EXHIBIT 99.1
Ashland Inc. and Consolidated Subsidiaries
STATEMENTS OF CONSOLIDATED INCOME
Years Ended September 30
(In millions except per share data) 2004 2003 2002 2001 2000
- -------------------------------------------------------------------------------------------------------------------------
REVENUES
Sales and operating revenues $ 8,301 $ 7,566 $ 7,390 $ 7,544 $ 7,785
Equity income 432 301 181 755 395
Other income 48 45 46 53 63
---------- ---------- ----------- ---------- ----------
8,781 7,912 7,617 8,352 8,243
COSTS AND EXPENSES
Cost of sales and operating expenses 6,948 6,390 6,115 6,358 6,517
Selling, general and administrative expenses 1,171 1,256 1,181 1,163 1,081
---------- ---------- ----------- ---------- ----------
8,119 7,646 7,296 7,521 7,598
---------- ---------- ----------- ---------- ----------
OPERATING INCOME 662 266 321 831 645
Net interest and other financial costs (114) (128) (138) (175) (194)
---------- ---------- ----------- ---------- ----------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 548 138 183 656 451
Income taxes (150) (44) (68) (266) (179)
---------- ---------- ----------- ---------- ----------
INCOME FROM CONTINUING OPERATIONS 398 94 115 390 272
Results from discontinued operations (20) (14) 13 32 (202)
---------- ---------- ----------- ---------- ----------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGES 378 80 128 422 70
Cumulative effect of accounting changes - (5) (11) (5) -
---------- ---------- ----------- ---------- ----------
NET INCOME $ 378 $ 75 $ 117 $ 417 $ 70
========== ========== =========== ========== ==========
EARNINGS PER SHARE
Basic
Income from continuing operations $ 5.69 $ 1.37 $ 1.67 $ 5.60 $ 3.84
Results from discontinued operations (.28) (.19) .19 .46 (2.85)
Cumulative effect of accounting changes - (.08) (.17) (.07) -
---------- ---------- ----------- ---------- ----------
Net income $ 5.41 $ 1.10 $ 1.69 $ 5.99 $ .99
========== ========== =========== ========== ==========
Diluted
Income from continuing operations $ 5.59 $ 1.37 $ 1.64 $ 5.54 $ 3.83
Results from discontinued operations (.28) (.19) .19 .45 (2.85)
Cumulative effect of accounting changes - (.08) (.16) (.06) -
---------- ---------- ----------- ---------- ----------
Net income $ 5.31 $ 1.10 $ 1.67 $ 5.93 $ .98
========== ========== =========== ========== ==========
Ashland Inc. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30
(In millions) 2004 2003 2002 2001 2000
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 243 $ 223 $ 90 $ 236 $ 67
Accounts receivable 1,290 1,135 1,056 1,165 1,211
Inventories 458 441 456 468 461
Deferred income taxes 103 142 119 131 136
Current assets of discontinued operations held for sale - - 211 64 99
Other current assets 208 144 139 169 199
----------- ---------- ---------- ---------- -----------
2,302 2,085 2,071 2,233 2,173
INVESTMENTS AND OTHER ASSETS
Investment in Marathon Ashland Petroleum LLC (MAP) 2,713 2,448 2,350 2,387 2,295
Goodwill 513 523 510 517 525
Asbestos insurance receivable (noncurrent portion) 399 399 171 162 46
Noncurrent assets of discontinued operations held for sale - - - 145 142
Other noncurrent assets 319 279 261 299 288
----------- ---------- ---------- ---------- -----------
3,944 3,649 3,292 3,510 3,296
PROPERTY, PLANT AND EQUIPMENT
Cost
APAC 1,302 1,337 1,372 1,304 1,234
Ashland Distribution 356 357 383 382 356
Ashland Specialty Chemical 780 723 710 701 662
Valvoline 466 452 406 395 354
Corporate 200 178 135 143 159
----------- ---------- ---------- ---------- -----------
3,104 3,047 3,006 2,925 2,765
Accumulated depreciation, depletion and amortization (1,848) (1,775) (1,647) (1,540) (1,410)
----------- ---------- ---------- ---------- -----------
1,256 1,272 1,359 1,385 1,355
----------- ---------- ---------- ---------- -----------
$ 7,502 $ 7,006 $ 6,722 $ 7,128 $ 6,824
=========== ========== ========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Debt due within one year
Short-term debt $ 40 $ - $ 10 $ - $ 245
