EX-99.2 3 ash-ex992_7.htm EX-99.2 PRO FORMA FINANCIAL STATEMENTS ash-ex992_7.htm

Exhibit 99.2

 

ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS

 

The following unaudited condensed consolidated pro forma financial statements are based upon the historical financial statements of Ashland Global Holdings Inc. and its consolidated subsidiaries (Ashland), adjusted to reflect the disposition of  the Composites segment (excluding maleic) and Intermediates and Solvents facility in Marl Germany (Marl facility).  The following unaudited condensed consolidated pro forma financial statements of Ashland should be read in conjunction with the related notes and with the historical consolidated financial statements of Ashland and the related notes included in previous filings with the Securities and Exchange Commission.  The unaudited condensed pro forma consolidated balance sheet reflects the separation of the Composites segment (excluding maleic) and Marl facility as if it occurred on June 30, 2019 while the unaudited condensed pro forma statements of consolidated income give effect to the disposition as if it occurred on October 1, 2015, the beginning of the earliest period presented.  The pro forma adjustments in the unaudited condensed pro forma statements of consolidated income include the maleic business.  The pro forma adjustments, described in the related notes, are based on the best available information and certain assumptions that Ashland management believe are reasonable.

 

The unaudited condensed consolidated pro forma financial statements are provided for illustrative purposes only and are not necessarily indicative of the operating results or financial position that would have occurred had the disposition of the Composites segment (excluding maleic) and Marl facility closed on June 30, 2019 for the unaudited condensed pro forma consolidated balance sheet or on October 1, 2015 for the unaudited condensed pro forma statements of consolidated income.  For example, these financial statements do not reflect any potential earnings or other impacts from the use of the proceeds from the disposition or cost reductions of previously allocated corporate costs and potential subsequent restructuring charges.  Readers should not rely on the unaudited condensed consolidated pro forma financial statements as being indicative of the historical operating results that Ashland would have achieved or any future operating results or financial position that it will experience after the transaction closes.

 

 

 

Ashland Global Holdings Inc. and Consolidated Subsidiaries

 

Unaudited Condensed Pro Forma Consolidated Balance Sheet

 

June 30, 2019

 

 

 

 

 

 

 

(a)

 

 

 

 

 

(In millions)

 

Historical

 

 

Composites and Marl facility

 

 

Pro Forma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

132

 

 

$

488

 

 

$

620

 

Accounts receivable

 

 

507

 

 

 

 

 

 

 

507

 

Inventories

 

 

595

 

 

 

 

 

 

 

595

 

Other assets

 

 

47

 

 

 

 

 

 

 

47

 

Held for sale

 

 

756

 

 

 

(702

)

 

 

54

 

Total current assets

 

 

2,037

 

 

 

(214

)

 

 

1,823

 

Noncurrent assets

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

 

 

 

 

 

 

 

 

 

 

Cost

 

 

3,196

 

 

 

-

 

 

 

3,196

 

Accumulated depreciation

 

 

1,616

 

 

 

-

 

 

 

1,616

 

Net property, plant and equipment

 

 

1,580

 

 

 

-

 

 

 

1,580

 

Goodwill

 

 

2,285

 

 

 

 

 

 

 

2,285

 

Intangibles

 

 

1,118

 

 

 

 

 

 

 

1,118

 

Restricted Investments

 

 

310

 

 

 

 

 

 

 

310

 

Asbestos insurance receivable

 

 

161

 

 

 

 

 

 

 

161

 

Deferred income taxes

 

 

28

 

 

 

 

 

 

 

28

 

Other assets

 

 

406

 

 

 

 

 

 

 

406

 

Held for sale

 

 

-

 

 

 

 

 

 

 

-

 

Total noncurrent assets

 

 

5,888

 

 

 

-

 

 

 

5,888

 

Total assets

 

$

7,925

 

 

$

(214

)

 

$

7,711

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Short-term debt

 

$

332

 

 

$

(6

)

 

$

326

 

Trade and other payables

 

 

275

 

 

 

 

 

 

 

275

 

Accrued expenses and other liabilities

 

 

241

 

 

 

83

 

 

 

324

 

Held for sale

 

 

159

 

 

 

(155

)

 

 

4

 

Total current liabilities

 

 

1,007

 

 

 

(78

)

 

 

929

 

Noncurrent liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

2,275

 

 

 

(506

)

 

 

1,769

 

Asbestos litigation reserve

 

 

576

 

 

 

 

 

 

 

576

 

Deferred income taxes

 

 

284

 

 

 

(15

)

 

 

269

 

Employee benefit obligations

 

 

147

 

 

 

4

 

 

 

151

 

Other liabilities

 

 

419

 

 

 

-

 

 

 

419

 

Held for sale

 

 

-

 

 

 

 

 

 

 

-

 

Total noncurrent liabilities

 

 

3,701

 

 

 

(517

)

 

 

3,184

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

3,217

 

 

 

381

 

 

 

3,598

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

$

7,925

 

 

$

(214

)

 

$

7,711

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Unaudited Condensed Consolidated Pro Forma Financial Statements.

