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                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                 FORM 10-K
            Annual Report Pursuant to Section 13 or 15(d) of the
                      Securities Exchange Act of 1934

                FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999
                           Commission file number
                                   1-2918

                                ASHLAND INC.
                          (a Kentucky corporation)

                           I.R.S. No. 61-0122250
                        50 E. RiverCenter Boulevard
                                P.O. Box 391
                       Covington, Kentucky 41012-0391

                      Telephone Number: (606) 815-3333

              Securities Registered Pursuant to Section 12(b):

                                                        Name of each exchange
        Title of each class                             on which registered
        -------------------                             ---------------------
Common Stock, par value $1.00 per share                New York Stock Exchange
                                                     and Chicago Stock Exchange
Rights to Purchase Series A Participating              New York Stock Exchange
     Cumulative Preferred Stock                      and Chicago Stock Exchange


           Securities Registered Pursuant to Section 12(g): None

         Indicate by check mark  whether the  Registrant  (1) has filed all
reports  required  to be filed  by  Section  13 or 15(d) of the  Securities
Exchange  Act of 1934 during the  preceding  12 months (or for such shorter
period that the Registrant was required to file such reports),  and (2) has
been  subject  to such  filing  requirements  for the past 90 days. Yes  [X]
No [ ]

         Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of  Regulation  S-K is not  contained  herein,  and will not be
contained,  to the best of Registrant's  knowledge,  in definitive proxy or
information  statements  incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]

         At November 30, 1999,  based on the New York Stock Exchange closing
price, the aggregate market value of voting stock held by non-affiliates of
the  Registrant  was  approximately  $2,394,294,188.  In  determining  this
amount,  the  Registrant  has  assumed  that its  directors  and  executive
officers are affiliates. Such assumption shall not be deemed conclusive for
any other purpose.

         At November 30, 1999, there were 71,290,693  shares of Registrant's
common stock outstanding.

                    Documents Incorporated by Reference

         Portions of  Registrant's  Annual Report to  Shareholders  for the
fiscal year ended  September 30, 1999 are  incorporated  by reference  into
Parts I and II.

         Portions  of  Registrant's  definitive  Proxy  Statement  for  its
January  27,  2000  Annual  Meeting of  Shareholders  are  incorporated  by
reference into Part III.

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                             TABLE OF CONTENTS
                                                                           Page

PART I
     Item 1.    Business ..................................................  1
                    Corporate Developments.................................  1
                    APAC...................................................  2
                    Ashland Distribution...................................  2
                    Ashland Specialty Chemical.............................  3
                    Valvoline..............................................  4
                    Refining and Marketing.................................  5
                    Arch Coal..............................................  8
                    Miscellaneous.......................................... 10
     Item 2.    Properties................................................. 12
     Item 3.    Legal Proceedings.......................................... 12
     Item 4.    Submission of Matters to a
                  Vote of Security Holders................................. 13
     Item X.    Executive Officers of Ashland.............................. 13

PART II
     Item 5.    Market for Registrant's Common Stock and Related
                  Security Holder Matters.................................. 14
     Item 6.    Selected Financial Data.................................... 15
     Item 7.    Management's Discussion and Analysis of Financial
                  Condition and Results of Operations...................... 15
     Item 7A.   Quantitative and Qualitative Disclosures About Market Risk..15
     Item 8.    Financial Statements and Supplementary Data.................15
     Item 9.    Changes in and Disagreements with Accountants
                  on Accounting and Financial Disclosure....................15
PART III
     Item 10.   Directors and Executive Officers of the Registrant..........15
     Item 11.   Executive Compensation......................................15
     Item 12.   Security Ownership of Certain Beneficial
                  Owners and Management.....................................15
     Item 13.   Certain Relationships and Related Transactions..............15

PART IV
     Item 14.   Exhibits, Financial Statement Schedules and Reports
                  on Form 8-K...............................................15


<PAGE>

                                   PART I

ITEM 1. BUSINESS
         Ashland Inc. is a Kentucky  corporation,  organized on October 22,
1936, with its principal  executive  offices  located at 50 E.  RiverCenter
Boulevard,  Covington,  Kentucky 41012 (Mailing Address:  50 E. RiverCenter
Boulevard, P.O. Box 391, Covington,  Kentucky 41012-0391) (Telephone: (606)
815-3333).  The terms  "Ashland" and the  "Company" as used herein  include
Ashland Inc. and its  consolidated  subsidiaries,  except where the context
indicates otherwise.
     Ashland's  businesses  are grouped into six industry  segments:  APAC,
Ashland Distribution,  Ashland Specialty Chemical,  Valvoline, Refining and
Marketing and Arch Coal. Financial information about these segments for the
three fiscal years ended  September  30, 1999, is set forth on Pages 52 and
53 of Ashland's  Annual  Report to  Shareholders  for the fiscal year ended
September 30, 1999 ("Annual Report").
     APAC performs contract construction work, including highway paving and
repair,  excavation  and  grading,  and bridge  construction,  and produces
asphaltic  and  ready-mix  concrete,  crushed  stone and  other  aggregate,
concrete  block  and  certain  specialized  construction  materials  in the
southern and midwestern United States.
     Ashland  Distribution  distributes  industrial  chemicals,   solvents,
ingredients,  thermoplastics  and  resins,  fiberglass  materials  and fine
ingredients  in North  America and  plastics in Europe.  Ashland  Specialty
Chemical  manufactures  and sells a wide variety of performance  chemicals,
resins,   products  and  services  and  certain   petrochemicals.   Ashland
Distribution and Ashland  Specialty  Chemical were formed from the division
of Ashland Chemical in March 1999.
     Valvoline  is a marketer of premium  branded,  packaged  motor oil and
automotive chemicals,  automotive appearance products, antifreeze, filters,
rust  preventives  and coolants.  In addition,  Valvoline is engaged in the
"fast oil change"  business  through outlets  operating under the Valvoline
Instant Oil Change(R) name.
     Marathon Ashland Petroleum LLC ("MAP"),  a joint venture with Marathon
Oil  Company,  operates  seven  refineries  with a total crude oil refining
capacity  of 935,000  barrels per day.  Refined  products  are  distributed
through a network of independent and company-owned  outlets in the Midwest,
the upper Great Plains and the  southeastern  United  States.  Marathon Oil
Company  has a 62%  interest  in MAP,  and  Ashland  holds a 38%  interest.
Ashland accounts for its investment in MAP using the equity method.
     Ashland's coal operations are conducted by Arch Coal,  Inc.,  which is
owned  58%  by  Ashland  and  is  publicly  traded.   Arch  Coal  produces,
transports,  processes  and  markets  bituminous  coal  produced in Central
Appalachia and the western and midwestern  United States.  Ashland accounts
for its investment in Arch Coal using the equity method.
     At September 30, 1999,  Ashland and its consolidated  subsidiaries had
approximately 23,000 employees (excluding contract employees).


                           CORPORATE DEVELOPMENTS

     In October 1999,  Ashland completed its tender offer for Superfos a/s,
a Denmark  based  industrial  company.  In  November  1999,  in a series of
transactions,  Ashland sold the businesses of Superfos, other than its U.S.
construction operations,  to a unit of Industri Kapital, a European private
equity fund, for cash and a short-term note of $285 million (to be redeemed
by the end of the  March  2000  quarter).  Ashland's  net cost for the U.S.
construction business of Superfos will be approximately $520 million.
     In October 1999,  Ashland announced that it was making progress on its
study to explore strategic alternatives for its investment in Arch Coal and
that a tax-free spin-off to its shareholders would seem to be its preferred
alternative.  Ashland also  announced  that it has  submitted a proposal to
Arch Coal and has begun  discussions  with a special  committee of the Arch
Coal  Board of  Directors  regarding  such a spin-off  transaction.  Such a
spin-off would be subject,  among other things,  to a negotiated  agreement
with the special committee of the Arch Coal Board of Directors, approval by
the Arch Coal  shareholders,  a favorable  ruling from the Internal Revenue
Service  and  approval of  Ashland's  Board of  Directors.  There can be no
assurance  that an  agreement  with the special  committee of the Arch Coal
Board of Directors  will be reached or that the necessary  approvals of the
Arch Coal  shareholders and the Ashland Board of Directors will be obtained
or that a favorable ruling from the Internal Revenue Service


                                       1
<PAGE>
will be  obtained.  Even if an agreement  were reached and such  conditions
were met,  Ashland  anticipates  that it would be several  months  before a
spin-off could be consummated.


                                    APAC

      The APAC  group  of  companies  performs  construction  work  such as
paving, repairing and resurfacing highways, streets, airports,  residential
and  commercial  developments,  sidewalks and  driveways;  grading and base
work; and excavation and related  activities in the construction of bridges
and  structures,  drainage  facilities  and  underground  utilities  in  14
southern and midwestern  states.  APAC also produces and sells construction
materials,  such as hot-mix asphalt and ready-mix  concrete,  crushed stone
and other aggregate and, in certain markets, concrete block and specialized
construction  materials,  such as  architectural  block. For information on
Ashland's acquisition of the U.S. construction  operations of Superfos a/s,
see "Item 1. Corporate Developments."
     To  deliver  its  services  and  products,   APAC  utilizes  extensive
aggregate-producing properties and construction equipment. It currently has
26 permanent  operating  quarry  locations,  40 other aggregate  production
facilities,  54 ready-mix concrete plants, 189 hot-mix asphalt plants and a
fleet of over 11,000 mobile equipment units,  including heavy  construction
equipment and transportation-related equipment.
     Raw aggregate generally consists of sand, gravel,  granite,  limestone
and sandstone.  About 26% of the raw aggregate  produced by APAC is used in
APAC's  own  contract  construction  work  and the  production  of  various
processed construction  materials.  The remainder is sold to third parties.
APAC also  purchases  substantial  quantities of raw  aggregate  from other
producers whose proximity to the job site renders it economically feasible.
Most  other raw  materials,  such as liquid  asphalt,  portland  cement and
reinforcing steel, are purchased from third parties.  APAC is not dependent
upon any one supplier or customer.
     Approximately 59% of APAC's revenues are derived directly from highway
and other public sector sources.  The other 41% are derived from industrial
and commercial  customers,  private developers and other contractors to the
public sector.  The 1998 highway funding  authorization  package  increased
federal  funding for highways by $52 billion over a six-year  period.  More
importantly,  the  states in which  APAC  operates  should  see an  average
increase  in  annual  funding  of 59% or $3.3  billion,  based  on  current
estimates.
     Climate and weather  significantly affect revenues in the construction
business.  Due to its  location,  APAC  tends  to enjoy a  relatively  long
construction  season.  Most of APAC's  operating income is generated during
the construction period of May to October.
     Total backlog at September 30, 1999 was $948 million, compared to $838
million at September 30, 1998. The backlog orders at September 30, 1999 are
considered firm, and a major portion is expected to be filled during fiscal
2000.


