form11k.htm
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
____________
 
 
FORM 11-K
 
 
FOR ANNUAL REPORTS OF EMPLOYEE STOCK
PURCHASE, SAVINGS AND SIMILAR PLANS
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
 
(Mark One):
 
 
x
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2010
 
OR
 
 
o
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 
For the transition period from __________ to __________
 
 
Commission File Number 1-32532
 
 
 
A.
Full title of the plan and the address of the plan, if different from that of the issuer named
below:
 
ASHLAND INC. EMPLOYEE SAVINGS PLAN
 
 
B.
Name of issuer of the securities held pursuant to the plan and the address of its principal
executive office:
 
ASHLAND INC.
50 E. RiverCenter Boulevard
P.O. Box 391
Covington, Kentucky 41012-0391
 
Telephone Number (859) 815-3333
 


 
 
 
 

Ashland Inc. Employee Savings Plan

Financial Statements and Schedules

December 31, 2010 and 2009 and
for the year ended December 31, 2010




CONTENTS

 
     Page
 
Reports of Independent Registered Public Accounting Firm  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  
 
3
     
Audited Financial Statements
   
     
Statements of Net Assets Available for Benefits  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  
5
Statement of Changes in Net Assets Available for Benefits  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  
6
Notes to Financial Statements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  
7
     
Schedules *
    
     
Schedule H; Line 4a – Schedule of Delinquent Participation Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  19
Schedule H; Line 4i – Schedule of Assets (Held at End of Year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
 
20
 
  *
Other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.
 

 
-2-
 
 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Investment and Administrative Oversight Committee
and Participants of the Ashland Inc. Employee Savings Plan

 
We have audited the accompanying statement of net assets available for benefits of the Ashland Inc. Employee Savings Plan (the “Plan”) as of December 31, 2010, and the related statement of changes in net assets available for benefits for the year ended December 31, 2010.  These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audit.
 
We conducted our audit in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2010, and the changes in net assets available for benefits for the year ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.
 
Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole.  The supplemental Schedule H, line 4i – Schedule of Assets (Held at End of Year) and Schedule H, Line 4a – Schedule of Delinquent Participant Contributions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  Such information is the responsibility of the Plan’s management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements.  The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America.  In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.



/s/ Blue & Co., LLC


Lexington, Kentucky
June 28, 2011

 
-3-
 
 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Participants and Administrator of the
Ashland Inc. Employee Savings Plans
 
 
 

 
 
 
In our opinion, the accompanying statement of net assets available for benefits presents fairly, in all material respects, the net assets available for benefits of the Ashland Inc. Employee Savings Plan (the “Plan”) at December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.  This financial statement is the responsibility of the Plan’s management.  Our responsibility is to express an opinion on this financial statement based on our audit.  We conducted our audit of this statement in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.
 
 
/s/ PricewaterhouseCoopers LLP


Cincinnati, Ohio
June 28, 2010


 
-4-
 
 

ASHLAND INC. EMPLOYEE SAVINGS PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS


   
December 31
  
   
2010
    
2009
  
Assets
            
Investments, at fair value
            
Ashland common stock fund
   $ 180,942,299     $ 123,469,431  
Shares of registered investment companies
     699,397,566       561,529,410  
Common/collective trust
     -       10,450,807  
Short-term investment fund
     -       4,546,705  
Stable Value fund
     182,590,057       194,541,114  
      1,062,929,922       894,537,467  
Receivables
                
Contributions
     2,380,937       -  
Participant loans receivable
     21,442,798       16,052,571  
Transfer from Hercules Plan
     221,564,252       -  
Receivable for pending transactions (Stable Value fund)
     52,209,970       88,530,423  
Accrued interest and dividends
     1,337,938       -  
Proceeds from sales of securities
     2,722,667       612,819  
                 
Total assets
     1,364,588,484       999,733,280  
                 
Liabilities
                
Payable for pending transactions (Stable Value fund)
     25,428,861       89,322,079  
Accrued expenses
     388,497       551,749  
                 
Total liabilities
     25,817,358       89,873,828  
                 
Net assets available for benefits at fair value
     1,338,771,126       909,859,452  
                 
Adjustment from fair value to contract value for
                
fully benefit-responsive investment contracts
     (15,370,855 )     (11,492,015 )
                 
Net assets available for benefits
   $ 1,323,400,271     $ 898,367,437  
                 
                 
                 
                 
See accompanying notes.
                


 
-5-
 
 

ASHLAND INC. EMPLOYEE SAVINGS PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

Year Ended December 31, 2010
 

Additions to net assets attributed to:
      
Investment income
      
Dividends
   $ 14,403,384  
Interest
     8,709,934  
Net realized and unrealized appreciation in fair value of investments     102,168,983  
Contributions
        
Participants
     27,571,962  
Employers
     17,168,634  
Rollover
     5,347,329  
Loan interest
     920,732  
         
Total additions
     176,290,958  
         
Deductions from net assets attributed to:
        
Benefits paid to participants
     (100,723,894 )
Administrative expenses
     (545,741 )
         
Total deductions
     (101,269,635 )
         
Transfers from other plans
     350,011,511  
         
Net change in plan assets
     425,032,834  
Net assets available for benefits, beginning of year
     898,367,437  
         
Net assets available for benefits, end of year
   $ 1,323,400,271  
         
         
         
         
See accompanying notes.
        


 
-6-
 
 

ASHLAND INC. EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

December 31, 2010


NOTE A – DESCRIPTION OF THE PLAN
 
The following description of the Ashland Inc. Employee Savings Plan (Plan) provides only general information.  The information in this Note is not a Summary Plan Description or Plan document, as these terms are defined under the Employee Retirement Income Security Act of 1974 (ERISA).  Instead, this information merely summarizes selected aspects of the Plan.  Read the Summary Plan Description or the Plan document for more information about the Plan.  The Plan document controls the terms of the Plan and supersedes any inconsistencies contained herein or in the Summary Plan Description.  Ashland Inc. (Ashland), as Plan Administrator, retains all rights to determine, interpret and apply the Plan’s terms to factual matters and matters of law.  This retained discretionary authority is more particularly described in the Summary Plan Description and in the Plan document.
 
General
 
The Plan is a contributory, defined contribution plan and covers active regular employees in groups designated by Ashland, the Plan sponsor, as eligible to participate in accordance with Plan documents.  The Plan is intended to qualify under sections 401(a), 401(k), and 401(m) of the Internal Revenue Code (IRC), and under section 404(c) of ERISA.
 
Contributions
 
Participants may make pre-tax contributions, pursuant to the terms of the Plan and Section 401(k) of the IRC.  The Plan utilizes a safe harbor design under Section 401(k)(12) of the IRC.  The Plan does not allow participants to make after-tax contributions.  Ashland and its participating subsidiaries also make matching contributions related to participant contributions, subject to applicable limitations in the Plan and IRC.  Employees in designated eligible groups may immediately enroll in the Plan, regardless of the amount of company service.  However, Ashland’s matching contributions will not begin until the eligible employee completes one year of service.
 
Participants may contribute from 1 to 50 percent of eligible compensation in whole number percentage increments.  Excluding catch-up contributions, participants were limited to contributions of $16,500 in 2010.  Beginning August 1, 2007, newly hired eligible employees are automatically enrolled in the Plan for a contribution of 5 percent.  Employees have the opportunity to elect a different amount before the automatic contributions are withheld.  The contributions are invested in the Plan’s default investment option if the employee does not make a different investment election.  The default investment option is the Fidelity Freedom Fund that most closely matches the employee’s assumed retirement date, based on the employee’s age at the time of enrollment.  The new automatic enrollment rules do not apply to hourly paid employees at the Valvoline Instant Oil Change locations.
 
