Ashland(Valvoline) to Reduce SG&A Expense by $75 Million; Will Eliminate 500 Jobs

COVINGTON, Ky., Oct. 1, 2003 -- Ashland Inc. said today it is taking action to reduce selling, general and administrative expenses by approximately $75 million a year in fiscal 2004. This amount is in addition to $25 million in annual savings already achieved from a previously announced program earlier in fiscal 2003.

Ashland Chairman and Chief Executive Officer James J. O'Brien said the savings initiative reflects an effort to build and maintain a Top-Quartile Cost Structure (TQCS). "Reducing our costs is a pivotal part of our strategy to produce top-quartile results relative to our peers. Becoming a low-cost, operationally excellent organization is critical to serving our customers, enhancing our financial strength and restoring our ability to grow," he added.

The TQCS program will eliminate approximately 500 jobs in Ashland's wholly owned businesses and corporate resource groups. Eighty percent of the current reductions will be completed before Nov. 30. The company expects to record approximately $18 million in before-tax charges in the September quarter for severance and other costs related to the personnel changes occurring by Nov. 30.

O'Brien noted that Ashland had eliminated about 200 jobs earlier in fiscal 2003 and recorded $8 million in severance and related costs in earlier periods. When added to the 500 positions currently being eliminated, the combined total of 700 jobs is equal to about 7 percent of Ashland's salaried employees.

"The TQCS program is a reflection of the transformation we began about a year ago," O'Brien said. "Since then, we have rewritten the book on how we operate as a company. We have a new vision, new mission, new operating principles, common values and a clearly defined business strategy. That strategy is grounded in achieving a level of cost and efficiency that enables us to consistently outperform our peers."

O'Brien added that Ashland is examining additional cost reductions that may be available through a realignment of activities across the corporation and outsourcing, but estimates of potential savings and transition charges have not yet been made.

In other factors affecting results for the September quarter, Ashland intends to establish a reserve in the quarter for an estimated pre-tax loss of about $9 million on non-strategic APAC assets identified for disposition. Also, as previously disclosed, Ashland expects to record an after-tax gain of approximately $80 million on the sale of its Electronic Chemicals business group, a transaction that closed August 29. Ashland's fiscal fourth quarter ended September 30, and the company expects to report results for the quarter and fiscal 2003 on October 21.

Ashland Inc. is a Fortune 500 company providing products, services, and customer solutions throughout the world. Our businesses include road construction, specialty chemicals, lubricants, car-care products, chemical and plastics distribution and transportation fuels. Through the dedication of our employees, we are "The Who In How Things Work(TM)." Find us at www.ashland.com.