8-K

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):  August 14, 2009

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  41011

(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 230.425)
[  ]	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 7.01.  Regulation FD Disclosure

Members of Ashland Inc.’s senior management are scheduled to speak this morning at the KeyBanc Analyst Day in Wilmington, Delaware. A copy of the supporting materials for this presentation is attached hereto as Exhibit 99.1, and incorporated herein by reference.  The supporting materials provide summary information and are to be considered in the context of Ashland’s filings with the Securities and Exchange Commission and other public announcements.

Ashland is furnishing this information pursuant to the Securities and Exchange Commission’s Regulation FD.  By filing this report on Form 8-K, Ashland makes no admission as to the materiality of any information in this report.

Item 9.01.  Exhibits

(d) Exhibits

99.1 Presentation slides dated August 14, 2009.

-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)
August 14, 2009	/s/ Lamar M. Chambers
	Lamar M. Chambers
	Senior Vice President and Chief Financial Officer

-3-

EXHIBIT INDEX

99.1 Presentation slides dated August 14, 2009.

EX-99.1

James J. O'Brien, Chairman and Chief Executive Officer

Lamar M. Chambers, Senior Vice President and Chief Financial Officer

John E. Panichella, President, Ashland Aqualon Functional Ingredients

Paul C. Raymond III, President, Ashland Hercules Water Technologies

Eric N. Boni, Director, Investor Relations

KeyBanc Analyst Day
August 14, 2009

Formula for growth.

2

Forward-Looking Statements

This presentation 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. These forward-looking statements are based
upon a number of assumptions, including those mentioned within this presentation. Performance estimates are
also based upon internal forecasts and analyses of current and future market conditions and trends;
management plans and strategies; operating efficiencies and economic conditions, such as prices, supply and
demand, and cost of raw materials; legal proceedings and claims (including environmental and asbestos
matters); and weather. These risks and uncertainties may cause actual operating results to differ materially
from those stated, projected or implied. Other risks and uncertainties include the possibility that the benefits
anticipated from Ashland's acquisition of Hercules will not be fully realized; Ashland's substantial
indebtedness may impair its financial condition; the restrictive covenants under the debt instruments may
hinder the successful operation of Ashland’s business; future cash flow may be insufficient to repay the debt;
and other risks that are described in filings made by Ashland with the Securities and Exchange Commission
(the “SEC”). 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, uncertainties and risks affecting Ashland are contained in Ashland's periodic
filings made with the SEC, including its Form 10-K for the fiscal year ended Sept. 30, 2008,and Form 10-Q for
the quarters ended Dec. 31, 2008, and March 31 and June 30, 2009, which are available on Ashland’s Investor
Relations website at http://investor.ashland.com or the SEC’s website at www.sec.gov. Ashland undertakes no
obligation to subsequently update or revise the forward-looking statements made in this presentation to reflect
events or circumstances after the date of this presentation.

3

3

Agenda

•Ashland Overview and Strategy

•Ashland Hercules Water Technologies

•Ashland Aqualon Functional Ingredients

List of Abbreviations Used in This Presentation

4

To be a leading, global specialty chemicals company
that is a market leader in all major businesses

Ashland Vision for the Future

•Built on three growth platforms

–Ashland Aqualon Functional
Ingredients

–Ashland Hercules Water
Technologies

–Ashland Performance Materials

•Investing in two primary
chemistries

–Water-soluble polymers

–Thermoset resins

•Sharing three common capabilities

–Application expertise

–Formulation expertise

–Polymerization expertise

•Focused on five key markets

–Paper and packaging

–Personal care

–Pharmaceutical

–Construction

–Transportation

5

Ashland
Consumer
Markets

(Valvoline)

Ashland

Performance
Materials

Ashland

Hercules
Water
Technologies

Ashland

Distribution

Ashland

Aqualon
Functional
Ingredients

#1 global leader
in unsaturated
polyester resins
and vinyl ester
resins

#3 passenger-
car motor oil
and
#2 quick-lube
chain in the
United States

#2 plastics
and #3
chemicals
distributor
in North
America

#1 global
producer
of
papermaking
chemicals

#2 global
producer
of cellulose
ethers

Ashland

Strong Leadership Positions
in the Markets We Serve

6

1 For the 12 months ended June 30, 2009.

Ashland

Ashland

Distribution

Distribution

11%

11%

Ashland Consumer
Markets
29%

Ashland Hercules
Water Technologies

Ashland Hercules
Water Technologies

21%

21%

Ashland

Ashland

Aqualon Functional

Aqualon Functional

Ingredients

Ingredients

28%

28%

•60 percent of EBITDA comes from specialty chemicals

•More than 25 percent from renewable materials

Pro Forma Ongoing EBITDA1
by Commercial Unit

ASH

NYSE Ticker Symbol:

~2,600

Active patents worldwide:

~650

Active patents in U.S.:

More than
100

Number of countries
in which Ashland
has sales:

~15,000

Employees:

Corporate Profile

7

Ashland
Distribution
37%

Ashland
Distribution
37%

Ashland
Consumer
Markets
18%

By Commercial Unit

20%

20%

1 For the 12 months ended June 30, 2009, including intersegment sales.

North
America
68%

North
America
68%

Latin America/
Other - 4%

Europe

Europe

21%

21%

•32 percent of total revenue comes
from outside North America

Trailing 12 Months' Pro Forma1
Sales and Operating Revenue

8

North
America

North
America

42%

42%

Asia
Pacific

Asia
Pacific

17%

17%

Europe

37%

Latin America/

Other - 4%

Coatings
26%

Coatings
26%

Energy & Spec.
Solutions
25%

Regulated
Industries
28%

Regulated
Industries
28%

Revenue
by Geography

Revenue
by Market

For the 12 Months Ended June 30, 2009

Pro Forma Revenue: $1.0 billion

Pro Forma Ongoing EBITDA: $216 million

Pro Forma Ongoing EBITDA Margin: 21.6%

Business Overview
Customers	•Diversified, global customer base
Products	•Broad product line based on renewable resources -Water-soluble polymers (cellulose ethers and guar derivatives) -Refined wood rosin and natural wood terpenes
Markets	•Water-based paints •Regulated markets -Personal care -Food -Pharmaceuticals •Construction •Paper coatings •Oilfield (chemicals and drilling muds)