Current portion of long-term debt 399 102 191 85 82
Trade and other payables 1,362 1,371 1,256 1,399 1,309
Current liabilities of discontinued operations held for sale - - 39 26 35
Income taxes 14 11 24 20 40
----------- ---------- ---------- ---------- -----------
1,815 1,484 1,520 1,530 1,711
NONCURRENT LIABILITIES
Long-term debt (less current portion) 1,109 1,512 1,606 1,786 1,899
Employee benefit obligations 428 385 509 412 383
Deferred income taxes 367 291 246 439 283
Reserves of captive insurance companies 179 168 166 173 179
Asbestos litigation reserve (noncurrent portion) 568 560 152 162 44
Noncurrent liabilities of discontinued operations held for sale - - - 13 11
Other long-term liabilities and deferred credits 330 353 350 387 349
----------- ---------- ---------- ---------- -----------
2,981 3,269 3,029 3,372 3,148
STOCKHOLDERS' EQUITY
Common stock 72 68 68 69 70
Paid-in capital 478 350 338 363 388
Retained earnings 2,262 1,961 1,961 1,920 1,579
Accumulated other comprehensive loss (106) (126) (194) (126) (72)
----------- ---------- ---------- ---------- -----------
2,706 2,253 2,173 2,226 1,965
----------- ---------- ---------- ---------- -----------
$ 7,502 $ 7,006 $ 6,722 $ 7,128 $ 6,824
=========== ========== ========== ========== ===========
Ashland Inc. and Consolidated Subsidiaries
STATEMENTS OF CONSOLIDATED CASH FLOWS
Years Ended September 30
(In millions) 2004 2003 2002 2001 2000
- -------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATIONS
Income from continuing operations $ 398 $ 94 $ 115 $ 390 $ 272
Expense (income) not affecting cash
Depreciation, depletion and amortization 193 204 208 240 227
Deferred income taxes 125 49 (121) 151 107
Equity income from affiliates (432) (301) (181) (755) (395)
Distributions from equity affiliates 169 203 201 664 282
Other items 2 1 - 5 (19)
Change in operating assets and liabilities (1) (246) (8) (54) 119 (6)
---------- ---------- ----------- ---------- ----------
209 242 168 814 468
CASH FLOWS FROM FINANCING
Proceeds from issuance of long-term debt - - 55 52 988
Proceeds from issuance of common stock 108 2 11 15 5
Repayment of long-term debt (100) (216) (140) (169) (675)
Repurchase of common stock - - (42) (49) (89)
Increase (decrease) in short-term debt 40 (10) 10 (245) 63
Dividends paid (77) (75) (76) (76) (78)
---------- ---------- ----------- ---------- ----------
(29) (299) (182) (472) 214
CASH FLOWS FROM INVESTMENT
Additions to property, plant and equipment (210) (112) (178) (214) (240)
Purchase of operations - net of cash acquired (5) (5) (15) (91) (590)
Proceeds from sale of operations 48 7 - 9 50
Other - net 26 13 26 37 85
---------- ---------- ----------- ---------- ----------
(141) (97) (167) (259) (695)
---------- ---------- ----------- ---------- ----------
CASH PROVIDED (USED) BY CONTINUING OPERATIONS 39 (154) (181) 83 (13)
Cash provided (used) by discontinued operations (19) 287 35 86 (30)
---------- ---------- ----------- ---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 20 133 (146) 169 (43)
Cash and cash equivalents - beginning of year 223 90 236 67 110
---------- ---------- ----------- ---------- ----------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 243 $ 223 $ 90 $ 236 $ 67
========== ========== =========== ========== ==========
DECREASE (INCREASE) IN OPERATING ASSETS (1)
Accounts receivable $ (157) $ (79) $ 110 $ 70 $ 69
Inventories (14) 15 12 5 1
Deferred income taxes 2 22 17 - (28)
Other current assets (64) (5) 30 31 (29)
Investments and other assets (15) 7 41 (168) (69)
INCREASE (DECREASE) IN OPERATING LIABILITIES (1)
Trade and other payables (15) 115 (132) 71 108
Income taxes (19) (50) (18) 4 (15)
Noncurrent liabilities 36 (33) (114) 106 (43)
---------- ---------- ----------- ---------- ----------
CHANGE IN OPERATING ASSETS AND LIABILITIES $ (246) $ (8) $ (54) $ 119 $ (6)
========== ========== =========== ========== ==========
(1) Excludes changes resulting from operations acquired or sold.
