ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and the accompanying Notes to Condensed Consolidated Financial Statements herein.





BUSINESS OVERVIEW

Ashland profile

Ashland is a premier global leader in providing specialty materials to customers
in a wide range of consumer and industrial markets, including adhesives,
architectural coatings, construction, energy, food and beverage, personal care
and pharmaceutical. With approximately 4,700 employees worldwide, Ashland serves
customers in more than 100 countries.

Ashland's sales generated outside of North America were 60% for the three and
six months ended March 31, 2020 and 61% for the three and six months ended March
31, 2019. Sales by region expressed as a percentage of total consolidated sales
for the three and six months ended March 31 were as follows:



                           Three months ended           Six months ended
                                March 31                    March 31
Sales by Geography           2020            2019         2020         2019
North America (a)              40 %            39 %         40 %         39 %
Europe                         35 %            34 %         33 %         33 %
Asia Pacific                   17 %            18 %         19 %         19 %
Latin America & other           8 %             9 %          8 %          9 %
                              100 %           100 %        100 %        100 %




(a) Ashland includes only U.S. and Canada in its North America designation.




Reportable segments

During the second quarter of fiscal year 2020, Ashland changed the manner in
which it manages the business moving from a functionally led to a business led
organization. This change recognizes that Ashland has a diverse portfolio of
businesses with different value propositions for the markets Ashland serves. The
organizational change allows Ashland to align its business models, resources and
cost structure to the specific needs of each business and enable greater
ownership and accountability for both short- and long-term performance. As a
result, Ashland's five reportable segments include the consumer specialty
businesses: Life Sciences and Personal Care & Household; the industrial
specialty businesses: Specialty Additives and Performance Adhesives; and
Intermediates and Solvents. Corporate includes corporate governance activities
and certain legacy matters. The historical segment information has been recast
to conform to the current segment structure. The contribution to sales by each
reportable segment expressed as a percentage of total consolidated sales for the
three and six months ended March 31 were as follows:



                                 Three months ended           Six months ended
                                      March 31                    March 31
Sales by Reportable Segment        2020            2019         2020         2019
Life Sciences                        30 %            30 %         30 %         30 %
Personal Care & Household            26 %            28 %         26 %         27 %
Consumer Specialties                 56 %            58 %         56 %         57 %
Specialty Additives                  25 %            25 %         25 %         25 %
Performance Adhesives                14 %            13 %         14 %         14 %
Industrial Specialties               39 %            38 %         39 %         39 %
Intermediates and Solvents            5 %             4 %          5 %          4 %
                                    100 %           100 %        100 %        100 %








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KEY DEVELOPMENTS

Business results

Ashland recorded a net loss of $582 million in the current quarter (loss of $575
million in continuing operations and $7 million loss in discontinued operations)
compared to a net income of $76 million in the prior year quarter (income of $45
million in continuing operations and $31 million in discontinued operations).
Results for Ashland's continuing operations were primarily driven by a non-cash
goodwill impairment charge of $530 million related to the Personal Care &
Household and Specialty Additives segments, debt restructuring costs of $67
million and lower volumes partially offset by lower selling, general and
administrative expense and other expenses, between periods. Discontinued
operations were primarily driven by the results of the Composites segment and
Marl facility. Ashland's EBITDA decreased by $550 million, primarily due to the
$530 goodwill impairment charge during the current quarter and lower sales
volume partially offset by lower selling, general and administrative expense
costs between periods. Ashland's Adjusted EBITDA is flat at $142 million (see
U.S. GAAP reconciliation below under consolidated review). Adjusted EBITDA was
negatively impacted by lower sales volumes and offset by lower selling, general
and administrative expenses as a result of cost reduction programs.

Uncertainty relating to the COVID-19 pandemic



Ashland did not incur significant financial consequences during the three and
six months ended March 31, 2020 from the COVID-19 pandemic, as Ashland was able
to manage through the execution of shelter in place, social distancing and deep
cleaning process requirements. To date, the effects from the COVID-19 pandemic
have not been significant and Ashland's operations and cash flows remain
stable. Ashland's overall liquidity remains sufficient for it to meet its
operating needs and other investing and financing requirements.

Ashland is closely monitoring the impact of the COVID-19 pandemic on all aspects
of its business and geographies, including how it will impact customers,
employees, suppliers, vendors, business partners and distribution channels.
Ashland is unable to predict the impact that the COVID-19 pandemic will have on
its future financial position and operating results due to numerous
uncertainties. These uncertainties include the severity of the virus, the
duration of the outbreak, governmental, business or other actions, impacts on
Ashland's supply chain, the effect on customer demand, or changes to Ashland's
operations. The health of Ashland's workforce and its ability to meet staffing
needs throughout the critical functions cannot be predicted and is vital to
operations. Further, the impacts of a potential worsening of global economic
conditions and the continued disruptions to, and volatility in, the credit and
financial markets, consumer spending as well as other unanticipated consequences
remain unknown. In addition, Ashland cannot predict the impact that the COVID-19
pandemic will have on its customers, vendors, suppliers and other business
partners; however, any material effect on these parties could adversely impact
Ashland.

The situation surrounding the COVID-19 pandemic remains fluid, and Ashland is
actively managing its response in collaboration with customers, government
officials, team members and business partners. For further information regarding
the impact of the COVID-19 pandemic on the Company, please see Item 1A, risk
factors in this report, which is incorporated herein by reference.



RESULTS OF OPERATIONS - CONSOLIDATED REVIEW

Consolidated review

Net income



Ashland's net income is primarily affected by results within operating income,
net interest and other expense, income taxes, discontinued operations and other
significant events or transactions that are unusual or nonrecurring.

Current Quarter - Key financial results for the three months ended March 31, 2020 and 2019 included the following:

• Ashland's net income amounted to a loss of $582 million compared to income


      of $76 million for the three months ended March 31, 2020 and 2019,
      respectively, or loss of $9.61 compared to income of $1.19 diluted
      earnings per share, respectively.


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   •  Discontinued operations, which are reported net of taxes, resulted in a
      loss of $7 million compared to income of $31 million during the three
      months ended March 31, 2020 and 2019, respectively.


   •  Results from continuing operations, which excludes results from

discontinued operations, amounted to a loss of $575 million compared to

income of $45 million for the three months ended March 31, 2020 and 2019,

respectively.

• Results from continuing operations include a goodwill impairment charge of

$530 million during the current quarter related to the Personal Care &

Household and the Specialty Additives segments. See Critical Accounting

Policies section for additional information.

• The effective income tax rates were a benefit of 2% and expense of 2% for

the three months ended March 31, 2020 and 2019, respectively, and were

significantly impacted by certain tax discrete items in both the current

and prior year quarters.

• Ashland incurred pretax net interest and other expense of $117 million

compared to income of $3 million for the three months ended March 31, 2020

and 2019, respectively. This includes charges for $59 million and $8

million for debt refinancing costs and accelerated debt issuance costs,

respectively, for the current quarter, as well as losses of $29 million

compared to gains of $29 million on restricted investments.

• Operating income amounted to a loss of $468 million compared to income of

$44 million for the three months ended March 31, 2020 and 2019,

respectively.

Year-to-date - Key financial results for the six months ended March 31, 2020 and 2019 included the following:

• Ashland's net income amounted to a loss of $550 million compared to an

income of $28 million for the six months ended March 31, 2020 and 2019,


      respectively, or loss of $9.08 and income of $0.45 diluted earnings per
      share, respectively.

• Discontinued operations, which are reported net of taxes, resulted in a

loss of $9 million compared to income of $54 million during the six months


      ended March 31, 2020 and 2019, respectively.


   •  Results from continuing operations, which excludes results from
      discontinued operations, amounted to losses of $541 million and $26

million for the six months ended March 31, 2020 and 2019, respectively.

• Results from continuing operations include a goodwill impairment charge of

$530 million during the current year related to the Personal Care &

Household and the Specialty Additives segments. See Critical Accounting

Policies section for additional information.

• The effective income tax rates were a benefit of 6% and expense of 2500%

for the six months ended March 31, 2020 and 2019, respectively, and were

significantly impacted by certain tax discrete items in both the current

and prior year periods.

• Ashland incurred pretax net interest and other expense of $127 million and

$52 million for the six months ended March 31, 2020 and 2019,

respectively. This includes charges for $59 million and $8 million for

debt refinancing costs and accelerated debt issuance costs, respectively,

for the current year, as well as losses of $16 million compared to gains

of $2 million on restricted investments.

• Other net periodic benefit income totaled $17 million for the six months


      ended March 31, 2019, which was related to the curtailment gain from the
      settlement of a non-U.S. pension plan.

• Net income/loss on divestitures totaled income of $3 million and a loss of

$3 million for the six months ended March 31, 2020 and 2019, respectively.

• Operating income/loss amounted to a loss of $451 million compared to an

income of $37 million for the six months ended March 31, 2020 and 2019,

respectively.

For further information on the items reported above, see the discussion in the comparative Statements of Consolidated Comprehensive Income (Loss) caption review analysis.


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Operating income

Current Quarter - Operating income/loss amounted to a loss of $468 million
compared to income of $44 million for the three months ended March 31, 2020 and
2019, respectively. The current and prior year quarters' operating income
included certain key items that were excluded to arrive at Adjusted EBITDA and
are quantified in the table below in the "EBITDA and Adjusted EBITDA" section.
These operating key items for the applicable periods are summarized as follows:

Goodwill impairment - During the current quarter, Ashland realigned its

operations into five reportable segments which resulted in a reassessment

of the Company's reporting units used to evaluate goodwill impairment. The


      impairment test under the new reporting unit structure concluded that the
      carrying value of the Personal Care & Household and the Specialty
      Additives reporting units exceeded their fair value, resulting in a

non-cash goodwill impairment charge. See note G and Critical Accounting


      Policies for additional information.


   •  Restructuring, separation and other costs - Ashland periodically

implements company-wide cost reduction programs related to acquisitions,

divestitures and other cost reduction programs in order to enhance

profitability through streamlined operations and an improved overall cost

structure. Ashland often incurs severance, facility and integration costs


      associated with these programs. See Note D in the Notes to Condensed
      Consolidated Financial Statements for further information on the
      restructuring activities.

• Accelerated depreciation - As a result of various restructuring activities

at certain office facilities and manufacturing facilities during the prior

year quarter, Ashland recorded accelerated depreciation due to changes in

the expected useful life of certain property, plant and equipment.

• Proxy costs - Ashland incurred significant consulting and other costs

associated with the 2019 Annual Meeting of Stockholders and agreement with

Cruiser Capital in the prior year quarter.

