUE_MEASUREMENTS_Curren
FAIR VALUE MEASUREMENTS (Currency Hedges) (Details) (Not Designated as Hedging Instrument [Member], Foreign Exchange Contract [Member], USD $) | 3 Months Ended | ||||||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | |
Other Current Assets [Member] | Other Current Assets [Member] | Accrued Expenses and Other Liabilities [Member] | Accrued Expenses and Other Liabilities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' | ' | ' | ' | |
Foreign currency derivative gains | $3 | $1 | ' | ' | ' | ' | |
Foreign currency derivative assets | ' | ' | 2 | 1 | ' | ' | |
Foreign currency derivative liabilities | ' | ' | ' | ' | 1 | 0 | [1] |
Notional amounts, foreign currency derivatives | ' | ' | $122 | $312 | $130 | $246 | |
[1] | Fair values of liabilities of $0 denote values less than $1 million. |
FAIR_VALUE_MEASUREMENTS_Intere
FAIR VALUE MEASUREMENTS (Interest Rate Hedges) (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | ||
Interest rate hedges [Abstract] | ' | ' | ||
Loss reclassified from accumulated other comprehensive income | $0 | [1] | $5 | [1] |
Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | ' | ' | ||
Interest rate hedges [Abstract] | ' | ' | ||
Loss reclassified from accumulated other comprehensive income | ' | 5 | ||
Change in unrealized loss in accumulated other comprehensive income | ' | $0 | ||
[1] | Losses from interest rate hedges are recorded in the net interest and other financing expense caption. See Note D for further information. |
FAIR_VALUE_MEASUREMENTS_Other_
FAIR VALUE MEASUREMENTS (Other Financial Instruments) (Details) (USD $) | Dec. 31, 2013 | Sep. 30, 2013 |
In Millions, unless otherwise specified | ||
Carrying (Reported) Amount, Fair Value Disclosure [Member] | ' | ' |
Other financial instruments [Abstract] | ' | ' |
Long-term debt | $2,948 | $2,959 |
Estimate of Fair Value, Fair Value Disclosure [Member] | ' | ' |
Other financial instruments [Abstract] | ' | ' |
Long-term debt | $3,060 | $3,003 |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Dec. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | Specialty Ingredients [Member] | ||
Inventory [Line Items] | ' | ' | ' |
Inventory impairment | ' | ' | $31 |
Inventory lower of cost or market write-down | ' | ' | 28 |
Finished products | 640 | 610 | ' |
Raw materials, supplies and work in process | 311 | 310 | ' |
LIFO reserve | -17 | -21 | ' |
Inventory, Net | $934 | $899 | ' |
GOODWILL_AND_OTHER_INTANGIBLES3
GOODWILL AND OTHER INTANGIBLES (Goodwill) (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | |
Goodwill [Line Items] | ' | ' | |
Goodwill impairment | ' | $0 | |
Goodwill [Roll Forward] | ' | ' | |
Balance | 3,366 | ' | |
Goodwill, Other Changes | -6 | [1] | ' |
Currency translation adjustment | 17 | ' | |
Balance | 3,377 | 3,366 | |
Specialty Ingredients [Member] | ' | ' | |
Goodwill [Roll Forward] | ' | ' | |
Balance | 2,231 | ' | |
Goodwill, Other Changes | -6 | [1] | ' |
Currency translation adjustment | 17 | ' | |
Balance | 2,242 | ' | |
Water Technologies [Member] | ' | ' | |
Goodwill [Roll Forward] | ' | ' | |
Balance | 657 | ' | |
Goodwill, Other Changes | 0 | [1] | ' |
Currency translation adjustment | -2 | ' | |
Balance | 655 | ' | |
Performance Materials [Member] | ' | ' | |
Goodwill [Roll Forward] | ' | ' | |
Balance | 311 | [2] | ' |
Goodwill, Other Changes | 0 | [1],[2] | ' |
Currency translation adjustment | 2 | [2] | ' |
Balance | 313 | [2] | ' |
Consumer Markets [Member] | ' | ' | |
Goodwill [Roll Forward] | ' | ' | |
Balance | 167 | ' | |
Goodwill, Other Changes | 0 | [1] | ' |