Eligible employees who are at least age 50 by December 31 can make catch-up contributions in addition to the regular contribution.  Catch-up contributions are pre-tax contributions from an eligible participant’s compensation in excess of a plan-imposed limit or the legal pre-tax contribution limit.  Therefore, the eligible participant’s contributions must first reach a plan-imposed limit or the legal pre-tax contribution limit before any contributions are characterized as catch-up contributions.  These employees may contribute a maximum of $5,500 as catch-up contributions for 2010.
 


 
-7-
 
 

ASHLAND INC. EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS (continued)


NOTE A – DESCRIPTION OF THE PLAN (continued)
 
Contributions (continued)
 
Ashland and its participating subsidiaries contribute up to 5.5 percent of eligible compensation as a matching contribution to a participant’s contributions.  The company matching contribution is $1.10 for each $1.00 the participant contributes up to a maximum participant contribution of 5 percent of eligible compensation.  Matching contributions are calculated on a payroll by payroll basis and can be made in cash or Ashland Inc. common stock, as determined by the company.  If matching contributions are made directly to the Plan in common stock, then such contributions shall be invested in the Ashland Common Stock Fund, and can be moved at any point thereafter by the Plan participant.  All matching contributions made in cash shall be invested pursuant to the participant’s investment elections thereby mirroring the participant’s contributions.  During 2010, employer matching contributions made to the Plan were in Ashland Inc. common stock.
 
Plan participants age 45 or older are permitted to transfer a designated portion of their Leveraged Employee Stock Ownership Plan (LESOP) accounts to their accounts in the Ashland Inc. Employee Savings Plan during annual election periods.  Amounts subject to this election in the LESOP are transferred to the Ashland Common Stock Fund account in the Plan of electing participants.  Those participants can then transfer the amounts from the Ashland Common Stock Fund to other investment options in the Plan.  During 2010, 200,874 shares of Ashland Inc. common stock were transferred from the LESOP accounts of the electing participants to their corresponding Ashland Common Stock Fund accounts in the Plan.
 
Participants direct the investment of their contributions into various investment options offered by the Plan.  Such investment options can be changed at the discretion of the Plan Administrator.
 
Effective November 1, 2008, the Plan was amended designating the Ashland Common Stock Fund investment option as an employee stock ownership plan (ESOP).  The ESOP component of the Plan allows dividends paid on Ashland common stock held in the fund to be passed through to participants and beneficiaries.  Participants and beneficiaries may elect to have the dividends passed through and paid to them or to have the dividends reinvested.  If a participant or beneficiary fails to make an affirmative election, the default is to reinvest the dividends.  Dividends that are reinvested and paid into the Ashland Common Stock Fund are allocated proportionately to participants and beneficiaries on the basis of each participant’s and beneficiary’s investment in the fund and used to purchase additional units in the Ashland Common Stock Fund.  Amounts allocated to the portion of the Plan that is an ESOP may still be exchanged to other investments in the Plan and other investments in the Plan may be exchanged into the ESOP component of the Plan.
 
Vesting
 
The Plan provides for immediate vesting of all employer and employee contributions regardless of the employee’s length of participation in the Plan or service with the employer.  However, to preserve the qualified status of the Plan with the IRS, there are certain restrictions on the employee’s right to withdraw contributions and any earnings thereon while actively employed by Ashland or its subsidiaries.  If a participant or beneficiary entitled to a benefit cannot be located, the vested benefit is forfeited.  However, if such a participant or beneficiary makes a proper claim prior to the termination of the Plan, the forfeited benefit shall be restored in an amount equal to the amount forfeited, unadjusted for any gains or losses.
 


 
-8-
 
 

ASHLAND INC. EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS (continued)


NOTE A – DESCRIPTION OF THE PLAN (continued)
 
Participant Loans
 
Any participant can obtain a loan from the Plan for any reason and may hold up to 2 loans at any one time.  Loans cannot exceed the lesser of (a) 50 percent of the participant’s account balance or (b) $50,000 reduced by the difference between the highest outstanding loan balance during the 12 months before the loan and the actual balance on the date of the loan.  Participants’ plan accounts will be security for the loan.  Loans must be repaid within 5 years in equal installment amounts determined by the Plan sponsor.  Loan interest compounds monthly at an annual rate equal to the prime rate on the last business day of the month before the loan is made plus 1 percent.  Interest on the loan will be credited to the participant’s account as the loan is repaid as investment earnings.  The loan repayments and the interest payments are then invested among the Plan investment options in the same percentage as the participant’s contributions.
 
Payments of Benefits
 
Participants may withdraw a certain portion of their account while employed.  The portion that can be withdrawn depends upon whether the employee is age 59-½ and the source of funds.  Only one such withdrawal is allowed in any 12 month period and the withdrawal cannot exceed the current value of the total account.
 
Upon termination of employment, the participant, or beneficiary in the event of death, may receive the entire value of the account in either a lump sum payment or installments paid monthly, quarterly, or annually over a limited period of time.  If the total value of the account is $1,000 or less, the value of the account will be distributed in a lump sum without the participant’s consent.  Benefits are recorded when paid.
 
Plan Termination
 
Although it has not expressed any intention to do so, Ashland reserves the right, at its sole discretion, to amend, suspend, modify, interpret, discontinue or terminate the Plan or change the funding method at any time without the requirement to give cause or consideration to any individual, subject to the provisions set forth in ERISA.  No accounting treatment or funding of the Plan shall be deemed evidence of an intent to limit in any way the right to amend or terminate the Plan.
 
Plan Merger
 
Effective December 31, 2010, certain participant accounts formerly held under the Hercules Incorporated Savings and Investment Plan (Hercules Plan) were merged into this Plan.  Prior to the merger, the plans covered eligible employees of Ashland Inc. and its subsidiary, Hercules Incorporated.  Certain investment assets and participant loans have been recognized in the accounts of the Plan as of December 31, 2010, at their balances as previously carried in the accounts of the Hercules Plan.  The remaining investment assets were received by the Plan on January 3, 2011, but were liquidated from assets held in the Hercules Plan at December 31, 2010.  These investment assets have been recorded by the Plan as a receivable on December 31, 2010.  The changes in net assets of the Hercules Plan are not included in the accompanying Statement of Changes in Net Assets Available for Benefits at December 31, 2010.

 
-9-
 
 

ASHLAND INC. EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS (continued)


 
NOTE A – DESCRIPTION OF THE PLAN (continued)
 
Plan Merger (continued)
 
A summary of the transferred net assets follows:
 
Investments, at fair value
   $ 123,439,393  
Receivables:
        
Participant loans
     4,321,770  
From Hercules Plan
     221,564,252  
         
    $ 349,325,415  
 
 
NOTE B – SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
The financial statements have been prepared on the accrual basis of accounting.  The majority of costs and expenses of administering the Plan are paid by Ashland, except that loan initiation and maintenance fees, short-term redemption fees and overnight charges are paid by participants.  Investment management fees are paid to the investment managers from their respective funds.  The preparation of the financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles requires the Plan’s management to make estimates and assumptions that affect the amounts reported.  Actual results could differ from those estimates.
 
The Stable Value fund consists primarily of investment contracts held by the Plan which are required to be reported at fair value.  However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan.  The Statement of Net Assets Available for Benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value.  The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.
 