                            ASHLAND DISTRIBUTION

     Ashland   Distribution   distributes   chemicals,    plastics,   fiber
reinforcements  and fine  ingredients  in North  America  and  plastics  in
Europe.  Ashland Distribution owns or leases approximately 100 distribution
facilities  in North America and 25  distribution  facilities in 17 foreign
countries.  Ashland  Distribution  is comprised of the  following  business
units:
     INDUSTRIAL  CHEMICALS  &  SOLVENTS  DIVISION - This  division  markets
specialty chemicals, additives and solvents to industrial chemical users in
major markets through  distribution  centers in the United States,  Canada,
Mexico and Puerto  Rico.  It  distributes  approximately  7,000  chemicals,
solvents,  additives and raw materials made by many of the nation's leading
chemical  manufacturers  and a growing  number of  offshore  producers.  It
specializes  in  supplying   mixed   truckloads   and   less-than-truckload
quantities to many  industries,  including  the paint and  coatings,  inks,
adhesives,  polymer,  rubber,  industrial  and  institutional  compounding,
automotive,  appliance  and  paper  industries.  It also  offers  customers
chemical  waste  collection,  disposal and recycling  services,  working in
cooperation with major chemical waste services companies.

                                       2
<PAGE>
     GENERAL  POLYMERS  DIVISION - This  division  markets a broad range of
thermoplastic  resins to injection molders,  extruders,  blow molders,  and
rotational molders in the plastics industry through distribution  locations
in the United  States,  Canada,  Mexico and Puerto Rico.  It also  provides
plastic material  transfer and packaging  services and  less-than-truckload
quantities of packaged  thermoplastics.  The division's  basic resins group
markets bulk wide-spec and off-grade  thermoplastic  resins to a variety of
proprietary processors in North America.
     FRP  SUPPLY  DIVISION - This  division  markets  to  customers  in the
reinforced  plastics and cultured  marble  industries  mixed  truckload and
less-than-truckload  quantities of polyester  resins,  fiberglass and other
specialty  reinforcements,  catalysts and allied products from distribution
facilities located throughout North America.
      FINE INGREDIENTS  DIVISION - This division  distributes  cosmetic and
pharmaceutical specialty chemicals and food-grade and nutritional additives
and ingredients across North America.
     ASHLAND  PLASTICS  EUROPE - This  division  markets  a broad  range of
thermoplastics  to  processors  in  Europe.  Ashland  Plastics  Europe  has
distribution centers located in Belgium, Finland, France, Germany, Ireland,
Italy, the Netherlands,  Norway,  Spain,  Sweden and the United Kingdom and
has compounding manufacturing facilities located in Italy and Spain.
     DISTRIBUTION   SERVICES  -  This  division  provides  warehousing  and
trucking services for North American distribution businesses. It operates a
network of 95  warehouses  and a fleet of 475 trucks  making  deliveries to
44,000 customers throughout North America.

                         ASHLAND SPECIALTY CHEMICAL
     Ashland  Specialty   Chemical   manufactures  and  supplies  specialty
chemical  products  and services to  industries  including  the  adhesives,
automotive,  composites,  foundry,  merchant marine, paint, paper, plastics
and semiconductor  fabrication industries.  Ashland Specialty Chemical owns
and  operates  36   manufacturing   facilities  and   participates   in  14
manufacturing joint ventures in 20 countries. Ashland Specialty Chemical is
comprised of the following business units:
     COMPOSITE  POLYMERS DIVISION - This division  manufactures and sells a
broad  range  of  chemical-resistant,  fire-retardant  and  general-purpose
grades of  unsaturated  polyester and vinyl ester resins for the reinforced
plastics industry. Key markets include the transportation, construction and
marine industries.  It has manufacturing plants in Jacksonville,  Arkansas;
Los Angeles,  California;  Bartow, Florida;  Ashtabula, Ohio; Philadelphia,
Pennsylvania;  Kelowna, British Columbia,  Canada;  Benicarlo,  Spain; and,
through a joint venture, in Jeddah,  Saudi Arabia and Sao Paolo, Brazil. In
addition,  the division also  manufactures  products  through other Ashland
Specialty Chemical facilities located in Mississauga,  Ontario,  Canada and
Neville Island, Pennsylvania.
     FOUNDRY  PRODUCTS  DIVISION  - This  division  manufactures  and sells
foundry  chemicals   worldwide,   including   sand-binding  resin  systems,
refractory  coatings,  release agents,  engineered  sand  additives,  riser
sleeves and die  lubricants.  This division serves the global metal casting
industry  from 22  locations  in 18  countries.  The  division is currently
building a manufacturing  facility in China expected to be completed in the
third quarter of calendar 2000.
     DREW  INDUSTRIAL   DIVISION  -  This  division  supplies   specialized
chemicals  and  consulting  services  for the  treatment  of boiler  water,
cooling  water,  steam,  fuel and waste streams.  It also supplies  process
chemicals  and  technical  services  to  the  pulp  and  paper  and  mining
industries and additives to  manufacturers  of latex and paint. It conducts
operations  throughout  North  America,  Europe  and the Far  East  through
subsidiaries,  joint venture companies and  distributors.  The division has
manufacturing plants in Kearny, New Jersey;  Houston, Texas; Ajax, Ontario,
Canada; Somercotes,  England;  Singapore;  Sydney and Perth, Australia; and
Auckland, New Zealand.
     ELECTRONIC CHEMICALS DIVISION - This division manufactures and sells a
variety of ultrapure  chemicals  for the worldwide  semiconductor  industry
through various manufacturing locations and also custom blends and packages
ultrapure  liquid  chemicals  to  customer  specifications.   The  division
operates manufacturing plants in Pueblo,  Colorado;  Easton,  Pennsylvania;
Dallas,  Texas and Milan,  Italy.  In  addition,  it enters into  long-term
agreements  to  provide  complete  on-site  chemical  management  services,
including  purchasing,  warehousing  and delivering  chemicals for in-plant
use, at major facilities of large consumers of high purity chemicals.  This
division  has  entered  into  a  joint  venture  with  Union  Petrochemical
Corporation  of Taipei,  Taiwan to build and operate an  ultrapure  process
chemicals  manufacturing  facility in Taiwan.  In  addition,  the  division
recently  built a  facility  in Korea  to  manufacture  specialty  stripper
products for semiconductor manufacturing.


                                       3
<PAGE>
     SPECIALTY POLYMERS & ADHESIVES  DIVISION - This division  manufactures
and sells  specialty  phenolic resins for paper  impregnation  and friction
material  bonding;  acrylic  polymers  for  pressure-sensitive   adhesives;
emulsion  polymer   isocyanate   adhesives  for  structural  wood  bonding;
polyurethane  and  epoxy  structural   adhesives  for  bonding   fiberglass
reinforced plastics,  composites,  thermoplastics and metals in automotive,
recreational,  and industrial  applications;  induction bonding systems for
thermoplastic  materials;  elastomeric  polymer  adhesives and butyl rubber
roofing  tapes for  commercial  roofing  applications;  and  vapor  curing,
high-performance  urethane coatings systems. It has manufacturing plants in
Calumet City,  Illinois;  Norwood and Totowa,  New Jersey;  and Ashland and
Columbus, Ohio.
     DREW MARINE DIVISION - This division supplies specialty  chemicals for
water  and fuel  treatment  and  general  maintenance,  as well as  sealing
products,  welding and  refrigerant  products and fire  fighting and safety
services to the  world's  merchant  marine  fleet.  Drew  Marine  currently
provides shipboard technical service for more than 10,000 vessels from more
than 100 locations serving approximately 600 ports throughout the world.
     PETROCHEMICALS  DIVISION - This division manufactures maleic anhydride
at Neal,  West  Virginia,  and  Neville  Island,  Pennsylvania.  Its Energy
Services business unit provides  industrial and commercial  businesses with
expert management of their total energy requirements.
     RESEARCH  AND  DEVELOPMENT  -  Ashland  Specialty   Chemical  conducts
research and  commercial  development  programs at the Technical  Center in
Dublin, Ohio to identify and develop innovative technologies.

OTHER MATTERS
         For  information  on Ashland  Distribution  and Ashland  Specialty
Chemical and federal,  state and local statutes and  regulations  governing
releases   into,  or  protection   of,  the   environment,   see  "Item  1.
Miscellaneous  -  Environmental  Matters" and "Item 3. Legal  Proceedings -
Environmental Proceedings."


