Ashland is subject to liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims result from indemnification obligations undertaken in 1990 in connection with the sale of Riley and the acquisition of Hercules in November 2008. Although Riley, a former subsidiary, was neither a producer nor a manufacturer of asbestos, its industrial boilers contained some asbestos-containing components provided by other companies. Hercules, an indirect wholly-owned subsidiary of Ashland, has liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims typically arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products sold by one of Hercules’ former subsidiaries to a limited industrial market.

To assist in developing and annually updating independent reserve estimates for future asbestos claims and related costs given various assumptions for Ashland and Hercules asbestos claims, Ashland retained third party actuarial experts Gnarus. The methodology used by Gnarus to project future asbestos costs is based largely on recent experience, including claim-filing and settlement rates, disease mix, open claims and litigation defense. The claim experience of Ashland and Hercules are separately compared to the results of previously conducted third party epidemiological studies estimating the number of people likely to develop asbestos-related diseases. Those studies were undertaken in connection with national analyses of the population expected to have been exposed to asbestos. Using that information, Gnarus estimates a range of the number of future claims that may be filed, as well as the related costs that may be incurred in resolving those claims. Changes in asbestos litigation reserves and receivables are recorded on an after-tax basis within the income from discontinued operations, net of income taxes caption in the Statements of Condensed Consolidated Comprehensive Income (Loss).

The claims alleging personal injury caused by exposure to asbestos asserted against Ashland result primarily from indemnification obligations undertaken in 1990 in connection with the sale of Riley. The amount and timing of settlements and number of open claims can fluctuate from period to period. A summary of Ashland asbestos claims activity, excluding Hercules claims, is as follows:


	Six months ended
	March 31						Years ended September 30
(In thousands)	2026			2025			2025			2024			2023
Open claims - beginning of year		40			41			41			42			44
New claims filed		1			1			2			2			2
Claims settled		—			—			—			(1	)		(1	)
Claims dismissed		(1	)		(1	)		(3	)		(2	)		(3	)
Open claims - end of period		40			41			40			41			42

From the range of estimates, Ashland records the amount it believes to be the best estimate of future payments for litigation defense and claim settlement costs. Ashland reviews this estimate and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate 40-year model developed with the assistance of Gnarus.

Total reserves for asbestos claims were $239 million and $258 million at March 31, 2026 and September 30, 2025, respectively.

A progression of activity in the asbestos litigation reserves is presented in the following table.


	Six months ended
	March 31						Years ended September 30
(In millions)	2026			2025			2025			2024			2023
Asbestos litigation reserves - beginning of year	$	258		$	274		$	274		$	281		$	305
Reserve adjustment		—			—			16			24			9
Amounts paid		(19	)		(18	)		(32	)		(31	)		(33	)
Asbestos litigation reserves - end of period(a)	$	239		$	256		$	258		$	274		$	281

Ashland has insurance coverage for certain litigation defense and claim settlement costs incurred in connection with its asbestos claims, and coverage-in-place agreements exist with the insurance companies that provide substantially all of the coverage that will be accessed.

For the Ashland asbestos-related obligations, Ashland has estimated the value of probable insurance recoveries associated with its asbestos litigation reserves based on management’s interpretations and estimates surrounding the available or applicable insurance coverage, including an assumption that all solvent insurance carriers remain solvent. Substantially all of the estimated receivables from insurance companies are expected to be due from domestic insurers, all of which are solvent.

At March 31, 2026 and September 30, 2025, Ashland’s receivable for recoveries of litigation defense and claim settlement costs from insurers amounted to $91 million (excluding the Hercules receivable for asbestos claims discussed below) and $95 million, respectively.

A progression of activity in the Ashland insurance receivable is presented in the following table.


	Six months ended
	March 31						Years ended September 30
(In millions)	2026			2025			2025			2024			2023
Insurance receivable - beginning of year	$	95		$	97		$	97		$	95		$	101
Receivable adjustment		—			—			5			11			3
Amounts collected		(4	)		(2	)		(7	)		(9	)		(9	)
Insurance receivable - end of period(a)(b)	$	91		$	95		$	95		$	97		$	95

(a)

The allowance for credit losses was $1 million at both March 31, 2026 and September 30, 2025.

(b)

Includes $10 million classified in accounts receivable, net on the Condensed Consolidated Balance Sheets at both March 31, 2026 and September 30, 2025.

Hercules has liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims typically arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products which were sold by one of Hercules’ former subsidiaries to a limited industrial market. The amount and timing of settlements and number of open claims can fluctuate from period to period. A summary of Hercules’ asbestos claims activity follows:


	Six months ended
	March 31						Years ended September 30
(In thousands)	2026			2025			2025			2024		2023
Open claims - beginning of year		11			12			12			11		12
New claims filed		1			1			1			1		1
Claims dismissed		(1	)		(1	)		(2	)		—		(2	)
Open claims - end of period		11			12			11			12		11

From the range of estimates, Ashland records the amount it believes to be the best estimate of future payments for litigation defense and claim settlement costs. Ashland reviews this estimate, and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate 40-year model developed with the assistance of Gnarus. Total reserves for asbestos claims were $169 million and $177 million at March 31, 2026 and September 30, 2025, respectively.

A progression of activity in the asbestos litigation reserves is presented in the following table.


	Six months ended
	March 31						Years ended September 30
(In millions)	2026			2025			2025			2024			2023
Asbestos litigation reserves - beginning of year	$	177		$	185		$	185		$	191		$	213
Reserve adjustments		—			—			10			14			(2	)
Amounts paid		(8	)		(5	)		(18	)		(20	)		(20	)
Asbestos litigation reserves - end of period(a)	$	169		$	180		$	177		$	185		$	191

(a)

Includes $17 million classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets at both March 31, 2026 and September 30, 2025.

