ex991.htm

EXHIBIT 99.1

News Release

	FOR IMMEDIATE RELEASE
	April 24, 2012

Ashland Inc. reports preliminary financial results for second quarter of

fiscal 2012

Earnings from continuing operations equal $1.13 per diluted share; adjusted earnings, excluding key items, increased 57 percent to $1.52 per diluted share

COVINGTON, Ky. – Ashland Inc. (NYSE: ASH), a global leader in specialty chemical solutions for consumer and industrial markets, today announced preliminary(1) financial results for the quarter ended Mar. 31, 2012, the second quarter of its 2012 fiscal year.

Quarterly Highlights

(in millions except per-share amounts)	Quarter Ended Mar. 31,
	2012		2011
Operating income	$	179	$	256
Key items*		42		(114	)
Adjusted operating income*	$	221	$	142

Adjusted pro forma EBITDA*†	$	329	$	322

Diluted earnings per share (EPS)
From net income	$	1.10	$	6.02

From continuing operations	$	1.13	$	2.26
Key items*		0.39		(1.29	)
Adjusted EPS from continuing operations*	$	1.52	$	0.97

Cash flows provided by operating activities from continuing operations	$	210	$	114
Free cash flow*		141		72

* See Tables 5, 6 and 7 for definitions and U.S. GAAP reconciliations. † Includes International Specialty Products Inc. in both periods.

For the second quarter of fiscal 2012, Ashland reported income from continuing operations of $90 million, or $1.13 per diluted share, on sales of $2.1 billion. These results included three key items that together reduced income from continuing operations by approximately $31 million, net of tax, or 39 cents per diluted share. The after-tax charges related to adjustments to stepped-up inventory values from the acquisition of International Specialty Products Inc. (ISP) last August; expenses related to Ashland’s integration and cost-reduction program; and a write-off related to pre-construction costs for a previously planned greenfield manufacturing facility in northern China. Excluding these three key items, Ashland’s adjusted income from continuing operations was $121 million, or $1.52 per diluted share, an increase of 57 percent versus the year-ago quarter.

For the year-ago quarter, income from continuing operations was $182 million, or $2.26 per diluted share, on sales of $1.6 billion. The year-ago results included four key items that had a combined positive impact of $103 million, net of tax, or $1.29 per diluted share. Excluding these items, adjusted income from continuing operations was 97 cents per diluted share. The March 2011 results do not include ISP or related financing costs associated with that acquisition. (Please refer to Table 5 of the accompanying financial statements for details of key items in both periods.)

Adjusting for the impact of key items in both the current and prior-year quarters and for the acquisition of ISP on a pro forma basis, Ashland’s results for the March 2012 quarter as compared with the March 2011 quarter were as follows:

·	Sales grew 2 percent to $2.1 billion;

·	Operating income rose 4 percent to $221 million;

·	Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 2 percent to $329 million; and

·	EBITDA as a percent of sales held steady at 15.8 percent.

“I am pleased with Ashland’s solid financial performance in the second quarter. Our overall business continues to perform well, with increased sales, stable margins and improved cash flow during the quarter despite some market weakness in certain commercial units,” said James J. O’Brien, Ashland chairman and chief executive officer. “Ashland Specialty Ingredients achieved another strong quarter with double-digit sales and earnings increases, and good sales growth in all regions of the world. With last year’s acquisition of International Specialty Products, we have strengthened our position in higher-margin growth markets and we are seeing the benefit to our bottom-line results. Also during the quarter, Ashland Performance Materials had improved pricing and stronger demand in the North American market. Although Ashland Consumer Markets was down versus the prior year due to softness in the domestic market, its performance improved when compared to the first quarter. Ashland Water Technologies continues to face a challenging demand environment, with lower volumes more than offsetting the benefit from improved pricing in the quarter.”

Business Segment Performance

In order to aid understanding of Ashland’s ongoing business performance, the results of Ashland’s business segments are presented on an adjusted or pro forma adjusted basis, and EBITDA is reconciled to operating income in Tables 7 and 8 of this news release.