                                 VALVOLINE

     The Valvoline Company, a division of Ashland, is a marketer of premium
branded automotive and industrial oils,  automotive  chemicals,  automotive
appearance  products and automotive  services,  with sales in more than 140
countries.  The Valvoline(R) trademark was federally registered in 1873 and
is the  oldest  trademark  for a  lubricating  oil in  the  United  States.
Valvoline is comprised of the following business units:
     NORTH AMERICAN  PRODUCTS - This unit,  Valvoline's  largest  division,
markets  automotive,  commercial,  and  industrial  lubricants,  automotive
chemicals and  automotive  appearance  products to a broad network of North
American  customers.  This unit markets Valvoline branded motor oil, one of
the top selling  brands in the U.S.  private  passenger car and light truck
market  and  premium  synthetic   SynPower(R)   automobile   chemicals  for
"under-the-hood" use.
     North American  Products also markets Eagle One(R) premium  automotive
appearance   products,   Zerex(R)   antifreeze  and  Pyroil(R)   automotive
chemicals.  Zerex is the  second  leading  antifreeze  brand in the  United
States. This division also markets R-12, an automotive refrigerant that was
phased out of production in 1995. R-12 is being replaced in the market by a
new generation of refrigerants.
     The domestic  commercial  and  specialty  products  group of the North
American Products unit continued its strategic alliance with Cummins Engine
Company to distribute heavy-duty lubricants to the commercial market.
     EAGLE  ONE - Eagle  One is a brand of  premium  automobile  appearance
chemicals  for  "above-the-hood"  applications.   Products  include  waxes,
polishes and wheel  cleaners.  Managed by Valvoline as a separate  business
unit,  Eagle One markets its products  through  Valvoline's  North American
Products and Valvoline International divisions.
     VALVOLINE  INTERNATIONAL - Valvoline  International  markets Valvoline
branded  products,  TECTYL(R)  rust  preventives  and Eagle One  automotive
appearance  products  through  company-owned  affiliates  or  divisions  in
Argentina,  Australia, Austria, Belgium, Denmark, Finland, France, Germany,
Great  Britain,  Italy,  the  Netherlands,  Poland,  South Africa,  Sweden,
Switzerland  and Thailand.  Licensees and  distributors  market products in
other parts of Europe, Mexico, Central and South America, the Far East, the
Middle  East and  certain  African  countries.  Joint


                                       4
<PAGE>
ventures have been established in Ecuador,  India,  Thailand and Venezuela.
Packaging and blending plants and  distribution  centers in Australia,  the
Netherlands and the United States supply international customers.
     VALVOLINE INSTANT OIL CHANGE(R)  ("VIOC") - VIOC is one of the largest
competitors  in the  expanding  U.S.  "fast oil change"  service  business,
providing  Valvoline with a significant  share of the installed  segment of
the  passenger  car and light truck motor oil market.  As of September  30,
1999, 377 company-owned  and 207 franchised  service centers were operating
in 35 states.
     VIOC has continued its customer service innovation through its Maximum
Vehicle Performance program ("MVP").  MVP is a computer-based  program that
maintains  system-wide  service records on all customer vehicles.  MVP also
contains a database  on all car  models,  which  allows  employees  to make
service recommendations based on vehicle owner's manual recommendations.
         ECOGARD, INC. - In September 1999, Valvoline sold Ecogard, Inc. to
Safety-Kleen  Corp.  Ecogard,  Inc.,  through its First Recovery  division,
collects used motor oil from a network of automotive  aftermarket retailers
and service businesses.

                           REFINING AND MARKETING
         Refining and  Marketing  operations  are  conducted by MAP and its
subsidiaries,    including   its   wholly-owned   subsidiaries,    Speedway
SuperAmerica LLC and Marathon  Ashland Pipe Line LLC.  Marathon Oil Company
holds a 62% interest in MAP and Ashland holds a 38% interest in MAP.

REFINING
     MAP owns and operates  seven  refineries  with an  aggregate  refining
capacity of 935,000  barrels of crude oil per calendar day. The table below
sets forth the location and daily throughput capacity (measured in barrels)
of each of MAP's refineries as of September 30, 1999:

<TABLE>
<CAPTION>
<S>                                                                                           <C>
           Garyville, Louisiana.............................................................. 232,000
           Catlettsburg, Kentucky............................................................ 222,000
           Robinson, Illinois................................................................ 192,000
           Detroit, Michigan................................................................   74,000
           Canton, Ohio.....................................................................   73,000
           Texas City, Texas................................................................   72,000
           St. Paul Park, Minnesota.........................................................   70,000
                                                                                              -------
                       Total................................................................. 935,000
                                                                                              =======
</TABLE>

     MAP's   refineries   include   crude  oil   atmospheric   and   vacuum
distillation,    fluid    catalytic    cracking,    catalytic    reforming,
desulfurization   and  sulfur  recovery  units.  The  refineries  have  the
capability  to process a wide variety of crude oils and to produce  typical
refinery products,  including reformulated gasoline ("RFG"). In addition to
typical  refinery   products,   the  Catlettsburg   refinery   manufactures
lubricating oils and a wide range of petrochemicals.  For the twelve months
ended September 30, 1999, 73% of MAP's  production of lubricating  oils was
purchased by Valvoline and 40% of MAP's  production of  petrochemicals  was
purchased by Ashland Distribution.
     MAP  also  produces  asphalt  cements,  polymerized  asphalt,  asphalt
emulsions and industrial asphalts. Additionally, MAP manufactures petroleum
pitch, primarily used in the graphite electrode, clay target and refractory
industries.


                                       5
<PAGE>
     The  table  below  sets  forth  MAP's   refinery  input  and  refinery
production by product group for the twelve months ended  September 30, 1999
and for the nine months ended September 30, 1998.
<TABLE>
<CAPTION>

                                                               Twelve Months  Ended            Nine Months ended
                                                               --------------------            -----------------
                                                                September 30, 1999             September 30, 1998
                                                                ------------------             ------------------
<S>                                                                  <C>                             <C>
      Refinery Input (In thousands of barrels per day)               1,034.0                         1,023.3
      ------------------------------------------------

      Refined Product Yields (In thousands of barrels per day)
      --------------------------------------------------------
      Gasoline    .................................................... 565.5                           539.8
      Distillates....................................................  265.6                           269.2
      Propane........................................................   22.2                            20.9
      Feedstocks & Special Products.................................    64.9                            71.7
      Heavy Fuel Oils................................................   45.1                            47.4
      Asphalt........................................................   70.4                            69.3
                                                                     --------                      ---------
                           Total.....................................1,033.7                         1,018.3
                                                                     =======                         =======
</TABLE>

     MAP and Epsilon Products Company have developed  facilities to produce
800 million pounds per year of polymer grade propylene and polypropylene at
the Garyville refinery. MAP owns and operates facilities to produce polymer
grade  propylene,  which began  production in June 1999.  Epsilon  Products
Company  owns and  operates the  polypropylene  facilities  and markets its
output.
     During the second quarter of 1999, MAP sold Scurlock  Permian LLC, its
crude oil gathering business, to Plains Marketing, L. P. Scurlock Permian's
crude oil gathering  operations were conducted in an area reaching from the
Rocky  Mountains  to the Gulf  Coast.  In  addition,  Scurlock  Permian was
engaged in  purchasing,  selling  and  trading  crude oil,  principally  at
Midland, Texas; Cushing,  Oklahoma and St. James,  Louisiana,  three of the
major  distribution  points for United  States  crude oil. MAP retained the
western Canadian  operations of Marathon  Ashland  Petroleum  Canada,  Ltd.

MARKETING
         MAP's principal  marketing areas for gasoline,  kerosene and light
oils  include  the  Midwest,  the upper Great  Plains and the  southeastern
United  States.  Gasoline,  kerosene  and  light  fuel  oils are sold in 25
states.  Gasoline is sold at wholesale primarily to independent  marketers,
jobbers and chain  retailers who resell  through  several  thousand  retail
outlets  principally  under  their  own  names.  MAP  also  supplies  3,171
jobber-dealer,   open-dealer   and   lessee-dealer   locations   using  the
Marathon(R) and Ashland(R) brand names.
     Gasoline, kerosene, distillates and aviation products are also sold to
utilities,  railroads, river towing companies,  commercial fleet operators,
airlines and governmental agencies.
     Retail  sales of  gasoline  and  diesel  fuel are made  through  MAP's
wholly-owned  subsidiary,  Speedway SuperAmerica LLC. Speedway SuperAmerica
LLC operates 2,217 retail outlets (convenience  store-gasoline stations and
truck stops) in 20 states in the  Southeast  and Midwest  under brand names
including Speedway(R), SuperAmerica(R), Rich(R) and others. The convenience
store-gasoline locations offer consumers gasoline, diesel fuel (at selected
locations) and a broad mix of other products and services, such as tobacco,
soft  drinks,  health  and  beauty  aids,  groceries,   fresh-baked  goods,
automated   teller   machines,   automotive   accessories  and  a  line  of
private-label  items.  The truck stops offer  diesel  fuel,  gasoline and a
variety of other services  associated  with such  locations.  Several truck
stop and  convenience  store  locations  also have  on-premises  brand-name
restaurants such as Subway and Taco Bell.
     On May 24,  1999,  MAP  signed  an  agreement  with  Ultramar  Diamond
Shamrock ("UDS") to purchase 179 UDS owned-and-operated convenience stores,
five  product   terminals  and  an  assignment  of  supply   contracts  for
approximately 240 branded UDS jobber stations in Michigan.  MAP anticipates
closing  this  transaction  before  the end of  calendar  1999,  subject to
receipt of government approvals, consents of third parties and satisfaction
of customary closing conditions.


                                       6
<PAGE>

     During the twelve months ended September 30, 1999, 59% of the revenues
(excluding  excise  taxes) of the  Speedway  SuperAmerica  LLC stores  were
derived from the sale of gasoline and diesel fuel and 41% of such  revenues
were derived from the sale of merchandise.

     The table below shows the volume of MAP's consolidated refined product
sales for the twelve  months ended  September  30, 1999 and the nine months
ended September 30, 1998.
<TABLE>
<CAPTION>
                                                              Twelve Months Ended        Nine Months ended
                                                              -------------------        -----------------
                                                              September 30, 1999         September 30, 1998
                                                              ------------------         ------------------

<S>                                                                  <C>                       <C>
   Refined Product Sales (In thousands of barrels per day)
   -------------------------------------------------------
   Gasoline.......................................................   699.3                     659.1
   Distillates....................................................   324.6                     312.9
   Propane........................................................    22.4                      20.8
   Feedstocks & Special Products..................................    65.1                      68.8
   Heavy Fuel Oils................................................    44.9                      48.4
   Asphalt........................................................    74.3                      73.7
                                                                   ---------                --------
                          Total................................... 1,230.6                   1,183.7
                                                                   =======                   =======

   Matching Buy/Sell Volumes included in above....................    47.7                      38.4
</TABLE>

         MAP  sells  RFG in parts  of its  marketing  territory,  primarily
Chicago,  Illinois;  Louisville,  Kentucky;  Northern  Kentucky;  Maryland;
Virginia;  and  Milwaukee,  Wisconsin.  MAP also markets low vapor pressure
gasolines in eleven states.

