NOTE B – VALVOLINE

Ashland Separation of Valvoline

On September 22, 2015, Ashland announced that the Board of Directors approved proceeding with a plan to separate Ashland into two independent, publicly traded companies comprising of the new Ashland (now known as Ashland Global Holdings Inc.) and Valvoline Inc. The initial step of the separation, the initial public offering (IPO) of Valvoline Inc., closed on September 28, 2016. As discussed further within the Final Separation section of this Note, Ashland completed the distribution of its remaining shares in Valvoline Inc. on May 12, 2017. The new Ashland is a premier global leader in providing specialty chemical solutions to customers in a wide range of consumer and industrial markets. Key markets and applications include pharmaceutical, personal care, food and beverage, architectural coatings, adhesives, automotive, construction and energy

After completing the IPO on September 28, 2016 and before the distribution of its remaining shares on May 12, 2017, Ashland owned 170 million shares of Valvoline Inc.’s common stock which represented approximately 83% of the total outstanding shares of Valvoline Inc.’s common stock. As a result, Ashland continued to consolidate Valvoline within the Condensed Consolidated Financial Statements up until the distribution of the remaining shares. The resulting outside stockholders’ interests in Valvoline Inc., which were approximately 17%, was presented separately as a noncontrolling interest within Ashland’s equity in the Condensed Consolidated Balance Sheets up until the distribution of the remaining shares. The amount of consolidated net income attributable to these minority holders is presented as a separate caption on the Statements of Consolidated Comprehensive Income (Loss) for the three and nine months ended June 30, 2017.

Final Separation

Ashland completed the distribution of its remaining 170 million shares of common stock of Valvoline Inc. as a pro rata dividend on shares of Ashland common stock outstanding at the close of business on the record date of May 5, 2017. Based on the shares of Ashland common stock outstanding as of May 5, 2017, the record date for the distribution, each share of Ashland common stock received 2.745338 shares of Valvoline common stock in the distribution. The distribution was recorded at the carrying amount of Valvoline Inc.'s net assets which was a deficit of $187 million as of May 12, 2017, as follows:

	May 12
(In millions)	2017
ASSETS
Current assets
Cash and cash equivalents	$	179
Accounts receivable, net		385
Inventories		153
Other current assets		24
Total current assets		741
Noncurrent assets
Net property, plant and equipment		357
Goodwill		329
Equity and other unconsolidated investments		31
Deferred income taxes		391
Other noncurrent assets		93
Total noncurrent assets		1,201
Total assets		1,942
LIABILITIES AND EQUITY
Current liabilities
Short-term debt		75
Current portion of long-term debt		16
Trade and other payables		353
Other current liabilities		34
Total current liabilities		478
Noncurrent liabilities
Long-term debt		662
Employee benefit obligations		826
Other long-term liabilities		163
Total noncurrent liabilities		1,651
Total liabilities		2,129
Net deficit	$	(187	)

A Tax Matters Agreement between Ashland and Valvoline Inc. governs the rights and obligations after the separation regarding certain income taxes and other taxes, including certain tax liabilities and benefits, attributes, returns and contests.

Discontinued Operations Assessment

Valvoline met the criteria to qualify as a discontinued operation and accordingly, its 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. See Note D for more information.

Costs of transaction

Ashland recognized separation costs of $1 million and $28 million for the three months ended June 30, 2018 and 2017, respectively, and $9 million and $82 million for the nine months ended June 30, 2018 and 2017, respectively. Of these amounts, $13 million of separation costs directly related to Valvoline and were included within the discontinued operations caption of the Statement of Consolidated Comprehensive Income (Loss) for the nine months ended June 30, 2017, respectively. Otherwise, separation costs are recorded within the selling, general and administrative expense caption of the Statements of Consolidated Comprehensive Income (Loss).