1-32532 | 20-0865835 | |||
(Commission File Number) | (I.R.S. Employer Identification No.) | |||
[ ] | 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))
|
Item 2.02. |
Results of Operations and Financial Condition
|
Item 9.01. |
Financial Statements and Exhibits
|
|
(d)
|
Exhibits | |
99.1 | News Release dated January 29, 2013. |
ASHLAND INC.
|
|
(Registrant)
|
|
January 29, 2013 |
/s/ Lamar M. Chambers
|
Lamar M. Chambers
|
|
Senior Vice President and
Chief Financial Officer
|
99.1 |
News Release dated January 29, 2013.
|
FOR IMMEDIATE RELEASE
January 29, 2013
|
(in millions except per-share amounts)
|
Quarter Ended Dec. 31
|
|||||||
2012
|
2011
|
|||||||
Operating income
|
$ | 176 | $ | 144 | ||||
Key items*
|
(13 | ) | 53 | |||||
Adjusted operating income*
|
$ | 163 | $ | 197 | ||||
Adjusted EBITDA*
|
$ | 268 | $ | 301 | ||||
Diluted earnings per share (EPS)
|
||||||||
From net income
|
$ | 1.26 | $ | 0.77 | ||||
From continuing operations
|
$ | 1.27 | $ | 0.76 | ||||
Key items*
|
(0.15 | ) | 0.44 | |||||
Adjusted EPS from continuing operations*
|
$ | 1.12 | $ | 1.20 | ||||
Cash flows provided by operating activities
from continuing operations
|
$ | 81 | $ | (181 | ) | |||
Free cash flow*
|
30 | (133 | ) | |||||
*See Tables 5, 6 and 7 for definitions and U.S. GAAP reconciliations.
|
·
|
Sales were $1.9 billion; normalizing for currency, divestitures and joint ventures, sales were flat;
|
·
|
Operating income decreased 17 percent to $163 million;
|
·
|
Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 11 percent to $268 million; and
|
·
|
EBITDA as a percent of sales declined 130 basis points to 14.3 percent.
|
Ashland Inc. and Consolidated Subsidiaries
|
Table 1
|
|||||||
STATEMENTS OF CONSOLIDATED INCOME
|
||||||||
(In millions except per share data - preliminary and unaudited)
|
||||||||
Three months ended
|
||||||||
December 31
|
||||||||
2012
|
2011
|
|||||||
Sales
|
$ | 1,869 | $ | 1,930 | ||||
Cost of sales
|
1,332 | 1,408 | ||||||
GROSS PROFIT
|
537 | 522 | ||||||
Selling, general and administrative expense
|
343 | 362 | ||||||
Research and development expense
|
32 | 30 | ||||||
Equity and other income
|
14 | 14 | ||||||
OPERATING INCOME
|
176 | 144 | ||||||
Net interest and other financing expense
|
44 | 57 | ||||||
Net loss on acquisitions and divestitures
|
- | 4 | ||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
132 | 83 | ||||||
Income tax expense
|
30 | 23 | ||||||
INCOME FROM CONTINUING OPERATIONS
|
102 | 60 | ||||||
(Loss) income from discontinued operations (net of income taxes)
|
(1 | ) | 1 | |||||
NET INCOME
|
$ | 101 | $ | 61 | ||||
DILUTED EARNINGS PER SHARE
|
||||||||
Income from continuing operations
|
$ | 1.27 | $ | .76 | ||||
(Loss) income from discontinued operations
|
(.01 | ) | .01 | |||||
Net income
|
$ | 1.26 | $ | .77 | ||||
AVERAGE COMMON SHARES AND ASSUMED CONVERSIONS
|
80 | 79 | ||||||
SALES
|
||||||||
Specialty Ingredients
|
$ | 622 | $ | 628 | ||||
Water Technologies
|
421 | 449 | ||||||
Performance Materials
|
345 | 378 | ||||||
Consumer Markets
|
481 | 475 | ||||||