Purchases and sales of securities are recorded on a trade-date basis.  Interest income is recorded on the accrual basis.  Dividends are recorded on the ex-dividend date.  Net appreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year.  Pending transactions represent investment trade activity in the Stable Value fund that has not settled at December 31.  This activity is presented as “Receivable for pending transactions (Stable Value fund)” and “Payable for pending transactions (Stable Value fund)” on the Statement of Net Assets Available for Benefits.
 
New Pronouncements
 
In January 2010, the FASB issued Accounting Standards Update 2010-06, Improving Disclosures about Fair Value Measurements (ASU 2010-06).  ASU 2010-06 amended ASC 820 to clarify certain existing fair value disclosures and requires a number of additional disclosures.  The guidance in ASU 2010-06 clarified that disclosures should be presented separately for each “class” of assets and liabilities measured at fair value and provided guidance on how to determine the appropriate classes of assets and liabilities to be presented. ASU 2010-06 also clarified the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements.  In addition, ASU 2010-06 introduced new requirements to disclose the amounts (on a gross basis) and reasons for any

 
-10-
 
 
 
ASHLAND INC. EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS (continued)


NOTE B – SIGNIFICANT ACCOUNTING POLICIES (continued)
 
New Pronouncements (continued)
 
significant transfers between Levels 1, 2, and 3 of the fair value hierarchy and presents information regarding the purchases, sales, issuances, and settlements of Level 3 assets and liabilities on a gross basis.  With the exception of the requirement to present changes in Level 3 measurements on a gross basis, which is delayed until 2011, the guidance is ASU 2010-06 becomes effective for reporting periods beginning after December 15, 2009.  Adoption of ASU 2010-06 did not have a material effect on the Plan’s Net Assets Available for Benefits or its Changes in Net Assets Available for Benefits.
 
In September 2010, The FASB issued Accounting Standards Update 2010-25, Reporting Loans to Participants by Defined Contribution Pension Plans (ASU 2010-25). ASU 2010-25 requires loans to the participants in an entity’s defined contribution pension plan be classified as notes receivable.  These loans are to be reported separately from plan investments.  The proper measurement of these loans is their unpaid principal balances, plus all accrued but unpaid interest.  The guidance in ASU 2010-25 becomes effective for reporting periods ending after December 15, 2010 and must be applied retrospectively.  Adoption of ASU 2010-25 did not have a material effect on the Plan’s Net Assets Available for Benefits or its Changes in Net Assets Available for Benefits.
 
Reclassifications
 
Certain prior year amounts have been reclassified herein to conform to the current method of presentation.
 
Subsequent Events
 
The Plan evaluated subsequent events through June 28, 2011, the date the financial statements were available to be issued.

NOTE C – FAIR VALUE MEASUREMENTS
 
ASC 820 establishes a framework for measuring fair value.  That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value, summarized below:
 
Level 1 – Quoted prices in active markets for assets identical to the securities to be valued. If a Level 1 input is available, it must be used.
 
Level 2 – Inputs other than quoted prices that are observable for securities, either directly or indirectly.  Examples include matrix pricing utilizing yield curves, prepayment speeds, credit risks, etc.; quoted prices for similar assets in active markets; and input derived from observable market data by correlation or other means.
 
Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
 
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

 
-11-
 
 

ASHLAND INC. EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS (continued)


NOTE C – FAIR VALUE MEASUREMENTS (continued)
 
The following table sets forth by level, within the fair value hierarchy, the Plan’s investment assets at fair value as of December 31, 2010:

                         
   
Level 1
    
Level 2
    
Level 3
    
Total
  
                         
Ashland Common Stock Fund
                        
Money Market Fund
   $ 1,548,977     $ -     $ -     $ 1,548,977  
Ashland Inc. Common Stock
     179,393,322       -       -       179,393,322  
Shares of Registered Investment Companies
                                
Domestic Equity
     340,301,779       -       -       340,301,779  
International Equity
     11,277,724       -       -       11,277,724  
Bond/Fixed Income
     100,189,993       -       -       100,189,993  
Lifecycle/Blended
     239,632,689       -       -       239,632,689  
Self-directed Brokerage Accounts
     -       7,995,381       -       7,995,381  
Stable Value Fund
                                
Money Market Fund
     5,388,093       -       -       5,388,093  
Cash Equivalents
     -       45,220,204       -       45,220,204  
Government Bonds/Notes
     -       10,944,393       -       10,944,393  
Non-U.S. Government Bonds
     -       5,785,338       -       5,785,338  
Corporate Bonds
     -       68,443,570       -       68,443,570  
Mutual Funds
     5,358,595       -       -       5,358,595  
Mortgage-backed Securities
     -       39,564,314       -       39,564,314  
Other     -       1,359,371       -       1,359,371  
Wrap Contracts
     -       -       526,179       526,179  
 Total
   $ 883,091,172     $ 179,312,571     $ 526,179     $ 1,062,929,922  
                                 
                                 
                                 
                                 
During 2010, significant transfers between Level 1 and Level 2 were as follows:
                        
                                 
From Level 2 to Level 1                                
Money Market Funds
                           $ 6,937,070  
Ashland Inc. Common Stock
                             179,393,322  
 
 
Transfers from Level 2 to Level 1 were made at year-end because in the current year fair values presented above have been determined based on the disaggregated underlying investment assets within the Ashland Common Stock Fund and the Stable Value Fund which are traded on an exchange and active market.


 
-12-
 
 

ASHLAND INC. EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS (continued)


NOTE C – FAIR VALUE MEASUREMENTS (continued)
 
The following table sets forth by level, within the fair value hierarchy, the Plan’s investment assets at fair value as of December 31, 2009:

             
   
Level 1
    
Level 2
    
Level 3
    
Total
  
                         
Money Market Fund
   $ -     $ 4,546,705     $ -     $ 4,546,705  
Ashland Common Stock Fund
     -       123,469,431       -       123,469,431  
Shares of Registered Investment Companies
                                
Domestic Equity
     285,323,886       -       -       285,323,886  
International Equity
     74,340,837       -       -       74,340,837  
Bond/Fixed Income
     45,790,618       -       -       45,790,618  
Lifecycle/Blended
     125,709,334       -       -       125,709,334  
U.S. Government
     25,906,416       -       -       25,906,416  
Convertible Securities
     1,645,341       -       -       1,645,341  
Common/Collective Trust - Equity
     -       10,450,807       -       10,450,807  
Brokeragelink
     -       2,812,978       -       2,812,978  
Stable Value Fund
                                
Cash Equivalents
     -       38,179,042       -       38,179,042  
Government Bonds/Notes
     -       17,864,620       -       17,864,620  
Non-U.S. Government Bonds
     -       3,381,447       -       3,381,447  
Corporate Bonds
     -       75,070,095       -       75,070,095  
Mutual Funds
     4,750,985       -       -       4,750,985  
Mortgage-backed Securities
     -       52,008,497       -       52,008,497  
Futures Variation Margin Account
     -       865,641       -       865,641  
Other     -       1,239,285       -       1,239,285  
Wrap Contracts
     -       -       1,181,502       1,181,502  
Total
   $ 563,467,417     $ 329,888,548     $ 1,181,502     $ 894,537,467  
                                 

Following is a description of the valuation methodologies used for assets measured at fair value:
 
Money Market Funds, Shares of Registered Investment Companies, Mutual Funds, Ashland Inc. Common Stock – Valued at the quoted market price of shares held by the plan at year-end.
 
Ashland Common Stock Fund – Value is determined based on the underlying investments, which are traded on an exchange and active market.
 