Ashland Specialty Ingredients reported sales of $723 million for the March 2012 quarter, an increase of 11 percent when compared to a year ago on a pro forma basis. EBITDA rose 12 percent, to $186 million, while EBITDA as a percent of sales was 25.7 percent, an increase of 10 basis points versus the year-ago quarter. Each of Specialty Ingredients’ businesses performed well during the quarter, with particularly impressive performance from the Energy, Construction and Specialty Performance businesses. Specialty Ingredients represents the largest commercial unit within Ashland, comprising 56 percent of the company’s consolidated EBITDA on a trailing 12-month basis.

Ashland Performance Materials reported sales of $408 million, a 4-percent decrease from the March 2011 quarter on the same pro forma basis, which includes the results of ISP’s elastomers business. Excluding effects associated with our Casting Solutions joint venture and the recently divested PVAc business, year-over-year sales for Performance Materials rose 4 percent. EBITDA increased 9 percent, to $35 million, while EBITDA as a percent of sales grew 110 basis points to 8.6 percent.

Sales at Ashland Consumer Markets rose 6 percent, to $520 million, when compared to a year ago. EBITDA totaled $66 million, a decline of 10 percent versus a year ago, while EBITDA as a percent of sales was 12.7 percent, a decline of 220 basis points from March 2011. However, EBITDA was higher on a sequential basis when compared to the December 2011 quarter due to seasonal volume increases, increased pricing and lower raw material costs.

Ashland Water Technologies’ sales totaled $428 million in the March 2012 quarter, a decline of 9 percent from the year-ago quarter. EBITDA was $39 million, a 24-percent decline from March 2011. EBITDA as a percent of sales was 9.1 percent, down 170 basis points. Lower volumes remain the primary challenge within Water Technologies’ business. Water Technologies has taken a number of steps over the past year to refocus its business on higher-margin, higher-growth opportunities, and these actions should lead to improved results over time. This includes the divestiture of our synlubes business and the repositioning of our middle-market commercial business through a well-established distributor. The latter decision, announced last week, will eliminate the high costs associated with servicing approximately 5,000 customer locations that together generated only $15 million in annualized sales.

After excluding the effects from key items, Ashland’s effective tax rate for the March 2012 quarter was 27 percent. Given our ongoing work in this area and a refinement of some of our initial assumptions, we now expect Ashland’s tax rate for the full year to be in the range of 28-30 percent.

Outlook

Looking ahead, O’Brien said he is confident about Ashland’s growth opportunities and business performance.

“Our year-to-date financial performance provides clear evidence of the strategic benefits provided by the addition of ISP’s higher-margin business portfolio. Specialty chemicals are now the core of our business, and we are beginning to see the improved earnings power that comes with this focus on higher-growth, less cyclical markets. At the same time, we have made great progress on our cost reduction program, which is targeting $90 million in annualized savings. Through the end of March, we had already achieved more than two-thirds of that goal and the integration with ISP is progressing largely as expected. While rising raw material costs are always a concern in our business, we have demonstrated a strong ability to effectively manage these challenges through pricing and efficiency improvements,” he explained.

“We have good momentum going into the second half of fiscal 2012, with the June quarter typically being our seasonally strongest. We will continue to focus on driving earnings through organic volume growth, margin improvement, cost efficiencies and strategic capital investment. We are well on track for the year and remain confident in our ability to deliver our fiscal 2014 financial targets for sales and earnings growth,” O’Brien said.

Conference Call Webcast

Ashland will host a live webcast of its second-quarter conference call with securities analysts at 9 a.m. EDT Tuesday, April 24, 2012. The webcast and supporting materials will be accessible through Ashland’s website at http://investor.ashland.com. Following the live event, an archived version of the webcast and supporting materials will be available for 12 months.

Use of Non-GAAP Measures

This news release includes certain non-GAAP (Generally Accepted Accounting Principles) measures. Such measurements are not prepared in accordance with GAAP and should not be construed as an alternative to reported results determined in accordance with GAAP. Management believes the use of such non-GAAP measures assists investors in understanding the ongoing operating performance of the company and its segments. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP amounts have been reconciled with reported GAAP results in Tables 5, 6 and 7 of the financial statements provided with this news release.

