ASHLAND INC. Commitments Disclosure
NOTE M – LITIGATION, CLAIMS AND CONTINGENCIES
Asbestos litigation
Ashland and Hercules have liabilities from claims alleging personal injury caused by exposure to asbestos. To assist in developing and annually updating independent reserve estimates for future asbestos claims and related costs, Ashland has retained third party actuarial experts Gnarus. The methodology used by Gnarus to project future asbestos costs is based largely on recent experience, including claim-filing and settlement rates, disease mix, open claims and litigation defense. The claim experience of Ashland and Hercules are separately compared to the results of previously conducted third party epidemiological studies estimating the number of people likely to develop asbestos-related diseases. Those studies were undertaken in connection with national analyses of the population expected to have been exposed to asbestos. Using that information, Gnarus estimates a range of the number of future claims that may be filed, as well as the related costs that may be incurred in resolving those claims. Changes in asbestos litigation reserves and receivables are recorded on an after-tax basis within the discontinued operations caption in the Statements of Consolidated Comprehensive Income (Loss).
Ashland asbestos-related litigation
The claims alleging personal injury caused by exposure to asbestos asserted against Ashland result primarily from indemnification obligations undertaken in 1990 in connection with the sale of Riley, a former subsidiary. The amount and timing of settlements and number of open claims can fluctuate from period to period. A summary of Ashland asbestos claims activity, excluding Hercules claims, is as follows for the years ended September 30:
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Open claims - beginning of year |
|
|
41 |
|
|
|
42 |
|
|
|
44 |
|
New claims filed |
|
|
2 |
|
|
|
2 |
|
|
|
2 |
|
Claims settled |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
Claims dismissed |
|
|
(3 |
) |
|
|
(2 |
) |
|
|
(3 |
) |
Open claims - end of year |
|
|
40 |
|
|
|
41 |
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|||
Ashland asbestos-related liability
From the range of estimates, Ashland records the amount it believes to be the best estimate of future payments for litigation defense and claim settlement costs. Ashland reviews this estimate and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate 40-year model developed with the assistance of Gnarus.
During the most recent update completed during 2025, it was determined that the liability for Ashland asbestos-related claims should be increased by $16 million. Total reserves for asbestos claims were $258 million at September 30, 2025 compared to $274 million at September 30, 2024.
A progression of activity in the asbestos litigation reserves for the years ended September 30, is as follows:
(In millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Asbestos reserve - beginning of year |
|
$ |
274 |
|
|
$ |
281 |
|
|
$ |
305 |
|
Reserve adjustment |
|
|
16 |
|
|
|
24 |
|
|
|
9 |
|
Amounts paid |
|
|
(32 |
) |
|
|
(31 |
) |
|
|
(33 |
) |
Asbestos reserve - end of year(a) |
|
$ |
258 |
|
|
$ |
274 |
|
|
$ |
281 |
|
|
|
|
|
|
|
|
|
|
|
|||
Ashland asbestos-related receivables
Ashland has insurance coverage for certain litigation defense and claim settlement costs incurred in connection with its asbestos claims, and coverage-in-place agreements exist with the insurance companies that provide substantially all of the coverage that will be accessed.
For the Ashland asbestos-related obligations, Ashland has estimated the value of probable insurance recoveries associated with its asbestos litigation reserves based on management’s interpretations and estimates surrounding the available or applicable insurance coverage, including an assumption that all solvent insurance carriers remain solvent. Substantially all of the estimated receivables from insurance companies are expected to be due from domestic insurers, all of which are solvent.
At September 30, 2025, Ashland’s receivable for recoveries of litigation defense and claim settlement costs from insurers amounted to $95 million (excluding the Hercules receivable for asbestos claims discussed below). Receivables from insurers amounted to $97 million at September 30, 2024. During 2025, the annual update of the model used for purposes of valuing the asbestos litigation reserves and its impact on valuation of future recoveries from insurers was completed. This model update resulted in a $5 million increase in the receivable for probable insurance recoveries.
