Requirements

For 
Fundamentals of
Accountancy,Busines
s,& 
Management
 

 
 

               Danniella Tracy Alava

                Grade XII-Walt Disney

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Ashland Global Holdings Inc. and Consolidated Subsidiaries

Opinion on Internal Control Over Financial Reporting

We have audited Ashland Global Holdings Inc. and Consolidated Subsidiaries’ internal control over financial reporting as of September

30, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations

of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Ashland Global Holdings Inc. and Consolidated

Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30,

2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),

the consolidated balance sheets of the Company as of September 30, 2020 and 2019, the related consolidated statements of

comprehensive income (loss), equity and cash flows for each of the three years in the period ended September 30, 2020, and the

related notes and our report dated November 23, 2020 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of

the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control

Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on

our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company

in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness

exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such

other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our

opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of

financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting

principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the

company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in

accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in

accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect

on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions, or that the degree of compliance with the policies or procedures may deteriorate.

  /s/ Ernst & Young LLP

Cincinnati, Ohio

November 23, 2020

Ashland Global Holdings Inc.

Statement of financial Position

(Dollars in thousands, except  per share amounts)

 
ASSETS INCREASE DECREASE

CURRENT ASSETS 2020 2019 P %

Cash and cash equivalents $ 454 $232 $ 222  95.69%

Accounts receivable (a) 471  481 (10) -2.08%

Inventories - Note A 529  597 (68) - 11.39%

Other assets 87  64 23  35.94%

Current assets held for sale - Note C 6  59 (53)  -89.83%

Total current assets 1,547 1,433 114 7.96 %

Property, plant and equipment - Note

G

Cost 3,265 3,165 100  3.16%

Accumulated depreciation  1,700  1,588 112 7.05%

Net property, plant and equipment 1,565 1,577  (12)  -0.76%

Goodwill - Note H 1,758  2,253 (495)  -21.97%

Intangibles - Note H 1,013  1,088 (75)  -6.89%

Operating lease assets, net - Note K  137 -  -  -

Restricted investments - Note F  301  310 (9)  -2.90%

Asbestos insurance receivable - Note 136  157 (21) - 13.38%

N

Deferred income taxes - Note L  26  23 3  13.04%

Other assets - Note J 394  410  (16) -3.90%

Total noncurrent assets 5,330  5,818 (488)  -8.39

Total assets  $ 6,877 $ 7,251  $ (374)  -5.16%

 
 Ashland Global Holdings Inc.

Statement of financial Position

(Dollars in thousands, except  per share amounts)

Vertical

ASSETS INCREASE DECREASE

CURRENT ASSETS 2020 % 2019 %

Cash and cash equivalents $ 454  29.35%  $ 232 16.19%

Accounts receivable (a) 471 30.45% 481 33.57%

Inventories - Note A 529  34..20% 597  41.66%

Other assets 87  5.62%  64 4.47%

Current assets held for sale - Note C 6 0.39% 59 4.12%

Total current assets  1,547  100% 1,433 100%

Property, plant and equipment - Note

G

Cost  3,265  52.71% 3,165  43.65%

Accumulated depreciation  1,700  24.72%  1,588 21.90%

Net property, plant and equipment  1,565  22.76% 1,577 21.75%

Goodwill - Note H 1,758  25.56%  2,253 31.07%

Intangibles - Note H 1,013 14.73% 1,088 15.00%

Operating lease assets, net - Note K 137  1.99%  - -

Restricted investments - Note F  301 4.38% 310 4.28%

Asbestos insurance receivable - Note N  136 1.98%  157 0.02%

Deferred income taxes - Note L  26 0.38% 23 0.32%

Other assets - Note J 394 5.73% 410 5.65%

Total noncurrent assets  5,330 77.50% 5,818 80.24%

Total assets $ 6,877  100% $ 7,251 100%

 
 