About Ashland

In more than 100 countries, the people of Ashland Inc. (NYSE: ASH) provide the specialty chemicals, technologies and insights to help customers create new and improved products for today and sustainable solutions for tomorrow. Our chemistry is at work every day in a wide variety of markets and applications, including architectural coatings, automotive, construction, energy, food and beverage, personal care, pharmaceutical, tissue and towel, and water treatment. Visit ashland.com to see the innovations we offer through our four commercial units – Ashland Specialty Ingredients, Ashland Water Technologies, Ashland Performance Materials and Ashland Consumer Markets.

- 0 -

C-ASH

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. In addition, Ashland may from time to time make forward-looking statements in its other filings with the Securities and Exchange Commission (SEC), news releases and other written and oral communications. These forward-looking statements are based on Ashland’s expectations and assumptions, as of the date such statements are made, regarding Ashland’s future operating performance and financial condition, the economy and other future events or circumstances. Ashland’s expectations and assumptions include, without limitation, 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, cost of raw materials, and the ability to recover raw-material cost increases through price increases), and risks and uncertainties associated with the following: Ashland’s substantial indebtedness (including the possibility that such indebtedness and related restrictive covenants may adversely affect Ashland’s future cash flows, results of operations, financial condition and its ability to repay debt), severe weather, natural disasters, and legal proceedings and claims (including environmental and asbestos matters). Various risks and uncertainties may cause actual results to differ materially from those stated, projected or implied by any forward-looking statements, including, without limitation, risks and uncertainties affecting Ashland that are described in its most recent Form 10-K (including Item 1A Risk Factors) filed with the SEC, which is available on Ashland’s website at http://investor.ashland.com or on the SEC’s website at www.sec.gov. Ashland believes its expectations and assumptions are reasonable, but there can be no assurance that the expectations reflected herein will be achieved. Ashland undertakes no obligation to subsequently update any forward-looking statements made in this news release or otherwise except as required by securities or other applicable law.

(1) Preliminary Results

Financial results are preliminary until Ashland’s Form 10-Q for the fiscal quarter ended Mar. 31, 2012, is filed with the SEC.

FOR FURTHER INFORMATION:

Media Relations	Investor Relations:
Gary Rhodes	David Neuberger
+1 (859) 815-3047	+1 (859) 815-4454
glrhodes@ashland.com	daneuberger@ashland.com

Ashland Inc. and Consolidated Subsidiaries											Table 1
STATEMENTS OF CONSOLIDATED INCOME
(In millions except per share data - preliminary and unaudited)
		Three months ended						Six months ended
		March 31						March 31
		2012			2011			2012			2011

SALES		$	2,079		$	1,557		$	4,009		$	2,989

COSTS AND EXPENSES
	Cost of sales (a) (b)		1,504			1,094			2,912			2,128
	Selling, general and administrative expense (b) (c)		381			201			743			478
	Research and development expense		31			20			61			39
			1,916			1,315			3,716			2,645
EQUITY AND OTHER INCOME			16			14			30			27

OPERATING INCOME			179			256			323			371
	Net interest and other financing expense		(56	)		(39	)		(113	)		(66	)
	Net gain (loss) on acquisitions and divestitures		1			-			(3	)		21
INCOME FROM CONTINUING OPERATIONS
	BEFORE INCOME TAXES		124			217			207			326
	Income tax expense		34			35			57			72
INCOME FROM CONTINUING OPERATIONS			90			182			150			254
	Income (loss) from discontinued operations (net of income taxes) (d)		(2	)		303			(1	)		329
NET INCOME		$	88		$	485		$	149		$	583

DILUTED EARNINGS PER SHARE
	Income from continuing operations	$	1.13		$	2.26		$	1.89		$	3.16
	Income (loss) from discontinued operations		(.03	)		3.76			(.02	)		4.10
	Net income	$	1.10		$	6.02		$	1.87		$	7.26