• Lower of cost or net realizable value inventory adjustment - Inventories

are carried at the lower of cost or net realizable value. When comparing

the stated value of its inventory to its net realizable value, Ashland

determined that an adjustment was required for the current quarter.

Operating income/loss for the three months ended March 31, 2020 and 2019 included depreciation and amortization of $61 million and $62 million, respectively (which excluded accelerated depreciation and amortization of $20 million for the three months ended March 31, 2019).

Year-to-date - Operating income/loss was a loss of $451 million compared to income of $37 million for the six months ended March 31, 2020 and 2019, respectively. The current and prior year periods' operating income included certain key items that were excluded to arrive at Adjusted EBITDA and are quantified in the table below in the "EBITDA and Adjusted EBITDA" section. These operating key items for the applicable periods are summarized as follows:

Goodwill impairment - During the current period, Ashland realigned its

operations into five reportable segments which resulted in a reassessment

of the Company's reporting units used to evaluate goodwill impairment. The


      impairment test under the new reporting unit structure concluded that the
      carrying value of the Personal Care & Household and the Specialty
      Additives reporting units exceeded their fair value, resulting in a

non-cash goodwill impairment charge. See note G and Critical Accounting


      Policies for additional information.


   •  Restructuring, separation and other costs - Ashland periodically

implements company-wide cost reduction programs related to acquisitions,

divestitures and other cost reduction programs in order to enhance

profitability through streamlined operations and an improved overall cost

structure. Ashland often incurs severance, facility and integration costs


      associated with these programs. See Note D in the Notes to Condensed
      Consolidated Financial Statements for further information on the
      restructuring activities.

• Accelerated depreciation - As a result of various restructuring activities

at certain office facilities and manufacturing facilities during the prior


      year period, Ashland recorded accelerated depreciation due to changes in
      the expected useful life of certain property, plant and equipment.


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• Proxy costs - Ashland incurred significant consulting and other costs

associated with the 2019 Annual Meeting of Stockholders and agreement with

Cruiser Capital in the prior year period.

• Lower of cost or net realizable value inventory adjustment -Inventories

are carried at the lower of cost or net realizable value. When comparing

the stated value of its inventory to its net realizable value, Ashland

determined that an adjustment was required for the current year.




Operating income for the six months ended March 31, 2020 and 2019 included
depreciation and amortization of $122 million and $124 million, respectively
(which excluded accelerated depreciation and amortization of $39 million the six
months ended March 31, 2019).

Non-operating key items affecting EBITDA

• Gain on pension and other postretirement plan remeasurements - Ashland


      recognized a remeasurement gain due to the settlement of a non-U.S.
      pension plan during the prior year quarter. See Note K of the Notes to
      Condensed Consolidated Financial Statements for more information.


   •  Net loss on divestitures - Ashland recorded a loss during the first
      quarter of fiscal 2019 related to the impairment of an investment.

Statements of Consolidated Comprehensive Income (Loss) - caption review

A comparative analysis of the Statements of Consolidated Comprehensive Income (Loss) by caption is provided as follows for the three and six months ended March 31, 2020 and 2019.





                      Three months ended March 31                Six months ended March 31
(In millions)        2020            2019        Change          2020          2019      Change
Sales           $     610       $     667      $    (57 )   $   1,143       $ 1,243     $  (100 )

The following table provides a reconciliation of the change in sales for the three and six months ended March 31, 2020 and 2019.





                     Three months ended       Six months ended
(In millions)          March 31, 2020          March 31, 2020
Volume              $                (35 )   $              (64 )
Plant realignment                     (8 )                  (14 )
Currency exchange                     (7 )                  (11 )
Pricing                               (7 )                  (11 )
Change in sales     $                (57 )   $             (100 )





Current Quarter - Sales for the current quarter decreased $57 million compared to the prior year quarter. Unfavorable volume, plant realignment, foreign currency exchange and product pricing decreased sales by $35 million, $8 million, $7 million and $7 million, respectively.





Year-to-Date - Sales for the current year decreased $100 million compared to the
prior year period. Unfavorable volume, plant realignment, foreign currency and
product pricing decreased sales by $64 million, $14 million, $11 million and $11
million, respectively.





                                           Three months ended March 31                 Six months ended March 31
(In millions)                             2020            2019        Change       2020            2019        Change
Cost of sales                        $     413       $     469      $    (56 )   $     793       $    893     $   (100 )
Gross profit as a percent of sales        32.3 %          29.7 %                      30.6 %         28.2 %




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Fluctuations in cost of sales are driven primarily by raw material prices,
volume and changes in product mix, currency exchange, acquisitions and
divestitures and other certain charges incurred as a result of changes or events
within the businesses or restructuring activities. The following table provides
a quantified reconciliation of the changes in cost of sales between the three
and six months ended March 31, 2020 and 2019.



                                   Three months ended       Six months ended
(In millions)                        March 31, 2020          March 31, 2020
Changes in:
Plant realignment/closure costs   $                (27 )   $              (61 )
Volume                                             (23 )                  (41 )
Currency exchange                                   (3 )                   (6 )
Operating costs                                     (4 )                    4
Price/mix                                            1                      4
Change in cost of sales           $                (56 )   $             (100 )




Current Quarter - Cost of sales for the current quarter decreased $56 million
compared to the prior year quarter. Unfavorable plant realignment/closure costs,
volume, operating costs and foreign currency exchange decreased cost of sales by
$27 million, $23 million, $4 million and $3 million, respectively. Those
decreases were partially offset by an increase in price/mix of $1 million.



Year-to-Date - Cost of sales for the current year decreased $100 million
compared to the prior year. Unfavorable plant realignment/closure costs, volume
and foreign currency exchange decreased cost of sales by $61 million, $41
million and $6 million, respectively. Those decreases were partially offset by
higher operating costs and unfavorable price/mix which increased cost of sales
by $4 million and $4 million, respectively.



                                         Three months ended March 31                 Six months ended March 31
(In millions)                           2020            2019        Change       2020            2019         Change
Selling, general and               $     103       $     115      $    (12 )   $     202       $     236     $    (34 )
administrative expense
As a percent of sales                   16.9 %          17.2 %                      17.7 %          19.0 %




Current Quarter - Selling, general and administrative expense for the current
quarter decreased $12 million compared to the prior year quarter with expenses
as a percent of sales decreasing 0.3 percentage points. Key drivers of the
fluctuation in selling, general and administrative expense compared to the prior
year quarter were:

$14 million and $12 million of key items for severance, lease abandonment


      and other restructuring costs related to company-wide cost-savings
      initiatives during the current and prior year quarters, respectively.

• Favorable currency exchange of $3 million during the current quarter as


      well as achieved cost savings during the current quarter compared to the
      prior year quarter.




Year-to-Date - Selling, general and administrative expense for the current
quarter decreased $34 million compared to the prior year quarter with expenses
as a percent of sales decreasing 1.3 percentage points. Key drivers of the
fluctuation in selling, general and administrative expense compared to the prior
year quarter were:

$21 million and $30 million of key items for restructuring, separation and

other costs during the current and prior year periods, respectively.

$5 million of consulting and other costs associated with the 2019 proxy

during the prior year period.

• Favorable currency exchange of $6 million as well as achieved cost savings


      during the current year period.


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                                           Three months ended March 31                     Six months ended March 31
(In millions)                           2020              2019          Change          2020              2019        Change

Research and development expense $ 18 $ 17 $


 1     $      34         $      34     $       -



Current Quarter - Research and development expense are relatively consistent with the prior year quarter.





Year-to-Date - Research and development expense are consistent year over year.





                                Three months ended March 31                         Six months ended March 31

(In millions)               2020                2019            Change           2020             2019           Change
Intangibles
amortization         $        21         $        21       $         -     $       42       $       43       $       (1 )
expense

Current Quarter - Amortization expense is consistent with the prior year quarter.



Year-to-Date - Amortization expense is relatively consistent with the prior year
period.



                           Three months ended March 31               Six months ended March 31
(In millions)              2020        2019          Change          2020        2019        Change
Goodwill impairment   $     530       $   -       $     530     $     530       $   -       $   530

Current Quarter - Ashland recorded an impairment charge of $530 million in the current quarter. See note G and Critical Accounting Policies for more information.



Year-to-Date - Ashland recorded an impairment charge of $530 million in the
current year. See note G Critical and Accounting Policies for more information.



                                           Three months ended March 31                        Six months ended March 31
(In millions)                          2020              2019            Change          2020              2019            Change
Equity and other income
Equity income (a)                 $       -         $       -         $       -     $       -         $       -         $       -
Other income                              7                (1 )               8             7                 -                 7
                                  $       7         $      (1 )       $       8     $       7         $       -         $       7





  (a) Activity of $0 denotes value less than $1 million.


Equity and other income increased during the three and six months due to a liquidation gain of $3 million and China subsidies of $2 million.





                                       Three months ended March 31                  Six months ended March 31
(In millions)                         2020            2019        Change          2020           2019         Change
Net interest and other expense
(income)
Interest expense                 $      28       $      26      $      2     $      51       $     53       $     (2 )
Interest income                          -               -             -            (1 )           (1 )            -
Loss on early retirement of             59               -            59            59              -             59
debt
Loss (income) from restricted           29             (29 )          58            16             (2 )           18
investments
Other financing costs                    1               -             1             2              2              -
                                 $     117       $      (3 )    $    120     $     127       $     52       $     75




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Current Quarter - Net interest and other expense increased by $120 million
during the current quarter compared to the prior year quarter. Interest expense
decreased $6 million due to lower cost of debt related to the debt restructuring
activity during the current quarter compared to the prior year quarter. The
decreases were offset by $8 million of accelerated debt issuance costs and
original issuance discount costs for the current quarter. Ashland incurred $59
million of debt refinancing costs during the current quarter. See Note H for
more information on the refinancing activity. Restricted investments included a
loss of $29 million compared to gains of $29 million for the three months ended
March 31, 2020 and 2019, respectively. See Note E for more information on the
restricted investments.



Year-to-Date - Net interest and other expense increased by $75 million during
the current year compared to the prior year period. Interest expense decreased
$10 million due to lower cost of debt related to the debt restructuring activity
during the current year compared to the prior year period. The decreases were
partially offset by $8 million of accelerated debt issuance costs and original
issuance discount costs for the current period. Ashland incurred $59 million of
debt refinancing costs during the current year. See Note H for more information
on the refinancing activity. Restricted investments included losses of $16
million for the current period compared to gains of $2 million for the prior
periods. See Note E for more information on the restricted investments.



