EXHIBIT 99.1
Ashland Inc. and Consolidated Subsidiaries
STATEMENTS OF CONSOLIDATED INCOME
Years Ended September 30
(In millions except per share data) 2005 2004 2003 2002 2001
- -------------------------------------------------------------------------------------------------------------------------
Revenues
Sales and operating revenues $ 9,270 $ 8,301 $ 7,566 $ 7,390 $ 7,544
Equity income 531 432 301 181 755
Other income 59 48 45 46 53
---------- ---------- ----------- ---------- ----------
9,860 8,781 7,912 7,617 8,352
Costs and expenses
Cost of sales and operating expenses 7,823 6,948 6,390 6,115 6,358
Selling, general and administrative expenses 1,291 1,171 1,256 1,181 1,163
---------- ---------- ----------- ---------- ----------
9,114 8,119 7,646 7,296 7,521
---------- ---------- ----------- ---------- ----------
Operating income 746 662 266 321 831
Gain on the MAP Transaction 1,284 - - - -
Loss on early retirement of debt (145) - - - -
Net interest and other financial costs (82) (114) (128) (138) (175)
---------- ---------- ----------- ---------- ----------
Income from continuing operations
before income taxes 1,803 548 138 183 656
Income taxes 202 (150) (44) (68) (266)
---------- ---------- ----------- ---------- ----------
Income from continuing operations 2,005 398 94 115 390
Results from discontinued operations (1) (20) (14) 13 32
---------- ---------- ----------- ---------- ----------
Income before cumulative effect
of accounting changes 2,004 378 80 128 422
Cumulative effect of accounting changes - - (5) (11) (5)
---------- ---------- ----------- ---------- ----------
Net income $ 2,004 $ 378 $ 75 $ 117 $ 417
========== ========== =========== ========== ==========
Earnings per share
Basic
Income from continuing operations $ 27.50 $ 5.69 $ 1.37 $ 1.67 $ 5.60
Results from discontinued operations (.01) (.28) (.19) .19 .46
Cumulative effect of accounting changes - - (.08) (.17) (.07)
---------- ---------- ----------- ---------- ----------
Net income $ 27.49 $ 5.41 $ 1.10 $ 1.69 $ 5.99
========== ========== =========== ========== ==========
Diluted
Income from continuing operations $ 26.86 $ 5.59 $ 1.37 $ 1.64 $ 5.54
Results from discontinued operations (.01) (.28) (.19) .19 .45
Cumulative effect of accounting changes - - (.08) (.16) (.06)
---------- ---------- ----------- ---------- ----------
Net income $ 26.85 $ 5.31 $ 1.10 $ 1.67 $ 5.93
========== ========== =========== ========== ==========
Ashland Inc. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30
(In millions) 2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 985 $ 243 $ 223 $ 90 $ 236
Available-for-sale securities 403 - - - -
Accounts receivable 1,599 1,290 1,135 1,056 1,165
Inventories 527 458 441 456 468
Deferred income taxes 122 103 142 119 131
Current assets of discontinued operations held for sale - - - 211 64
Other current assets 121 208 144 139 169
---------- ---------- ---------- ----------- -----------
3,757 2,302 2,085 2,071 2,233
INVESTMENTS AND OTHER ASSETS
Investment in Marathon Ashland Petroleum LLC (MAP) - 2,713 2,448 2,350 2,387
Goodwill and other intangibles 650 529 538 531 538
Asbestos insurance receivable (noncurrent portion) 370 399 399 171 162
Deferred income taxes 175 - - - -
Noncurrent assets of discontinued operations held for sale - - - - 145
Other noncurrent assets 441 303 264 240 278
---------- ---------- ---------- ----------- -----------
1,636 3,944 3,649 3,292 3,510
PROPERTY, PLANT AND EQUIPMENT
Cost
APAC 1,444 1,302 1,337 1,372 1,304
Ashland Distribution 378 356 357 383 382
Ashland Specialty Chemical 757 780 723 710 701
Valvoline 488 466 452 406 395
Corporate 207 200 178 135 143
---------- ---------- ---------- ----------- -----------
3,274 3,104 3,047 3,006 2,925
Accumulated depreciation, depletion and amortization (1,852) (1,848) (1,775) (1,647) (1,540)
---------- ---------- ---------- ----------- -----------
1,422 1,256 1,272 1,359 1,385
---------- ---------- ---------- ----------- -----------
$ 6,815 $ 7,502 $ 7,006 $ 6,722 $ 7,128
========== ========== ========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Debt due within one year
Short-term debt $ - $ 40 $ - $ 10 $ -