AVERAGE COMMON SHARES AND ASSUMED CONVERSIONS			80			80			79			80

SALES
	Specialty Ingredients	$	723		$	270		$	1,351		$	486
	Water Technologies		428			471			876			921
	Performance Materials		408			325			787			650
	Consumer Markets		520			491			995			932
		$	2,079		$	1,557		$	4,009		$	2,989
OPERATING INCOME (LOSS)
	Specialty Ingredients	$	115		$	43		$	186		$	64
	Water Technologies		23			31			45			59
	Performance Materials		22			5			55			13
	Consumer Markets		57			64			104			132
	Unallocated and other (b)		(38	)		113			(67	)		103
		$	179		$	256		$	323		$	371

(a)	Includes a noncash charge of $28 million for the six months ended March 31, 2012 related to the fair value assessment of inventory acquired from ISP at the date of acquisition.
(b)	The three and six months ended March 31, 2011 include $120 million of income ($37 million and $83 million recognized within the cost of sales and selling, general and administrative expense captions, respectively) related to the actuarial gain on pension and postretirement benefit plans, recognized in the prior year quarter due to a required plan remeasurement from the Distribution sale, which is further discussed in note (d).
(c)	The three and six months ended March 31, 2012 include restructuring charges of $38 million and $66 million, respectively, related to certain company wide restructuring and integration activities related to recent business realignments through acquisitions, divestitures and joint venture arrangements.
(d)	Includes income in the prior year of $44 million and $68 million for the three and six months ended March 31, 2011, respectively, related to direct results of the Distribution business that was divested on March 31, 2011. Due to the sale qualifying for discontinued operation treatment, the direct results of this business have been presented within this caption. In addition, the three and six months ended March 31, 2011 include an after-tax gain of $256 million on the sale of the Distribution business.

Ashland Inc. and Consolidated Subsidiaries				Table 2
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions - preliminary and unaudited)

	March 31			September 30
	2012			2011
ASSETS
Current assets
Cash and cash equivalents	$	599		$	737
Accounts receivable		1,489			1,482
Inventories		949			925
Deferred income taxes		163			163
Other assets		83			80
		3,283			3,387

Noncurrent assets
Goodwill		3,319			3,291
Intangibles		2,066			2,134
Asbestos insurance receivable (noncurrent portion)		431			448
Equity and other unconsolidated investments		200			193
Other assets		585			599
		6,601			6,665

Property, plant and equipment
Cost		4,341			4,306
Accumulated depreciation and amortization		(1,519	)		(1,392	)
		2,822			2,914

Total assets	$	12,706		$	12,966

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term debt	$	55		$	83
Current portion of long-term debt		109			101
Trade and other payables		882			911
Accrued expenses and other liabilities		532			644
		1,578			1,739

Noncurrent liabilities
Long-term debt (noncurrent portion)		3,588			3,648
Employee benefit obligations		1,504			1,566
Asbestos litigation reserve (noncurrent portion)		753			783
Deferred income taxes		408			404
Other liabilities		643			691
		6,896			7,092