$ | 1,869 | $ | 1,930 | |||||
OPERATING INCOME (LOSS)
|
||||||||
Specialty Ingredients
|
$ | 72 | $ | 71 | ||||
Water Technologies
|
17 | 21 | ||||||
Performance Materials
|
13 | 33 | ||||||
Consumer Markets
|
66 | 47 | ||||||
Unallocated and other
|
8 | (28 | ) | |||||
$ | 176 | $ | 144 |
Ashland Inc. and Consolidated Subsidiaries
|
Table 2
|
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
(In millions - preliminary and unaudited)
|
||||||||
December 31
|
September 30
|
|||||||
2012
|
2012
|
|||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 488 | $ | 523 | ||||
Accounts receivable
|
1,380 | 1,481 | ||||||
Inventories
|
1,008 | 1,008 | ||||||
Deferred income taxes
|
116 | 116 | ||||||
Other assets
|
85 | 81 | ||||||
Total current assets
|
3,077 | 3,209 | ||||||
Noncurrent assets
|
||||||||
Property, plant and equipment
|
||||||||
Cost
|
4,541 | 4,478 | ||||||
Accumulated depreciation and amortization
|
(1,724 | ) | (1,646 | ) | ||||
Net property, plant and equipment
|
2,817 | 2,832 | ||||||
Goodwill
|
3,358 | 3,342 | ||||||
Intangibles
|
1,910 | 1,936 | ||||||
Asbestos insurance receivable (noncurrent portion)
|
444 | 449 | ||||||
Equity and other unconsolidated investments
|
220 | 217 | ||||||
Other assets
|
550 | 539 | ||||||
Total noncurrent assets
|
9,299 | 9,315 | ||||||
Total assets
|
$ | 12,376 | $ | 12,524 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities
|
||||||||
Short-term debt
|
$ | 349 | $ | 344 | ||||
Current portion of long-term debt
|
114 | 115 | ||||||
Trade and other payables
|
738 | 877 | ||||||
Accrued expenses and other liabilities
|
569 | 577 | ||||||
Total current liabilities
|
1,770 | 1,913 | ||||||
Noncurrent liabilities
|
||||||||
Long-term debt (noncurrent portion)
|
3,090 | 3,131 | ||||||
Employee benefit obligations
|
1,795 | 1,839 | ||||||
Asbestos litigation reserve (noncurrent portion)
|
753 | 771 | ||||||
Deferred income taxes
|
208 | 208 | ||||||
Other liabilities
|
608 | 633 | ||||||
Total noncurrent liabilities
|
6,454 | 6,582 | ||||||
Stockholders’ equity
|
4,152 | 4,029 | ||||||
Total liabilities and stockholders' equity
|
$ | 12,376 | $ | 12,524 |
Table 3
|
|||||||||
STATEMENTS OF CONSOLIDATED CASH FLOWS
|
|||||||||
(In millions - preliminary and unaudited)
|
|||||||||
Three months ended
|
|||||||||
December 31
|
|||||||||
2012
|
2011
|
||||||||
CASH FLOWS (USED) PROVIDED BY OPERATING ACTIVITIES
|
|||||||||
FROM CONTINUING OPERATIONS
|
|||||||||
Net income
|
$ | 101 | $ | 61 | |||||
Loss (income) from discontinued operations (net of income taxes)
|
1 | (1 | ) | ||||||
Adjustments to reconcile income from continuing operations to
|
|||||||||
cash flows from operating activities
|
|||||||||
Depreciation and amortization
|
107 | 104 | |||||||
Debt issuance cost amortization
|
5 | 6 | |||||||
Deferred income taxes
|
(3 | ) | 2 | ||||||
Equity income from affiliates
|
(5 | ) | (7 | ) | |||||
Distributions from equity affiliates
|
5 | 1 | |||||||
Gain from sale of property and equipment
|
(2 | ) | - | ||||||
Stock based compensation expense
|
9 | 6 | |||||||
Net loss on acquisitions and divestitures