Currency translation adjustment | 0 | ' | |
Balance | 167 | ' | |
International Specialty Products Inc. Elastomers [Member] | ' | ' | |
Goodwill [Roll Forward] | ' | ' | |
Balance | 10 | 10 | |
Performance Materials Composite Polymers Specialty Polymers and Adhesives Reporting Unit [Member] | ' | ' | |
Goodwill [Roll Forward] | ' | ' | |
Balance | $303 | $301 | |
[1] | This entry represents an adjustment of certain items identified from the ISP and Hercules acquisitions that were reclassified on the Consolidated Balance Sheet. | ||
[2] | Goodwill consisted of $10 million for the Elastomers reporting unit as of December 31, 2013 and September 30, 2013, as well as $303 million and $301 million for the Composites and Adhesives reporting unit as of December 31, 2013 and September 30, 2013, respectively. |
GOODWILL_AND_OTHER_INTANGIBLES4
GOODWILL AND OTHER INTANGIBLES (Other Intangible Assets) (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2013 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ' | ' | ' |
Gross carrying amount | $2,262 | ' | $2,255 |
Accumulated amortization | -493 | ' | -464 |
Net carrying amount | 1,769 | ' | 1,791 |
Balance of intangible assets classified as indefinite-lived | 495 | ' | 495 |
Amortization expense recognized on intangible assets | 29 | 29 | ' |
Expected future amortization expense [Abstract] | ' | ' | ' |
2014 (includes three months actual and nine months estimated) | 115 | ' | ' |
2015 | 113 | ' | ' |
2016 | 112 | ' | ' |
2017 | 112 | ' | ' |
2018 | 111 | ' | ' |
IPR and D [Member] | ' | ' | ' |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ' | ' | ' |
Balance of intangible assets classified as indefinite-lived | 32 | ' | 32 |
Trademarks and Trade Names [Member] | ' | ' | ' |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ' | ' | ' |
Gross carrying amount | 535 | ' | 535 |
Accumulated amortization | -47 | ' | -46 |
Net carrying amount | 488 | ' | 489 |
Intellectual Property [Member] | ' | ' | ' |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ' | ' | ' |
Gross carrying amount | 840 | ' | 840 |
Accumulated amortization | -198 | ' | -185 |
Net carrying amount | 642 | ' | 655 |
Customer Relationships [Member] | ' | ' | ' |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ' | ' | ' |
Gross carrying amount | 855 | ' | 848 |
Accumulated amortization | -248 | ' | -233 |
Net carrying amount | $607 | ' | $615 |
Minimum [Member] | Trademarks and Trade Names [Member] | ' | ' | ' |
Estimated useful life [Abstract] | ' | ' | ' |
Useful life (in years) | '4 years | ' | ' |
Minimum [Member] | Intellectual Property [Member] | ' | ' | ' |
Estimated useful life [Abstract] | ' | ' | ' |
Useful life (in years) | '5 years | ' | ' |
Minimum [Member] | Customer Relationships [Member] | ' | ' | ' |
Estimated useful life [Abstract] | ' | ' | ' |
Useful life (in years) | '3 years | ' | ' |
Minimum [Member] | Other Intangible Assets [Member] | ' | ' | ' |
Estimated useful life [Abstract] | ' | ' | ' |
Useful life (in years) | '2 years | ' | ' |
Maximum [Member] | Trademarks and Trade Names [Member] | ' | ' | ' |
Estimated useful life [Abstract] | ' | ' | ' |
Useful life (in years) | '25 years | ' | ' |
Maximum [Member] | Intellectual Property [Member] | ' | ' | ' |
Estimated useful life [Abstract] | ' | ' | ' |
Useful life (in years) | '20 years | ' | ' |
Maximum [Member] | Customer Relationships [Member] | ' | ' | ' |
Estimated useful life [Abstract] | ' | ' | ' |
Useful life (in years) | '24 years | ' | ' |
Maximum [Member] | Other Intangible Assets [Member] | ' | ' | ' |