Stockholders’ equity		4,232			4,135

Total liabilities and stockholders' equity	$	12,706		$	12,966

Ashland Inc. and Consolidated Subsidiaries											Table 3
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In millions - preliminary and unaudited)
		Three months ended						Six months ended
		March 31						March 31
		2012			2011			2012			2011
CASH FLOWS (USED) PROVIDED BY OPERATING ACTIVITIES
FROM CONTINUING OPERATIONS
	Net income	$	88		$	485		$	149		$	583
	Loss (income) from discontinued operations (net of income taxes)		2			(303	)		1			(329	)
	Adjustments to reconcile income from continuing operations to
	cash flows from operating activities
	Depreciation and amortization		108			70			212			143
	Debt issuance cost amortization		6			15			12			19
	Deferred income taxes		1			10			3			20
	Equity income from affiliates		(7	)		(4	)		(14	)		(7	)
	Distributions from equity affiliates		-			1			1			3
	Gain from sale of property and equipment		(1	)		-			(1	)		(2	)
	Stock based compensation expense		7			5			13			9
	Stock contributions to qualified savings plans		-			1			-			13
	Net (gain) loss on acquisitions and divestitures		(1	)		-			1			(21	)
	Inventory fair value adjustment related to ISP acquisition		4			-			28			-
	Actuarial gain on pension and post retirement plans		-			(120	)		-			(120	)
	Change in operating assets and liabilities (a)		3			(46	)		(377	)		(234	)
			210			114			28			77
CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES
FROM CONTINUING OPERATIONS
	Additions to property, plant and equipment		(55	)		(30	)		(98	)		(52	)
	Proceeds from disposal of property, plant and equipment		1			1			3			4
	Purchase of operations - net of cash acquired		-			-			-			(5	)
	Proceeds from sale of available-for-sale securities		4			-			4			-
	Proceeds from sale of operations or equity investments		43			19			42			40
			(7	)		(10	)		(49	)		(13	)
CASH FLOWS (USED) PROVIDED BY FINANCING ACTIVITIES
FROM CONTINUING OPERATIONS
	Proceeds from issuance of long-term debt		2			-			2			11
	Repayment of long-term debt		(34	)		(289	)		(57	)		(299	)
	Repayment of short-term debt		(20	)		(35	)		(28	)		(29	)
	Cash dividends paid		(14	)		(12	)		(27	)		(24	)
	Proceeds from exercise of stock options		1			1			2			2
	Excess tax benefits related to share-based payments		3			-			3			1
			(62	)		(335	)		(105	)		(338	)
CASH (USED) PROVIDED BY CONTINUING OPERATIONS			141			(231	)		(126	)		(274	)
	Cash (used) provided by discontinued operations
	Operating cash flows		(5	)		5			(8	)		5
	Investing cash flows		-			979			-			979
	Effect of currency exchange rate changes on cash and
	cash equivalents		(3	)		2			(4	)		2
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			133			755			(138	)		712
Cash and cash equivalents - beginning of period			466			374			737			417
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	599		$	1,129		$	599		$	1,129

DEPRECIATION AND AMORTIZATION
	Specialty Ingredients	$	67		$	23		$	132		$	47
	Water Technologies		18			20			37			41
	Performance Materials		13			17			25			35
	Consumer Markets		9			9			18			18
	Unallocated and other		1			1			-			2
		$	108		$	70		$	212		$	143
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
	Specialty Ingredients	$	23		$	10		$	47		$	19
	Water Technologies		12			8			20			14
	Performance Materials		9			3			16			6
	Consumer Markets		6			4			8			8
	Unallocated and other		5			5			7			5
		$	55		$	30		$	98		$	52

(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						Six months ended
		March 31						March 31
		2012			2011			2012			2011
SPECIALTY INGREDIENTS (a) (b)
	Sales per shipping day	$	11.3		$	4.3		$	10.8		$	3.9
	Metric tons sold (thousands)		113.1			42.8			211.4			81.3
	Gross profit as a percent of sales (c)		32.9	%		33.7	%		31.4	%		32.6	%
WATER TECHNOLOGIES (a)
	Sales per shipping day	$	6.7		$	7.5		$	7.0		$	7.4
	Gross profit as a percent of sales		32.1	%		31.3	%		31.4	%		31.5	%
PERFORMANCE MATERIALS (a) (b)
	Sales per shipping day	$	6.4		$	5.2		$	6.3		$	5.2
	Metric tons sold (thousands)		140.5			125.2			277.9			249.6
	Gross profit as a percent of sales		14.6	%		12.0	%		16.8	%		13.3	%
CONSUMER MARKETS (a)
	Lubricant sales (gallons)		40.7			44.8			77.4			85.3
	Premium lubricants (percent of U.S. branded volumes)		30.4	%		32.5	%		29.9	%		31.4	%
	Gross profit as a percent of sales		26.4	%		29.3	%		25.9	%		30.0	%

(a)	Gross profit as a percent of sales is defined as sales, less cost of sales divided by sales.
(b)	Amounts for the three and six months ended March 31, 2011 exclude pre-acquisition results of ISP.
(c)	Includes expense of $4 million and $28 million for the three and six months ended March 31, 2012, respectively, related to the fair value of inventory acquired from ISP. Excluding this expense, the gross profit percentages would have been 33.5% for both current periods.