Horizontal
LIABILITIES INCREASE DECREASE

2020 2019 P %

 Liabilities and Equity

 Current Liabilities

 Short-term debt- Note I $ 280 $ 166  $ 144% $  68.67%

 Trade and other payables 233  313  (80)  -25.56%

 Accrued expenses and other liabilities 277  271 6 2.21 %

 Current operating lease obligation- Note K 23 -  -  -

 Current liabilities held for sale- Note C - 7  -  -

  Total current liabilities  813  757  56  7.40%

 Noncurrent liabilities

 Long-term debt- Note I  1,573 1,501 72 4.80%

 Asbestos litigation reserve-Note N  513  555 (42) 7.57%

 Deffered income taxes- Note L  229  264 (35) 13.26%

 Employee benefit obligations- Note M  157  150 7  4.67%

 Operating lease obligations- Note K  124  - - -

 Other liabilities- Note J  432 453  (21) -4.64%

  Total noncurrent liabilities  3,028 2,923 105 3.59%

 Commitment and contingencies- Note K and N

 Equity- Notes O and P

 Common stock, par values S.01 per share, 200 1 1

million shares autorized

 Issued 61 million and 60 million shares in 2020

and 2019

 Paid- in capital  769 756 13 -17.83 %

 Retained earnings  2,649  3,224  (575) -17.83 %

 Accumulated other comprehensive loss  (383) (410) (27) -6.58 %

  Total equity  3,036 3,571 (535) -14.98%

 Total liabilities and equity $ 6,877  $ 7,251 (374) -5.16 %

 
LIABILITIES DECREASE

2020 % 2019

Luabilities and Equity

 Current liabilities

 Short-term debt- Note I $ 280 $ 34.44% $ 166

 Trade and orher payables 233 28.66%  313

Accrued expenses and other liabilities 277 34.07%  271

Current operating lease obligation-Note K 23 2.83% -

 Lcurrent liabilities held for sale- Note C --  -  7

Total current liabilities  8813  100%  757

Noncurrent liabilities

Long-term debt- Note I 1,573 51.95% 1,501

Asbestos litigation reserve-Note K 513 16.94% 555

 Deffered income taxes-Note L 229 7.56% 264

Employee benefit obligations-Note M 157 5.18% 150

Operating lease obligations-Note K 124 4.10% -

Other liabilities-Note J  432 14.27% 453

Total noncurrent liabilities  3,028 100% 2,923

Commitment and contingencies-Note K and N

Equity-Notes O and P

Common stock, par values S.01 per share,200 million  1 0% 1

shares authorized

Issued 61 million and 60 million shares in 2020 and 2019

Paid-in capital  769  11.18% 756

Retained earnings 2,649 38.52% 3,224

Accumulated other comprehensive loss (383) (5.56)% (410)

Total equity 3,036 44.15% 3,571

Total liabilities and equity $ 6,877 100% $

7,251

Vertical
 

Ashland Global Holdings Inc.

Statements of Consolidated Comprehensive Income (Loss)

Years Ended September 30

 
(In millions except per share data) 2020 2019 P %

Sales  $ 2,326  $ 2,493  $ (167) $-6.70%

Cost of sales  1,619  1,726  (107) -6.20%

Gross profit  707  767  (60) -7.82%

Selling, general and administrative expense  424  453  (29) -6.40%

Research and development expense  64  66  (2) -3.03%

Intangibles amortization expense  85  86  (1) -1.16%

Equity and other income  8  4  4 100%

Goodwill impairment - Note H  530  -  - -

Operating income (loss)  (388)  166 222 133.73%

Net interest and other expense - Note I  199  99 20 20.20%

Other net periodic benefit income - Note M  2  5  (3) -60%

Net income (loss) on acquisitions and  2  (2)  0 0%

divestitures - Notes B and C

Income (loss) from continuing operations before  (503) 70  433 618.57%

income taxes

Income tax expense (benefit) - Note L  (12)  46 (34) -73.91%

Income (loss) from continuing operations  (491)  24 467 1,945.83%

Income (loss) from discontinued operations (net  (17)  481  (464) -96.47%
of tax) - Note D

