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Fair Value Measurements (Tables)
 3 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Summary of Financial Instruments Subject to Recurring Fair Value Measurements

The following table summarizes financial instruments subject to recurring fair value measurements as of December 31, 2018.

 

 

Carrying

 

 

Total

fair

 

 

Quoted prices

in active

markets for

identical

assets

 

 

Significant

other

observable

inputs

 

 

Significant

unobservable

inputs

 

(In millions)

value

 

 

value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

149

 

 

$

149

 

 

$

149

 

 

$

—

 

 

$

—

 

Restricted investments (a)

 

309

 

 

 

309

 

 

 

309

 

 

 

—

 

 

 

—

 

Deferred compensation investments (b)

 

161

 

 

 

161

 

 

 

—

 

 

 

161

 

 

 

—

 

Investment of captive insurance company

 

3

 

 

 

3

 

 

 

3

 

 

 

—

 

 

 

—

 

Foreign currency derivatives

 

2

 

 

 

2

 

 

 

—

 

 

 

2

 

 

 

—

 

Total assets at fair value

$

624

 

 

$

624

 

 

$

461

 

 

$

163

 

 

$

—

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency derivatives

$

1

 

 

$

1

 

 

$

—

 

 

$

1

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Included in restricted investments is $30 million classified in the other current assets caption on the Condensed Consolidated Balance Sheets.

 

(b)

Included in other noncurrent assets in the Condensed Consolidated Balance Sheets.

The following table summarizes financial asset instruments subject to recurring fair value measurements as of September 30, 2018.

 

 

Carrying

 

 

Total

fair

 

 

Quoted prices

in active

markets for

identical

assets

 

 

Significant

other

observable

inputs

 

 

Significant

unobservable

inputs

 

(In millions)

value

 

 

value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

294

 

 

$

294

 

 

$

294

 

 

$

—

 

 

$

—

 

Restricted investments (a)

 

342

 

 

 

342

 

 

 

342

 

 

 

—

 

 

 

—

 

Deferred compensation investments (b)

 

165

 

 

 

165

 

 

 

—

 

 

 

165

 

 

 

—

 

Investment of captive insurance company

 

3

 

 

 

3

 

 

 

3

 

 

 

—

 

 

 

—

 

Foreign currency derivatives

 

11

 

 

 

11

 

 

 

—

 

 

 

11

 

 

 

—

 

Total assets at fair value

$

815

 

 

$

815

 

 

$

639

 

 

$

176

 

 

$

—

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency derivatives

$

3

 

 

$

3

 

 

$

—

 

 

$

3

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Included in restricted investments is $30 million classified in the other current assets caption on the Condensed Consolidated Balance Sheets.

 

(b)

Included in other noncurrent assets in the Condensed Consolidated Balance Sheets.
Summary of Investment Portfolio The following table provides a summary of the activity within the investment portfolio as of December 31, 2018 and September 30, 2018:

 

(In millions)

December 31

2018

 

 

September 30

2018

 

Original cost

$

335

 

 

$

335

 

Accumulated adjustments, net

 

(47

)

 

 

(38

)

Adjusted cost, beginning of year (a)

 

288

 

 

 

297

 

Investment income (b)

 

3

 

 

 

8

 

Net unrealized gain

 

24

 

 

 

54

 

Realized gains

 

—

 

 

 

6

 

Settlement funds

 

2

 

 

 

10

 

Disbursements

 

(8

)

 

 

(33

)

Fair value

$

309

 

 

$

342

 

 

 

 

 

 

 

 

 

 

(a)

The accumulated adjustments include investment income, realized gains, disbursements and settlements recorded in previous periods.

 

(b)

Investment income for the demand deposit includes interest income as well as dividend income transferred from the equity and corporate bond mutual funds.

The following table presents gross unrealized gains and losses for the restricted investment securities as of December 31, 2018 and September 30, 2018:

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

(In millions)

Adjusted Cost

 

 

Unrealized Gain

 

 

Unrealized Loss

 

 

Fair Value

 

As of December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposit

$

17

 

 

$

—

 

 

$

—

 

 

$

17

 

Equity mutual fund

 

148

 

 

 

30

 

 

 

—

 

 

 

178

 

Corporate bond mutual fund

 

120

 

 

 

—

 

 

 

(6

)

 

 

114

 

Fair value

$

285

 

 

$

30

 

 

$

(6

)

 

$

309

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposit

$

20

 

 

$

—

 

 

$

—

 

 

$

20

 

Equity mutual fund

 

148

 

 

 

59

 

 

 

—

 

 

 

207

 

Corporate bond mutual fund

 

120

 

 

 

—

 

 

 

(5

)

 

 

115

 

Fair value

$

288

 

 

$

59

 

 

$

(5

)

 

$

342

 

 
Summary of Investment Income, Realized Gains and Disbursements Related to Investments

The following table presents the investment income, net unrealized gains and losses, realized gains and disbursements related to the investments within the portfolio for the three months ended December 31, 2018 and 2017.

 

 

Three months ended

 

 

December 31

 

(In millions)

2018

 

 

2017

 

Investment income

$

3

 

 

$

2

 

Realized gains

 

—

 

 

 

1

 

Net unrealized gains (losses) (a)

 

(30

)

 

 

10

 

Disbursements

 

(8

)

 

 

(5

)

 

 

 

 

 

 

 

 

 

(a)

Ashland determined that all unrealized gains and losses were related to equity securities with readily determinable fair values. Due to the new accounting guidance adopted in the current quarter, the net unrealized losses during the three months ended December 31, 2018 were recorded within the net interest and other financing expense caption in the Statements of Consolidated Comprehensive Income (Loss).
Summary of Net Gains and Losses on Foreign Currency Derivatives The following table summarizes the net gains and losses recognized during the three months ended December 31, 2018 and 2017 within the Statements of Consolidated Comprehensive Income (Loss).

 

 

Three months ended

 

 

December 31

 

(In millions)

2018

 

 

2017

 

Foreign currency derivative gains (losses)

$

1

 

 

$

(11

)

 
Summary of Fair Values of Outstanding Foreign Currency Derivatives

The following table summarizes the fair values of the outstanding foreign currency derivatives as of December 31, 2018 and September 30, 2018 included in accounts receivable and accrued expenses and other liabilities of the Condensed Consolidated Balance Sheets.

 

 

December 31

 

 

September 30

 

(In millions)

2018

 

 

2018

 

Foreign currency derivative assets

$

2

 

 

$

11

 

Notional contract values

 

399

 

 

 

1,209

 

 

 

 

 

 

 

 

 

Foreign currency derivative liabilities

$

1

 

 

$

3

 

Notional contract values

 

304

 

 

 

755