                                             Three months ended March 31                     Six months ended March 31
(In millions)                            2020              2019            Change         2020           2019          Change

Other net periodic benefit income $ - $ (1 ) $


    1     $      -       $     17       $     (17 )

Other net periodic benefit income during the prior year related to the curtailment gain from the settlement of a non-U.S. pension plan.





                                              Three months ended March 31                        Six months ended March 31
(In millions)                            2020              2019              Change          2020              2019          Change

Net income (loss) on divestitures $ - $ - $


      -     $       3         $      (3 )     $       6




The activity in the current year was related to post-closing adjustments for
certain divestitures, while activity in the prior year related to the impairment
of an investment.



                                        Three months ended March 31                  Six months ended March 31
(In millions)                          2020           2019          Change         2020            2019        Change
Income tax expense (benefit)      $     (10 )     $      1        $    (11 )   $    (34 )     $      25      $    (59 )
Effective tax rate                        2 %           (2 )%              

          6 %        (2,500 )%




Current Quarter - Ashland's effective tax rate in any interim period is subject
to adjustments related to discrete items and the mix of domestic and foreign
operating results. The overall effective tax rate was a benefit of 2% for the
three months ended March 31, 2020 and was impacted by a nondeductible goodwill
impairment of $527 million of the $530 million charge taken during the quarter.

The overall effective tax rate was 2% for the three months ended March 31, 2019
and was impacted by certain nondeductible restructuring costs as well as $11
million in favorable tax discrete items including nontaxable earnings in
deferred compensation related investments and other items.



Year-to-Date - Ashland's effective tax rate in any interim period is subject to
adjustments related to discrete items and the mix of domestic and foreign
operating results. The overall effective tax rate was 6% for the six months
ended March 31, 2020 and was primarily impacted by nondeductible goodwill
impairment of $527 million as well as $25 million favorable tax discrete items
from the tax benefit related to the Swiss Tax Reform enacted in the first
quarter.

The overall effective tax rate was 2500% for the six months ended March 31, 2019
and was primarily impacted by the income mix and net unfavorable tax discrete
adjustments of $30 million related to the enactment of the US Tax Cuts and Jobs
Act of 2017 (Tax Act).

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Adjusted income tax expense (benefit)



Key items are defined as the financial effects from significant transactions
that may have caused short-term fluctuations in net income and/or operating
income which Ashland believes do not accurately reflect Ashland's underlying
business performance and trends. Tax specific key items are defined as the
financial effects from tax specific financial transactions, tax law changes or
other matters that fall within the definition of key items as previously
described. The effective tax rate, excluding key items, which is a non-GAAP
measure, has been prepared to illustrate the ongoing tax effects of Ashland's
operations. Management believes investors and analysts use this financial
measure in assessing Ashland's business performance and that presenting this
non-GAAP measure on a consolidated basis assists investors in better
understanding Ashland's ongoing business performance and enhancing their ability
to compare period-to-period financial results. The effective tax rate during the
three months ended March 31, 2020 and 2019 was significantly impacted by the
following tax specific key items:



• Deferred tax rate changes - Includes the impact from the remeasurement of

Ashland's domestic deferred tax balances resulting from the enactment of

the Tax Act as well as the impact from deferred rate changes for other

jurisdictions;

• One-time transition tax - Includes the impact from the one-time transition


      tax resulting from the enactment of the Tax Act;


   •  Restructuring and separation activity - Includes the impact from
      company-wide cost reduction programs; and

• Other tax reform - Includes the impact from other items related to the Tax

Act and other tax law changes including Swiss Tax Reform. The Swiss Tax

Reform benefit is an estimate based on ten year income projections and is

subject to approval by the Swiss tax authorities. Ashland will monitor

this amount and make adjustments as appropriate in future periods. These

adjustments also include the impact from the deductibility of compensation


      items and miscellaneous state tax items.




The following table is a calculation of the effective tax rate, excluding these
key items.



                                            Three months ended                 Six months ended
                                                 March 31                          March 31
(In millions)                                 2020              2019            2020             2019
Income (loss) from continuing
operations before income taxes         $      (585 )     $        46     $      (575 )     $       (1 )
Key items (pre-tax) (a)                        648                10             646               70
Adjusted income from continuing
operations
before income taxes                    $        63       $        56     $        71       $       69

Income tax expense (benefit)           $       (10 )     $         1     $       (34 )     $       25
Income tax rate adjustments:
Tax effect of key items                         21                (2 )            20                5
Tax specific key items: (b)
Deferred tax rate changes                        -                 -               -               (2 )
One-time transition tax                          -                 -               -              (22 )
Restructuring and separation
activity                                         -                 2               -                1
Other tax reform                                 -                 3              25                -
Total income tax rate adjustments               21                 3              45              (18 )
Adjusted income tax expense            $        11       $         4     $  

11 $ 7



Effective tax rate, excluding key
items (Non-GAAP) (c)                            18 %               6 %            16 %             10 %




(a) See Adjusted EBITDA reconciliation table previously disclosed in this


       MD&A for a summary of the key items, before tax.


   (b) For additional information on the effect that these tax specific key

items had on EPS, see the Adjusted Diluted EPS table previously disclosed

in this MD&A.

(c) Due to rounding conventions, the effective tax rate presented may not

recalculate precisely based on the numbers disclosed within this table.




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                                        Three months ended March 31                  Six months ended March 31
(In millions)                         2020           2019          Change         2020           2019          Change
Income (loss) from discontinued operation (net of taxes)
Composites/Marl facility          $      4       $     28       $     (24 )   $      4       $     53       $     (49 )
Valvoline                                -              1              (1 )         (1 )            1              (2 )
Water Technologies                       -              2              (2 )         (1 )            1              (2 )
Distribution                            (2 )            -              (2 )         (2 )           (1 )            (1 )
Asbestos                                (7 )            -              (7 )         (7 )            -              (7 )
Gain (loss) on disposal of
discontinued operations (net of
taxes)
Composites/Marl facility                (2 )            -              (2 )         (2 )            -              (2 )
                                  $     (7 )     $     31       $     (38 )   $     (9 )     $     54       $     (63 )




Current Quarter - As a result of the divestiture of the Composites segment and
Marl facility, the related operating results have been reflected as discontinued
operations (net of tax) within the Statements of Consolidated Comprehensive
Income (Loss). See Note B for more information on this divestiture. In the
current quarter, for the Maleic business component of the Composites business
not sold to INEOS, the sales and pre-tax operating income included in
discontinued operations were $17 million and $5 million, respectively. In the
prior year quarter, the sales and pre-tax operating income included in
discontinued operations were $284 million and $45 million, respectively for the
Composites/Marl facility.

The activity for Valvoline, Water Technologies, Distribution and the Composites
loss on sale during the current and prior quarters was related to post-closing
adjustments.

Year-to-Date - As a result of the divestiture of the Composites segment and Marl
facility, the related operating results have been reflected as discontinued
operations (net of tax) within the Statements of Consolidated Comprehensive
Income (Loss). See Note B for more information on this divestiture. In the
current year, for the Maleic business component of the Composites business not
sold to INEOS, the sales and pre-tax operating income included in discontinued
operations were $28 million and $7 million, respectively. In the prior year
period, the sales and pre-tax operating income included in discontinued
operations were $559 million and $81 million, respectively for the
Composites/Marl facility.

The activity for Valvoline, Water Technologies, Distribution and the Composites
loss on sale during the current and prior periods was related to post-closing
adjustments.

Other comprehensive income (loss)

A comparative analysis of the components of other comprehensive income (loss) is provided below for the three and six months ended March 31, 2020 and 2019.





                                            Three months ended March 31                 Six months ended March 31
(In millions)                              2020          2019          Change         2020           2019        Change
Other comprehensive income (loss)
(net of taxes)
Unrealized translation gain (loss)    $     (52 )     $    (9 )     $     (43 )   $    (14 )     $    (40 )     $    26
Pension and postretirement obligation
adjustment                                    -             -               -            -             (6 )           6
                                      $     (52 )     $    (9 )     $     (43 )   $    (14 )     $    (46 )     $    32




Current Quarter - Total other comprehensive income, net of tax, for the current
quarter decreased $43 million compared to the prior year quarter as a result of
the following components:

• For the three months ended March 31, 2020, the change in unrealized gain

(loss) from foreign currency translation adjustments resulted in a loss of

$52 million compared to $9 million for the three months ended March 31,

2019. The fluctuations in unrealized translation gains and losses are

primarily due to translating foreign subsidiary financial statements from


      local currencies to U.S. Dollars.


                                       46

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Year-to-Date - Total other comprehensive income, net of tax, for the current
period increased $32 million compared to the prior year period as a result of
the following components:

• For the six months ended March 31, 2020, the change in unrealized gain

(loss) from foreign currency translation adjustments resulted in losses of

$14 million compared to $40 million for the six months ended March 31,
      2019. The fluctuations in unrealized translation gains and losses are
      primarily due to translating foreign subsidiary financial statements from
      local currencies to U.S. Dollars.

• For the six months ended March 31, 2019, the pension and postretirement


      obligation adjustment included $6 million of prior service costs
      recognized within other comprehensive income (loss) due to pension plan
      remeasurements.


Use of non-GAAP measures

Ashland has included within this document the following non-GAAP measures, on
both a consolidated and reportable segment basis, which are not defined within
U.S. GAAP and do not purport to be alternatives to net income or cash flows from
operating activities as a measure of operating performance or cash flows:

   •  EBITDA - net income (loss), plus income tax expense (benefit), net
      interest and other expenses, and depreciation and amortization.


   •  Adjusted EBITDA - EBITDA adjusted for noncontrolling interests,
      discontinued operations, net income (loss) on acquisitions and
      divestitures, other income and (expense) and key items (including the

remeasurement gains and losses related to pension and other postretirement


      plans).


  • Adjusted EBITDA margin - Adjusted EBITDA divided by sales.

• Adjusted diluted earnings per share (EPS) - income (loss) from continuing

operations, adjusted for key items, net of tax, divided by the average


      outstanding diluted shares for the applicable period.


   •  Adjusted diluted earnings per share (EPS) excluding intangibles
      amortization expense - Adjusted earnings per share adjusted for
      intangibles amortization expense net of tax, divided by the average
      outstanding diluted shares for the applicable period.


   •  Free cash flow - operating cash flows less capital expenditures and
      certain other adjustments as applicable.