Current portion of long-term debt 12 399 102 191 85
Trade and other payables 1,520 1,362 1,371 1,256 1,399
Current liabilities of discontinued operations held for sale - - - 39 26
Income taxes 13 14 11 24 20
---------- ---------- ---------- ----------- -----------
1,545 1,815 1,484 1,520 1,530
NONCURRENT LIABILITIES
Long-term debt (less current portion) 82 1,109 1,512 1,606 1,786
Employee benefit obligations 358 428 385 509 412
Deferred income taxes - 367 291 246 439
Reserves of captive insurance companies 182 179 168 166 173
Asbestos litigation reserve (noncurrent portion) 521 568 560 152 162
Noncurrent liabilities of discontinued operations held for sale - - - - 13
Other long-term liabilities and deferred credits 388 330 353 350 387
---------- ---------- ---------- ----------- -----------
1,531 2,981 3,269 3,029 3,372
STOCKHOLDERS' EQUITY
Common stock 1 72 68 68 69
Paid-in capital 605 478 350 338 363
Retained earnings 3,251 2,262 1,961 1,961 1,920
Accumulated other comprehensive loss (118) (106) (126) (194) (126)
---------- ---------- ---------- ----------- -----------
3,739 2,706 2,253 2,173 2,226
---------- ---------- ---------- ----------- -----------
$ 6,815 $ 7,502 $ 7,006 $ 6,722 $ 7,128
========== ========== ========== =========== ===========
Ashland Inc. and Consolidated Subsidiaries
STATEMENTS OF CONSOLIDATED CASH FLOWS
Years Ended September 30
(In millions) 2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATIONS
Income from continuing operations $ 2,005 $ 398 $ 94 $ 115 $ 390
Adjustments to reconcile to cash flows from operations
Depreciation, depletion and amortization 193 193 204 208 240
Deferred income taxes (532) 125 49 (121) 151
Equity income from affiliates (531) (432) (301) (181) (755)
Distributions from equity affiliates 281 169 203 201 664
Gain on the MAP transaction (1,284) - - - -
Loss on early retirement of debt 145 - - - -
Change in operating assets and liabilities (a) (235) (246) (8) (54) 119
Other items (5) 2 1 - 5
---------- ---------- ----------- ---------- ----------
37 209 242 168 814
CASH FLOWS FROM FINANCING
Proceeds from issuance of long-term debt - - - 55 52
Proceeds from issuance of common stock 115 108 2 11 15
Repayment of long-term debt (1,552) (100) (216) (140) (169)
Repurchase of common stock (100) - - (42) (49)
Increase (decrease) in short-term debt (40) 40 (10) 10 (245)
Cash dividends paid (79) (77) (75) (76) (76)
---------- ---------- ----------- ---------- ----------
(1,656) (29) (299) (182) (472)
CASH FLOWS FROM INVESTMENT
Additions to property, plant and equipment (380) (210) (112) (178) (214)
Purchase of operations - net of cash acquired (156) (5) (5) (15) (91)
Proceeds from sale of operations 3,306 48 7 - 9
Purchases of available-for-sale securities (402) - - - -
Proceeds from sales and maturities of
available-for-sale securities 1 - - - -
Other - net 19 26 13 26 37
---------- ---------- ----------- ---------- ----------
2,388 (141) (97) (167) (259)
---------- ---------- ----------- ---------- ----------
CASH PROVIDED (USED) BY CONTINUING OPERATIONS 769 39 (154) (181) 83
Cash provided (used) by discontinued operations (27) (19) 287 35 86
---------- ---------- ----------- ---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 742 20 133 (146) 169
Cash and cash equivalents - beginning of year 243 223 90 236 67
---------- ---------- ----------- ---------- ----------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 985 $ 243 $ 223 $ 90 $ 236
========== ========== =========== ========== ==========
DECREASE (INCREASE) IN OPERATING ASSETS (a)
Accounts receivable $ (312) $ (157) $ (79) $ 110 $ 70
Inventories (82) (14) 15 12 5
Deferred income taxes (3) 2 22 17 -
Other current assets 94 (64) (5) 30 31
Investments and other assets (245) (15) 7 41 (168)
Increase (decrease) in operating liabilities (a)
Trade and other payables 150 (15) 115 (132) 71
Income taxes (3) (19) (50) (18) 4
Noncurrent liabilities 166 36 (33) (114) 106
---------- ---------- ----------- ---------- ----------
Change in operating assets and liabilities $ (235) $ (246) $ (8) $ (54) $ 119
========== ========== =========== ========== ==========
(a) Excludes changes resulting from operations acquired or sold.