Common/Collective Trusts, Self-directed Brokerage Accounts – Fair value is determined based on the underlying investments, which are traded on an exchange and active market.
 
Stable Value Fund – The value of the Stable Value Fund is based on the fair value of the underlying investment assets, and the fair value of the wrap contracts is determined using a discounted cash flow model which considers recent pricing as determined by providers, a yield curve for financial institutions, and the duration of the underlying asset portfolio.  Future fee payments under the wrap contracts are calculated based on the estimated replacement cost and projected over a time period equal to the duration of the underlying asset portfolio.  The duration of the portfolio is used as that is the time to maturity in the event the wrap contracts are terminated at contract value.  The future estimated fee payments are then discounted using a AA bank yield curve provided by Bloomberg to determine each future payment’s present value.  This present value is the estimated fair value for the wrap contracts.  In order to achieve the desired returns, the investment manager of the Stable Value Fund may invest in various derivative instruments including equity futures, credit default swaps and purchase and call options.  Use of such derivative instruments did not have a material effect on the 2010 and 2009 statements.

 
-13-
 
 

ASHLAND INC. EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS (continued)


NOTE C – FAIR VALUE MEASUREMENTS (continued)
 
The table below sets forth a summary of changes in the fair value of the Plan’s Level 3 investment assets for the year ended December 31, 2010.

     
   
Level 3 Assets
  
         
         
   
Wrap Contracts
Balance at December 31, 2008
  
$
162,217,606
  
Realized and Unrealized Gains (Losses)
    
30,717,441
  
Purchases, Sales, Issuances and Settlements, Net
    
814,411
  
Transfer to Level 2 Assets
    
(192,567,956)
  
Balance at December 31, 2009
    
1,181,502
  
Realized and Unrealized Gains (Losses)
    
(655,323)
  
Balance at December 31, 2010
  
$
526,179
  
         
         

The total gains and losses including unrealized gains and losses for Level 3 assets relate to investment and insurance contracts held in the Stable Value Fund and are not reported in the Statements of Changes in Net Assets Available for Benefits because these statements are prepared on a contract value basis. Total gains and losses for Level 3 assets are included in the adjustment from fair value to contract value for fully benefit responsive investment and insurance contracts reported on the Statement of Net Assets Available for Benefits.
 
NOTE D – INVESTMENTS
 
The fair values of individual investments that represent 5 percent or more of the net assets of the Plan at December 31, 2010 and 2009 are as follows:

   
December 31
  
   
2010
    
2009
  
Ashland Inc. Common Stock
   $ 179,393,322     $ 123,469,431  
State Street Bank & Trust Contract
     -       57,153,780  
Fidelity Contrafund K
     127,290,793       100,798,832  
Fidelity Low-Priced Stock Fund K
     77,761,571       -  
PIMCO Total Return Instl
     71,935,368       -  
 

 
The assets of the Plan are held by the trustee, Fidelity Trust Company.  During 2010, the Plan’s investments, including gains and losses on investments bought and sold as well as held during the year, appreciated in value by $102,168,983 as follows:
 
Ashland Inc. Common Stock
   $ 35,453,739  
Shares of Registered Investment Companies
     64,842,201  
Common/Collective trust
     1,873,043  
    $ 102,168,983  
 
During the Plan year ended December 31, 2010, the Plan received the following cash dividends:
 
Ashland Inc. Common Stock
   $ 1,524,685  
Various other investments
     12,878,699  
    $ 14,403,384  


 
-14-
 
 

ASHLAND INC. EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS (continued)


NOTE D – INVESTMENTS (continued)
 
Stable Value Fund
 
The investment contracts held by the Plan in the Stable Value Fund are known as synthetic guaranteed investment contracts (GICs).  In a synthetic GIC structure, the underlying investments are owned by the Plan and held in trust for plan participants.  Wrapper contracts are purchased from an insurance company or bank.  The wrapper contracts amortize the realized and unrealized gains and losses on the underlying fixed income investments, typically over the duration of the investments, through adjustments to the future interest crediting rate.
 
The key factors that influence the future interest crediting rates include:  the level of market interest rates; the amount and timing of participant contributions, transfers, and withdrawals into and out of the contract; the investment returns generated by the underlying fixed income investments; and the duration of the underlying investments.
 
To determine the interest crediting rate, wrapper contracts use a formula that is based on the characteristics of the underlying fixed income portfolio, including the contract interest credit rate, yield to maturity of underlying investments, market value of underlying investments, contract value, duration of the portfolio, and wrapper contract fees.  The interest crediting rates of the contracts are typically reset on a quarterly basis.  All wrapper contracts provide for a minimum interest crediting of zero percent.
 
The resulting gains and losses in the market value of the underlying investments relative to the wrapper contract value are represented on the Statement of Net Assets Available for Benefits as the “Adjustment from fair value to contract value.”  If the adjustment amount is positive for a specific contract, this indicates that the wrapper contract value is greater than the market value of the underlying investments.  The embedded market value losses will be amortized in the future through a lower interest crediting rate.  If the adjustment amount is negative for a specific contract, this indicates that the wrapper contract value is less than the market value of the underlying investments.  The amortization of the embedded market value gains will cause the future interest crediting rate to be higher.
 
The fair value of the synthetic GIC contracts at December 31, 2010 and 2009 was $205,320,073 and $193,749,458 while the contract values were $189,949,218 and $182,257,443, respectively.  The fair value assigned to the wrapper contracts at December 31, 2010 and 2009 was $526,179 and $1,181,502, respectively.  At December 31, 2010, the crediting interest rate for these investment contracts was between 5.35% and 5.44% and at December 31, 2009 it was between 4.94% and 5.08%.
 
The average yield of the investment contracts based on actual earnings was 3.58% in 2010 and 4.21% in 2009, while the average yield adjusted to reflect the actual interest rate credited to participants was 4.24% in 2010 and 3.96% in 2009.
 
Limits to Ability to Transact at Fair Value
 
In certain circumstances, the amount withdrawn from a wrapper contract would be payable at fair value rather than at contract value.  These circumstances include termination of the Plan, a material adverse change to the provisions of the Plan, if Ashland withdraws from a wrapper contract in order to switch to a different investment provider, or if the terms of a successor plan do not meet the wrapper contract issuer’s underwriting criteria.  The circumstances described above that could result in payment of benefits at market value rather than contract value are not probable of occurring in the foreseeable future.

 
-15-
 
 

ASHLAND INC. EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS (continued)


NOTE D – INVESTMENTS (continued)
 
Issuer-Initiated Contract Termination
 
Examples of events that would permit a wrapper contract issuer to terminate a wrapper contract upon short notice include the Plan’s loss of its qualified status, material and adverse changes to the provisions of the Plan, or un-cured material breaches of responsibilities.  If one of these events was to occur, the wrapper contract issuer could terminate the wrapper contract at the market value of the underlying investments, or in the case of a traditional GIC, at the hypothetical market value based upon a contractual formula.
 
NOTE E – TRANSACTIONS WITH RELATED PARTIES
 
The Plan held 3,402,818 and 3,116,341 shares of Ashland common stock as of December 31, 2010 and 2009, respectively, with a fair value of $179,393,322 and $123,469,431, respectively.  The Plan received dividends on Ashland common stock of $1,524,685 in 2010.  The remaining dividends relate to certain Plan investments classified as units of mutual funds managed by Fidelity Investments, the Trustee of the Plan, and PIMCO, an Allianz Global Investors company, a provider of fiduciary services to the Plan during the year.
 
