v3.25.2
Fair Value Measurements
 9 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements

NOTE E – FAIR VALUE MEASUREMENTS

Ashland uses applicable guidance for defining fair value, the initial recording and periodic remeasurement of certain assets and liabilities measured at fair value and related disclosures for instruments measured at fair value. Fair value accounting guidance establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement.

For assets that are measured using quoted prices in active markets (Level 1), the total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs. Assets and liabilities that are measured using significant other observable inputs (Level 2) are primarily valued by reference to quoted prices of similar assets or liabilities in active markets, adjusted for any terms specific to that asset or liability. For all other assets and liabilities for which unobservable inputs are used (Level 3), fair value is derived through the use of fair value models, such as a discounted cash flow model or other standard pricing models that Ashland deems reasonable.

The following table summarizes financial instruments subject to recurring fair value measurements as of June 30, 2025:

 

(In millions)

 

Carrying value

 

 

Total
fair value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

207

 

 

$

207

 

 

$

207

 

 

$

—

 

 

$

—

 

Restricted investments(a)(b)

 

 

350

 

 

 

350

 

 

 

350

 

 

 

—

 

 

 

—

 

Investment of captive insurance company(c)

 

 

3

 

 

 

3

 

 

 

3

 

 

 

—

 

 

 

—

 

Foreign currency derivatives(d)

 

 

2

 

 

 

2

 

 

 

—

 

 

 

2

 

 

 

—

 

Commodity derivatives(d)

 

 

1

 

 

 

1

 

 

 

—

 

 

 

1

 

 

 

—

 

Total assets at fair value

 

$

563

 

 

$

563

 

 

$

560

 

 

$

3

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency derivatives(e)

 

$

1

 

 

$

1

 

 

$

—

 

 

$

1

 

 

$

—

 

Total liabilities at fair value

 

$

1

 

 

$

1

 

 

$

—

 

 

$

1

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(a)
Includes $283 million within restricted investments and $67 million within other current assets in the Condensed Consolidated Balance Sheet.
(b)
Includes $228 million related to the Asbestos trust and $122 million related to the Environmental trust.
(c)
Included in other noncurrent assets in the Condensed Consolidated Balance Sheet.
(d)
Included in accounts receivable, net in the Condensed Consolidated Balance Sheet.
(e)
Included in accrued expenses and other liabilities in the Condensed Consolidated Balance Sheet.

The following table summarizes financial instruments subject to recurring fair value measurements as of September 30, 2024:

 

(In millions)

 

Carrying value

 

 

Total
fair value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

300

 

 

$

300

 

 

$

300

 

 

$

—

 

 

$

—

 

Restricted investments(a)(b)

 

 

368

 

 

 

368

 

 

 

368

 

 

 

—

 

 

 

—

 

Investment of captive insurance company(c)

 

 

7

 

 

 

7

 

 

 

7

 

 

 

—

 

 

 

—

 

Foreign currency derivatives(d)

 

 

1

 

 

 

1

 

 

 

—

 

 

 

1

 

 

 

—

 

Total assets at fair value

 

$

676

 

 

$

676

 

 

$

675

 

 

$

1

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency derivatives(e)

 

$

1

 

 

$

1

 

 

$

—

 

 

$

1

 

 

$

—

 

Commodity derivatives(e)

 

 

2

 

 

 

2

 

 

 

—

 

 

 

2

 

 

 

—

 

Total liabilities at fair value

 

$

3

 

 

$

3

 

 

$

—

 

 

$

3

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(a)
Includes $295 million within restricted investments and $73 million within other current assets in the Condensed Consolidated Balance Sheet.
(b)
Includes $248 million related to the Asbestos trust and $120 million related to the Environmental trust.
(c)
Included in other noncurrent assets in the Condensed Consolidated Balance Sheet.
(d)
Included in accounts receivable, net in the Condensed Consolidated Balance Sheet.
(e)
Included in accrued expenses and other liabilities in the Condensed Consolidated Balance Sheet.

Restricted investments

Ashland maintains certain investments in Company restricted renewable annual trusts for the purpose of paying future asbestos indemnity and defense costs and future environmental remediation and related litigation costs. The financial instruments are designated as investment securities, classified as Level 1 measurements within the fair value hierarchy. These investment securities were classified primarily as noncurrent restricted investment assets, with $67 million and $73 million classified within other current assets, in the Condensed Consolidated Balance Sheets at June 30, 2025 and September 30, 2024, respectively.

