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Fair Value Measurements (Tables)
 3 Months Ended
Dec. 31, 2019
Fair Value Disclosures [Abstract]  
Summary of Financial Instruments Subject to Recurring Fair Value Measurements

The following table summarizes financial instruments subject to recurring fair value measurements as of December 31, 2019.

 

 

 

Carrying

 

 

Total

fair

 

 

Quoted prices

in active

markets for

identical

assets

 

 

Significant

other

observable

inputs

 

 

Significant

unobservable

inputs

 

(In millions)

 

value

 

 

value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

157

 

 

$

157

 

 

$

157

 

 

$

—

 

 

$

—

 

Restricted investments (a)

 

 

338

 

 

 

338

 

 

 

338

 

 

 

—

 

 

 

—

 

Investment of captive insurance company (b)

 

 

6

 

 

 

6

 

 

 

6

 

 

 

—

 

 

 

—

 

Foreign currency derivatives

 

 

1

 

 

 

1

 

 

 

—

 

 

 

1

 

 

 

—

 

Total assets at fair value

 

$

502

 

 

$

502

 

 

$

501

 

 

$

1

 

 

$

—

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency derivatives

 

$

2

 

 

$

2

 

 

$

—

 

 

$

2

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Included in restricted investments is $24 million classified in the other current assets caption on the Condensed Consolidated Balance Sheets.

 

(b)

Included in other noncurrent assets in the Condensed Consolidated Balance Sheets.

The following table summarizes financial asset instruments subject to recurring fair value measurements as of September 30, 2019.

 

 

 

Carrying

 

 

Total

fair

 

 

Quoted prices

in active

markets for

identical

assets

 

 

Significant

other

observable

inputs

 

 

Significant

unobservable

inputs

 

(In millions)

 

value

 

 

value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

232

 

 

$

232

 

 

$

232

 

 

$

—

 

 

$

—

 

Restricted investments (a)

 

 

334

 

 

 

334

 

 

 

334

 

 

 

—

 

 

 

—

 

Investment of captive insurance company (b)

 

 

5

 

 

 

5

 

 

 

5

 

 

 

—

 

 

 

—

 

Foreign currency derivatives

 

 

2

 

 

 

2

 

 

 

—

 

 

 

2

 

 

 

—

 

Total assets at fair value

 

$

573

 

 

$

573

 

 

$

571

 

 

$

2

 

 

$

—

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency derivatives

 

$

2

 

 

$

2

 

 

$

—

 

 

$

2

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Included in restricted investments is $24 million classified in the other current assets caption on the Condensed Consolidated Balance Sheets.

 

(b)

Included in other noncurrent assets in the Condensed Consolidated Balance Sheets.
Summary of Investment Portfolio The following table provides a summary of the activity within the investment portfolio as of December 31, 2019 and September 30, 2019:

 

(In millions)

 

December 31

2019

 

 

September 30

2019

 

Original cost

 

$

335

 

 

$

335

 

Accumulated adjustments, net (a)

 

 

(30

)

 

 

(47

)

Adjusted cost, beginning of year

 

 

305

 

 

 

288

 

Investment income (b)

 

 

4

 

 

 

10

 

Net unrealized gain (c)

 

 

38

 

 

 

29

 

Realized gains (c)

 

 

—

 

 

 

32

 

Settlement funds

 

 

1

 

 

 

7

 

Disbursements

 

 

(10

)

 

 

(32

)

Fair value

 

$

338

 

 

$

334

 

 

 

 

 

 

 

 

 

 

 

 

(a)

The accumulated adjustments include investment income, realized gains, disbursements and settlements recorded in previous periods.

 

 

(b)

Investment income for the demand deposit includes interest income as well as dividend income transferred from the equity and corporate bond mutual funds.

 

 

(c)

Presented under the original cost method.

 

The following table presents gross unrealized gains and losses for the restricted investment securities as of December 31, 2019 and September 30, 2019:

 

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

(In millions)

 

Adjusted Cost

 

 

Unrealized Gain

 

 

Unrealized Loss

 

 

Fair Value

 

As of December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposit

 

$

8

 

 

$

—

 

 

$

—

 

 

$

8

 

Equity mutual fund

 

 

120

 

 

 

33

 

 

 

—

 

 

 

153

 

Corporate bond mutual fund

 

 

172

 

 

 

5

 

 

 

—

 

 

 

177

 

Fair value

 

$

300

 

 

$

38

 

 

$

—

 

 

$

338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposit

 

$

9

 

 

$

—

 

 

$

—

 

 

$

9

 

Equity mutual fund

 

 

120

 

 

 

24

 

 

 

(2

)

 

 

142

 

Corporate bond mutual fund

 

 

176

 

 

 

7

 

 

 

—

 

 

 

183

 

Fair value

 

$

305

 

 

$

31

 

 

$

(2

)

 

$

334

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Summary of Investment Income, Net Unrealized Gains and Losses, Realized Gains and Disbursements Related to Investments

The following table presents the investment income, net unrealized gains and losses, realized gains and disbursements related to the investments within the portfolio for the three months ended December 31, 2019 and 2018.

 

 

 

Three months ended

 

 

 

December 31

 

(In millions)

 

2019

 

 

2018

 

Investment income

 

$

4

 

 

$

3

 

Net gains (losses) realized (a)

 

 

9

 

 

 

(30

)

Disbursements

 

 

(10

)

 

 

(8

)

 

 

 

 

 

 

 

 

 

 

 

(a)

Ashland determined that all unrealized gains and losses were related to equity securities with readily determinable fair values. Due to the new accounting guidance adopted in the first quarter of fiscal 2019, the net unrealized gains (losses) during the three months ended December 31, 2018 and forward were recorded within the net interest and other expense caption in the Statements of Consolidated Comprehensive Income (Loss).
Summary of Net Gains and Losses on Foreign Currency Derivatives The following table summarizes the net gains and losses recognized during the three months ended December 31, 2019 and 2018 within the Statements of Consolidated Comprehensive Income (Loss).

 

 

 

Three months ended

 

 

 

December 31

 

(In millions)

 

2019

 

 

2018

 

Foreign currency derivative gains (losses)

 

$

1

 

 

$

1

 

 

 
Summary of Fair Values of Outstanding Foreign Currency Derivatives

The following table summarizes the fair values of the outstanding foreign currency derivatives as of December 31, 2019 and September 30, 2019 included in accounts receivable and accrued expenses and other liabilities of the Condensed Consolidated Balance Sheets.

 

 

 

December 31

 

 

September 30

 

(In millions)

 

2019

 

 

2019

 

Foreign currency derivative assets

 

$

1

 

 

$

2

 

Notional contract values

 

 

160

 

 

 

271

 

 

 

 

 

 

 

 

 

 

Foreign currency derivative liabilities

 

$

2

 

 

$

2

 

Notional contract values

 

 

330

 

 

 

168