-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JsEC6s5QunI3KP5wJOozOkX5JmTpnq1z+tZOdDuGdhX7pPaZlYz50BPaP5lTW7QV Pun/eVcHj0a0ZT/pgj9tvA== 0001305014-06-000020.txt : 20060125 0001305014-06-000020.hdr.sgml : 20060125 20060125084826 ACCESSION NUMBER: 0001305014-06-000020 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060125 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060125 DATE AS OF CHANGE: 20060125 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASHLAND INC. CENTRAL INDEX KEY: 0001305014 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-CHEMICALS & ALLIED PRODUCTS [5160] IRS NUMBER: 200865835 STATE OF INCORPORATION: KY FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32532 FILM NUMBER: 06548010 BUSINESS ADDRESS: STREET 1: 50 EAST RIVERCENTER BLVD., 16TH FLOOR CITY: COVINGTON STATE: KY ZIP: 41012 BUSINESS PHONE: 859-815-3483 MAIL ADDRESS: STREET 1: 50 EAST RIVERCENTER BLVD., 16TH FLOOR CITY: COVINGTON STATE: KY ZIP: 41012 FORMER COMPANY: FORMER CONFORMED NAME: New EXM Inc. DATE OF NAME CHANGE: 20041004 8-K 1 form8k.txt FORM 8-K 1-25-2006 EARNINGS RELEASE UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): January 25, 2006 ASHLAND INC. (Exact name of registrant as specified in its charter) Kentucky (State or other jurisdiction of incorporation) 1-32532 20-0865835 (Commission File Number) (I.R.S. Employer Identification No.) 50 E. RiverCenter Boulevard, Covington, Kentucky 41012-0391 (Address of principal executive offices) (Zip Code) P.O. Box 391, Covington, Kentucky 41012-0391 (Mailing Address) (Zip Code) Registrant's telephone number, including area code (859) 815-3333 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 2230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) -1- Item 2.02. Results of Operations and Financial Condition On January 25, 2006, Ashland Inc. ("Ashland") reported its first quarter results, which are discussed in more detail in the press release attached hereto as Exhibit 99.1, which is incorporated by reference into this Item 2.02. The information in this report, being furnished pursuant to Item 2.02 of Form 8-K, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section, and is not incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing. Item 9.01. Financial Statements and Exhibits (c) Exhibits 99.1 Press Release dated January 25, 2006. -2- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ASHLAND INC. ------------------------------------------- (Registrant) Date: January 25, 2006 /s/ J. Marvin Quin -------------------------------------------- Name: J. Marvin Quin Title: Senior Vice President and Chief Financial Officer -3- EXHIBIT INDEX 99.1 Press Release dated January 25, 2006. -4- EX-99 2 ex991.txt EXHIBIT 99.1 PRESS RELEASE EXHIBIT 99.1 FOR FURTHER INFORMATION: Media Relations: Investor Relations: Jim Vitak Daragh Porter (614) 790-3715 (859) 815-3825 jevitak@ashland.com dlporter@ashland.com FOR IMMEDIATE RELEASE JANUARY 25, 2006 ASHLAND INC. REPORTS PRELIMINARY NET INCOME OF $0.91 PER SHARE FOR FISCAL FIRST QUARTER Covington, Ky. - Ashland Inc. (NYSE: ASH) today announced preliminary* results for the fiscal first quarter ended Dec. 31, 2005. Net income was $66 million, or $0.91 per share. As compared with the December 2004 quarter: o Chemical Sector operating income reached $62 million, up 27 percent - Ashland Specialty Chemical operating income grew to $27 million, up 69 percent - Ashland Distribution operating income increased to $34 million, up 70 percent - Valvoline recorded operating income of $1 million versus $13 million in the prior-year period o Transportation Construction Sector operating income rose to $39 million versus $4 million for the prior-year period. Net income for Ashland's fiscal first quarter, ended Dec. 31, 2005, amounted to $66 million, or $0.91 per share, as compared with $94 million, or $1.28 per share, in the prior-year quarter. The comparison is affected by the June 2005 transfer of Ashland's former 38-percent interest in Marathon Ashland Petroleum LLC (MAP) to Marathon Oil Corp., the retirement of most of Ashland's debt and the investment of the remaining proceeds. Net income in the 2004 quarter included $83 million of net income from MAP, as well as net, after-tax interest expense of $18 million, for a net benefit of $65 million, or $.89 per share. The 2005 quarter included $6 million, or $.08 per share, of net, after-tax interest income. "We are pleased with the strong start we've had to fiscal 2006," said James J. O'Brien, Ashland chairman and chief executive officer. "Three of our four businesses performed well. The continued excellent performances of Ashland Specialty Chemical and Ashland Distribution drove results in the Chemical Sector. These businesses increased revenues and expanded their profit margins in an environment of rising costs. The quarter was disappointing Ashland Inc. reports preliminary net income of $0.91 per share for fiscal first quarter, page 2 for Valvoline, however, as declining demand in the motor oil market, rising raw materials costs and competitive price discounting adversely affected results. The Transportation Construction Sector benefited from margin improvement due to our efforts to incorporate higher material values and energy costs into our bids, as well as more favorable weather conditions in the quarter." Line of business results reflect new methodology for allocating substantially all corporate expenses to Ashland's four operating businesses, with the exception of certain legacy costs