Estimated useful life [Abstract] | ' | ' | ' |
Useful life (in years) | '50 years | ' | ' |
DEBT_Details
DEBT (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2013 | Sep. 30, 2013 | |
Debt Instrument [Line Items] | ' | ' |
Total debt | $3,262,000,000 | $3,267,000,000 |
Short-term debt | -314,000,000 | -308,000,000 |
Current portion of long-term debt | 0 | -12,000,000 |
Long-term debt (less current portion) | 2,948,000,000 | 2,947,000,000 |
Scheduled aggregate debt maturities by fiscal year [Abstract] | ' | ' |
2014 | 39,000,000 | ' |
2015 | 284,000,000 | ' |
2016 | 600,000,000 | ' |
2017 | 0 | ' |
2018 | 700,000,000 | ' |
Borrowing capacity | 1,171,000,000 | ' |
2013 Senior Credit Facility [Member] | ' | ' |
Scheduled aggregate debt maturities by fiscal year [Abstract] | ' | ' |
Revolving credit facility | 1,200,000,000 | ' |
Borrowing capacity | 1,119,000,000 | ' |
Letters of credit outstanding | 81,000,000 | ' |
Covenant restrictions [Abstract] | ' | ' |
Maximum consolidated leverage ratio | 3.25 | ' |
Calculated leverage ratio | 2.7 | ' |
Permitted consolidated interest coverage ratio | 3 | ' |
Calculated consolidated interest coverage ratio | 7.3 | ' |
Notes due 2022 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Total debt | 1,120,000,000 | 1,119,000,000 |
Interest rate | 4.75% | 4.75% |
Debt instrument maturity | 15-Aug-22 | 15-Aug-22 |
Notes due 2018 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Total debt | 700,000,000 | 700,000,000 |
Interest rate | 3.88% | 3.88% |
Debt instrument maturity | 15-Apr-18 | 15-Apr-18 |
Notes due 2016 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Total debt | 600,000,000 | 600,000,000 |
Interest rate | 3.00% | 3.00% |
Debt instrument maturity | 15-Mar-16 | 15-Mar-16 |
Notes due 2043 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Total debt | 376,000,000 | 376,000,000 |
Interest rate | 6.88% | 6.88% |
Debt instrument maturity | 15-May-43 | 15-May-43 |
Accounts Receivable Securitization [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Total debt | 275,000,000 | 270,000,000 |
Scheduled aggregate debt maturities by fiscal year [Abstract] | ' | ' |
Borrowing capacity | 52,000,000 | ' |
Junior Subordinated Debt [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Total debt | 132,000,000 | 131,000,000 |
Interest rate | 6.50% | 6.50% |
Debt instrument maturity | 31-Dec-29 | 31-Dec-29 |
Other International Loans [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Total debt | 39,000,000 | 44,000,000 |
Debt, Weighted Average Interest Rate | 6.50% | ' |
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Minimum | 1.20% | ' |
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Maximum | 10.40% | ' |
Medium-term Notes [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Total debt | 14,000,000 | 14,000,000 |
Debt, Weighted Average Interest Rate | 8.70% | ' |
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Minimum | 8.40% | ' |
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Maximum | 9.40% | ' |
Debt instrument maturity range, start | 31-Dec-15 | 31-Dec-15 |
Debt instrument maturity range, end | 31-Dec-19 | 31-Dec-19 |
Other Notes [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Total debt | $6,000,000 | $13,000,000 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Sep. 30, 2013 |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | ' | ' | ' | ' |
Estimated annual effective interest rate | ' | ' | 25.00% | 29.20% |
Effective tax rate (in hundredths) | 21.80% | 22.70% | ' | ' |
Net discrete tax adjustments | $6 | ' | ' | ' |