Revenue
by Product

CMC
17%

CMC
17%

HEC
28%

HEC
28%

MC
22%

MC
22%

Other
17%

Other
17%

Stumpwood
Derivatives

6%

6%

Construction
21%

Construction
21%

9

•Use leadership position in cellulose ethers
to drive growth through product innovation
and geographic expansion

•Invest in additional water-soluble polymers that can be
leveraged across multiple growth platforms and markets

•Leverage deep customer relationships
in core markets (coatings, construction,
personal care and pharmaceutical) to introduce
high-value complementary products

Ashland Aqualon Functional Ingredients
Strategy

10

North
America

48%

Latin America/
Other - 6%

E&PS
16%

E&PS
16%

Pulp/Paper

59%

Business Overview
Customers/ Markets	•Pulp and paper processing •Industrial and institutional •Mining •Municipal wastewater treatment
Products/ Services	•Process chemicals for microbial and contaminant control, pulping aids and retention aids •Functional chemicals for sizing and wet strength •Utility water treatments •Process water treatments

Revenue
by Geography

Revenue
by Market

Asia
Pacific
11%

Europe
35%

For the 12 Months Ended June 30, 2009

Pro Forma Revenue: $1.9 billion

Pro Forma Ongoing EBITDA: $165 million

Pro Forma Ongoing EBITDA Margin: 8.7%

Ashland Hercules Water Technologies
A major global supplier of process and functional chemicals

11

•Build on leadership position
in specialty papermaking chemicals
through product-line extension and
geographic expansion

•Extend best-in-class, market-focused business model
to additional water-intensive verticals, leveraging
core process chemical technologies

•Continue to optimize operational efficiency
of high-volume functional chemical assets

Ashland Hercules Water Technologies
Strategy

12

North
America

North
America

56%

56%

Europe

27%

Latin
America/
Other - 8%

Trans-
portation

Trans-
portation

18%

18%

Ind.
Constr.

30%

Business Overview
Customers	•Auto manufacturers; foundries; pipe and tank fabricators; packaging and converting; bathware, countertop and window lineal manufacturers; pipe relining contractors; boat builders; wide and narrow web printers
Products/ Services	•Adhesives and Composites -Unsaturated polyester resins -Vinyl ester resins -Gelcoats -Pressure-sensitive adhesives -Structural adhesives -Specialty resins •Casting Solutions -Foundry binder resins -Chemicals -Sleeves and filters -Design services
Markets	•Construction, packaging and con- verting, transportation, and marine

Revenue
by Geography

Revenue
by Market

For the 12 Months Ended June 30, 2009

Pro Forma Revenue: $1.3 billion

Pro Forma Ongoing EBITDA: $81 million

Pro Forma Ongoing EBITDA Margin: 6.3%

Res. Constr.

11%

Infra-
structure

14%

Asia
Pacific - 9%

Ashland Performance Materials
A global leader in specialty chemicals

13

•Use market insight and thermoset chemistry expertise
to create innovative substitutes that are stronger,
lighter and more resistant than traditional materials
for core transportation, construction and
infrastructure markets

•Use leadership position in unsaturated polyester resins
and vinyl ester resins to catalyze growth
in Brazil, Russia, India and China

•Further build position in packaging and converting market,
capitalizing on strength in high-end, solvent-based systems
to drive innovation from our new water-based and
radiation-cured technologies

Ashland Performance Materials
Strategy

14

Lubricants

84%

Filters - 2%

Valvoline
Int'l
20%

Valvoline
Int'l
20%

Do-It-
Yourself

38%

Business Overview
Customers	•Retail auto parts stores and mass merchandisers who sell to consumers; installers, such as car dealers and quick lubes; distributors
Products/ Services	•Valvoline® lubricants and automotive chemicals •MaxLife® lubricants for high-mileage vehicles •SynPower® synthetic motor oil •Eagle One® and Car Brite® appearance products •Zerex® antifreeze •Valvoline Instant Oil Change® service
Market Channels	•Do-It-Yourself (DIY) •Do-It-For-Me (DIFM) •Valvoline International

Revenue
by Product Line

Revenue
by Market Channel

Do-It-
For-Me
40%

DIFM:
Installer channel
29%

Specialty/
Other - 2%

DIFM:
Valvoline Instant
Oil Change - 11%

Antifreeze - 5%

Appearance
products - 3%

Chemicals - 6%

For the 12 Months Ended June 30, 2009

Pro Forma Revenue: $1.7 billion

Pro Forma Ongoing EBITDA: $227 million

Pro Forma Ongoing EBITDA Margin: 13.4%

Ashland Consumer Markets: A leading worldwide
marketer of premium-branded automotive lubricants and chemicals

15

•Use superior consumer insight to create channel-focused
solutions that leverage the Valvoline brand

•Build brand loyalty in key Do-It-Yourself (DIY) growth
segments, such as youth and Hispanics, through
highly targeted advertising, promotions and programs

•Continue to deliver preferred customer experience
in oil-change business through superior employee training,
store traffic optimization, point-of-sale enhancements
and highly targeted service offerings

