VIChallenge ASH DanielLawrence

2013 Value Investing Challenge Finalist
Long on AshLAnd (Ash:Us)

By Daniel Lawrence, Elmrox Investment Group
C H A L L E N G E
BROUGHT TO YOU BY FACTSET
2nd Annual Value Investing Challenge Winners
Travis Cocke
Southpaw Capital
Travis Cocke has over seven years of public market investment experience including one year as a portfolio manager with complete
investment discretion for a portion of the public equity portfolio of a family office. Prior to cofounding Southpaw Capital LLC, he was a
Portfolio Manager at Farney Management Corp., and Analyst at Ascendant Advisors LLC. Mr. Cocke joined Ascendant in 2009 as a generalist
research analyst. Mr. Cocke also interned at the Texas Teachers Retirement System, a $100 billion public pension fund, in the summer of 2008,
and interned at Omega Advisors, a $6+ billion long/short fund based in NYC. Mr. Cocke received a BBA in Finance from Texas A&M University.
daniel W. Lawrence
Elmrox Investment Group
Daniel W. Lawrence is Managing Partner and Founder of Elmrox Investment Group (EIG). EIG is an investment partnership focused on capital
preservation and superior risk-adjusted returns that looks for highly idiosyncratic, asymmetric opportunities using a concentrated approach
over a multi-year horizon. Prior to founding Elmrox Investment Group in 2013, Mr. Lawrence was a Managing Director and co-founder of
Talara Capital Management. Previously, Mr. Lawrence was a Senior Analyst at Citadel Investment Group. Mr. Lawrence began his career as an
investment banking analyst and equity derivatives analyst for Merrill Lynch & Co. Mr. Lawrence is also Founder and Principal Owner of Elmrox
Media LLC, a global content firm targeting 18 to 34 year olds. In addition, Mr. Lawrence has served on the Board of Directors of SUS since
2009. Mr. Lawrence earned a B.S. in Commerce from the McIntire School of Commerce at the University of Virginia. He has since been a guest
finance lecturer at the University and participates in UVa?s Galant Center for Entrepreneurship.
david swartz
Pacific West Land, LLC
David Swartz is a financial analyst at Pacific West Land, LLC. Founded in 1981, PWL is a Seattle-based real estate investment firm with more
than $100 million in assets under management. David Swartz assists PWL CEO Bruce Galloway with equity investments. David Swartz has
previously worked as an equity analyst and fund manager for three hedge funds. He has a B.A. in economics from U.C. Berkeley and an M.A. in
economics from Yale University.
C H A L L E N G E
www.ValueInvestingChallenge.com
LONG ON ASHLAND (ASH:US)
Contributer: Daniel Lawrence
Title: Founder/Managing Partner
Firm: Elmrox Investment Group
Firm Type: Hedge Fund
Location: New York, NY
Prior Employers: Citadel, Merrill Lynch.
Ticker: ASH:US
Recommendation: Long
Expected Timeframe: 6 Months to 1 Year
Country: United States
Situation: Value
Catalysts: M&A/Buyout Target, Spinoff
Market Cap: $6,670mm
Date of Recommendation: 8/01/2013
Recommendation Price: $87.44
Target Price: $120.00
C H A L L E N G E
www.ValueInvestingChallenge.com
AshlandInc
ElmroxInvestmentGroup
Withgoodchemistry,greatthings(shareholderreturns)happen
July2013
DanielW.Lawrence
2013ElmroxInvestmentGroupLLC.Allrightsreserved
Disclaimer
The analyses and conclusions of Elmrox Investment Group LLC (Elmrox) contained in this presentation are based on publicly available information. Elmrox
recognizes that there may be conMidential information in the possession of the companies discussed in the presentation that could lead these companies to disagree
withElmroxsconclusions.Thispresentationisforgeneralinformationalpurposesonly,isnotcompleteanddoesnotconstituteanagreement,offer,asolicitationofan
offer, or any advice or recommendation to enter into or conclude any transaction or conMirmation thereof (whether on the terms shown herein or otherwise). This
presentationshouldnotbeconstruedaslegal,tax,investment,Minancialorotheradvice.ItdoesnothaveregardtothespeciMicinvestmentobjective,Minancialsituation,
suitability,ortheparticularneedofanyspeciMicpersonwhomayreceivethispresentation,andshouldnotbetakenasadviceonthemeritsofanyinvestmentdecision.
TheviewsexpressedinthispresentationrepresenttheopinionsofElmrox,andarebasedonpubliclyavailableinformationwithrespecttoAshlandInc.(the"Issuer")
andtheothercompaniesreferredtoherein.CertainMinancialinformationanddatausedhereinhavebeenderivedorobtainedfromMilingsmadewiththeSecuritiesand
ExchangeCommission("SEC")orotherregulatoryauthoritiesandfromotherthirdpartyreports.
The analyses provided may include certain statements, estimates and projections prepared with respect to, among other things, the historical and anticipated
operatingperformanceofthecompanies,accesstocapitalmarketsandthevaluesofassetsandliabilities.Suchstatements,estimates,andprojectionsreMlectvarious
assumptionsbyElmroxconcerninganticipatedresultsthatareinherentlysubjecttosigniMicanteconomic,competitive,andotheruncertaintiesandcontingenciesand
havebeenincludedsolelyforillustrativepurposes.Norepresentations,expressorimplied,aremadeastotheaccuracyorcompletenessofsuchstatements,estimates
orprojectionsorwithrespecttoanyothermaterialsherein.Actualresultsmayvarymateriallyfromtheestimatesandprojectedresultscontainedherein.Accordingly,
nopartyshouldpurchaseorsellsecuritiesonthebasisoftheinformationcontainedinthispresentation.Elmroxexpresslydisclaimsliabilityonaccountofanypartys
relianceontheinformationcontainedhereinwithrespecttoanysuchpurchasesorsales.
Elmrox has not sought or obtained consent from any third party to use any statements or information indicated herein as having been obtained or derived from
statements made or published by third parties. Any such statements or information should not be viewed as indicating the support of such third party for the views
expressedherein.Elmroxdoesnotendorsethird-partyestimatesorresearchwhichareusedinthispresentationsolelyforillustrativepurposes.Nowarrantyismade
thatdataorinformation,whetherderivedorobtainedfromMilingsmadewiththeSECoranyotherregulatoryagencyorfromanythirdparty,areaccurate.
Elmroxherebydisclaimsanydutytoprovideanyupdatesorchangestotheanalysescontainedhere.
NeitherElmroxnoranyofitsafMiliatesshallberesponsibleorhaveanyliabilityforanymisinformationcontainedinanythirdparty,SECorotherregulatoryMilingor
thirdpartyreport.ThereisnoassuranceorguaranteewithrespecttothepricesatwhichanysecuritiesoftheIssuerwilltrade,andsuchsecuritiesmaynottradeat
pricesthatmaybeimpliedherein.Theestimates,projections,proformainformationandpotentialimpactoftheopportunitiesidentiMiedbyElmroxhereinarebasedon
assumptionsthatElmroxbelievestobereasonableasofthedateofthispresentation,buttherecanbenoassuranceorguaranteethatactualresultsorperformanceof
theIssuerwillnotdiffer,andsuchdifferencesmaybematerial.Thispresentationdoesnotrecommendthepurchaseorsaleofanysecurity.
Elmrox reserves the right to change any of its opinions expressed herein at any time as it deems appropriate. Elmrox disclaims any obligation to update the data,
informationoropinionscontainedinthispresentation.
2
!"#"$%"&'&()*+,-&./0&
Ashlanu
Specialty
Ingieuients
SS%
Watei
21%
Peifoimance
Nateiials
19%
valvoline
2S%
Situation 0veiview
!"##$%&'(#)*$+',-./01'234514567''''''' '''''''''''''''89#:$&'!9;+',1/3<%'''''=%&$#;#)>$'?9@"$+,5A/1<%'
./1%$2"314552&+36$1753864/5$&9/4:&;/<$/=/>6$4&?@1/2"&'&A646BC141
-! Nuch less cyclical than maiket peiceives; ~2u% of sales & shiinking
-! Naiket uoes not unueistanu the impact of uivestituies of lowei
maigin anu cyclical assets anu acquisition of highei giowth, high
maigin chemical ingieuients businesses
&
D"C&)"$"=/>/63C&57&(8"3</$<&.63E"41&./22B"FAB611&A5$1%8"3&
-! Sells into seculai giowth in EN peisonal caie maikets
-! EN sales uoubleu 2uu7 to 2u12 leveieu to China, Inuia, Biazil

;">%B63&G359"3&9/4:&H3"2/>46IB"&'&J/1/IB"&K%4B55E&
-! 0ne of stiongest eainings giowth piofiles in mateiials
-! Naiket incoiiectly values stock as commouity "olu Ashlanu" at 7x
EBITBA veisus the new specialty Ashlanu (comps 8x-12x)&

A5$1"$1%1&,5"1&L54&-11%8"&6&+%3$635%$2&64&M64"3&N&?@1/2"&
-! New management biought into coiiect piioi execution shoitfalls
-! Nanagement woulu eithei fix oi sell watei by YE2u1S&
O/<:BC&J6B%6IB"&J6B#5B/$"&P36$>:/1"&;/<$/=/>6$4BC&?$2"3#6B%"2&
-! Naiket implieu valuation is $u - 1bn veisus $4bn - $9bn potential
-! Potential spinoff anuoi NLP qualification to unlock value
.6$6<"8"$4&O61&Q5$<&O/1453C&57&+:5%<:47%B&A6@/46B&-BB5>64/5$&
-! Long histoiy of patiently anu thoughtfully changing poitfolio anu
ietuining excess cash flow to shaieholueis
+:"1/1& )%1/$"11&K#"3#/"9&
S
;6B"1&IC&A588"3>/6B&?$/4&
N.B.: Financials LTN as of Naich S1, 2u1S. Enteipiise value incluues $7S9mm asbestos ieseive anu
$211enviionmental contingency. Stock piice as of }uly 16, 2u1S. valuation multiples calculateu using
consensus sell siue estimates as of }uly 16, 2u1S. Fiee cash flow uefineu as : (EBITBA - capex - cash
inteiest - cash taxes - enviionmental payments - pension0PEB) (equity maiket capitalization).
-1:B6$2&R4:"&SA58@6$CTU&/1&6&Q"62"3&/$&GB5I6B&;@">/6B4C&A:"8/>6B1&&
-! Foui 0nique Assets: Specialty Ingieuients, Watei, Peifoimance
Chemicals, anu valvoline
-! LTN Revenues SS12u1S: $8.ubn
-! LTN EBITBA SS12u1S: $1.Sbn (16.2% LTN EBITBA Naigin)
-4436>4/#"&J6B%64/5$&.%B4/@B"1&RPV(&WXYZX[\(U&
-! 9x PE
-! 7x Ev EBITBA
-! 9% fiee cash flow yielu
-! Tiauing in-line with cyclical, lowei-maigin, commouity chemicals
Ashlanu
Specialty
Ingieuients
S4%
Watei
11%
Peifoimance
Nateiials
11%
valvoline
24%
()*+,-&&IC&A588"3>/6B&?$/4&
Souice: Company uata.
-1C88"43/>&!/1E&X&!"9632&9/4:&.6$C&M6C1&45&
M/$]&H54"$4/6B&!"4%3$&57&?@&45&[ZZ^&45&[WY^&
VariantPerception
4
Commoditychemicalsvaluation(5x7xEBITDA)doesnotreMlecttheCompanystransformationtoaspecialty
chemicalsbusiness(comps8x-12xEBITDA)
- OneofstrongestandmostpredictableearningsgrowthproMilesinmaterials
- Muchstrongerpricingpowerandmoresustainablemarginsthatmarketgivescreditfor
- Muchlesscyclicalthanmarketrealizes(~20%ofsales)
- ~80%ofEBITDAcomesfromcompetitiveadvantaged,specialtychemicalbusinesses
FreecashMlowgenerationpotentialandamountofcashthatcanbereturnedtoshareholdersisunderappreciated
ConsensusdoesnotassumeaturnaroundofWaterbusinessundernewmanagement;ifturnarounddoesnot
materialize,Waterwillbemonetizedwithcashproceedslikelyreturnedtoshareholders(2013/2014)
ConsensusincorrectlybelievesthatWaterbusinessisexposedtoNorthAmericannewsprintpaper
CurrentsharepriceascribeslittlevaluetouniqueandvaluableValvolineasset;Multipleoptionsforunlocking
signiMicantshareholdervalueincludingatax-freespinoffand/orMLPqualiMication(2014/2015)
ValvolineInstantOilChange(VIOC)storebaseishiddenassetwheresigniMicantincrementalvaluecanbecreated
withlittle(ifany)capex
Rawmaterialconcernsespeciallyaroundguarandoilareexaggeratedandmisunderstood
ConsensusdoesnotassumeanyrecoveryinEuropeinFYE2014andFYE2015despiteendmarketimprovements
CheapoptiononU.S.housingrecoverythroughPerformanceMaterialssegment(2013-2015)
Freeoptiononhigherinterestratesthroughpension
Privatemarketvaluationcreatesmarginofsafety
Misunderstoodassettransformationwithsigni=icantupsideandcatalysts.
Illustiative Potential Retuins
S
&
,59$1/2"&H354">4/5$&`&J63/6$4&H"3>"@4/5$&N&-1C88"43/>&!"4%3$&H35=/B"&
8u
1uu
12u
14u
16u
18u
2uu
22u
24u
26u
ASB Cuiient
Piice
ASB LB0 Stanualone Stanualone +
Pension Funueu
Status
ASB Solu to
Stiategic
ASB + valvoline
Spin
ASB + valvoline
Spin + Pension
Funueu Status
ASB + valvoline
NLP
ASB + valvoline
NLP + Pension
Funueu Status
a[[ZFa[b[&
a[[ZFa[cd&
a[eZFad\W&
a[\eFad[Y&
a[ZdFa[d[&
a[YdFa[WY&
a[YdFadZ\&
a[dcFaddb&
ac\_Wf&
^&?@1/2"&]&& &&&&&&&&&&&&&&&&dZ^&45&\d^&&&&&&&&dW^&45&[Z[^&&&&ee^&45&[db^&&&&bZ^&45&[eZ^&&&&&dW^&45&[[\^&&&&&ee^&45&[\Z^&&&eZ^&45&[fb^&&&&bf^&45&[WY^&
&
.6$C&@64:1&45&B5$<F4"38&1:63":5B2"3&#6B%"&>3"64/5$_&
H54"$4/6B&%@1/2"&57&%@&45&g[ZZ^&45&g[WY^&2"@"$2/$<&5$&3562&46E"$_&
N.B.: Revenue consistent with consensus estimates anu iecent tienus. Cases uo not assume that uiscietionaiy fiee cash flow (post-uiviuenu) useu to iepuichase stock.
N.B. Illustiative valuation ianges incluue uiviuenus of $u.S4 pei quaitei foi eight quaiteis except "ASB LB0" valuation.