Reversal of unrecognized tax benefit | ' | 6 | ' | ' |
Benefit from foreign income tax rate change | ' | 4 | ' | ' |
Change in Unrecognized Tax Benefits [Roll Forward] | ' | ' | ' | ' |
Balance | 133 | ' | 133 | ' |
Increases related to positions taken in the current year | 5 | ' | ' | ' |
Balance | 138 | ' | ' | 133 |
Segment, Continuing Operations [Member] | ' | ' | ' | ' |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | ' | ' | ' | ' |
Expected decrease in the amount accrued for uncertain tax positions | 10 | ' | ' | ' |
Segment, Discontinued Operations [Member] | ' | ' | ' | ' |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | ' | ' | ' | ' |
Expected decrease in the amount accrued for uncertain tax positions | $2 | ' | ' | ' |
EMPLOYEE_BENEFIT_PLANS_Details
EMPLOYEE BENEFIT PLANS (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | ||
United States Pension Plans of US Entity, Defined Benefit [Member] | ' | ' | ||
Defined Benefit Plan Disclosure [Line Items] | ' | ' | ||
Actual contributions to benefit plans in period | $7 | ' | ||
Estimated future contributions in current fiscal year | 13 | ' | ||
Foreign Pension Plans, Defined Benefit [Member] | ' | ' | ||
Defined Benefit Plan Disclosure [Line Items] | ' | ' | ||
Actual contributions to benefit plans in period | 5 | ' | ||
Estimated future contributions in current fiscal year | 16 | ' | ||
Pension Plans, Defined Benefit [Member] | ' | ' | ||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ' | ' | ||
Service cost | 11 | [1] | 12 | [1] |
Interest cost | 49 | [2] | 44 | [2] |
Expected return on plan assets | -59 | [2] | -59 | [2] |
Amortization of prior service credit | -1 | [2] | -1 | [2] |
Total | 0 | -4 | ||
Other Pension Plans, Postretirement or Supplemental Plans, Defined Benefit [Member] | ' | ' | ||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ' | ' | ||
Service cost | 0 | [1],[3] | 1 | [1] |
Interest cost | 2 | [2] | 2 | [2] |
Expected return on plan assets | 0 | [2] | 0 | [2] |
Amortization of prior service credit | -5 | [2] | -5 | [2] |
Total | ($3) | ($2) | ||
[1] | For segment reporting purposes, cost is proportionately allocated to each business segment, excluding the Unallocated and other segment. | |||
[2] | For segment reporting purposes, cost is recorded within the Unallocated and other segment. | |||
[3] | Service cost and net pension benefit costs of $0 denote values less than $1 million. |
LITIGATION_CLAIMS_AND_CONTINGE3
LITIGATION, CLAIMS AND CONTINGENCIES (Asbestos Litigation) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
claim | claim | claim | claim | claim | |
Asbestos litigation cost projection [Abstract] | ' | ' | ' | ' | ' |
Possible total future litigation defense and claim settlement costs | $1,400 | ' | ' | ' | ' |
Minimum [Member] | ' | ' | ' | ' | ' |
Asbestos litigation cost projection [Abstract] | ' | ' | ' | ' | ' |
Number of Years Included in Asbestos Assumption | '40 years | ' | ' | ' | ' |
Maximum [Member] | ' | ' | ' | ' | ' |
Asbestos litigation cost projection [Abstract] | ' | ' | ' | ' | ' |
Number of Years Included in Asbestos Assumption | '50 years | ' | ' | ' | ' |
Ashland [Member] | ' | ' | ' | ' | ' |
Asbestos claims [Roll Forward] | ' | ' | ' | ' | ' |
Open claims - beginning of period | 65,000 | 66,000 | 66,000 | 72,000 | 83,000 |
New claims filed | 1,000 | 1,000 | 2,000 | 2,000 | 2,000 |
Claims settled | 0 | 0 | -1,000 | -1,000 | -1,000 |
Claims dismissed | 0 | -1,000 | -2,000 | -7,000 | -12,000 |
Open claims - end of period | 66,000 | 66,000 | 65,000 | 66,000 | 72,000 |
