================================================================================

                     SECURITIES AND EXCHANGE COMMISSION

                           Washington, D.C. 20549

                                FORM 10-K/A

                              AMENDMENT NO. 1

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

                FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2003

                       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: (859) 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 annual
report on Form 10-K or any amendment to this annual report on Form 10-K. [x]

     Indicate by check mark whether the Registrant is an accelerated filer.
Yes [x] No

     At October  31,  2003,  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  $2,549,347,022.  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 October 31,  2003,  there were  68,603,477  shares of  Registrant's
common stock outstanding.

                    DOCUMENTS INCORPORATED BY REFERENCE

     Portions of  Registrant's  definitive  Proxy Statement for its January
29, 2004 Annual Meeting of Shareholders  are incorporated by reference into
Part III.

<PAGE>

                              EXPLANATORY NOTE
                              ----------------

     This amendment to the Annual Report on Form 10-K/A for the fiscal year
ended  September  30, 2003 of Ashland  Inc.  ("Ashland")  is being filed to
include the audited financial  statements of Marathon Ashland Petroleum LLC
("MAP")  for the fiscal  year ended  December  31, 2003 as required by Rule
3-09 of  Regulation  S-X.  Ashland  has a 38% equity  interest  in MAP.  In
accordance  with Rule 12b-15 under the Securities and Exchange Act of 1934,
as amended,  the text of the amended  item is set forth in its  entirety in
the pages attached hereto.

     A consent of  PricewaterhouseCoopers  LLP, independent accountants for
MAP, is being filed as an exhibit hereto.



<PAGE>



                                  PART IV

ITEM 15. 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 in this annual report on Form 10-K are listed in the
index on page F-1.

     Audited financial statements of Marathon Ashland Petroleum LLC.
Financial statement schedules are omitted because they are not applicable
as the required information is contained in the applicable financial
statements or notes thereto.

      (3) Exhibits

3.1      Third  Restated  Articles of  Incorporation  of Ashland  (filed as
         Exhibit 3 to  Ashland's  Form 10-Q for the quarter  ended June 30,
         2002 and incorporated herein by reference).

3.2      By-laws of Ashland,  effective  as of November  15, 2002 (filed as
         Exhibit 3.2 to Ashland's annual report on Form 10-K for the fiscal
         year  ended  September  30,  2002  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 4.2 to Ashland's  annual report on Form 10-K for
         the fiscal year ended September 30, 2001 and  incorporated  herein
         by reference).

4.3      Indenture, dated as of September 7, 2001, between Ashland and U.S.
         Bank  National  Association,  as Trustee  (filed as Exhibit 4.3 to
         Ashland's  annual  report on Form 10-K for the  fiscal  year ended
         September 30, 2001 and incorporated herein by reference).

4.4      Rights Agreement,  dated as of May 16, 1996,  between Ashland Inc.
         and the  Rights  Agent,  together  with Form of Right  Certificate
         (filed as Exhibit 4.4 to Ashland's  annual report on Form 10-K for
         the fiscal year ended September 30, 2001 and  incorporated  herein
         by reference).

     The following  Exhibits 10.1 through 10.12 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 (filed as Exhibit 10.1 to Ashland's annual report
         on Form 10-K for the fiscal  year  ended  September  30,  1999 and
         incorporated herein by reference).

10.2     Ashland Inc. Deferred Compensation Plan for Non-Employee Directors
         (filed as  Exhibit  10.2 to  Ashland's  Form 10-Q for the  quarter
         ended June 30, 2003 and incorporated herein by reference).

10.3     Ashland Inc. Deferred  Compensation Plan (filed as Exhibit 10.1 to
         Ashland's  Form  10-Q for the  quarter  ended  June  30,  2003 and
         incorporated herein by reference).

10.4     Eleventh  Amended and  Restated  Ashland Inc.  Supplemental  Early
         Retirement  Plan for Certain  Employees  (filed as Exhibit 10.3 to
         Ashland's  Form  10-Q for the  quarter  ended  June  30,  2003 and
         incorporated herein by reference).


<PAGE>



10.5     Ashland Inc.  Salary  Continuation  Plan (filed as Exhibit 10.5 to
         Ashland's  annual  report on Form 10-K for the  fiscal  year ended
         September 30, 2002 and incorporated herein by reference).

10.6     Form of Ashland Inc. Executive Employment Contract between Ashland
         Inc. and certain  executives of Ashland  (filed as Exhibit 10.6 to
         Ashland's  annual  report on Form 10-K for the  fiscal  year ended
         September 30, 2002 and incorporated herein by reference).

10.7     Form of Indemnification Agreement between Ashland Inc. and members
         of its Board of Directors.

10.8     Ashland Inc.  Nonqualified  Excess Benefit  Pension Plan (filed as
         Exhibit 10.4 to Ashland's Form 10-Q for the quarter ended June 30,
         2003 and incorporated herein by reference).

10.9     Ashland Inc. Directors' Charitable Award Program (filed as Exhibit
         10.11 to Ashland's  annual report on Form 10-K for the fiscal year
         ended September 30, 2002 and incorporated herein by reference).

10.10    Ashland Inc. 1993 Stock  Incentive Plan (filed as Exhibit 10.11 to
         Ashland's  annual  report on Form 10-K for the  fiscal  year ended
         September 30, 2000 and incorporated herein by reference).

10.11    Ashland Inc. 1997 Stock  Incentive Plan (filed as Exhibit 10.14 to
         Ashland's  annual  report on Form 10-K for the  fiscal  year ended
         September 30, 2002 and incorporated herein by reference).

10.12    Amended and Restated Ashland Inc. Incentive Plan (filed as Exhibit
         10.15 to Ashland's  annual report on Form 10-K for the fiscal year
         ended September 30, 2002 and incorporated herein by reference).

10.13    Amended  and  Restated  Limited  Liability  Company  Agreement  of
         Marathon  Ashland  Petroleum  LLC dated as of  December  31,  1998
         (filed as Exhibit  10.17 to Ashland's  annual  report on Form 10-K
         for the fiscal  year ended  September  30,  1999 and  incorporated
         herein by reference).

10.14    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  (filed as Exhibit
         10.18 to Ashland's  annual report on Form 10-K for the fiscal year
         ended September 30, 1999 and incorporated herein by reference).

11       Computation  of Earnings Per Share  (appearing on page F-9 of this
         annual report on Form 10-K).

12       Computation of Ratio of Earnings to Fixed Charges.

21       List of subsidiaries.

23.1     Consent of independent auditors.

23.2*    Consent of PricewaterhouseCoopers LLP.

24       Power  of  Attorney,   including   resolutions  of  the  Board  of
         Directors.

31.1*    Certificate  of James  J.  O'Brien,  Chief  Executive  Officer  of
         Ashland,  pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
         2002.

31.2*    Certificate of J. Marvin Quin, Chief Financial Officer of Ashland,
         pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32*      Certificate  of James  J.  O'Brien,  Chief  Executive  Officer  of
         Ashland,  and J. Marvin Quin, Chief Financial  Officer of Ashland,
         pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.

     *Filed herewith

     Upon written or oral  request,  a copy of the above  exhibits  will be
furnished at cost.

<PAGE>

     (b) REPORTS ON FORM 8-K

     During the quarter ended September 30, 2003, and between such date and
the filing of this annual  report on Form 10-K,  Ashland filed or furnished
the following reports on Form 8-K.

(1)      A report on Form 8-K dated July 18, 2003 reporting the filing of a
         lawsuit  by  a  third  party  seeking,  among  other  remedies,  a
         preliminary and permanent  injunction  preventing the consummation
         of the  proposed  sale of the net assets of  Ashland's  Electronic
         Chemicals business and certain related subsidiaries.

(2)      A report on Form 8-K dated July 22, 2003 reporting Ashland's third
         quarter results.

(3)      A report on Form 8-K dated July 23, 2003  containing  a Regulation
         FD disclosure.

(4)      A report on Form 8-K dated August 20, 2003  reporting that Ashland
         had signed a  definitive  agreement  to sell the net assets of its
         Electronic Chemicals business group to Air Products and Chemicals,
         Inc.

(5)      A report on Form 8-K dated August 27, 2003 containing a Regulation
         FD disclosure.

(6)      A report on Form 8-K dated August 29, 2003  reporting that Ashland
         had completed the sale of its Electronic  Chemicals business group
         to Air Products and Chemicals, Inc.

(7)      A report on Form 8-K dated October 1, 2003 containing a Regulation
         FD disclosure.

(8)      A report on Form 8-K dated  October 21, 2003  reporting  Ashland's
         fourth quarter and fiscal 2003 results.

(9)      A  report  on  Form  8-K  dated  October  23,  2003  containing  a
         Regulation FD disclosure.

(10)     A report on Form 8-K dated November 26, 2003, as amended by a Form
         8-K/A  dated  November  26,  2003,   containing  a  Regulation  FD
         disclosure.


<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/ J. Marvin Quin
                                           -----------------------------------
                                           J. Marvin Quin
                                           Senior Vice President and Chief
                                           Financial Officer

                                           Date:  March 19, 2004



<PAGE>




                               EXHIBIT INDEX
                               -------------

23.2     Consent of PricewaterhouseCoopers LLP.

31.1     Certificate  of James  J.  O'Brien,  Chief  Executive  Officer  of
         Ashland,  pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
         2002.

31.2     Certificate of J. Marvin Quin, Chief Financial Officer of Ashland,
         pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32       Certificate  of James  J.  O'Brien,  Chief  Executive  Officer  of
         Ashland,  and J. Marvin Quin, Chief Financial  Officer of Ashland,
         pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.