The following table presents gross unrealized gains and losses for the restricted investments as of:

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

(In millions)

 

Adjusted Cost

 

 

Unrealized Gain

 

 

Unrealized Loss

 

 

Fair Value

 

June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposit

 

$

2

 

 

$

—

 

 

$

—

 

 

$

2

 

Equity mutual fund

 

 

113

 

 

 

61

 

 

 

—

 

 

 

174

 

Fixed income mutual fund

 

 

209

 

 

 

—

 

 

 

(35

)

 

 

174

 

Fair value

 

$

324

 

 

$

61

 

 

$

(35

)

 

$

350

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposit

 

$

5

 

 

$

—

 

 

$

—

 

 

$

5

 

Equity mutual fund

 

 

124

 

 

 

56

 

 

 

—

 

 

 

180

 

Fixed income mutual fund

 

 

211

 

 

 

—

 

 

 

(28

)

 

 

183

 

Fair value

 

$

340

 

 

$

56

 

 

$

(28

)

 

$

368

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table presents the investment income, net gains and losses realized, funds restricted for specific transactions, and disbursements related to the investments within the restricted investments portfolio:

 

 

Three months ended

 

 

Nine months ended

 

 

 

June 30

 

 

June 30

 

(In millions)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Investment income(a)

 

$

3

 

 

$

3

 

 

$

10

 

 

$

12

 

Net gains(a)

 

 

19

 

 

 

1

 

 

 

5

 

 

 

39

 

Funds restricted for specific transactions

 

 

—

 

 

 

—

 

 

 

8

 

 

 

5

 

Disbursements

 

 

(17

)

 

 

(23

)

 

 

(41

)

 

 

(60

)

 

 

 

 

 

 

 

 

 

 

 

 

 
(a)
Included in the net interest and other expense (income) caption within the Statements of Condensed Consolidated Comprehensive Income (Loss).

Foreign currency derivatives

Ashland conducts business in a variety of foreign currencies. Accordingly, Ashland regularly uses foreign currency derivative instruments to manage exposure on certain transactions denominated in foreign currencies to curtail potential earnings volatility effects of certain assets and liabilities, including short-term intercompany loans, denominated in currencies other than Ashland’s functional currency of an entity. These derivative contracts generally require exchange of one foreign currency for another at a fixed rate at a future date and generally have maturities of less than twelve months. All contracts are valued at fair value with net changes in fair value recorded within the selling, general and administrative expense caption within the Statements of Condensed Consolidated Comprehensive Income (Loss). The impacts of these contracts were largely offset by gains and losses resulting from the impact of changes in exchange rates on transactions denominated in non-functional currencies. The following table summarizes the gains recognized within the Statements of Condensed Consolidated Comprehensive Income (Loss):

 

 

Three months ended

 

 

Nine months ended

 

 

 

June 30

 

 

June 30

 

(In millions)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Foreign currency derivative gains

 

$

20

 

 

$

1

 

 

$

17

 

 

$

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table summarizes the fair values of the outstanding foreign currency derivatives included in accounts receivable, net and accrued expenses and other liabilities of the Condensed Consolidated Balance Sheets as of:

 

 

 

June 30

 

 

September 30

 

(In millions)

 

2025

 

 

2024

 

Foreign currency derivative assets

 

$

2

 

 

$

1

 

Notional contract values

 

 

122

 

 

 

125

 

 

 

 

 

 

Foreign currency derivative liabilities

 

$

1

 

 

$

1

 

Notional contract values

 

 

80

 

 

 

184

 

 

 

 

 

 

 

 

 

Commodity derivatives

To manage its exposure to the market price volatility of natural gas consumed by its U.S. plants during the manufacturing process, Ashland regularly enters into forward contracts that are designated as cash flow hedges.

The following table summarizes the net losses recognized within the cost of sales caption of the Statements of Condensed Consolidated Comprehensive Income (Loss):

 

 

Three months ended

 

 

Nine months ended

 

 

 

June 30

 

 

June 30

 

(In millions)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Commodity derivative losses

 

$

(1

)

 

$

(2

)

 

$

(2

)

 

$

(5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table summarizes the fair values of the outstanding commodity derivatives included in accounts receivable, net and accrued expenses and other liabilities of the Condensed Consolidated Balance Sheets as of:

 

 

June 30

 

 

September 30

 

(In millions)

 

2025

 

 

2024

 

Commodity derivative assets

 

$

1

 

 

$

—

 

Notional contract values

 

 

10

 

 

 

3

 

 

 

 

 

 

Commodity derivative liabilities

 

$

—

 

 

$

2

 

Notional contract values

 

 

4

 

 

 

13

 

 

 

 

 

 

 

 

Other financial instruments

At June 30, 2025 and September 30, 2024, Ashland's long-term debt (including the current portion and excluding debt issuance cost discounts) had a carrying value of $1,392 million and $1,361 million, respectively, compared to a fair value of $1,361 million and $1,327 million, respectively. The fair values of long-term debt are based on quoted market prices (level 1 of the fair value hierarchy).