Asbestos reserve [Roll Forward] | ' | ' | ' | ' | ' |
Asbestos reserve - beginning of period | 463 | 522 | 522 | 543 | 537 |
Reserve adjustment | 0 | 0 | -28 | 11 | 41 |
Amounts paid | -8 | -9 | -31 | -32 | -35 |
Asbestos reserve - end of period | 455 | 513 | 463 | 522 | 543 |
Estimated percentage of insurance receivables that are domestic insurers (in hundredths) | 65.00% | ' | ' | ' | ' |
Percentage Of Domestic Insurers With A B Plus Credit Rating Or Higher | 100.00% | ' | ' | ' | ' |
Insurance receivables relating to costs previously paid | 91 | ' | ' | ' | ' |
Insurance receivable [Roll Forward] | ' | ' | ' | ' | ' |
Insurance receivable - beginning of period | 408 | 423 | 423 | 431 | 421 |
Receivable adjustment | 0 | 0 | -3 | 19 | 42 |
Amounts collected | -3 | -4 | -12 | -27 | -32 |
Insurance receivable - end of period | 405 | 419 | 408 | 423 | 431 |
Asbestos litigation cost projection [Abstract] | ' | ' | ' | ' | ' |
Possible total future litigation defense and claim settlement costs | 740 | ' | ' | ' | ' |
Hercules [Member] | ' | ' | ' | ' | ' |
Asbestos claims [Roll Forward] | ' | ' | ' | ' | ' |
Open claims - beginning of period | 21,000 | 21,000 | 21,000 | 21,000 | 20,000 |
New claims filed | 0 | 0 | 1,000 | 1,000 | 2,000 |
Claims dismissed | 0 | 0 | -1,000 | -1,000 | -1,000 |
Open claims - end of period | 21,000 | 21,000 | 21,000 | 21,000 | 21,000 |
Asbestos reserve [Roll Forward] | ' | ' | ' | ' | ' |
Asbestos reserve - beginning of period | 342 | 320 | 320 | 311 | 375 |
Reserve adjustment | 0 | 0 | 46 | 30 | -48 |
Amounts paid | -5 | -9 | -24 | -21 | -16 |
Asbestos reserve - end of period | 337 | 311 | 342 | 320 | 311 |
Percentage Of Domestic Insurers With A B Plus Credit Rating Or Higher | 100.00% | ' | ' | ' | ' |
Insurance receivable [Roll Forward] | ' | ' | ' | ' | ' |
Insurance receivable - beginning of period | 75 | 56 | 56 | 48 | 68 |
Receivable adjustment | 0 | 0 | 19 | 9 | -20 |
Amounts collected | 0 | -1 | 0 | -1 | 0 |
Insurance receivable - end of period | 75 | 55 | 75 | 56 | 48 |
Asbestos litigation cost projection [Abstract] | ' | ' | ' | ' | ' |
Possible total future litigation defense and claim settlement costs | $640 | ' | ' | ' | ' |
LITIGATION_CLAIMS_AND_CONTINGE4
LITIGATION, CLAIMS AND CONTINGENCIES (Environmental Remediation and Asset Retirement Obligations) (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2013 |
waste_treatment_or_disposal_sites | |||
disposal_site | |||
service_station_property | |||
Environmental remediation and asset retirement obligations [Abstract] | ' | ' | ' |
Number of waste treatment or disposal sites were company is identified as a potentially responsible party under the superfund or similar state laws | 80 | ' | ' |
Number of current and former operating facilities subject to various environmental laws. | 145 | ' | ' |
Total number of service station properties subject to various environmental laws | 1,225 | ' | ' |
Number of service stations being actively remediated | 84 | ' | ' |
Noncurrent environmental reserves | $167 | ' | $171 |
Environmental receivables from insurers | 26 | ' | 26 |
Environmental contingencies and asset retirement obligation [Roll Forward] | ' | ' | ' |
Reserve - beginning of period | 211 | 228 | ' |
Disbursements, net of cost recoveries | -8 | -12 | ' |
Revised obligation estimates and accretion | 5 | 3 | ' |
Foreign currency translation | 0 | 1 | ' |
Reserve - end of period | 208 | 220 | ' |
Environmental Remediation Costs Recognized [Abstract] | ' | ' | ' |
Environmental expense | 4 | 2 | ' |
Accretion | 1 | 1 | ' |
Total expense | 5 | 3 | ' |