SUPPLY AND TRANSPORTATION
     The  crude  oil  processed  in  MAP's   refineries  is  obtained  from
negotiated lease, contract and spot purchases or exchanges.  For the twelve
months ended September 30, 1999, MAP's negotiated lease,  contract and spot
purchases of U.S. crude oil for refinery input averaged 325,400 barrels per
day (1 barrel = 42 United  States  gallons)  including an average of 21,800
barrels per day acquired from  Marathon Oil Company.  For the twelve months
ended  September 30, 1999,  MAP's foreign crude oil  requirements  were met
largely  through  purchases  from various  foreign  national oil companies,
producing companies and traders. Purchases of foreign crude oil represented
64% of MAP's crude oil  requirements  for the twelve months ended September
30, 1999.
     MAP's  ownership  or  interest  in  domestic  pipeline  systems in its
refining and marketing  areas is  significant.  MAP owns,  leases or has an
ownership  interest  in 7,282 miles of active  pipeline in 16 states.  This
network  transports  crude oil and refined  products to and from terminals,
refineries  and  other  pipelines.  It  includes  381  miles of  crude  oil
gathering  lines,  4,040  miles of crude oil trunk lines and 2,861 miles of
refined product lines.
     MAP has a 46.7% ownership interest in LOOP LLC ("LOOP"),  which is the
owner and  operator of the only U.S.  deepwater  port  facility  capable of
receiving crude oil from very large crude carriers.  Ashland has retained a
4% ownership  interest in LOOP. MAP also owns a 49.9% ownership interest in
LOCAP  INC.  ("LOCAP"),  which is the  owner  and  operator  of a crude oil
pipeline  connecting  LOOP to the Capline  system.  Ashland has retained an
8.6% ownership interest in LOCAP. In addition,  MAP has a 37.169% ownership
interest in the Capline system. These port and pipeline systems provide MAP
with access to common carrier  transportation from the Louisiana Gulf Coast
to Patoka,  Illinois.  At Patoka,  the Capline  system  connects with other
common   carrier   pipelines   owned  or  leased   by  MAP  which   provide
transportation  to MAP's  refineries  in Illinois,  Kentucky,  Michigan and
Ohio.
     MAP also has a stock  interest in Minnesota  Pipe Line Company,  which
owns a crude  oil  pipeline  in  Minnesota.  Minnesota  Pipe  Line  Company
provides MAP with access to crude oil common  carrier  transportation  from
Clearbrook, Minnesota to Cottage Grove, Minnesota, which is in the vicinity
of MAP's St. Paul Park, Minnesota refinery.
     MAP's marine  transportation  operations  include  towboats and barges
that  transport  refined  products on the Ohio,  Mississippi  and  Illinois
rivers, their tributaries and the Intracoastal  Waterway. In addition,  MAP
leases on a long-term  basis two 80,000  deadweight ton tankers,  which are
"bare boat sub-chartered" to a third party operation. These tankers are not
essential for MAP to satisfy its own crude oil requirements.


                                       7
<PAGE>

     MAP  leases  and owns rail cars in various  sizes and  capacities  for
movement of  petroleum  products and  chemicals.  MAP also owns or leases a
large number of tractor-trailers, tank trailers and general service trucks.
         In  addition,  MAP owns and operates 88 terminal  facilities  from
which it sells a wide range of petroleum  products.  These  facilities  are
supplied by a combination of barges, pipeline, truck and rail.

OTHER MATTERS
     MAP experiences normal seasonal  variations in its sales and operating
results. This seasonality is due primarily to increased demand for gasoline
during the summer driving season,  higher demand for distillate  during the
winter heating season and increased demand for asphalt from the road paving
industry during the construction season.
     For  information  on MAP and  federal,  state and local  statutes  and
regulations  governing  releases into the  environment or protection of the
environment, see "Item 1. Miscellaneous - Environmental Matters."


                                 ARCH COAL

     Ashland owns  approximately  58% of Arch Coal, Inc., a publicly-traded
corporation (NYSE:ACI).  Arch Coal files periodic reports, including annual
reports on Form 10-K,  pursuant to the Securities Exchange Act of 1934. For
information  on  Ashland's  proposed  spin-off  of Arch Coal,  see "Item 1.
Corporate Developments."
     Arch Coal is the second  largest  coal  producer in the United  States
with annual  production  that  accounts for almost 10% of annual U.S.  coal
production. Arch Coal mines, processes and markets primarily compliance and
low-sulfur  coal from 40 surface,  underground  and auger mines  located in
western,  central  Appalachian  and  midwestern  United States coal fields.
Compliance and low-sulfur  coal are types of coal that,  when burned,  emit
1.2  pounds  and 1.6  pounds or less of sulfur  dioxide  per  million  Btu,
respectively.   Coal  from  the  mines  of  Arch  Coal's   subsidiaries  is
transported by rail, truck and barge to domestic  customers and to Atlantic
or Pacific  coast  terminals  for  shipment to domestic  and  international
customers.
     On June 1,  1998,  Arch  Coal  acquired  the  Colorado  and Utah  coal
operations  of  Atlantic  Richfield  Company  ("ARCO")  and  simultaneously
combined the acquired ARCO operations,  Arch Coal's Wyoming  operations and
ARCO's  Wyoming  operations  in a new  joint  venture  named  Arch  Western
Resources, LLC ("Arch Western"). Arch Western is 99% owned by Arch Coal and
1% owned by ARCO. All of the domestic coal reserves  acquired from ARCO are
"compliance  coal," meeting the sulfur dioxide  emissions  requirements  of
Phase II of the Clean Air Act.
     The following  discussion  includes pro forma combined  operating data
which gives  effect to the merger of Ashland  Coal,  Inc.  and Arch Mineral
Corporation  (which  occurred  on July 1,  1997) as if it had  occurred  at
October 1, 1996 and to the acquisition of ARCO's U.S. operations as of June
1,  1998.  The pro  forma  combined  operating  data  does not  purport  to
represent  the  operating  results  which would have been  achieved had the
merger of Ashland Coal, Inc. and Arch Mineral Corporation actually occurred
as of October 1, 1996.
     Arch Coal and its independent  operating  subsidiaries (which does not
include  tons  sold by  Canyon  Fuel as Arch  Coal's  interest  therein  is
accounted  for using the equity  method) sold  approximately  109.3 million
tons of coal in the twelve months ended  September 30, 1999, as compared to
67.3 and 53.7 million tons sold in the twelve  months ended  September  30,
1998 and 1997, respectively. Of the total tonnage sold in the twelve months
ended  September  30,  1999,  approximately  80.3% was sold under long term
contracts  (contracts  having a term greater than one year), as compared to
76.5% and 72.4% for the twelve  months ended  September  30, 1998 and 1997,
respectively,  with the balance  being sold on the spot  market  (contracts
having a term of one year or less).  In the twelve  months ended  September
30, 1999, Arch Coal and its  independent  operating  subsidiaries  sold 3.9
million tons of coal in the export market (which does not include tons sold
by Canyon Fuel),  compared to 3.8 and 2.7 million tons in the twelve months
ended September 30, 1998 and 1997, respectively.
     During the twelve months ended  September 30, 1999,  Arch Coal's total
sales to American Electric Power Company, Inc. ("AEP") and Southern Company
and their  respective  affiliates  accounted  for  approximately  11.3% and
11.1%,  respectively,  of Arch Coal's total revenues for such period.  AEP,
Southern  Company  and/or  their  affiliates  each  currently  has multiple
long-term  contracts with Arch Coal. If Arch Coal  experienced an immediate
loss of all of the contracts with either of these customers, the loss could
have a material adverse effect on Arch Coal.
     As of September 30, 1999,  Arch Coal  estimates it owned or controlled
measured  (proven) and indicated  (probable) coal reserves of approximately
3.6 billion tons, as set forth in the following  table.  Reserve  estimates
are


                                       8
<PAGE>
prepared by Arch Coal's  engineers and  geologists and are reviewed and
updated periodically. Total reserve estimates will change from time to time
reflecting  mining  activities,  analysis of new engineering and geological
data,  changes in reserve  holdings and other factors.  Anticipated  losses
from  extraction  and,  where  applicable,  washing  of the coal  have been
eliminated  from the estimate.  Arch Coal believes that a majority of these
reserves are comprised of  low-sulfur  coal,  and a substantial  portion of
such  low-sulfur  coal  is  "compliance  coal."  Ashland  has  not  made an
independent  verification of the reserve  estimate or sulfur content of the
estimated reserves.

     RECOVERABLE COAL
<TABLE>
<CAPTION>
                  Region or State                                   Measured         Indicated            Total
                  ---------------                                   --------         ---------            -----
                                                                                 (Thousands of Tons)
<S>                                                                 <C>               <C>
         Central Appalachia ....................................    982,079         418,171              1,400,250
         Illinois ..............................................    241,735          86,687                328,422
         Colorado ..............................................    115,327          24,931                140,258
         Utah ..................................................    183,330          57,420                240,750 *
         Wyoming ...............................................  1,423,878          68,794              1,492,672
                                                                  ---------         -------              ---------
                           Total................................. 2,946,349         656,003              3,602,352
                                                                  =========          =======             =========

      *  Represents  100% of the  reserves  held by Canyon  Fuel  Company,  LLC,  in which  Arch  Coal  holds a 65%
         interest.