A progression of activity in the Ashland insurance receivable for the years ended September 30, is as follows:
(In millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Insurance receivable - beginning of year |
|
$ |
97 |
|
|
$ |
95 |
|
|
$ |
101 |
|
Receivable adjustment(a) |
|
|
5 |
|
|
|
11 |
|
|
|
3 |
|
Amounts collected |
|
|
(7 |
) |
|
|
(9 |
) |
|
|
(9 |
) |
Insurance receivable - end of year(b) |
|
$ |
95 |
|
|
$ |
97 |
|
|
$ |
95 |
|
|
|
|
|
|
|
|
|
|
|
|||
Hercules asbestos-related litigation
Hercules has liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims typically arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products which were sold by one of Hercules’ former subsidiaries to a limited industrial market. The amount and timing of settlements and number of open claims can fluctuate from period to period. A summary of Hercules’ asbestos claims activity for the years ended September 30, is as follows:
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Open claims - beginning of year |
|
|
12 |
|
|
|
12 |
|
|
|
11 |
|
New claims filed |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Claims dismissed |
|
|
(2 |
) |
|
|
(1 |
) |
|
|
— |
|
Open claims - end of year |
|
|
11 |
|
|
|
12 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|||
Hercules asbestos-related liability
From the range of estimates, Ashland records the amount it believes to be the best estimate of future payments for litigation defense and claim settlement costs. Ashland reviews this estimate and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate 40-year model developed with the assistance of Gnarus. As a result of the most recent annual update of this estimate completed during 2025, it was determined that the liability for Hercules asbestos-related claims should be increased by $10 million. Total reserves for asbestos claims were $177 million at September 30, 2025 compared to $185 million at September 30, 2024.
A progression of activity in the asbestos litigation reserves for the years ended September 30, is as follows:
(In millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Asbestos reserve - beginning of year |
|
$ |
185 |
|
|
$ |
191 |
|
|
$ |
213 |
|
Reserve adjustments |
|
|
10 |
|
|
|
14 |
|
|
|
(2 |
) |
Amounts paid |
|
|
(18 |
) |
|
|
(20 |
) |
|
|
(20 |
) |
Asbestos reserve - end of year(a) |
|
$ |
177 |
|
|
$ |
185 |
|
|
$ |
191 |
|
|
|
|
|
|
|
|
|
|
|
|||
Hercules asbestos-related receivables
For the Hercules asbestos-related obligations, certain reimbursement obligations pursuant to coverage-in-place agreements with insurance carriers exist. As a result, any increases in the asbestos litigation reserves have been partially offset by probable insurance recoveries. Ashland has estimated the value of probable insurance recoveries associated with its asbestos litigation reserves based on management’s interpretations and estimates surrounding the available or applicable insurance coverage, including an assumption that all solvent insurance carriers remain solvent. The estimated receivable consists exclusively of solvent domestic insurers.
As of September 30, 2025 and 2024, the receivables from insurers amounted to $48 million and $50 million, respectively. During 2025, the annual update of the model used for purposes of valuing the asbestos litigation reserves and its impact on valuation of future recoveries from insurers was completed. This model update resulted in a $4 million increase in the receivable for probable insurance recoveries.