Ashland Consumer Markets
Strategy

16

Chemicals

Chemicals

49%

49%

Plastics

39%

Environmental
Services/Other
- 3%

Construction

Construction

24%

24%

Other

15%

Business Overview
Customers	•Diversified customer base in North America and Europe
Products/ Services	•More than 28,000 packaged and bulk chemicals, solvents, plastics and additives •Comprehensive, hazardous and nonhazardous waste- management solutions in North America
Markets	•Construction •Transportation •Chemical manufacturing •Paint and coatings •Retail consumer •Personal care •Medical •Marine

Revenue
by Product
Line

Revenue
by Market

Trans-
portation

15%

Paint & Coatings - 10%

Medical - 6%

Marine - 4%

Com-
posites

9%

Chemical Mfg.
- 11%

Retail
Consumer - 8%

Personal
Care - 7%

For the 12 Months Ended June 30, 2009

Pro Forma Revenue: $3.4 billion

Pro Forma Ongoing EBITDA: $88 million

Pro Forma Ongoing EBITDA Margin: 2.6%

Ashland Distribution
A leading North American chemicals and plastics distributor

17

•Continue focus on efficiency to create
highest-value channel for customers and suppliers

•Build best-in-class product offering by aligning
with globally leading suppliers that:

–have low-cost production

–can ensure continuity of supply

–are investing in their business

–are industry leaders in quality and reliability

•Leverage Ashland's technical resources and asset network
to provide mass market penetration for specialty products

Ashland Distribution
Strategy

18

Ashland Recent Performance and
Near-Term Outlook

•Repayment of debt through cash flow is a priority
to achieve investment-grade credit statistics

–Reduced gross debt to under $2 billion at June 30

•Focus on generating and growing cash flow

–Generated cash flows from operating activities of $649 million
for fiscal year-to-date at June 30

–Can be supplemented with noncore assets sales

•Exceeded $265 million cost-reduction target by $22 million,
three months ahead of plan

•Margin and price management mitigating significant volume declines

•Resizing business and cost structure to reflect
20-percent volume-reduction environment

•Ashland is well-positioned to outperform as the economy improves

19

Ashland's Strategy

•Focus on specialty chemicals supported by Hercules acquisition

•Generate cash flow for paying down debt

•Manage cost structure and leverage new scale

•Reduce volatility of earnings and cash flow
and retain conservative financial position

•Invest in sustainable technologies to decrease reliance
on petroleum-based raw materials

•Continue to grow in water-intensive industries
to capitalize on increasing demand for clean, usable water

•Leverage formulation and application expertise
into adjacent markets that value our customized-service model

•Accelerate investment in long-term high-growth nations
such as Brazil, Russia, India and China

•Improve position in core specialty chemical businesses,
while reducing investment in noncore businesses

 

Paul C. Raymond III, President

20

Ashland Hercules Water Technologies

Formula for growth.

21

Microbial Control

Contaminant Control

Foam Control

Retention Aids

Softness

Strength

Printability

Sizing

Cooling Water

Wastewater

Influent Water

Boiler Water

Process
Additives

Water
Treatment
Chemicals

Functional
Additives

How Our Products Are Used

22

Application Expertise -

Understanding Customers’

Unique Applications

Customer Intimacy -

Sales and Market

Alignment

Technology Expertise -

Process, Water Treatment, Functional

Core of the Business … How We Make Money

23

0

2

4

6

8

10

12

14

16

18

20

2004

2005

2006

2007

2008

0

5

10

15

20

25

30

% Sales

# Platforms

AHWT Platform Launch

•Reflects strategic priorities

•Emphasizes high-margin
products

•Showcases platforms that
build competitive advantage

Organizational
Alignment

•Dedicated team in each region

•Specific accountabilities

Platform Launch

24

Time

(years)

Traditional Cooling
Water Chemistries

Corrosion Inhibitors

Scale Control

Biocides

Incubator Market

Identification

Bus Plan

Dev.

Incubator

Commercialization

Value

Capture

New Growth Curve

Growth Step Change

Hybrid Technology

SONOXIDE + chemical treatment

SONOXIDE®
ultrasonic
water
treatment
system

Incubator Businesses

25

Sonoxide Ultrasonic Water Treatment System

•Nonchemical, microbiological control
for cooling water systems

•Market: $800 million in cooling water

•Improved environmental profile

•Energy optimization

•Reduced chemical use

•Improved worker safety

26

Global Technology Footprint

•Research & Development

–Wilmington, Delaware, U.S.A.

–Krefeld, Germany

•Customer Applications Laboratories

–Wilmington, Delaware, U.S.A.

–Krefeld, Germany

–Shanghai, P.R. China

–Paulinia, Brazil (2010)

27

17.Beringen, Belgium

18.Busnago, Italy

19.Helsingborg, Sweden

20.Krefeld, Germany

21.Perm, Russia

22.Sobernheim, Germany

23.Somercotes, United Kingdom

24.Tampere, Finland

25.Tarragona, Spain

26.Voreppe, France*

27.Zwijndrecht, Netherlands

14.Americana, Brazil

15.Leme, São Paulo, Brazil

16.Paulinia, Brazil

1.Burlington, Ontario, Canada

2.Chicopee, Massachusetts

3.Franklin, Virginia

4.Greensboro, North Carolina

5.Hattiesburg, Mississippi*

6.Houston, Texas

7.Kearny, New Jersey*

8.Louisiana, Missouri

9.Macon, Georgia

10.Mexico City, Mexico

11.Milwaukee, Wisconsin

12.Portland, Oregon

13.Savannah, Georgia

28.Beijing, P.R. China

29.Kim Cheon, Korea

30.Nanjing, P.R. China*

31.Nantou, Taiwan

32.Perawang, Indonesia

33.Shanghai, P.R. China

34.Singapore

35.Chester Hill, Australia

* Facility closure announced.