or items clearly not associated with the operating divisions. Accordingly, an additional $21 million has been allocated to the divisions for the December 2005 quarter. The remaining $6 million expense is classified as "Unallocated and other" in Ashland's segment reporting. Results for previously reported periods have been reclassified to conform with the new allocation methodology. For the December 2005 quarter, in the Chemical Sector, robust results from Ashland Distribution and Ashland Specialty Chemical more than offset the weak performance from Valvoline. As a result, operating income for the Chemical Sector amounted to $62 million, a 27-percent improvement over the $49 million of operating income in the December 2004 quarter. Ashland Specialty Chemical achieved record operating income for the December 2005 quarter of $27 million, up 69 percent over the $16 million of operating income in the prior-year quarter. The December 2004 quarter included approximately $4 million in net nonrecurring gains, primarily from the termination of a product supply contract. Sales and operating revenues grew to $449 million for the December 2005 quarter, a 12-percent increase over the December 2004 quarter. Sales from the DERAKANE(R) resins business acquired in December 2004 contributed approximately half of the growth, with the remainder mainly attributable to higher selling prices. The increase in operating income reflected a combination of revenue and margin growth. Ashland Distribution earned $34 million of operating income in the December 2005 quarter--marking its eighth consecutive record quarter. Operating income increased by 70 percent compared with the prior-year quarter. Sales and operating revenues increased 8 percent versus the December 2004 quarter to $967 million. The division's performance reflects its ability to expand margins despite rising costs of chemicals and plastics. Daily sales volume Ashland Inc. reports preliminary net income of $0.91 per share for fiscal first quarter, page 3 declined 4 percent, a result of the sale of the ingestibles business in the March 2005 quarter and supply disruptions from hurricanes Katrina and Rita. Valvoline's performance for the December 2005 quarter reflected a 6-percent decrease in total lubricant volumes in a declining U.S. market for passenger-car lubricants, and continued high raw material costs. Sales and operating revenues were $310 million for the quarter, essentially even with $309 million of revenues in the December 2004 quarter. The Transportation Construction Sector, commercially known as Ashland Paving And Construction, Inc. (APAC), reported operating income of $39 million for the December 2005 quarter, compared to $4 million in the December 2004 quarter. Results for the December 2005 quarter reflect APAC's continuing focus on incorporating increases in raw material and energy costs into its sales prices and more favorable weather conditions. Results for the December 2005 quarter also include a $10-million gain from the transfer of property subject to eminent domain, as well as a $4-million loss on fuel hedges. At Dec. 31, 2005, APAC's construction backlog, which consists of work awarded and funded but not yet performed, was $1.9 billion, up 12 percent over the same period last year. Today at 4:30 p.m. (EST), Ashland will provide a live webcast of its quarterly conference call with securities analysts. The webcast will be accessible through Ashland's website, www.ashland.com. Following the live event, an archived version of the webcast will be available for 12 months at www.ashland.com/investors. Ashland Inc. (NYSE: ASH) is a Fortune 500 chemical and transportation construction company providing products, services and customer solutions throughout the world. To learn more about Ashland, visit www.ashland.com. (R) Registered trademark, Ashland -0- * PRELIMINARY RESULTS Financial results are preliminary until the Company's Quarterly Report on Form 10-Q is filed with the U.S. Securities and Exchange Commission. This filing is expected to be made on or before February 9, 2006. FORWARD-LOOKING STATEMENTS This news release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, with respect to Ashland's operating performance. These estimates are based upon a number of assumptions, including those mentioned within this news release. Such estimates are also based upon internal forecasts and analyses of current and future market conditions and trends, management plans and strategies, weather, operating efficiencies and economic conditions, such as prices, supply and demand, cost of raw materials, and legal proceedings and claims (including environmental and asbestos matters). Although Ashland believes its expectations are based on reasonable assumptions, it cannot assure the expectations reflected herein will be achieved. This forward-looking information may prove to be inaccurate and actual results may differ significantly from those anticipated if one or more of the underlying assumptions or expectations proves to be inaccurate or is unrealized or if other unexpected conditions or events occur. Other factors and risks affecting Ashland are contained in Ashland's Form 10-K for the fiscal year Ashland Inc. reports preliminary net income of $0.91 per share for fiscal first quarter, page 4 ended Sept. 30, 2005. Ashland undertakes no obligation to subsequently update or revise the forward-looking statements made in this news release to reflect events or circumstances after the date of this release.