A progression of activity in the Hercules insurance receivable for the years ended September 30, is as follows:
(In millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Insurance receivable - beginning of year |
|
$ |
50 |
|
|
$ |
47 |
|
|
$ |
52 |
|
Receivable adjustment(a) |
|
|
4 |
|
|
|
6 |
|
|
|
(3 |
) |
Amounts collected |
|
|
(6 |
) |
|
|
(3 |
) |
|
|
(2 |
) |
Insurance receivable - end of year(b) |
|
$ |
48 |
|
|
$ |
50 |
|
|
$ |
47 |
|
|
|
|
|
|
|
|
|
|
|
|||
Asbestos litigation cost projection
Projecting future asbestos costs is subject to numerous variables that are difficult to predict. In addition to the uncertainties surrounding the number of claims that might be received, other variables include the type and severity of the disease alleged by each claimant and the related costs incurred in resolving those claims, mortality rates, dismissal rates, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case. Furthermore, any predictions with respect to these variables are subject to even greater uncertainty as the projection period lengthens. In light of these inherent uncertainties, Ashland believes that the asbestos litigation reserves for Ashland and Hercules represent the best estimate within a range of possible outcomes. As a part of the process to develop these estimates of future asbestos costs, a range of long-term cost models was developed. These models are based on national studies that predict the number of people likely to develop asbestos-related diseases and are heavily influenced by assumptions regarding long-term inflation rates for indemnity payments and legal defense costs, as well as other variables mentioned previously. Ashland has currently estimated in various models ranging from approximately 40 year periods that it is reasonably possible that total future litigation defense and claim settlement costs on an inflated and undiscounted basis could range as high as approximately $382 million for the Ashland asbestos-related litigation (current reserve of $258 million) and approximately $262 million for the Hercules asbestos-related litigation (current reserve of $177 million), depending on the combination of assumptions selected in the various models. While the timeframe used in Ashland's models for projecting asbestos liabilities generally decreases over time based on the expected lifetime of the liabilities, these models have been consistently applied within all periods presented. If actual experience is worse than projected, relative to the number of claims filed, the severity of alleged disease associated with those claims or costs incurred to resolve those claims, or actuarial refinement or improvements to the assumptions used within these models are initiated, Ashland may need to further increase the estimates of the costs associated with asbestos claims and these increases could be material over time.
Environmental remediation
Ashland is subject to various federal, state and local environmental laws and regulations that require environmental assessment or remediation efforts (collectively environmental remediation) at multiple locations. At September 30, 2025, such locations included 53 sites where Ashland has been identified as a potentially responsible party under Superfund or similar state laws, 107 current and former operating facilities and about 1,225 service station properties, of which 14 are being actively remediated.
Ashland’s reserves for and related environmental litigation amounted to $226 million at September 30, 2025 compared to $221 million at September 30, 2024, of which $179 million at September 30, 2025 and $164 million at September 30, 2024, were classified in other noncurrent liabilities on the Consolidated Balance Sheets. The remaining reserves were classified in accrued expenses and other liabilities on the Consolidated Balance Sheets.
The following table provides a reconciliation of the changes in the environmental remediation reserves the years ended September 30:
(In millions) |
|
2025 |
|
|
2024 |
|
||
Environmental remediation reserve - beginning of year |
|
$ |
221 |
|
|
$ |
214 |
|
Disbursements |
|
|
(46 |
) |
|
|
(49 |
) |
Revised obligation estimates and accretion |
|
|
51 |
|
|
|
56 |
|
Environmental remediation reserve - end of year |
|
$ |
226 |
|
|
$ |
221 |
|
|
|
|
|
|
|
|
||
The total reserves for environmental remediation reflect Ashland’s estimates of the most likely costs that will be incurred over an extended period to remediate identified conditions for which the costs are reasonably estimable, without regard to any third-party recoveries. Engineering studies, historical experience and other factors are used to identify and evaluate remediation alternatives and their related costs in determining the estimated reserves for environmental remediation. Ashland regularly adjusts its reserves as environmental remediation continues. Ashland
has estimated the value of its probable insurance recoveries associated with its environmental remediation reserves based on management’s interpretations and estimates surrounding the available or applicable insurance coverage. At September 30, 2025 and 2024, Ashland’s recorded receivable for these probable insurance recoveries was $14 million and $13 million, respectively, of which $12 million and $11 million was classified in other noncurrent assets on the Consolidated Balance Sheets.
During 2025, 2024 and 2023, Ashland recognized $50 million, $54 million and $56 million of expense, respectively, for certain environmental liabilities related to normal ongoing remediation cost estimate updates for sites, which is consistent with Ashland’s historical environmental accounting policy.
