Ashland Inc. (ASH, Financial) filed Quarterly Report for the period ended 2008-12-31.
Ashland Inc. is engaged in the business of providing products services and customer solutions throughout the world. Its businesses include road construction specialty chemicals lubricants car-care products chemical and plastics distribution and transportation fuels. They are market leaders in highway construction chemical and thermoplastic distribution specialty chemicals motor oil and car-care products. They also have an equity interest in petroleum refining and marketing. Ashland Inc. has a market cap of $590.46 million; its shares were traded at around $8.25 with a P/E ratio of 4.4 and P/S ratio of 0.07. The dividend yield of Ashland Inc. stocks is 3.74%. Ashland Inc. had an annual average earning growth of 16.5% over the past 10 years.
The cumulative effect of these restructuring activities has resulted in the elimination of approximately 500 employee positions through the end of the December 2008 quarter and in total is currently expected to reduce the global workforce, once specific employees are identified, by a total of approximately 1,300, or 9%, when excluding Valvoline retail employees, by the end of fiscal 2010. As of December 31, 2008, the total restructuring reserve under the program was $39 million, of which $23 million was charged as an expense during the current quarter within the Unallocated and Other caption and classified within the selling, general and administrative expense caption. The remaining reserve of $16 million relates to Hercules employees and was recorded as part of purchase price accounting within the accrued expenses and other liabilities caption of the Condensed Consolidated Balance Sheet and had no effect on the Statement of Consolidated Income. Additional charges will likely occur as plans are finalized throughout the remainder of fiscal year 2009.
Ashland recorded a net loss of $119 million for the three months ended December 31, 2008 as compared to net income of $33 million in the prior year same quarter. Loss from continuing operations was $120 million as compared to income from continuing operations of $58 million in the prior quarter. An operating loss of $7 million, compared to $46 million in income during the prior quarter, contributed to the current quarter loss as well as a $54 million loss related to cross-currency swaps, and a $32 million loss on auction rate securities, which were both reported below operating income within the other expense caption of the Statement of Consolidated Income. In addition, Ashland incurred net interest and other financing expense of $28 million for the December 2008 quarter as compared to net interest and other financing income of $12 million in the prior year quarter, with the current quarter expense due to interest attributable to the debt issued in conjunction with the financing of the Hercules acquisition. The operating loss of $7 million for the December 2008 quarter included $31 million in nonrecurring purchase accounting adjustments related to the Hercules acquisition and $26 million in severance charges. These key items, along with volume declines
Sales and operating revenues (revenues) for December 2008 increased 3% from the December 2007 quarter primarily due to a $238 million, or 12%, increase related to the acquired Hercules businesses recorded during the current quarter as well as price increases of $183 million, or 10%, across all business operations. These increases were offset by a $319 million, or 17%, cumulative decline in volume and mix, principally in Distribution and Performance Materials, and an unfavorable currency exchange of $71 million, or 4%. Revenues from the acquisition of Air Products pressure sensitive adhesive business and atmospheric emulsions business (Air Products) on June 30, 2008 contributed an additional $30 million, or 2%, in the current quarter.
Cost of sales and operating expenses (cost of sales) for the December 2008 quarter increased 3% compared to the December 2007 quarter, which resulted in an overall 10 basis point decline in gross profit as a percent of sales (gross profit). The acquisitions of Hercules and Air Products and raw material price increases were the primary factors for the gross profit decline, which represented a $197 million and $149 million cost increase, respectively, compared to the December 2007 quarter. Cost of sales included a nonrecurring charge of $21 million associated with the inventory fair value adjustment of Hercules acquired inventory and a depreciation step-up adjustment of $5 million associated with the fair value adjustment of Hercules property, plant and equipment, which will be ongoing. These cost of sales increases were more than offset by a $263 million decline related to volume and a $57 million decline in currency exchange due to strengthening of the U.S. dollar.
Selling, general and administrative expenses for the December 2008 quarter increased 22% compared to the December 2007 quarter with selling, general and administrative expenses as a percent of revenue increasing 2.7 percentage points. Expenses impacting the comparability of the December 2008 quarter compared to the December 2007 quarter included charges of $10 million related to the purchased in-process research and development projects at Hercules as of the merger date and $26 million for severance charges primarily due to the ongoing integration and reorganization from the Hercules acquisition. The acquisitions of Hercules and Air Products added an additional $53 million in selling, general and administrative expenses as compared to the prior year same quarter. Currency exchange effects, Ashlands implemented cost reduction initiatives and other items reduced selling, general and administrative expenses by $26 million from the prior year December quarter. For further information on cost cutting initiatives see the Key Fiscal 2009
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Ashland Inc. is engaged in the business of providing products services and customer solutions throughout the world. Its businesses include road construction specialty chemicals lubricants car-care products chemical and plastics distribution and transportation fuels. They are market leaders in highway construction chemical and thermoplastic distribution specialty chemicals motor oil and car-care products. They also have an equity interest in petroleum refining and marketing. Ashland Inc. has a market cap of $590.46 million; its shares were traded at around $8.25 with a P/E ratio of 4.4 and P/S ratio of 0.07. The dividend yield of Ashland Inc. stocks is 3.74%. Ashland Inc. had an annual average earning growth of 16.5% over the past 10 years.