Net income (loss)  $ (508)  $ 505 3 0.59%

PER SHARE DATA - NOTE A

Basic earnings per share

Income (loss) from continuing operations  $ (8.10)  $ 0.39  7.71 19.77%

Income (loss) from discontinued operations  (0.29)  7.76  (7.47) 96.26%

Net income (loss)  $ (8.39)  8.15  0.24 2.94%

Diluted earnings per share  $ (8.10)  0.39  $ 7.71 19.77%

Income (loss) from continuing operations  (0.29)  7.64 (7.47) 96.26%

Income (loss) from discontinued operations  $ (839)  $ 8.03 0.36 4.48%

Net income (loss)

COMPREHENSIVE INCOME (LOSS)

Net income (loss)  $ (508)  $ 505  $ 3 0.59%

Other comprehensive income (loss), net of tax

Unrealized translation gain (loss)  27  (80)  (53) -66.25%

Pension and postretirement obligation  -  (5)  - -

adjustment

Net change in investment securities  -  - - -

Other comprehensive income (loss)  27  (85)  (58) -68.24%

Comprehensive income (loss)  $ (481) $ 420  61 14.52%

 Ashland Global Holdings Inc.

 Statements of Consolidated Comprehensive Income (Loss)

Years Ended September 30

vertical

(In millions except per share data) 2020 % 2019 %

Sales  $ 2,326  $ 2,493

Cost of sales  1,619  1,726

Gross profit  707  767

Selling, general and administrative expense  424  453

Research and development expense  64  66

Intangibles amortization expense  85  86

Equity and other income  8  4

Goodwill impairment - Note H  530  -

Operating income (loss)  (388)  166

Net interest and other expense - Note I  119  99

Other net periodic benefit income - Note M  2  5

Net income (loss) on acquisitions and  2  (2)

divestitures - Notes B and C

Income (loss) from continuing operations before  (503)  70

income taxes

Income tax expense (benefit) - Note L  (12) 46

Income (loss) from continuing operations (491)  24

Income (loss) from discontinued operations (net  (17)  481

of tax) - Note D

Net income (loss)  $ (508)  $ 505

PER SHARE DATA - NOTE A

Basic earnings per share

Income (loss) from continuing operations  $ (8.10)  $ 0.39

Income (loss) from discontinued operations  (0.29)  7.76

Net income (loss)  $ (8.39)  $ 8.15

Diluted earnings per share

Income (loss) from continuing operations  $ (8.10)  $ 0.39

Income (loss) from discontinued operations  (0.29)  7.76

Net income (loss)  $ (8.39)  $ 8.13

COMPREHENSIVE INCOME (LOSS)

Net income (loss)  $ (508)  $ 505

Other comprehensive income (loss), net of tax

Unrealized translation gain (loss)  27  (80)

Pension and postretirement obligation  -  (5)

adjustment

Net change in investment securities  -  -

Other comprehensive income (loss)  27  (85)

Comprehensive income (loss)  $ (481)  $ 420

Ashland Global Holdings Inc.

Statement of Consolidated Cashflow

(Dollars in thousands, except  per share amounts)

(In millions) 2020 2019

98Cash flows provided (used) by operating activities from continuing

operations

98Net income (loss) $ (508 ) $ 505

(Income) loss from discontinued operations (net of tax) 17 (481 )

Adjustments to reconcile income from continuing operations to cash

flows from operating activities

Depreciation and amortization 247 289

Original issue discount and debt issuance cost amortization 15 13

Deferred income taxes (43 ) 20

Distributions from equity affiliates 1 -

Stock based compensation expense - Note P 14 21

Excess tax benefits on stock based compensation 1 11

Loss on early retirement of debt 59 -

Income from restricted investments (30 ) (17)