Management believes the use of EBITDA and Adjusted EBITDA measures on a
consolidated and reportable segment basis assists investors in understanding the
ongoing operating performance by presenting comparable financial results between
periods. Ashland believes that by removing the impact of depreciation and
amortization and excluding certain non-cash charges, amounts spent on interest
and taxes and certain other charges that are highly variable from year to year,
EBITDA and Adjusted EBITDA provide Ashland's investors with performance measures
that reflect the impact to operations from trends in changes in sales, margin
and operating expenses, providing a perspective not immediately apparent from
net income and operating income. The adjustments Ashland makes to derive the
non-GAAP measures of EBITDA and Adjusted EBITDA exclude items which may cause
short-term fluctuations in net income and operating income and which Ashland
does not consider to be the fundamental attributes or primary drivers of its
business. EBITDA and Adjusted EBITDA provide disclosure on the same basis as
that used by Ashland's management to evaluate financial performance on a
consolidated and reportable segment basis and provide consistency in our
financial reporting, facilitate internal and external comparisons of Ashland's
historical operating performance and its business units and provide continuity
to investors for comparability purposes.

The Adjusted diluted EPS metric enables Ashland to demonstrate what effect key
items have on an earnings per diluted share basis by taking income (loss) from
continuing operations, adjusted for key items after tax that have been
identified in the Adjusted EBITDA table, and dividing by the average outstanding
diluted shares for the applicable period. Ashland's management believes this
presentation is helpful to illustrate how the key items have impacted this
metric during the applicable period.

The Adjusted diluted EPS, excluding intangibles amortization expense metric
enables Ashland to demonstrate the impact of non-cash intangibles amortization
expense on EPS, in addition to the key items previously mentioned. Ashland's
management believes this presentation is helpful to illustrate how previous
acquisitions impact applicable period results.

                                       47

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The free cash flow metric enables Ashland to provide a better indication of the
ongoing cash being generated that is ultimately available for both debt and
equity holders as well as other investment opportunities. Unlike cash flow
provided by operating activities, free cash flow includes the impact of capital
expenditures from continuing operations, providing a more complete picture of
cash generation. Free cash flow has certain limitations, including that it does
not reflect adjustment for certain non-discretionary cash flows such as
mandatory debt repayments. The amount of mandatory versus discretionary
expenditures can vary significantly between periods.

Although Ashland may provide forward-looking guidance for Adjusted EBITDA,
Adjusted diluted EPS and free cash flow, Ashland is not reaffirming or providing
forward-looking guidance for U.S. GAAP-reported financial measures or a
reconciliation of forward-looking non-GAAP financial measures to the most
directly comparable U.S. GAAP measure because it is unable to predict with
reasonable certainty the ultimate outcome of certain significant items that
affect these metrics such as domestic and international economic, political,
legislative, regulatory and legal actions. In addition, certain economic
conditions, such as recessionary trends, inflation, interest and monetary
exchange rates, government fiscal policies and changes in the prices of certain
key raw materials, can have a significant effect on operations and are difficult
to predict with certainty.

These non-GAAP measures should be considered supplemental in nature and should
not be construed as more significant than comparable measures defined by U.S.
GAAP. Limitations associated with the use of these non-GAAP measures include
that these measures do not present all of the amounts associated with our
results as determined in accordance with U.S. GAAP. The non-GAAP measures
provided are used by Ashland management and may not be determined in a manner
consistent with the methodologies used by other companies. EBITDA and Adjusted
EBITDA provide a supplemental presentation of Ashland's operating performance on
a consolidated and reportable segment basis. Adjusted EBITDA generally includes
adjustments for items that impact comparability between periods. In addition,
certain financial covenants related to Ashland's 2020 Credit Agreement are based
on similar non-GAAP measures and are defined further in the sections that refer
to this metric.

                                       48

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EBITDA and Adjusted EBITDA



EBITDA totaled a loss of $414 million compared to an income of $136 million for
the three months ended March 31, 2020 and 2019, respectively, and a loss of $335
million compared to an income of $229 million for the six months ended March 31,
2020 and 2019, respectively. EBITDA and Adjusted EBITDA results in the table
below have been prepared to illustrate the ongoing effects of Ashland's
operations, which exclude certain key items previously described. Management
believes the use of such non-GAAP measures on a consolidated and reportable
segment basis assists investors in understanding the ongoing operating
performance by presenting the financial results between periods on a more
comparable basis.

                                            Three months ended                 Six months ended
                                                 March 31                          March 31
(In millions)                                 2020              2019            2020             2019
Net income (loss)                      $      (582 )     $        76     $      (550 )     $       28
Income tax expense (benefit)                   (10 )               1             (34 )             25
Net interest and other expense                 117                (3 )           127               52
Depreciation and amortization (a)               61                62             122              124
EBITDA                                        (414 )             136            (335 )            229
Loss (income) from discontinued
operations (net of tax)                          7               (31 )             9              (54 )
Key items included in EBITDA:
Restructuring, separation and other
costs                                           15                12              22               38
Proxy costs                                      -                 5               -                5
Goodwill impairment                            530                 -             530                -
Inventory adjustment                             4                 -               4                -
Accelerated depreciation                         -                20               -               39
Gain on pension and other
postretirement plan remeasurements               -                 -               -              (18 )
Net loss on divestitures                         -                 -               -                3
Total key items included in EBITDA             549                37             556               67
Adjusted EBITDA                        $       142       $       142     $  

230 $ 242

Total key items included in EBITDA $ 549 $ 37 $

      556       $       67
Accelerated amortization of debt
issuance costs                                   8                 -               8                -
Debt refinancing costs                          59                 -              59                -
Unrealized (gain) loss on securities
(b)                                             32               (27 )            23                3
Total key items, before tax            $       648       $        10     $       646       $       70

(a) Excludes $20 million of accelerated depreciation for the three months


       ended March 31, 2019, and $39 million for the six months ended March 31,
       2019 included as key items.


   (b) Due to the adoption of new accounting guidance in October 2018, the
       unrealized losses on certain investment securities directly impact
       earnings and are recorded within the net interest and other expense
       caption on the Statements of Consolidated Comprehensive Income
       (Loss). See Note E of the Notes to Condensed Consolidated Financial
       Statements for more information.


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Diluted EPS and Adjusted Diluted EPS



The following table reflects the U.S. GAAP calculation for the income (loss)
from continuing operations adjusted for the cumulative diluted EPS effect for
key items after tax that have been identified in the Adjusted EBITDA table in
the previous section. Key items are defined as the financial effects from
significant transactions that may have caused short-term fluctuations in net
income and/or operating income which Ashland believes do not accurately reflect
Ashland's underlying business performance and trends. The Adjusted diluted EPS
for the income (loss) from continuing operations in the following table has been
prepared to illustrate the ongoing effects of Ashland's operations. Management
believes investors and analysts use this financial measure in assessing
Ashland's business performance and that presenting this non-GAAP measure on a
consolidated basis assists investors in better understanding Ashland's ongoing
business performance and enhances their ability to compare period-to-period
financial results.



                                           Three months ended               Six months ended
                                                March 31                        March 31
                                              2020            2019            2020           2019
Diluted EPS from continuing
operations (as reported)               $     (9.48 )    $     0.71     $     (8.93 )   $    (0.41 )
Key items, before tax:
Restructuring, separation and other
costs                                         0.23            0.50            0.35           1.21
Gain on pension and other
postretirement plan remeasurements               -            0.08               -           0.08
Legal settlement                                 -               -               -          (0.29 )
Unrealized (gain) loss on securities          0.53           (0.42 )          0.38           0.05
Goodwill impairment                           8.75               -            8.75              -
Inventory adjustment                          0.06               -            0.06              -
Accelerated amortization of debt
issuance costs                                0.13               -            0.13              -
Debt refinancing costs                        0.97               -            0.97              -
Net loss on divestitures                         -               -               -           0.05
Key items, before tax                        10.67            0.16           10.64           1.10
Tax effect of key items (a)                  (0.35 )          0.04           (0.33 )        (0.08 )
Key items, after tax                         10.32            0.20           10.31           1.02
Tax specific key items:
Deferred tax rate changes                        -               -               -           0.03
One-time transition tax                          -               -               -           0.35
Restructuring and separation
activity                                         -           (0.03 )             -          (0.02 )
Other tax reform                                 -           (0.05 )         (0.41 )
Tax specific key items (b)                       -           (0.08 )         (0.41 )         0.36
Total key items                              10.32            0.12            9.90           1.38
Adjusted diluted EPS from continuing
operations (non-GAAP)                  $      0.84      $     0.83     $      0.97     $     0.97
Amortization expense adjustment (net
of tax) (c)                            $      0.28      $     0.25     $      0.56     $     0.51
Adjusted diluted EPS from continuing
operations (non-GAAP) excluding
intangibles amortization expense       $      1.12      $     1.08     $      1.53     $     1.48

(a) Represents the diluted EPS impact from the tax effect of the key items


       that are identified above.


   (b) Represents the diluted EPS impact from tax specific financial
       transactions, tax law changes or other matters that fall within the

definition of key items. For additional explanation of these tax specific


       key items, see the income tax expense (benefit) discussion within the
       following caption review section.


   (c) Amortization expense adjustment (net of tax) tax rates were 20% for the
       three and six months ended March 31, 2020, and 25% for the three and six
       months ended March 31, 2019.



RESULTS OF OPERATIONS - REPORTABLE SEGMENT REVIEW



During the second quarter of fiscal year 2020, Ashland changed the manner in
which it manages the business moving from a functionally led to a business led
organization. This change recognizes that Ashland has a diverse portfolio of
businesses with different value propositions for the markets Ashland

                                       50

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serves. The organizational change allows Ashland to align its business models,
resources and cost structure to the specific needs of each business and enable
greater ownership and accountability for both short- and long-term performance.
Ashland has realigned its segment reporting structure commensurate with this
organizational change. As a result, Ashland's five reportable segments include
the consumer specialty businesses: Life Sciences and Personal Care & Household;
the industrial specialty businesses: Specialty Additives and Performance
Adhesives; and Intermediates and Solvents. Corporate includes corporate
governance activities and certain legacy matters. The historical segment
information has been recast to conform to the current segment structure.

Results of Ashland's reportable segments are presented based on its management
and internal accounting structure. The structure is specific to Ashland;
therefore, the financial results of Ashland's reportable segments are not
necessarily comparable with similar information for other companies. Ashland
allocates all significant costs to its reportable segments except for certain
significant company-wide restructuring activities, certain corporate governance
costs and other costs or activities that relate to former businesses that
Ashland no longer operates. The service cost component of pension and other
postretirement benefits costs is allocated to each reportable segment on a
ratable basis; while the remaining components of pension and other
postretirement benefits costs are recorded within the other net periodic benefit
income caption on the Statements of Consolidated Comprehensive Income
(Loss). Ashland refines its expense allocation methodologies to the reportable
segments from time to time as internal accounting practices are improved, more
refined information becomes available and the industry or market
changes. Significant revisions to Ashland's methodologies are adjusted for all
segments on a retrospective basis. This includes charges in the current fiscal
year for certain corporate governance costs, which were previously allocated.
These costs are now reflected in Unallocated and Other for all periods
presented.