Ashland Inc. and Consolidated Subsidiaries														Table 5
RECONCILIATION OF NON-GAAP DATA - INCOME (LOSS) FROM CONTINUING OPERATIONS
(In millions - preliminary and unaudited)

	Three Months Ended March 31, 2012
	Specialty			Water		Performance			Consumer		Unallocated
	Ingredients			Technologies		Materials			Markets		& Other			Total
OPERATING INCOME (LOSS)
Restructuring and other integration costs	$	-		$	2	$	-		$	-	$	(24	)	$	(22	)
Discontinued planned facility		-			-		-			-		(16	)		(16	)
Inventory fair value adjustment		(4	)		-		-			-		-			(4	)
All other operating income		119			21		22			57		2			221
Operating income		115			23		22			57		(38	)		179

NET INTEREST AND OTHER FINANCING EXPENSE												(56	)		(56	)

NET GAIN ON ACQUISITIONS AND DIVESTITURES												1			1

INCOME TAX (EXPENSE) BENEFIT
Key items												11			11
All other income tax expense												(45	)		(45	)
												(34	)		(34	)

INCOME (LOSS) FROM CONTINUING OPERATIONS	$	115		$	23	$	22		$	57	$	(127	)	$	90


	Three Months Ended March 31, 2011
	Specialty			Water		Performance			Consumer		Unallocated
	Ingredients			Technologies		Materials			Markets		& Other			Total
OPERATING INCOME (LOSS)
Actuarial gain on pension and other postretirement
plan remeasurement	$	-		$	-	$	-		$	-	$	120		$	120
Accelerated depreciation		-			-		(6	)		-		-			(6	)
All other operating income		43			31		11			64		(7	)		142
Operating income		43			31		5			64		113			256

NET INTEREST AND OTHER FINANCING EXPENSE
Accelerated amortization of debt issuance costs												(12	)		(12	)
All other net interest and other financing expense												(27	)		(27	)
												(39	)		(39	)

INCOME TAX (EXPENSE) BENEFIT
Actuarial gain on pension and other postretirement
plan remeasurement												(45	)		(45	)
Release of valuation allowances												45			45
Repatriation of proceeds from AD sale												(6	)		(6	)
Other key items												6			6
All other income tax expense												(35	)		(35	)
												(35	)		(35	)

INCOME FROM CONTINUING OPERATIONS	$	43		$	31	$	5		$	64	$	39		$	182

Ashland Inc. and Consolidated Subsidiaries											Table 6
RECONCILIATION OF NON-GAAP DATA - FREE CASH FLOW
(In millions - preliminary and unaudited)

		Three months ended						Six months ended
		March 31						March 31
Free cash flow		2012			2011			2012			2011
Total cash flows provided by operating activities
	from continuing operations	$	210		$	114		$	28		$	77
Adjustments:
	Additions to property, plant and equipment		(55	)		(30	)		(98	)		(52	)
	Cash dividends paid		(14	)		(12	)		(27	)		(24	)
	ISP acquisition - change in control payment (a)		-			-			92			-
Free cash flows		$	141		$	72		$	(5	)	$	1


(a)	Since payment was generated from investment activity, this amount has been included within this calculation.

Ashland Inc. and Consolidated Subsidiaries					Table 7
RECONCILIATION OF NON-GAAP DATA - ADJUSTED EBITDA
(In millions - preliminary and unaudited)

		Three months ended
		March 31
Adjusted EBITDA - Ashland Inc.		2012			2011
Net income		$	88		$	485
	Income tax expense		34			35
	Net interest and other financing expense		56			39
	Depreciation and amortization (a)		107			64
EBITDA			285			623
	Income from discontinued operations (net of income taxes)		2			(303	)
	Key items (see Table 5)		42			(114	)
	Results of the ISP business prior to acquisition (b)		-			116
Adjusted EBITDA		$	329		$	322