</TABLE>
     Arch Coal's coal properties are either owned outright or controlled by
lease.  As of  September  30,  1999,  Arch Coal's  subsidiaries  owned,  or
controlled  primarily  through  long-term  leases,  approximately  104,346,
57,571  and  14,500  acres of coal  lands in  Wyoming,  Utah and  Colorado,
respectively;  273,000,  90,500  and  2,000  acres  of coal  lands  in West
Virginia, Eastern Kentucky, and Virginia,  respectively;  and 118,600 acres
of coal lands in the Illinois Basin.
     Approximately  84,327 acres of Arch Coal's  660,000 acres of coal land
(which  totals  include 100% of the acreage held by Canyon Fuel) are leased
from the federal  government  with terms  expiring  between  1999 and 2019,
subject to  readjustment  and/or  extension and to earlier  termination for
failure to meet diligent development  requirements.  Additionally,  private
term leases  covering  principal  reserves under Arch Coal's current mining
plans are not scheduled to expire prior to  expiration of projected  mining
activities.  Arch Coal's  subsidiaries  also control  through  ownership or
long-term  leases  approximately  5,880 acres of land which are used either
for Arch Coal's coal  processing  facilities or are being held for possible
future  development.  Royalties are paid to lessors either as a fixed price
per ton or as a percentage of the gross sales price of the mined coal. Most
of these leases run until the exhaustion of mineable and merchantable coal.
The  remaining  leases have primary terms ranging from one to 40 years from
the date of their execution,  with most containing options to renew. Mining
plans are not necessarily indicative of the life of the mine. The extent to
which reserves will  eventually be mined depends upon a variety of factors,
including  future economic  conditions and governmental  actions  affecting
both the mining and marketability of coal.
     Arch Coal's  Apogee Coal Company and Hobet Mining,  Inc.  subsidiaries
are members of the  Bituminous  Coal Operators  Association,  and each is a
signatory to a collective bargaining agreement with the United Mine Workers
of  America  that  expires  on  December  31,  2002.  Two  other  Arch Coal
subsidiaries  are  signatories  to collective  bargaining  agreements  with
independent  employee  associations.  Employees  of the  remainder  of Arch
Coal's operating subsidiaries are not represented by labor unions.
         For  information  on federal and state  statutes  and  regulations
governing the coal industry,  see "Item 1.  Miscellaneous  -  Environmental
Matters."


                                       9
<PAGE>
                               MISCELLANEOUS

ENVIRONMENTAL MATTERS
     Ashland has implemented a company-wide  environmental  policy overseen
by the  Public  Policy -  Environmental  Committee  of  Ashland's  Board of
Directors.  Ashland's  Environmental,  Health  and  Safety  group  has  the
responsibility   to  ensure  that  Ashland's   operating   groups  maintain
environmental   compliance  in   accordance   with   applicable   laws  and
regulations.
     Federal,  state  and  local  laws  and  regulations  relating  to  the
protection  of the  environment  have a  significant  impact on how Ashland
conducts  its  businesses.  These  include the Clean Air Act  ("CAA")  with
respect to air emissions, the Clean Water Act ("CWA") with respect to water
discharges,  the Resource  Conservation  and  Recovery  Act  ("RCRA")  with
respect to solid and hazardous  waste  generation,  treatment,  storage and
disposal,  the  Comprehensive  Environmental  Response,  Compensation,  and
Liability Act ("CERCLA") and the Superfund  Amendments and  Reauthorization
Act of 1986 ("SARA") with respect to releases and  remediation of hazardous
substances  (CERCLA  and SARA are  sometimes  referred to  collectively  as
"Superfund"),  the Toxic  Substances  Control Act ("TSCA")  with respect to
chemical formulation and use, the Oil Pollution Act of 1990 ("OPA 90") with
respect  to  oil  pollution,   spill   response  and  financial   assurance
requirements  for  marine  operations,   the  Surface  Mining  Control  and
Reclamation  Act of 1977  ("SMCRA")  with  respect to surface  mining,  the
Federal  Occupational  Safety  and  Health  Act  ("OSHA")  with  respect to
workplace health and safety  standards,  the Federal Mine Safety and Health
Act of 1977 ("MSHA") with respect to health and safety  standards on mining
operations,  and various other federal, state and local laws related to the
environment,  health and safety.  In addition,  most  foreign  countries in
which Ashland conducts business have laws dealing with the same matters.
     In  connection  with the  formation of MAP,  Marathon and Ashland each
retained  responsibility  for certain  environmental  costs  arising out of
their   respective   prior   ownership  and  operation  of  the  facilities
transferred to MAP. In certain  situations,  various  threshold  provisions
apply,   eliminating  or  reducing  the  financial  responsibility  of  the
contributing  party until certain levels of expenditure  have been reached.
In other  situations,  sunset  provisions  gradually  diminish the level of
financial responsibility of the contributing party over time.
     At  September   30,  1999,   Ashland's   reserves  for   environmental
assessments and remediation efforts were $166 million, reflecting Ashland's
current estimate of the costs which are most likely to be incurred over the
period during which the clean-up will be performed to remediate  identified
environmental conditions for which costs are reasonably estimable.
     Expenditures  for  investigatory  and remedial efforts in future years
are subject to the uncertainties  associated with environmental  exposures,
including  identification  of new sites at which  cleanup is  required  and
changes in laws and regulations and their  application.  Such expenditures,
however,  are not expected to have a material  adverse  effect on Ashland's
consolidated financial position, cash flow or liquidity.
     AIR - The CAA imposes stringent limits on air emissions, establishes a
federally  mandated  operating  permit  program,  and  allows for civil and
criminal  enforcement  actions.  Additionally,  it establishes  air quality
attainment  deadlines and control requirements based on the severity of air
pollution  in a given  geographical  area.  Various  state  clean  air acts
implement,  complement and, in some instances,  add to the  requirements of
the federal CAA.  The  requirements  of the CAA and its state  counterparts
have a significant  impact on the daily  operation of Ashland's  businesses
and, in many cases, on product  formulation  and other  long-term  business
decisions. Ashland's businesses maintain numerous permits pursuant to these
clean air laws, and have implemented  systems to oversee ongoing compliance
efforts.
     In July  1997,  the  United  States  Environmental  Protection  Agency
("EPA") promulgated revisions to the National Ambient Air Quality Standards
for ground level ozone and particulate matter. These revisions, if they are
implemented  by the states,  could have a significant  effect on certain of
Ashland's chemical manufacturing and


                                       10
<PAGE>


distribution   businesses,   and  on  MAP.  However,  EPA's  authority  and
scientific  basis to promulgate these standards were challenged by industry
and  overturned  by the  federal  Court  of  Appeals  for the  District  of
Columbia.  Litigation  is  continuing  as  are  efforts  by EPA  and  other
regulatory and law enforcement  agencies to achieve the objectives of these
standards through other means. It is not currently possible to estimate any
potential financial impact that any revised standards may have on Ashland's
operations.
     WATER - Ashland's  businesses  maintain numerous  discharge permits as
required under the National Pollutant  Discharge  Elimination System of the
CWA and state  programs,  and have  implemented  systems to  oversee  their
compliance efforts. In addition, several of MAP's operations, in particular
its barge and terminal facilities, are regulated under OPA 90.
     SOLID  WASTE  -  Ashland's  businesses  are  subject  to  RCRA,  which
establishes  standards for the  management  of solid and hazardous  wastes.
Besides affecting current waste disposal practices, RCRA also addresses the
environmental  effects  of  certain  past waste  disposal  operations,  the
recycling  of  wastes  and the  regulation  of  underground  storage  tanks
("USTs") containing regulated substances.  In addition,  new laws are being
enacted and regulations are being adopted by various regulatory agencies on
a continuing basis, and the costs of compliance with these new rules cannot
be estimated  until the manner in which they will be  implemented  has been
more accurately defined.
     REMEDIATION - Ashland  currently or has in the past  operated  various
facilities  where,  during the normal  course of  operations,  releases  of
hazardous constituents have occurred. Federal and state laws, including but
not  limited  to  RCRA  and  various   remediation   laws,   require   that
contamination  caused by such  releases  be  assessed  and,  if  necessary,
remediated to meet applicable standards.  MAP operates, and in the past has
operated,  certain  retail  outlets  where,  during  the  normal  course of
operations, releases of petroleum products from USTs have occurred. Federal
and state laws require that contamination  caused by such releases at these
sites  be  assessed  and,  if  necessary,  remediated  to  meet  applicable
standards.
     SURFACE  MINING - SMCRA was enacted to regulate the surface  mining of
coal and the surface  effects of  underground  coal  mining.  All states in
which Arch Coal's  subsidiaries  operate have similar laws and  regulations
enacted  pursuant  to SMCRA.  These laws impose  environmental  performance
standards,  requirements to perform land and natural resource  reclamation,
and funding  requirements  to assure that adequate  financial  reserves are
maintained to meet all substantive environmental obligations.
     On October 20, 1999, the U.S. District Court for the Southern District
of West  Virginia  permanently  enjoined  the  West  Virginia  Division  of
Environmental Protection (the "West Virginia DEP") from issuing new permits
that  authorize the  construction  of "valley fills" as part of coal mining
operations.  The  injunction  stems  from  litigation  brought  by  private
individuals  challenging  the legality of surface  mining in West  Virginia
which results in the construction of such valley fills. A valley fill is an
engineered  work located at a lower  elevation  from the surface mine where
excess rock and earth is placed during mining.
     The district  court has granted a stay of its  injunction  pending the
outcome of an appeal of the court's decision filed by the West Virginia DEP
with the U.S. Court of Appeals for the Fourth Circuit.  It is impossible to
predict with certainty the outcome of the appeal. If, however, the district
court's decision is not overturned or if a legislative or other solution is
not achieved, then Arch Coal and other coal producers' ability to mine coal
in West Virginia in the future would be seriously compromised.

RESEARCH
         Ashland  conducts a program of research and  development to invent
and improve  products and processes and to improve  environmental  controls
for its existing  facilities.  It maintains its primary research facilities
in Dublin, Ohio; Lexington,  Kentucky; and Atlanta,  Georgia.  Research and
development costs are expensed as they are incurred and totaled $27 million
in fiscal 1999 ($28 million in 1998 and $29 million in 1997).