<PAGE>



                 MARATHON ASHLAND PETROLEUM LLC AND SUBSIDIARIES



                    AUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2003




                                    CONTENTS
<TABLE>
<CAPTION>

<S>                                                                                                                        <C>
                                                                                                                           Page

REPORT OF INDEPENDENT AUDITORS:                                                                                             1


CONSOLIDATED FINANCIAL STATEMENTS:

     CONSOLIDATED STATEMENTS OF INCOME -----------------------------------------------------------------------              2
     CONSOLIDATED BALANCE SHEETS -----------------------------------------------------------------------------              3
     CONSOLIDATED STATEMENTS OF CASH FLOWS -------------------------------------------------------------------              4
     CONSOLIDATED STATEMENTS OF MEMBERS' CAPITAL -------------------------------------------------------------              5


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

     NOTE A     -  BUSINESS DESCRIPTION AND BASIS OF PRESENTATION --------------------------------------------              6
     NOTE B     -  SUMMARY OF PRINCIPAL ACCOUNTING POLICIES --------------------------------------------------              6
     NOTE C     -  NEW ACCOUNTING STANDARDS ------------------------------------------------------------------              9
     NOTE D     -  RELATED PARTY TRANSACTIONS ----------------------------------------------------------------             11
     NOTE E     -  OTHER ITEMS -------------------------------------------------------------------------------             13
     NOTE F     -  PENSIONS AND OTHER POSTRETIREMENT BENEFITS ------------------------------------------------             14
     NOTE G     -  INCOME TAXES ------------------------------------------------------------------------------             17
     NOTE H     -  INVENTORIES -------------------------------------------------------------------------------             17
     NOTE I     -  INVESTMENTS AND LONG-TERM RECEIVABLES -----------------------------------------------------             17
     NOTE J     -  PROPERTY, PLANT AND EQUIPMENT -------------------------------------------------------------             19
     NOTE K     -  GOODWILL ----------------------------------------------------------------------------------             19
     NOTE L     -  INTANGIBLE ASSETS -------------------------------------------------------------------------             19
     NOTE M     -  SHORT-TERM DEBT ---------------------------------------------------------------------------             19
     NOTE N     -  LONG-TERM DEBT ----------------------------------------------------------------------------             20
     NOTE O     -  SUPPLEMENTAL CASH FLOW INFORMATION --------------------------------------------------------             20
     NOTE P     -  LEASES ------------------------------------------------------------------------------------             20
     NOTE Q     -  DERIVATIVE INSTRUMENTS --------------------------------------------------------------------             21
     NOTE R     -  FAIR VALUE OF FINANCIAL INSTRUMENTS -------------------------------------------------------             21
     NOTE S     -  CONTINGENCIES AND COMMITMENTS -------------------------------------------------------------             22



</TABLE>






<PAGE>







PRICEWATERHOUSECOOPERS LLP
                                                     PricewaterhouseCoopers LLP
                                                     1201 Louisiana, Suite 2900
                                                     Houston, TX  77002-5678






                         REPORT OF INDEPENDENT AUDITORS



February 25, 2004


To the Board of Managers of
Marathon Ashland Petroleum LLC:




In  our  opinion,  the  accompanying   consolidated   financial  statements
appearing on pages 2 through 23 present fairly,  in all material  respects,
the  financial   position  of  Marathon  Ashland   Petroleum  LLC  and  its
subsidiaries  (MAP) at December 31, 2003 and 2002, and the results of their
operations  and their cash flows for each of the three  years in the period
ended December 31, 2003, in conformity with accounting principles generally
accepted in the United States of America.  These  financial  statements are
the responsibility of MAP's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards  generally
accepted in the United  States of America,  which  require that we plan and
perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
financial statements are free of material  misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial  statements,  assessing the accounting principles used and
significant  estimates  made by  management,  and  evaluating  the  overall
financial  statement  presentation.  We believe  that our audits  provide a
reasonable basis for our opinion.



/ s /   PricewaterhouseCoopers LLP


                                     1
<PAGE>



CONSOLIDATED STATEMENTS OF INCOME (Dollars in Millions)


MARATHON ASHLAND PETROLEUM LLC AND SUBSIDIARIES
<TABLE>
<CAPTION>
                                                                                         Year Ended December 31
                                                                          -----------------------------------------------------
<S>                                                                       <C>                 <C>                 <C>
                                                                               2003               2002                2001
                                                                          -------------       -------------       -------------
REVENUES AND OTHER INCOME:
       Sales and other operating revenues (including consumer
              excise taxes)                                               $     33,508        $     25,389        $     26,587
       Sales to related parties - Note D                                         1,006               1,010                 658
       Income from equity method investments                                        82                  48                  41
       Net gains on disposal of assets                                              42                  40                  30
       Other income                                                                 34                  26                  32
                                                                          ------------        ------------        ------------

              Total revenues and other income                                   34,672              26,513              27,348
                                                                          -------------       -------------       -------------

COSTS AND EXPENSES:
       Cost of revenues (excludes items shown below)                            27,704              20,020              19,372
       Purchases from related parties - Note D                                     778                 870                 710
       Consumer excise taxes                                                     4,285               4,250               4,404
       Depreciation and amortization                                               372                 365                 348
       Selling, general and administrative expenses                                581                 489                 435
       Other taxes                                                                 137                 138                 141
       Inventory market valuation charges (credits)                                 --                 (77)                 77
                                                                          -------------       -------------       -------------

              Total costs and expenses                                          33,857              26,055              25,487
                                                                          -------------       -------------       -------------

INCOME FROM OPERATIONS:                                                            815                 458               1,861
Net interest and other financing costs (income) - Note E                             9                   5                  (4)
                                                                          -------------       -------------       -------------

INCOME BEFORE INCOME TAXES:                                                        806                 453               1,865
Provision for income taxes - Note G                                                  5                   3                   9
                                                                          -------------       -------------       -------------

INCOME BEFORE CUMULATIVE EFFECT OF CHANGES
       IN ACCOUNTING PRINCIPLES:                                                   801                 450               1,856
       Cumulative effect of changes in accounting principles - Note C               (2)                 --                 (20)
                                                                          -------------       -------------       -------------


NET INCOME                                                                $        799        $        450        $      1,836
                                                                          =============       =============       =============


</TABLE>




            THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                    CONSOLIDATED FINANCIAL STATEMENTS.

                                     2
<PAGE>


CONSOLIDATED BALANCE SHEETS (Dollars in Millions)


MARATHON ASHLAND PETROLEUM LLC AND SUBSIDIARIES
<TABLE>
<CAPTION>
                                                                                                         December 31
                                                                                              ---------------------------------
                                                                                                  2003                2002
                                                                                              -------------       -------------
<S>                                                                                           <C>                 <C>
ASSETS:
       Current assets:
              Cash and cash equivalents                                                       $         80        $         27
              Receivables, less allowance for doubtful accounts of $5
                    and $5 , respectively                                                            1,764               1,196
              Receivables from related parties - Note D                                                 53                  52
              Inventories - Note H                                                                   1,894               1,915
              Other current assets                                                                      42                  40
                                                                                              -------------       -------------
                           Total current assets                                                      3,833               3,230

       Investments and long-term receivables - Note I                                                  544                 543
       Property, plant and equipment - net - Note J                                                  4,442               4,204
       Goodwill - Note K                                                                                21                  21
       Intangibles - Note L                                                                             62                  57
       Other noncurrent assets                                                                          18                  26
                                                                                              -------------       -------------

                           Total assets                                                       $      8,920        $      8,081
                                                                                              =============       =============

LIABILITIES:
       Current liabilities:
              Accounts payable                                                                $      2,734        $      2,116
              Payables to related parties - Note D                                                      66                  81
              Payroll and benefits payable                                                             125                 125
              Accrued taxes                                                                             52                  41
              Long-term debt due within one year                                                         2                   1
                                                                                              -------------       ------------
                           Total current liabilities                                                 2,979               2,364

       Long-term debt - Note N                                                                          44                   6
       Deferred income taxes - Note G                                                                    5                   5
       Employee benefits obligations - Note F                                                          545                 465
       Asset retirement obligations - Note C                                                             1                  --
       Deferred credits and other liabilities                                                           61                  55
                                                                                              -------------       -------------

                           Total liabilities                                                         3,635               2,895
                                                                                              -------------       -------------

       Contingencies and commitments - Note S                                                           --                  --

MEMBERS' CAPITAL
       Members' contributed capital                                                                  4,310               4,285
       Retained earnings                                                                             1,053                 942
       Accumulated other comprehensive loss                                                            (78)                (41)
                                                                                              -------------       -------------
                           Total members' capital                                                    5,285               5,186
                                                                                              -------------       -------------

                           Total liabilities and members' capital                             $      8,920        $      8,081
                                                                                              =============       =============

</TABLE>



            THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                    CONSOLIDATED FINANCIAL STATEMENTS.