Global Manufacturing Footprint

28

Business Strategy

•Follow Responsible Care* principles to ensure that safety
and environmental excellence are core values

•Achieve leadership positions in all of our growth
and base markets

•Improve sales mix through new product introduction

•Grow top line in adjacent markets and emerging geographies

•Leverage external technology to augment internal efforts

•Balance service delivery investment to maximize
profitable growth

•Maintain reliable and efficient global supply chain

29

Water
Test
$4 B

Municipal Water &
Wastewater
Treatment

Municipal Water &
Wastewater
Treatment

$138 B

$138 B

Infrastructure$40 B

Valves
$40 B

Valves
$40 B

Pumps$25 B

Other Water-Related $20 B

Residential $18 B

Water Market
~$365 B

Industrial Water
Treatment

Industrial Water
Treatment

$80 B

$80 B

Functional
Chemicals

Functional
Chemicals

$10 B

$10 B

Pigments & Fillers

Pigments & Fillers

$7.4 B

$7.4 B

Coatings

$5.5 B

Bleaching

Bleaching

$4.7 B

$4.7 B

Pulping

$4.3 B

Process Chem $2 B

Deinking $1 B

Global Water/Pulp & Paper Market $400 Billon

AHWT Target
Markets

$28.5 B

Water
Treatment

Water
Treatment

$17.5 B

$17.5 B

Pulp & Paper

Pulp & Paper

$11.0 B

$11.0 B

Non-Focus

Water Segments

·Equipment and
hardware

·Infrastructure

·Residential

·Water test

Non-Focus

Paper Segments

·Pigments and fillers

·Coatings

·Deinking

·Bleaching

Sources:Poyry Global Pulp & Paper Market Review, 2008: Goldman Sachs Water Sector Primer,
June 2005; Global Water Intelligence (GWI) Global Water Market Survey, 2008; The Future
of Global Water Treatment Chemicals Market, Pira International; Citi Investment Research,
“A Rising Tide of Growth” (March 2008), internal estimates.

Defining AHWT’s Markets

30

•Pulp

•Other

$2.0 B

•Size

•Strength

•Retention aids

•Boiler water

•Cooling water

•Waste water

•Recovery boilers

AHWT Position

•Leading position in boiler &
cooling water treatment
for paper, commercial &
institutional, food & bever-
age, general manufacturing
and marine

•Significant player in highly
fragmented market

$0.9 B

$1.1 B

•Leading position in size,
strength, retention aids,
MB

•Complementary ultrasonic
technology to current MB
control offering

•Sizeable, but underperforming,
position in polyacrylamides
(municipal)

Water
Treatment

Water
Treatment

~$900 MM

~$900 MM

Process
Chemicals
~$450 MM

Process
Chemicals
~$450 MM

Functional
Chemicals

Functional
Chemicals

~$650 MM

~$650 MM

Water
Treatment

Water
Treatment

$17.5 B

$17.5 B

Pulp & Paper

Pulp & Paper

$11.0 B

$11.0 B

$28.5 B

•Defoamers

•Microbiocides (MB)

•Contaminant control

Target Market

AHWT

AHWT Business Overview

31

Process
Chemicals
~$450 MM

Process
Chemicals
~$450 MM

AHWT
$2.0 B

Water
Treatment

Water
Treatment

~$900 MM

~$900 MM

Functional
Chemicals

Functional
Chemicals

~$650 MM

~$650 MM

Vertical Markets

Growth

•Pulp and paper segments
with high growth rates

•High-margin water segments
with process expansion
potential

Segmentation

Base

•Paper segments with
moderate growth rates

•Water segments with
reasonable growth
in water treatment

Municipal

Oil Refining

Power

Metals

Printing &
Writing

Mining

Chemicals

Gen’l Mfgr.

Packaging

Tissue/Towel

Pulp

C&I

Food & Bev

Opportunistic

•Low service, underperforming

•Water segments with limited/
no expansion into process
applications

Stand-alone

•Lubes

Commercial &
Institutional (C&I)

Chemicals

Food & Beverage

General
Manufacturing

Lubes

Metals

Mining

Municipal

Oil Refining

Printing & Writing

Packaging

Power Generation

Pulp

Tissue/Towel

AHWT Strategic Market Segmentation

32

Focus on markets with inherently higher growth

	Demand	Customer Profitability	Key Drivers
Tissue			•Fiber types/recycle - Biocides/contaminant control •Emerging markets growing •Absorbency and strength
Packaging			•Machine productivity - Dry strength •China expansion
Commercial & Institutional (C&I)			•Urbanization driving market growth •Purchasing consolidation driving demand for global suppliers •Geographic expansion in industrialized markets •Energy-reduction requirements driving treatment demand
Food & Beverage			•Industrialization driving demand for processed foods •Increased water and food regulation driving chemical demand •Emerging markets growing rapidly
Pulp			•Changing paper, board, tissue grade needs and fiber source •Emerging market growth (Brazil, Chile, Russia, Indonesia, China and India) •New technologies for new fiber sources

Growth Market Segments

33

•Paper: MB, retention, contaminant control, dry strength

•Water: Scale inhibitors, defoamers, cooling/boiler water
treatment applications

•Rapid deployment in growing geographies
(Latin America and Asia Pacific)

Seed Key
Industry Verticals

Expand via
Core Technologies

Seek Sustainable
Critical Mass

Align Resources

Actions

•Dedicated marketing leader for each growth vertical

•Develop and staff R&D pipeline

•Align platform-launch teams and programs
on high-margin, high-growth applications

•Build knowledge and credibility in key verticals
for future expansion

•Use “incubator” model across high-potential segments

•Carve off verticals that have achieved critical mass
into market-focused virtual teams