Insurance receivable | -1 | -2 | ' |
Total expense, net of receivable activity | 4 | 1 | ' |
Maximum future environmental remediation costs for identified sites | $420 | ' | ' |
Maximum reserve for remediation reserve related to any one site (in hundredths) | 12.00% | ' | ' |
LITIGATION_CLAIMS_AND_CONTINGE5
LITIGATION, CLAIMS AND CONTINGENCIES (Insurance Settlement) (Details) (Cost of Sales [Member], USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2012 |
Cost of Sales [Member] | ' |
Gain Contingencies [Line Items] | ' |
Gain on business interruption insurance recovery | $22 |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) (USD $) | 3 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Earnings Per Share [Abstract] | ' | ' |
Antidilutive securities excluded from calculation of earnings per share | 0.6 | 0.6 |
Numerator [Abstract] | ' | ' |
Numerator for basic and diluted EPS - Income from continuing operations | $111 | $102 |
Denominator [Abstract] | ' | ' |
Denominator for basic EPS - Weighted-average common shares outstanding | 77 | 79 |
Share based awards convertible to common shares | 1 | 1 |
Denominator for diluted EPS - Adjusted weighted-average shares and assumed conversions | 78 | 80 |
EPS from continuing operations [Abstract] | ' | ' |
Basic (in usd per share) | $1.44 | $1.29 |
Diluted (in usd per share) | $1.42 | $1.27 |
STOCKHOLDERS_EQUITY_ITEMS_Deta
STOCKHOLDERS' EQUITY ITEMS (Details) (USD $) | 3 Months Ended | |||||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2011 | ||
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | ' | ' | ' | ' | ' | ||
Unrealized translation gain (loss), before tax | $39 | ' | ' | ' | $45 | ' | ||
Unrealized translation gain (loss), tax | 0 | ' | ' | ' | 0 | ' | ||
Unrealized translation gain (loss), net of tax | 39 | ' | ' | ' | 45 | ' | ||
Amortization of unrecognized prior service credits included in net income, before tax | -6 | [1] | ' | ' | ' | -6 | [1] | ' |
Amortization of unrecognized prior service credits included in net income, tax | 2 | [1] | ' | ' | ' | 2 | [1] | ' |
Amortization of unrecognized prior service credits included in net income, net of tax | -4 | [1] | ' | ' | ' | -4 | [1] | ' |
Reclassification adjustment for interest rate hedge gains included in net income, before tax | 0 | [2] | ' | ' | ' | 5 | [2] | ' |
Reclassification adjustment for interest rate hedge gains included in net income, tax | 0 | [2] | ' | ' | ' | -2 | [2] | ' |
Reclassification adjustment for interest rate hedge gains included in net income, net of tax | 0 | [2] | ' | ' | ' | 3 | [2] | ' |
Other comprehensive income (loss), before tax | 33 | ' | ' | ' | 44 | ' | ||
Other comprehensive income (loss), tax | 2 | ' | ' | ' | 0 | ' | ||
Other comprehensive income | 35 | ' | ' | ' | 44 | ' | ||
Stock repurchase program, authorized amount | ' | ' | 600 | ' | ' | 400 | ||
Stock repurchase program, remaining authorized repurchase amount | 450 | ' | ' | ' | 329 | ' | ||
Dividends [Abstract] | ' | ' | ' | ' | ' | ' | ||
Quarterly dividend (per share) | $0.34 | $0.34 | $0.34 | $0.23 | $0.23 | ' | ||
Cost of Sales [Member] | ' | ' | ' | ' | ' | ' | ||
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | ' | ' | ' | ' | ' | ||
Amortization of unrecognized prior service credits included in net income, net of tax | 2 | ' | ' | ' | 2 | ' | ||
Selling, General and Administrative Expenses [Member] | ' | ' | ' | ' | ' | ' | ||
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | ' | ' | ' | ' | ' | ||
Amortization of unrecognized prior service credits included in net income, net of tax | $4 | ' | ' | ' | $4 | ' | ||
