ASHLAND INC. Fair Value Disclosure
NOTE E – FAIR VALUE MEASUREMENTS
As required by U.S. GAAP, Ashland uses applicable guidance for defining fair value, the initial recording and periodic remeasurement of certain assets and liabilities measured at fair value and related disclosures for instruments measured at fair value. Fair value accounting guidance establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement. The three levels within the fair value hierarchy are described as follows.
Level 1 – Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3 – Unobservable inputs for the asset or liability for which there is little, if any, market activity at the measurement date. Unobservable inputs reflect Ashland’s own assumptions about what market participants would use to price the asset or liability. The inputs are developed based on the best information available in the circumstances, which might include Ashland’s own financial data such as internally developed pricing models, discounted cash flow methodologies, as well as instruments for which the fair value determination requires significant management judgment.
For assets that are measured using quoted prices in active markets (Level 1), the total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs. Assets and liabilities that are measured using significant other observable inputs (Level 2) are primarily valued by reference to quoted prices of similar assets or liabilities in active markets, adjusted for any terms specific to that asset or liability. For all other assets and liabilities for which unobservable inputs are used (Level 3), fair value is derived through the use of fair value models, such as a discounted cash flow model or other standard pricing models that Ashland deems reasonable.
The following table summarizes financial instruments subject to recurring fair value measurements as of September 30, 2025. For additional information on fair value hierarchy measurements of pension plan assets, see Note L.
(In millions) |
|
Carrying value |
|
|
Total fair value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
$ |
215 |
|
|
$ |
215 |
|
|
$ |
215 |
|
|
$ |
— |
|
|
$ |
— |
|
Restricted investments(a)(b) |
|
|
347 |
|
|
|
347 |
|
|
|
347 |
|
|
|
— |
|
|
|
— |
|
Investments of captive insurance company(c) |
|
|
5 |
|
|
|
5 |
|
|
|
5 |
|
|
|
— |
|
|
|
— |
|
(d) |
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Total assets at fair value |
|
$ |
568 |
|
|
$ |
568 |
|
|
$ |
567 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency derivatives(e) |
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
— |
|
) |
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Total liabilities at fair value |
|
$ |
2 |
|
|
$ |
2 |
|
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
The following table summarizes financial instruments subject to recurring fair value measurements as of September 30, 2024:
(In millions) |
|
Carrying value |
|
|
Total fair value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
$ |
300 |
|
|
$ |
300 |
|
|
$ |
300 |
|
|
$ |
— |
|
|
$ |
— |
|
Restricted investments(a)(b) |
|
|
368 |
|
|
|
368 |
|
|
|
368 |
|
|
|
— |
|
|
|
— |
|
Investments of captive insurance company(c) |
|
|
7 |
|
|
|
7 |
|
|
|
7 |
|
|
|
— |
|
|
|
— |
|
Foreign currency derivatives(d) |
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Total assets at fair value |
|
$ |
676 |
|
|
$ |
676 |
|
|
$ |
675 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency derivatives(e) |
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
— |
|
) |
|
|
2 |
|
|
|
2 |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
Total liabilities at fair value |
|
$ |
3 |
|
|
$ |
3 |
|
|
$ |
— |
|
|
$ |
3 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Restricted investments
As discussed in Note A, Ashland maintains certain investments in a company restricted renewable annual trusts for the purpose of paying future asbestos indemnity and defense costs and future environmental remediation and related litigation costs. The financial instruments are designated as investment securities, classified as Level 1 measurements within the fair value hierarchy. These investment securities were classified primarily as noncurrent restricted investment assets, with $50 million and $73 million classified within other current assets, in the Consolidated Balance Sheets at September 30, 2025 and 2024, respectively.