 

 

Ashland Global Holdings Inc. and Consolidated Subsidiaries

 

Unaudited Condensed Pro Forma Statement of Consolidated Income

 

Nine months ended June 30, 2019

 

 

 

 

 

 

 

(b)

 

 

 

 

 

(In millions except per share data)

 

Historical

 

 

Composites and Marl facility

 

 

Pro Forma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

1,884

 

 

 

 

 

 

$

1,884

 

Cost of sales

 

 

1,327

 

 

 

 

 

 

 

1,327

 

Gross profit

 

 

557

 

 

 

-

 

 

 

557

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

 

429

 

 

 

 

 

 

 

429

 

Research and development expense

 

 

51

 

 

 

 

 

 

 

51

 

Equity and other income

 

 

3

 

 

 

 

 

 

 

3

 

Operating income

 

 

80

 

 

 

-

 

 

 

80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest and other expense

 

 

73

 

 

 

 

 

 

 

73

 

Other net periodic benefit income

 

 

17

 

 

 

 

 

 

 

17

 

Net loss on divestitures

 

 

(3

)

 

 

-

 

 

 

(3

)

Income from continuing operations, before income taxes

 

 

21

 

 

 

-

 

 

 

21

 

Income tax expense

 

 

24

 

 

 

 

 

 

 

24

 

Income (loss) from continuing operations

 

$

(3

)

 

$

-

 

 

$

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

  Basic

 

$

(0.05

)

 

 

 

 

 

$

(0.05

)

  Diluted

 

 

(0.05

)

 

 

 

 

 

 

(0.05

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

  Basic

 

 

63

 

 

 

 

 

 

 

63

 

  Diluted

 

 

63

 

 

 

 

 

 

 

63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Unaudited Condensed Consolidated Pro Forma Financial Statements.

 

 

 

 

 

 

 

Ashland Global Holdings Inc. and Consolidated Subsidiaries

 

Unaudited Condensed Pro Forma Statement of Consolidated Income

 

Year ended September 30, 2018

 

 

 

 

 

 

 

(c)

 

 

 

 

 

(In millions except per share data)

 

Historical

 

 

Composites and Marl facility

 

 

Pro Forma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

3,743

 

 

$

(1,154

)

 

$

2,589

 

Cost of sales

 

 

2,668

 

 

 

(942

)

 

 

1,726

 

Gross profit

 

 

1,075

 

 

 

(212

)

 

 

863

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

 

771

 

 

 

(79

)

 

 

692

 

Research and development expense

 

 

85

 

 

 

(12

)

 

 

73

 

Equity and other income

 

 

8

 

 

 

(4

)

 

 

4

 

Operating income

 

 

227

 

 

 

(125

)

 

 

102

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest and other expense

 

 

122

 

 

 

(20

)

 

 

102

 

Other net periodic benefit income

 

 

13

 

 

 

2

 

 

 

15

 

Net loss on acquisitions and divestitures

 

 

(4

)

 

 

 

 

 

 

(4

)

Income from continuing operations, before income taxes

 

 

114

 

 

 

(103

)

 

 

11

 

Income tax expense

 

 

9

 

 

 

(17

)

 

 

(8

)

Income from continuing operations

 

$

105

 

 

$

(86

)

 

$

19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

  Basic

 

$

1.68

 

 

$

(1.38

)

 

$

0.30

 

  Diluted

 

 

1.66

 

 

 

(1.37

)

 

 

0.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

  Basic

 

 

63

 

 

 

-

 

 

 

63

 

  Diluted

 

 

64

 

 

 

-

 

 

 

64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Unaudited Condensed Consolidated Pro Forma Financial Statements.

 

 

 

 

 

 

 

 

Ashland Global Holdings Inc. and Consolidated Subsidiaries

 

Unaudited Condensed Pro Forma Statement of Consolidated Income

 

Year ended September 30, 2017

 

 

 

 

 

 

 

(c)

 

 

 

 

 

(In millions except per share data)

 

Historical

 

 

Composites and Marl facility

 

 

Pro Forma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

3,260

 

 

$

(951

)

 

$

2,309

 

Cost of sales

 

 

2,363

 

 

 

(783

)

 

 

1,580

 

Gross profit

 

 

897

 

 

 

(168

)

 

 

729

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

 

675

 

 

 

(65

)

 

 

610

 

Research and development expense

 

 

83

 

 

 

(10

)

 

 

73

 

Equity and other income

 

 

7

 

 

 

(4

)

 

 

3

 

Operating income (loss)

 

 

146

 

 

 

(97

)

 

 

49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest and other expense

 

 

234

 

 

 

(5

)

 

 

229

 

Other net periodic benefit costs

 

 

(4

)

 

 

(2

)

 

 

(6

)

Net loss on acquisitions and divestitures

 

 

(6

)

 

 

(4

)

 

 

(10

)

Loss from continuing operations, before income taxes

 

 

(98

)

 

 

(98

)

 

 

(196

)

Income tax benefit

 

 

7

 

 

 

(23

)

 

 

(16

)

Loss from continuing operations

 

$

(105

)

 

$

(75

)

 

$

(180

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

  Basic

 

$

(1.69

)

 

$

(1.21

)

 

$

(2.90

)

  Diluted

 

 

(1.69

)

 

 

(1.21

)

 

 

(2.90

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

  Basic

 

 

62

 

 

 

-

 

 

 

62

 

  Diluted

 

 

62

 

 

 

-

 

 

 

62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Unaudited Condensed Consolidated Pro Forma Financial Statements.