[1] | Amortization of unrecognized prior service credits are included in the calculation of net periodic benefit costs for pension and other postretirement plans. Of the total amortization in each period, $2 million during the three months ended December 31, 2013 and 2012 was included in the cost of sales caption, and $4 million during the three months ended December 31, 2013 and 2012 was included in the selling, general and administrative expense caption. See Note I for further information. | |||||||
[2] | Losses from interest rate hedges are recorded in the net interest and other financing expense caption. See Note D for further information. |
STOCK_INCENTIVE_PLANS_Details
STOCK INCENTIVE PLANS (Details) (USD $) | 3 Months Ended | |
In Millions, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Stock-based compensation | $8 | $9 |
Stock Appreciation Rights (SARs) [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Unexercised SARs lapse expiration period | '10 years 1 month | ' |
Grants of share-based payment awards in period | 400,000 | 900,000 |
Total unrecognized compensation costs | 29 | ' |
Unrecognized cost expected to be recognized over a weighted-average period (in years) | '2 years 2 months | ' |
Model to fair value share-based payment awards | 'Black-Scholes option-pricing model | ' |
Stock Appreciation Rights (SARs) [Member] | Minimum [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Vesting period of share-based payment award | '1 year | ' |
Stock Appreciation Rights (SARs) [Member] | Maximum [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Vesting period of share-based payment award | '3 years | ' |
Nonvested Stock Awards [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Grants of share-based payment awards in period | 133,300 | 0 |
Total unrecognized compensation costs | 14 | ' |
Unrecognized cost expected to be recognized over a weighted-average period (in years) | '2 years | ' |
Nonvested Stock Awards [Member] | Minimum [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Vesting period of share-based payment award | '1 year | ' |
Nonvested Stock Awards [Member] | Maximum [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Vesting period of share-based payment award | '5 years | ' |
Performance Shares [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Performance cycle covered by performance based awards | '3 years | ' |
Number of common shares for each converted performance share | 1 | ' |
Grants of share-based payment awards in period | 100,000 | 100,000 |
Total unrecognized compensation costs | $14 | ' |
Unrecognized cost expected to be recognized over a weighted-average period (in years) | '2 years 2 months | ' |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Segment Reporting Information [Line Items] | ' | ' |
Number of reportable segments | 4 | ' |
SALES | $1,868 | $1,869 |
OPERATING INCOME | 179 | 176 |
Specialty Ingredients [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
SALES | 599 | 622 |
OPERATING INCOME | 45 | 72 |
Water Technologies [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
SALES | 436 | 421 |
OPERATING INCOME | 27 | 17 |
Performance Materials [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
SALES | 347 | 345 |
OPERATING INCOME | 20 | 13 |
Consumer Markets [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Number of Stores | 900 | ' |
SALES | 486 | 481 |
OPERATING INCOME | 75 | 66 |
Unallocated and other [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
OPERATING INCOME | $12 | $8 |