                                     3


<PAGE>


CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Millions)


MARATHON ASHLAND PETROLEUM LLC AND SUBSIDIARIES
<TABLE>
<CAPTION>
                                                                                         Year Ended December 31
                                                                          -----------------------------------------------------
                                                                               2003               2002                2001
                                                                          -------------       -------------       -------------
<S>                                                                       <C>                 <C>                 <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

OPERATING ACTIVITIES:
Net income                                                                $        799        $        450        $      1,836
Adjustments to reconcile to net cash provided from
       operating activities:
       Depreciation and amortization                                               372                 365                 348
       Inventory market valuation charges (credits)                                 --                 (77)                 77
       Pensions and other postretirement benefits                                   42                  69                  44
       Cumulative effect of changes in accounting principles                         2                  --                  20
       Deferred income taxes                                                        --                   1                  --
       Net gains on disposal of assets                                             (42)                (40)                (30)
       Equity income from investees                                                (82)                (48)                (41)
       Distributions from investees                                                 80                  39                  31
       Changes in:
              Current receivables                                                 (565)               (105)                300
              Inventories                                                           21                 (45)                (59)
              Accounts payable and other current liabilities                       631                 434                (511)
              Receivables from/payables to related parties                         (16)                 39                 (26)
       All other - net                                                              14                   2                  35
                                                                          -------------       -------------       -------------
              Net cash provided from operating activities                        1,256               1,084               2,024
                                                                          -------------       -------------       -------------

INVESTING ACTIVITIES:
Capital expenditures                                                              (755)               (611)               (576)
Disposal of assets                                                                 181                  89                  51
Loan transactions  - principal loaned                                              (27)                (14)                (31)
                   - principal collected                                            24                  14                  35
Restricted cash  - deposits                                                        (54)                (79)                (62)
                 - withdrawals                                                      93                  48                  54
Investments    -  contributions                                                    (24)               (100)                (16)
               -  loans and advances                                                (4)                 --                  (5)
               -  returns and repayments                                            42                  --                  10
                                                                          -------------       -------------       -------------
              Net cash used in investing activities                               (524)               (653)               (540)
                                                                          -------------       -------------       -------------

FINANCING ACTIVITIES:
Revolving credit facilities  -  borrowings - Notes D & M                         1,940                 701                 294
                             -  repayments - Notes D & M                        (1,940)               (701)               (294)
Debt repayments                                                                     (1)                 --                  (1)
Member contributions                                                                11                  --                  --
Member distributions                                                              (689)               (437)             (1,508)
                                                                          -------------       -------------       -------------
              Net cash used in financing activities                               (679)               (437)             (1,509)
                                                                          -------------       -------------       -------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                53                  (6)                (25)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                      27                  33                  58
                                                                          -------------       -------------       -------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                  $         80        $         27        $         33
                                                                          =============       =============       =============

</TABLE>
See Note O for supplemental cash flow information.

            THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                    CONSOLIDATED FINANCIAL STATEMENTS.

                                     4
<PAGE>


CONSOLIDATED STATEMENTS OF MEMBERS' CAPITAL (Dollars in Millions)


MARATHON ASHLAND PETROLEUM LLC AND SUBSIDIARIES
<TABLE>
<CAPTION>

                                                      Members' Capital                          Comprehensive Income
                                                         Year Ended                                  Year Ended
                                                         December 31                                 December 31
                                            ----------------------------------------   ----------------------------------------
<S>                                         <C>            <C>           <C>           <C>           <C>            <C>
                                                2003          2002          2001           2003          2002          2001
                                            -----------    -----------   -----------   -----------   -----------    -----------
MEMBERS' CONTRIBUTED CAPITAL:
     Balance at beginning of year           $    4,285     $    4,259    $    4,244
     Member contributions                           25             26            15
                                            -----------    -----------   -----------
     Balance at end of year                      4,310          4,285         4,259
                                            -----------    -----------   -----------

RETAINED EARNINGS:
     Balance at beginning of year                  942            912           601
     Net income                                    799            450         1,836    $      799    $      450     $    1,836
     Distributions to members                     (688)          (420)       (1,525)
                                            -----------    -----------   -----------
     Balance at end of year                      1,053            942           912
                                            -----------    -----------   -----------

ACCUMULATED OTHER COMPREHENSIVE
LOSS:
     Minimum pension liability adjustments:
         Balance at beginning of year              (38)            (5)           (4)
         Changes during the year                   (38)           (33)           (1)          (38)          (33)            (1)
                                            -----------    -----------   -----------
         Balance at end of year                    (76)           (38)           (5)
                                            -----------    -----------   -----------

     Deferred gains (losses) on derivative
     instruments:
         Balance at beginning of year               (3)            --            --
         Cumulative effect adjustment               --             --             6            --            --              6
         Reclassification of the cumulative
              effect adjustment into
              income                                --             --            (6)           --            --             (6)
         Changes in fair value                      (1)            (3)           --            (1)           (3)            --
         Reclassification to income                  2             --            --             2            --             --
                                            -----------    -----------   -----------   -----------   -----------    -----------
         Balance at end of year                     (2)            (3)           --
                                            -----------    -----------   -----------

         TOTAL                                     (78)           (41)           (5)   $      762    $      414     $    1,835
                                            -----------    -----------   -----------   ===========   ===========    ===========

TOTAL MEMBERS' CAPITAL                      $    5,285     $    5,186    $    5,166
                                            ===========    ===========   ===========


</TABLE>




            THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                    CONSOLIDATED FINANCIAL STATEMENTS.

                                     5

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARATHON ASHLAND PETROLEUM LLC AND SUBSIDIARIES


NOTE A - BUSINESS DESCRIPTION AND BASIS OF PRESENTATION

On December  12,  1997,  Marathon  Oil Company  (Marathon),  a wholly owned
subsidiary of Marathon Oil  Corporation  (MOC),  formerly USX  Corporation,
entered into an Asset Transfer and Contribution Agreement with Ashland Inc.
(Ashland)  providing  for the formation of Marathon  Ashland  Petroleum LLC
(MAP). Effective January 1, 1998, Marathon contributed substantially all of
its refining,  marketing and transportation (RM&T) operations to MAP. Also,
on January 1, 1998,  Marathon acquired certain RM&T net assets from Ashland
in  exchange  for a 38 percent  interest  in MAP.  The  purchase  price was
determined  to be $1.9  billion,  based  upon an  external  valuation.  The
acquisition  of Ashland's  net assets was  accounted for under the purchase
method of accounting.

In connection with the formation of MAP,  Marathon and Ashland entered into
a Limited  Liability  Company  Agreement (LLC  Agreement)  dated January 1,
1998.  The LLC Agreement  provides for an initial term expiring on December
31,  2022 (25 years from its  formation).  The term will  automatically  be
extended  for ten-year  periods,  unless a  termination  notice is given by
either party.

Also in connection  with the  formation of MAP, the parties  entered into a
Put/Call,  Registration  Rights  and  Standstill  Agreement  (the  Put/Call
Agreement). The Put/Call Agreement provides that at any time after December
31, 2004,  Ashland will have the right to sell to Marathon all of Ashland's
ownership  interest in MAP,  for an amount in cash  and/or  Marathon or MOC
debt or equity securities equal to the product of 85 percent (90 percent if
equity  securities  are used) of the fair market value of MAP at that time,
multiplied by Ashland's  percentage  interest in MAP. Payment could be made
at closing,  or at Marathon's  option, in three equal annual  installments,
the first of which would be payable at closing.  At any time after December
31,  2004,  Marathon  will  have the  right to  purchase  all of  Ashland's
ownership  interests  in MAP, for an amount in cash equal to the product of
115 percent of the fair  market  value of MAP at that time,  multiplied  by
Ashland's percentage interest in MAP.

MAP is engaged in petroleum  supply,  refining,  marketing & transportation
operations  and includes  Speedway  SuperAmerica  LLC (SSA), a wholly owned
subsidiary,  which  operates  retail  outlets for  petroleum  products  and
merchandise.  In  addition,  MAP,  through  its  wholly  owned  subsidiary,
Marathon  Ashland  Pipe Line  LLC,  is  actively  engaged  in the  pipeline
transportation of crude oil and petroleum products.


NOTE B - SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

PRINCIPLES APPLIED IN CONSOLIDATION - The consolidated financial statements
include the accounts of MAP and the  majority-owned  subsidiaries  which it
controls. Investments in undivided interest pipelines are consolidated on a
pro rata  basis.  Investments  in entities  over which MAP has  significant
influence are  accounted for using the equity method of accounting  and are
carried at MAP's  share of net assets  plus  advances.  Differences  in the
basis of the  investment  and the separate net asset value of the investee,
if any, are amortized into income in accordance  with the remaining  useful
life of the underlying  assets.  Investments in companies whose stocks have
no readily determinable fair value are carried at cost.

Income from equity method investments  represents MAP's proportionate share
of income from equity method  investments.  Other income includes  dividend
income from other investments.  Dividend income is recognized when dividend
payments are received.

USE OF ESTIMATES - The  preparation  of financial  statements in accordance
with generally accepted  accounting  principles requires management to make
estimates and  assumptions  that affect the reported  amounts of assets and
liabilities,  the  disclosure  of  contingent  assets  and  liabilities  at
year-end and the reported amounts of revenues and expenses during the year.
Items subject to such estimates and assumptions  include the carrying value
of property,  plant and  equipment,  goodwill,  intangibles,  equity method
investments; non-exchange traded derivative contracts; valuation allowances
for receivables and  inventories;  environmental  remediation  liabilities;
liabilities for potential tax deficiencies and potential  litigation claims
and settlements;  and assets and obligations  related to employee benefits.
Actual results could differ from the estimates and assumptions used.

REVENUE  RECOGNITION - Revenues are recognized  generally when products are
shipped or services are provided to customers  and the sales price is fixed
or determinable and collectibility is reasonably assured.  Costs associated
with revenues are recorded in cost of revenues.