Ashland Inc. and Consolidated Subsidiaries
INFORMATION BY INDUSTRY SEGMENT
Years Ended September 30
(In millions) 2005 2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------------------
REVENUES
Sales and operating revenues
APAC $ 2,539 $ 2,525 $ 2,400 $ 2,652 $ 2,624
Ashland Distribution 3,810 3,199 2,811 2,541 2,858
Ashland Specialty Chemical 1,763 1,386 1,212 1,130 1,091
Valvoline 1,326 1,297 1,235 1,152 1,064
Intersegment sales (a)
Ashland Distribution (22) (19) (21) (20) (27)
Ashland Specialty Chemical (144) (86) (69) (63) (64)
Valvoline (2) (1) (2) (2) (2)
---------- ---------- ---------- ---------- -----------
9,270 8,301 7,566 7,390 7,544
Equity income
APAC 6 19 9 - -
Ashland Specialty Chemical 8 8 7 4 5
Valvoline - - - 1 1
Refining and Marketing 517 405 285 176 749
---------- ---------- ---------- ---------- -----------
531 432 301 181 755
Other income
APAC 20 22 - 12 13
Ashland Distribution 7 9 18 17 15
Ashland Specialty Chemical 21 16 10 4 6
Valvoline 6 4 5 6 6
Refining and Marketing 3 (6) 2 2 7
Corporate 2 3 10 5 6
---------- ---------- ---------- ---------- -----------
59 48 45 46 53
---------- ---------- ---------- ---------- -----------
$ 9,860 $ 8,781 $ 7,912 $ 7,617 $ 8,352
========== ========== ========== ========== ===========
OPERATING INCOME
APAC $ 48 $ 111 $ (42) $ 122 $ 55
Ashland Distribution 123 78 32 1 35
Ashland Specialty Chemical 134 87 31 70 38
Valvoline 90 105 87 77 81
Refining and Marketing (b) 486 383 263 143 707
Corporate (135) (102) (105) (92) (85)
---------- ---------- ---------- ---------- -----------
$ 746 $ 662 $ 266 $ 321 $ 831
========== ========== ========== ========== ===========
DEPRECIATION, DEPLETION AND AMORTIZATION
APAC $ 93 $ 95 $ 108 $ 114 $ 133
Ashland Distribution 18 18 19 21 27
Ashland Specialty Chemical 44 41 40 38 46
Valvoline 27 27 26 24 23
Corporate 11 12 11 11 11
---------- ---------- ---------- ---------- -----------
$ 193 $ 193 $ 204 $ 208 $ 240
========== ========== ========== ========== ===========
(a) Intersegment sales are accounted for at prices that approximate
market value.