•Established market-specific product lines and
service offerings

2009 Strategy for Growth Verticals

34

Protect and maintain the business base

	Demand	Customer Profitability	Key Drivers
Printing & Writing			•Reduce costs - Increase filler loading, reduce overall chemical costs •Resume significant expansion in Asia, mainly China •Building larger machines and shutting the smaller ones
Mining			•Global slowdown has led to high reserves of aluminum, copper, nickel, zinc; prices flat in 2009, down from 2008 •Precious metals and coal demand increasing •Increased need for process chemicals to improve metals yield and water removal
Chemicals			•Process-focused, performance-driven and seeking more sophisticated programs and service expertise •Accommodate volatility in supply and demand •Typically engage in long-term corporate and/or global agreements •Energy conservation
General Manufacturing			•Optimize efficiencies and reduce total cost of operation •Cost - Economic slowdown has significantly reduced production in most sectors •Need for restructuring will open door for innovation in water treatment

Base Market Segments

35

•Cross-train field sales team to cover multiple markets

•Improve sales and applications expertise in Latin America and
Asia Pacific

•Develop R&D relationships with early-adopter customers
to develop game-changing products

Protect Profit Engine

Standardization

Actions

•Maintain product differentiation in base printing & writing and
chemicals via healthy R&D pipeline

•Rationalize manufacturing assets to lower unit costs

•Commercialize new technologies in emerging geographies

Grow Water
Treatment

Channel to Market

•Expand geographical coverage in underdeveloped markets

•Develop products to fill gaps (e.g., equipment for dosing and
monitoring)

•Identify supply chain synergies to remove costs

•Rationalize water treatment product lines across geographies

•All regions reporting via SAP* platform

Strategy for Base Verticals

36

•Municipal market

•PAM distributors/contract service companies

•Paper sizing

•Paper wet strength

Implement Alternate Business Model

•Low/declining margins in sizing/wet strength

•Lack of vertical integration in polyacrylamides (PAM)
drives uncompetitive cost position in municipal segment

•Overall trend toward product commoditization

•Inability to monetize service offering

•Low value of innovation to customers

•Some competitors have moved to low-cost model

Business

Trends

Product Lines and

Verticals Impacted

Consolidate

FTEs

Lower Raw Material
and Freight Costs

SG&A Savings

Cost Leverage via

Lower Complexity

Targeted Outcomes

Alternate Business Model

37

Summary

•AHWT Business Overview

–$2.0 billion business

–Provides process, water treatment and functional chemistries to paper, pulp,
commercial and institutional, food and beverage, chemical, marine and
municipal industries

–Products are used to improve operational efficiencies, enhance product quality,
protect plant assets and ensure environmental compliance

•Business Strategy

–Leverage platform-launch and incubator processes to accelerate growth
through delivery of innovative, low-cost products to current and adjacent
markets

•Use segmented approach to AHWT vertical markets

–Resource growth verticals with dedicated sales, marketing and R&D teams

–Manage base verticals primarily by sales to maximize profitable growth

–Alternate business model enables cost-effective approach to volume growth
with enhanced profitability in segments that do not require high service levels

John E. Panichella, President

38

Ashland Aqualon Functional Ingredients

Formula for growth.

39

Flow and Leveling

Conditioning

Stabilizing

Drilling & Fracturing

Extrusion

Protective Coating

Flow Properties

Suspending

Binding

Thickening

Gel Formation

Water Retention

How Customers Use Our Products

40

Technology Expertise -

Application Expertise -

Understanding Customers’

Unique Applications

Core of the Business … How We Make Money

41

•Cellulose is cut from sheets/rolls
into fine particles

•Cellulose is air-conveyed to reactor
and swollen with caustic

•Ethylene oxide, propylene oxide
or other reactants impart
water-solubility

•Solvent recycled via distillation

•Viscosity reduction and purification

•Hot-air drying

•Grinding to control dissolution rate,
dry blending, packing into bags/
sacks

Caustic

Caustic

H2O2

Cellulose

Cellulose

Distillation

Solvent

Washing

Grinding/Sifting/

Blending/Packaging

Viscosity

Reduction

Reactor

Drying

Cutting

How We Make Our Products

42

CMC

MC

HEC

HEC

HEC

HEC
CMC
HPC

EC

Rosins and

Phosphate Esters

Guar
Aquaflow

MC

MC

Parlin, New Jersey

Hopewell, Virginia

Kenedy, Texas

Dalton, Georgia

Alizay,

France

Doel,

Belgium

Zwijndrecht,

Netherlands

Luzhou,

P.R. China

Suzhou,

P.R. China

Jiangmen,

P.R. China

Guar

Brunswick,

Georgia

CMC

Nanjing,

P.R. China

(Under
construction.)

Aquarius®

Wilmington,

Delaware

Global Manufacturing Footprint

43

Zwinjdrecht, Netherlands

Facilities and Processes

•Eleven world-class
manufacturing facilities
including one joint
venture

•New 10,000MT HEC
facility under
construction

•Low-cost facilities

•Combination of batch and
continuous processes -
24/7 operations

•All facilities ISO-certified,
well-maintained and in
compliance with stringent
EH&S guidelines

•Capital intensive

44

Regional Technical Service

External Technology Partner

Construction
Technical Service

Coatings Additives,

Personal Care

Technical Service

China

Engineering and

Pilot Plant

Specialty Resins

and Adhesives

Technical Service

Latin America

Hopewell, Virginia

Mexico City,

Mexico

Houston, Texas

Düsseldorf,

Germany

Zwijndrecht,

Netherlands

Oil and Gas

Technologies

Brunswick, Georgia

Nanjing,

P.R. China

Central R&D

Technical Service North America

Wilmington,

Delaware

Natural

Hydrocolloids

Delhi, India

Technical Service

Asia Pacific

Singapore

Global Technology Footprint

45

•Follow Responsible Care* principles to ensure that safety
and environmental excellence are core values