COMPETITION
     In all its operations,  Ashland is subject to intense competition both
from  companies in the industries in which it operates and from products of
companies in other industries.  The majority of the business for which APAC
competes  is  obtained  by  competitive  bidding.   Ashland  Distribution's
chemicals  and solvents  distribution  businesses  compete  with  national,
regional and local companies  throughout North America,  while its plastics
distribution  businesses  compete worldwide.  Ashland Specialty  Chemical's
businesses compete globally in selected niche


                                       11
<PAGE>

markets,  largely on the basis of  technology  and service,  while  holding
proprietary technology in virtually all its specialty chemicals businesses.
Ashland  Specialty   Chemical's   petrochemicals   business  is  largely  a
commodities  business,  with pricing and quality  being the most  important
factors. Valvoline competes primarily with domestic oil companies and, to a
lesser  extent,  with  international  oil  companies on a worldwide  basis.
Valvoline's  brand recognition and increasing market share in the "fast oil
change" market are important competitive factors.
     MAP competes  primarily with other domestic  refiners and, to a lesser
extent,  with imported products.  MAP's refineries are located close to its
market areas, giving MAP a geographic advantage in supplying these regions.
MAP's retail operations  compete with major oil companies,  independent oil
companies  and   independent   marketers.   The  coal  industry  is  highly
competitive,  and Arch Coal competes  (principally  in price,  location and
quality of coal) with other coal producers.

FORWARD-LOOKING STATEMENTS
     This Form 10-K and the  documents  incorporated  by reference  contain
forward-looking  statements  within  the  meaning  of  Section  27A  of the
Securities  Act of 1933 and Section 21E of the  Securities  Exchange Act of
1934,   including  various  information  within  the  "Capital  Resources,"
"Derivative  Instruments,"  "Year 2000 Readiness" and "Outlook" sections in
Management's Discussion and Analysis in Ashland's Annual Report. Words such
as  "anticipates,"   "believes,"   "estimates,"   "expects,"  "is  likely,"
"predicts,"  and  variations  of such  words and  similar  expressions  are
intended to identify  such  forward-looking  statements.  Although  Ashland
believes  that its  expectations  are based on reasonable  assumptions,  it
cannot assure that the  expectations  contained in such  statements will be
achieved.  Important  factors  which could cause  actual  results to differ
materially  from those  contained in such  statements  are discussed  under
"Risks  and  Uncertainties"  in Note A of Notes to  Consolidated  Financial
Statements in Ashland's  Annual Report.  Other factors and risks  affecting
Ashland's  revenues and operations are discussed below, as well as in other
portions of this Form 10-K.
     Ashland's  operations  are  affected  by  domestic  and  international
political,  legislative,  regulatory  and legal  actions.  Such actions may
include  changes in the  policies of OPEC or other  developments  affecting
oil-producing countries, changes in tax laws, and changes in environmental,
health and safety laws.
     Domestic and international  economic conditions,  such as recessionary
trends, inflation, interest and monetary exchange rates, as well as changes
in demand for products and services,  can also have a significant effect on
Ashland's  operations.  Although Ashland maintains reserves for anticipated
liabilities  and carries  various  levels of  insurance,  Ashland  could be
affected by civil, criminal,  regulatory or administrative  actions, claims
or proceedings.  In addition,  climate and weather can significantly affect
Ashland  in  several  of  its  operations  such  as its  APAC  construction
activities,  MAP's  heating  oil  businesses  and  Arch  Coal's  sales  and
production of coal.

ITEM 2. PROPERTIES
     Ashland's  corporate  headquarters,  which is  leased,  is  located in
Covington,  Kentucky.  Principal  offices  of other  major  operations  are
located in Atlanta,  Georgia (APAC); Dublin, Ohio (Ashland Distribution and
Ashland Specialty Chemical);  Lexington, Kentucky (Valvoline); and Russell,
Kentucky (Administrative Services), all of which are leased, except for the
Russell  office,  which is owned.  Principal  manufacturing,  marketing and
other  materially   important  physical   properties  of  Ashland  and  its
subsidiaries  are  described  under the  appropriate  segment under Item 1.
Additional  information concerning certain leases may be found in Note H of
Notes to Consolidated Financial Statements in Ashland's Annual Report.

ITEM 3. LEGAL PROCEEDINGS
     ENVIRONMENTAL  PROCEEDINGS - (1) As of September 30, 1999, Ashland had
been  identified  as  a  "potentially   responsible  party"  ("PRP")  under
Superfund or similar state laws for potential  joint and several  liability
for  clean-up  costs in  connection  with  alleged  releases  of  hazardous
substances in connection with 89 waste  treatment or disposal sites.  These
sites  are  currently   subject  to  ongoing   investigation  and  remedial
activities,  overseen  by the EPA or a state  agency,  in which  Ashland is
typically participating as a member of a PRP group. Generally,  the type of
relief sought includes remediation of contaminated soil and/or groundwater,
reimbursement for past costs of site clean-up and administrative oversight,
and/or  long-term  monitoring  of  environmental  conditions  at the sites.
Ashland carefully  monitors the investigatory and remedial activity at many
of  these  sites.  Based  on its  experience  with  site  remediation,  its
familiarity with current  environmental laws and regulations,  its analysis
of the  specific  hazardous  substances  at issue,  the  existence of other
financially  viable  PRPs  and  its  current  estimates  of  investigatory,
clean-up  and  monitoring  costs at each site,  Ashland  believes  that its
liability at these sites,  either  individually or in the


                                       12
<PAGE>
aggregate, after taking into account its insurance coverage and established
financial  reserves,  will not have a material  adverse effect on Ashland's
consolidated  financial  position,  cash flow or liquidity.  However,  such
matters could have a material effect on Ashland's  results of operations in
a  particular  quarter or fiscal year as they  develop or as new issues are
identified.  Estimated costs for these matters are recognized in accordance
with generally accepted accounting principles governing the likelihood that
costs will be incurred and Ashland's ability to reasonably  estimate future
costs.
     (2)  Pursuant  to  a  1990  Agreed  Order  with  the  Commonwealth  of
Kentucky's   Natural   Resources  and  Environmental   Protection   Cabinet
("NREPC"),   Ashland  has  conducted  source   investigation  and  remedial
activities related to hydrocarbon  contamination of the groundwater beneath
the Catlettsburg,  Kentucky refinery,  operated since 1998 by MAP. In 1999,
Ashland and the NREPC initiated  negotiations  for a new Agreed Order which
would identify future  investigative  efforts and establish  timetables for
strategic  remedial  activities.  This Order is also  expected to include a
monetary  penalty.  In connection with the formation of MAP, Ashland agreed
to retain responsibility for this matter.  Because discussions are ongoing,
Ashland  is  unable to  predict  what the final  penalty  amount  might be.
However,  the penalty  amount is not  expected  to have a material  adverse
effect  on  Ashland's  consolidated   financial  position,   cash  flow  or
liquidity.
     LOCKHEED  LITIGATION  - Ashland was a  defendant  in a series of cases
involving   more  than  600  former   workers  at  the  Lockheed   aircraft
manufacturing  facility  in Burbank,  California.  The  plaintiffs  alleged
personal injuries  resulting from exposure to chemicals sold to Lockheed by
Ashland, and inadequate labeling of such chemicals.  Ashland has reached an
agreement with plaintiffs' counsel to fully resolve and settle this matter,
subject to execution of  appropriate  documents by the parties and approval
by the court. Ashland believes the settlement amount, which is not material
to Ashland, will be covered by insurance.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         No matters were submitted to a vote of security  holders,  through
the  solicitation  of  proxies  or  otherwise,  during  the  quarter  ended
September 30, 1999.

ITEM X.  EXECUTIVE OFFICERS OF ASHLAND
     The following is a list of Ashland's  executive  officers,  their ages
and  their  positions  and  offices  during  the last  five  years  (listed
alphabetically  after  the  top  two  officers  as  to  other  Senior  Vice
Presidents, Administrative Vice Presidents and other executive officers).
      PAUL W. CHELLGREN* (age 56) is Chairman of the Board, Chief Executive
Officer and  Director of Ashland and a Director of Arch Coal,  Inc. and has
served in such capacities  since 1997,  1996, 1992 and 1997,  respectively.
During  the past five  years,  he has also  served as  President  and Chief
Operating Officer of Ashland.
      JOHN  A.  BROTHERS*  (age  59) was an  Executive  Vice  President  of
Ashland,  a position he had held since 1997. During the past five years, he
also  served as Senior Vice  President  and Group  Operating  Officer - The
Valvoline  Company and  Ashland  Chemical  Company.  Mr.  Brothers  retired
effective September 30, 1999.
     JAMES R. BOYD* (age 53) is Senior Vice  President and Group  Operating
Officer - APAC,  Inc. and a Director of Arch Coal,  Inc.,  having served in
such capacities since 1989, 1993 and 1997, respectively.
      DAVID J.  D'ANTONI*  (age 54) is  Senior  Vice  President  and  Group
Operating  Officer - Ashland  Distribution  Company and  Ashland  Specialty
Chemical  Company  and has served in such  capacities  since 1998 and 1999,
respectively.  During the past five years,  he has also served as President
of Ashland Chemical Company.
      JAMES J.  O'BRIEN  (age 45) is Senior Vice  President  of Ashland and
President of The Valvoline  Company and has served in such capacities since
1997 and 1995, respectively. During the past five years, he has also served
as Vice  President  of Ashland  and Vice  President  of  Ashland  Petroleum
Company.
      CHARLES F. POTTS (age 55) is Senior  Vice  President  of Ashland  and
President of APAC, Inc. and has served in such capacities since 1992.