Consistent with each mutual fund prospectus applicable to the Plan, fees paid by the Plan for investment management services were included as a reduction of the return earned on each fund.
 
While the majority of the administrative costs are paid by Ashland, other miscellaneous administrative expenses of $545,741 were paid by the Plan during 2010.  Ashland does not charge the Plan for services it performs on behalf of the Plan.
 
NOTE F – DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND FORM 5500
 
The following is a reconciliation of net assets available for benefits per the financial statements to Form 5500.

   
December 31
  
   
2010
    
2009
  
Net assets available for benefits per financial statements
   $ 1,323,400,271     $ 898,367,437  
Fair value in excess of contract value
     15,370,855       11,492,015  
Benefit claims payable
     (60,653 )     (42,969 )
Accrued interest on deemed distributions of participant loans
     (968,466 )     (916,184 )
Net assets available for benefits per Form 5500
   $ 1,337,742,007     $ 908,900,299  
 
The following is a reconciliation of the net investment appreciation per the financial statements to the Form 5500.
 
   
Year Ended
   
December 31, 2010
Interest and dividend income
   $ 24,034,050  
Net realized/unrealized appreciation
     102,168,983  
Total net investment appreciation per the financial statements
     126,203,033  
Adjustment from contract value to fair value - current year
     15,370,855  
Reversal of prior year contract value to fair value adjustment
     (11,492,015 )
Total appreciation of investments per Form 5500
   $ 130,081,873  
 

 
-16-
 
 

ASHLAND INC. EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS (continued)


NOTE F – DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND FORM 5500 (continued)
 
The following is a reconciliation of benefits paid to participants per the financial statements to Form 5500.
 
   
December 31,
  
   
2010
  
Benefits paid per financial statements
   $ 100,723,894  
Add:  Benefit claims payable
     60,653  
Benefits paid per Form 5500
   $ 100,784,547  

 
 
NOTE G – TAX STATUS OF THE PLAN
 
The Plan has received a determination letter from the IRS dated March 3, 2003, stating that the Plan is qualified under Section 401(a) of the IRC and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the IRS, the Plan was amended.  Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification.  The Plan administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes the Plan, as amended, is qualified and the related trust is tax exempt.
 
NOTE H – RISKS AND UNCERTAINTIES
 
The Plan invests in various investment securities.  Investment securities are exposed to various risks such as interest rate, market and credit risks.  Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits.
 
NOTE I – SUBSEQUENT EVENT
 
Effective January 1, 2011, Ashland and its participating subsidiaries will make the following contributions to the Trust on behalf of each eligible member:
 
Basic Retirement Contributions
 
Employees who were eligible to participate in the Plan as of December 31, 2010 and who were not eligible for future contributions under the Ashland Hercules Pension Plan (Grandfathered Employee), shall be entitled to a Basic Retirement Contribution based on percentage of the employee’s compensation determined in accordance with the following tables:
 
 
       
Period of  Service
          
Percentage of Compensation
       
      1 - 10 years
            
1.5%
       
      11- 20 years
            
3.0%
       
      21 or more years
            
4.5%

 
-17-
 
 

ASHLAND INC. EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS (continued)


NOTE I – SUBSEQUENT EVENT (continued)
 
Basic Retirement Contributions (continued)
 
plus, a transition contribution equal to:
 
       
Age as of January 1, 2011
          
Percentage of Compensation
       
      40 - 44
            
2.0%
       
      45 - 49
            
3.0%
       
      50 - 54
            
4.0%
       
      55 or greater
            
5.0%
 

 
Notwithstanding the foregoing, any employee that is a Hercules Employee or becomes eligible to participate in the Plan on or after January 1, 2011, shall only be entitled to a Basic Retirement Contribution based on a percentage of the employee’s compensation determined in accordance with the following:
 
       
Period of  Service
          
Percentage of Compensation
       
      1 - 10 years
            
1.5%
       
      11- 20 years
            
3.0%
       
      21 or more years
            
4.5%


 
Hourly paid employees of Valvoline Instant Oil Change shall not be entitled to a Basic Retirement Contribution.
 
Performance Retirement Contributions
 
Ashland, in its sole discretion, may declare a Performance Retirement Contribution to be made to the Plan.  The Performance Retirement Contribution will be determined based upon the Company’s performance for the most recently completed fiscal year, and will be based upon the percentage of the employee’s compensation for the plan year.
 
NOTE J – DELINQUENT PARTICIPANT LOAN REPAYMENTS
 
Participant loan repayments of $3,582,007 were withheld from participants’ pay on a weekly or bi-weekly basis from January 14, 2010 to October 22, 2010 but were remitted to the Plan’s trust on a monthly basis.  Therefore the loan repayments were not remitted within the time frame required by the Department of Labor under the plan asset rules.  The Plan began remitting the payments timely beginning October 22, 2010.
 

 
 
 
-18-
 
 

 
SCHEDULE I
 
 
Ashland Inc. Employee Savings Plan
 
Employer Identification Number 20-0865835
Plan Number 010
 
Schedule H; Line 4a - Schedule of Delinquent Participant Contributions
 
December 31, 2010
 
 
Participant
Contributions
Transferred Late to Plan
  
Total That Constitute Nonexempt
Prohibited Transactions
  
Total Fully
Corrected Under
VFCP and PTE
2002-51
         
Check here if Late
Participant Loan
Repayments are
included: þ
  
Contributions
Not Corrected
Contributions
Corrected
Outside VFCP
 Contributions
Pending
Correction in
VFCP
    
  $    3,582,007  
0
0
0
  
 $          3,582,007
 
-19-
 
 

 
SCHEDULE II
 
Ashland Inc. Employee Savings Plan
               
Employer Identification Number 20-0865835
Plan Number 010
               
Schedule H; Line 4i - Schedule of Assets (Held at End of Year)
               
December 31, 2010
 
 
(a)
(b)
  
(c)
(d)
 (e)
           
Description of
        
 Current
  
Identity of Issue
  
Investment
  
Cost^
    
 Value
  
                       
Common Stock:
                
 
*
Ashland Inc. Common Stock
  
Company Stock Fund
       $ 
 179,393,322
  
                       
Shares of Registered Investment Companies:
                