•Expand Ashland Aqualon Functional Ingredients' portfolio
of water-soluble polymers while adding
complementary adjacent technologies
that enable us to provide broader solutions
to meet our customers’ formulation needs globally

Growth Strategy

46

Core Organic

Adjacent Organic

Acquisition

„Geographic expansion

•China, Russia, India, Japan
and South America

„Accelerate new product
introductions

„Productivity … cost/unit
reduction

„Pricing leadership

„Capital investment consistent
with growth

„Commercialize existing
programs … film coatings,
phosphate esters and
redispersible powders

„Launch adjacent
technologies consistent
with strategic direction

„Align resources (capital
and work force) to deliver
this growth

„Accelerate growth via bolt-on
acquisitions … good
opportunities and consistent
with the strategy

Ashland Aqualon Functional Ingredients
Strategies

47

Voice of Customer

Solutions Mode

Broad portfolio of

functional ingredients

Specialty Blends

A product customized to

individual customer needs

Innovation

New products to

solve clients' needs

Regulatory

Products that help

customers solve their

regulatory issues

Total Costs

Products and solutions

to drive down the total

cost of ownership

Current

State

Core products

in a narrow
technology

area …

rheology

control,

water

retention,

etc.

Future State … Solutions Platform

Core products, plus additional functionality

•Broaden the rheology portfolio

•Adjacent functionality … redispersible
powders, antifoam, color, etc.

•Specialty blends

•Synthetic functionality

•Expand hydrocolloid functionality

Solutions Offering … How We Win!

48

Segmenting Our Markets to Develop Our Growth Strategy

Redefined Markets
(estimated market size)

Industry

Targeted Markets
(estimated market size)

Construction

$6.2 billion

$2.1 billion

Food

$5.8 billion

$2.2 billion

Personal Care

$3.5 billion

$1.4 billion

Pharmaceutical

$2.0 billion

$1.0 billion

$2.3 billion

$1.7 billion

Coatings Additives

Energy

$1.0 billion

$0.5 billion

Specialties Solutions

$3.0 billion

$1.9 billion

Regulated Industries

Source:Internal estimates.

Market Segmentation

49

Industry

Construction

Food

Personal Care

Pharmaceutical

Coatings Additives

Energy

Specialties Solutions

Regulated Industries

Targeted Markets

(estimated market size)

$1.7 billion

Targeted Segment

Water-Based Architectural

Cementing and
Stimulation

Dry Mortar and Gypsum

Hair Care

Rheology and Conditioning

Oral Dosage
Binders and Coatings

Civil Engineering
and Ceramics

Bakery, Process Foods
and Beverage

$2.1 billion

$0.5 billion

$1.9 billion

$1.0 billion

$1.4 billion

$2.2 billion

Targeting Segments to Focus and Align Resources

Source:Internal estimates.

Ashland Aqualon Functional Ingredients
Targeted Segments

50

Industry

Construction

Food

Personal Care

Pharmaceutical

Coatings Additives

Energy

Specialties Solutions

Regulated Industries

Primary Target

Future Target

Water-Based

(rheology, surfactants)

Cementing and
Stimulation

Dry Mortar and Gypsum

Hair Care

(rheology, conditioning)

Oral Dosage

(binders, coatings)

Civil Engineering
and Ceramics

Bakery, Process Foods

and Beverage

Targeting Segments to Focus and Align Resources

Industrial Coatings

Emulsion Polymerization

Concrete

Skin Care

Oral Dosage

(disintegrants)

Targeted Segments

51

•Products have a long history of effective
performance

•Strong brand recognition with Klucel HPC

•Vertical integration strategy with Aquarius
coating systems

•Strong position in the nutritional supplement
industry

Pharmaceutical

The $2.0 billion business of producing and marketing excipients (i.e., inactive ingredients)

for pharmaceuticals and nutritional supplements.

•Long approval cycles
for new formulations

•Pending patent
expirations for key
drugs

•Fragmented market

Key Challenges

•AAFI’s highest-margin
segment and relatively
recession-resistant

•The growth of generics
offers opportunity and
threat

Health of Industry

•The formulator is
traditionally the
decision maker

•Highly risk averse -
compelling value
proposition required
to dislodge incumbents

Buying Behavior

Sources of Differentiation

Economic Model and Path to Win

Target

Excipient

Market

$1.0 B

Major Competitors

Binders
$400 MM

Coatings

$500 MM

Immediate-release and controlled-release binders - AAFI’s
traditional focus with Klucel® HPC and Benecel® HPMC.

Polymers and formulated systems that deliver aesthetic (color)
and functional (controlled release, moisture barrier) properties.
AAFI introduced Aquarius coating systems in 2007.

Dow/Colorcon

FMC
ISP

Colorcon

Evonik

•Large industrial base needed for cost-effective
excipient manufacturing

• Excipients are low-volume, high-value

•Continue to optimize the customer mix:
branded, generic, OTC and nutritional

•Continue to build mind-share with application
studies, publications and frequent customer
seminars

•Need to improve positioning in the emerging
markets

Disintegrants

$100 MM

Additives that enhance tablet disintegration. AAFI does not
participate in this space.

FMC

ISP

DMV International

BASF

Source:Internal estimates.

Key Chemistries

•EC

•HEC

•HPC

•MC

•Film coatings

51

52

•Technical leadership and product performance

•Brand recognition

•Technical support and collaboration, including
regional labs

•Global channel to market and depth of
relationships with key commercial and
technical decision makers

Coatings

The $2.3 billion business of producing and marketing specialty additives for water-based

architectural coatings.