                                     6
<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE B - SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - CONTINUED

Rebates from vendors are recognized as a reduction to cost of revenues when
the  initiating  transaction  occurs.  Incentives  that  are  derived  from
contractual  provisions are accrued based on past experience and recognized
within cost of revenues.

Matching  buy/sell  transactions  settled  in  cash  are  recorded  in both
revenues and cost of revenues as separate sales and purchase  transactions.
During the years ended December 31, 2003, 2002 and 2001,  matching buy/sell
transactions  were  $7,030  million,  $4,335  million  and $3,817  million,
respectively.

CASH AND CASH EQUIVALENTS - Cash and cash equivalents  include cash on hand
and on deposit  and  investments  in highly  liquid debt  instruments  with
maturities  generally of three months or less.  See Note D for  information
regarding investments with related parties.

INVENTORIES - Inventories  are carried at lower of cost or market.  Cost of
inventories is determined  primarily  under the last-in,  first-out  (LIFO)
method.

The  inventory  market  valuation  reserve  reflects  the  extent  that the
recorded  LIFO cost  basis of crude oil and  refined  products  inventories
exceeds net realizable value. The reserve is decreased to reflect increases
in market prices and inventory  turnover and increased to reflect decreases
in market prices.  Changes in the inventory market valuation reserve result
in noncash charges or credits to costs and expenses.

DERIVATIVE INSTRUMENTS - MAP uses commodity-based derivatives and financial
instrument  related  derivatives to manage its exposure to commodity  price
risk.  As  market  conditions  change,  MAP  may use  selective  derivative
instruments  that assume  market risk in exchange  for an upfront  premium.
Management  has  authorized  the  use  of  futures,   forwards,  swaps  and
combinations of options,  including written or net written options, related
to the  purchase or sale of crude oil,  natural  gas and refined  products.
Changes in the fair value of all derivatives are recognized  immediately in
income, within revenues, other income or costs of revenues.

For derivative  instruments that are classified as trading,  changes in the
fair value are recognized  immediately  within  revenues as a part of other
income.  Any  premium  received  is  amortized  into  income  based  on the
underlying settlement terms of the derivative position. All related effects
of a trading  strategy,  including  physical  settlement of the  derivative
position, are reflected within other income.

PROPERTY,   PLANT  AND  EQUIPMENT  -  Property,  plant  and  equipment  are
depreciated  principally by the  straight-line  method over their estimated
useful lives, which range from 3 to 42 years.

When property,  plant and equipment  depreciated on an individual basis are
sold or otherwise disposed of, any gains or losses are reflected in income.
Gains on disposal of property,  plant and  equipment  are  recognized  when
earned, which is generally at the time of closing. Included in net gains on
disposal of assets are gains on the sale of SSA stores of $30 million,  $37
million and $23 million for 2003, 2002 and 2001, respectively. If a loss on
disposal  is  expected,  such  losses  are  recognized  when the assets are
reclassified  as held for sale.  Proceeds from disposal of property,  plant
and  equipment  depreciated  on a group basis are  credited to  accumulated
depreciation and amortization with no immediate effect on income.

GOODWILL - Goodwill  represents  the excess of the purchase  price over the
estimated  fair  value of the net assets  acquired  by MAP.  Annually,  MAP
assesses the  carrying  amount of goodwill by testing for  impairment.  The
impairment  test  requires   allocating   goodwill  and  other  assets  and
liabilities  to reporting  units.  The fair value of each reporting unit is
determined  and compared to the book value of the  reporting  unit.  If the
fair value of the  reporting  unit is less than the book  value,  including
goodwill,  then the recorded  goodwill is impaired down to its implied fair
value with a charge to expense.

INTANGIBLE ASSETS - Intangible assets consist of deferred  marketing costs,
intangible  contract  rights and  unrecognized  pension plan prior  service
costs.  The  marketing  costs relate to  refurbishment  of various  branded
jobber  locations.  These  marketing  costs are  amortized  over 5-10 years
depending on the term of the associated marketing agreement.

MAJOR  MAINTENANCE  ACTIVITIES - MAP incurs planned major maintenance costs
primarily for refinery turnarounds. These types of costs include contractor
repair  services,  materials  and supplies,  equipment  rentals and company
labor costs. Such costs are

                                     7
<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE B - SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - CONTINUED

expensed in the same annual period as incurred;  however,  estimated annual
turnaround costs are recognized in income throughout the year on a pro rata
basis.

ENVIRONMENTAL   REMEDIATION   LIABILITIES   -   Environmental   remediation
expenditures  are  capitalized  if the costs  mitigate  or  prevent  future
contamination or if the costs improve environmental safety or efficiency of
the existing assets.  MAP provides for remediation costs and penalties when
the  responsibility  to remediate is probable and the amount of  associated
costs can be  reasonably  estimated.  The  timing of  remediation  accruals
coincides  with  completion of a feasibility  study or the  commitment to a
formal  plan of  action.  Remediation  liabilities  are  accrued  based  on
estimates  of known  environmental  exposure  and are  discounted  when the
estimated amounts are reasonably fixed and  determinable.  If recoveries of
remediation  costs  from  third  parties  are  probable,  a  receivable  is
recorded.

ASSET  RETIREMENT   OBLIGATIONS  -  The  fair  value  of  asset  retirement
obligations  are  recognized  in the period in which they are incurred if a
reasonable  estimate of fair value can be made. For MAP,  asset  retirement
obligations primarily relate to certain underground storage tanks at leased
locations.  Depreciation of capitalized asset retirement cost and accretion
of asset  retirement  obligations are recorded over time. The  depreciation
will generally be determined on a straight-line  basis, while the accretion
to be  recognized  will  escalate  over  the  life  of  the  assets.  Asset
retirement obligations have not been recognized for certain refinery, crude
oil and product pipeline and marketing assets because the fair value cannot
be  estimated  due  to  the  uncertainty  of  the  settlement  date  of the
obligation.

PENSIONS  AND OTHER  POSTRETIREMENT  BENEFITS  - MAP has a  noncontributory
defined  benefit pension plan with two benefit  payment  formulas  covering
substantially  all employees and related  excess  benefit  plans.  Benefits
under  its final  pay  formula  are  based  primarily  upon  age,  years of
participation in the plan and the highest consecutive three years' earnings
during the last ten years  before  retirement.  Benefits  under its pension
equity formula are based primarily upon age, years of  participation in the
plan  and the  final  three  years  of  earnings  at  retirement.  MAP also
participates in a multi-employer  plan that provides coverage for less than
5 percent of its employees.  The benefits provided include both pension and
health care.

MAP also has defined  benefit  retiree health care and life insurance plans
covering most  employees  upon their  retirement.  Health care benefits are
provided through comprehensive hospital, surgical and major medical benefit
provisions or through  health  maintenance  organizations,  both subject to
various  cost sharing  features.  Life  insurance  benefits are provided to
certain  nonunion  and  union  represented  retiree  beneficiaries.   Other
postretirement  benefits  have not been  prefunded.  MAP uses a December 31
measurement date for its plans.

STOCK-BASED  COMPENSATION - Effective January 1, 2003, MAP applied the fair
value based method of accounting  to future grants and any modified  grants
for MOC  stock-based  compensation  granted  to MAP  employees.  All  prior
outstanding  and unvested  awards  continue to be  accounted  for under the
intrinsic value method.  The following table  illustrates the effect on net
income if the fair value  method had been  applied to all  outstanding  and
unvested awards in each period.
<TABLE>
<CAPTION>
                                                                                         Year Ended December 31
                                                                                                (Millions)
                                                                          -----------------------------------------------------
                                                                               2003               2002                2001
                                                                          -------------       -------------       -------------
<S>                                                                       <C>                 <C>                 <C>
Net income
       As reported                                                        $        799        $        450        $      1,836
       Add:     MOC stock-based employee compensation expense
                included in reported net income                                      2                   3                   1
       Deduct:  MOC stock-based employee compensation expense
                determined under fair value method for all awards                   (2)                 (6)                 (4)
                                                                          -------------       -------------       -------------

Pro forma net income                                                      $        799        $        447        $       1,833
                                                                          =============       =============       =============

</TABLE>
The above pro forma  amounts were based on a  Black-Scholes  option-pricing
model, which included the following information and assumptions:

                                     8

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE B - SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - CONTINUED
<TABLE>
<CAPTION>
                                                                                         Year Ended December 31
                                                                          -----------------------------------------------------
                                                                               2003               2002                2001
                                                                          -------------       -------------       -------------
<S>                                                                       <C>                 <C>                 <C>
Weighted-average grant-date exercise price per share                      $      25.58        $      28.12        $      32.52
Expected annual dividends per share                                       $        .97        $        .92        $        .92
Expected life in years                                                               5                   5                   5
Expected volatility                                                               34.0%               35.0%               34.0%
Risk-free interest rate                                                            3.0%                4.5%                4.9%
Weighted-average grant date fair value of options granted
       during the year, as calculated from above                          $       5.37        $       7.79        $       9.45

</TABLE>

MAP applies the principles of Statement of Financial  Accounting  Standards
No.  123,  Accounting  for  Stock-Based  Compensation  (SFAS No.  123),  as
interpreted  by  Emerging  Issues Task Force Issue  96-18,  Accounting  for
Equity  Instruments  that are Issued to Other than Employees for Acquiring,
or in  Conjunction  with  Selling,  Goods or Services,  to the  stock-based
compensation granted to MAP employees by Ashland.

The amounts of stock-based  compensation  recorded in selling,  general and
administrative  expenses  totaled $6  million,  $3  million  and $3 million
during the years ended December 31, 2003, 2002 and 2001, respectively.