The following table discloses sales, operating income and depreciation and
amortization by reportable segment for the three and six months ended March 31,
2020 and 2019.



                               Three months ended          Six months ended
                                    March 31                   March 31
(In millions)                      2020         2019          2020        2019
Sales
Life Sciences                $      184       $  196     $     340     $   366
Personal Care & Household           159          183           296         337
Consumer Specialties                343          379           636         703
Specialty Additives                 155          169           294         316
Performance Adhesives                85           89           159         171
Industrial Specialties              240          258           453         487
Intermediates and Solvents           37           44            64          77
Intersegment sales (a)              (10 )        (14 )         (10 )       (24 )
                             $      610       $  667     $   1,143     $ 1,243
Operating income (loss)
Life Sciences                $       36       $   33     $      58     $    56
Personal Care & Household          (336 )         25          (326 )        42
Consumer Specialties               (300 )         58          (268 )        98
Specialty Additives                (161 )         (2 )        (152 )       (24 )
Performance Adhesives                16           17            27          26
Industrial Specialties             (145 )         15          (125 )         2
Intermediates and Solvents           (2 )          9           (14 )        11
Unallocated and other               (21 )        (38 )         (44 )       (74 )
                             $     (468 )     $   44     $    (451 )   $    37


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Depreciation expense
Life Sciences                $  8     $  8     $ 16     $  16
Personal Care & Household      10       10       20        21
Consumer Specialties           18       18       36        37
Specialty Additives            16       36       32        69
Performance Adhesives           3        3        6         6
Industrial Specialties         19       39       38        75
Intermediates and Solvents      3        2        6         5
Unallocated and other           -        2        -         3
                             $ 40     $ 61     $ 80     $ 120
Amortization expense
Life Sciences                $  7     $  7     $ 14     $  14
Personal Care & Household       9        9       18        18
Consumer Specialties           16       16       32        32
Specialty Additives             4        3        8         9
Performance Adhesives           1        1        1         1
Industrial Specialties          5        4        9        10
Intermediates and Solvents      -        1        1         1
                             $ 21     $ 21     $ 42     $  43




EBITDA (b) (c)
Life Sciences                $   51     $  48     $   88     $  86
Personal Care & Household      (317 )      44       (288 )      81
Consumer Specialties           (266 )      92       (200 )     167
Specialty Additives            (141 )      37       (112 )      54
Performance Adhesives            20        21         34        33
Industrial Specialties         (121 )      58        (78 )      87
Intermediates and Solvents        1        12         (7 )      17
Unallocated and other           (21 )     (36 )      (44 )     (71 )
                             $ (407 )   $ 126     $ (329 )   $ 200

(a) Intersegment sales are accounted for at prices that approximate fair value.

(b) Excludes income (loss) from discontinued operations, other net periodic


       benefit income (expense) and net income (loss) on divestitures. See the
       Statement of Consolidated Comprehensive Income (Loss) for applicable
       amounts excluded.

(c) Includes $20 million of accelerated depreciation for the three months ended

March 31, 2019 and $39 million for the six months ended March 31, 2019.




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Consumer Specialties


The Consumer Specialties group is comprised of the following business segments:





Life Sciences

Life Sciences is comprised of pharmaceuticals, nutrition, nutraceuticals,
agricultural chemicals, advanced materials and fine chemicals. Pharmaceutical
solutions include controlled release polymers, disintegrants, film coatings,
solubilizers, and tablet binders. Nutrition solutions include thickeners,
stabilizers, emulsifiers and additives for enhancing mouthfeel, controlling
moisture migration, reducing oil uptake and controlling color. Nutraceutical
solutions include products for weight management, joint comfort, stomach and
intestinal health, sports nutrition and general wellness, and provide custom
formulation, toll processing and particle engineering solutions. Customers
include pharmaceutical, food, beverage, nutraceuticals and supplements
manufacturers, hospitals and radiologists and industrial manufacturers.



Personal Care & Household



Personal Care & Household is comprised of biofunctionals, preservatives, skin
care, sun care, oral care, hair care and household. These businesses have a
broad range of nature-based, biodegradable, and performance ingredients for
customer-driven solutions to help protect, renew, moisturize and revitalize skin
and hair, and provide solutions for toothpastes, mouth washes and rinses,
denture cleaning and care for teeth. Household supplies nature-derived rheology
ingredients, biodegradable surface wetting agents, performance encapsulates, and
specialty polymers for household, industrial and institutional cleaning
products. Customers include formulators at large multinational branded consumer
products companies and smaller, independent boutique companies.

March 2020 quarter compared to March 2019 quarter



Consumer Specialties' sales decreased $36 million to $343 million in the current
quarter. Personal Care & Household and Life Sciences represented $24 million and
$12 million of the decrease, respectively. Lower volume, unfavorable currency
exchange, plant realignment and lower pricing decreased sales by $23 million, $4
million, $6 million and $3 million, respectively.

Operating income/loss decreased $358 million to a loss of $300 million for the
current quarter. Personal Care & Household recorded a $336 million loss, mostly
due to a goodwill impairment, while Life Sciences recorded a $36 million
operating income, up $3 million for the prior year quarter. Goodwill impairment,
lower volume and unfavorable foreign exchange decreased operating income by $356
million, $8 million and $2 million, respectively. Those decreases were partially
offset by favorable price/mix and favorable costs which increased operating
income/loss by $6 million and $2 million, respectively. Current quarter EBITDA
decreased $358 to a loss of $266 million, a $317 million loss in Personal Care &
Household and a $51 million income in Life Sciences, while Adjusted EBITDA
decreased $1 million to $91 million, of which $52 million and $39 million
originated from Life Sciences and Personal Care & Household, respectively.
Adjusted EBITDA margin increased 2.2 percentage points in the current quarter to
26.5%.

Fiscal 2020 year-to-date compared to fiscal 2019 year-to-date



Consumer Specialties' sales decreased $67 million to $636 million in the current
period. Personal Care & Household and Life Sciences represented $26 million and
$41 million of the decrease, respectively. Lower volume, unfavorable currency
exchange, plant restructuring and lower pricing decreased sales by $48 million,
$7 million, $10 million and $2 million, respectively.

Operating income/loss decreased $366 million to a loss of $268 million for the
current period. Personal Care & Household recorded a $326 million loss, mostly
due to a goodwill impairment, while Life Sciences recorded a $58 million
operating income, up $2 million for the prior year quarter. Goodwill
impairments, lower volume and unfavorable foreign exchange decreased operating
income by $356 million, $17 million and $3 million, respectively. Those
decreases were partially offset by lower costs and favorable price/mix which
increased operating income/loss by $2 million and $8 million, respectively.
Current year EBITDA decreased $367 to a loss of $200 million, a $288 million
loss in Personal Care & Household and a $88

                                       53

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million income in Life Sciences, while Adjusted EBITDA decreased $10 million to
$157 million, of which $89 million and $68 million originated from Life Sciences
and Personal Care & Household, respectively. Adjusted EBITDA margin increased
0.9 percentage points in the current period to 24.7%.

EBITDA and Adjusted EBITDA reconciliation



The EBITDA and Adjusted EBITDA amounts presented within this business section
are provided as a means to enhance the understanding of financial measurements
that Ashland has internally determined to be relevant measures of comparison for
each segment. Each of these non-GAAP measures is defined as follows: EBITDA
(operating income plus depreciation and amortization), Adjusted EBITDA (EBITDA
adjusted for key items, which may include pro forma effects for significant
acquisitions or divestitures, as applicable), and Adjusted EBITDA margin
(Adjusted EBITDA, which may include pro forma adjustments, divided by sales or
sales adjusted for pro forma results). Ashland does not allocate items to each
reportable segment below operating income, such as interest expense and income
taxes. As a result, reportable segment EBITDA and Adjusted EBITDA are reconciled
directly to operating income since it is the most directly comparable Statements
of Consolidated Comprehensive Income (Loss) caption.

The following EBITDA presentation for the three and six months ended March 31,
2020 and 2019 is provided as a means to enhance the understanding of financial
measurements that Ashland has internally determined to be relevant measures of
comparison for the results of Consumer Specialties. The key items during the
three and six months ended March 31, 2020 related to a goodwill impairment of
$356 million for Personal Care & Household and $1 million in restructuring costs
for Life Sciences.



                                      Life Sciences               Personal Care & Household            Consumer Specialties
                                                                  Three months ended March 31
(In millions)                        2020            2019               2020               2019            2020            2019
Operating income                $      36       $      33     $         (336 )       $       25     $      (300 )     $      58
Depreciation and amortization          15              15                 19                 19              34              34
EBITDA                                 51              48               (317 )               44            (266 )            92
Restructuring and other costs           1               -                  -                  -               1               -
Goodwill impairment                     -               -                356                  -             356               -
Adjusted EBITDA                 $      52       $      48     $           39         $       44     $        91       $      92

                                      Life Sciences               Personal Care & Household            Consumer Specialties
                                                                   Six months ended March 31
(In millions)                        2020            2019               2020               2019            2020            2019
Operating income                $      58       $      56     $         (326 )       $       42     $      (268 )     $      98
Depreciation and amortization          30              30                 38                 39              68              69
EBITDA                                 88              86               (288 )               81            (200 )           167
Restructuring and other costs           1               -                  -                  -               1               -
Goodwill impairment                     -               -                356                  -             356               -
Adjusted EBITDA                 $      89       $      86     $           68         $       81     $       157       $     167




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Industrial Specialties


The Industrial Specialties business group is comprised of the below business segments:





Specialty Additives

Specialty Additives is comprised of rheology- and performance-enhancing
additives serving the coatings, construction, energy, automotive and various
industrial markets. Solutions include coatings additives for architectural
paints, finishes and lacquers, cement- and gypsum- based dry mortars,
ready-mixed joint compounds, synthetic plasters for commercial and residential
construction, and specialty materials for industrial applications. Products
include rheology modifiers (cellulosic and associative thickeners), foam-control
agents, surfactants and wetting agents, pH neutralizers, advanced ceramics used
in catalytic converters, and environmental filters, ingredients that aid the
manufacturing process of ceramic capacitors, plasma display panels and solar
cells, ingredients for textile printing, thermoplastic metals and alloys for
welding. Products help improve desired functional outcomes through rheology
modification and control, water retention, workability, adhesive strength,
binding power, film formation, deposition and suspension and emulsification.
Customers include global paint manufacturers, electronics and automotive
manufacturers, textile mills, the construction industry, and welders.