Ashland Inc. and Consolidated Subsidiaries
INFORMATION BY INDUSTRY SEGMENT
Years Ended September 30
(In millions) 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------
REVENUES
Sales and operating revenues
APAC $ 2,525 $ 2,400 $ 2,652 $ 2,624 $ 2,504
Ashland Distribution 3,199 2,811 2,541 2,858 3,221
Ashland Specialty Chemical 1,386 1,212 1,130 1,091 1,127
Valvoline 1,297 1,235 1,152 1,064 1,049
Intersegment sales (1)
Ashland Distribution (19) (21) (20) (27) (39)
Ashland Specialty Chemical (86) (69) (63) (64) (76)
Valvoline (1) (2) (2) (2) (1)
---------- ---------- ---------- ---------- -----------
8,301 7,566 7,390 7,544 7,785
Equity income
APAC 19 9 - - -
Ashland Specialty Chemical 8 7 4 5 4
Valvoline - - 1 1 2
Refining and Marketing 405 285 176 749 389
---------- ---------- ---------- ---------- -----------
432 301 181 755 395
Other income
APAC 22 - 12 13 21
Ashland Distribution 9 18 17 15 9
Ashland Specialty Chemical 16 10 4 6 12
Valvoline 4 5 6 6 7
Refining and Marketing (6) 2 2 7 6
Corporate 3 10 5 6 8
---------- ---------- ---------- ---------- -----------
48 45 46 53 63
---------- ---------- ---------- ---------- -----------
$ 8,781 $ 7,912 $ 7,617 $ 8,352 $ 8,243
========== ========== ========== ========== ===========
OPERATING INCOME
APAC $ 111 $ (42) $ 122 $ 55 $ 140
Ashland Distribution 78 32 1 35 70
Ashland Specialty Chemical 87 31 70 38 69
Valvoline 105 87 77 81 78
Refining and Marketing (2) 383 263 143 707 361
Corporate (102) (105) (92) (85) (73)
---------- ---------- ---------- ---------- -----------
$ 662 $ 266 $ 321 $ 831 $ 645
========== ========== ========== ========== ===========
DEPRECIATION, DEPLETION AND AMORTIZATION
APAC $ 95 $ 108 $ 114 $ 133 $ 129
Ashland Distribution 18 19 21 27 23
Ashland Specialty Chemical 41 40 38 46 40
Valvoline 27 26 24 23 22
Corporate 12 11 11 11 13
---------- ---------- ---------- ---------- -----------
$ 193 $ 204 $ 208 $ 240 $ 227
========== ========== ========== ========== ===========
(1) Intersegment sales are accounted for at prices that approximate
market value.
(2) Includes Ashland's equity income from MAP, amortization related to
Ashland's excess investment in MAP, and other activities
associated with refining and marketing.
Ashland Inc. and Consolidated Subsidiaries
INFORMATION BY INDUSTRY SEGMENT
Years Ended September 30
(In millions) 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------
ASSETS
APAC $ 1,428 $ 1,481 $ 1,498 $ 1,574 $ 1,654
Ashland Distribution 922 856 884 961 1,047
Ashland Specialty Chemical 842 749 941 941 887
Valvoline 658 667 611 642 573
Refining and Marketing 2,742 2,484 2,409 2,452 2,352
Corporate (1) 910 769 379 558 311
---------- ---------- ---------- ---------- -----------
$ 7,502 $ 7,006 $ 6,722 $ 7,128 $ 6,824
========== ========== ========== ========== ===========
CAPITAL EMPLOYED
APAC $ 959 $ 1,014 $ 1,039 $ 1,047 $ 1,156
Ashland Distribution 449 418 459 470 574
Ashland Specialty Chemical 490 438 610 612 597
Valvoline 388 399 343 389 333
Refining and Marketing 2,053 1,866 1,818 1,654 1,679
Corporate (85) (268) (289) (75) (148)
---------- ---------- ---------- ---------- -----------
$ 4,254 $ 3,867 $ 3,980 $ 4,097 $ 4,191
========== ========== ========== ========== ===========
RETURN ON INVESTMENT (2)
APAC 7.3% (2.4)% 7.3 % 2.5% 7.5%
Ashland Distribution 10.8% 4.3 % (0.5)% 2.8% 7.2%
Ashland Specialty Chemical 12.3% 4.8 % 9.8 % 5.4% 10.1%
Valvoline 15.7% 14.1 % 12.5 % 12.5% 12.2%
Refining and Marketing 12.4% 8.7 % 4.9 % 25.3% 13.2%
Ashland Inc. consolidated 11.7% 4.4 % 5.0 % 12.3% 9.6%
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
APAC $ 73 $ 47 $ 107 $ 92 $ 101
Ashland Distribution 10 5 15 25 25
Ashland Specialty Chemical 62 34 27 39 64
Valvoline 26 18 22 37 30
Corporate 39 8 7 21 20
---------- ---------- ---------- ---------- -----------
$ 210 $ 112 $ 178 $ 214 $ 240
========== ========== ========== ========== ===========
(1) Includes cash, cash equivalents and other unallocated assets.