|
- | 2 | |||||||
Inventory fair value adjustment related to ISP acquisition
|
- | 25 | |||||||
Change in operating assets and liabilities (a)
|
(137 | ) | (380 | ) | |||||
81 | (181 | ) | |||||||
CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES
|
|||||||||
FROM CONTINUING OPERATIONS
|
|||||||||
Additions to property, plant and equipment
|
(51 | ) | (44 | ) | |||||
Proceeds from disposal of property, plant and equipment
|
2 | 1 | |||||||
(49 | ) | (43 | ) | ||||||
CASH FLOWS (USED) PROVIDED BY FINANCING ACTIVITIES
|
|||||||||
FROM CONTINUING OPERATIONS
|
|||||||||
Repayment of long-term debt
|
(43 | ) | (23 | ) | |||||
Proceeds from/(repayment of) short-term debt
|
5 | (7 | ) | ||||||
Cash dividends paid
|
(18 | ) | (14 | ) | |||||
Proceeds from exercise of stock options
|
1 | 1 | |||||||
Excess tax benefits related to share-based payments
|
2 | - | |||||||
(53 | ) | (43 | ) | ||||||
CASH USED BY CONTINUING OPERATIONS
|
(21 | ) | (267 | ) | |||||
Cash used by discontinued operations
|
|||||||||
Operating cash flows
|
(16 | ) | (3 | ) | |||||
Effect of currency exchange rate changes on cash and
|
|||||||||
cash equivalents
|
2 | (1 | ) | ||||||
DECREASE IN CASH AND CASH EQUIVALENTS
|
(35 | ) | (271 | ) | |||||
Cash and cash equivalents - beginning of period
|
523 | 737 | |||||||
CASH AND CASH EQUIVALENTS - END OF PERIOD
|
$ | 488 | $ | 466 | |||||
DEPRECIATION AND AMORTIZATION
|
|||||||||
Specialty Ingredients
|
$ | 66 | $ | 64 | |||||
Water Technologies
|
17 | 19 | |||||||
Performance Materials
|
15 | 12 | |||||||
Consumer Markets
|
9 | 9 | |||||||
$ | 107 | $ | 104 | ||||||
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
|
|||||||||
Specialty Ingredients
|
$ | 27 | $ | 24 | |||||
Water Technologies
|
10 | 9 | |||||||
Performance Materials
|
5 | 7 | |||||||
Consumer Markets
|
5 | 2 | |||||||
Unallocated and other
|
4 | 2 | |||||||
$ | 51 | $ | 44 | ||||||
(a)
|
Excludes changes resulting from operations acquired or sold.
|
Ashland Inc. and Consolidated Subsidiaries
|
Table 4 | |||||||
INFORMATION BY INDUSTRY SEGMENT
|
||||||||
(In millions - preliminary and unaudited)
|
||||||||
Three months ended
|
||||||||
December 31
|
||||||||
2012
|
2011
|
|||||||
SPECIALTY INGREDIENTS
|
||||||||
Sales per shipping day
|
$
|
10.0
|
$
|
10.3
|
||||
Metric tons sold (thousands)
|
88.9
|
90.0
|
||||||
Gross profit as a percent of sales (a) (b)
|
31.0%
|
29.6%
|
||||||
WATER TECHNOLOGIES
|
||||||||
Sales per shipping day
|
$
|
6.8
|
$
|
7.4
|
||||
Gross profit as a percent of sales (a)
|
33.3%
|
30.8%
|
||||||
PERFORMANCE MATERIALS
|
||||||||
Sales per shipping day
|
$
|
5.6
|
$
|
6.2
|
||||
Metric tons sold (thousands)
|
124.6
|
137.4
|
||||||
Gross profit as a percent of sales (a)
|
15.6%
|
19.2%
|
||||||
CONSUMER MARKETS
|
||||||||
Lubricant sales (gallons)
|
37.1
|
36.7
|
||||||
Premium lubricants (percent of U.S. branded volumes)
|
32.6%
|
29.3%
|
||||||
Gross profit as a percent of sales (a)
|
30.1%
|
25.3%
|
||||||
(a) |
Gross profit as a percent of sales is defined as sales, less cost of sales divided by sales.