Performance Adhesives



Performance Adhesives is comprised of adhesives used in packaging, converting
and structural applications. Packaging adhesives has an extensive line of
pressure sensitive adhesives, functional coatings and primers combined with
innovative technology solutions for narrow-, mid- and wide-web applications.
Products meet stringent requirements in food and beverage safety, shipping,
transportation, health and beauty, industrial, postage and security printing.
Structural adhesives include light weighting vehicles and eliminating VOCs in
buildings. Customers include converters of packaging materials, manufacturers of
building materials and tier one suppliers to transportation industry.

March 2020 quarter compared to March 2019 quarter



Industrial Specialties' sales decreased $18 million to $240 million in the
current quarter. Specialty Additives and Performance Adhesives represented $14
million and $4 million of the decrease, respectively. Lower volume, unfavorable
currency exchange lower pricing, and plant restructuring decreased sales by $12
million, $2 million, $3 million and $1 million, respectively.

Operating income/loss decreased $160 million to a loss of $145 million for the
current quarter. Specialty Additives recorded a $161 million loss, mostly due to
a Goodwill impairment, while Performance Adhesives recorded a $16 million
operating income, down $1 million from the prior year quarter. Goodwill
impairment, lower volume and unfavorable costs decreased operating income by
$174 million, $3 million and $5 million, respectively. Those decreases were
partially offset by the prior year plant restructuring costs and improved
price/mix of $20 million and $2 million, respectively. Current quarter EBITDA
decreased $160 to a loss of $121 million, a $141 million loss in Specialty
Additives and a $20 million income in Performance Adhesives, while Adjusted
EBITDA decreased $6 million to $53 million, of which $33 million and $20 million
originated from Specialty Additives and Performance Adhesives, respectively.
Adjusted EBITDA margin decreased 0.8 percentage points in the current quarter to
22.1%.

Fiscal 2020 year-to-date compared to fiscal 2019 year-to-date



Industrial Specialties' sales decreased $34 million to $453 million in the
current period. Specialty Additives and Performance Adhesives represented $22
million and $12 million of the decrease, respectively. Lower volume, unfavorable
currency exchange, plant restructuring and lower pricing decreased sales by $22
million, $4 million, $4 million and $4 million, respectively.

Operating income/loss decreased $127 million to a loss of $125 million for the
current year. Specialty Additives recorded a $152 million loss, mostly due to a
goodwill impairment, while Performance Adhesives recorded a $27 million
operating income, up $1 million from the prior year period. Goodwill impairment
and lower volume decreased operating income by $174 million and $6 million,
respectively. Those decreases were partially offset by prior year plant
restructuring costs and favorable price/mix of $47 million

                                       55

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and $6 million, respectively. Current year EBITDA decreased $127 to a loss of
$78 million, a $112 million loss in Specialty Additives and a $34 million income
in Performance Adhesives, while Adjusted EBITDA decreased $1 million to $96
million, of which $62 million and $34 million originated from Specialty
Additives and Performance Adhesives, respectively. Adjusted EBITDA margin
increased 1.3 percentage points in the current year to 21.2%.

EBITDA and adjusted EBITDA reconciliation



The following EBITDA and Adjusted EBITDA presentation (as defined and described
in the section above) for the three and six months ended March 31, 2020 and 2019
below is provided as a means to enhance the understanding of financial
measurements that Ashland has internally determined to be relevant measures of
comparison for the results of Industrial Specialties. Adjusted EBITDA results
have been prepared to illustrate the ongoing effects of Ashland's operations,
which exclude certain key items. The key items during the three and six months
ended March 31, 2020 related to a Goodwill impairment for Specialty Additives.
The key items during the prior year periods related to $20 million and $48
million of restructuring costs associated with the planned closure of a
manufacturing facility within Specialty Additives (which included $19 million
and $38 million of accelerated depreciation) for the three and six months ended
March 31, 2019, respectively.



                                 Specialty Additives             Performance Adhesives             Industrial Specialties
                                                                Three months ended March 31
(In millions)                       2020            2019           2020               2019              2020              2019
Operating income              $     (161 )     $      (2 )   $       16         $       17     $        (145 )       $      15
Depreciation and
amortization (a)                      20              20              4                  4                24                24
EBITDA                              (141 )            18             20                 21              (121 )              39
Accelerated depreciation               -              19              -                  -                 -                19
Goodwill Impairment                  174               -              -                  -               174                 -
Severance and other
restructuring costs                    -               1              -                  -                 -                 1
Adjusted EBITDA               $       33       $      38     $       20         $       21     $          53         $      59

                                 Specialty Additives             Performance Adhesives             Industrial Specialties
                                                                 Six months ended March 31
(In millions)                       2020            2019           2020               2019              2020              2019
Operating income              $     (152 )     $     (24 )   $       27         $       26     $        (125 )       $       2
Depreciation and
amortization (a)                      40              40              7                  7                47                47
EBITDA                              (112 )            16             34                 33               (78 )              49
Accelerated depreciation               -              38              -                  -                 -                38
Goodwill Impairment                  174               -              -                  -               174                 -
Severance and other
restructuring costs                    -              10              -                  -                 -                10
Adjusted EBITDA               $       62       $      64     $       34         $       33     $          96         $      97


   (a) Depreciation and amortization excludes accelerated depreciation of $19
       million and $38 million for the three and six months ended March 31,
       2019, which are included as key items.

Intermediates and Solvents



Intermediates and Solvents is comprised of the production of 1,4 butanediol
(BDO) and related derivatives, including n-methylpyrrolidone. These products are
used as chemical intermediates in the production of engineering polymers and
polyurethanes, and as specialty process solvents in a wide array of applications
including electronics, pharmaceuticals, water filtration membranes and more.
Butanediol is also provided as a feedstock to the supplied to Life Sciences,
Personal Care, and Specialty Additives for use as a raw material.

March 2020 quarter compared to March 2019 quarter



Intermediates and Solvents' sales decreased $7 million to $37 million in the
current quarter. Lower volume and lower pricing decreased sales by $3 million
and $4 million, respectively.

                                       56

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Operating income/loss decreased $11 million to a loss of $2 million for the
current quarter. Unfavorable price/mix, unfavorable costs and inventory
adjustments decreased operating income by $4 million, $3 million and $4 million,
respectively. Current quarter EBITDA decreased $11 to $1 million, while Adjusted
EBITDA decreased $7 million to $5 million. Adjusted EBITDA margin decreased 13.8
percentage points in the current quarter to 13.5%.

Fiscal 2020 year-to-date compared to fiscal 2019 year-to-date



Intermediates and Solvents' sales decreased $13 million to $64 million in the
current period. Lower volume and lower pricing decreased sales by $7 million and
$6 million, respectively.

Operating income/loss decreased $25 million to a loss of $14 million for the
current period. Lower volume, unfavorable price/mix, unfavorable costs and
inventory adjustments decreased operating income by $1 million, $3 million, $17
million and $4 million, respectively. Current year EBITDA decreased $24 to a
loss of $7 million, while Adjusted EBITDA decreased $20 million to a loss of $3
million. Adjusted EBITDA margin decreased 26.8 percentage points in the current
year to -4.7%.

EBITDA and Adjusted EBITDA reconciliation



The following EBITDA presentation (as defined and described in the section
above) for the three and six months ended March 31, 2020 and 2019 is provided as
a means to enhance the understanding of financial measurements that Ashland has
internally determined to be relevant measures of comparison for the results of
Intermediates and Solvents. Key items for the three and six months ended March
31, 2020 included an inventory adjustment of $4 million.



                                   Three months ended          Six months ended
                                        March 31                   March 31
(In millions)                        2020           2019          2020        2019
Operating income                $      (2 )       $    9     $     (14 )     $  11
Depreciation and amortization           3              3             7           6
EBITDA                          $       1         $   12     $      (7 )     $  17
Inventory adjustment                    4              -             4           -
Adjusted EBITDA                 $       5         $   12     $      (3 )     $  17






Unallocated and other

The following table summarizes the key components of the Unallocated and other
segment's operating income (loss) for the three and six months ended March 31,
2020 and 2019.



                                          Three months ended                 Six months ended
                                               March 31                          March 31
(In millions)                               2020              2019            2020              2019
Restructuring activities             $       (14 )     $       (24 )   $       (22 )     $       (53 )
Environmental expenses                        (5 )              (4 )            (8 )              (6 )
Proxy costs                                    -                (5 )             -                (5 )
Other expenses (primarily
governance and legacy expenses)               (2 )              (5 )           (14 )             (10 )
Total expense                        $       (21 )     $       (38 )   $       (44 )     $       (74 )

March 2020 quarter compared to March 2019 quarter



Unallocated and other recorded expense of $21 million and $38 million for the
three months ended March 31, 2020 and 2019, respectively. The current and prior
year quarters included charges for restructuring activities of $14 million and
$24 million, respectively, which were comprised of the following items:

$12 million of stranded divestiture costs during the prior year quarter,

primarily related to the planned divestiture of the Composites segment and

Marl facility;

$14 million and $8 million of severance, lease abandonment and other

restructuring costs related to company-wide cost reduction programs during


      the current and prior quarters, respectively; and


                                       57

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$4 million of impairment related to the planned sale of an office building

during the prior year quarter.

The current quarter included $5 million for environmental expenses.

The remaining items during the prior year quarter primarily included $4 million for environmental expenses and $5 million in proxy defense costs.

Fiscal 2020 year-to-date compared to fiscal 2019 year-to-date



Unallocated and other recorded expense of $44 million and $74 million for the
six months ended March 31, 2020 and 2019, respectively. The current and prior
year periods included charges for restructuring activities of $22 million and
$53 million, respectively, which were comprised of the following items:

$24 million of stranded divestiture costs during the prior year period;

$22 million and $25 million of severance, lease abandonment and other

restructuring costs related to company-wide cost reduction programs during

the current and prior year periods, respectively; and

$4 million of impairment related to the planned sale of an office building

during the prior year period.

The current year period also included $8 million for environmental expenses.

The remaining items during the prior year period primarily included $6 million for environmental expenses and $5 million in proxy defense costs.





FINANCIAL POSITION

Liquidity

Ashland had $353 million in cash and cash equivalents as of March 31, 2020, of
which $160 million was held by foreign subsidiaries and had no significant
limitations that would prohibit remitting the funds to satisfy corporate
obligations. In certain circumstances, if such amounts were repatriated to the
United States, additional taxes might need to be accrued and paid depending on
the source of the earnings remitted. Ashland currently has no plans to
repatriate any amounts for which additional taxes would need to be accrued.