(2) Calculated as income from continuing operations before interest
expense on debt (net of related tax benefits) divided by average
quarterly capital employed (excluding capital employed in
discontinued operations).
Ashland Inc. and Consolidated Subsidiaries
INFORMATION BY INDUSTRY SEGMENT
Years Ended September 30
2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATING INFORMATION
APAC
Construction backlog at September 30 (millions) (1) $ 1,746 $ 1,745 $ 1,691 $ 1,629 $ 1,397
Net construction job revenues (millions) (2) $ 1,433 $ 1,361 $ 1,527 $ 1,547 $ 1,536
Hot-mix asphalt production (million tons) 33.4 32.5 36.7 36.7 35.0
Aggregate production (million tons) 29.6 28.7 31.0 28.7 27.8
Ready-mix concrete production (million cubic yards) 1.7 2.0 2.1 2.3 2.6
Ashland Distribution (3)
Sales per shipping day (millions) $ 12.6 $ 11.2 $ 10.1 $ 11.2 $ 12.8
Gross profit as a percent of sales 9.6% 9.9% 9.7% 8.9% 9.1%
Ashland Specialty Chemical (3)
Sales per shipping day (millions) $ 5.4 $ 4.8 $ 4.5 $ 4.3 $ 4.5
Gross profit as a percent of sales 27.9% 29.9% 32.9% 29.7% 29.7%
Valvoline
Lubricant sales (million gallons) 191.6 193.5 199.0 187.4 194.1
Premium lubricants (percent of U.S. branded volumes) 21.5% 18.5% 16.1% 11.7% 10.7%
Refining and Marketing (4)
Refinery runs (thousand barrels per day)
Crude oil refined 920 900 930 912 892
Other charge and blend stocks 167 133 151 139 141
Refined product yields (thousand barrels per day)
Gasoline 600 554 594 560 559
Distillates 291 278 293 279 272
Asphalt 74 71 73 75 73
Other 135 131 127 136 131
---------- ---------- ---------- ----------- ----------
Total 1,100 1,034 1,087 1,050 1,035
Refined product sales (thousand barrels per day) (5) 1,385 1,345 1,321 1,302 1,309
Refining and wholesale marketing margin (per barrel) (6) $ 3.11 $ 2.59 $ 1.82 $ 5.17 $ 2.63
Speedway SuperAmerica (SSA)
Retail outlets at September 30 1,685 1,791 2,063 2,145 2,288
Gasoline and distillate sales (million gallons) 3,165 3,423 3,622 3,587 3,742
Gross margin - gasoline and distillates (per gallon) $ .1167 $ .1191 $ .1040 $ .1218 $ .1284
Merchandise sales (millions) $ 2,301 $ 2,281 $ 2,381 $ 2,186 $ 2,143
Merchandise margin (as a percent of sales) 24.4% 24.5% 24.2% 23.3% 24.5%
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Includes APAC's proportionate share of the backlog of
unconsolidated joint ventures.
(2) Total construction job revenues, less subcontract costs.
(3) Sales are defined as sales and operating revenues. Gross profit is
defined as sales and operating revenues, less cost of sales and
operating expenses.
(4) Amounts represent 100% of MAP's operations, in which Ashland owns
a 38% interest.
(5) Total average daily volume of all refined product sales to MAP's
wholesale, branded and retail (SSA) customers.
(6) Sales revenue less cost of refinery inputs, purchased products and
manufacturing expenses, including depreciation.