6
&
A58@6$C&K#"3#/"9&
&
InvestmentMerits
7
StrongMarketPositionswithAttractiveandWideningMoats
- #1or#2positioninitsglobalcorechemistries
- Leadershippositionsinsuchhighmargin,lesscyclicalen-marketsaspharmaceuticalsandpersonalcare
- Pricingpowerandsustainablemargins
- ExtensiveIPknowledge
- SpecialIngredients:#1cellulosicethersproducerandgloballeaderinPVP
- Water:#1producerofspecialtypapermakingchemicals
- PerformanceMaterials:Globalleaderofunsaturatedpolyesterandvinylesterresins
- Valvoline:Secondlargestfranchisedquick-lubechainintheU.S.and#2inpassengercarmotoroil
Signi=icantValuePropositionforCustomers;FocusedGrowththroughinnovation
- Highlytailoredcustomersolutionswithbroadnewproductpipeline
- Performance-enhancingchemistriesacrossmorethan30differentindustries
- Technology-drivensalesprocessandapproachtomeeteachtheneedsofeachcustomer
- Broadapplicationexpertiseanddeepindustryknowledgeofbothproductsandtheirapplications
Signi=icantGlobalPresenceandFootprint
- 30manufacturinglocationsand20technologycenters
- HalfofsalesoutsidetheU.S.withsigniMicantemergingmarketmiddle-classexposure
- NearlyhalfofsalescomeoutsidetheU.S.andapproximately20%ofsalescomefromtherapidlygrowingAsia
PaciMicandLatinAmericaregions
ASHisapremierglobalspecialtychemical=irm
well-positionedforgrowthandmarginexpansion.
0veiview of Ashlanu
8
&
S)"&3">5<$/i"2&61&4:"&@3"8/"3&1@">/6B4C&/$<3"2/"$41&6$2&7538%B64/5$&
I%1/$"11&/$&4:"&953B2&9/4:&1435$<&<3594:&6$2&1%@"3/53&863</$1_T&
;6B"1&IC&A588"3>/6B&?$/4& ;6B"1&IC&G"5<36@:C&
&
-2j_&()*+,-&IC&A588"3>/6B&?$/4&
Ashlanu
Specialty
Ingieuients
SS%
Watei
21%
Peifoimance
Nateiials
19%
valvoline
2S%
Euiope
26%
Noith
Ameiica
SS%
Asia
Pacific
14%
Latin
Ameiica
0thei
7% Ashlanu
Specialty
Ingieuients
S4%
Watei
11%
Peifoimance
Nateiials
11%
valvoline
24%
N..B.: Quotations taken fiom Ashlanu Specialty Ingieuients Analyst Bay piesentation on Becembei 4, 2u12.
LV;(&+/>E"3&;C8I5B& +546B&(8@B5C""1&
+546B&(8@B5C""1&
RK%41/2"&L534:&-8"3/>6U&
k&57&A5%$43/"1&&
-1:B6$2&:61&;6B"1&
-;O& g[elZZZ& g\Z^& [ZZ`&
&
SM"&9/BB&6>:/"#"&4:/1&<56B&4:35%<:&3"B"$4B"11&75>%1&5$&/$$5#64/5$l&:"B@/$<&
5%3&>%1458"31&45&/8@35#"&4:"/3&7538%B64/5$1&6$C9:"3"&/$&4:"&953B2_T&
&
Q+.&YXY[X[Y&;6B"1]&ac&I/BB/5$& Q+.&YXY[X[Y&-2j_&()*+,-]&a[_Y&I/BB/5$&
WhyInvestinSpecialtyChemicals?
9
Long-termgrowth
Moreconsistent,predictableperformance
Strong,sustainablemargins
SigniMicanthurdlesfornewentrants
Technologydriven,difMiculttodisplace
Technology
SwitchingCosts
Intellectual
Property
HighBarriersto
Entry
Highlytailored
products
Customer-intimate
technologymodel
Pushforconstant
innovation
RequaliMicationperiods
costlyandtime
consuming
Productstypically
representsmall%of
customersMinal
product
Highnumberof
- Patents
- Tradesecrets
Largedegreeof
manufacturingknow-
how
SigniMicantamountof
backwardintegration
Stand-aloneplant
capitalis$40M+
Fullsupply-chain
replicationwouldcost
$billions
Ourfavoritechemicalassetsareingredientsbusinesses:designand
producehighlyformulated(andusuallypatented)mission-critical
ingredientsthatareasmall%oftheoverallcostofcustomersproduct.
1u
Tiansfoimation
&
-1:B6$2&436$17538"2&7358&6&>C>B/>6Bl&B59F863</$&>58852/4C&>:"8/>6B&
@B6C"3&45&6&B"62/$<&:/<:F863</$l&<B5I6B&1@">/6B4C&>:"8/>6B&I%1/$"11_&
dZZe]&Solu state
in Naiathon 0il
joint ventuie&
dZZf]&Bivesteu Paving
anu Constiuction
business
dZZc]&Acquiieu Beicules dZ[Z]&Announces sale of
Bistiibution business
dZ[[]&Acquiieu
Inteinational Specialty
Piouucts ("ISP")
()*+,-&
.63</$1]&
2uu6
Y_W^&
2uu8
\_Y^&
2u11
[d_f^&
2uu7
\_e^&
2uu9
W_Z^&
2u1u
W_b^&
LTN
(1)
[f_Y^&
(1) LTN as of Naich S1, 2u1S.
&
;"BB/$<&B59F863</$&,/143/I%4/5$&/$&L5#"8I"3&dZ[Z&753&aWYZ88&>61:&R[Z0&
()*+,-U&>3C146BB/i"2&6&436$1753864/5$&9"&:62&85$/453"2&753&86$C&C"631_&
;@">/6B4C&(63$/$<1&^]&
g[e^& gcZ^&
11
ISPAcquisition
In2011,ASHacquiredglobalspecialtychemical=irm,InternationalSpecialtyIngredients(ISP),for$3.2bn
- ManagementusedthecashproceedsfromsellingitslowmarginandcyclicalDistributionbusinessandhighly
attractivedebtMinancingtoacquirehighgrowthandhighmarginISP
- ISPwasacquiredfromtheestateofthelateMinancierSamHeyman.Heymanhadpreviouslyattemptedto
combineISPwithHerculesin2002(ASHpurchasedHerculesin2008)
HighQualityAssetThatFurtheredTransformationtoaLeadingSpecialtyChemicalFirm
- ManufacturedhighlyspecializedchemicalstomeetcustomersuniquespeciMications
- Productsrepresentasmallfractionofcustomersoverallcosts,andprovidehighfunctionality(mission-critical)
- Hadbroadtechnologyportfolioprotectedbypatents,tradesecretsandmanufacturingknow-how
- Highcapitalcoststoreplicatemanufacturingcapabilities(signiMicantbarrierstoentry)
- WithEBITDAmargins~24%inFYE2011,thetransactionwasimmediatelyaccretive
Signi=icantlyUpgradedExistingASHPortfolio
- Strengthenedpositionsinanumberofimportanthigh-growth,high-marginendmarketssuchas
pharmaceuticalsandpersonalcare(haircare,skincare,oralcare)
- BroadenedIPportfolioofwater-solublepolymersandglobalR&Dandapplicationscapability
- Hadstrongpipelineofnewproductstodrivegrowthofcombinedbusiness
- Deepenedrelationshipswithexistingcustomersandenhancedpenetrationofexistingmarkets
Signi=icantLong-TermCostandRevenueSynergies
- $300mmplussalessynergiesbyFYE2015fromcomplementaryproductofferingsinfamiliarASHsegments:
food&beverage,energy,pharma,skincare,oralcare,haircare
- Atleast$50mmincostreductions
Source:Companydata.
TransformationDrivingOutperformance
12
ThoughtfulcapitalallocationupgradedASHsportfoliotohigherquality
specialtyassetsandshouldleadtocreationoflong-termshareholdervalue.
MoreR&D,New
Productsand
Ef=icientOperations
ImprovedEnd
MarketExposure,
HigherRevenue
Growth
ImprovedCost
Ef=iciency,Asset
Utilization,Operating
Margins
ImprovedBalance
SheetandNew
Investment
Opportunities
HigherCashFlow,
IncreasedReturnson
InvestedCapital
Refreshed
AssetPortfolio
Growthand
MarginImprovement
TransformtoSpecialty
Chemicals
CompetitiveAdvantages&Moats
13
Sustainable&wideningmoatsfromproprietaryandpatentedIP.
#1or#2inpositioninits
global,corechemistries
Broadglobalfootprintthat
sellsintomorethan100
countries
30manufacturinglocations
20technologycenters
Activeprogramof
collaborationwithacademia
Afullcomplementoftesting
servicesforpersonalcare
productcompanies
LeadingEconomiesofScale
andMarketShare
HighSwitchingCosts
HighBarrierstoEntry
Extensiverelationshipswith
leadingconsumerproducts
andpharmaceuticalproviders
Uniquetechnologyportfolio
highlycustomizedtomeet
demandingcustomer
applications
RequaliMicationperiodscostly
andtimeconsuming
Mission-criticalproductsthat
typicallyrepresentasmall%
ofoverallcostofacustomers
Minalproduct
Highcapitalcoststoreplicate
manufacturingcapabilities
Stand-aloneplantcapitalis
over$40+million
Fullsupply-chainreplication
wouldcostbillions
Highnumberofactivepatents
andtradesecrets
Approximately400scientists
positionedglobally
14
value Pioposition
;4677&57&eZZ&"8@B5C""1&
-! 0vei 1uu PhB's
-! ulobal piesence
!"1"63>:&G56B1&
-! Suppoit business stiategies
-! Builu maintain competitive
auvantage (innovate)
!5%<:BC&WZZ&->4/#"&H64"$41&
-! Coveis wiue iange of enuumaikets
anu applicants
-! uianteu 71 new patents in 2u12
L"9&H352%>41&
-! ~7S% uevelopeu woiking uiiectly
with customeis
-! ~Su% Ashlanu geneiateu
&
H64"$4"2&*H&>5%@B"2&9/4:&2""@&4">:$/>6B&6$2&!',&"0@"34/1"&753&>%1458"31_&
Analytical
Chemistiy
Nateiial
Science
Nanufactuiing
Excellence
Applications
Expeitise
Foimulation
Consumei
Science
Synthetic
Chemistiy
P%BB&36$<"&57&>6@6I/B/4/"1&
45&6223"11&>%1458"3&$""21&
value Pioposition (cont'u)
1S
&
)"14F/$F>B611&4">:$/>6B&1"3#/>"&`&M53B29/2"&!',&>6@6I/B/4/"1&N&&
O/<:&#6B%"&@35@51/4/5$&753&>%1458"31 &&
&
GB5I6B&$"4953E&57&953B2F>B611&1>/"$4/141l&[Z&A"$4"31&57&(0>"BB"$>"_&
Long-Teim Focus on Innovation
16

&
!5I%14&*$$5#64/5$&H/@"B/$"&
&
Well-PositionedProductPortfolio
17
Bene=iciaryoflong-term,globalseculargrowthtrends,
whereAshlandschemicalsaremission-criticalingredients.
Pharmaceuticals
Source:Companydata.
PersonalCare
Emerging
MiddleClass
Energy
Agingpopulation
Globalaccesstohealth
care
Controlledrelease
forms(medication)
Rapidgrowthof
genericsleadingto
lowerpriceand
increasedavailability
PharmaceuticalR&D
centerslocated
worldwide
Globalfocusonanti-
aging
Increasedglobal
consumerawareness
ofUVprotection/
suncare
Malegrooming,
particularlyinyoung
men
Desireforsimple,
natural/green
products
Consumerspending
inMluencedbyglobal
middleclass
Improvedproduct
performance
Manufacturingcost
efMiciency
Environmental/
Regulation
Horizontaland
deepwaterwells
require2xthe
specialtychemicalsper
rig
Depressednaturalgas
inNorthAmericaand
shiftfromdrygasto
moreliquid-richwells
Unconventionalwells,
includingshalegasin
NorthAmerica
Environmental/
Regulatory
StrongBalanceSheet&Liquidity
18
Amplecash&
liquidity
Lowcostofdebt
Verymanageable
maturityschedule
Flexibilitytomake
opportunisticand
accretive,bolt-on
acquisitions
2.0xgrossdebt
long-termtarget
Improvingcash=lowshouldleadtorapidde-leveringthroughFYE2015.
Source:Companydata.
Predictable&GrowingFreeCashFlow
19
FYE2013andFYE2014growthcapexof~$220mmwith80%allocatedtoSpecialty
Ingredients,givencapacityconstraints
Maintenancecapex~$200mmto$220mmperyear
Taxrateshouldfalltomid20sbyFYE2014fromhigh20soverthelastfewyears
ConsensusdoesnotunderstandthesigniMicantdeclineinpensioncashcommitments
inFYE9/30/2014andFYE9/30/2014
Basedonourdiligence,ASHshouldgeneratebetween~$1.2bnto$1.4bnincumulative
freecashMlow
(1)
throughFYE9/30/2015orapproximately~$15to$17pershare
Cash=lowgenerationtemporarilydepressedbygrowthcapex,higher
coupondebt,andhigherthanlikelycorporatetaxrate.
(1)FreecashMlowdeMinedas:(EBITDAcapexcashinterestcashtaxesenvironmentalpaymentspension/OPEB)/(equitymarketcapitalization).
CapitalAllocation&CashManagement
20
Managementhaslonghistoryofthoughtfulcapital
allocationtocreateshareholdervalue.
Allocationofcashtohighest-returnopportunities
ConcentratedgrowthinSpecialtyIngredients
- Numerousorganicgrowthopportunities(greenMield&brownMield)
- Furtherexpandshort-andlong-termR&Dpipeline
- Selectivebolt-onM&Aopportunities
Continuetotightlymanageandimproveworkingcapital
Returnexcesscashviasharerepurchasesanddividendincreases
Continuedtoselectiveportfolioassetsales(likelytheremainingnon-specialtyormore
cyclicalpieces)
Wehavetakenadisciplinedapproachtomanagingcash.Wehaveuseditto
makestrategicacquisitions,toinvestinorganicgrowth,andtoreturncapitalto
ourshareholders.Wewillcontinuetolookforwaystounlockvalueand
generatesigni=icantreturnsforAshlandshareholders.
(1)
(1)CEOJimOBrien,May15.2013.