For the Hercules asbestos-related obligations, certain reimbursement obligations pursuant to coverage-in-place agreements with insurance carriers exist. As a result, any increases in the asbestos reserve have been partially offset by probable insurance recoveries. Ashland has estimated the value of probable insurance recoveries associated with its asbestos reserve based on management’s interpretations and estimates surrounding the available or applicable insurance coverage, including an assumption that all solvent insurance carriers remain solvent. The estimated receivable consists exclusively of solvent domestic insurers.

As of March 31, 2026 and September 30, 2025, Ashland’s receivable for recoveries of litigation defense and claims costs from insurers with respect to Hercules amounted to $47 million and $48 million, respectively.

A progression of activity in the Hercules insurance receivable is presented in the following table.


	Six months ended
	March 31						Years ended September 30
(In millions)	2026			2025			2025			2024			2023
Insurance receivable - beginning of year	$	48		$	50		$	50		$	47		$	52
Receivable adjustment		—			—			4			6			(3	)
Amounts collected		(1	)		(4	)		(6	)		(3	)		(2	)
Insurance receivable - end of period(a)(b)	$	47		$	46		$	48		$	50		$	47

(a)

The allowance for credit losses was $1 million at both March 31, 2026 and September 30, 2025.

(b)

Includes $6 million classified in accounts receivable, net on the Condensed Consolidated Balance Sheets at both March 31, 2026 and September 30, 2025.

Projecting future asbestos costs is subject to numerous variables that are difficult to predict. In addition to the uncertainties surrounding the number of claims that might be received, other variables include the type and severity of the disease alleged by each claimant and the related costs incurred in resolving those claims, mortality rates, dismissal rates, and uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case. Furthermore, any predictions with respect to these variables are subject to even greater uncertainty as the projection period lengthens. In light of these inherent uncertainties, Ashland believes that the asbestos reserves for Ashland and Hercules represent the best estimate within a range of possible outcomes. As a part of the process to develop these estimates of future asbestos costs, a range of long-term cost models was developed. These models are based on national studies that predict the number of people likely to develop asbestos-related diseases and are heavily influenced by assumptions regarding long-term inflation rates for indemnity payments and legal defense costs, as well as other variables mentioned previously. Ashland has currently estimated in various models ranging from approximately 40 year periods that it is reasonably possible that total future litigation defense and claim settlement costs on an inflated and undiscounted basis could range as high as approximately $382 million for the Ashland asbestos-related litigation (current reserve of $239 million) and approximately $262 million for the Hercules asbestos-related litigation (current reserve of $169 million), depending on the combination of assumptions selected in the various models. While the timeframe used in Ashland’s models for projecting asbestos litigation reserves generally decreases over time based on the expected lifetime of the reserves, these models have been consistently applied between all periods presented. If actual experience is worse than projected, relative to the number of claims filed, the severity of alleged disease associated with those claims or costs incurred to resolve those claims, or actuarial refinement or improvements to the assumptions used within these models are initiated, Ashland

may need to further increase the estimates of the costs associated with asbestos claims and these increases could be material over time.

Ashland is subject to various federal, state and local environmental laws and regulations that require environmental assessment or remediation efforts (collectively environmental remediation) at multiple locations. At March 31, 2026, such locations included 52 sites where Ashland has been identified as a potentially responsible party under Superfund or similar state laws, 107 current and former operating facilities and about 1,225 service station properties, of which 15 are being actively remediated.

Ashland’s reserves for environmental remediation and related environmental litigation amounted to $219 million and $226 million at March 31, 2026 and September 30, 2025, respectively, of which $171 million and $179 million at March 31, 2026 and September 30, 2025, respectively, were classified in other noncurrent liabilities on the Condensed Consolidated Balance Sheets. The remaining reserves were classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets.

The following table provides a reconciliation of the changes in the environmental remediation reserves:


	Six months ended
	March 31
(In millions)	2026			2025
Environmental remediation reserves - beginning of year	$	226		$	221
Disbursements		(18	)		(17	)
Revised obligation estimates and accretion		11			3
Environmental remediation reserves - end of period	$	219		$	207

Components of environmental remediation expense included within the selling, general and administrative expense caption of the Statements of Condensed Consolidated Comprehensive Income (Loss) are presented in the following table:


	Three months ended				Six months ended
	March 31				March 31
(In millions)	2026		2025		2026		2025
Environmental expense	$	1	$	2	$	11	$	3
Legal expense		1		—		1		1
Total expense		2		2		12		4

Insurance receivable		—		—		—		(1	)
Total expense, net of receivable activity	$	2	$	2	$	12	$	3

Environmental remediation reserves are subject to uncertainties that affect Ashland’s ability to estimate its share of the costs. Such uncertainties involve the nature and extent of contamination at each site and the extent of required cleanup efforts under existing environmental regulations. Although it is not possible to predict with certainty the ultimate costs of environmental remediation, Ashland currently estimates that the upper end of the reasonably possible range of future costs for identified sites could be as high as approximately $480 million. The largest reserve for any site is 22% of the environmental remediation reserves as of March 31, 2026.

In addition to the matters described above, there are other various claims, lawsuits and administrative proceedings pending or threatened against Ashland and its current and former subsidiaries. Such actions are with respect to commercial matters, product liability, toxic tort liability, and other environmental matters, which seek remedies or damages, some of which are for substantial amounts. While Ashland cannot predict with certainty the outcome of such actions, it believes that adequate reserves have been recorded and losses already recognized with respect to such actions were immaterial as of March 31, 2026. There is a reasonable possibility that a loss exceeding amounts already recognized may be incurred related to these actions; however, Ashland believes that such potential losses were immaterial as of March 31, 2026.