Components of environmental remediation expense included within the selling, general and administrative expense caption of the Statements of Consolidated Comprehensive Income (Loss) are presented in the following table for the years ended September 30:
(In millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Environmental expense |
|
$ |
50 |
|
|
$ |
54 |
|
|
$ |
56 |
|
Accretion |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Legal expense |
|
|
1 |
|
|
|
3 |
|
|
|
3 |
|
|
|
52 |
|
|
|
58 |
|
|
|
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Insurance receivable |
|
|
(4 |
) |
|
|
(2 |
) |
|
|
(1 |
) |
Total expense, net of receivable activity(a) |
|
$ |
48 |
|
|
$ |
56 |
|
|
$ |
59 |
|
|
|
|
|
|
|
|
|
|
|
|||
Environmental remediation reserves are subject to uncertainties that affect Ashland’s ability to estimate its share of the costs. Such uncertainties involve the nature and extent of contamination at each site and the extent of required cleanup efforts under existing environmental regulations. Although it is not possible to predict with certainty the ultimate costs of environmental remediation, Ashland currently estimates that the upper end of the reasonably possible range of future costs for identified sites could be as high as approximately $495 million. The largest reserve for any site is 21% of the total environmental remediation reserves as of September 30, 2025.
Brazil tax credits
In March 2017, the Federal Supreme Court of Brazil (Brazil Supreme Court) ruled in a leading case that a Brazilian value-added tax ("ICMS") should not be included in the base used to calculate a taxpayer’s federal contribution on total revenue known as PIS/COFINS ("2017 Decision"). As a result, two of Ashland’s Brazilian subsidiaries filed lawsuits challenging the inclusion of ICMS in Ashland’s calculation of PIS/COFINs, seeking recovery of excess taxes paid plus interest.
In response to the 2017 Decision, the Brazilian tax authority filed an appeal of the 2017 Decision seeking clarification of the amount of ICMS tax to exclude from the calculation of PIS/COFINS. In May 2021, the Brazil Supreme Court ruled that the ICMS tax be excluded from the calculation of PIS/COFINS. In May 2023, Law 14592/23 was passed in Brazil, converting the 2017 Decision provisional measure effective for PIS/COFINS legislation excluding ICMS from the calculation basis.
As of September 30, 2025, Ashland had received all favorable court rulings for previously filed suits, completed its analysis of certain prior year overpayments related to ICMS and received acknowledgment from the Brazilian tax authority that allows Ashland to begin the process to recover the taxes. As a result, Ashland recorded a pre-tax gain of $12 million during the year ended September 30, 2023 for certain excess PIS/COFINS paid from 2012 to February 2023 plus interest. The gain was recognized within the selling, general and administrative expense caption of the Statement of Consolidated Comprehensive Income (Loss). Ashland started utilizing these credits in December 2023. As of September 30, 2025, Ashland had remaining credits for a total of $7 million available for future use ($3 million within other current assets and $4 million within other noncurrent assets in the Consolidated Balance Sheets, respectively).
Other legal proceedings and claims
In addition to the matters described above, there are other various claims, lawsuits and administrative proceedings pending or threatened against Ashland and its current and former subsidiaries. Such actions are with respect to commercial matters, product liability, toxic tort liability, and other environmental matters, which seek remedies or damages, some of which are for substantial amounts. While Ashland cannot predict with certainty the outcome of such actions, it believes that adequate reserves have been recorded and losses already recognized with respect to such actions were immaterial as of September 30, 2025 and 2024. There is a reasonable possibility that a loss exceeding amounts already
recognized may be incurred related to these actions; however, Ashland believes that such potential losses were immaterial as of September 30, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 20, 2025 | Showing above |
| 2024 | Nov 18, 2024 | |
| 2023 | Nov 17, 2023 | |
| 2022 | Nov 21, 2022 | |
| 2021 | Nov 22, 2021 | |
| 2020 | Nov 23, 2020 | |
| 2019 | Nov 25, 2019 | |
| 2018 | Nov 19, 2018 | |
| 2017 | Nov 20, 2017 | |
| 2016 | Nov 21, 2016 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.