21
&
;@">/6B4C&*$<3"2/"$41&
&
ASB Specialty Ingieuients ("ASI")
22

&
;@">/6B4C&/$<3"2/"$41&/1&6&%$/n%"&6$2&14364"</>6BBC&/8@5346$4&611"4_&&
&
Leauing manufactuiei of chemical ingieuients to consumei anu phaimaceutical maikets
Bas moie than 7,Suu customeis in ovei 1uu countiies foi which it piouuces moie than Suu unique
piouucts in 2u,uuu sepaiate stock-keeping units (SK0s)
EBITBA maigins aie among the highest in specialty chemicals at ~22% plus
Noie than 4uu active patents anu appioximately 27S scientists positioneu globally
uieatei than 6u% of sales aie fiom inteinational maikets
uiows 2x to Sx global uBP oi 6% to 8% oiganic giowth iate
Specialty
Peifoimance
2S%
Inuustiial
2S%
Coatings
1S%
Peisonal
Caie
21%
Phaima
Nutiition
18%
Solvents
Inteimeuiates
2u%
Cellulosics
SS%
Biociues
4%
uuai
14%
vinyl Etheis
S%
Actives
S%
PvP
17%
Euiope
S7%
Noith
Ameiica
S7%
Asia
Pacific
17%
Latin
Ameiica
0thei
9%
;6B"1&IC&.63E"4& ;6B"1&IC&H352%>4& ;6B"1&IC&G"5<36@:C&
Q+.&YXY[X[Y&;6B"1& Q+.&YXY[X[Y&-2j%14"2&()*+,-& Q+.&YXY[X[Y&()*+,-&.63</$&
$2.8 billion $689 million 24.S%
Enu Naikets & Applications
2S

&
-;*&:61&e&<3594:&@/BB631_&
&
H:6386&X&
L%43/4/5$&
&
H"315$6B&A63"&
&
&
A564/$<1&
&
&
*$2%143/6B&
&
H:6386>"%4/>6B&
-! Tablets
-! Capsules
L%43/4/5$&
-! Foou - textuiant
-! Custom foou
blenus
-! Beveiage,
claiification anu
stabilization
&
H"375386$>"&
&
;E/$&A63"&
-! Skin lotions
-! Anti-aging piouucts
-! Bouy washes
-! Suncaie
O6/3&A63"&
-! Shampoos
-! Conuitioneis
-! Nousses gels
-! Baiispiay
K36B&A63"&
-! Toothpaste
mouthwash
-! Bentuie auhesives
-! Beteigents anu
cleaning piouucts
A564/$<1&
-! Watei baseu
aichitectuial
paints
(8%B1/5$&
H5BC8"3/i64/5$&
-! Paints
-! Auhesives
($"3<C&
-! Biilling
-! Cementing
-! Stimulation
-! Piouuction
A5$143%>4/5$&
-! Biy moitai
-! uypsum
-! }oint compounu
;@">/6B4/"1&
-! Civil engineeiing
-! Inks anu piinting
-! Ceiamics
-! Agiicultuie
-! Batteiies
*$2%143/6B1&
-! Inteimeuiaiies
-BB&K4:"3&
-! Specialty solvents
ASI Biiveis
24
[6_&H:6386>"%4/>6B&
&
GB5I6B&B"62"3&/$&"0>/@/"$41&R>:"8/>6B1&4:64&"$:6$>"&53&:"B@&6&
23%<m1&@"375386$>"U&
.5641&
-! Bigh baiiieis to entiy because of scientific knowleuge
iequiieu anu FBA appioval piocess
-! Bigh switching costs uue to customizeu foimulations; phaima
company assumes significant bianu anu iecall iisk
-! Bas inuustiy-leauing, most uiveise poitfolio
;">%B63&,3/#"31]&&
-! Aging global population (iising hypeitension, uiabetes,
obesity)
-! ulobal access to healthcaie
-! Rapiu giowth of geneiics
-! Noie convenient foims of uosage
-! Regulatoiy iequiiements
G3594:&K@@534%$/4/"1]&
-! uiowth of geneiics
-! Natuial coatings
-! Impioveu uiug solubilization
Binuing Bisintegiation Coating Time Release
&aYW[_Z&&
&a\[f_Z&&
&a\Ye_Z&&
&a\cW_Z&&
&aedf_Z&&
$-
$1uu.u
$2uu.u
$Suu.u
$4uu.u
$Suu.u
$6uu.u
2uu8 2uu9 2u1u 2u11 2u12
!"#$%&'(&
Phaimaceuticals
67%
Foou & Beveiage
SS%
PV(&WXYZXdZ[d&;6B"1]&aedf.&
;6B"1&Ra&/$&8/BB/5$1U&
ASIDrivers(contd)
25
1b.Nutrition
Providerofnaturalandsyntheticadditives
- Makefoodsmoreviscous(thickeningagent)forbaked,
diaryandpreparedfoods
- Enhancesfoodtexture
- Addsstability
- Increasesproductshelflife
- Improvespackagingclarities
SecularDrivers:
- Increasingcustomerdemandsformoreconvenience
- Healthandwellness
- Morenaturalingredients
GrowthOpportunities:
- Beveragesandbakery
- Naturalproducts
Viscosity
Stability
ShelfLife
ClariMication
ASI Biiveis (cont'u)
26

d_&H"315$6B&A63"&
&
&
H"315$6B&A63"&
&
;E/$&A63"&
-22/4/#"1&
O6/3&A63"&
-22/4/#"1&
K36B&A63"&
-22/4/#"1p&
O58"&A63"&
-22/4/#"1&
Skin Caie
S8%
Baii Caie
S1%
0ial Caie
2S% 0thei
6%
Emulsifieis
27%
Pieseivatives
1u%
0thei
9%
Actives
SS%
Actives - 0v
19%
Fixatives
S2%
Conuitioning
Agents
44%
Rheology
Nouifieis
24%
PV(&WXYZXdZ[d&;6B"1]&aeWf.&
Bloauhesive
S6%
Rheology
Nouifieis
44%
.63E"4&
-! $SB to $6B global taiget
maiket focuseu on skin, haii
anu oial caie
-! uiowing 4% to S% pei yeai
-! Leauei in fixatives, iheology
mouifieis anu uental
auhesives
.63E"4&,3/#"31&
-! Population giowth anu
global emeigence of miuule
class
-! Tailoieu innovation anu
new piouucts
-! ulobal awaieness of neeu
foi complete 0v piotection
.63E"4&
-! $2.4B taigeteu maiket
-! uiowing S% to 6% pei yeai
.63E"4&,3/#"31&
-! Incieasing global focus on
anti-aging
-! Bemanu foi 0v Piotection
sun-caie
-! uiowing male uemogiaphic
foi giooming piouucts
-! Besiie foi natuial gieen
.63E"4&
-! $1.S billion haii-caie maiket
-! uiowing at S% to 4% pei yeai
.63E"4&,3/#"31&
-! Consumeis want taiget
solutions foi haii iepaii
anu uamage pievention
-! Incieaseu neeu foi moie
sophisticateu piouucts like
textuiizing
-! Laige shift towaius male
giooming
-! Tienu towaius moie
natuial ingieuients
.63E"4&
-! uiowing at S% to 4% pei yeai
.63E"4&,3/#"31&
-! Bioau-baseu, moie holistic
appioach to oial caie
-! Nulti-benefit piouucts
continue to gain shaie (i.e.,
Taitai-contiol, gingivitis,
sensitivity)
-! Consumei view of "beauty"
incieasingly associateu with
white teeth
-! Emeiging miuule class moie
financially capable of
uentuies anu othei piouucts
.63E"4&
-! $1.7B available maiket
-! uiowing S% pei yeai
-! Laigest segment is launuiy
.63E"4&,3/#"31&
-! Emeiging iegions, global
emeigence of miuule class
-! Niche piouucts
miciobianuing
-! Eneigy anu watei
conseivation
Bye Tiansfei
Inhibition
Suiface Cleaning Rheology Contiol
Soil Release
Removal
Suifactants
Bispeisants
19%
Foam Contiol
14%
Biociues
1S%
0thei
8%
Rheology
Nouifieis
46%
Watei-Baseu
Aichitectuial
98%
0thei
2%
27
Y_&A564/$<1&
&
&adWc_Z&& &aYZZ_Z&&
&aYYf_Z&&
&aYcZ_Z&& &aYbW_Z&&
$-
$1uu.u
$2uu.u
$Suu.u
$4uu.u
2uu8 2uu9 2u1u 2u11 2u12
!"#$%&)(&
;6B"1&Ra&/$&8/BB/5$1U&
.63E"4&
-! $2.6B auuitives maiket size
-! Watei-baseu paints giowing ~S% pei yeai
"! Piimaiily sell into aichitectuial paints foi both inteiioi
anu exteiioi applications
-! Roughly half of the maiket is iheology mouifieis
"! Contiol flow piopeities of liquius
-! Typical iheology mouifications
"! Flow anu leveling (even coat)
"! Sag iesistance (no uiip)
"! Coloi stability
"! Spattei iesistance
.63E"4&,3/#"31&
-! uiowth in emeiging global miuule class
-! Nanufactuiing cost efficiency
-! ulobal iegulation to ieuuce levels of oiganic solvents
PV(&WXYZXdZ[d&;6B"1]&aYbW.&
Spattei-
Resistance
Flow anu
Leveling
Low v0C Pieseivative
-22/4/#"1&.63E"4]&ad_f)&
N.B.: Company fiscal yeai enus Septembei Su
th
.
28
\_&*$2%143/6B&
p&
&
*$2%143/6B&
&
Eneigy
64%
Constiuction
S6%
)%1/$"11&1"<8"$4&/$>B%2"1]&
-! Eneigy
-! Constiuction
($"3<C&
-! Specialty auuitives into all stages
of upstieam opeiation
A5$143%>4/5$&
-! Piimaiily focuseu on auuitives foi
uiy moitais anu cements
PV(&WXYZXdZ[d&;6B"1]&afeZ&8/BB/5$&
&
($"3<C&
&
Stimulation
4u%
Piouuction
S7%
Biilling
12%
Cementing
11%
.63E"4&
-! $S.8B maiket
-! uiowing 1u%+ pei yeai
.63E"4&,3/#"31&
-! Biilling activity, stimulation
anu fiactuiing
-! Beepei, hoiizontal wells anu
shift fiom gas to ciuue
-! Push to minimize
enviionment impact
-#6/B6IB"&.63E"4]&ae_c)&
&
A5$143%>4/5$&
&
.63E"4&
-! $2B maiket
-! uiowing 4% to S% pei yeai
.63E"4&,3/#"31&
-! Economic iecoveiy anu
giowth in emeiging iegions
-! Extenu into associateu
maikets with ieuispeisible
poweis
Watei Retention Eneigy Savings
29
)%1/$"11&;"<8"$41&
-! Inteimeuiates anu solvents
"! Butaneuiol (BB0)
"! N-methyl 2-pyiioliuone (NNP)
"! Tetiahyuiofuian (TBF)
-! Specialties
"! Incubatoi business appioach
"! Wiue iange of specialty technologies anu maikets
.63E"4&
-! Bioau, uiveise maiket
-! uiowing 2% to 4% pei yeai
-! uiowth aieas incluue agiicultuie anu lithium batteiies
.63E"4&,3/#"31&
-! ulobal uemanu foi BB0 anu othei specialty solvents
-! Alteinative eneigy souices (batteiies)
-! Bemanu foi high ciop yielus (agiicultuie)
-! uiowth in aujacent maikets
Binuei foi Lithium-ion Inciease Efficacy
Solvents foi Ink Electionic Solvents
e_&H"375386$>"&
&
Inteimeuiates
& Solvents
7u%
Specialties
Su%
PV(&WXYZXdZ[d&;6B"1]&abdb.&
30
&
M64"3&
&
0veiview of Watei
S1
&
A5$1"$1%1&25"1&$54&611%8"&$"9&86$6<"8"$4&>6$&4%3$635%$2&I%1/$"11_&
&
Leauing global pioviuei of specialty chemicals anu seivices to watei-intensive inuustiies
#1 global position in $6bn pulp & papei chemicals maiket leveieu to seculai giowth of EN consumei
ulobal platfoim foi specialty chemicals in $2Sbn global inuustiials maiket
Watei has become a top S global playei
(1)
by size ovei the last Su yeais, but has seemingly been an unuei-manageu
asset anu has not ieceiveu significant capital allocations
Consensus also uoes not appieciate the consoliuation oppoitunity in this global maiket given the fiagmenteu
natuie of the inuustiy anu incoiiectly believes that Watei has Noith Ameiican newspiint exposuie (it has none)
Inuustiial
S2%
Papei
S8%
Nunicipal
1u%
Functional
4S%
0tility
27%
Piocess
28%
Euiope
SS%
Noith
Ameiica
4S%
Asia
Pacific
11%
Latin
Ameiica
0thei
9%
;6B"1&IC&.63E"4& ;6B"1&IC&H352%>4& ;6B"1&IC&G"5<36@:C&
$1.7 billion $14S million 8.4%
(1) Ashlanu Watei's piimaiy two global competitois aie uE Watei anu Nalco (Ecolab) baseu on oui uiligence.
Bistoiy of Watei
S2
&
-;O&I%/B4&5$"&57&45@&Y&<B5I6B&@B6C"31&/$&964"3&>:"8/>6B1&5#"3&B614&YZ&C"631_&
&
[Wc[] Ashlanu acquiies Biew
Chemical, a manufactuiei of watei
tieatment chemicals
dZZZ] Acquiieu 0TENE: inuustiial
watei tieatment, cooling, boilei,
wastewatei anu chemicals in Euiope
dZZf]&Paiu $144mm foi Begussa Au's
watei tieatment business, which
incluueu five locateu in ueimany,
China, Biazil, Russia anu the 0niteu
States iepiesenting ~$2Summ sales;
enteis municipal watei tieatment
dZZc]&Acquiies Beicules foi $S.Sbn; maiket leauei in
specialty auuitives anu ingieuients that mouify physical
piopeities of watei-baseu systems & leauing supplieis
of specialty chemicals foi pulp anu papei
dZZW&45&dZ[[]
Successfully integiateu of
Beicules anu Ashlanu
watei businesses, which
ueliveieu $12umm in cost
savings (vs initial
estimate of $Summ).
Nanagement
stanuaiuizeu piicing
policies anu pioceuuies
dZ[[&45&dZ[d: Post Beicules Integiation:
0lu management faileu to giow ievenues uue to inauequate
piicing tools anu pooi execution
Inuustiial piece was pioblem aiea (~SS% of Watei sales) as
Su&A too laige ielative to ievenue base
Not a stiuctuial issue because theie aie significant giowth
oppoitunities in this maiket in EN consumei iegions; ASB
Watei alieauy has #1 position in giowing global categoiy of
tissue anu towel packaging maikets
K>45I"3&dZ[d]
}ohn Panichella,
C00 assumes
inteiim
iesponsibility foi
Watei anu begins
seaich foi new
heau of Watei
WaterTurnaroundInitiative
33
Newmanagementbroughtinto=ixbusiness.
1. Consolidatedbusinessintotwosegments:
reducesmanagementcomplexity
Alignsbusinessbycustomerand
marketopportunity
$20mmfull-yearrun-rateSG&A
fromoverheardreduction
2. Bringingintherightteam:
Newtalentformarketingand
geographicexpansion
Realignedsalesforcetobetter
addresscustomerneeds
3. ImproveExecution:
Atcustomerlevel
Acceleratenewproductpenetration
Innovation
Richpipelineofinnovationplatformswitha
numberofproductsinlaunchphase:
BioguardPackaging
OptiMilmPrinting&Writing
MicrobialControlWaterTech
Monitoring&Diagnosis-Industrial
StrongR&DPortfolio
ImprovingaRepeatableProcess
Multiregionalmarketing
Sellingprocess
Pricingmanagement
Contractadministration
Channelmanagement
Corporatecustomerfocus
Salesandoperationsplanning
Signi=icantStrategicActionsin2013
HiredLuisFernandez-MorenoasnewPresidentof
Waterinlate2012.Hehas30yearsofrelevant
industryexperience(Arch,Dow,Rohm&Haas)
PotentialUpsideatWater
34
Potentialvaluecreationfromrecentactionstaken.