The following table presents gross unrealized gains and losses for the restricted investments as of:
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
||||
(In millions) |
|
Adjusted Cost |
|
|
Unrealized Gain |
|
|
Unrealized Loss |
|
|
Fair Value |
|
||||
September 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Demand deposit |
|
$ |
3 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3 |
|
Equity mutual fund |
|
|
103 |
|
|
|
67 |
|
|
|
— |
|
|
|
170 |
|
Fixed income mutual fund |
|
|
205 |
|
|
|
— |
|
|
|
(31 |
) |
|
|
174 |
|
Fair value |
|
$ |
311 |
|
|
$ |
67 |
|
|
$ |
(31 |
) |
|
$ |
347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
September 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Demand deposit |
|
$ |
5 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5 |
|
Equity mutual fund |
|
|
124 |
|
|
|
56 |
|
|
|
— |
|
|
|
180 |
|
Fixed income mutual fund |
|
|
211 |
|
|
|
— |
|
|
|
(28 |
) |
|
|
183 |
|
Fair value |
|
$ |
340 |
|
|
$ |
56 |
|
|
$ |
(28 |
) |
|
$ |
368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
The following table presents the investment income, net gains and losses realized, funds restricted for specific transactions, and disbursements related to restricted investments for the years ended September 30:
(In millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Investment income(a) |
|
$ |
13 |
|
|
$ |
15 |
|
|
$ |
13 |
|
Net gains(a) |
|
|
20 |
|
|
|
60 |
|
|
|
29 |
|
Funds restricted for specific transactions |
|
|
8 |
|
|
|
5 |
|
|
|
9 |
|
Disbursements |
|
|
(62 |
) |
|
|
(79 |
) |
|
|
(58 |
) |
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency derivatives
Ashland conducts business in a variety of foreign currencies. Accordingly, Ashland regularly uses foreign currency derivative instruments to manage exposure on certain transactions denominated in foreign currencies to curtail potential earnings volatility effects of certain assets and liabilities, including short-term intercompany loans denominated in currencies other than Ashland’s functional currency of an entity. These derivative contracts generally require exchange of one foreign currency for another at a fixed rate at a future date and generally have maturities of less than twelve months. All contracts are valued at fair value with net changes in fair value recorded within the selling, general and administrative expense caption of the Statements of Comprehensive Income (Loss). The impacts of these contracts were largely offset by gains and losses resulting from the impact of changes in exchange rates on transactions denominated in non-functional currencies.
The following table summarizes the gains and losses recognized within the Statements of Consolidated Comprehensive Income (Loss) for the years ended September 30:
(In millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Foreign currency derivative gains |
|
$ |
15 |
|
|
$ |
7 |
|
|
$ |
10 |
|
|
|
|
|
|
|
|
|
|
|
|||
The following table summarizes the fair values of the outstanding foreign currency derivatives included in accounts receivable, net and accrued expenses and other liabilities of the Consolidated Balance Sheets at September 30:
(In millions) |
|
2025 |
|
|
2024 |
|
||
Foreign currency derivative assets |
|
$ |
— |
|
|
$ |
1 |
|
Notional contract values |
|
|
44 |
|
|
|
125 |
|
|
|
|
|
|
|
|
||
Foreign currency derivative liabilities |
|
$ |
1 |
|
|
$ |
1 |
|
Notional contract values |
|
|
128 |
|
|
|
184 |
|
|
|
|
|
|
|
|
||
Commodity derivatives
To manage its exposure to the market price volatility of natural gas consumed by its U.S. plants during the manufacturing process, Ashland regularly enters into forward contracts that are designated as cash flow hedges. See Note A for more information.
The following table summarizes the gains and losses recognized within the cost of sales caption of the Statements of Consolidated Comprehensive Income (Loss) for the years ended September 30:
(In millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
|
$ |
(2 |
) |
|
$ |
(6 |
) |
|
$ |
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
The following table summarizes the fair values of the outstanding commodity derivatives included in accounts receivable, net and accrued expenses and other liabilities of the Consolidated Balance Sheets at September 30:
(In millions) |
|
2025 |
|
|
2024 |
|
||
Commodity derivative assets |
|
$ |
1 |
|
|
$ |
— |
|
Notional contract values |
|
|
6 |
|
|
|
3 |
|
|
|
|
|
|
|
|
||
Commodity derivative liabilities |
|
$ |
1 |
|
|
$ |
2 |
|
Notional contract values |
|
|
7 |
|
|
|
13 |
|
|
|
|
|
|
|
|
||
Other financial instruments
At September 30, 2025 and 2024, Ashland’s long-term debt (including the current portion and excluding debt issuance cost discounts) had carrying values of $1,394 million and $1,361 million, respectively, compared to a fair value of $1,366 million and $1,327 million, respectively. The fair values of long-term debt are based on quoted market prices (level 1 of the fair value hierarchy).
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 Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.