Highlight of Business Operations:
The transaction was valued at $2,596 million and included $786 million of debt assumed in the acquisition. As part of the financing arrangement for the transaction, Ashland borrowed $2,300 million and retained $205 million in existing debt.The cumulative effect of these restructuring activities has resulted in the elimination of approximately 500 employee positions through the end of the December 2008 quarter and in total is currently expected to reduce the global workforce, once specific employees are identified, by a total of approximately 1,300, or 9%, when excluding Valvoline retail employees, by the end of fiscal 2010. As of December 31, 2008, the total restructuring reserve under the program was $39 million, of which $23 million was charged as an expense during the current quarter within the Unallocated and Other caption and classified within the selling, general and administrative expense caption. The remaining reserve of $16 million relates to Hercules employees and was recorded as part of purchase price accounting within the accrued expenses and other liabilities caption of the Condensed Consolidated Balance Sheet and had no effect on the Statement of Consolidated Income. Additional charges will likely occur as plans are finalized throughout the remainder of fiscal year 2009.
Ashland recorded a net loss of $119 million for the three months ended December 31, 2008 as compared to net income of $33 million in the prior year same quarter. Loss from continuing operations was $120 million as compared to income from continuing operations of $58 million in the prior quarter. An operating loss of $7 million, compared to $46 million in income during the prior quarter, contributed to the current quarter loss as well as a $54 million loss related to cross-currency swaps, and a $32 million loss on auction rate securities, which were both reported below operating income within the other expense caption of the Statement of Consolidated Income. In addition, Ashland incurred net interest and other financing expense of $28 million for the December 2008 quarter as compared to net interest and other financing income of $12 million in the prior year quarter, with the current quarter expense due to interest attributable to the debt issued in conjunction with the financing of the Hercules acquisition. The operating loss of $7 million for the December 2008 quarter included $31 million in nonrecurring purchase accounting adjustments related to the Hercules acquisition and $26 million in severance charges. These key items, along with volume declines
Sales and operating revenues (revenues) for December 2008 increased 3% from the December 2007 quarter primarily due to a $238 million, or 12%, increase related to the acquired Hercules businesses recorded during the current quarter as well as price increases of $183 million, or 10%, across all business operations. These increases were offset by a $319 million, or 17%, cumulative decline in volume and mix, principally in Distribution and Performance Materials, and an unfavorable currency exchange of $71 million, or 4%. Revenues from the acquisition of Air Products pressure sensitive adhesive business and atmospheric emulsions business (Air Products) on June 30, 2008 contributed an additional $30 million, or 2%, in the current quarter.
Cost of sales and operating expenses (cost of sales) for the December 2008 quarter increased 3% compared to the December 2007 quarter, which resulted in an overall 10 basis point decline in gross profit as a percent of sales (gross profit). The acquisitions of Hercules and Air Products and raw material price increases were the primary factors for the gross profit decline, which represented a $197 million and $149 million cost increase, respectively, compared to the December 2007 quarter. Cost of sales included a nonrecurring charge of $21 million associated with the inventory fair value adjustment of Hercules acquired inventory and a depreciation step-up adjustment of $5 million associated with the fair value adjustment of Hercules property, plant and equipment, which will be ongoing. These cost of sales increases were more than offset by a $263 million decline related to volume and a $57 million decline in currency exchange due to strengthening of the U.S. dollar.
Selling, general and administrative expenses for the December 2008 quarter increased 22% compared to the December 2007 quarter with selling, general and administrative expenses as a percent of revenue increasing 2.7 percentage points. Expenses impacting the comparability of the December 2008 quarter compared to the December 2007 quarter included charges of $10 million related to the purchased in-process research and development projects at Hercules as of the merger date and $26 million for severance charges primarily due to the ongoing integration and reorganization from the Hercules acquisition. The acquisitions of Hercules and Air Products added an additional $53 million in selling, general and administrative expenses as compared to the prior year same quarter. Currency exchange effects, Ashlands implemented cost reduction initiatives and other items reduced selling, general and administrative expenses by $26 million from the prior year December quarter. For further information on cost cutting initiatives see the Key Fiscal 2009
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