Newmanagementstabilizedsalesin
1H2013andidentiMiedsigniMicant
operationalrestructuringopportunities
Industrialmiddlemanagementstructure
beingstreamlinedor~$20mmpermanent
run-ratesavings;(PFLTMEBITDA
$163mm)
PotentialforEBITDAmarginstoreachmid
teensoverlong-termfrom8.4%LTM
3/31/13throughnewmarketpenetration,
increasingsalesofexistingcustomersand
operatingleverage
Peer-likegrossmarginswouldcreate$5to
$13pershareofincrementalvalue
(1)
Sensitivity)Analyses
EBITDA)Margin
Sales Gross)Margin
33% 34% 35% 36% 37%
$1,700 9% 10% 11% 12% 13%
$1,750 9% 10% 11% 12% 13%
$1,800 10% 11% 12% 13% 14%
$1,850 11% 12% 13% 14% 15%
$1,900 11% 12% 13% 14% 15%
Incremental)EBITDA
Sales Gross)Margin
33% 34% 35% 36% 37%
$1,700 $6 $23 $40 $57 $74
$1,750 $22 $40 $57 $75 $92
$1,800 $39 $57 $75 $93 $111
$1,850 $55 $74 $92 $111 $129
$1,900 $72 $91 $110 $129 $148
Value)Per)Share)(7x)EBITDA)
Sales Gross)Margin
33% 34% 35% 36% 37%
$1,700 $0.49 $1.97 $3.45 $4.93 $6.41
$1,750 $1.93 $3.45 $4.97 $6.50 $8.02
$1,800 $3.36 $4.93 $6.50 $8.06 $9.63
$1,850 $4.80 $6.41 $8.02 $9.63 $11.24
$1,900 $6.23 $7.89 $9.54 $11.20 $12.85
(1) Nalco,nowownedbyEcolab,had~40%grossmarginwhenitwasanindependentcompany.
N.B.:AshlandWaterLTM3/31/13grossmarginwas33%.
IfWaterisNotFixed,aSaleisLikely
35
IfWaterisNotFixed,aSaleisLikely
HowmuchcouldWatersellfor?
Newleadershipbythesummer,weshouldbeabletotellifthisismakingadifferenceornot.Ifit'snotmakingadifferencethen,
obviously,thatlimitsouralternativesinwhatwecando,andwe'llstarttotakeahardlookofwhattheoutcomewillbe.-CEOJim
OBrien,Q42012EarningsCall,October30,2012
GivenWatersscale,breadthofproducts,andIPknowledgetherewouldlikelybeanumberofinterestedstrategicand
Minancialbuyers.Waterassetishighlyattractiveplatformforconsolidatingafragmentedglobalindustry.
ItisunlikelythatAshlandwouldsellWaterforlessthanASHsconsolidatedmultipleof7xFYE2014EEBITDA.
(1)
Giventhe
turnaroundunderway,thesigniMicantbreadthandscaleoftheplatformforindustryconsolidation,potentialsynergies/cost
savings,webelieveWatercouldsellfor8xto12xPFLTM3/31/2013EBITDAof$163mm
PotentialStrategicBuyers:Permira,BASF,SNF,Danaher(GEandEcolablesslikelygivenpotentialDOJissuesandGEcapital
allocationprioritiestowardsotherindustries)
FinancialSponsors:Likelystronginterestfromprivateequitygiven:(i)theplatformforconsolidationitrepresents;(ii)the
operationalturnaroundopportunities;and(iii)globalseculargrowthtrends.Givencurrentstrengthinbankloanandhigh
yieldmarkets,wethinkaprivateequityMirmcouldpurchaseWaterwithupto4.0xto6.0xtotalleverage
Sensitivity)Analysis
Water
EBITDA EBITDA)Multiple
8.0x 9.0x 10.0x 11.0x 12.0x
$143 $1,144 $1,287 $1,430 $1,573 $1,716
$153 $1,224 $1,377 $1,530 $1,683 $1,836
$163 $1,304 $1,467 $1,630 $1,793 $1,956
$173 $1,384 $1,557 $1,730 $1,903 $2,076
$183 $1,464 $1,647 $1,830 $2,013 $2,196
Water&Potential&Valuation
Low High
LTM*3/31/13*PF*EBITDA $163 $163
EBITDA*Multiple 8.0x 12.0x
Implied&Water&Gross&Value $1,304 $1,956
Ashland*Shares 79 79
Water&Gross&Value&per&Share $17 $25
%*of*current*ASH*price 20% 29%
Source:BasedoffconsensusestimatesasofJuly16,2013.
36
&
H"375386$>"&A:"8/>6B1&
&
0veiview of Peifoimance Chemicals
S7
&
;/<$/=/>6$4&5@"364/$<&B"#"36<"&45&?_;_&:5%1/$<&6$2&6%45&3">5#"3/"1_&
_&
Naiine
1u%
Pkg. &
Conveiting
1S%
Constiuction:
Resiuential
1S%
Constiuction:
Inuustiial
29%
Constiuction:
Infiastiuctuie
S%
Tianspoitation
26%
Noith Ameiica
67%
Euiope
19%
Asia Pacific
9%
Latin
Ameiica
0thei
S%
Elastomeis
2S%
Auhesives
21%
Composites
S6%
;6B"1&IC&.63E"4& ;6B"1&IC&H352%>4& ;6B"1&IC&G"5<36@:C&
0.S. housing staits & 0.S. Auto SAAR alieauy above management's FYE 9Su14 guiuance
(1)
Bemanu highly coiielateu to:
-! Inuustiial Piouuction
-! Bousing Staits
-! Light vehicle Builus
Likely eventual sale of this business when 0.S. housing iecoveiy matuies
$1.S billion $141 million 9.S%
(1) Ashlanu Analyst Bay Novembei 1S, 2u11.
Verylargegrowingmarket
Aboveaveragegrossmargins
Relativelynon-cyclical
Estimated$1.5bnopportunity
Globalenergydemandsdriveone
newcoal-Miredpowerplantperweek
- Increasinglystringentlegislation
demandsreducedemissions
Estimated$100mmopportunity
Moreenvironmentallyfriendly
adhesives
- Maintainingsamelevelof
performanceassolvent-based
chemistries
Highlycorrosivepollutiongasesare
notsuitedfortraditionalmetals
Custom-formulatedproducts
Newtechnologiesincludingwater-
basedandradiation-curable
products
Leadingproviderofcorrosion
resistantresinsolutions
(Derakane
TM
)
Well-known,reliableperformance
- 20+yearhistoryintheMield
PerformanceChemicalsDrivers
38
Keylong-termgrowthmarkets
.
PackagingandConverting
.
FuelGasDesulfurization
MarketAppeal
MarketNeeds
ValueProposition
.
39
&
J6B#5B/$"&
&
&
;435$<&I36$21&`&Q5C6B&A%1458"31&`&*$$5#64/5$&N&G3"64&A5$1%8"3&)%1/$"11&
&
0veiview of valvoline
4u
Q"62/$<&GB5I6B&H35>"1153&'&,/143/I%453&57&O/<:BC&($</$""3"2&K/B1&&&
753&A5$1%8"31&
- Piouuces highly engineeieu, foimulateu, uiffeientiateu anu mission-
ciitical piouucts (not commouities)
- Lubiicant blenuing, piocessing, anu uistiibution opeiations
- LTN Revenues SS12u1S: $2.ubn
- LTN EBITBA SS12u1S: $S14mm (1S.6% EBITBA maigin)
;435$<&'&*$$5#64/#"&)36$21&
- .
O/<:&)633/"31&45&($43C&
- Specializeu piocesses; long leau times; peimitting; anu ueep
technological knowleuge iequiieu on the sales fiont
L64/5$6B&P554@3/$4&57&)36$2"2&A58@6$CFK9$"2&;453"1&'&P36$>:/1"1&
- #2 playei in the 0.S.
- ulobal footpiint of plants, uistiibution facilities, anu packaging plants
Bo-It-Foi-Ne:
Instant 0il
Change
1S%
Bo-It-Foi-Ne:
Installei
Channel
21%
Bo-It-
Youiself
S2%
valvoline Int'l
S2%
Latin
Ameiica
14%
Euiope
29%
Austialia
27%
Asia (ex-
Austialia)
Su%
*$4"3$64/5$6B&;6B"1&IC&!"</5$&
;6B"1&IC&.63E"4&
valvoline 0.S. Competitive Lanuscape
41
&
&
,5F*4FV5%31"B7&RS,*VTU&A:6$$"B&&
Rde^&57&?_;_&.63E"4U&
&
&
&
,5F*4FP53F."&RS,*P.TU&A:6$$"B&&
Rbe^&57&?_;_&.63E"4U&
&
&
+:"&?_;_&863E"4&/1&6$&5B/<5@5BC_&
&
Castiol
(BP),
valvoline
(Ashlanu),
Pennzoil
(Shell)
6u%
Nobil
(Exxon),
Quakei
State (Shell)
2u%
Piivate
Label
2u%
Shell,
ExxonNobil,
Ashlanu, BP
7S%
Regional
Blenueis
2S%
valvoline Piouuct Poitfolio
42

&
&
A5$1%8"3&H352%>41&
&
&
&
A588"3>/6B&'&*$2%143/6B&H352%>41&
&
Notoi 0il
Biake
Fluiu
Auto
Tiansmission
Piouucts
Powei
Steeiing
Piouucts
Antifieeze
& Rauiatoi
Piouucts
Naintenance
Piouucts
uiease &
ueai 0il
Engine & Paits
Cleaneis
Spiay
Lubiicants
Fuel
Auuitives
0EN
Enuoiseu
Piouucts
Beavy Buty
Biesel
Engine 0ils
Natuial uas
Engine 0ils
Biesel
Exhaust
Fluius
Beavy Buty
Chemicals
Beavy Buty
Coolant
Antifieeze
Tiansmission
Fluius & ueai
0ils
uiease
Byuiaulic &
Inuustiial 0ils
&
J6B#5B/$"&/1&6&%$/n%"&>5$1%8"3&I%1/$"11]&8/11/5$F>3/4/>6B&6$2&:/<:BC&
"$</$""3"2&@352%>41&9/4:&1435$<&I36$21l&9/2"&85641&6$2&B5C6B&>%1458"31_&
&
ValvolineOrganicOpportunities
43
Baseoil
capacity
expansions
shouldfurther
reduce
volatility
Themostvaluablebusinessesintheworldarebrandroyaltybusinesses
thatcangrowwithoutcapitalinvestment.
Leverage
InstantOil
Change
businessmodel
togrow
organicallyand
gainshare
NewProduct
Penetration:
Drive
NextGentrial
andMaxLife
growth
Expandand
strengthen
international
presencein
emerging
regions
OrganicOpportunities
N.B.:QuotefromPershingSquareCapitalManagement,L.P.presentation,JusticeisBestServedFlameBroiled,April4,2012.
Capitalizeon
secularshifts
- ShiftfromDIY
tohigher
marginDIFM
- Mixshiftto
highermargin
premium
products
InnovativeBrands:NextGen
TM
44
Innovativenewproductswithhighermarginsthatgainshare.
IntroducedinSpring
2011
Betterfor
environment
- 50%recycled,re-
reMinedoil
Nocompromiseto
quality
- 100%Valvoline
protection
Similarpricepoint
DrivesigniMicantDIY
sharegrowthand
DIFMconsumer/
installerloyalty
Increasebaseoil
purchasingleverage
bydriving
developmentofre-
reMinedmarket
EstablishNextGen
TM
inVIOCcompany
stores
DIYavailablein14,500
retailautopartsstores
Estimated600,000DIY
earlyadopters;$34
millioninsalesfor
Miscal2011
NextGen
TM
represents
19%ofoilchangesat
$5premium
Executerecycling
programinitiatives
withretailerstodrive
trial
Continueadvertising
focus
Establishnationalbulk
distributionforVIOC,
Installerchannels
Fleetopportunityfor
bothVIOCandC&I
businesses
Consumer
Proposition
Objectives ResultstoDate NextSteps
Nix Shift To Piemium Piouucts
4S
&
*$$5#64/5$&23/#"1&J6B#5B/$"m1&8/0&1:/74&45&:/<:"3&863</$&@3"8/%8&@352%>41_&
Piemium piouucts iepiesent highest-maigin
piouuct lines
-! SynPowei" full synthetic motoi oil
-! NaxLife" motoi oil
-! Piemium Blue" engine lubiicants foi uiesel
engines
Steauy impiovement in piemium mix
-! Focuseu auveitisingpiomotional activities
-! Bighei tiaining levels anu sales suppoit foi
installei channel
-! Biffeientiateu technologies
Taigeting 2u14 piemium levels of S4% to SS%
2S%
2S%
28%
Su%
S1%
SS%
u%
S%
1u%
1S%
2u%
2S%
Su%
SS%
FY
2uu7
FY
2uu8
FY
2uu9
FY
2u1u
FY
2u11
FY
2u12
H3"8/%8&./0&
valvoline Instant 0il Change ("vI0C")
46
26u company-owneu anu 6S6 fianchises in 41 states
2
nu
laigest fianchise in 0.S. "fast oil change" business
ASB typically takes S% of each fianchise's ievenues
uiowth Stiategy
-! Leveiage best-in-class customei seivice mouel
-! New fianchises anu ie-bianuing of existing stoie netwoiks, which iequiies no capex fiom ASB
-! Incieasing penetiation of existing seivice offeiings
-! Enhanceu selling tools anu stoie-level execution with an intense focus on continueu giowth of
the aveiage $ ticket pei customei
Aveiage system-wiue stoie giowth of appioximately 4u pei yeai histoiically
-! Fianchise system giowth expecteu to outpace company stoie giowth by 2:1
-! Numeious smallei iegional consoliuation oppoitunities of piivately helu chains

&
cWf&?_;_&1453"1&9/4:&1/<$/=/>6$4&5@@534%$/4C&45&&<359&7554@3/$4_&
&
Souice: National 0il & Lube News anu Company Bata
&
J*KA&/1&6&:/22"$&611"4&4:64&>6$&I"&%1"2&61&6&@B647538&753&<3594:_&
U.S.CompetitiveLandscapeforVIOC
47
Signi=icantopportunityexiststoconsolidateandre-brandU.S.market.
U.S.MarketSize(2013E):$9.8bn
Stableandhighlyfragmented
marketwith17,063stores
Industrylargelyconsistsof
smallmomandpopowners
Ripeforconsolidation
#1playeronlyhas~11%share
Top10playersrepresentonly
32%ofmarket
Minimalcapexrequiredtore-brandexistingprivatelyheldstorenetworks.