|
|||||||
(b) |
Gross profit for the three months ended December 31, 2012 includes a loss of $31 million related to certain commoditized guar inventories, as well as income of $22 million related to the settlement of a business interruption insurance claim. Excluding these two items, the gross profit percentage would have been 32.5%. Gross profit for the three months ended December 31, 2011 includes expense of $25 million related to the fair value of inventory acquired from ISP. Excluding this expense, the gross profit percentage would have been 33.4%.
|
Table 5
|
|||||||||||||||||||||||
RECONCILIATION OF NON-GAAP DATA - INCOME (LOSS) FROM CONTINUING OPERATIONS
|
|||||||||||||||||||||||
(In millions - preliminary and unaudited)
|
|||||||||||||||||||||||
Three Months Ended December 31, 2012 | |||||||||||||||||||||||
Specialty
Ingredients
|
Water
Technologies
|
Performance
Materials
|
Consumer
Markets
|
Unallocated
& Other
|
Total
|
||||||||||||||||||
OPERATING INCOME (LOSS)
|
|||||||||||||||||||||||
Restructuring and other integration costs
|
$ | - | $ | - | $ | (2 | ) | $ | - | $ | (7 | ) | $ | (9 | ) | ||||||||
Insurance settlement
|
22 | - | - | - | - | 22 | |||||||||||||||||
All other operating income
|
50 | 17 | 15 | 66 | 15 | 163 | |||||||||||||||||
Operating income
|
72 | 17 | 13 | 66 | 8 | 176 | |||||||||||||||||
NET INTEREST AND OTHER FINANCING EXPENSE
|
44 | 44 | |||||||||||||||||||||
INCOME TAX (EXPENSE) BENEFIT
|
|||||||||||||||||||||||
Key items
|
(5 | ) | (5 | ) | |||||||||||||||||||
Deferred tax adjustment for foreign country rate change
|
4 | 4 | |||||||||||||||||||||
All other income tax expense
|
(29 | ) | (29 | ) | |||||||||||||||||||
(30 | ) | (30 | ) | ||||||||||||||||||||
INCOME (LOSS) FROM CONTINUING | |||||||||||||||||||||||
OPERATIONS
|
$ | 72 | $ | 17 | $ | 13 | $ | 66 | $ | (66 | ) | $ | 102 | ||||||||||
Three Months Ended December 31, 2011 | |||||||||||||||||||||||
Specialty
|
Water
|
Performance
|
Consumer
|
Unallocated
|
|||||||||||||||||||
Ingredients
|
Technologies
|
Materials
|
Markets
|
& Other
|
Total
|
||||||||||||||||||
OPERATING INCOME (LOSS)
|
|||||||||||||||||||||||
Severance
|
$ | - | $ | - | $ | - | $ | - | $ | (28 | ) | $ | (28 | ) | |||||||||
Inventory fair value adjustment
|
(25 | ) | - | - | - | - | (25 | ) | |||||||||||||||
All other operating income
|
96 | 21 | 33 | 47 | - | 197 | |||||||||||||||||
Operating income
|
71 | 21 | 33 | 47 | (28 | ) | 144 | ||||||||||||||||
NET INTEREST AND OTHER FINANCING EXPENSE
|
57 | 57 | |||||||||||||||||||||
NET LOSS ON ACQUISITIONS AND DIVESTITURES
|
4 | 4 | |||||||||||||||||||||
INCOME TAX (EXPENSE) BENEFIT
|
|||||||||||||||||||||||
Key items
|
18 | 18 | |||||||||||||||||||||
All other income tax expense
|
(41 | ) | (41 | ) | |||||||||||||||||||
(23 | ) | (23 | ) | ||||||||||||||||||||
INCOME (LOSS) FROM CONTINUING | |||||||||||||||||||||||
OPERATIONS
|