Ashland has taken actions and may continue to take actions intended to increase
its cash position and preserve financial flexibility in light of current
uncertainty in the global markets. In January 2020, Ashland renewed and extended
its Revolving Credit Agreement through 2025 and issued new 2.00% senior notes in
Europe for €500 million which mature in 2028. During the three months ended
March 31, 2020, Ashland elected to access $240 million on its Revolving Credit
Facility, with these amounts on deposit as cash and cash equivalents. As of
March 31, 2020, Ashland has total remaining borrowing capacity of $339 million,
comprised of amounts remaining available under the Revolving Credit Facility and
two accounts receivable securitization facilities. Ashland has no major loan
maturities until 2022.

Ashland believes that cash flow from operations, availability under existing
credit facilities and arrangements, current cash and investment balances and the
ability to obtain other financing, if necessary, will provide adequate cash
funds for Ashland's foreseeable working capital needs, capital expenditures at
existing facilities, dividend payments and debt service obligations. Ashland's
cash requirements are subject to change as business conditions warrant and
opportunities arise. The timing and size of any new business ventures or
acquisitions that the Company may complete may also impact its cash
requirements. For information regarding the impact of COVID-19 on the Company,
including on its liquidity and capital resources, please see item 1A, risk
factors in this report.

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Ashland's cash flows from operating, investing and financing activities, as reflected in the Statements of Condensed Consolidated Cash Flows, are summarized as follows for the six months ended March 31, 2020 and 2019.





                                                            Six months ended
                                                                March 31
(In millions)                                                2020                   2019
Cash provided (used) by:
Operating activities from continuing
operations                                      $              13       $              6
Investing activities from continuing
operations                                                    (49 )                  (49 )
Financing activities from continuing
operations                                                    234                    (36 )
Discontinued operations                                       (78 )                  (49 )
Effect of currency exchange rate changes on
cash and cash equivalents                                       1                     (2 )
Net increase (decrease) in cash and cash
equivalents                                     $             121       $           (130 )




Operating activities

The following discloses the cash flows associated with Ashland's operating activities for the six months ended March 31, 2020 and 2019.





                                                           Six months ended
                                                               March 31
(In millions)                                                2020                  2019
Cash flows provided (used) by operating
activities from continuing operations
Net income (loss)                               $            (550 )    $    

28


Income (loss) from discontinued operations                      9                   (54 )
(net of income taxes)
Adjustments to reconcile income from
continuing operations to
cash flows from operating activities:
Depreciation and amortization                                 122           

163


Original issue discount and debt issuance                      12           

4


costs amortization
Deferred income taxes                                         (28 )         

2


Stock based compensation expense                                8           

13


(Income) loss from restricted investments                      16                    (2 )
Excess tax benefit on stock based                               1           

2

compensation


Loss on early retirement of debt                               59                     -
Net loss on divestitures                                        -                     3
Impairments                                                   530                     5
Pension contributions                                          (3 )                  (3 )
Gain on pension and other postretirement plan                   -                   (18 )
remeasurements
Change in operating assets and liabilities                   (163 )                (137 )
(a)
Total cash flows provided by operating          $              13      $    

6

activities from continuing operations





  (a) Excludes changes resulting from operations acquired or sold.




Cash flows used from operating activities from continuing operations amounted to
inflows of $13 million and $6 million in the current and prior year periods,
respectively.

                                       59

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Operating Activities - Operating Assets and Liabilities



The cash results during each period are primarily driven by net income (loss),
excluding discontinued operation results, adjusted for certain non-cash items
including depreciation and amortization (including original issue discount and
debt issuance cost amortization), as well as changes in working capital, which
are fluctuations within accounts receivable, inventory, trade payables and
accrued expenses. Ashland continues to emphasize working capital management as a
high priority and focus.

Changes in operating assets and liabilities for outflows of $163 million and
$137 million for the six months ended March 31, 2020 and 2019, respectively, and
were driven by the following net working capital accounts:

• Accounts receivable - There were cash outflows of $19 million and inflows

of $2 million during the current and prior year periods, respectively.

• Inventory - There were cash outflows of $15 million and $1 million during

the current and prior year periods, respectively.




   •  Trade and other payables - There were cash outflows of $83 million and
      $116 million during the current and prior year periods, respectively, and
      primarily related to the timing of certain payments.


The remaining changes to operating assets and liabilities resulted in outflows
of $46 million and $22 million in the current and prior year periods,
respectively, and were primarily due to income taxes paid or income tax refunds,
interest paid, and adjustments to certain accruals and other long-term assets
and liabilities.

Operating Activities - Summary



Operating cash flows for the current year period included a loss from continuing
operations of $541 million. Additionally, the current period included non-cash
adjustments of $530 million for a goodwill impairment charge, $122 million for
depreciation and amortization, $59 million loss on early retirement of debt, $12
million original issue discounts and debt issuance cost amortization, $8 million
for stock-based compensation expense and $16 million loss on restricted
investments.

Operating cash flows for the prior year period included a loss from continuing
operations of $26 million. Additionally, the prior year period included a
non-cash adjustment of $163 million for depreciation and amortization, $2
million for a gain on restricted investments, $5 million for an impairment of a
held for sale facility, $13 million for stock-based compensation expense and $18
million for the gain on pension and other postretirement plan remeasurements.

Investing activities

The following discloses the cash flows associated with Ashland's investing activities for the six months ended March 31, 2020 and 2019.





                                                            Six months ended
                                                                March 31
(In millions)                                                2020                   2019
Cash flows provided (used) by investing
activities from continuing operations
Additions to property, plant and equipment      $             (66 )     $            (70 )
Proceeds from disposal of property, plant and
equipment                                                       -                      4
Purchase of operations                                          -                     (1 )
Net purchase of funds restricted for specific
transactions                                                   (2 )                   (2 )
Reimbursement from restricted investments                      19           

20


Proceeds from sales of securities                              10           

156


Purchase of securities                                        (10 )                 (156 )
Proceeds from the settlement of derivative
instruments                                                     -                      2
Payments for the settlement of derivative
instruments                                                     -                     (2 )
Total cash flows used by investing activities
from continuing operations                      $             (49 )     $            (49 )


                                       60

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Cash used by investing activities was $49 million for both the current and prior
year periods, respectively. The significant cash investing activities for the
current period primarily related to cash outflows of $66 million for property
additions compared to $70 million in the prior year period. Additionally, there
were reimbursements from the restricted renewable annual asbestos trust of $19
million during the current period compared to $20 million in the prior year
period.

Financing activities

The following discloses the cash flows associated with Ashland's financing activities for the six months ended March 31, 2020 and 2019.





                                                            Six months ended
                                                                March 31
(In millions)                                                2020                   2019
Cash flows provided (used) by financing
activities from continuing operations
Proceeds from issuance of long-term debt                      804                      -
Repayment of long-term debt                                  (767 )                   (8 )
Premium on long-term debt repayment                           (59 )                    -
Proceeds from (repayment of) short-term debt                  306                     11
Debt issuance costs                                           (11 )                    -
Cash dividends paid                                           (33 )                  (31 )
Stock based compensation employee withholding
taxes paid in cash                                             (6 )                   (8 )
Total cash flows provided (used) by financing   $             234       $            (36 )
activities from continuing operations




Cash flows (used) provided by financing activities resulted in an inflow of $234
million for the current period as compared to an outflow of $36 million for the
prior year period.

Significant cash financing activities for the current period included proceeds
from issuance of long-term debt, repayment of long-term debt, premiums on
retirement of long-term debt, and debt issuance costs paid of $804 million, $767
million, $59 million and $11 million, respectively, all related to debt
refinancing activity. See note H for additional information. The current year
period also included short-term cash inflows of $306 million, primarily related
to draws on the 2020 Revolving Credit Facility. The current period included cash
dividends paid of $0.550 per share, for a total of $33 million.

Significant cash financing activities for the prior year period included
long-term cash outflows of $8 million, primarily related to repayments of term
loans and debentures. The prior period included cash dividends paid of $0.50 per
share, for a total of $31 million. Additionally, $11 million of inflows were
drawn out the 2017 Revolving Credit Facility.

The following discloses the cash flows associated with Ashland's discontinued operations for the six months ended March 31, 2020 and 2019.





                                                    Six months ended
                                                        March 31
(In millions)                                         2020         2019
Cash provided (used) by discontinued operations
Operating cash flows                              $    (79 )     $  (41 )
Investing cash flows                                     1           (8 )

Total cash used by discontinued operations $ (78 ) $ (49 )


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Cash flows for discontinued operations in the current period primarily related to previously divested businesses, including net payments of asbestos, environmental liabilities and tax payments associated with the Composites divestiture, which was a $59 million cash outflow.



Cash flows for discontinued operations in the prior year period included cash
outflows of $25 million related to the activity of Composites and the Marl
facility. The remaining cash flows for discontinued operations related to other
previously divested businesses, including net payments of asbestos and
environmental liabilities.

Free cash flow and other liquidity resources

The following represents Ashland's calculation of free cash flow for the disclosed quarters. Free cash flow does not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments.





                                                            Six months ended
                                                                March 31
(In millions)                                                2020                    2019
Total cash flows provided by operating          $              13       $               6
activities from continuing operations
Adjustments:
Additions to property, plant and equipment                    (66 )                   (70 )
Free cash flows (a)                             $             (53 )     $             (64 )


(a) Includes $13 million and $33 million of restructuring payments for the

six months ended March 31, 2020 and 2019, respectively.




Working capital (current assets minus current liabilities, excluding long-term
debt due within one year) amounted to $673 million and $676 million as of March
31, 2020 and September 30, 2019, respectively. Liquid assets (cash, cash
equivalents and accounts receivable) amounted to 88% and 94% of current
liabilities (excluding current liabilities held for sale) as of March 31, 2020
and September 30, 2019, respectively.

The following summary reflects Ashland's cash and unused borrowing capacity as of March 31, 2020 and September 30, 2019.





                                      March 31      September 30
(In millions)                           2020            2019
Cash and investment securities
Cash and cash equivalents             $     353     $         232

Unused borrowing capacity
Revolving credit facility             $     338     $         752
Accounts receivable securitizations           1                48




                                       62

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During the current year period, Ashland entered into a new revolving credit
facility. The borrowing capacity remaining under the new $600 million revolving
credit facility was $338 million due to an outstanding balance of $240 million
and a reduction of $22 million for letters of credit outstanding at March 31,
2020. In total, Ashland's available liquidity position, which includes cash, the
revolving credit facility and the accounts receivable securitization facilities,
was $692 million at March 31, 2020, compared to $1,032 million at September 30,
2019.



