Ashland Inc.

(ASH)
Ashland Inc. operates as a specialty chemicals company worldwide. The companys Specialty
Ingredients segment provides products, technologies, and resources for solving formulation and productperformance challenges. It offers solutions using natural, synthetic, and semisynthetic polymers derived
from plant and seed extract, cellulose ethers, and vinyl pyrrolidones, as well as acrylic and polyurethanebased adhesives for consumer and industrial applications. This segment serves pharmaceutical companies;
makers of personal and home care products, food, and beverages; manufacturers of paint, coatings, and
construction materials; packaging and converting markets; and oilfield service companies. Its
Performance Materials offers composites, intermediates and solvents, and elastomers, including polyester
and vinyl ester resins, as well as gelcoats, maleic anhydride, butanediol, tetrahydrofuran, nmethylpyrolidone, emulsion styrene butadiene rubber, and other intermediates and solvents. This segment
serves manufacturers of residential and commercial building products; infrastructure engineers; wind
blade and pipe manufacturers; auto, truck, and tire makers; boat builders; adhesives, engineered plastics,
and electronic producers; and specialty chemical manufacturers. The companys Valvoline segment
produces and distributes automotive, commercial, and industrial lubricants, automotive chemicals, and
car-care products. It also markets lubricants and automotive chemicals under the Valvoline brand name;
lubricants for higher-mileage engines under the MaxLife brand name; motor oil under the NextGen brand
name; synthetic motor oil under the SynPower brand name; automotive appearance products under the
Car Brite brand name; and antifreeze products under the Zerex brand name. In addition, this segment
operates and franchises approximately 920 Valvoline Instant Oil Change centers in the United States. The
company was founded in 1924 and is headquartered in Covington, Kentucky.

Earnings from continuing operations total $0.57 per diluted share

Adjusted earnings from continuing operations grow 30 percent, to $1.46 per diluted share
Adjusted EBITDA rose 11 percent, to $262 million
Annualized cost savings from global restructuring reach approximately $175 million run rate
Ashland reported earnings from continuing operations of $40 million, or $0.57 per diluted share, on sales
of nearly $1.4 billion. These results included three key items that together reduced income from
continuing operations by approximately $62 million, net of tax, or $0.89 per diluted share. The largest of
these three items was an after-tax charge of $57 million, or $0.82 per share, for a loss on the sale of
Ashlands elastomers division, which was sold during the quarter. Excluding the three key items,
Ashlands adjusted income from continuing operations was $102 million, or $1.46 per diluted share.
(Please refer to Table 5 of the accompanying financial statements for details of key items.)
For the year-ago quarter, Ashland reported income from continuing operations of $88 million, or $1.12
per diluted share, on sales of more than $1.4 billion. There were no key items in the year-ago quarter.
For the remainder of this news release, financial results have been adjusted to exclude the effect of key
items in the current quarter. On this basis, Ashlands results as compared to the year-ago quarter were as
follows:
Sales fell 3 percent, largely as a result of foreign exchange rates and divestitures;
Operating income grew 24 percent to $177 million;
Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 11 percent to
$262 million; and
EBITDA as a percent of sales increased 230 basis points to 18.8 percent.

(http://www.sec.gov/Archives/edgar/data/1305014/000130501415000011/ex991.htm)

STRATEGY
The Best strategy to use would be buying the February 20th $125 calls at $0.50. This is a low risk trade
with plenty of upside potential. The counter trade the February $120 puts are trading at $4.52 ; an 804%
difference. That upside potential is there, and since Ashland has been on a steady upward trend due to the
strong 200 day moving average, I would look to a long bet instead of trying to predict a top.