$ | 71 | $ | 21 | $ | 33 | $ | 47 | $ | (112 | ) | $ | 60 | ||||||||||
Ashland Inc. and Consolidated Subsidiaries
|
Table 6
|
||||||||
RECONCILIATION OF NON-GAAP DATA - FREE CASH FLOW
|
|||||||||
(In millions - preliminary and unaudited)
|
|||||||||
Three months ended
|
|||||||||
December 31 | |||||||||
Free cash flow (a)
|
2012
|
2011
|
|||||||
Total cash flows provided by operating activities
|
|||||||||
from continuing operations
|
$ | 81 | $ | (181 | ) | ||||
Adjustments:
|
|||||||||
Additions to property, plant and equipment
|
(51 | ) | (44 | ) | |||||
ISP acquisition - change in control payment (b)
|
- | 92 | |||||||
Free cash flows
|
$ | 30 | $ | (133 | ) | ||||
(a)
|
Free cash flow is defined as cash flows provided by operating activities less additions to property, plant and equipment (no longer includes an adjustment for dividends).
|
||||||||
(b)
|
Since payment was generated from investment activity, this amount has been included within this calculation.
|
Table 7
|
|||||||||
RECONCILIATION OF NON-GAAP DATA - ADJUSTED EBITDA
|
|||||||||
(In millions - preliminary and unaudited)
|
|||||||||
Three months ended
|
|||||||||
December 31
|
|||||||||
Adjusted EBITDA - Ashland Inc.
|
2012
|
2011
|
|||||||
Net income
|
$ | 101 | $ | 61 | |||||
Income tax expense
|
30 | 23 | |||||||
Net interest and other financing expense
|
44 | 57 | |||||||
Depreciation and amortization (a)
|
105 | 104 | |||||||
EBITDA
|
280 | 245 | |||||||
Loss (income) from discontinued operations (net of income taxes)
|
1 | (1 | ) | ||||||
Net loss on acquisition and divestiture key items
|
- | 4 | |||||||
Operating key items (see Table 5)
|
(13 | ) | 53 | ||||||
Adjusted EBITDA
|
$ | 268 | $ | 301 | |||||
Adjusted EBITDA - Specialty Ingredients
|
|||||||||
Operating income
|
$ | 72 | $ | 71 | |||||
Add:
|
|||||||||
Depreciation and amortization
|
66 | 64 | |||||||
Key items (see Table 5)
|
(22 | ) | 25 | ||||||
Adjusted EBITDA
|
$ | 116 | $ | 160 | |||||
Adjusted EBITDA - Water Technologies
|
|||||||||
Operating income
|
$ | 17 | $ | 21 | |||||
Add:
|
|||||||||
Depreciation and amortization
|
17 | 19 | |||||||
Key items (see Table 5)
|
- | - | |||||||
Adjusted EBITDA
|
$ | 34 | $ | 40 | |||||
Adjusted EBITDA - Performance Materials
|
|||||||||
Operating income
|
$ | 13 | $ | 33 | |||||
Add:
|
|||||||||
Depreciation and amortization (a)
|
13 | 12 | |||||||
Key items (see Table 5)
|
2 | - | |||||||
Adjusted EBITDA
|
$ | 28 | $ | 45 | |||||
Adjusted EBITDA - Consumer Markets
|
|||||||||
Operating income
|
$ | 66 | $ | 47 | |||||
Add:
|
|||||||||
Depreciation and amortization
|
9 | 9 | |||||||
Key items (see Table 5)
|
- | - | |||||||
Adjusted EBITDA
|
$ | 75 | $ | 56 | |||||
(a)
|
Depreciation and amortization excludes accelerated depreciation of $2 million for Performance Materials for the three months ended December 31, 2012, which is displayed as a key item within this table.
|