Ashland Inc. and Consolidated Subsidiaries Page 1 STATEMENTS OF CONSOLIDATED INCOME (In millions except per share data - preliminary and unaudited) Three months ended December 31 ---------------------------- 2005 2004 ------------- ------------ REVENUES Sales and operating revenues $ 2,412 $ 2,177 Equity income 2 146 Other income 15 17 ------------- ------------ 2,429 2,340 COSTS AND EXPENSES Cost of sales and operating expenses 2,029 1,849 Selling, general and administrative expenses 305 311 ------------- ------------ 2,334 2,160 ------------- ------------ OPERATING INCOME 95 180 Gain on the MAP Transaction (a) 2 - Loss on early retirement of debt - (2) Net interest and other financial costs 10 (29) ------------- ------------ INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 107 149 Income taxes (40) (55) ------------- ------------ INCOME FROM CONTINUING OPERATIONS 67 94 Results from discontinued operations (net of income taxes) (1) - ------------- ------------ NET INCOME $ 66 $ 94 ============= ============ DILUTED EARNINGS PER SHARE Income from continuing operations $ .91 $ 1.28 Results from discontinued operations - - ------------- ------------ Net Income $ .91 $ 1.28 ============= ============ AVERAGE COMMON SHARES AND ASSUMED CONVERSIONS 73 73 SALES AND OPERATING REVENUES APAC $ 726 $ 611 Ashland Distribution 967 895 Ashland Specialty Chemical 449 400 Valvoline 310 309 Intersegment sales (40) (38) ------------- ------------ $ 2,412 $ 2,177 ============= ============ OPERATING INCOME (b) APAC $ 39 $ 4 Ashland Distribution 34 20 Ashland Specialty Chemical 27 16 Valvoline 1 13 Refining and Marketing (c) - 136 Unallocated and other (6) (9) ------------- ------------ $ 95 $ 180 ============= ============
(a) "MAP Transaction" refers to the June 30, 2005 transfer of Ashland's 38% interest in Marathon Ashland Petroleum LLC (MAP), Ashland's maleic anhydride business and 60 Valvoline Instant Oil Change centers in Michigan and northwest Ohio to Marathon Oil Corporation in a transaction valued at approximately $3.7 billion. (b) In October 2005, Ashland refined its segment reporting to allocate substantially all corporate expenses to Ashland's four operating divisions, with the exception of certain legacy costs or items clearly not associated with the operating divisions. Prior periods have been conformed to the current period presentation. (c) Includes Ashland's equity income from MAP, amortization related to Ashland's excess investment in MAP and other activities associated with refining and marketing through June 30, 2005.