(b) Includes Ashland's equity income from MAP through June 30, 2005,
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) 2005 2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------------------
ASSETS
APAC $ 1,569 $ 1,428 $ 1,481 $ 1,498 $ 1,574
Ashland Distribution 1,057 922 856 884 961
Ashland Specialty Chemical 997 842 749 941 941
Valvoline 723 658 667 611 642
Refining and Marketing 85 2,742 2,484 2,409 2,452
Corporate (a) 2,384 910 769 379 558
---------- ---------- ---------- ---------- ----------
$ 6,815 $ 7,502 $ 7,006 $ 6,722 $ 7,128
========== ========== ========== ========== ==========
CAPITAL EMPLOYED
APAC $ 1,133 $ 959 $ 1,014 $ 1,039 $ 1,047
Ashland Distribution 513 449 418 459 470
Ashland Specialty Chemical 612 490 438 610 612
Valvoline 483 388 399 343 389
Refining and Marketing (107) 2,053 1,866 1,818 1,654
Corporate 1,199 (85) (268) (289) (75)
---------- ---------- ---------- ---------- ----------
$ 3,833 $ 4,254 $ 3,867 $ 3,980 $ 4,097
========== ========== ========== ========== ==========
RETURN ON INVESTMENT (b)
APAC 3.0% 7.3% (2.4)% 7.3 % 2.5%
Ashland Distribution 15.0% 10.8% 4.3 % (0.5)% 2.8%
Ashland Specialty Chemical 13.6% (c) 12.3% 4.8 % 9.8 % 5.4%
Valvoline 13.2% (c) 15.7% 14.1 % 12.5 % 12.5%
Refining and Marketing 23.2% (c) 12.4% 8.7 % 4.9 % 25.3%
Ashland Inc. consolidated 12.4% (c) 11.7% 4.4 % 5.0 % 12.3%
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
APAC $ 200 $ 73 $ 47 $ 107 $ 92
Ashland Distribution 26 10 5 15 25
Ashland Specialty Chemical 64 62 34 27 39
Valvoline 66 26 18 22 37
Corporate 24 39 8 7 21
---------- ---------- ---------- ---------- ----------
$ 380 $ 210 $ 112 $ 178 $ 214
========== ========== ========== ========== ==========
(a) Includes cash, cash equivalents and other unallocated assets.
(b) 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).
(c) On June 30, 2005, Ashland transferred its 38-percent interest in
Marathon Ashland Petroleum LLC and two other businesses to Marathon
Oil Corp. (the "MAP Transaction"). Amounts for 2005 exclude the net
gain on the MAP transaction and the loss on the early retirement of
debt of $1,531 million. For further information, see Note D of Notes
to Consolidated Financial Statements in Ashland's annual report of
Form 10-K for the year ended September 30, 2005. Including these
amounts, the return on investment would have been the following:
Ashland Specialty Chemical 20.8%, Valvoline 18.6%, Refining and
Marketing 148.8% and Ashland Inc. consolidated 48.5%.
Ashland Inc. and Consolidated Subsidiaries
INFORMATION BY INDUSTRY SEGMENT
Years Ended September 30
(In millions) 2005 2004 2003 2002 2001
- -----------------------------------------------------------------------------------------------------------------------------
OPERATING INFORMATION
APAC
Construction backlog at September 30 (a) $ 2,038 $ 1,746 $ 1,745 $ 1,691 $ 1,629
Net construction job revenues (b) $ 1,458 $ 1,433 $ 1,361 $ 1,527 $ 1,547
Hot-mix asphalt production (tons) 31.3 33.4 32.5 36.7 36.7
Aggregate production (tons) 31.4 29.6 28.7 31.0 28.7
Ashland Distribution (c)
Sales per shipping day $ 15.1 $ 12.6 $ 11.2 $ 10.1 $ 11.2
Gross profit as a percent of sales 9.7% 9.6% 9.9% 9.7% 8.9%
Ashland Specialty Chemical (c)
Sales per shipping day $ 7.0 $ 5.4 $ 4.8 $ 4.5 $ 4.3
Gross profit as a percent of sales 26.6% 27.9% 29.9% 32.9% 29.7%
Valvoline
Lubricant sales (gallons) 175.4 191.6 193.5 199.0 187.4
Premium lubricants (percent of U.S. branded volumes) 23.4% 21.5% 18.5% 16.1% 11.7%
- -----------------------------------------------------------------------------------------------------------------------------
(a) Includes APAC's proportionate share of the backlog of unconsolidated
joint ventures.