Source:NationalOil&LubeNewsandCompanyData
Top$US$Fast$Lube$Chains$2013
Owned Franchised Total %$Share
1 Jiffy&Lube 0 1,962 1,962 11.5%
2 Valvoline$Instant$Oil$Change 260 636 896 5.3%
3 Pennzoil 750 0 750 4.4%
4 Kwik&Tar 393 0 393 2.3%
5 Express&Care 336 0 336 2.0%
6 Mobil&1&Lube&Express 327 0 327 1.9%
7 Express&Lube 300 0 300 1.8%
8 Express&Oil&Change&&&Service 85 110 195 1.1%
9 Philips&66 186 0 186 1.1%
10 Grease&Monkey 8 172 180 1.1%
Total$Top$10 2,645 2,880 5,525 32.4%
Total$Top$50 3,736 3,039 6,775 39.7%
Total$US$Fast$Lube$Industry 17,063
vI0C Stoie Economics
48
&
."6$/$<7%B&5@@534%$/4/"1&45&/$>3"61"&6#"36<"&a&4/>E"4&@"3&>%1458"3_&
&
&f\f&&
&fWZ&&
&bdd&&
&bef&&
SSu
6uu
6Su
7uu
7Su
8uu
2uu9 2u1u 2u11 2u12
-#<_&;453"&;6B"1&RZZZ1U&
&Ye_c&&
&Yb_d&& &Yb_d&&
&Yb_[&&
SS.u
SS.S
S6.u
S6.S
S7.u
S7.S
2uu9 2u1u 2u11 2u12
-#<_&K/B&A:6$<"&@"3&,6C&
&ec_eY&&
&fZ_de&&
&fY_Y[&&
&ff_ZY&&
S4.uu
S6.uu
S8.uu
6u.uu
62.uu
64.uu
66.uu
68.uu
2uu9 2u1u 2u11 2u12
-#<_&a&+/>E"4&@"3&K/B&A:6$<"&
&ecc&&
&fdc&&
&fed&&
&fW[&&
Suu
SSu
6uu
6Su
7uu
2uu9 2u1u 2u11 2u12
-#<_&;453"&;6B"1&RZZZ1U&
&Yd_Z&&
&Yd_e&&
&Y[_b&&
&YY_e&&
Su.S
S1.u
S1.S
S2.u
S2.S
SS.u
SS.S
S4.u
2uu9 2u1u 2u11 2u12
-#<_&K/B&A:6$<"&@"3&,6C&
&eW_Wf&&
&f[_e[&&
&fe_dc&&
&ff_fc&&
S6.uu
S8.uu
6u.uu
62.uu
64.uu
66.uu
68.uu
2uu9 2u1u 2u11 2u12
-#<_&a&+/>E"4&@"3&K/B&A:6$<"&
A58@6$C&;453"1&& P36$>:/1"&;453"1&&
ValvolineInternational
49
AddressableMarket
- 6.3billiongallonsperyearversus800millionintheU.S.
- EMEA:MiddleEast,Africa,Russia,andEasternEurope
- LatAm:particularlyBrazil
- IndiaJointVenture:expandingdistributornetwork;newblending&packagingplant
- Asia:leveragingCumminsrelationship;followingbuild-outmodelinIndia
EmergingMarketGrowth
- Nowaccountformorethan50%ofgloballightvehiclesales
Consumer&Industrial
- Valvolinesfocushasbeenonheavy-dutytransportationandpowergeneration
Largeandgrowingunder-penetratedmarketrepresentslargeopportunity.
InternationalLandscapeforVIOC
50
While#2sharepositioninUS,VIOChasnointernationallybrandedstores.
Bigopportunityforgrowthand
penetrationparticularlyamong
developingmarkets
BrandedInternationalMarket
consistsprimarilyof~4,500US-
basedchainswithforeign
facilities
Growingandhighlyfragmented
marketinitsinfancy
Nocapexrequiredtore-brandexisting,privatelyheldstorenetworks.
Source:NationalOil&LubeNewsandCompanyData.
Top$US'Based$Chains$with$Foreign$Facilities
Total %$Share
1 Mobil'1'Centers 2,188 48.5%
2 Texaco'Havoline'xpress'lube 1,432 31.8%
3 Walmart'Tire'&'Lube'Express 266 5.9%
4 Midas'Auto'Service'Experts 160 3.5%
5 Jiffy'Lube 150 3.3%
6 Precision'Tune'Auto'Care 82 1.8%
7 Meineke'Care'Care'Centers 78 1.7%
8 Pennzoil 75 1.7%
9 Grease'Monkey 65 1.4%
10 AAMCO 11 0.2%
11 Citgo 1 0.0%
Total$US'Based$Chains$with$Foreign$Facilities 4,508
MarketAscribesLittleValuetoValvoline
51
UsinganillustrativespecialtychemicalEBITDAmultiplerangeof8x-10x
andillustrativeFYE9/30/15EASHEBITDArangeof$1.4bnto$1.6bn
suggeststhemarketimpliedvaluationofValvolineis:$0to$1.1bn.
AtthecurrentASHshareprice,
ashareholdereffectivelygetsValvolineforfree.
Valvoline)Implied)Valuation
ASH$consolidated$9/15E$EBITDA $1,400 $1,600
$Less:$Valvoline$EBITDA ($350) ($350)
ASH$EBITDA$exEValvoline $1,050 $1,250
EBITDA$Multiple 8.0x 8.0x
Implied$ASH$Value$exEValvoline $8,400 $10,000
Plus:$2014E$&$2015E$FCF 1,200 1,400
Total$Implied$Value$exEValvoline $9,600 $11,400
Current$ASH$Enterprise$Value $10,660 $10,660
$Less:$Value$exEValvoline ($9,600) ($11,400)
Implied)Valvoline)Value $1,060 $0
Implied$Valvoline$Value$per$Share $14 $0
Valvoline$EBITDA $350 $350
Implied$Valvoline$Multiple 3.0x 0.0x
FYE)9/15E
EBITDA ASH) EBITDA)Multiple
7.0x 7.5x 8.0x 8.5x 9.0x
$1,400 $2,110 $1,585 $1,060 $535 $10
$1,450 $1,760 $1,210 $660 $110 $0
$1,500 $1,410 $835 $260 $0 $0
$1,550 $1,060 $460 $0 $0 $0
$1,600 $710 $85 $0 $0 $0
$1,650 $360 $0 $0 $0 $0
N.B.:EBITDAmultipleinValvolineimpliedvaluationtableconservativelyassumesthelow-endofspecialtychemicalEBITDAmultiplerangeof8x-12x.
HowMuchIsValvolineWorth?
52
Aspartspecialtychemicalcompanyandpartleading,brandedconsumer
franchisewithapredictable,highcash=low/lowcapexmodel,
webelieveValvolineshouldtradebetween8x12xEBITDA.
(1)
(1) Representsablendedmultipleofspecialtychemicals(8x-12xEBITDA)andleadingconsumerfranchises(10x-14xEBITDA).
(2) MarketImpliedValuepershareof$14frompreviousslide.
Valvolinehaslowmaintenancecapexof~$36mmorlessthan2%ofsales.
Sensitivity)Analysis:)Value)per)Share
8.0x 9.0x 10.0x 11.0x 12.0x
$350 $36 $40 $45 $49 $54
$375 $38 $43 $48 $53 $57
$400 $41 $46 $51 $56 $61
$425 $43 $49 $54 $60 $65
$450 $46 $52 $57 $63 $69
Valvoline)Potential)Valuation
Low High
Valvoline.Normalized.EBITDA $400 $400
EBITDA.Multiple
(1)
8.0x 12.0x
Implied)Valvoline)Value $3,200 $4,800
Ashland.Shares 79 79
Valvoline)Value)per)Share $41 $61
Market.Implied.Value.per.Share $14 $14.00
%.difference 191% 337%
PotentialWaystoUnlockTrappedValue
53
Basedonourdiligence,webelieveValvolinehasalowtaxbaseandanoutrightsalewould
likelynotbethemosttaxefMicientmechanismtoreleasetrappedvalueforshareholders.
Twovalueunlockingalternatives:
Tax-FreeSpintoShareholders
- Givenitspredictability,lowcapexgrowthmodel,andhighcashMlowgeneration,an
independentlytradedValvoline,wouldlikelybeinhighdemandamongincome
orientedinvestors
ConversiontoMasterLimitedPartnership
- GivenitsoperationalproMileandhighcashMlowgeneration,Valvolinecouldqualify
asanMLPfortaxpurposesandwouldlikelybeinhighdemandamongyield
orientedinvestors
Valvoline:SpinorMLPorboth?
PotentialFurtherValueCreationasMLP
54
AstrongcaseexiststhatValvolinecouldqualifyasaMLP.
IRSPrivateLetterRulingreleasedAugust10,2012(PLR-104854-12)forMLP
quali=ication:
- principallyengagedinthegathering,processing,transportation,storage,and
distributionofreMinedpetroleumproducts
- incomederivedfromadditizationactivitiesisqualifyingincomeforMLPstatus
- qualifyingMLPincomeunderSection7704(d)(1)(E)oftheInternalRevenueCode:
incomeorgainsderivedfrom.processing,reMining,transportation,orthemarketingof
anymineralornaturalresource
Ashland10-KforFYE9/30/2012describingValvolinesactivities:
- operatesblendingandpackagingplants
- blendinganddistribution
- additivesandbaseoilsconstitutealargeportionoftherawmaterialsrequiredto
manufacture[Valvoline]products
HowCouldValvolineQualifyasaMLP?
55
CalumetSpecialtyProductsPartners(NYSE:CLMT)
- Manufacturepetroleum-basedspecialtyproducts
(1)
includingmotorsoils
NorthernTier(NYSE:NTI)
- Produces[anddistributes]abroadslateofreMined[petroleum-based]productsincludinggasoline,
diesel,jetfuelandasphalt
(2)
CVR(NYSE:CVRR)
- Producesanddistributespetroleum-basedproductsincludinggasoline,naturalgasliquids,asphalt,jet
fuel,andotherreMinedproducts
(3)
MLPsalreadyexistthatprocess,blend,and
distributehydrocarbonsincludingmotoroils.
(1) Source:2013CLMTInvestor&AnalystDay
(2) Source:NorthernTier201210-KMiling
(3) Source:CVRReMining201210-KMiling
WhileCLMT,NTIandCVRRtakehydrocarbonstoproducecyclical
commodityproducts,Valvolineusesthemtoproducehighly-engineered,
value-added(non-commodity),brandedconsumerproducts.
OperationsThatCouldQualifyforMLP
56
- SantaFeSprings,California
- Cincinnati,Ohio
- EastRochester,Pennsylvania
- DeerPark,Texas
- WetherillPark,Australia
- Dordrecht,theNetherlands
Valvolinehasplantsanddistributioncapabilitiesakinto
entitiesthatalreadyqualifyasMLPsfortaxpurposes.
Source:CompanyData
BulkBlending
LubricantBlending&Manufacturing
- CollegePark,Georgia
- WillowSprings,Illinois
- St.Louis,Missouri
- Mississauga,Canada
- CollegePark,Georgia
- WillowSprings,Illinois
- Noblesville,Indiana
- St.Louis,Missouri
- Cincinnati,Ohio
- EastRochester,Pennsylvania
- Birkenhead,UnitedKingdom
- Sydney,Australia
- Dordrecht,theNetherlands
Distribution
IllustrativeValvolineMLPValuation
57
GiventhepredictabilityandlowcapitalneedsofValvoline,apotentialMLP
couldtradenearcomparablesthatpossesssimilarhighdegreesofvisibility
ofdistributiongrowth.SuchMLPstradebetween4%to8%yields.
Valvoline)MLP)Valuation MLP)Enterprise)Value
EBITDA'(FYE'9/14E) $350
(4)'Maintenance'Capex (36)
(4)'Interest 0
Distributable'CF $314
Yield 5.0%
Implied'Equity'Value $6,280
(+)'Net'Debt 0
Enterprise'Value $6,280
Implied'EBITDA'Multiple 17.9x
MLP$Enterprise$Value Implied$MLP$EBITDA$Multiples
EBITDA Yield
4.0% 5.0% 6.0% 7.0% 8.0%
$325 $7,225 $5,780 $4,817 $4,129 $3,613
$350 $7,850 $6,280 $5,233 $4,486 $3,925
$375 $8,475 $6,780 $5,650 $4,843 $4,238
$400 $9,100 $7,280 $6,067 $5,200 $4,550
$425 $9,725 $7,780 $6,483 $5,557 $4,863
Implied(MLP(EBITDA(Multiples
EBITDA Yield
4.0% 5.0% 6.0% 7.0% 8.0%
$325 22.2x 17.8x 14.8x 12.7x 11.1x
$350 22.4x 17.9x 15.0x 12.8x 11.2x
$375 22.6x 18.1x 15.1x 12.9x 11.3x
$400 22.8x 18.2x 15.2x 13.0x 11.4x
$425 22.9x 18.3x 15.3x 13.1x 11.4x
ValvolineasaMLPcouldbe
worth$4bnto$9bnversus
ASHcurrentequitymarket
capitalizationof$6.7bn.
HowMuchValueCouldanMLPCreate?
58
UnlikemostMLPs,Valvolineisnotcapitalintensiveandthuswouldlikely
notrequireleveragetogrow.Highrecurringcash=lowwouldbereturned.
WebelieveaValvolineMLPwouldgarnerapremiumvaluationrelativeto
mostMLPs:muchlesscyclical,signi=icantlylesscapitalintensive,and
manufactureshighlyengineered,brandedconsumerproducts.
MLP$$Value$Creation MLP$per$Share$Value$Creation
Implied(MLP((Equity(Value $6,280
ASH(Shares(Outstanding 79
Equity(Value(Per(Share $80.00
ASH(EBITDA(Reduction ($350)
ASH(EV(Multiple 7.0x
EV(Value(Reduction ($2,450)
ASH(Shares(Outstanding 79
(Q)(ASH(EBITDA(Reduction ($31.01)
Net$Value$Creation $48.99
%(from(current 57.6%
MLP$per$Share$Value$Creation
EBITDA Yield
4.0% 5.0% 6.0% 7.0% 8.0%
$325 $63.24 $44.83 $32.56 $23.80 $17.22
$350 $68.99 $48.99 $35.65 $26.13 $18.99
$375 $74.73 $53.14 $38.75 $28.46 $20.75
$400 $80.48 $57.30 $41.84 $30.80 $22.52
$425 $86.23 $61.45 $44.93 $33.13 $24.28
N.B.:MLPValuationCreationtableconservativelyassumesthecurrentforwardEV/EBITDAmultipleof7xofAshlandasofJuly16,2013..
59
&
J6B%64/5$&'&P/$6$>/6B1&
&
WebelieveASHisUndervalued
60
RevenuesynergiesfromISP
BeneMitsofgrowthcapex
Stand-alonemarginopportunities
Turnaroundatwaterbusiness
CyclicalupsidetoU.S.housingandautomarkets
Multipleexpansiononastand-alonebasis
Potentialmonetizationofwater
OwnValvoline,agreatconsumerbusinessfor~3xEBITDAorless(comps8x-12x)
RecoveryinEuropeanend-markets
Optionontax-freespinand/orMLPofValvoline
Optiononhigherlong-terminterestrates
WebelieveAshlandissigni=icantlyundervaluedwithlong-term
potentialupside.Atcurrentprices,along-termshareholderpays
7xconsensusFYE9/30/14EEBITDAandgetsforfree:
WhyThisOpportunityExists
61
Manymovingpiecesmasktrueunderlyingvalue
Longhistoryofbeingdeeplycyclicalcompany
withitsoldportfolio
Misguidedconcernsoverhydrocarbonchain
exposure(baseoilII)
InvestorfatigueoverWaterrestructurings
LackofpubliclytradedcompsforValvoline
Scantinsiderownership
ManagementislowproMile
ASHstocknotinmajorindexesorsectorETFs
Historicallyunder-followedonthesellside
Marketfailstorecognizetransformationtoleadingspecialtychemical=irm.