Adjusted EBITDA - Specialty Ingredients
Operating income		$	115		$	43
Add:
	Depreciation and amortization		67			23
	Key items (see Table 5)		4			-
	Results of the ISP business prior to acquisition (b)		-			100
Adjusted EBITDA		$	186		$	166


Adjusted EBITDA - Water Technologies
Operating income		$	23		$	31
Add:
	Depreciation and amortization		18			20
	Key items (see Table 5)		(2	)		-
Adjusted EBITDA		$	39		$	51


Adjusted EBITDA - Performance Materials
Operating income		$	22		$	5
Add:
	Depreciation and amortization (a)		13			11
	Key items (see Table 5)		-			6
	Results of the ISP business prior to acquisition (b)		-			10
Adjusted EBITDA		$	35		$	32


Adjusted EBITDA - Consumer Markets
Operating income		$	57		$	64
Add:
	Depreciation and amortization		9			9
	Key items (see Table 5)		-			-
Adjusted EBITDA		$	66		$	73


(a)	Depreciation and amortization for the three months ended March 31, 2012 and 2011 excludes $1 million and $6 million, respectively, of accelerated depreciation which is displayed as a key item (as applicable) within this table.
(b)	The ISP business results during 2011 relate to the operating income and depreciation and amortization recognized for the period in which Ashland did not yet own this business.

Ashland Inc. and Consolidated Subsidiaries													Table 8
SUPPLEMENTAL RECONCILIATION OF NON-GAAP DATA - ADJUSTED EBITDA
(In millions - preliminary and unaudited)

RECONCILIATION OF SEPTEMBER 2011 QUARTER ADJUSTED PRO FORMA RESULTS
($ millions, except percentages)				Pro Forma Adjustments
ASHLAND SPECIALTY INGREDIENTS Three Months Ended September 30, 2011	Ashland As Reported Results			ISP Pro Forma Results			Additional Purchase Accounting D&A			Key Items			Adjusted Pro Forma Results
Sales	$	467		$	205		$	-		$	-		$	672
Cost of sales		334			139			9			(16	)		466
Gross profit as a percent of sales		28.5	%		32.2	%								30.7	%
SG&A expenses (includes research and development)		78			34			7			-			119
Equity and other income		1			-			-			-			1
Operating income		56			32			(16	)		16			88
Operating income as a percent of sales		12.0	%		15.6	%								13.1	%
Depreciation and amortization		42			9			16			-			67
Earnings before interest, taxes, depreciation and amortization	$	98		$	41		$	-		$	16		$	155
EBITDA as a percent of sales		21.0	%		20.0	%								23.1	%

RECONCILIATION OF SEPTEMBER 2011 QUARTER ADJUSTED PRO FORMA RESULTS
($ millions, except percentages)				Pro Forma Adjustments
ASHLAND PERFORMANCE MATERIALS Three Months Ended September 30, 2011	Ashland As Reported Results			ISP Pro Forma Results			Additional Purchase Accounting D&A			Key Items			Adjusted Pro Forma Results
Sales and operating revenue	$	371		$	65		$	-		$	-		$	436
Cost of sales and operating expenses		323			56			-			(1	)		378
Gross profit as a percent of sales		12.9	%		13.8	%								13.3	%
SG&A expenses (includes research and development)		37			3			-			-			40
Equity and other income		1			-			-			-			1
Operating income		12			6			-			1			19
Operating income as a percent of sales		3.2	%		9.2	%								4.4	%
Depreciation and amortization		11			1			-			-			12
Earnings before interest, taxes, depreciation and amortization	$	23		$	7		$	-		$	1		$	31
EBITDA as a percent of sales		6.2	%		10.8	%								7.1	%