INSURANCE - MAP is insured for  catastrophic  casualty and certain property
and business interruption  exposures, as well as those risks required to be
insured by law or contract.  Costs  resulting  from  noninsured  losses are
charged against income upon occurrence.

INCOME TAXES - MAP is a limited liability  company,  and therefore,  except
for several small subsidiary  corporations,  is not subject to U.S. federal
income  taxes.  Accordingly,  the  taxable  income or loss  resulting  from
operations of MAP is  ultimately  included in the U.S.  federal  income tax
returns of MOC and  Ashland.  MAP is,  however,  subject to income taxes in
certain state, local and foreign jurisdictions.

CONCENTRATION  OF CREDIT  RISK - MAP is exposed to credit risk in the event
of  nonpayment  by  counterparties,  a  significant  portion  of which  are
concentrated  in  energy  related  industries.   The   creditworthiness  of
customers  and  other  counterparties  is  subject  to  continuing  review,
including  the use of master  netting  agreements,  where  appropriate.  No
single customer accounts for more than 10 percent of annual gross revenues.

RECLASSIFICATIONS  - Certain  reclassifications  of prior  years' data have
been made to conform to 2003 classifications.


NOTE C - NEW ACCOUNTING STANDARDS

Effective  January 1, 2003, MAP adopted  Statement of Financial  Accounting
Standards No. 143,  Accounting for Asset Retirement  Obligations  (SFAS No.
143).  This statement  requires that the fair value of an asset  retirement
obligation  be  recognized  in the  period  in  which it is  incurred  if a
reasonable  estimate of fair value can be made.  The  present  value of the
estimated  asset  retirement  cost is  capitalized  as part of the carrying
amount of the long-lived asset.  SFAS No. 143 requires  depreciation of the
capitalized  asset  retirement  cost and accretion of the asset  retirement
obligation  over time.  The  depreciation  will be calculated on a straight
line  basis  from the date a  reasonable  estimate  can be made  until  the
estimated  retirement  date,  while the  accretion  to be  recognized  will
escalate over the life of the assets.

While  assets  such as  refineries,  crude oil and  product  pipelines  and
marketing  assets  have  retirement  obligations  covered by SFAS No.  143,
certain of those obligations are not recognized since the fair value cannot
be  estimated  due  to  the  uncertainty  of  the  settlement  date  of the
obligation.  MAP has recognized  asset  retirement  obligations for certain
underground  storage tanks at leased locations.  The transition  adjustment
related to adopting  SFAS No. 143 on January 1, 2003,  was  recognized as a
cumulative  effect  of a change in  accounting  principle.  The  cumulative
effect on net income of adopting SFAS No. 143 was a net unfavorable  pretax
effect of $2 million.  At the time of adoption,  total assets  increased by
less than $1  million  and total  liabilities  increased  $2  million.  The
amounts  recognized upon adoption are based upon estimates and assumptions,
including  future  retirement   costs,   future  inflation  rates  and  the
credit-adjusted  risk-free  interest  rate.  Changes  in  asset  retirement
obligations during the year were:


                                     9
<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE C - NEW ACCOUNTING STANDARDS - CONTINUED
<TABLE>
<CAPTION>
                                                                                                         (Millions)
                                                                                                                    Pro Forma
                                                                                                  2003              2002 (a)
                                                                                              -------------       -------------
<S>                                                                                           <C>                 <C>
Asset retirement obligations as of January 1                                                  $          2        $          2
       Liabilities incurred during 2003                                                                 --                  --
       Liabilities settled during 2003 (b)                                                              (1)                 --
       Accretion expense (included in depreciation and amortization)                                    --                  --
                                                                                              -------------       -------------
Asset retirement obligations as of December 31                                                $          1        $          2
                                                                                              =============       =============
</TABLE>

(a)      Pro forma data as if SFAS No.  143 had been  adopted on January 1,
         2002. If adopted,  income before  cumulative  effect of changes in
         accounting  principles  for 2002 would have been decreased by less
         than $1 million.

(b)      Related to assets sold in 2003.


Effective  January 1, 2003, MAP adopted  Statement of Financial  Accounting
Standards No. 146,  Accounting  for Exit or Disposal  Activities  (SFAS No.
146). SFAS No. 146 is effective for exit or disposal  activities  initiated
after  December  31, 2002.  There were no  adjustments  necessary  upon the
initial adoption of SFAS No. 146.

Effective   January  1,  2003,  MAP  adopted  the  fair  value  recognition
provisions of SFAS No. 123 for the stock-based  compensation granted to MAP
employees  by MOC.  Statement of Financial  Accounting  Standards  No. 148,
Accounting for Stock-Based  Compensation - Transition and Disclosure  (SFAS
No. 148), an amendment of SFAS No. 123,  provides  alternative  methods for
the  transition of the  accounting for  stock-based  compensation  from the
intrinsic  value method to the fair value method.  MAP has applied the fair
value  method to grants  made,  modified or settled on or after  January 1,
2003. The impact on MAP's 2003 net income was not materially different than
under previous accounting standards.

The  Financial  Accounting  Standards  Board  (FASB)  issued  Statement  of
Financial  Accounting  Standards  No. 149,  Amendment of  Statement  133 on
Derivative  Instruments and Hedging Activities (SFAS No. 149), on April 30,
2003.  SFAS No. 149 is effective for derivative  contracts  entered into or
modified after June 30, 2003 and for hedging relationships designated after
June 30, 2003. The adoption of SFAS No. 149 did not have an effect on MAP's
financial position, cash flows or results of operations.

The FASB  issued  Statement  of  Financial  Accounting  Standards  No. 150,
Accounting for Certain Financial  Instruments with  Characteristics of Both
Liabilities  and Equity  (SFAS No. 150),  on May 30, 2003.  The adoption of
SFAS No.  150,  effective  July 1,  2003,  did not have an  effect on MAP's
financial position or results of operations.

Effective  January  1,  2003,  FASB   Interpretation  No.  45,  Guarantor's
Accounting and Disclosure  Requirements for Guarantees,  Including Indirect
Guarantees  of  Indebtedness  of Others (FIN 45),  requires the  fair-value
measurement and recognition of a liability for the issuance or modification
of  certain  guarantees.   There  were  no  cumulative  effect  adjustments
necessary  upon  the  initial  adoption  of  FIN  45.  Enhanced  disclosure
requirements  apply to both new and existing  guarantees subject to FIN 45.
See Note S for outstanding guarantees.

FASB  Interpretation  No. 46,  Consolidation of Variable  Interest Entities
(FIN 46R),  identifies certain off-balance sheet arrangements that meet the
definition of a variable interest entity (VIE). The primary  beneficiary of
a VIE is the party  that is  exposed to the  majority  of the risks  and/or
returns of the VIE. The primary  beneficiary is required to consolidate the
VIE. In  addition,  more  extensive  disclosure  requirements  apply to the
primary beneficiary,  as well as other significant  investors.  FIN 46R was
effective  immediately  for VIE's  created  after  January  31,  2003.  For
special-purposes entities (SPEs) created prior to February 1, 2003, FIN 46R
is effective at the first interim or annual  reporting  period ending after
December 15, 2003,  or December  31, 2003 for MAP.  For  non-SPE's  created
prior to February  1, 2003,  FIN 46R is  effective  for MAP as of March 31,
2004.  The adoption of this  interpretation  did not and is not expected to
have any effect on MAP's financial statements.

The FASB  issued  Statement  of  Financial  Accounting  Standards  No.  132
(revised   2003),   Employers'   Disclosures   about   Pensions  and  Other
Postretirement  Benefits  (SFAS No.  132),  effective  for interim  periods
beginning  after December 15, 2003.  This statement  retains the disclosure
requirements  contained in Statement of Financial  Accounting Standards No.
132,  Employers'   Disclosures  about  Pensions  and  Other  Postretirement
Benefits,  which it replaces, but requires additional disclosures about the
assets,  obligations,  cash flows, and net periodic benefit cost of defined
benefit pension plans and other defined benefit

                                    10

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE C - NEW ACCOUNTING STANDARDS - CONTINUED

postretirement  plans. Certain required disclosures of information relating
to foreign  plans and  estimated  future  benefit  payments  of all defined
benefit plans have a delayed  effective  date for fiscal years ending after
June 15, 2004. MAP has elected earlier application of the entire disclosure
provisions of SFAS No. 132.

On January 12, 2004,  the FASB released  FASB Staff  Position No. FAS 106-1
(FSP 106-1), Accounting and Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (the Act). Due
to  uncertainties as to the effect of the provisions of the Act and certain
accounting  issues raised by the Act that are not addressed by Statement of
Financial   Accounting   Standards  No.  106,  Employers'   Accounting  for
Postretirement Benefits Other Than Pensions, FSP 106-1 allows plan sponsors
to elect a one-time deferral of the accounting for the Act. MAP has elected
to apply the one-time  deferral  until further  guidance is provided by the
FASB or the remeasurement of plan assets and obligations  occurs subsequent
to  January  31,   2004.   Accordingly,   any   measures   of   accumulated
postretirement  benefit obligation or net periodic  postretirement  benefit
cost in the financial  statements and  accompanying  notes does not reflect
the effects of the Act on MAP's plans.

Effective  January 1, 2003, MAP adopted  Emerging  Issues Task Force (EITF)
Abstract No.  02-16,  Accounting  by a Customer  (Including a Reseller) for
Certain  Consideration  Received from a Vendor (EITF 02-16), which requires
rebates  from  vendors to be recorded as  reductions  to cost of  revenues.
Restatement  of prior year results is permitted but not  required.  Rebates
from  vendors of $159  million for 2003 are recorded as a reduction to cost
of revenues. Rebates from vendors of $169 million and $149 million for 2002
and 2001, respectively, are recorded in sales and other operating revenues.
There was no effect on net income related to the adoption of EITF 02-16.