Ashland Inc. and Consolidated Subsidiaries Page 2 CONDENSED CONSOLIDATED BALANCE SHEETS (In millions - preliminary and unaudited) December 31 -------------------------- 2005 2004 ----------- ------------ ASSETS Current assets Cash and cash equivalents $ 601 $ 146 Available-for-sale securities 479 - Accounts receivable 1,514 1,212 Inventories 584 538 Deferred income taxes 78 95 Other current assets 132 106 ----------- ------------ 3,388 2,097 Investments and other assets Investment in Marathon Ashland Petroleum LLC (MAP) - 2,856 Goodwill and other intangibles 645 624 Asbestos insurance receivable (noncurrent portion) 363 396 Deferred income taxes 164 - Other noncurrent assets 499 313 ----------- ------------ 1,671 4,189 Property, plant and equipment Cost 3,310 3,166 Accumulated depreciation, depletion and amortization (1,887) (1,889) ----------- ------------ 1,423 1,277 ----------- ------------ $ 6,482 $ 7,563 =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Debt due within one year $ 12 $ 575 Trade and other payables 1,228 1,197 Income taxes 2 69 ----------- ------------ 1,242 1,841 Noncurrent liabilities Long-term debt (less current portion) 77 1,087 Employee benefit obligations 394 438 Deferred income taxes - 248 Reserves of captive insurance companies 183 177 Asbestos litigation reserve (noncurrent portion) 512 553 Other long-term liabilities and deferred credits 388 375 ----------- ------------ 1,554 2,878 Stockholders' equity 3,686 2,844 ----------- ------------ $ 6,482 $ 7,563 =========== ============
Ashland Inc. and Consolidated Subsidiaries Page 3 STATEMENTS OF CONSOLIDATED CASH FLOWS (In millions - preliminary and unaudited) Three months ended December 31 ------------------------- 2005 2004 ----------- ----------- CASH FLOWS FROM OPERATIONS Income from continuing operations $ 67 $ 94 Adjustments to reconcile to cash flows from operations Depreciation, depletion and amortization 51 46 Deferred income taxes 54 17 Equity income from affiliates (2) (146) Distributions from equity affiliates 1 1 Change in operating assets and liabilities (a) (312) (70) Other items (3) 2 ----------- ----------- (144) (56) CASH FLOWS FROM FINANCING Proceeds from issuance of common stock 4 20 Excess tax benefits related to share-based payments 1 2 Repayment of long-term debt (5) (98) Repurchase of common stock (96) - Increase in short-term debt - 211 Cash dividends paid (20) (20) ----------- ----------- (116) 115 CASH FLOWS FROM INVESTMENT Additions to property, plant and equipment (50) (55) Purchase of operations - net of cash acquired - (95) Purchases of available-for-sale securities (227) - Proceeds from sales and maturities of available-for-sale securities 152 - Other - net 3 2 ----------- ----------- (122) (148) ----------- ----------- CASH USED BY CONTINUING OPERATIONS (382) (89) Cash used by discontinued operations (2) (8) ----------- ----------- DECREASE IN CASH AND CASH EQUIVALENTS $ (384) $ (97) =========== =========== DEPRECIATION, DEPLETION AND AMORTIZATION APAC $ 26 $ 22 Ashland Distribution 5 4 Ashland Specialty Chemical 10 11 Valvoline 6 6 Unallocated and other 4 3 ----------- ----------- $ 51 $ 46 =========== =========== ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT APAC $ 25 $ 33 Ashland Distribution 3 5 Ashland Specialty Chemical 12 11 Valvoline 5 5 Unallocated and other 5 1 ----------- ----------- $ 50 $ 55 =========== ===========
(a) Excludes changes resulting from operations acquired or sold.
Ashland Inc. and Consolidated Subsidiaries Page 4 OPERATING INFORMATION BY INDUSTRY SEGMENT (In millions - preliminary and unaudited) Three months ended December 31 ----------------------------- 2005 2004 ------------ -------------- APAC Construction backlog at December 31 (a) $ 1,941 $ 1,730 Net construction job revenues (b) $ 423 $ 344 Hot-mix asphalt production (tons) 7.8 7.8 Aggregate production (tons) 8.1 7.8 ASHLAND DISTRIBUTION (c) Sales per shipping day $ 15.9 $ 14.4 Gross profit as a percent of sales 10.2% 9.6% ASHLAND SPECIALTY CHEMICAL (c) Sales per shipping day $ 7.4 $ 6.4 Gross profit as a percent of sales 27.4% 24.2% VALVOLINE Lubricant sales (gallons) 38.5 41.1 Premium lubricants (percent of U.S. branded volumes) 22.9% 21.8%
(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. -----END PRIVACY-ENHANCED MESSAGE-----