 
*
Allianz NFJ Small Cap Pval I
  
Registered Investment Company
    
7,623,332
  
 
Self-directed brokerage accounts
  
Registered Investment Company
    
7,995,381
  
 
*
Fidelity Contra Fund K
  
Registered Investment Company
    
127,290,793
  
 
*
Fidelity Freedom K Income
  
Registered Investment Company
    
14,841,057
  
 
*
Fidelity Freedom K 2010
  
Registered Investment Company
    
18,915,532
  
 
*
Fidelity Freedom K 2015
  
Registered Investment Company
    
41,293,592
  
 
*
Fidelity Freedom K 2020
  
Registered Investment Company
    
49,372,607
  
 
*
Fidelity Freedom K 2025
  
Registered Investment Company
    
41,866,265
  
 
*
Fidelity Freedom K 2030
  
Registered Investment Company
    
32,743,267
  
 
*
Fidelity Freedom K 2035
  
Registered Investment Company
    
22,032,038
  
 
*
Fidelity Freedom K 2040
  
Registered Investment Company
    
12,632,735
  
 
*
Fidelity Freedom K 2045
  
Registered Investment Company
    
3,888,278
  
 
*
Fidelity Freedom K 2050
  
Registered Investment Company
    
2,047,318
  
 
*
Fidelity International Discovery
  
Registered Investment Company
    
8,632,267
  
 
*
Fidelity Low Priced Stock Fund K
  
Registered Investment Company
    
77,761,571
  
 
Eaton Vance Large Cap Value I
  
Registered Investment Company
    
            45,005,171
  
 
Invesco Developing Markets A
  
Registered Investment Company
    
              2,645,457
  
 
*
PIM Total RT Inst
  
Registered Investment Company
    
71,935,368
  
 
Royce Low Pr Stock IS
  
Registered Investment Company
    
4,836,823
  
 
*
Vanguard Institutional Index
  
Registered Investment Company
    
42,897,629
  
 
*
Vanguard Small Cap Index Instl
  
Registered Investment Company
    
9,587,124
  
 
*
Vanguard Total Bond Market Instl
  
Registered Investment Company
    
25,159,920
  
 
*
Vanguard Explorer Adm
  
Registered Investment Company
    
14,412,727
  
 
*
Vanguard Extended Market Idx Instl
  
Registered Investment Company
    
8,740,743
  
 
*
Vanguard Inflation-Protected Secs Adm
  
Registered Investment Company
    
3,094,705
  
 
Victory Diversified Stock I
  
Registered Investment Company
    
2,145,866
  
   
Total Shares of Registered Investment Companies
            
          699,397,566
  
                       
                       
Money Market Funds
                
 
*
Fidelity Management Trust Company Institutional
                
     
Cash Portfolio
  
Short-term Investment Fund
        
6,937,070
  

 
-20-
 
 
 
Ashland Inc. Employee Savings Plan
             
Employer Identification Number 20-0865835
Plan Number 010
             
Schedule H; Line 4i - Schedule of Assets (Held at End of Year)
             
December 31, 2010
 
 
(a)
(b)
(c)
(d)
 (e)
         
Description of
      
 Current
Identity of Issue
  
Investment
  
Cost^
  
 Value
                   
Stable Value Fund Investments        
   
AIG INC
Cash Equivalent
  
                 103,324
  
   
AMERICAN EXPRESS CREDIT SR UNSEC FRN
Cash Equivalent
  
                 399,971
  
   
CITIGROUP INC SR UNSEC FRN EMTN
Cash Equivalent
  
                 127,662
  
   
CITIGROUP INC SR UNSECURED FRN EMTN
Cash Equivalent
  
                 923,571
  
   
DEXIA CR GOVT GTD 144A
Cash Equivalent
  
              1,595,315
  
   
LLOYDS TSB BANK PLC GOV GTD BK EMTN
Cash Equivalent
  
                 939,790
  
   
UBS AG STAMFORD CT GLBL SR UNSEC FRN
Cash Equivalent
  
              2,017,554
  
   
WACHOVIA BANK NA GLBL SUBORDINATED FRN
Cash Equivalent
  
                 375,211
  
   
AUSTRALIAN GOVERNMENT BD
Cash Equivalent
  
              2,795,063
  
   
CANADA GOVT NT
Cash Equivalent
  
                 503,515
  
   
JAPAN TREASURY DISC BILL #146
Cash Equivalent
  
              4,315,210
  
   
JAPAN TREASURY DISC BILL #160
Cash Equivalent
  
              2,220,068
  
   
U S TREASURY BILLS
Cash Equivalent
  
                 579,608
  
   
U S TREASURY BILLS
Cash Equivalent
  
                 259,843
  
   
AUSTRALIAN DOLLARS
Cash Equivalent
  
            (7,664,698
 ) 
   
BRITISH POUND STERLING
Cash Equivalent
  
            (3,975,773
 ) 
   
CANADIAN DOLLAR
Cash Equivalent
  
                 267,433
  
   
CHINESE - YUAN RENMINBI NDF
Cash Equivalent
  
                 101,189
  
   
CHINESE - YUAN RENMINBI NDF
Cash Equivalent
  
                 395,289
  
   
CHINESE - YUAN RENMINBI NDF
Cash Equivalent
  
              2,932,326
  
   
EUROPEAN MONETARY UNION EURO
Cash Equivalent
  
            (3,753,624
 ) 
   
EUROPEAN MONETARY UNION EURO
Cash Equivalent
  
              1,387,111
  
   
EUROPEAN MONETARY UNION EURO
Cash Equivalent
  
            (1,129,543
 ) 
   
FIDELITY MGMT OVRNT RT EUR**RNA**
Cash Equivalent
  
                   17,324
  
   
FIDELITY MGMT TR  OVRNT RT GBP**RNA**
Cash Equivalent
  
                     2,192
  
   
FINL FUTURES MAINTENANCE (EUR)
Cash Equivalent
  
                   13,267
  
   
FINL FUTURES MAINTENANCE (GBP) - 6152
Cash Equivalent
  
                            2
  
   
FINL FUTURES MAINTENANCE ACCT
Cash Equivalent
  
                   17,436
  
   
INDIAN RUPEE-INR NDF
Cash Equivalent
  
                 117,508
  
   
INDIAN RUPEE-INR NDF
Cash Equivalent
  
               (117,508
 ) 
   
INDIAN RUPEE-INR NDF
Cash Equivalent
  
                 115,308
  
   
JAPANESE YEN
Cash Equivalent
  
               (712,178
 ) 
   
JAPANESE YEN
Cash Equivalent
  
            (4,316,914
 ) 
   
JAPANESE YEN
Cash Equivalent
  
            (2,221,428
 ) 
   
SOUTH KOREA WON-NDF
Cash Equivalent
  
              2,053,269
  
   
SSBANK SHORT TERM INVESTMENT FUND
Cash Equivalent
  
                 588,781
  
   
STIF FUND (AUD) 6152 **RNA**
Cash Equivalent
  
                   85,397
  
   
STIF FUND (BRL)
Cash Equivalent
  
                            1
  
   
STIF FUND (CAD)
Cash Equivalent
  
                        756
  
   
STIF FUND (JPY)
Cash Equivalent
  
                     3,087
  
   
U S TREASURY REPO
Cash Equivalent
  
            20,400,000
  
   
U S TREASURY REPO
Cash Equivalent
  
            16,700,000
  
   
MLCC 2005-2 1A ARM 6MLIB+125
Cash Equivalent
  
              2,505,862
  
   
SLMA 2008-1 A1 3MLIB+25
Cash Equivalent
  
                 140,349
  
   
ILLINOIS-TXBL
Cash Equivalent
  
                 900,000
  
   
ILLINOIS-TXBL
Cash Equivalent
  
              3,010,380
  
   
AIG / ILFC
Corporate
  
                 404,000
  

 
-21-
 
 
 
Ashland Inc. Employee Savings Plan
             
Employer Identification Number 20-0865835
Plan Number 010
             
Schedule H; Line 4i - Schedule of Assets (Held at End of Year)
             
December 31, 2010
 
 
(a)
(b)
(c)
(d)
 (e)
         