RECONCILIATION OF SEPTEMBER 2011 QUARTER ADJUSTED PRO FORMA RESULTS
($ millions, except percentages)				Pro Forma Adjustments
ASHLAND INC. Three Months Ended September 30, 2011	Ashland As Reported Results			ISP Pro Forma Results			Additional Purchase Accounting D&A			Key Items			Adjusted Pro Forma Results
Sales and operating revenue	$	1,846		$	270		$	-		$	-		$	2,116
Cost of sales and operating expenses		1,528			195			9			(152	)		1,580
Gross profit as a percent of sales		17.2	%		27.8	%								25.3	%
SG&A expenses (includes research and development)		695			42			7			(355	)		389
Equity and other income		7			-			-			-			7
Operating income		(370	)		33			(16	)		507			154
Operating income as a percent of sales		-20.0	%		12.2	%								7.3	%
Depreciation and amortization		88			10			16			(4	)		110
Earnings before interest, taxes, depreciation and amortization	$	(282	)	$	43		$	-		$	503		$	264
EBITDA as a percent of sales		-15.3	%		15.9	%								12.5	%

Ashland Inc. and Consolidated Subsidiaries													Table 8
SUPPLEMENTAL RECONCILIATION OF NON-GAAP DATA - ADJUSTED EBITDA
(In millions - preliminary and unaudited)

RECONCILIATION OF MARCH 2011 QUARTER ADJUSTED PRO FORMA RESULTS
($ millions, except percentages)				Pro Forma Adjustments
ASHLAND SPECIALTY INGREDIENTS Three Months Ended March 31, 2011	Ashland As Reported Results			ISP Pro Forma Results			Additional Purchase Accounting D&A			Key Items			Adjusted Pro Forma Results
Sales	$	270		$	379		$	-		$	-		$	649
Cost of sales		178			242			15			-			435
Gross profit as a percent of sales		33.7	%		36.1	%								33.0	%
SG&A expenses (includes research and development)		50			52			12			-			114
Equity and other income		1			-			-			-			1
Operating income		43			85			(27	)		-			101
Operating income as a percent of sales		15.9	%		22.4	%								15.6	%
Depreciation and amortization		23			15			27			-			65
Earnings before interest, taxes, depreciation and amortization	$	66		$	100		$	-		$	-		$	166
EBITDA as a percent of sales		24.4	%		26.4	%								25.6	%

RECONCILIATION OF MARCH 2011 QUARTER ADJUSTED PRO FORMA RESULTS
($ millions, except percentages)				Pro Forma Adjustments
ASHLAND PERFORMANCE MATERIALS Three Months Ended March 31, 2011	Ashland As Reported Results			ISP Pro Forma Results			Additional Purchase Accounting D&A			Key Items			Adjusted Pro Forma Results
Sales and operating revenue	$	325		$	100		$	-		$	-		$	425
Cost of sales and operating expenses		285			88			-			(6	)		367
Gross profit as a percent of sales		12.0	%		12.0	%								13.6	%
SG&A expenses (includes research and development)		38			4			1			-			43
Equity and other income		3			-			-			-			3
Operating income		5			8			(1	)		6			18
Operating income as a percent of sales		1.5	%		8.0	%								4.2	%
Depreciation and amortization		17			2			1			(6	)		14
Earnings before interest, taxes, depreciation and amortization	$	22		$	10		$	-		$	-		$	32
EBITDA as a percent of sales		6.8	%		10.0	%								7.5	%

RECONCILIATION OF MARCH 2011 QUARTER ADJUSTED PRO FORMA RESULTS
($ millions, except percentages)				Pro Forma Adjustments
ASHLAND INC. Three Months Ended March 31, 2011	Ashland As Reported Results			ISP Pro Forma Results			Additional Purchase Accounting D&A			Key Items			Adjusted Pro Forma Results
Sales and operating revenue	$	1,557		$	479		$	-		$	-		$	2,036
Cost of sales and operating expenses		1,094			330			15			31			1,470
Gross profit as a percent of sales		29.7	%		31.1	%								27.8	%
SG&A expenses (includes research and development)		221			50			13			83			367
Equity and other income		14			-			-			-			14
Operating income		256			99			(28	)		(114	)		213
Operating income as a percent of sales		16.4	%		20.7	%								10.5	%
Depreciation and amortization		70			17			28			(6	)		109
Earnings before interest, taxes, depreciation and amortization	$	326		$	116		$	-		$	(120	)	$	322
EBITDA as a percent of sales		20.9	%		24.2	%								15.8	%