Pharmaceuticals
PersonalCare
Coatings
Energy
Construction
Food&Beverage
Transform
WhyareASHSharesCheap?
62
Guarexposure
Oilexposure
ValvolinedifMiculttovalue
WeakcashMlow
Underfundedpension
Managementwillmakepoor
acquisition
TheBearsConcerns
ElmroxView
Guarpricingbubbleinthepast.F3Q2013ismostdifMicultcomp.
Managementconsideringdivestingcommodityguaroperations
toeliminatepotentialvolatility
Limiteddirectexposure.BaseoilGroupII(anoilderivative)is
inputforValvolinepricingcoversinputinMlationwith3-4
monthlag.GroupIIovercapacitygrowing2013-2015
Ismisunderstoodbecausenodirectpubliccomps.Isstable,high
recurring-cashMlowbusinesswithsmallcapexrequirements
withstrongconsumerbrandsanddifferentiatedproducts.Has
hiddengrowthassetinU.S.storebrandedstorebase
CashMlowwillnormalizeasgrowthcapexsunsets,lowerinterest
costsannualize,andtaxratesfalltowardsmid20s;Consensus
overestimatescashpensionpaymentsinFYE2014andFYE2015
200bpsmoveinthediscountrateeliminatesunderfunding,
whichgenerallytrackstheAAcorporatebondspread
Thiswasbeforetherecentmoveininterestratesin2Q2013
Managementhaslonghistoryofbeingpatientandthoughtful
capitalallocatorsmanagingtheportfolio.
MultipleWaystoCreateValue
63
OrganicGrowth+
Under-AppreciatedAssets
Newproducts
Developingmarketspenetration
ShareholderValueCreation
SpecialtyIngredients
Water
Valvoline
Operationalturnaround
Salesofasset
Storeandfranchisegrowth
SecularshifttoDo-It-For-Me
Mixshifttopremiumproducts
Spin-offand/orMLPconversion
OpportunityforMultipleExpansion
64
Specialtychemicalstradeathighermultiplesthancommoditychemicals
giventheaforementionedcharacteristics.WeexpectASHsharesto
garneraspecialtymultipleasthemarketarrivesatourvariantview.
STRICTLYCONFIDENTIAL
Multiple
Expansion
FYE2014 Specialty Commodity Ashland
EV/EBITDA 9x 6x
7x
P/E 16x 10x
11x
N.B.:Specialtychemicalsinclude:ALB,CYT,DD,ECL,FMC,GRA,POL,PPG,ROC,RPM,SHW,VAL.
N.B.:Commoditychemicalsinclude:DOW,HUN,KRA,LYB,MEOH,OLN,OMN,WLK.
N.B.:MultiplesbasedonsellsideestimatesandsharepricesasofJuly16,2013.
Webelievethemarketisoffering
investorsaleadingglobalspecialty
chemicalbusinessforrelativelylow
multiplesofearningsandcash=low.
6S
ASB is Cuiiently 0nuei-Eaining
In the miuule of S-yeai capital spenu piogiam of appioximately
$2uumm pei yeai
-! 0vei Su% of capital consists of giowth anu piouuctivity piojects
"! 4 plant expansions coming on-line in 2u1S
-! Specialty Ingieuients constitutes 8u+% of Ashlanu's giowth capital
Typical IRR huiules on a new capex piojects iange in the high teens foi
gieenfielu anu 2u% to Su% foi biownfielu expansions
&
.6$6<"8"$4&:61&6BB5>64"2&1/<$/=/>6$4&>6@/46B&45&<3594:_&
&
H352%>4&P68/BC& k&57&
H35j">41&
H35j">4R1U&
dZ[Y&
(0@">4"2&
dZ[\&
A58@B"4/5$&
dZ[e&
BEC 2 Niu -- Late
Beiivatizeu uuai S Late Niu Eaily
NC 2 -- -- TBB
CNC 2 Late -- Eaily
PvP 1 -- -- Niu
vinyl Etheis 1 -- -- TBB
Skin-Caie Actives 1 Niu --
Laige
11 Piojects
>$2u million
Niu-Size
SS Piojects
$S to $2u million
Piouuct Line Extensions
S2 Piojects
$2 to $S million
&a\YW_Z&&
&a\b\_Z&&
&af[b_Z&&
2u1u 2u11 2u12 Long-
teim
L"9&H352%>4&;6B"1&Ra&/$&8/BB/5$1U&
de^&57&;6B"1&
IllustrativeASHStandaloneValuation
66
Evenifrevenuegrowthremains=latinFYE2014andFYE2015,ASHshould
generate~$15to~$17pershareofcumulativefreecash=low.
(1)
Specialtychemical=irmsgenerallytradefor8xto12xEBITDAinthepublic
marketsversuscommoditychemicalassetsat4xto7xEBITDA.
!
ASH!Potential!Standalone!Valuation
Low High
ASH*EBITDA*(FYE*9/30/15E) $1,400 $1,600
EBITDA*Multiple 8.0x 8.0x
Implied!Firm!Value $11,200 $12,800
Less:*Net*Debt (3,991) (3,991)
Plus:*2014E*&*2015E*FCF 1,200 1,400
Implied*Equity*Value 8,409 10,209
Ashland*Shares 79 79
Implied!Equity!Value!per!Share $107 $130
Current*Price $85 $85
%*from*current 26% 53%
8.0x 9.0x 10.0x 11.0x 12.0x
$1,400 $107 $125 $143 $161 $178
$1,450 $112 $131 $149 $168 $186
$1,500 $117 $136 $156 $175 $194
$1,550 $122 $142 $162 $182 $201
$1,600 $128 $148 $168 $189 $209
N.B.:EBITDAmultipleinASHPotentialStandaloneValuationtableconservativelyassumesthelow-endofspecialtychemicalEBITDAmultiplerangeof8x-12x.Thisanalysisconservativelyassumesnoadditional
sharerepurchasesandexcludesdividends.
IllustrativeSum-of-PartsValuations
67
(Ashland)+(ValvolineSpin)
(1)AssumesASHEBITDAof$1.5bn
N.B.:ASHEBITDAmultipleinSum-of-the-Partstableconservativelyassumesthelow-endofspecialtychemicalEBITDAmultiplerangeof8x-12xandValvolineEBITDAmultipleassumesthemid-pointvaluation
rangeof8x-12x(asreferencedonpage52).Thisanalysisconservativelyassumesnoadditionalsharerepurchasesandexcludesdividends.
Sum$of$the$Parts
ASH$consolidated$EBITDA $1,400 $1,600
ASH$EBITDA$exCValvoline $1,050 $1,250
Implied3ASH3Value3ex$Valvoline $8,400 $10,000
Implied3Valvoline3Value $3,500 $3,500
Total3Enterprise3Value $11,900 $13,500
$Less:$Net$Debt (3,991) (3,991)
Plus:$2014E$&$2015E$FCF 1,200 1,400
Total$Equity$Value $9,109 $10,909
ASH$Shares$Outstanding 79 79
Per3Share3Equity3Value $115 $138
%"from"current 36% 62%
(1)
ASH)EBITDA
Multiple Valvoline)EBITDA)Multiple
8.0x 9.0x 10.0x 11.0x 12.0x
8.0x $129 $133 $137 $142 $146
8.5x $136 $140 $145 $149 $154
9.0x $143 $148 $152 $156 $161
9.5x $150 $155 $159 $164 $168
10.0x $158 $162 $167 $171 $175
IllustrativeSum-of-PartsValuations(contd)
68
(Ashland)+(ValvolineasMLP)
Sum$of$the$Parts
ASH$consolidated$EBITDA $1,400 $1,600
ASH$EBITDA$exCValvoline $1,050 $1,250
Implied3ASH3Value3ex$Valvoline $8,400 $10,000
Implied3Valvoline3Value $5,250 $5,250
Total3Enterprise3Value $13,650 $15,250
$Less:$Net$Debt (3,991) (3,991)
Plus:$2014E$&$2015E$FCF 1,200 1,400
Total$Equity$Value $10,859 $12,659
ASH$Shares$Outstanding 79 79
Per3Share3Equity3Value $137 $160
%"from"current 62% 89%
(1)
ASH)EBITDA
Multiple Valvoline)EBITDA)Multiple
14.0x 16.0x 18.0x 20.0x 22.0x
8.0x $155 $164 $173 $182 $191
8.5x $162 $171 $180 $189 $198
9.0x $170 $179 $187 $196 $205
9.5x $177 $186 $195 $204 $212
10.0x $184 $193 $202 $211 $220
(1)AssumesASHEBITDAof$1.5bn
N.B.:ASHEBITDAmultipleinSum-of-the-Partstableconservativelyassumesthelow-endofspecialtychemicalEBITDAmultiplerangeof8x-12xandValvolineEBITDAmultipleconservativelyassumesthelower-end
ofthe12x-22xMLPvaluationrange(wheremostpublicly-tradedMLPScurrentlytrade).Thisanalysisconservativelyassumesnoadditionalsharerepurchasesandexcludesdividends.
AttractiveLeveragedBuyoutCandidate
69
HighFreeCashFlow
Characteristics
SustainableMargins
andPricingPower
Signi=icant
Competitive
Advantages(Barrier
toEntry,Switching
Costs,Patents)
GlobalFootprintand
Scale
OrganicGrowth
Opportunities
especiallyin
DevelopingMarkets
Potentialfor
Signi=icantMargin
ExpansioninCore
Business
especiallyWater
MarginofSafety:
ValvolineValuation
Signi=icantlyUnder-
Appreciated
SynergyPotential
withExistingPrivate
EquityOwned
ChemicalFirms
ScalingUpof
ValvolineFranchises
MayBeExecuted
BetterinPrivate
Market
AttractiveLBO
Target
LowCyclicalityof
Business
Strongfreecash=lowandlowcyclicality=Attractiveprivateequityreturns
Webelievea=inancialsponsorcouldcontributeupto30%equityusingtotalleverage
between4xto6xandcouldpayupto$121persharewhilemeetingtypicalreturnshurdles.
69
Fiee 0ption on Bighei Inteiest Rates
7u

&
&gdZZI@1&/$>3"61"&/$&2/1>5%$4&364"&1:5%B2&I3/$<&@"$1/5$&@B6$&45&7%$2"2&
1464%1_&+:/1&"n%64"1&45&gadd&@"3&1:63"&57&/$>3"8"$46B&"n%/4C&#6B%"_
R[U&
&
Souice: Ashlanu FYE 2u12 1u-K lists unfunueu status of pension plan anu othei postietiiement benefit obligations as $1.Sbn anu $2SSmm iespectively.
(1) This was piioi to the upwaiu move in inteiest iates since Nay 2u1S.

-;Om1&@"$1/5$&2/1>5%$4&364"&4"$21&45&436>E&4:"&--&>53@5364"&I5$2&1@3"62_&
ManagementGetsIt
71
Theacceleratedsharerepurchaseplan(ASR)withCitibankwaspartofa$600mm
commonstockbuybackplanthatexpiresDecember31,2014.
Atthecurrentshareprice,managementcouldrepurchase~15%to~20%ofASH
sharesbetween2014and2015usingdiscretionaryfreecashMlow
(1)
SharerepurchasesmayacceleratefurtherasfreecashMlownormalizesthrough2015
TheBoardalsoincreasedthequarterlydividend51.1%inMay2013to34centsper
quarterinrecognitionofincreasingcashMlowsoverthenextfewyears.
Despitethe2Q2013moveinU.S.interestrates,thecurrentenvironmentmakesdebt
Minancinganadditionalandattractivesourceofcapitalforsharerepurchases.
May20,2013:Announced$150mmacceleratedsharerepurchaseplan.
Thoughtfulcapitalallocationbymanagement=shareholdervaluecreation
Source:DiscretionaryfreecashMlowdeMinedasfreecashMlowlessdividends.
ManagementAlignedwithShareholders
72
Long-termexecutivecompensationtiedtoperformanceof:
- Operatingincome
- WorkingcapitalefMiciency
- Returnoninvestment
Majorityofcompensationatriskforseniormanagementtiedtolong-termmetrics:
- CEO:84%tiedtolong-termandannualincentives(64%long-term/20%annual)
- OtherexecutiveofMicers:70%atrisk(44%long-term/26%annual)
Programsshouldcreatealignmentbetweentheinterestsoftheexecutives
andtheshareholdersbyensuringthatcompensationopportunitiesfor
executivesarelinkedtobuildinglong-termshareholdervalue.
(1)
(1):AshlandproxydatedDecember12,2012
(2):AshlandvisionstatementfromAshland2012AnalystDay
Berecognizedasthepremierspecialtyingredientsandformulation
businessintheworldwithstronggrowthandsuperiormargins.
(2)
Conclusion
73
Valuableandhighqualityassetstradingatsubstantialdiscountto
intrinsicvalue.Multiplepathstosigni=icantshareholdervaluecreation.
Privatemarketvalueprovidesmarginofsafetyandlimitsdownsiderisk.
AshlandisaGoodBusiness
MarketleaderinspecialtychemicalswithsigniMicantcompetitiveadvantages
Seculargrowthopportunities
StableandpredictablefreecashMlowthatwilllikelybereturnedtoshareholders
Strongbalancesheet
Managementisthoughtfulcapitalallocators
SharesareUndervalued
Waterturnaroundnotpricedintoshares
EffectivelygettingValvolineforfree
VIOCishiddenassetforsigniMicantgrowthwithscantcapexrequiredtogrow
AdditionalValueCreationOpportunitiesExist
IfWaterisnotMixed,itwillbesold
Valvolinevaluecouldbeunlockedviatax-freespinand/orconversiontoMLP
Aggressivesharerepurchaseprograminplace
AttractiveacquisitioncandidateforstrategicandMinancialsponsors
Freeoptiononhigherinterestrates
LowRelativeValuationandAssetValueCreatesMarginofSafety=AsymmetricRisk/Reward
Potential Timeline
74
&
.%B4/@B"&96C1&45&9/$_&
2B 2u1S CY 2u16 anu Beyonu CY 2u1S CY 2u14
M64"3&
,">/1/5$
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J6B#5B/$"&
;@/$&X&.QH&
.5$"4/i"&
H"375386$>"&
A:"8/>6B1&
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*$<3"2/"$41&
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(0@6$1/5$&
P3""&K@4/5$&
5$&!64"1&
)%CI6>E1&'&
,/#/2"$21&
Illustiative Potential Retuins
7S
&
,59$1/2"&H354">4/5$&`&J63/6$4&H"3>"@4/5$&N&-1C88"43/>&!"4%3$&H35=/B"&
8u
1uu
12u
14u
16u
18u
2uu
22u
24u
26u
ASB Cuiient
Piice
ASB LB0 Stanualone Stanualone +
Pension Funueu
Status
ASB Solu to
Stiategic
ASB + valvoline
Spin
ASB + valvoline
Spin + Pension
Funueu Status
ASB + valvoline
NLP
ASB + valvoline
NLP + Pension
Funueu Status
a[[ZFa[b[&
a[[ZFa[cd&
a[eZFad\W&
a[\eFad[Y&
a[ZdFa[d[&
a[YdFa[WY&
a[YdFadZ\&
a[dcFaddb&
ac\_Wf&
^&?@1/2"&]&& &&&&&&&&&&&&&&&&dZ^&45&\d^&&&&&&&&dW^&45&[Z[^&&&&ee^&45&[db^&&&&bZ^&45&[eZ^&&&&&dW^&45&[[\^&&&&&ee^&45&[\Z^&&&eZ^&45&[fb^&&&&bf^&45&[WY^&
&
.6$C&@64:1&45&B5$<F4"38&1:63":5B2"3&#6B%"&>3"64/5$_&
H54"$4/6B&%@1/2"&57&%@&45&g[ZZ^&45&g[WY^&2"@"$2/$<&5$&3562&46E"$_&
N.B.: Revenue consistent with consensus estimates anu iecent tienus. Cases uo not assume that uiscietionaiy fiee cash flow (post-uiviuenu) useu to iepuichase stock.