(Income) loss on acquisitions and divestitures - Notes B and C (3) -

Impairments 530 8

Pension contributions (6) (5)

Gain on pension and other postretirement plan remeasurements - (7)

Change in operating assets and liabilities (a) 19) (129)

Total cash flows provided by operating activities from continuing 313( 228
operation

Cash flows provided (used) by investing activities from continuing

operations

Additions to property, plant and equipment (138 ) (154 )

Proceeds from disposal of property, plant and equipment 5 9

Purchase of operations - net of cash acquired - (2)

Proceeds from sale or restructuring of operations 9 -

Proceeds from settlement of Company-owned life insurance contract 8 3

Company-owned life insurance payments (6 ) (3)

Net purchases of funds restricted for specific transactions (3) (7)

Reimbursement from restricted investments 35 32

Proceeds from sale of securities 21 348

Purchase of securities (21) (348 )

Proceeds from the settlement of derivative instrument - 6

Payments for the settlement of derivative instruments - (2)

Total cash flows used by investing activities from continuing (90 ) (118 )
operations

Cash flows provided (used) by financing activities from continuing (767 )

operations

Proceeds from issuance of long-term debt 804 -

Repayment of long-term debt (797)

Premium on long-term debt repayment (59 ) -

Proceeds from (repayment of) short-term deb 115 (78 )

Repurchase of common stock - (200 )

Debt issuance costs (11 ) -

Cash dividends paid (66 ) (64 )

Stock based compensation employee withholding taxes paid in cash (7 ) (10)

Total cash flows provided (used) by financing activities from 9 (1,149 )

continuing operations

Cash provided (used) by continuing operations 232 (1,039 )

Cash provided (used) by discontinued operations

Operating cash flows (110 ) 13

Investing cash flows 98 967

Total cash provided (used) by discontinued operations (12) 980

Effect of currency exchange rate changes on cash and cash 2 (3 )

equivalents
Increase (decrease) in cash and cash equivalents 222 (62 )

Cash and cash equivalents - beginning of year 232 294

Cash and cash equivalents - end of year $ 454 $ 232

Changes in assets and liabilities (a)

Accounts receivable $7 $ 38

Inventories 65 (4 )

Trade and other payables (50 ) (79 )

Other assets and liabilities (3 ) (84 )

Change in operating assets and liabilities $ 19 $ (129 )

Supplemental disclosures

Interest paid $ 77 $ 124

Income taxes paid 91 67

(In Common Paid-in Retained Accumulated

millions)  Stock  Capital  earnings  other   Total
comprehensive income(loss)
(a)
Balance at $1 $931 $2,696 $ (222) $ 3,406
September
30,2017
Total
comprehe
nsive
income(los
s)
    Net 114 114
income
     Other (69) (69)
comprehe
nsive loss
Dividends, (60) (60)
$0.95 per
common
share
Common
shared
issued
under
stock
incentive
     And 15 15
other plan
(b) ( c)
Balance at 1 946 2,750 (291) 3,406
September
30, 2018
 Adoption 34 (34) -
of new
accounting
pronounce
ments (d)
Total
Comprehe
nsive
income
(loss)
Net 505 505
income
Other (85) (85)
comprehe
nsive loss
Dividends, (65) (65)
$1.05 per
common
shares
Common
share
under
stock
insensitive
And other 10 10
plans (b) (c
)
Repurchas (200) (200)
e of
common
stock (c)
Balance at 1 756 3,224 (410) 3,571
september
30,2019
Total
comprehe
nsive
income
(loss)
Net loss (508) (508)
Other 27 27
comprehe
nsive
income
Dividends, (67) (67)
$1.10 per
common
share
Common
shares
issued
under
stock
incentive
And other 13 13
plans (b)
(c)
Balance at $1 $ 768 $ 2,649 $ (383) $ 3,036
September
30,2030