Description of
      
 Current
Identity of Issue
  
Investment
  
Cost^
  
 Value
                   
    AIG / ILFC Corporate    95,203  
   
AIG INC
Corporate
  
              2,426,340
  
   
AIG INC
Corporate
  
                 103,527
  
   
AMERICAN EXPRESS GLBL SR NT
Corporate
  
                 816,520
  
   
AMERICAN GENERAL FINANCE
Corporate
  
              2,437,500
  
   
AUTOZONE SR NT
Corporate
  
              1,159,203
  
   
AUTOZONE SR UNSECURED
Corporate
  
                 860,501
  
   
BANK OF AMERICA CORP GLBL NT
Corporate
  
                 813,847
  
   
BANK OF AMERICA CORP GLBL SR NT
Corporate
  
                 208,421
  
   
BARCLAYS BANK PLC 144A NT
Corporate
  
              1,086,250
  
   
BARCLAYS BANK PLC SUBORDINATED
Corporate
  
              1,509,287
  
   
BEAR  STEARNS CO INC GLBL NT SDF
Corporate
  
                 549,854
  
   
BNP PARIBAS 144A FRN
Corporate
  
                 772,000
  
   
BP CAPITAL MARKETS PLC CO GTD
Corporate
  
              1,200,486
  
   
BP CAPITAL MARKETS PLC CO GTD
Corporate
  
                 899,586
  
   
CARDINAL HEALTH INC GLBL SR UNSECURED
Corporate
  
                 997,141
  
   
CITIGROUP INC NT
Corporate
  
              3,072,056
  
   
COMPUTER SCIENCES CORP GLBL SR UNSEC
Corporate
  
              1,090,290
  
   
CON-WAY INC SR UNSEC
Corporate
  
              3,673,282
  
   
DEXIA CREDIT LOCAL GOVT GTD 144A
Corporate
  
              2,946,493
  
   
GATX FIN INC NT
Corporate
  
              2,137,742
  
   
GOLDMAN SACHS GROUP INC GLBL SR NT
Corporate
  
                 552,533
  
   
HOSPITALITY PROP TRUST
Corporate
  
              1,889,878
  
   
JP MORGAN CHASE & CO NT
Corporate
  
                 228,025
  
   
JPMORGAN CHASE & CO NT
Corporate
  
                 205,693
  
   
KRAFT FOODS INC SR UNSEC
Corporate
  
              1,145,171
  
   
LEHMAN BROS HLDGS SR UNS **DEF 1/24/13*
Corporate
  
                 650,000
  
   
LLOYDS TSB BANK PLC BK GTD 144A
Corporate
  
              1,400,959
  
   
MACQUARIE BANK LTD GOV GTD NT 144A
Corporate
  
              1,903,433
  
   
MACYS INC
Corporate
  
              2,681,250
  
   
MARRIOTT INTL SR NT
Corporate
  
              1,903,522
  
   
MARSH & MCLENNAN COS INC
Corporate
  
              2,154,890
  
   
MERRILL LYNCH & CO NT MTN
Corporate
  
              5,260,522
  
   
NABORS INDUSTRIES GLBL CO GTD
Corporate
  
              3,741,133
  
   
OVERSEAS PRIVATE INV COR NT B
Corporate
  
              1,373,631
  
   
PEARSON DOLLAR FIN PLC (U.K.) GTD 144A
Corporate
  
              2,169,738
  
   
PETROBRAS INTL FIN CO GLBL CO GTD
Corporate
  
              1,187,170
  
   
RBS 144A***FLAT***
Corporate
  
                 232,500
  
   
SMFG PREFERRED CAPITAL 3 NT PFD 144A
Corporate
  
              1,047,192
  
   
STADSHYPOTEK AB COVERED 144A
Corporate
  
              2,098,864
  
   
TOTAL CAPITAL SA CO GTD
Corporate
  
              2,044,074
  
   
VOLVO TREASURY AB NT 144A
Corporate
  
              1,956,983
  
   
WELLS FARGO & CO JR SUBORD K PFD
Corporate
  
                 530,000
  
   
YUM BRANDS INC GLBL SR UNSECURED
Corporate
  
              2,826,880
  
   
AMERICAN GENERAL FINANCE NS BP GST
Credit Default Swap
  
                 796,589
  
   
AUTOZONE NEGB NS BP BOA
Credit Default Swap
  
(9,027
 ) 
   
AUTOZONE NEGB NS BP BOA
Credit Default Swap
  
                   (4,740
 ) 
   
CARDINAL HEALTH NS BP UAG
Credit Default Swap
  
                     6,272
  

 
-22-
 
 
 
Ashland Inc. Employee Savings Plan
             
Employer Identification Number 20-0865835
Plan Number 010
             
Schedule H; Line 4i - Schedule of Assets (Held at End of Year)
             
December 31, 2010
 
 
(a)
(b)
(c)
(d)
 (e)
         
Description of
      
 Current
Identity of Issue
  
Investment
  
Cost^
  
 Value
                   
   
CDX IG10 10Y BP DUB
Credit Default Swap
   (11,708 )
   
CDX IG10 10Y BP GST
Credit Default Swap
   (72,199 )
   
CDX IG9 5Y 15-30% SP MYC
Credit Default Swap
   9,496  
   
CON-WAY INC NEGB NS BP BOA
Credit Default Swap
   104,883  
   
GATX FIN NS BP BRC
Credit Default Swap
   85,838  
   
GOLDMAN SACHS GROUP INC SNR S* SP BRC
Credit Default Swap
   1,649  
   
GOLDMAN SACHS GROUP INC SNR S* SP DUB
Credit Default Swap
   446  
   
HOSPITALITY PROP TRUST NS BP MYC
Credit Default Swap
   (76,740 )
   
KRAFT FOODS INC NEGB SNR NS BP RYL
Credit Default Swap
   (92,737 )
   
MACYS INC NEGB SNR NS BP RYL
Credit Default Swap
   (71,151 )
   
MARRIOTT INTERNATIONAL NEGB NS BP BOA
Credit Default Swap
   (84,275 )
   
MARSH & MCLENNAN NEGB NS BP BOA
Credit Default Swap
   8,523  
   
MERRILL LYNCH & CO INC SNR S* BP CBK
Credit Default Swap
   44,383  
   
NABORS INDUSTRIES NEGB NS BP CBK
Credit Default Swap
   86,786  
   
NABORS INDUSTRIES NEGB NS BP GST
Credit Default Swap
   47,265  
   
PEARSON DOLLAR NEGB NS BP MYC
Credit Default Swap
   (19,075 )
   
TARGET CORP NEGB NS NS BP GST
Credit Default Swap
   (71,347 )
   
TARGET CORP NEGB NS NS BP MYC
Credit Default Swap
   (73,604 )
   
TRANSOCEAN INC SNR NEGB S* BP GST
Credit Default Swap
   (1,644 )
   
TRANSOCEAN INC SNR S* BP BRC
Credit Default Swap
   (592 )
   
VIACOM NEGB SNR NS BP BOA
Credit Default Swap
   (161,687 )
   
YUM BRANDS NS BP UAG
Credit Default Swap
   (62,540 )
   
AUSTRALIAN GOVERNMENT
Govt-Non US
   1,266,728  
   
AUSTRALIAN GOVERNMENT
Govt-Non US
   3,478,610  
   
QATAR (STATE OF) SR NT 144A
Govt-Non US
   1,040,000  
   
IRS BRL ZCS R 11.935/CDI 07/13/10 HUS
Interest Rate Swap
   121  
   
IRS BRL ZCS R 11.96%/CDI 03/09/10 GLM
Interest Rate Swap
   420  
   
IRS BRL ZCS R 12.12/CDI 02/24/10 HUS
Interest Rate Swap
   3,490  
   
IRS BRL ZCS R 12.285/CDI 01/28/10 BRC
Interest Rate Swap
   960  
   
IRS BRL ZCS R 12.61/CDI 04/22/10 RYL
Interest Rate Swap
   980  
   
IRS USD R 3ML/1.7 12/15/10 CBK
Interest Rate Swap
   (107,975 )
   
IRS USD R 3ML/1.95 12/15/10 FBF
Interest Rate Swap
   (23,269 )
   