•Weak global economy
and paint demand

•Mature product lines
contribute a lot of profit
today

•Rate of growth of new
product sales

Key Challenges

•Although current crisis
hurts industry profit-
ability, long-term pros-
pects for growth are
solid, especially as
housing standards
improve in developing
world

Health of Industry

•Most customers value
technical excellence
in products and
technical service

•Customers prefer to
align with strategic
suppliers thatare
innovators and have
broad portfolios

Buying Behavior

Sources of Differentiation

Economic Model and Path to Win

Target

Additives

Market

$1.7 B

Major Competitors

Rheology
$700 MM

Surfactants

$300 MM

Chemicals used to improve flow, leveling, water retention
and anti-spatter.

Chemicals used for surface wetting, dispersion of
pigments, improved gloss and color stability.

Dow/Rohm & Haas

Akzo Nobel

SE Tylose

Dow/Rohm & Haas

Rhodia

Air Products

•Requires new products and strong regional
technical service

•Must maintain premium/price leader status in
key products, e.g., HEC

•Grow emerging markets via continued
investment in people

•Grow via adjacencies that allow us to leverage
our strong channel and bring more value with
the “total solutions” approach

•Maintain HEC market leadership with
technology and manufacturing capacity

Foam & pH
Control

$400 MM

Chemicals used to neutralize and stabilize paint.

Cognis

BYK

Rhodia

Preservatives

$300 MM

Chemicals used to ensure long-term stability.

Dow/Rohm & Haas

Arch

Key Chemistries

•HEC

•Synthetic (Aquaflow)

•Phosphate esters

•Antifoams

Source:Internal estimates.

52

53

•Technical depth in focus areas

•Global account management

•Chemistry based on naturally occurring raw
materials

Personal Care

The $3.5 billion business of producing and marketing specialty additives for the

personal-care and cosmetics consumer markets. 

•3- to 5-year
development timeline

•Replacement of cationic
chemistry with less eco-
toxic molecules

•Competition from small,
lower-priced suppliers
in China and India

Key Challenges

•Recession is hitting
even P&G and Unilever
hard as retailers manage
to lower inventories and
consumers switch to
generics

Health of Industry

•Customers value
technical excellence
in products and product
support

•Customers value
interaction and input
to their R&D processes

Buying Behavior

Sources of Differentiation

Economic Model and Path to Win

Target

Specialty

Chemicals

Market

$1.4 B

Major Competitors

Conditioning

$300 MM

Rheology
Control

$300 MM

Chemicals that are substantive to hair and skin and provide
conditioning performance such as softness, smoothness
and de-tangling.

Chemicals used to provide flow control, formulation
stabilization, syneresis-control and suspension of active
ingredients in a wide variety of personal care compositions,
including toothpaste, shampoos, shower gels, shaving gels
and conditioners

Rhodia

BASF

ISP

•Must maintain premium/price leader status
in key products, e.g., Natrosol HEC and Klucel
HPC

•Follow multinational corporations into
emerging regions and source the demand
from local plants at price points required
to win in these geographies

•Engage with multinational corporations
at R&D level and focus R&D programs
on a key few opportunities where AAFI
is competitively positioned to win

Dow

Noveon

Other
Specialty
Polymers

$800 MM

Silicones, proteins and fixative polymers.AAFI does not
participate in this space today.

Momentive

Dow Corning

BASF

ISP

Akzo

Key Chemistries

•CMC

•HEC

•Guar

Source:Internal estimates.

53

54

•Technical leadership and product performance

•Product portfolio scope

•Brand recognition

•Large-scale Chinese operations
with high quality … Tianpu joint venture

•First-mover abilities in establishing JDAs
with key clients

•Global channel

•Sustainability

Construction

The $6.2 billion business of producing and marketing additives for the tile cement,

gypsum and exterior insulation markets.

•Cellulose supply and
costs

•Commoditization

•Mature vs. emerging
markets

•Changing construction
practice

•Cost vs. performance

•Regional needs

Key Challenges

•MC global demand has
grown steadily over the
past 10 years. Continued
growth expected, but
economic crisis has
impacted this market

•Redispersible powders
will continue to grow
as more formulated
products are developed
and job-site mixing is
reduced in emerging
regions

Health of Industry

•Customers value
technical excellence
in products and product
support

•Customers expect just-
in-time supply and
formulation support

Buying Behavior

Sources of Differentiation

Economic Model and Path to Win

Target

Additives
Market

$2.1 B

Major Competitors

Cellulose
Ethers

$1.1 B

Functional

Additives

$100 MM

MC, HEC and EHEC used for water retention and rheology
control to achieve workability, adhesion and strength.

Starch ethers, air-entrainers, polyacrylamides, set-time
additives and defoamers used to enhance workability and
durability.

Dow Wolff

SE Tylose

Samsung

Akzo

Chinese suppliers

•Tianpu joint venture to serve low-end and
price-sensitive markets

•Must maintain premium/price leader status

•Grow in emerging markets via investment
in plants/people to seed the market as
technology advances

•Technology differentiation via formulation
expertise

•Grow mature markets via adjacencies; however,
need continuous product evolution
to offer alternatives to lower-priced products

Redispersible

Powders

$900 MM

Redispersible latex polymers added to improve adhesion,
flexibility and water repellency.

Wacker

Akzo (Elotex)

Dairen

Dow

Hexion

BASF

Avebe

Agrana

Emsland

Sichel (Henkel)

Cognis

Key Chemistries

•MC

•Redispersible powders

Source:Internal estimates.

54

55

Guar and guar derivatives used for rheology control and
proppant carrier for high-pressure fracturing of gas wells.

•Innovative manufacturer of novel products

•Industry application expertise

•Broad portfolio of additives for drilling,
stimulation and cementing

•Global manufacturing footprint

Energy

The $1.0 billion business of producing and marketing drilling, well-stimulation

and cementing additives for the production of oil and natural gas.

