NOTE D – DISCONTINUED OPERATIONS

In previous periods, Ashland has divested certain businesses that have qualified as discontinued operations. The operating results from these divested businesses and subsequent adjustments related to ongoing assessments of certain retained liabilities and tax items have been recorded within the discontinued operations caption in the Statements of Consolidated Comprehensive Income (Loss) for all periods presented and are discussed further within this note.

As previously discussed in Notes A and B, Ashland completed the distribution of its remaining 170 million shares of common stock of Valvoline Inc. on May 12, 2017. Ashland determined that the Valvoline separation qualified as a discontinued operation, in accordance with U.S. GAAP, since it represents a strategic shift for Ashland and has a major effect on Ashland's operations and financial results. Accordingly, Valvoline's operating results and cash flows for the three and nine months ended June 30, 2017 have been classified as discontinued operations within the Condensed Consolidated Financial Statements. The activity during the three and nine months ended June 30, 2018 generally represents subsequent adjustments that were made in conjunction with the Tax Matters Agreement.

Ashland is subject to liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims result primarily from indemnification obligations undertaken in 1990 in connection with the sale of Riley Stoker Corporation (Riley), a former subsidiary of Ashland, which qualified as a discontinued operation, and from the 2009 acquisition of Hercules LLC (formerly Hercules Incorporated), a wholly-owned subsidiary of Ashland. Adjustments to the recorded litigation reserves and related insurance receivables are recorded within discontinued operations. See Note K for more information related to the adjustments on asbestos liabilities and receivables.

During 2011, Ashland completed the sale of substantially all of the assets and certain liabilities of its global distribution business, which previously comprised the Ashland Distribution (Distribution) reportable segment. Ashland determined that this sale qualified as a discontinued operation, in accordance with U.S. GAAP, since Ashland does not have significant continuing involvement in the Distribution business. Ashland has made subsequent adjustments to the discontinued operations caption related to the sale.

On July 31, 2014, Ashland completed the sale of the Ashland Water Technologies (Water Technologies) business. Ashland made subsequent post-closing adjustments to the discontinued operations caption as defined by the definitive agreement during the three and nine months ended June 30, 2017.

Components of amounts reflected in the Statements of Consolidated Comprehensive Income (Loss) related to discontinued operations are presented in the following table for the three and nine months ended June 30, 2018 and 2017.

	Three months ended						Nine months ended
	June 30						June 30
(In millions)	2018			2017			2018			2017
Income (loss) from discontinued operations (net of tax)
Valvoline	$	(7	)	$	12		$	1		$	161
Asbestos-related litigation		9			(25	)		12			(25	)
Distribution		(2	)		—			(3	)		—
Water Technologies		—			(1	)		(1	)		2
	$	—		$	(14	)	$	9		$	138

The following table presents a reconciliation of the historically reported captions within Ashland's Statements of Consolidated Income (Loss) for the income from discontinued operations attributable to Valvoline for the three and nine months ended June 30, 2017.

	Three			Nine
	months ended			months ended
(In millions)	June 30, 2017			June 30, 2017
Income (loss) from discontinued operations attributable to Valvoline
Sales	$	234		$	1,237
Cost of sales		(148	)		(750	)
Selling, general and administrative expense		(50	)		(222	)
Research and development expense		(1	)		(8	)
Equity and other income		3			17
Pretax operating income of discontinued operations		38			274
Net interest and other financing expense		(5	)		(22	)
Pretax income of discontinued operations		33			252
Income tax expense		(21	)		(91	)
Income from discontinued operations	$	12		$	161