(b) Total construction job revenues, less subcontract costs.
(c) Sales are defined as sales and operating revenues. Gross profit is
defined as sales and operating revenues, less cost of sales and
operating expenses.
Ashland Inc. and Consolidated Subsidiaries
INTERNATIONAL OPERATIONS
Years Ended September 30
(In millions) 2005 2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL ASSETS
Ashland Distribution $ 216 $ 184 $ 152 $ 125 $ 126
Ashland Specialty Chemical 484 416 352 319 295
Valvoline 146 132 121 101 92
---------- ---------- ---------- ---------- -----------
846 732 625 545 513
INTERNATIONAL LIABILITIES
Ashland Distribution 94 88 59 49 50
Ashland Specialty Chemical 133 128 104 99 99
Valvoline 42 54 45 37 36
---------- ---------- ---------- ---------- -----------
269 270 208 185 185
NET INTERNATIONAL INVESTMENT
Ashland Distribution 122 96 93 76 76
Ashland Specialty Chemical 351 288 248 220 196
Valvoline 104 78 76 64 56
---------- -------- -------- -------- --------
$ 577 $ 462 $ 417 $ 360 $ 328
========== ========== ========== ========== ===========
INTERNATIONAL INCOME BEFORE INCOME TAXES (a)
Ashland Distribution $ 17 $ 14 $ 8 $ 6 $ 12
Ashland Specialty Chemical 101 73 54 54 48
Valvoline 26 20 16 9 2
---------- ---------- ---------- ---------- -----------
$ 144 $ 107 $ 78 $ 69 $ 62
========== ========== ========== ========== ===========
INTERNATIONAL REVENUES
Ashland Distribution $ 663 $ 537 $ 432 $ 360 $ 417
Ashland Specialty Chemical 830 589 485 418 371
Valvoline 287 249 208 177 168
---------- ---------- ---------- ---------- -----------
$ 1,780 $ 1,375 $ 1,125 $ 955 $ 956
========== ========== ========== ========== ===========
(a) 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) 2005 2004 2003 2002 2001
- ---------------------------------------------------------------------------------------------------------------------
INTERNATIONAL ASSETS
Europe $ 496 $ 432 $ 368 $ 325 $ 295
Canada 189 164 141 124 126
Asia 72 58 47 40 38
Australia and New Zealand 49 48 43 34 27
Other 40 30 26 22 27
----------- ---------- ---------- ----------- ----------
846 732 625 545 513
INTERNATIONAL LIABILITIES
Europe 180 180 137 129 119
Canada 48 52 40 32 42
Asia 10 11 11 8 8
Australia and New Zealand 17 17 11 10 9
Other 14 10 9 6 7
----------- ---------- ---------- ----------- ----------
269 270 208 185 185
NET INTERNATIONAL INVESTMENT
Europe 316 252 231 196 176
Canada 141 112 101 92 84
Asia 62 47 36 32 30
Australia and New Zealand 32 31 32 24 18
Other 26 20 17 16 20
----------- ---------- ---------- ----------- ----------
$ 577 $ 462 $ 417 $ 360 $ 328
=========== ========== ========== =========== ==========
INTERNATIONAL INCOME BEFORE INCOME TAXES (a)
Europe $ 61 $ 41 $ 23 $ 30 $ 25
Canada 40 32 25 25 26
Asia 14 14 14 11 10
Australia and New Zealand 11 11 8 3 1
Other 18 9 8 - -
----------- ---------- ---------- ----------- ----------
$ 144 $ 107 $ 78 $ 69 $ 62
=========== ========== ========== =========== ==========
INTERNATIONAL REVENUES
Europe $ 994 $ 757 $ 618 $ 510 $ 475
Canada 422 344 292 265 288
Asia 114 87 76 63 55
Australia and New Zealand 110 95 75 61 61
Other 140 92 64 56 77
----------- ---------- ---------- ----------- ----------
$ 1,780 $ 1,375 $ 1,125 $ 955 $ 956
=========== ========== ========== =========== ==========
(a) 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.