•Current downturn in
global oilfield market

•Global applications
expertise

•Geographical expansion

•Emerging market
competitors

Key Challenges

•Current downturn in mar-
ket due to lower global
price/demand for oil and
natural gas. N. A. rig
count down to levels last
seen in 2004

•Industry turnaround
expected 2010

Health of Industry

•Customers value techni-
cal excellence in prod-
ucts and product support

•Customers expect to buy
a full range of products
from a single supplier

•Customers value
suppliers with global
reach both commercial
and technical

Buying Behavior

Sources of Differentiation

Economic Model and Path to Win

Target

Energy
Market

$500 MM

Major Competitors

Drilling
Additives
$200 MM

Well
Stimulation

$200 MM

Cellulosic ethers (CMC) used for rheology and filtration
control as additives with drilling muds.

CP Kelco
Lamberti

Dow Wolff

Benchmark

Rhodia

Economy Polymer

Other

•Requires supply chain efficiency and ability
to maintain local inventory near well sites

•Must maintain premium/price leader status
in key products, e.g., cementing, synthetics

•Grow emerging markets via investment
in plants/people

•Expand global applications expertise
to support regional requirements
by service companies

Cementing
Additives

$100 MM

Cellulosic ethers (HEC) used for rheology and fluid loss and
gas migration control as additives into high-density cement.

Dow Wolff

SE Tylose

Clariant

Key Chemistries

•CMC

•Guar

Source:Internal estimates.

55

56

Significant Potential for Growth

One-Step Adjacencies

Superplasticizer

3%

Enzymes

6%

Silicones

5%

Diluents

7%

Film Coatings

6%

Emulsifiers

11%

Antifoams

6%

Redispersible

Powders

6%

Dispersants

13%

Biocides

15%

Surfactants

and Other

22%

Total = $9 Billion

Core

Total = $4 Billion

Total = $23 Billion

Cellulose

Ethers and
Resins

17%

One-Step

Adjacencies

41%

Natural

Hydrocolloids

19%

Synthetics

23%

CMC

$800 MM

Resins

$1,100 MM

MC

$1,200 MM

HEC

$700 MM

HPC

$80 MM

(Water-Soluble Polymers)

EC

$80 MM

Grow the Core First ... Then Adjacencies

57

	AAFI 2008 (MT)	Food	Pharma	Personal Care	Energy	Construction	Specialties Solutions	Coatings Additives
HEC	42,000		L	L	M	L	L	H
CMC	55,000	H		M	H		M	L
MC	39,000	M	L			H	M
EC	900		L				H
HPC	1,900		H				L
Guar	53,900	M		M	H	L
Polyterpene Resin	31,500			L			H
Film Coatings	100		H
Redispersible Powders	300					H
Synthetic (Aquaflow)	600				L			H
Phosphate Esters	1,000							H
Antifoams	200					L	M	H

Relative Consumption:H = High, M = Medium, L= Low

Products by Industry Segment

58

ü Market size and growth rate

ü Channel strategy

ü Target existing customer base

ü Competitive landscape

ü Intellectual-property landscape

ü Technical capability requirements

ü Relative cost position vs. market leader

ü Value chain analysis

ü Regulatory environment and trends

ü Formulation expertise

ü Voice-of-customer interviews

One-Step
Adjacencies

Total = $9 Billion

Superplasticizer

3%

Enzymes 6%

Silicones 5%

Diluents 7%

Film Coatings

6%

Emulsifiers

11%

Antifoams 6%

Redispersible

Powders

6%

Dispersants

13%

Biocides

15%

Surfactants

and Other

22%

Adjacent Products Selection Criteria

59

Core Organic

Adjacent Organic

Acquisition

„Geographic expansion

•China, Russia, India, Japan
and South America

„Accelerate new product
introductions

„Productivity … cost/unit
reduction

„Pricing leadership

„Capital investment consistent
with growth

„Commercialize existing
programs … film coatings,
phosphate esters and
redispersible powders

„Launch adjacent
technologies consistent
with strategic direction

„Align resources (capital
and work force) to deliver
this growth

„Accelerate growth via bolt-on
acquisitions … good
opportunities and consistent
with the strategy

Ashland Aqualon Functional Ingredients
Strategies

60

KeyBanc Analyst Day
August 14, 2009

Formula for growth.

61

Investment Highlights

•Among top 10 specialty chemicals companies worldwide

–Diversified business portfolio serving wide range of end markets

–Leading market positions across platform

•Strong emphasis on cash flow generation and debt pay-down

–Reduced debt by $616 million in eight months since Hercules acquisition

•Over-delivering on cost-reduction program

–Achieved $287 million in total Ashland run-rate savings at June 30,
three months ahead of plan

–Total Hercules run-rate synergies of $130 million by fiscal year-end 2010

•Additional sources of cash available

–Working capital, auction rate securities, divestitures

•Management committed to conservative financing structure

–Total leverage of 2.4x

–Aim to achieve investment-grade credit statistics within 12 months

•Equity market capitalization of approximately $2.0 billion

•Experienced management team

AAFI = Ashland Aqualon Functional Ingredients

AHWT = Ashland Hercules Water Technologies

BWT = Boiler Water Treatment(s)

C&I = Commercial & Institutional

CMC = Carboxymethylcellulose

CWT = Cooling Water Treatment(s)

EC = Ethylcellulose

EH&S = Environmental, Health & Safety

EMEA = Europe, Middle East, Africa

FTEs = Full-time employees

HEC = Hydroxyethylcellulose

HPC = Hydroxypropylcellulose

MB = Microbiocide(s)

MC = Methylcellulose

PAM = Polyacrylamide(s)

RDP = Redispersible powders

® Registered trademark, Ashland or its subsidiaries

* Trademark owned by third party

62

Abbreviations