---------------
*Member of Ashland's Executive Committee


                                       13
<PAGE>

     J. MARVIN QUIN* (age 52) is Senior Vice President and Chief  Financial
Officer of Ashland and a Director of Arch Coal, Inc. and has served in such
capacities since 1992 and 1997, respectively.
     KENNETH  L.  AULEN  (age  50) is  Administrative  Vice  President  and
Controller of Ashland and has served in such capacities since 1992.
      PHILIP W. BLOCK* (age 52) is  Administrative  Vice  President - Human
Resources  of Ashland and a Director of Arch Coal,  Inc.  and has served in
such capacities since 1992 and 1999, respectively.
     PETER M. BOKACH (age 53) is Vice President of Ashland and President of
Ashland  Distribution Company and has served in such capacities since 1999.
During the past five  years,  he has also  served as Group  Vice  President
Distribution of Ashland Chemical Company.
     JAMES A. DUQUIN (age 52) is Vice President of Ashland and President of
Ashland Specialty  Chemical Company and has served in such capacities since
1999.  During  the past  five  years,  he has  also  served  as Group  Vice
President - Specialty  Chemical Division and Vice President - IC&S Division
of Ashland Chemical Company.
     DAVID L. HAUSRATH*  (age 47) is Vice President and General  Counsel of
Ashland   and  has  served  in  such   capacities   since  1998  and  1999,
respectively.  During the past five years,  he has also served as Associate
General Counsel and Assistant General Counsel of Ashland.
      J. DAN  LACY*  (age 52) is Vice  President  -  Corporate  Affairs  of
Ashland and has served in such capacity since 1986.
     RICHARD P. THOMAS* (age 53) is Vice President and Secretary of Ashland
and has served in such capacities since 1998 and 1999, respectively. During
the past five years,  he has also served as  Associate  General  Counsel of
Ashland and  Administrative  Vice President and General  Counsel of Ashland
Petroleum Company.
     LAMAR M.  CHAMBERS  (age 45) is Auditor  of Ashland  and has served in
such capacity since 1998. During the past five years, he has also served as
Vice  President,   Finance  and  Controller  of  MAP,  Administrative  Vice
President - Finance of Ashland Petroleum Company and Executive Assistant to
the Chief Executive Officer of Ashland.

     Each executive officer is elected by the Board of Directors of Ashland
to a term of one year, or until his or her  successor is duly  elected,  at
the annual  meeting of the Board of  Directors,  except in those  instances
where the officer is elected  other than at an annual  meeting of the Board
of  Directors,  in which  case his or her  tenure  will  expire at the next
annual meeting of the Board of Directors unless the officer is re-elected.

                                  PART II

ITEM 5. MARKET FOR  REGISTRANT'S  COMMON STOCK AND RELATED  SECURITY HOLDER
MATTERS
     There is hereby incorporated by reference the information appearing in
Note P of Notes to Consolidated  Financial  Statements in Ashland's  Annual
Report.
     At September  30, 1999,  there were  approximately  21,000  holders of
record of Ashland's Common Stock. Ashland Common Stock is listed on the New
York and  Chicago  stock  exchanges  (ticker  symbol  ASH) and has  trading
privileges  on the  Boston,  Cincinnati,  Pacific  and  Philadelphia  stock
exchanges.
     During the quarter ended  September 30, 1999,  Ashland  issued 790,011
shares of its Common Stock,  par value $1.00 per share in  connection  with
the acquisition of Buster Paving Company,  Inc., which closed on August 31,
1999.  The shares were  issued in a  transaction  exempt from  registration
pursuant to Section 4(2) of the Securities Act of 1933, as amended, and the
regulations thereunder.

---------------
*Member of Ashland's Executive Committee


                                       14
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
     There is hereby  incorporated by reference the  information  appearing
under the caption "Five-Year Selected Financial  Information" on Page 54 in
Ashland's Annual Report.

ITEM 7.  MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS
     There is hereby  incorporated by reference the  information  appearing
under the caption "Management's  Discussion and Analysis" on Pages 26 to 33
in Ashland's Annual Report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      There is hereby  incorporated by reference the information  appearing
under the caption "Derivative  Instruments" on Pages 31 and 32 in Ashland's
Annual Report.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
      There is hereby incorporated by reference the consolidated  financial
statements appearing on Pages 35 through 53 in Ashland's Annual Report.

ITEM 9. CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
FINANCIAL DISCLOSURE
     None

                                  PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
     There is hereby  incorporated  by reference the  information to appear
under the  caption  "Ashland  Inc.'s  Board of  Directors  -  Nominees  for
Election at the 2000 Annual Meeting" and the information  regarding Section
16 beneficial  ownership reporting compliance in Ashland's definitive Proxy
Statement for its January 27, 2000 Annual  Meeting of  Shareholders,  which
will be filed with the SEC within 120 days after September 30, 1999 ("Proxy
Statement").  See also the list of Ashland's executive officers and related
information  under  "Executive  Officers  of  Ashland"  in  Part I - Item X
herein.

ITEM 11. EXECUTIVE COMPENSATION
      There is hereby  incorporated  by reference the information to appear
under the captions  "Executive  Compensation,"  "Compensation of Directors"
and  "Miscellaneous - Personnel and Compensation  Committee  Interlocks and
Insider Participation" in Ashland's Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
      There is hereby  incorporated  by reference the information to appear
under the caption  "Ashland Common Stock Ownership of Directors and Certain
Officers  of  Ashland"  and the  information  regarding  the  ownership  of
securities of Ashland in Ashland's Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
     There is hereby  incorporated  by reference the  information to appear
under the caption "Business Relationships" in Ashland's Proxy Statement.

                                  PART IV

ITEM 14. EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES AND REPORTS ON FORM 8-K
     (a)  DOCUMENTS  FILED  AS PART OF THIS  REPORT
      (1) and (2)  Financial Statements and Financial Schedule
     The  consolidated  financial  statements  and  financial  schedule  of
Ashland presented or incorporated by reference in this report are listed in
the index on Page 20.


                                       15
<PAGE>

      (3) Exhibits
         3.1      -        Second Restated  Articles of  Incorporation of
                           Ashland,  as amended to January  30, 1998 (filed
                           as  Exhibit  3 to  Ashland's  Form  10-Q for the
                           quarter ended December 31, 1997 and incorporated
                           herein by reference).
         3.2      -        By-laws of Ashland,  as amended to January 28,
                           1999  (filed as Exhibit  3.2 to  Ashland's  Form
                           10-Q for the quarter ended December 31, 1998 and
                           incorporated herein by reference).
         4.1      -        Ashland  agrees  to  provide  the  SEC,  upon
                           request,  copies  of  instruments  defining  the
                           rights of holders of  long-term  debt of Ashland
                           and   all  of   its   subsidiaries   for   which
                           consolidated   or    unconsolidated    financial
                           statements  are  required  to be filed  with the
                           SEC.
         4.2       -       Indenture,  dated as of August 15,  1989,  as
                           amended  and  restated  as of August  15,  1990,
                           between  Ashland and Citibank,  N.A., as Trustee
                           (filed as Exhibit  4(a) to  Ashland's  Form 10-K
                           for the fiscal year ended September 30, 1991 and
                           incorporated herein by reference).
         4.3       -       Rights  Agreement,  dated as of May 16,  1996,
                           between   Ashland  Inc.  and  Harris  Trust  and
                           Savings  Bank,   together  with  Form  of  Right
                           Certificate  (filed as  Exhibits  4(a) and 4(c),
                           respectively,  to Ashland's  Form 8-A filed with
                           the SEC on May 16, 1996 and incorporated  herein
                           by reference).

     The following  Exhibits 10.1 through 10.16 are  compensatory  plans or
arrangements  or  management  contracts  required  to be filed as  exhibits
pursuant to Item 601(b)(10)(ii)(A) of Regulation S-K.

         10.1       -      Amended Stock Incentive Plan for Key Employees
                           of Ashland Inc. and its Subsidiaries.
         10.2       -      Ashland Inc.  Deferred  Compensation  Plan for
                           Non-Employee Directors.
         10.3       -      Tenth  Amended  and  Restated   Ashland  Inc.
                           Supplemental  Early  Retirement Plan for Certain
                           Employees.
         10.4       -      Ashland  Inc.  Incentive   Compensation  Plan
                           (filed as Exhibit  10.6 to  Ashland's  Form 10-K
                           for the fiscal year ended September 30, 1993 and
                           incorporated herein by reference).
         10.5       -      Ashland Inc. Salary  Continuation  Plan (filed
                           as Exhibit  10(c).11 to Ashland's  Form 10-K for
                           the fiscal  year ended  September  30,  1988 and
                           incorporated herein by reference).
         10.6       -      Form  of  Ashland  Inc.  Executive  Employment
                           Contract   between   Ashland  Inc.  and  certain
                           executive officers of Ashland.
         10.7       -      Form  of  Indemnification  Agreement  between
                           Ashland  Inc.  and each  member  of its Board of
                           Directors   (filed  as   Exhibit   10(c).13   to
                           Ashland's  Form 10-K for the  fiscal  year ended
                           September  30, 1990 and  incorporated  herein by
                           reference).
         10.8       -      Ashland  Inc.   Nonqualified  Excess  Benefit
                           Pension   Plan   (filed  as  Exhibit   10.11  to
                           Ashland's  Form 10-K for the  fiscal  year ended
                           September  30, 1998 and  incorporated  herein by
                           reference).
         10.9       -      Ashland Inc. Long-Term Incentive Plan.
         10.10      -      Ashland  Inc.  Directors'   Charitable  Award
                           Program  (filed as  Exhibit  10.13 to  Ashland's
                           Form 10-K for the fiscal  year  ended  September
                           30, 1996 and incorporated herein by reference).
         10.11      -      Ashland Inc. 1993 Stock Incentive Plan.
         10.12      -      Ashland Inc. 1995 Performance Unit Plan (filed
                           as Exhibit 10.2 to  Ashland's  Form 10-Q for the
                           quarter ended December 31, 1998 and incorporated
                           herein by reference).
         10.13      -      Ashland Inc.  Incentive  Compensation Plan for
                           Key Executives.
         10.14      -      Ashland Inc. Deferred Compensation Plan.