N.B. Illustiative valuation ianges incluue uiviuenus of $u.S4 pei quaitei foi eight quaiteis except "ASB LB0" valuation.
76
&
-@@"$2/0]&.6$6<"8"$4l&)5632&'&G5#"3$6$>"&
&
ExecutiveOfMicers
77
JamesJ.O'Brien,ChairmanandChiefExecutiveOfRicer,Age:58
Since2002,OBrienservedaschairmanandchiefexecutiveofMicer.O'BrienleadsAshland'sExecutiveCommittee,whosememberssetAshland'sglobalstrategy,manageitscapital,and
upholdAshland'soperatingprinciples.O'BrienjoinedtheformerAshlandChemicalCompanyin1976asanaccountant,ayearafterstartingasanaccountingintern.Hequicklymoved
intooperations,servinginproductmarketingandsalesmanagementpositionsinthechemicalsandplasticsbusinessesduringthe'80s. By1992,O'Brienhadgainedtheattentionof
then-Chairman and CEO John R. Hall. Hall tapped O'Brien to serve as his executive assistant to support him as the company grew its nonreMining businesses, strengthened its
competitivepositionandfocusedonreducingitsdependenceonearningsfromreMining.In1995hewasnamedpresidentofthecompany'sValvolinedivisionandbecameanexecutive
ofMicer of Ashland. At Valvoline, O'Brien and his team implemented a master brand strategy, while driving innovation and expanding the product line. In 2001, as group operating
ofMicer, O'Brien initiated the successful redesign of the Ashland Distribution business model and increased Ashland Specialty Chemical's focus on markets, new products and
applications and geographic expansion. A native of Circleville, Ohio, O'Brien is a graduate of The Ohio State University, from which he earned a bachelor's degree in accounting and
Minanceandamaster'sdegreeinbusinessadministration.Heisa1994graduateofLeadershipKentucky.
J.KevinWillis,SeniorVicePresidentandChiefFinancialOfRicer,Age:47
Mr. Willis was elected senior vice president and chief Minancial ofMicer of Ashland in 2013. He oversees Ashland's worldwide Minancial functions and processes, including Minancial
accounting and reporting, treasury and Minance, insurance, business development, planning and analysis, investor relations, tax and internal audit activities. A member of Ashland's
Executive Committee, he shares overall responsibility for setting Ashland's global strategy, managing capital, and upholding Ashland's operating principles. Willis joined Ashland in
1987asanassociateauditorintheinternalauditdepartment.Heservedinvariousmanagementpositionsofincreasingresponsibility,includingleadingteamsonmajorprojectsinthe
businessservices,informationtechnology,accountingandMinanceareas.SpendingnearlythreeyearsinTheNetherlands,hehelpedleadAshland'sefforttostandardizeprocessesand
implement accounting shared services across European operations. In 2004, Willis was designated general auditor. Later in 2007, he was appointed vice president and treasurer of
Ashland.SinceAshland'sacquisitionofInternationalSpecialtyProducts(ISP)inAugust2011,WillisservedasAshland'svicepresidentofMinance,andcontrollerforAshlandSpecialty
Ingredients,Ashland'slargestandfastest-growingcommercialunit.AnativeofRichmond,Ky.,KevinearnedabachelorsdegreeinaccountingfromEasternKentuckyUniversityandan
MBAfromtheKelloggSchoolofManagementatNorthwesternUniversity.
JohnE.Panichella,SeniorVicePresidentandGroupOperatingOfRicerofAshland;andPresident,AshlandSpecialtyIngredients,Age:53
Mr.PanichellawaselectedseniorvicepresidentofAshlandin2011andaddedtheadditionalpositionofgroupoperatingofMicerinSeptember2012.Alsoin2011,hebecamepresident
ofAshlandSpecialtyIngredients,whenInternationalSpecialtyProductsInc.wasacquiredandmergedintoAshlandAqualonFunctionalIngredients.PanichellajoinedAshlandin2008
asavicepresidentandpresidentofAshlandAqualonFunctionalIngredients,followingAshland'sacquisitionofHercules,whereheheldasimilarposition.PriortojoiningHerculesin
2006,Panichellaenjoyeda25-yearcareerwithGeneralElectricandBetzDearborn,whereheservedinnumerousmanagementpositions,includingbusinessdevelopment,operations
management, sales and marketing, and strategic development. His last position at General Electric Water and Process Technologies was vice president and general manager of the
Americasbusiness.BeforejoiningGeneralElectric,heservedasvicepresidentoftheGlobalHydrocarbonProcessingunitofBetzDearborn.AnativeofPittsburgh,Pa.,Panichellaholds
anM.B.A.fromtheUniversityofPhoenixandabachelor'sdegreeinchemistryfromtheUniversityofPittsburgh.
LuisFernandez-Moreno,VicePresidentandPresident,AshlandWaterTechnologies,Age:50
Mr.LuisFernandez-MorenojoinedAshlandin2012aspresident,AshlandWaterTechnologies.Heheadsaworldwidecommercialunitthatholdsaglobal,leadingmarketpositionasa
specialty chemicals supplier of process, utility and functional chemistries for the papermaking industry. He also serves as vice president of Ashland and a member of the Ashland
Operating Committee. A 30-year veteran of the global chemical industry, Fernandez-Moreno previously served as executive vice president of Arch Chemicals, Inc. where he was
responsible for the wood protection and HTH water products businesses. Prior to that, he served as business group vice president of Dow Coating Materials which was formed after
DowChemicalacquiredRohm&Haasin2009.Hepreviouslyspentmorethan25yearswithRohm&HaasinaseriesofleadershiprolesspanningacrossEurope,LatinAmericaandthe
United States. Fernandez-Moreno earned a Bachelor of Science degree in chemical engineering from Universidad Iberoamericana in Mexico City. He also completed the Wharton
ManagementProgramatTheWhartonSchoolattheUniversityofPennsylvania.
Source:CompanyWebsite
ExecutiveOfMicers(contd)
78
SamuelJ.MitchellJr.,SeniorVicePresidentandPresident,AshlandConsumerMarkets,Age:51
Mr. Mitchell heads Ashland Consumer Markets, a commercial unit of Ashland Inc. His responsibilities include leadership of the worldwide Valvoline business of automotive and
commerciallubricants,chemicals,andappearanceproducts,aswellasgrowthofthecompany'squick-lubebusinessandcontinueddevelopmentofinnovativepremiumproducts.He
joinedAshlandin1997asdirectorofmarketingforValvoline'sbrandmanagementgroup.InAugust1999,hewasnamedvicepresidentofmarketing,andin2000,vicepresidentand
generalmanageroftheValvolineDIY(Do-It-Yourself)retailbusiness.HebecamepresidentofValvolineandavicepresidentofAshlandin2002.In2011,Mitchellwaspromotedtothe
role of senior vice president of Ashland, while retaining his responsibilities for Ashland Consumer Markets. Prior to joining Ashland, he held brand and category management
leadership positions at The Clorox Company for eight years. A Birmingham, Mich., native, Mitchell earned a bachelor's degree from Miami University, Oxford, Ohio, and a master's
degreeinbusinessadministrationfromtheUniversityofChicago.HeisagraduateoftheHarvardBusinessSchool'sAdvancedManagementProgram.
PeterGanz,SeniorVicePresident,GeneralCounselandSecretary,Age:50
Mr.GanzjoinedAshlandin2011asseniorvicepresidentandgeneralcounsel,responsibleformanagingalllegalandcorporategovernancematterspertainingtoAshland.Inaddition,
heoverseesthecompany'sgovernmentrelationsfunctionandservesasAshland'schiefcomplianceofMicer,chairingitsEthicsandComplianceCommittee.Healsoservesasamember
of Ashland's Executive Committee, sharing overall responsibility for setting Ashland's global strategy, managing capital, and upholding Ashland's operating principles. Immediately
priortojoiningAshland,GanzwasapartnerwiththelawMirmSedgwickLLPinNewark,N.J.From2005to2010,heservedasexecutivevicepresident,generalcounselandsecretary
ofFosterWheelerAG,aglobalengineering,constructionandproject-managementcontractorandpower-equipmentsupplier.Previously,hewasseniorvicepresident,generalcounsel
and secretary of G-I Holdings Inc. (formerly GAF Corp.) and of its afMiliate, International Specialty Products Inc., in Wayne, N.J. Earlier in his career, Ganz practiced litigation for law
Mirms McCarter & English in Newark, N.J., and Kramer, Levin, Nessen, Kamin & Frankel in New York, N.Y. He began his legal career serving a federal judicial clerkship with the Hon.
AnneE.ThompsonintheU.S.DistrictCourtfortheDistrictofNewJersey.AnativeofCharlotte,N.C.,GanzearnedhisbachelorofartsdegreefromDukeUniversityin1984.In1987,he
receivedhisJ.D.degreefromHarvardLawSchool.HeisamemberoftheNewYork,NewJerseyandKentuckystatebarassociationsandtheAmericanCorporateCounselAssociation.
TheodoreL."Ted"Harris,SeniorVicePresidentandPresident,GlobalSupplyChainofAshland;andPresident,AshlandPerformanceMaterials,Age:47
Mr. Harris was named president, Ashland Performance Materials, in 2009. n addition, as president, Global Supply Chain, Harris holds Ashland-wide responsibility for the functions
thatencompassthemanufactureanddeliveryofproductstocustomers.Harrisjoinedthecompanyin2004asvicepresidentandgeneralmanageroftheCompositePolymersgroup
withinAshlandPerformanceMaterials.In2006,hewasnamedavicepresidentofAshlandandpresidentofAshlandDistribution.In2008,hewasnamedpresidentofAshland'sGlobal
SupplyChain.In2008and2009,healsoledthedevelopmentandexecutionoftheglobalintegrationstrategyrelatedtotheHerculesacquisition.In2011,Harriswasnamedasenior
vicepresidentofAshland,whileretaininghisresponsibilitiesforPerformanceMaterialsandtheGlobalSupplyChain. ImmediatelypriortojoiningAshland,Harrisservedasgeneral
manageroftheFoodIngredientsDivisionwithinFMC'sFood,PharmaceuticalandPersonalCareGroupinhiscareerwithFMCCorp.,whichbeganin1992.AnativeofPhiladelphia,Pa.,
Harrisearnedabachelor'sdegreeinchemicalengineeringfromLehighUniversity.HealsoholdsanM.B.A.fromtheHarvardGraduateSchoolofBusinessAdministration.
SusanB.Esler,VicePresidentandChiefHumanResourcesandCommunicationsOfRicer,Age:51
Ms.EslerassumedleadershipofboththehumanresourcesandcorporatecommunicationsfunctionsofAshlandin2006.Sheisresponsiblefortheglobalmanagementofallaspectsof
human resources, including talent management and development, compensation and beneMits, and labor and employee relations. Her communications responsibilities include
corporateandMinancialcommunications,publicrelationsandbusiness-to-businessmarketingcommunications.ShejoinedAshlandin1999asmanager,executivecompensation.She
waspromotedin2001todirector,corporatehumanresources,andin2002,tovicepresident,humanresourcesprogramsandservices.In2004,shebecamevicepresident,human
resources,andin2006,communicationsandcorporateaffairswereaddedtoherresponsibilities.Shewasnamedtohercurrentpositionofvicepresidentandchiefhumanresources
and communications ofMicer in 2011. Immediately prior to joining Ashland, Esler served as senior director of compensation, beneMits and HRIS for PepsiCo Food Systems. She held
variousHRleadershiproleswithinthePepsiCoorganizationstartingin1990.EslerhasalsobeenemployedasacompensationconsultantwithMercerandstartedherworkingcareer
atDowChemicalasanHRspecialist.AnativeofPittsburgh,Pa.,EslerisagraduateofMiamiUniversity,Oxford,Ohio,andearnedhermaster'sdegreeinbusinessadministrationfrom
theWeatherheadSchoolofManagementatCaseWesternReserveUniversity,Cleveland,Ohio.
ExecutiveOfMicers(contd)
79
J.WilliamHeitman,VicePresidentandController,Age:58
Mr.HeitmanjoinedAshlandin2008withmorethan30yearsofMinancialexperienceinvariousindustries,includingautomotiveandchemicals.Asvicepresidentandcontroller,heis
responsible for Ashland's global Minancial accounting and reporting processes, including oversight of accounting policies and practices and external and internal Minancial reporting.
Previously,Heitmanservedascontrollerforthe$9billionNorthAmericanTireoperationsofGoodyearTire&RubberCo.,responsibleforallaccountingandsharedservicesforNorth
America.Whilethere,hewasakeycontributortothesigniMicantrestructuringofoperationsandimplementationofanenterpriseresourceplanning(ERP)systemandprocessesrelated
to Sarbanes-Oxley compliance. He joined Goodyear in 2004 after three years of experience in the chemical industry at Ferro Corp., where he served as vice president of Minance and
interimchiefMinancialofMicer.AtFerro,heledtheMinancialintegrationofasizeableglobalacquisitionandwasakeycontributortoa$500milliondebt-reductioneffort.Heitmanwas
alsovicepresidentandcontrollerforMoenInc.,wherehespentsixyears.Earlierinhiscareer,heheldnumerousMinancialpositionsduringa16-yeartenurewithTRW.Heitmanearned
a B.S.B.A. degree in accounting and an M.B.A. in Minance from Pittsburg State University, Pittsburg, Kan. He is a certiMied public accountant and a member of the Financial Executives
Institute,theAmericanInstituteofCertiMiedPublicAccountantsandtheOhioSocietyofCPAs.