Capital resources

Debt

The following summary reflects Ashland's debt as of March 31, 2020 and September
30, 2019.



                                                    March 31            September 30
(In millions)                                         2020                  2019
Short-term debt (includes current portion of
long-term debt)                                 $             471     $     

166


Long-term debt (less current portion and debt
issuance cost discounts) (a)                                1,535                 1,501
Total debt                                      $           2,006     $           1,667


(a) Includes $15 million and $12 million of debt issuance cost discounts


          as of March 31, 2020 and September 30, 2019, respectively.




During the current year, Ashland entered into a new credit facility, the 2020
Credit Agreement, which was comprised of a $600 million, 5-year credit facility
and a $250 million 5-year term loan. Additionally, Ashland issued new 8-year
Senior notes in Europe, for approximately $554 million. The proceeds of these
debt issuances were primarily used to tender on current Senior notes for a total
of $767 million.  See Note H for more information.

Debt as a percent of capital employed was 40% and 32% at March 31, 2020 and at
September 30, 2019, respectively. At March 31, 2020, Ashland's total debt had an
outstanding principal balance of $2,066 million, discounts of $45 million, and
debt issuance costs of $15 million. The scheduled aggregate maturities of
long-term debt by year (including the current portion and excluding debt
issuance costs) are as follows: zero remaining in 2020, zero in 2021, $421
million in 2022, $22 million in 2023 and $44 million in 2024.

Ashland credit ratings



Ashland's corporate credit rating with Standard & Poor's is BB+, while Moody's
Investor Services is Ba1. Moody's Investor Services and Standard & Poor's
outlooks both remained at stable. Subsequent changes to these ratings may have
an effect on Ashland's borrowing rate or ability to access capital markets in
the future.

Ashland debt covenant restrictions



Ashland's most recent credit agreement (the 2020 Credit Agreement) contains
usual and customary representations, warranties and affirmative and negative
covenants, including financial covenants for leverage and interest coverage
ratios, limitations on liens, additional subsidiary indebtedness, restrictions
on subsidiary distributions, investments, mergers, sale of assets and restricted
payments and other customary limitations. As of March 31, 2020, Ashland is in
compliance with all debt agreement covenant restrictions under the 2020 Credit
Agreement.

The maximum consolidated net leverage ratio permitted under the 2020 Credit
Agreement is 4.0. The 2020 Credit Agreement defines the consolidated net
leverage ratio as the ratio of consolidated indebtedness minus unrestricted cash
and cash equivalents to consolidated EBITDA (Covenant Adjusted EBITDA) for any
measurement period. In general, the 2020 Credit Agreement defines Covenant
Adjusted EBITDA as net income plus consolidated interest charges, taxes,
depreciation and amortization expense, fees and expenses related to capital
market transactions and proposed or actual acquisitions and divestitures,
restructuring and integration charges, noncash stock and equity compensation
expense, and any other nonrecurring expenses or losses that do not represent a
cash item in such period or any future period; less any noncash gains or other
items increasing net income. The computation of Covenant Adjusted EBITDA differs
from the calculation of EBITDA and Adjusted EBITDA, which have been reconciled
above in the "consolidated

                                       63

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review" section. In general, consolidated indebtedness includes debt plus all
purchase money indebtedness, banker's acceptances and bank guaranties, deferred
purchase price of property or services, attributable indebtedness and
guarantees. At March 31, 2020, Ashland's calculation of the consolidated net
leverage ratio was 3.1.

The minimum required consolidated interest coverage ratio under the 2020 Credit
Agreement is 3.0. The 2020 Credit Agreement defines the consolidated interest
coverage ratio as the ratio of Covenant Adjusted EBITDA to consolidated interest
charges for any measurement period. At March 31, 2020, Ashland's calculation of
the consolidated interest coverage ratio was 7.7.

Any change in Covenant Adjusted EBITDA of $100 million would have an approximate
0.6x effect on the consolidated net leverage ratio and a 1.4x effect on the
consolidated interest coverage ratio. The average change in consolidated
indebtedness of $100 million would affect the consolidated leverage ratio by
approximately 0.2x.

Additional capital resources

Cash projection

Ashland believes that cash flow from operations, availability under existing
credit facilities and arrangements, current cash and investment balances and the
ability to obtain other financing, if necessary, will provide adequate cash
funds for the Company's foreseeable working capital needs, capital expenditures
at existing facilities, pending acquisitions, dividend payments and debt service
obligations. The Company's cash requirements are subject to change as business
conditions warrant and opportunities arise. The timing and size of any new
business ventures or acquisitions that the Company may complete may also impact
its cash requirements. For information regarding the impact of COVID-19 on the
Company, including on its liquidity and capital resources, please see item 1A,
risk factors in this report.

Total equity

Total equity decreased $588 million since September 30, 2019 to $2,983 million
at March 31, 2020. The decrease of $588 million was due to net loss of $550
million, deferred translation loss of $14 million, and dividends of $33 million,
offset by $9 million of common shares issued under stock incentive and other
plans.

Stockholder dividends

In May 2019, the Board of Directors of Ashland announced a quarterly cash
dividend of 27.5 cents per share to eligible stockholders at record, which
represented an increase from previous quarterly cash dividend of 25.0 cents per
share. This dividend was paid in the third and fourth quarter of fiscal 2019 and
the first and second quarters of fiscal 2020.

Capital expenditures

Capital expenditures were $66 million for the six months ended March 31, 2020 compared to $70 million for the six months ended March 31, 2019.

CRITICAL ACCOUNTING POLICIES



The preparation of Ashland's Condensed Consolidated Financial Statements in
conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, sales and expenses, and
the disclosures of contingent assets and liabilities. Significant items that are
subject to such estimates and assumptions include, but are not limited to,
long-lived assets (including goodwill and other intangible assets), income
taxes, other liabilities and receivables associated with asbestos litigation and
environmental remediation. These accounting policies are discussed in detail in
"Management's Discussion and Analysis - Critical Accounting Policies" in
Ashland's Annual Report on Form 10-K for the fiscal year ended September 30,
2019. Although management bases its estimates on historical experience and
various other assumptions that are believed to be reasonable under the
circumstances, actual results could differ significantly from the estimates
under different assumptions or conditions. Management has reviewed the estimates
affecting these items with the Audit Committee of Ashland's Board of
Directors. No material changes have been made to the valuation techniques during
the six months ended March 31, 2020.

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Goodwill and other indefinite-lived intangible assets



Ashland tests goodwill and other indefinite-lived intangible assets for
impairment annually as of July 1 and when events and circumstances indicate an
impairment may have occurred. Ashland tests goodwill and other indefinite-lived
intangible assets for impairment by comparing the estimated fair value of the
reporting units (for goodwill) or other indefinite-lived intangible assets to
the related carrying value. If the carrying amount of a reporting unit or other
indefinite-lived intangible asset exceeds its estimated fair value, Ashland
records an impairment loss based on the difference between fair value and
carrying amount, in the case of reporting units, not to exceed to the associated
carrying amount of goodwill.

Reporting units are defined as either operating segments or one level below the
operating segments for which discrete financial information is available and
reviewed by the business management. During the second quarter of fiscal 2020,
Ashland realigned its operations into five reportable segments which resulted in
a reassessment of the Company's reporting units used to evaluate goodwill
impairment. The Company's reporting units align with its reportable segments.
Ashland determined that its reporting units are Life Sciences, Personal Care &
Household, Specialty Additives, Performance Adhesives, and Intermediates and
Solvents. Prior to the business realignment, the reporting units consisted of
Ashland Specialty Ingredients and Intermediates and Solvents. The Ashland
Specialty Ingredients reporting unit contained all of Ashland's reported
goodwill at September 30, 2019.

In conjunction with the realignment, Ashland tested goodwill for impairment for
each reporting unit both immediately before and immediately after the business
realignment. The fair values of the reporting units were determined using a
combination of discounted cash flow models and valuations based on earnings
multiples for guideline public companies in each reporting unit's industry peer
group.

The goodwill impairment test under the former reporting unit structure concluded
that no impairment existed during the second quarter of fiscal 2020. Ashland
then allocated goodwill to the new reporting unit structure using a relative
fair value approach and re-assessed goodwill for impairment for each of its new
reporting units. The impairment test under the new reporting unit structure
concluded that Life Sciences and Performance Adhesives fair value were in excess
of the carrying amounts by more than 10%. The carrying value of the Personal
Care & Household reporting unit and the Specialty Additives reporting unit
exceeded its respective fair value, resulting in a non-cash goodwill impairment
charge of $530 million, which was recorded within the Goodwill impairment
caption within the Statement of Consolidated Comprehensive Income (Loss) for the
three and six months ended March 31, 2020. Remaining goodwill after impairment
was zero for Personal Care & Household and $435 million for Specialty
Additives. The Personal Care & Household goodwill impairment charge was due in
large part to lower growth and lower margins since the acquisitions of the Oral
Care and Avoca businesses, which collectively have resulted in reduced cash flow
projections. The Specialty Additives goodwill impairment charge was also due in
large part to lower growth and lower margins within the global construction and
energy end markets, which collectively have resulted in reduced cash flow
projections.

The table below provides a sensitivity analysis for Specialty Additives
goodwill, utilizing reasonably possible changes in the assumptions for the
shorter term and residual growth rates and the discount rate, to demonstrate the
potential impacts to the estimated fair values. The table below provides, in
isolation, the estimated fair value impacts related to a 25-basis point increase
to discount rate or a 25-basis point decrease to residual growth rates, both of
which would result in incremental impairment charges to Specialty Additives
reporting unit.



                      Approximate Percent Change in Estimated Fair Value
                             +25 bps                       -25 bps
                          Discount Rate                  Growth Rate
Specialty Additives           -2.9%                         -2.1%




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Significant assumptions inherent in the valuation methodologies include
estimates of future projected business results (principally revenue and EBITDA),
long-term growth rates, and the weighted-average cost of capital. Ashland
performed sensitivity analyses by using a range of inputs to confirm
reasonableness of these estimates. Additionally, Ashland compares the indicated
equity value to Ashland's market capitalization, and implied control
premium/discount, to determine if the estimated enterprise value is reasonable
compared to external market indicators. Ashland believes the data and
assumptions used are appropriate in the circumstances and consistent with
internal projections. Significant assumptions utilized in the impairment
analysis performed during the second quarter of 2020 included the weighted
average cost of capital, ranging between 9.0% and 10.5%, and terminal growth
rate, ranging between 2.0% and 4.0% depending on the reporting unit.

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