At the May 2003 EITF meeting,  a consensus was reached on EITF Abstract No.
01-8,  Determining  Whether an  Arrangement Is a Lease,  (EITF 01-8).  This
guidance, under certain conditions,  modifies the accounting for agreements
that historically have not been considered  leases.  EITF 01-8 is effective
for all arrangements that are agreed upon,  committed to, or modified after
July 1, 2003.  The adoption of EITF 01-8 did not have a material  effect on
MAP's financial position or results of operations.

Effective  January 1, 2001, MAP adopted  Statement of Financial  Accounting
Standards  No.  133,  Accounting  for  Derivative  Instruments  and Hedging
Activities  (SFAS No.  133),  as  amended  by SFAS Nos.  137 and 138.  This
statement  requires  recognition  of all  derivatives  as either  assets or
liabilities at fair value.  The transition  adjustment  related to adopting
SFAS No. 133 on January 1, 2001, was  recognized as a cumulative  effect of
change in accounting  principle.  The unfavorable  cumulative effect on net
income was $20 million.  The favorable  cumulative  effect  included within
Other  Comprehensive  Income  (OCI)  was  $6  million.  A  portion  of  the
cumulative effect  adjustment  relating to the adoption of SFAS No. 133 was
recognized in OCI which relates only to deferred  gains or losses for hedge
transactions  as of December 31, 2000. A  reconciliation  of the changes in
OCI  relating to  derivative  instruments  is included in the  Statement of
Members' Capital.


NOTE D - RELATED PARTY TRANSACTIONS

Related parties include:
o        Ashland and its affiliates.
o        MOC and its affiliates.
o        Equity method investees.

Management  believes that  transactions with related parties were conducted
under terms comparable to those with unrelated parties.
<TABLE>
<CAPTION>
                                                                                               Year Ended December 31
                                                                                      ------------------------------------------
                                                                                                      (Millions)
                                                                                          2003           2002           2001
                                                                                      -----------    -----------     -----------
<S>                                                                                   <C>            <C>             <C>
REVENUES FROM RELATED PARTIES WERE:
       Ashland and its affiliates                                                     $      258     $      218      $      237
       MOC and its affiliates                                                                 97            147             211
       Equity investees:
              Pilot Travel Centers LLC (PTC)                                                 635            645             210
              Centennial Pipeline LLC (Centennial)                                            16             --              --
                                                                                      -----------    -----------     -----------
                    Total                                                             $    1,006     $    1,010      $      658
                                                                                      ===========    ===========     ===========
</TABLE>

                                    11


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE D - RELATED PARTY TRANSACTIONS - CONTINUED

Related  party  sales to Ashland  and its  affiliates,  PTC and  Centennial
consist primarily of refined petroleum products. Related party sales to MOC
and its affiliates consist primarily of liquid hydrocarbons.
<TABLE>
<CAPTION>
                                                                                               Year Ended December 31
                                                                                      ------------------------------------------
                                                                                                     (Millions)
                                                                                          2003           2002            2001
                                                                                      -----------    -----------     -----------
<S>                                                                                   <C>            <C>             <C>
PURCHASES FROM RELATED PARTIES WERE:
       Ashland and its affiliates                                                     $       24     $       33      $       29
       MOC and its affiliates                                                                659            770             627
       Equity investees:
              PTC                                                                             --             15              --
              Centennial                                                                      27             --              --
              LOOP LLC (LOOP)                                                                 46             32              32
              Other                                                                           22             20              22
                                                                                      -----------    -----------     -----------
                    Total                                                             $      778     $      870      $      710
                                                                                      ===========    ===========     ===========
</TABLE>

Related party purchases from Ashland and its affiliates  consist  primarily
of refined petroleum products and the net amount of administrative services
provided  between the companies.  Related party  purchases from MOC and its
affiliates  consist  primarily  of  crude  oil,  natural  gas and  refinery
feedstocks and the net amount of  administrative  services provided between
the  companies.  Related  party  purchases  from PTC consist  primarily  of
refined petroleum  products and the net amount of  administrative  services
provided  between the companies.  Related party purchases from  Centennial,
LOOP and other equity investees  consist primarily of crude oil and refined
product transportation.

<TABLE>
<CAPTION>
                                                                                                              December 31
                                                                                                     ---------------------------
                                                                                                              (Millions)
                                                                                                         2003           2002
                                                                                                     -----------     -----------
<S>                                                                                                  <C>             <C>
RECEIVABLES FROM RELATED PARTIES WERE:
       Ashland and its affiliates                                                                    $       22      $       18
       MOC and its affiliates                                                                                 7              16
       Equity investees:
              PTC                                                                                            16              16
              Centennial                                                                                      8               2
                                                                                                     -----------     -----------
                    Total                                                                            $       53      $       52
                                                                                                     ===========     ===========

                                                                                                              December 31
                                                                                                     ---------------------------
                                                                                                              (Millions)
                                                                                                         2003           2002
                                                                                                     -----------     -----------
PAYABLES TO RELATED PARTIES WERE:
       Ashland and its affiliates                                                                    $        1      $        3
       MOC and its affiliates                                                                                51              71
       Equity investees:
              Centennial                                                                                     10               2
              LOOP                                                                                            3               3
              Other                                                                                           1               2
                                                                                                     -----------     -----------
                    Total                                                                            $       66      $       81
                                                                                                     ===========     ===========
</TABLE>

As of  December  31,  2003,  there was no member  distribution  payable  to
Ashland.  As of December 31, 2002,  accounts  payable to Ashland included a
member distribution payable of less than $1 million.

A revolving  credit agreement was entered into as of January 1, 1998, among
Ashland and Marathon  (collectively  the Lenders) and MAP.  This  agreement
provides  that the  Lenders  may loan to MAP up to $500  million at defined
short-term  market  rates.  At December  31,  2003 and 2002,  there were no
borrowings  against this  facility.  During 2003 and 2002, MAP borrowed and
repaid $478 million and $701 million,  respectively,  under this  revolving
credit facility.  The weighted average  borrowings  outstanding  under this
revolving  credit  facility  during the years 2003 and 2002 were $3 million
and $5 million,  respectively.  During the years ended  December  31, 2003,
2002 and 2001,  interest paid to Marathon on these borrowings was less than
$1 million. Interest paid to

                                    12


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE D - RELATED PARTY TRANSACTIONS - CONTINUED

Ashland for  borrowings  under this  agreement was less than $1 million for
the years 2003, 2002 and 2001. MAP is  investigating  alternatives  for the
replacement of this facility upon its expiration on March 15, 2004.

MAP had a $350 million  uncommitted  note  facility  with Marathon that was
entered into on March 31, 2003 and expired on July 31,  2003.  During 2003,
MAP had  borrowings  and  repayments of $847 million  under this  facility.
During  2003,  interest  paid to  Marathon  on the  borrowings  under  this
agreement  was  less  the  $1  million.  The  weighted  average  borrowings
outstanding under this note facility during 2003 were $15 million.

Effective  August 1, 2003,  MAP replaced the above  mentioned note facility
with a $350  million  committed  revolving  credit  facility  with MOC that
terminates  on January 31, 2004.  This facility was extended to January 31,
2005. There were no borrowings against this facility during 2003.

On November 16, 1998,  MAP entered  into  agreements  with MOC and Ashland,
which  allow MAP to invest its  surplus  cash  balances on a daily basis at
competitive  interest  rates with MOC and Ashland in proportion up to their
ownership  interests in MAP.  These  agreements,  as  previously  extended,
expired on March 15, 2003 and have been  subsequently  amended and extended
with an  expiration  date of March 15, 2004. At December 31, 2003 and 2002,
there was no cash invested under these  agreements.  During the years ended
December  31,  2003,  2002 and 2001,  interest  income  earned  from  these
investments was less than $1 million,  less than $1 million and $2 million,
respectively,  from  Ashland  and less than $1  million,  $2 million and $1
million, respectively, from MOC.

In 2003, 2002 and 2001, MAP recorded capital contributions from Marathon of
$1 million, $3 million and $2 million, respectively, and from Ashland of $7
million,  $20  million and $10  million,  respectively,  for  environmental
improvements.   In  2003,   MAP  also  recorded  an  $11  million   capital
contribution  from Marathon  related to the acquisition of leased property.
The LLC Agreement  stipulates  that  ownership  interest in MAP will not be
adjusted as a result of such  contributions.  In 2003,  2002 and 2001,  MAP
recorded capital  contributions  of $2 million,  $3 million and $1 million,
respectively,  from  Marathon,  and in 2003 and  2001,  $4  million  and $2
million from Ashland related to stock-based  compensation  expense which is
allocated 100 percent to Marathon and Ashland, respectively.