 

 

 

 

Ashland Global Holdings Inc. and Consolidated Subsidiaries

 

Unaudited Condensed Pro Forma Statement of Consolidated Income

 

Year ended September 30, 2016

 

 

 

 

 

 

 

(c)

 

 

 

 

 

(In millions except per share data)

 

Historical

 

 

Composites and Marl facility

 

 

Pro Forma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

3,019

 

 

$

(840

)

 

$

2,179

 

Cost of sales

 

 

2,132

 

 

 

(669

)

 

 

1,463

 

Gross profit

 

 

887

 

 

 

(171

)

 

 

716

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

 

858

 

 

 

(153

)

 

 

705

 

Research and development expense

 

 

87

 

 

 

(10

)

 

 

77

 

Equity and other income

 

 

8

 

 

 

(6

)

 

 

2

 

Operating loss

 

 

(50

)

 

 

(14

)

 

 

(64

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest and other expense

 

 

173

 

 

 

 

 

 

 

173

 

Other net periodic benefit costs

 

 

(77

)

 

 

15

 

 

 

(62

)

Net loss on acquisitions and divestitures

 

 

(8

)

 

 

 

 

 

 

(8

)

Loss from continuing operations, before income taxes

 

 

(308

)

 

 

1

 

 

 

(307

)

Income tax benefit

 

 

(25

)

 

 

(21

)

 

 

(46

)

Loss from continuing operations

 

$

(283

)

 

$

22

 

 

$

(261

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

  Basic

 

$

(4.51

)

 

$

0.35

 

 

$

(4.16

)

  Diluted

 

 

(4.51

)

 

 

0.35

 

 

 

(4.16

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

  Basic

 

 

63

 

 

 

-

 

 

 

63

 

  Diluted

 

 

63

 

 

 

-

 

 

 

63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Unaudited Condensed Consolidated Pro Forma Financial Statements.

 

 

 

 

 

 

ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS

 

(a)  These adjustments reflect the disposition of the Composites segment and Marl facility (excluding the maleic business) assets and liabilities which had been reported as "held for sale" as of June 30, 2019 for approximately $1.0 billion in cash, less estimated purchase price adjustments for changes in specified balance sheet items (primarily working capital and retirement plan accounts) as compared to the amounts set forth in the definitive agreement to sell the Composites segment and Marl facility dated November 15, 2018, as well as the amendments to the agreement in July 2019 to exclude the maleic business, the final amount of which will be determined subsequent to closing.  The net increase to stockholders' equity of $381 million at June 30, 2019 approximates the estimated after-tax gain on the disposition of the Composites segment and Marl facility to be reported in the fourth quarter of 2019.  This amount includes the estimated gain on sale of $369 million and deferred translation adjustment of $20 million offset by loss on pension curtailment of $4 million and accelerated debt issuance cost of $4 million.

 

 

The adjustments also reflect the accrual of estimated income taxes payable of $71 million, transaction costs of $12 million, covenant debt repayments of $516 million ($6 million of which represented a current portion reduction of long-term debt), accelerated debt issuance cost reduction of $4 million, and a curtailment loss of $1 million on the retained pension plans (with the related loss on remeasurement of these plans of $3 million resulting in a net estimated $4 million increase in employee benefit obligations).

 

 

(b)  The direct operating results of the Composites segment (including the maleic business) and Marl facility were presented in discontinued operations for the nine months ended June 30, 2019 in Ashland's Form 10-Q for the fiscal third quarter ended June 30, 2019.  As a result, no pro forma adjustments were required.  

 

 

(c ) These adjustments eliminate the operating results of the Composites segment (including the maleic business) and Marl facility as if the transaction occurred on October 1, 2015.  The direct operating results of the Composites segment and Marl facility are reported in discontinued operations.  The amounts eliminated do not include allocations of corporate expenses included in Selling, General and Administrative Expense.  These corporate expenses were $46 million, $36 million and $35 million for fiscal years ended September 30, 2018, 2017 and 2016, respectively.  Allocations of corporate overhead remaining with Ashland may not be allocated to discontinued operations for financial statement presentation.  

 

 

For purposes of these unaudited condensed consolidated pro forma financial statements, estimated income tax rates of 17%, 23% and benefit of 2100%  have been used for fiscal years ended September 30, 2018, 2017 and 2016, respectively.  The estimated income tax rates are based the application of the intraperiod tax allocation model in ASC 740, Income Taxes.