StevenE.Post,VicePresident,OperationsandEnvironmental,HealthandSafety,Age:58
StevePostisresponsibleforAshland'sglobalmanufacturingoperationsandenvironmental,healthandsafety(EH&S)activities.PostcametoAshlandin2011followingitsacquisition
ofInternationalSpecialtyProductsInc.(ISP).HejoinedISPin1999whenitacquiredMonsanto'salginatesbusiness,whichheservedaspresident.PostsoonbecameISP'sseniorvice
president of Operations, managing global manufacturing, which included 18 production facilities and engineering, process technology and environmental, health, safety and security
functions. Prior to ISP, Post enjoyed a 20-year career with Merck, holding manufacturing roles of increasing responsibility in both the U.S. and Europe. While at Merck, he gained
signiMicantexperienceintheproductionofspecialtypolymersderivedfromnaturalrawmaterialsandfermentationinthecompany'sKelcodivision.FollowingMonsanto'sacquisition
oftheKelcodivision,PostworkedforMiveyearsinMonsanto'snutritionandconsumergroupmanagingmanufacturing,procurementandlogistics,engineeringandEH&S,priortobeing
appointed president of the alginates business. A native of Alliance, Ohio, Post grew up in Tempe, Ariz. He holds a bachelor of science in chemical engineering from Arizona State
UniversityandservedontheboardofgovernorsoftheSocietyofChemicalManufacturers&AfMiliates(SOCMA).
AnneT.Schumann,VicePresidentandChiefInformationandAdministrativeServicesOfRicer,Age:52
Ms.SchumannwasnamedvicepresidentandchiefinformationandadministrativeservicesofMicerinAugust2009.Inthisrole,sheholdsresponsibilityforAshland'sglobalinformation
technology functions, security and facilities management. Schumann joined the company in 2008 as vice president, acquisition integration, at the time Ashland acquired Hercules
Incorporated.Previously,sheservedasHercules'vicepresidentofinformationtechnologyfrom2006,withresponsibilityforhumanresourcesaddedin2008.ShejoinedHerculesin
2000asvicepresidentoftheHerculesSharedServicesCenter.BeforejoiningHercules,SchumannservedasdirectorofMinanceandmanagementoperationsforBrynMawrCollegenear
Philadelphia,Pa.Shealsospent11yearswithARCOChemicalCompany,holdingvariousmanagementpositionsinMinance,humanresourcesandglobalbusinessoperations.Shebegan
her career in 1984 with Continental Illinois National Bank, where she managed corporate banking portfolios. A native of Chicago, Ill., Schumann earned a bachelor of science in
environmentalbiologyfromtheUniversityofIllinoisandanM.B.A.inMinancefromIndianaUniversity.
WalterH.Solomon,VicePresidentandChiefGrowthOfRicer,Age:52
AshlandvicepresidentandchiefgrowthofMicersinceAugust2005,Mr.Solomonisresponsibleforthecompany'senterprisestrategy.HisteamhasmappedAshland'stransformation
from a U.S. regional oil reMiner into a global specialty chemical company and leader in sustainable chemistry. Solomon joined Ashland in 2002 as senior vice president and general
managerofAshlandConsumerMarkets'(Valvoline)Do-It-Yourselfbusinessunit.Whileinthatrole,histeamgrewproMitabilityandpremiumlubricantvolumeeachyear.Priortojoining
Ashland,Solomonspent20yearsgrowingbothlargeandsmallcompanies.HisMirst10yearswereinaseriesofbrandmanagementroleswithProcter&Gamble,ultimatelydirecting
marketinginP&G'shaircareandjuicedrinkbusinesses.Duringthattime,Pantene*grewfromasmall,boutiquebrandintoa$100+millionbusinessenroutetobecomingoneofP&G's
billion-dollarglobalbrands.Hespentthenext10yearsleadingprivatelyfundedstartupcompaniesinthehealthcareandsoftwareindustries,includinganInc.500*companyandan
internettechnologyincubator.AnativeofCharleston,S.C.,Solomonhasservedaspresident,chairmanorvicechairmanoftheboardoftrusteesoffournot-for-proMitorganizationsand
asaboardmemberforsixothers.Hereceivedhisbachelor'sdegreeincommercefromtheUniversityofVirginia.
ManagementCompensation
80
Executivemanagementhighlyalignedwithlong-termshareholders.
CompensationPhilosophy
- seekstoalignexecutivecompensationwithshareholdervalueonanannualandlong-termbasis
throughacombinationofthefollowingtypesofcompensation:basepay,annualincentive
compensationawardsandlong-termincentivecompensationawardswhicharecomprisedprimarily
ofstockappreciationrights(SARs)andLongTermIncentivePlanAwards("LTIPs)
CompensationHeavilyWeightedTowardsAtRiskLongTermIncentiveTargets
- CEO:targetofTotalDirectCompensation
(1)
thatisatriskis84%:
- 64%tolongtermincentives
- 20%toannualincentives
- 16%tobasesalary
- OtherExecutiveOfMicersTotalDirectCompensationthatisatriskisanaverageof70%:
- 44%tolong-termincentives
- 26%toannualincentives
- 30%tobasesalary
Source:AshlandProxydatedJanuary31,2013.
(1) TotalDirectCompensationrepresentsthesumofbasesalary+targetannualincentive+targetlong-termincentive.ThebasesalaryistheonlyMixedcompensationcomponent.At-riskcompensationis
equaltothesumoftargetannualincentive+targetlong-termincentive.
BoardofDirectors
81
BoDiscurrentlymadeupofelevendirectors,dividedintothreeclasses.
BrendanM.Cummins,Age:61
Mr.Cumminsservedasaglobalstrategicadvisorto,andontheseniorexecutivepanelof,TheValenceGroup,aspecialistmergersandacquisitionsMirmfrom2010until
May 2012. Prior to that position, Mr. Cummins served with Ciba Specialty Chemicals as Chief Executive OfMicer from 2007 to 2008 and as Chief Operating OfMicer from
2005to2007.From1974to2005,Mr.CumminsheldavarietyofinternationalandseniormanagementpositionswithCiba.Mr.CumminsisanAssociateandFellowof
the Institute of Company Accountants, is a Fellow of the Association of International Accountants and received a Diploma in Company Direction from the Institute of
Directorsin2010.HealsocompletedamanagementdevelopmentprogramatHarvardin1989.
RogerW.Hale,Age:69
Mr. Hale is currently an independent consultant. He served as Chairman of the Board and Chief Executive OfMicer of LG&E Energy Corporation, a diversiMied energy
servicescompanyheadquarteredinLouisville,Kentucky,fromAugust1990untilretiringinApril2001.PriortojoiningLG&EEnergy,hewasExecutiveVicePresidentof
BellSouth Corporation, a communications services company in Atlanta, Georgia. From 1966 to 1986, Mr. Hale held several executive positions with AT&T Co., a
communicationsservicescompany,includingVicePresident,SouthernRegionfrom1983to1986.
KathleenLigocki,Age:56
Ms.LigockiisanOperatingExecutiveatKleinerPerkinsCauMield&Byers,oneofSiliconValley'slargestcapitalproviders.SheisalsoaprincipalinPineLakePartners,Inc.,
aconsultingMirmfocusedonturnaroundandstart-upcompanies.SheservedastheChiefExecutiveOfMicerofNextAutoworks,from2010to2012,andGSMotors,from
2008 to 2009, two privately- held start- up companies. Prior to joining GS Motors, Ms. Ligocki worked at Tower Automotive, the Ford Motor Company, United
Technologies and General Motors Corporation. Ms. Ligocki holds a Bachelor of Arts degree in liberal studies from Indiana University, a Masters in Business
AdministrationfromTheWhartonSchoolattheUniversityofPennsylvaniaandhonorarydoctoratesfromIndianaUniversityandCentralMichiganUniversity.
VadaO.Manager,Age:51
Mr. Manager is the Chief Executive OfMicer of Manager Global Consulting Group and a Senior Director/Senior Counselor of APCO Worldwide, a strategic consulting
company.Priortothisposition,hewasanindependentglobalconsultant.Mr.ManagerservedastheSeniorDirectorofGlobalIssuesManagementforNike,Inc.from2006
untilMarch2009,andheheldvariousmanagementpositionsatNikebeginningin1997.BeforejoiningNike,heperformedasimilarroleforLeviStrauss&Co.andwas
also a Vice President of the Washington, D.C.- based public affairs Mirm, Powell Tate, a part of Weber Shandwick. Mr. Manager holds a Bachelor of Science degree in
politicalsciencefromArizonaStateUniversityandperformedgraduateworkattheLondonSchoolofEconomics.
JamesJ.O'Brien,Age:58
Mr.O'BrienisAshland'sChairmanoftheBoardandChiefExecutiveOfMicer.Priortothisposition,Mr.O'BrienwasPresidentandChiefOperatingOfMicerofAshlandand
Senior Vice President and Group Operating OfMicer of Ashland. He also served as the President of Valvoline from 1995 to 2001. Mr. O'Brien holds a Bachelor of Science
degreeinaccountingandMinanceandaMastersinBusinessAdministrationfromTheOhioStateUniversity.
BoardofDirectors(contd)
82
BarryW.Perry,Age:66
Mr.PerryservedasChairmanandChiefExecutiveOfMicerofEngelhardCorporationfromJanuary2001toJune2006.Priortothisposition,heheldvariousmanagement
positionswithEngelhardCorporationbeginningin1993.From1991to1993,Mr.PerrywasaGroupVicePresidentofRhone-Poulenc.PriortojoiningRhone-Poulenc,he
held a number of executive positions with General Electric Company. Mr. Perry holds a Bachelor of Science degree in plastics engineering from the University of
Massachusetts.
MarkC.Rohr,Age:61
Mr.RohrisChairmanandChiefExecutiveOfMicerofCelaneseCorporation,atechnologyandspecialtymaterialscompany.HehasservedintheserolessinceApril2012.
Priortothisposition,heheldseveralexecutivepositionswithAlbemarleCorporation,aspecialtychemicalcompany,includingExecutiveChairmanoftheBoard(2011-
2012), Chairman of the Board (2008- 2011), Chief Executive OfMicer (2002- 2011) and President (2000- 2010). Before joining Albemarle, he served with Occidental
ChemicalCorporationasSeniorVicePresident,SpecialtyChemicals.Mr.RohrholdsBachelorofSciencedegreesinchemistryandchemicalengineeringfromMississippi
StateUniversity.
GeorgeA.Schaefer,Jr.,Age:67
Mr. Schaefer served as Chairman of the Board of Directors of Fifth Third Bancorp and Fifth Third Bank headquartered in Cincinnati, Ohio until June 2008. Prior to this
position,heheldseveralexecutivepositionswithFifthThirdBancorpandFifthThirdBank,includingChiefExecutiveOfMicer,PresidentandChiefOperatingOfMicer. Mr.
SchaeferholdsaBachelorofSciencedegreefromtheU.S.MilitaryAcademyatWestPointandaMastersinBusinessAdministrationfromXavierUniversity.
JaniceJ.Teal,Age:60
Dr.TealservedastheGroupVicePresidentandChiefScientiMicOfMicerforAvonProductsInc.,adirectsellerofbeautyandrelatedproducts,fromJanuary1999toMay
2010. Prior to that position, Dr. Teal served as Vice President of the Avon Skin Care Laboratories, where she led the bioscience research and skin care teams. Dr. Teal
holdsadoctoratedegreeandaMasterofSciencedegreeinPharmacologyfromEmoryUniversityMedicalSchool,aPharmacyDegreefromMercerUniversityandwasa
Post-DoctoralFellowattheNewYorkUniversityMedicalCenterInstituteofEnvironmentalMedicine.
JohnF.Turner,Age:70
Mr. Turner served as Assistant Secretary of State for the U.S. Department of State's Bureau of Oceans and International and ScientiMic Affairs in Washington, D.C., from
November 2001 until July 2005. Prior to serving at the Department of State, he was President and Chief Executive OfMicer of The Conservation Fund, a non- proMit
organizationdedicatedtoconservingAmerica'snaturalandhistoricheritage.Mr.TurneralsoservedintheWyomingstatelegislaturefor19yearsandisapastpresident
oftheWyomingStateSenate.HeisalsoamanagingpartnerinTheTriangleXRanchinWyomingandavisitingprofessorattheUniversityofWyoming.Mr.Turnerholdsa
BachelorofArtsdegreeinbiologyfromtheUniversityofNotreDameandaMasterofSciencedegreeinwildlifeecologyfromtheUniversityofMichigan.
MichaelJ.Ward,Age:62
Mr. Ward is Chairman of the Board and Chief Executive OfMicer of CSX Corporation, a transportation supplier. Prior to this position, he was President of CSX
Transportation,thecorporation'srailunit.Mr.WardholdsaBachelorofSciencedegreefromtheUniversityofMarylandandaMastersinBusinessAdministrationfrom
theHarvardBusinessSchool.
DirectorCompensation
83
AnnualRetainer
anannualretainerof$90,000foreachdirector
anadditionalannualretainerof$20,000fortheLeadIndependentDirector
anadditionalannualretainerof$15,000fortheChairoftheAuditCommitteeand$9,000forAuditCommitteemembers
anadditionalannualretainerof$10,000forotherCommitteeChairs
Non- employee directors may elect to receive part or all of each retainer in cash or in shares of Ashland Common Stock. They may also elect to have a portion or all retainers
deferredandpaidthroughtheDirectors'DeferralPlan.Thedirectorswhomakeanelectiontodeferretainersmayhavethedeferredamountsheldascommonstockunits(share
equivalents)inthehypotheticalAshlandCommonStockfundorinvestedundertheotheravailableinvestmentoptionsundertheplan.Thepayoutofthedeferredretainersoccurs
upon termination of service by a director. Directors may elect to have the payout in a single lump sum or in installments not to exceed 15 years. For deferrals before January 1,
2005,upona"changeincontrol"ofAshland(asdeMinedintheDirectors'DeferralPlan),amountsinthedirectors'deferralaccountswillbeautomaticallydistributedasalumpsum
in cash to the director. For deferrals on and after January 1, 2005, distributions for such deferrals will be made pursuant to each director's election and valued at the time of the
distribution.
RestrictedShares/Units
UponelectiontotheBoardofDirectors,eachnewdirectorreceived1,000restrictedsharesofAshlandCommonStock.
Each non- employee director also receives an annual award of deferred restricted stock units in the Directors' Deferral Plan with a grant date value of $100,000 (pro- rated as
applicable for less than a full- year of service). The restricted stock units vest one year after date of grant or upon the date of the next annual shareholder meeting, if earlier.
Dividendsonrestrictedstockunitsarereinvestedinadditionalrestrictedstockunits.Upona"changeincontrol"ofAshland,therestrictedstockunitsimmediatelyvest.Adirector
mayelectbeforetherestrictedstockunitsvesttohavehisorhervestedunitspaidinsharesofAshlandCommonStockorincashafterthedirectorterminatesfromservice.
StockOwnershipGuidelines
Minimum ownership guidelines for non- employee directors which require each director to own the lesser of (i) 12,500 shares or units of Ashland Common Stock, or (ii) Ashland
Common Stock having a value of at least Mive times his or her base annual cash retainer of $90,000. Each newly elected director has Mive years from the year elected to reach this
ownershiplevel.
TheBoardofDirectorsconsidersAshlandCommonStockownershipby
directorstobeofutmostimportance.TheBoardbelievesthatsuch
ownershipenhancesthecommitmentofdirectorstoAshland'sfutureand
alignstheirinterestswiththoseofAshland'sothershareholders.
Boardalignedwithshareholders.

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