NOTE E - OTHER ITEMS

<TABLE>
<CAPTION>
                                                                                                Year Ended December 31
                                                                                      ------------------------------------------
                                                                                                      (Millions)
                                                                                          2003           2002            2001
                                                                                      -----------    -----------     -----------
<S>                                                                                   <C>            <C>             <C>
NET INTEREST AND OTHER FINANCING COSTS (INCOME):

       INTEREST AND OTHER FINANCIAL INCOME:
              Interest income - third parties                                         $        2     $        3      $       11
              Interest income - related parties                                               --              2               3
                                                                                      -----------    -----------     -----------
                    Total                                                                      2              5              14
                                                                                      -----------    -----------     -----------

       INTEREST AND OTHER FINANCING COSTS:
              Interest incurred                                                                4              2               3
              Other                                                                            7              8               7
                                                                                      -----------    -----------     -----------
                    Total                                                                     11             10              10
                                                                                      -----------    -----------     -----------

              Net interest and other financing costs (income)                         $        9     $        5      $       (4)
                                                                                      ===========    ===========     ===========

</TABLE>

                                    13


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE F - PENSIONS AND OTHER POSTRETIREMENT BENEFITS
<TABLE>
<CAPTION>
                                                                     Pension Benefits                         Other Benefits
                                                                  ---------------------                    ---------------------
                                                                                            (Millions)
                                                                     2003        2002                        2003        2002
                                                                  ---------   ---------                    ---------   ---------
<S>                                                               <C>         <C>                          <C>         <C>
CHANGE IN BENEFIT OBLIGATIONS:
Benefit obligations at January 1                                  $    831    $    727                     $    295    $    216
Service cost                                                            64          49                           15          11
Interest cost                                                           59          47                           19          15
Actuarial losses                                                       144          49                           21          56
Benefits paid                                                          (47)        (41)                          (4)         (3)
                                                                  ---------   ---------                    ---------   ---------
Benefit obligations at December 31                                $  1,051    $    831                     $    346    $    295
                                                                  =========   =========                    =========   =========

CHANGE IN PLAN ASSETS:
Fair value of plan assets at January 1                            $    356    $    440
Actual return on plan assets                                            75         (43)
Employer contributions                                                  89          --
Benefits paid from plan assets                                         (47)        (41)
                                                                  ---------   ---------
Fair value of plan assets at December 31                          $    473    $    356
                                                                  =========   =========

FUNDED STATUS OF PLANS AT DECEMBER 31(a)                          $   (578)   $   (475)                    $   (346)   $   (295)
Unrecognized net transition asset                                       (3)         (5)                          --          --
Unrecognized prior service costs (credits)                              21          22                          (33)        (40)
Unrecognized net losses                                                411         323                           98          82
                                                                  ---------   ---------                    ---------   ---------
Accrued benefit cost                                              $   (149)   $   (135)                    $   (281)   $   (253)
                                                                  =========   =========                    =========   =========

AMOUNTS RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION:
Accrued benefit liability                                         $   (248)   $   (197)                    $   (281)   $   (253)
Intangible asset                                                        23          24                           --          --
Accumulated other comprehensive loss                                    76          38                           --          --
                                                                  ---------   ---------                    ---------   ---------
Accrued benefit cost                                              $   (149)   $   (135)                    $   (281)   $   (253)
                                                                  =========   =========                    =========   =========
</TABLE>
The  accumulated  benefit  obligation for all defined benefit pension plans
was  $721  million  and  $553  million  at  December  31,  2003  and  2002,
respectively.

(a)      All MAP plans have  accumulated  benefit  obligations in excess of
         plan assets:

<TABLE>
<CAPTION>
                                                                        December 31
                                                                  ----------------------
                                                                        (Millions)
                                                                      2003        2002
                                                                  ----------  ----------
              <S>                                                 <C>         <C>
              Projected benefit obligations                       $ (1,051)  $    (831)
              Accumulated benefit obligations                         (721)       (553)
              Fair value of plan assets                                473         356

</TABLE>

                                    14


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE F - PENSIONS AND OTHER POSTRETIREMENT BENEFITS - CONTINUED

The following summarizes net periodic benefit cost for those plans sponsored by
MAP:
<TABLE>
<CAPTION>
                                                                Pension Benefits                        Other Benefits
                                                      ---------------------------------        ---------------------------------
                                                                                      (Millions)
                                                         2003        2002        2001             2003        2002        2001
                                                      ---------   ---------   ---------        ---------   ---------   ---------
<S>                                                   <C>         <C>         <C>              <C>         <C>         <C>
COMPONENTS OF NET PERIODIC BENEFIT COST:
     Service cost                                     $     64    $     49    $     40         $     15    $     11    $      9
     Interest cost                                          59          47          42               20          15          14
     Expected return on plan assets                        (40)        (46)        (50)              --          --          --
     Amortization  - net transition gain                    (2)         (2)         (2)              --          --          --
                   - prior service costs (credits)           3           2           2               (7)         (7)         (6)
                   - actuarial loss                         20           3           1                4           2          --
     Multi-employer and other plans                          2           1           2                2           2          --
     Settlement and termination loss                        --          --           3               --          --          --
                                                      ---------   ---------   ---------        ---------   ---------   ---------
     Net periodic benefit cost                        $    106    $     54    $     38         $     34    $     23    $     17
                                                      =========   =========   =========        =========   =========   =========


                                                                Pension Benefits                        Other Benefits
                                                      ---------------------------------        ---------------------------------
                                                                                      (Millions)
                                                         2003        2002        2001            2003        2002        2001
                                                      ---------   ---------   ---------        ---------   ---------   ---------
Increase in minimum liability in
     other comprehensive loss                         $     38    $     33    $      1         $     --    $     --    $     --

PLAN ASSUMPTIONS

                                                                Pension Benefits                        Other Benefits
                                                      ---------------------------------        ---------------------------------
                                                                                      (Millions)
                                                         2003        2002        2001            2003        2002        2001
                                                      ---------   ---------   ---------        ---------   ---------   ---------
WEIGHTED-AVERAGE ASSUMPTIONS USED TO
DETERMINE BENEFIT OBLIGATION AT
DECEMBER 31:
     Discount rate                                        6.25%       6.50%       7.00%            6.25%       6.50%       7.00%
     Rate of compensation increase                        4.50%       4.50%       5.00%            4.50%       4.50%       5.00%

WEIGHTED-AVERAGE ACTUARIAL ASSUMPTIONS
USED TO DETERMINE NET PERIODIC BENEFIT
COST FOR YEARS ENDED DECEMBER 31:
     Discount rate                                        6.50%       7.00%       7.50%            6.50%       7.00%       7.50%
     Expected long-term return on
         plan assets                                      9.00%       9.50%       9.50%              --          --          --
     Rate of compensation increase                        4.50%       5.00%       5.00%            4.50%       5.00%       5.00%

</TABLE>

EXPECTED  LONG-TERM RETURN ON PLAN ASSETS - Historical  markets are studied
and long-term  historical  relationships  between equities and fixed income
are preserved  consistent with the widely accepted capital market principle
that assets with higher volatility  generate a greater return over the long
run.  Certain  components  of  the  asset  mix  are  modeled  with  various
assumptions  regarding inflation,  debt returns and stock yields. Peer data
and  historical  returns  are  reviewed  to  check  for  reasonability  and
appropriateness.

ASSUMED HEALTH CARE COST TREND RATES AT DECEMBER 31:
<TABLE>
<CAPTION>
                                                                                                         2003            2002
                                                                                                     -----------     -----------
<S>                                                                                                  <C>             <C>
Health care cost trend rate assumed for next year                                                        9.50%         10.00%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)                        5.00%          5.00%
Year that the rate reaches the ultimate trend rate                                                       2012           2012

</TABLE>

                                    15

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE F - PENSIONS AND OTHER POSTRETIREMENT BENEFITS - CONTINUED

Assumed  health  care cost  trend  rates have a  significant  effect on the
amounts reported for the health care plan. A one-percentage-point change in
assumed health care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
                                                                                             1 Percentage        1 Percentage
                                                                                            Point Increase      Point Decrease
                                                                                            --------------      --------------
<S>                                                                                         <C>                 <C>

                                                                                                        (Millions)
Effect on total of service and interest cost components                                     $            7      $          (6)
Effect on other postretirement benefit obligations                                                      59                (48)

</TABLE>

PLAN ASSETS

The pension plan weighted-average asset allocations at December 2003 and 2002,
by asset category are as follows:
<TABLE>
<CAPTION>
                                                                                                 Plan Assets at December 31
                                                                                             -----------------------------------
                                                                                                  2003                2002
                                                                                             ---------------    ----------------
<S>                                                                                          <C>                <C>
Asset Category:
       Equity securities                                                                                 77%                 78%
       Debt securities                                                                                   22%                 21%
       Real estate                                                                                        1%                  1%
                                                                                             ---------------    ----------------
              Total                                                                                     100%                100%
                                                                                             ===============    ================

</TABLE>

PLAN  INVESTMENT  POLICIES AND STRATEGIES - The investment  policy reflects
the funded status of the plan and the future ability of MAP to make further
contributions.  Historical  performance  results  and  future  expectations
suggest that common  stocks will provide  higher total  investment  returns
than  fixed-income  securities over a long-term  investment  horizon.  As a
result,  equity investments will likely continue to exceed 50% of the value
of the fund.  Accordingly,  bond and other fixed  income  investments  will
comprise the remainder of the fund.  Short-term  investments  shall reflect
the liquidity  requirements for making pension payments.  Management of the
plan's assets is delegated to the United States Steel and Carnegie  Pension
Fund.  Investments are  diversified by industry and type,  limited by grade
and maturity.  The policy  prohibits  investments  in any securities in the
steel  industry  and  allows  derivatives  subject  to  strict  guidelines.
Investment  performance  and risk is measured  and  monitored on an ongoing
basis  through  quarterly   investment  meetings  and  periodic  asset  and
liability studies.

CASH FLOWS

MAP expects to contribute  approximately  $93 million to its funded pension
plan in 2004.