LBI OPEN POSITION NET ASSET
MoneyMarket/Currency
   178,637  
   
LBSF OPEN POSITION NET ASSET
MoneyMarket/Currency
   23,261  
   
FNMA PASS THRU DWARF    #961818
Mortgage
   1,014,727  
   
FNMA PASS THRU DWARF    #962005
Mortgage
   1,009,580  
   
FNMA PASS THRU DWARF    #974655
Mortgage
   993,328  
   
FNMA PASS THRU DWARF    #995328
Mortgage
   29,708  
   
FNMA PASS THRU DWARF    #995527
Mortgage
   994,154  
   
FNMA PASS THRU DWARF    #AB1843
Mortgage
   1,958,914  
   
FNMA PASS THRU MTG      #889190
Mortgage
   130,860  
   
FNMA PASS THRU MTG      #933557
Mortgage
   394,400  
   
FNMA PASS THRU MTG      #934330
Mortgage
   1,738,424  
   
FNMA PASS THRU MTG      #935520
Mortgage
   353,473  
   
FNMA PASS THRU MTG      #935905
Mortgage
   224,461  
 
 
-23-
 
 
 
Ashland Inc. Employee Savings Plan
             
Employer Identification Number 20-0865835
Plan Number 010
             
Schedule H; Line 4i - Schedule of Assets (Held at End of Year)
             
December 31, 2010
 
 
(a)
(b)
(c)
(d)
 (e)
         
Description of
      
 Current
Identity of Issue
  
Investment
  
Cost^
  
 Value
                   
   
FNMA PASS THRU MTG      #964646
Mortgage
   194,508  
   
FNMA PASS THRU MTG      #990236
Mortgage
   772,809  
   
FNMA PASS THRU MTG      #AA2201
Mortgage
   203,475  
   
FNMA PASS THRU MTG      #AA4319
Mortgage
   225,586  
   
FNMA PASS THRU MTG      #AA9857
Mortgage
   1,234,084  
   
FNMA PASS THRU MTG      #AB0527
Mortgage
   4,112,116  
   
FNMA PASS THRU MTG      #AC5006
Mortgage
   271,024  
   
FNMA PASS THRU MTG      #AC6778
Mortgage
   303,614  
   
FNMA PASS THRU MTG      #AC9125
Mortgage
   531,232  
   
FNMA PASS THRU MTG      #AD1347
Mortgage
   294,884  
   
FNMA PASS THRU MTG      #AD3346
Mortgage
   327,325  
   
FNMA PASS THRU MTG      #AD5717
Mortgage
   976,738  
   
FNMA PASS THRU MTG      #AE0113
Mortgage
   15,942,335  
   
FNMA TBA 4% JAN 15YR
Mortgage
   14,937,262  
   
FNMA TBA 4.5% JAN
Mortgage
   2,053,438  
   
FNMA TBA 4.5% JAN 15YR
Mortgage
   943,735  
   
FNMA TBA 5.0% FEB
Mortgage
   (8,396,256 )
   
FNMA TBA 5.0% JAN
Mortgage
   (4,205,624 )
   
BAB KY PPTY BLDG-C
Municipals
   380,664  
   
BAB NYC TRANSL FIN
Municipals
   188,672  
   
BAB NYC TRANSL FIN
Municipals
   94,192  
   
BAB NYC TRANSL FIN
Municipals
   94,080  
   
CHICAGO TRANSIT AUTH
Municipals
   1,586,912  
   
CHICAGO TRANSIT AUTH
Municipals
   991,820  
   
CME ACAL EURO$CALL 09/11 @ 99.375
Option
   (6,463 )
   
CME APUT EURO$PUT 9/11 @ 99.375
Option
   (4,538 )
   
FVA USD 1Y1Y S ATM 10/11/11 GLM
Option
   (34,044 )
   
IRO USD 10Y P 10.000 07/10/12 BRC
Option
   (68 )
   
IRO USD 10Y P 10.000 07/10/12 MYC
Option
   (1,909 )
   
IRO USD 10Y P 10.000 07/10/12 RYL
Option
   (205 )
   
IRO USD 1Y P 1.0000 11/19/12 GLM
Option
   (45,209 )
   
IRO USD 1Y P 2.0000 11/19/12 GLM
Option
   24,637  
   
IRO USD 2Y P 2.2500 09/24/12 GLM
Option
   (84,006 )
   
IRO USD 2Y P 2.2500 09/24/12 MYC
Option
   (42,003 )
   
IRO USD 2Y P 2.2500 09/24/12 RYL
Option
   (85,361 )
   
IRO USD 3Y P 2.7500 06/18/12 DUB
Option
   (30,206 )
   
IRO USD 3Y P 2.7500 06/18/12 RYL
Option
   (30,206 )
   
IRO USD 3Y P 3.0000 06/18/12 BOA
Option
   (26,514 )
   
IRO USD 3Y P 3.0000 06/18/12 BRC
Option
   (15,151 )
   
IRO USD 3Y P 3.0000 06/18/12 CBK
Option
   (29,039 )
   
IRO USD 3Y P 3.0000 06/18/12 JPM
Option
   (32,827 )
   
ITRAXX.O C 0.9 EUR14 5Y 03/16/11 MYC
Option
   (6,496 )
   
ITRAXX.O P 1.6 EUR14 5Y 3/16/11 MYC
Option
   (4,725 )
   
ITRAXX.O P 1.60 EUR14 5Y 3/16/11 BPS
Option
   (4,200 )
   
AIG INC MANDATORY CONVERT
Preferred
   63,288  
   
WELLS FARGO & CO CONV NEW MONEY L
Preferred
   1,500,825  
   
PIMCO PRIV EMERG MKT SECT(781)
Sector Fund
   877,495  
 
 
 
-24-
 
 
 
Ashland Inc. Employee Savings Plan
             
Employer Identification Number 20-0865835
Plan Number 010
             
Schedule H; Line 4i - Schedule of Assets (Held at End of Year)
             
December 31, 2010
 
 
(a)
(b)
(c)
(d)
 (e)
         
Description of
      
 Current
Identity of Issue
  
Investment
  
Cost^
  
 Value
                   
   
PIMCO PRV DVLPNG LCL MKT(718)
Sector Fund
     4,481,100  
   
U S TREASURY INFLATE PROT BD
US Treasury
     151,148  
   
U S TREASURY INFLATE PROT BD
US Treasury
     7,354,819  
   
U S TREASURY NOTE
US Treasury
     102,086  
   
STATE STREET WRAPPER
Investment Contracts
     94,101  
   
JP MORGAN CHASE CO. WRAPPER
Investment Contracts
     269,825  
   
UBS AG WRAPPER
Investment Contracts
     162,253  
   
Total Stable Value fund
       177,201,964  
               
   
Participant Loans
 1-10 Years, interest 4.25% - 10.50%
     21,442,798  
               
          $  1,084,372,720  
 
__________________
          
 
*
Indicates parties-in-interest to the Plan
          
 
^
Required for nonparticipant-directed investments only
          


 
-25-
 
 

SIGNATURES

THE PLAN.  Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.


 
 
ASHLAND INC. EMPLOYEE SAVINGS PLAN
 
 
   
   
Date:  June 28, 2011
By      /s/ Lamar M. Chambers
 
Lamar M. Chambers
 
Senior Vice President and Chief Financial
Officer of Ashland Inc.
Chairperson of the Ashland Inc. Investment and
Administrative Oversight Committee
 
 
 
 
 
 
 
-26-
 
 

EXHIBIT INDEX


23.1           Consent of Blue & Co., LLC
23.2           Consent of PricewaterhouseCoopers LLP
 
 
 
 

-27-