                                       16
<PAGE>

         10.15      -      Ashland Inc. 1997 Stock  Incentive Plan (filed
                           as Exhibit 10.18 to Ashland's  Form 10-K for the
                           fiscal  year  ended   September   30,  1998  and
                           incorporated herein by reference).
         10.16      -      Retirement  Agreement  with  Michael  D. Rose,
                           director of Ashland.
         10.17      -      Amended and Restated Limited Liability Company
                           Agreement  of  Marathon  Ashland  Petroleum  LLC
                           dated as of December 31, 1998.
         10.18      -      Put/Call,  Registration  Rights and Standstill
                           Agreement  as amended to December 31, 1998
                           among  Marathon  Oil Company,  USX  Corporation,
                           Ashland Inc. and Marathon Ashland Petroleum LLC.
         11          -     Computation  of Earnings Per Share  (appearing
                           on  Page  41  of  Ashland's   Annual  Report  to
                           Shareholders,  incorporated by reference herein,
                           for the fiscal year ended September 30, 1999).
         12          -     Computation  of Ratios of  Earnings  to Fixed
                           Charges and Earnings to Combined  Fixed  Charges
                           and Preferred Stock Dividends.
         13          -     Portions  of  Ashland's   Annual   Report  to
                           Shareholders,  incorporated by reference herein,
                           for the fiscal year ended September 30, 1999.
         21          -     List of subsidiaries.
         23          -     Consent of independent auditors.
         24          -     Power of Attorney,  including  resolutions  of
                           the Board of Directors.
         27          -     Financial  Data  Schedule  for the fiscal year
                           ended September 30, 1999.

      Upon written or oral  request,  a copy of the above  exhibits will be
furnished  at cost.
     (b) REPORTS ON FORM 8-K
     A report on Form 8-K was filed on  September  29, 1999 to announce
certain events relating to Ashland's tender offer for Superfos a/s.
     A report on Form 8-K was filed on October 6, 1999 to  announce  that a
tax-free  spin-off  would  be  Ashland's  preferred   alternative  for  its
investment  in Arch Coal.  The report also noted that  Ashland is reviewing
its alternatives with respect to a change in its ownership in MAP.
     A report on Form 8-K was filed on October 12,  1999 to  announce  that
shareholders  representing  more than 90% of the share  capital of Superfos
a/s  accepted  Ashland's  September  27, 1999 offer and that  Ashland  will
implement the tender offer.


                                       17
<PAGE>


                                 SIGNATURES

     PURSUANT TO THE  REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE  ACT OF 1934,  THE  REGISTRANT  HAS DULY  CAUSED THIS REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

                                        ASHLAND INC.
                                         (Registrant)

                                        By:    /s/ Kenneth L. Aulen
                                            --------------------------------
                                           (Kenneth L. Aulen, Administrative
                                            Vice President and Controller)

                                            Date:   December 7, 1999

     PURSUANT TO THE  REQUIREMENTS OF THE SECURITIES  EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT, IN THE CAPACITIES INDICATED, ON DECEMBER 7, 1999.

         Signatures                    Capacity
         ----------                    --------


/s/ PAUL W. CHELLGREN
------------------------      Chairman of the Board, Chief Executive Officer
PAUL W. CHELLGREN               and Director


/s/ J. MARVIN QUIN
------------------------      Senior Vice President and Chief Financial Officer
J. MARVIN QUIN


/s/ KENNETH L. AULEN
------------------------      Administrative Vice President, Controller and
KENNETH L. AULEN                Principal Accounting Officer


           *
------------------------      Director
SAMUEL C. BUTLER


          *
------------------------      Director
FRANK C. CARLUCCI


          *
------------------------      Director
ERNEST H. DREW


          *
------------------------      Director
JAMES B. FARLEY


          *
------------------------      Director
BERNADINE P. HEALY


                                       18
<PAGE>

          *
------------------------      Director
MANNIE L. JACKSON


          *
------------------------      Director
PATRICK F. NOONAN


          *
------------------------      Director
JANE C. PFEIFFER


          *
------------------------      Director
MICHAEL D. ROSE


          *
------------------------      Director
WILLIAM L. ROUSE , JR.


          *
------------------------      Director
THEODORE M. SOLSO




*  By: /s/ David L. Hausrath
       --------------------------
       David L. Hausrath
       Attorney-in-Fact





Date:  December 7, 1999



                                       19
<PAGE>



            INDEX TO FINANCIAL STATEMENTS AND FINANCIAL SCHEDULE

                                                                    Page
                                                                    ----
     Consolidated financial statements:
     Statements of consolidated income ...............................*
     Consolidated balance sheets .....................................*
     Statements of consolidated stockholders' equity .................*
     Statements of consolidated cash flows ...........................*
     Notes to consolidated financial statements ......................*
     Information by industry segment .................................*


     Consolidated financial schedule:
     II - Valuation and qualifying account...........................22
     -----------

         *The  consolidated  financial  statements  appearing  on  Pages 35
through 53 in Ashland's Annual Report are incorporated by reference in this
Annual Report on Form 10-K.
         Schedules  other than that listed above have been omitted  because
of the absence of the  conditions  under which they are required or because
the information required is shown in the consolidated  financial statements
or the notes thereto.  Separate financial  statements for MAP and Arch Coal
required by Rule 3-09 of  Regulation  S-X will be filed as an  amendment to
this Form 10-K within 90 days after the end of these entities' fiscal years
ending  December  31,  1999.   Separate   financial   statements  of  other
unconsolidated  affiliates  are  omitted  because  each  company  does  not
constitute a  significant  subsidiary  using the 20% tests when  considered
individually.  Summarized  financial  information  for such  affiliates  is
disclosed  in Note E of  Notes  to  Consolidated  Financial  Statements  in
Ashland's Annual Report.



                                       20

<PAGE>



                       REPORT OF INDEPENDENT AUDITORS

     We have audited the consolidated  financial statements and schedule of
Ashland Inc. and consolidated subsidiaries listed in the accompanying index
to  financial   statements  and  financial  schedule  (Item  14(a)).  These
financial  statements  and  schedule  are the  responsibility  of Ashland's
management.  Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
     We conducted our audits in accordance with generally accepted auditing
standards.  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. 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  audits
provide a reasonable basis for our opinion.
     In our opinion,  the financial  statements  listed in the accompanying
index to financial  statements (Item 14(a)) present fairly, in all material
respects,   the  consolidated   financial  position  of  Ashland  Inc.  and
consolidated   subsidiaries  at  September  30,  1999  and  1998,  and  the
consolidated  results of their  operations and their cash flows for each of
the three years in the period ended  September 30, 1999, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial  statement  schedule,  when  considered  in relation to the basic
financial  statements  taken as a whole,  presents  fairly in all  material
respects the information set forth therein.


                                                  /s/ Ernst & Young LLP


Louisville, Kentucky
November 3, 1999



                                       21
<PAGE>

-------------------------------------------------------------------------------
Ashland Inc. and Subsidiaries
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS


<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
(In millions)                                              Balance at      Provisions                                      Balance
                                                            beginning      charged to      Reserves            Other       at end
Description                                                   of year        earnings      utilized          changes       of year
===================================================================================================================================

<S>                                                          <C>               <C>           <C>               <C>           <C>
YEAR ENDED SEPTEMBER 30, 1999
Reserves deducted from asset accounts
   Accounts receivable                                       $  19             $ 12          $ (8)(1)          $  -          $  23
   Inventories                                                  11                7            (3)                -             15
-----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1998
Reserves deducted from asset accounts
   Accounts receivable                                       $  25             $  8          $(10)(1)          $ (4)         $  19
   Inventories                                                  11                2            (2)                -             11
-----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1997
Reserves deducted from asset accounts
   Accounts receivable                                       $  27             $  9          $(10)(1)          $ (1)         $  25
   Inventories                                                  10                2            (1)                -             11
-----------------------------------------------------------------------------------------------------------------------------------

(1)  Uncollected amounts written off, net of recoveries of $2 million in 1999, 1998 and 1997.

</TABLE>

                                       22
<PAGE>

                                 EXHIBIT INDEX

       Exhibit No.                         Description
       -----------                         -----------

         10.1       -      Amended Stock Incentive Plan for Key Employees
                           of Ashland Inc. and its Subsidiaries.
         10.2       -      Ashland Inc.  Deferred  Compensation  Plan for
                           Non-Employee Directors.
         10.3       -      Tenth  Amended  and  Restated   Ashland  Inc.
                           Supplemental  Early  Retirement Plan for Certain
                           Employees.
         10.6       -      Form  of  Ashland  Inc.  Executive  Employment
                           Contract   between   Ashland  Inc.  and  certain
                           executive officers of Ashland.
         10.9       -      Ashland Inc. Long-Term Incentive Plan.
         10.11      -      Ashland Inc. 1993 Stock Incentive Plan.
         10.13      -      Ashland Inc.  Incentive  Compensation Plan for
                           Key Executives.
         10.14      -      Ashland Inc. Deferred Compensation Plan.
         10.16      -      Retirement  Agreement  with  Michael  D. Rose,
                           director of Ashland.
         10.17      -      Amended and Restated Limited Liability Company
                           Agreement  of  Marathon  Ashland  Petroleum  LLC
                           dated as of December 31, 1998.
         10.18      -      Put/Call,  Registration  Rights and Standstill
                           Agreement  as amended to December 31, 1998
                           among  Marathon  Oil Company,  USX  Corporation,
                           Ashland Inc. and Marathon Ashland Petroleum LLC.
         12          -     Computation  of Ratios of  Earnings  to Fixed
                           Charges and Earnings to Combined  Fixed  Charges
                           and Preferred Stock Dividends.
         13          -     Portions  of  Ashland's   Annual   Report  to
                           Shareholders,  incorporated by reference herein,
                           for the fiscal year ended September 30, 1999.
         21          -     List of subsidiaries.
         23          -     Consent of independent auditors.
         24          -     Power of Attorney,  including  resolutions  of
                           the Board of Directors.
         27          -     Financial  Data  Schedule  for the fiscal year
                           ended September 30, 1999.