Ashland Inc. and Consolidated Subsidiaries
INTERNATIONAL OPERATIONS
Years Ended September 30
(In millions) 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL ASSETS
Ashland Distribution $ 184 $ 152 $ 125 $ 126 $ 156
Ashland Specialty Chemical 416 352 319 295 226
Valvoline 132 121 101 92 94
---------- ---------- ---------- ---------- -----------
732 625 545 513 476
INTERNATIONAL LIABILITIES
Ashland Distribution 88 59 49 50 52
Ashland Specialty Chemical 128 104 99 99 69
Valvoline 54 45 37 36 31
---------- ---------- ---------- ---------- -----------
270 208 185 185 152
NET INTERNATIONAL INVESTMENT
Ashland Distribution 96 93 76 76 104
Ashland Specialty Chemical 288 248 220 196 157
Valvoline 78 76 64 56 63
---------- ---------- ---------- ---------- -----------
$ 462 $ 417 $ 360 $ 328 $ 324
========== ========== ========== ========== ===========
INTERNATIONAL INCOME BEFORE INCOME TAXES (1)
Ashland Distribution $ 14 $ 8 $ 6 $ 12 $ 13
Ashland Specialty Chemical 73 54 54 48 34
Valvoline 20 16 9 2 8
---------- ---------- ---------- ---------- -----------
$ 107 $ 78 $ 69 $ 62 $ 55
========== ========== ========== ========== ===========
INTERNATIONAL REVENUES
Ashland Distribution $ 537 $ 432 $ 360 $ 417 $ 496
Ashland Specialty Chemical 589 485 418 371 373
Valvoline 249 208 177 168 180
---------- ---------- ---------- ---------- -----------
$ 1,375 $ 1,125 $ 955 $ 956 $ 1,049
========== ========== ========== ========== ===========
(1) Amounts represent income recorded by international subsidiaries,
equity and dividend income from international affiliates, and
international source royalty and other income recorded by U.S.
subsidiaries. Amounts do not reflect any allocation of expenses
incurred in the U.S. (e.g., research and development, advertising
or administrative expenses) for the benefit of both U.S. and
international operations.
Ashland Inc. and Consolidated Subsidiaries
INTERNATIONAL OPERATIONS
Years Ended September 30
(In millions) 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL ASSETS
Europe $ 432 $ 368 $ 325 $ 295 $ 237
Canada 164 141 124 126 143
Asia 58 47 40 38 32
Australia and New Zealand 48 43 34 27 31
Other 30 26 22 27 33
---------- ---------- ---------- ---------- -----------
732 625 545 513 476
INTERNATIONAL LIABILITIES
Europe 180 137 129 119 89
Canada 52 40 32 42 38
Asia 11 11 8 8 5
Australia and New Zealand 17 11 10 9 13
Other 10 9 6 7 7
---------- ---------- ---------- ---------- -----------
270 208 185 185 152
NET INTERNATIONAL INVESTMENT
Europe 252 231 196 176 148
Canada 112 101 92 84 105
Asia 47 36 32 30 27
Australia and New Zealand 31 32 24 18 18
Other 20 17 16 20 26
---------- ---------- ---------- ---------- -----------
$ 462 $ 417 $ 360 $ 328 $ 324
========== ========== ========== ========== ===========
INTERNATIONAL INCOME BEFORE INCOME TAXES (1)
Europe $ 41 $ 23 $ 30 $ 25 $ 19
Canada 32 25 25 26 24
Asia 14 14 11 10 9
Australia and New Zealand 11 8 3 1 1
Other 9 8 - - 2
---------- ---------- ---------- ---------- -----------
$ 107 $ 78 $ 69 $ 62 $ 55
========== ========== ========== ========== ===========
INTERNATIONAL REVENUES
Europe $ 757 $ 618 $ 510 $ 475 $ 527
Canada 344 292 265 288 321
Asia 87 76 63 55 50
Australia and New Zealand 95 75 61 61 68
Other 92 64 56 77 83
---------- ---------- ---------- ---------- -----------
$ 1,375 $ 1,125 $ 955 $ 956 $ 1,049
========== ========== ========== ========== ===========
(1) Amounts represent income recorded by international subsidiaries,
equity and dividend income from international affiliates, and
international source royalty and other income recorded by U.S.
subsidiaries. Amounts do not reflect any allocation of expenses
incurred in the U.S. (e.g., research and development, advertising
or administrative expenses) for the benefit of both U.S. and
international operations.