The following benefit payments,  which reflect expected future service,  as
appropriate, are expected to be paid:
<TABLE>
<CAPTION>
                                                                       Pension Benefits                       Other Benefits
                                                                       ----------------                       --------------
                                                                                             (Millions)
                    <S>                                                <C>                                    <C>
                    2004                                               $         36                           $          8
                    2005                                                         45                                      9
                    2006                                                         48                                     11
                    2007                                                         56                                     13
                    2008                                                         59                                     15
                    Years 2009 - 2013                                           394                                    123

</TABLE>

MAP also  contributes to several  defined  contribution  plans for eligible
employees.  Contributions to these plans, which for the most part are based
on a percentage of the employees' salary,  totaled $26 million, $26 million
and $25 million in 2003, 2002 and 2001, respectively.

                                    16


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE G - INCOME TAXES

The taxable  income or loss resulting  from  operations of MAP,  except for
several  small  subsidiary  corporations,  is  ultimately  included  in the
federal income tax returns of MOC and Ashland. MAP is, however,  subject to
taxation in certain state, local and foreign jurisdictions.
<TABLE>
<CAPTION>
                                                               Year Ended December 31
                               ---------------------------------------------------------------------------------
                                                                      (Millions)
                                             2003                         2002                      2001
                               ---------------------------  -------------------------  -------------------------
<S>                            <C>       <C>         <C>    <C>       <C>       <C>    <C>      <C>        <C>
                               Current   Deferred    Total  Current   Deferred  Total  Current  Deferred   Total
                               -------   --------    -----  -------   --------  -----  -------  --------   -----
PROVISIONS FOR INCOME TAXES:
       Federal                 $    --   $     --    $  --  $    --   $     --  $  --  $    --  $     --   $  --
       State and local               3         --        3        1          1      2        8        --       8
       Foreign                       2         --        2        1         --      1        1        --       1
                               -------   --------    -----  -------   --------  -----  -------  --------  ------
              Total            $     5   $     --    $   5  $     2   $      1  $   3  $     9  $     --   $   9
                               =======   ========    =====  =======   ========  =====  =======  ========  ======

</TABLE>

Deferred tax liabilities at December 31, 2003 and 2002 of $5 million and $5
million, respectively,  principally arise from differences between the book
and tax basis of  inventories  and property,  plant and  equipment.  Pretax
income  included $5 million and $2 million  attributable to foreign sources
in 2003 and 2002,  respectively.  Pretax  income  attributable  to  foreign
sources was not material in 2001.


NOTE H - INVENTORIES
<TABLE>
<CAPTION>
                                                                                                              December 31
                                                                                                     --------------------------
                                                                                                              (Millions)
                                                                                                         2003           2002
                                                                                                     -----------    -----------
<S>                                                                                                  <C>            <C>
INVENTORIES CONSIST OF THE FOLLOWING:
       Liquid hydrocarbons                                                                           $      645     $       652
       Refined products and merchandise                                                                   1,156           1,191
       Supplies and sundry items                                                                             93              72
                                                                                                     -----------    ------------
              Total (at cost)                                                                        $    1,894     $     1,915
                                                                                                     ===========    ============
</TABLE>

The LIFO method  used for  financial  accounting  purposes  represented  93
percent and 95 percent of total  inventory  value at December  31, 2003 and
2002, respectively.  Current acquisition costs were estimated to exceed the
above inventory values at December 31, 2003 and 2002, by approximately $644
million and $594  million,  respectively.  Cost of revenues was reduced and
income from  operations was increased by $10 million in 2003,  less than $1
million in 2002 and $17 million in 2001 as a result of liquidations of LIFO
inventories.


NOTE I - INVESTMENTS AND LONG-TERM RECEIVABLES
<TABLE>
<CAPTION>
                                                                                                               December 31
                                                                                                     ---------------------------
                                                                                                               (Millions)
                                                                                                         2003           2002
                                                                                                     -----------     -----------
<S>                                                                                                  <C>             <C>
Equity method investments                                                                            $      525      $      489
Receivables due after one year                                                                               16              12
Deposits of restricted cash                                                                                   3              42
                                                                                                     -----------     -----------

              Total                                                                                  $      544      $      543
                                                                                                     ===========     ===========

</TABLE>

                                    17

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE I - INVESTMENTS AND LONG-TERM RECEIVABLES - CONTINUED

Summarized  financial  information of investees accounted for by the equity
method of accounting follows:
<TABLE>
<CAPTION>
                                                                                               Year Ended December 31
                                                                                      -----------------------------------------
                                                                                                       (Millions)
                                                                                         2003            2002           2001
                                                                                      ----------     -----------     ----------
<S>                                                                                   <C>            <C>             <C>
Income data - year:
       Revenues and other income                                                      $    5,513     $     4,174      $   1,462
       Operating income                                                                      237             153            134
       Net income                                                                            163              98             90
</TABLE>
<TABLE>
<CAPTION>
                                                                                                              December 31
                                                                                                     --------------------------
                                                                                                              (Millions)
                                                                                                         2003            2002
                                                                                                     -----------     ----------
<S>                                                                                                  <C>             <C>
Balance sheet data - December 31:
       Current assets                                                                                $      284      $      261
       Noncurrent assets                                                                                  2,296           2,195
       Current liabilities                                                                                  392             374
       Noncurrent liabilities                                                                               908             828

</TABLE>

MAP's carrying value of its equity method  investments is $97 million lower
than the underlying net assets of investees. This basis difference is being
amortized into income over the remaining useful lives of the underlying net
assets.

Dividends and partnership distributions received from equity investees were
$80  million,  $39  million  and  $31  million  in  2003,  2002  and  2001,
respectively.

Principal unconsolidated equity investees of MAP at December 31, 2003, were
as follows:
<TABLE>
<CAPTION>

                        Company                       Ownership                           Activity
                        -------                       ---------                           --------
              <S>                                     <C>                       <C>
              Centennial Pipeline LLC                   50.0%                   Refined products pipeline system
              Pilot Travel Centers LLC                  50.0%                   Travel centers
              LOCAP LLC                                 49.9%                   Crude oil pipeline system
              LOOP LLC                                  46.7%                   Offshore oil port
              Minnesota Pipe Line Company               33.3%                   Crude oil pipeline system
              Southcap Pipe Line Company                21.6%                   Crude oil pipeline system

</TABLE>

PTC, a MAP joint venture with Pilot Corporation  (Pilot),  began operations
on September 1, 2001. The travel centers offer diesel fuel,  gasoline and a
variety of other services,  including  on-premises  brand name restaurants.
Pilot and MAP each own a 50 percent  interest in PTC. PTC is accounted  for
under the equity method of accounting.

On February 10, 2003,  MAP increased its ownership in Centennial  from 33.3
percent to 50 percent.  MAP paid $20 million  for the  increased  ownership
interest.  Centennial is an interstate  refined petroleum products pipeline
extending  from the U.S.  Gulf of  Mexico  to the  Midwest.  Centennial  is
accounted for under the equity method of accounting.

MAP owns a 46.7 percent  interest in LOOP,  which is the owner and operator
of a deepwater oil port located 18 miles off the coast of  Louisiana.  LOOP
is accounted for under the equity method of accounting.


                                    18

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE J - PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
                                                                                                            December 31
                                                                                                     ---------------------------
                                                                                                              (Millions)
                                                                                                         2003           2002
                                                                                                     -----------     -----------
<S>                                                                                                  <C>             <C>
Refining                                                                                             $    3,679      $    3,183
Marketing                                                                                                 1,850           2,008
Transportation                                                                                            1,597           1,490
Other                                                                                                        41              37
                                                                                                     -----------     -----------
              Total                                                                                       7,167           6,718
Less accumulated depreciation and amortization                                                            2,725           2,514
                                                                                                     -----------     -----------
              Net                                                                                    $    4,442      $    4,204
                                                                                                     ===========     ===========
</TABLE>

Property, plant and equipment at December 31, 2003 and 2002, includes gross
assets  acquired  under  capital  leases  of $49  million  and $8  million,
respectively,   with  related  amounts  in  accumulated   depreciation  and
amortization of $2 million and $1 million, respectively.


NOTE K - GOODWILL

The  carrying  amount of  goodwill  was $21  million  for the  years  ended
December 31, 2003 and 2002.  The tests for  impairment are completed in the
fourth  quarter of each year. No impairment in the carrying  value has been
deemed necessary.


NOTE L - INTANGIBLE ASSETS
<TABLE>
<CAPTION>

                                                                      Gross Carrying          Accumulated         Net Carrying
                                                                          Amount             Amortization            Amount
                                                                     -----------------    ------------------    ----------------
<S>                                                                  <C>                  <C>                   <C>
INTANGIBLE ASSETS AS OF DECEMBER 31, 2003, ARE AS FOLLOWS:                                    (Millions)
       Amortized intangible assets:
              Branding agreements                                    $             53     $              19     $            34
              Other                                                                 2                     1                   1
                                                                     -----------------    ------------------    ----------------
                    Total                                            $             55     $              20     $            35
                                                                     =================    ==================    ================

       Unamortized intangible assets:
              Unrecognized prior service costs                       $             23     $              --     $            23
              Other                                                                 4                    --                   4
                                                                     -----------------    ------------------    ----------------
                    Total                                            $             27     $              --     $            27
                                                                     =================    ==================    ================

</TABLE>

Amortization  expense  related to  intangibles  during 2003,  2002 and 2001
totaled $6  million,  $6 million and $5  million,  respectively.  Estimated
amortization  expense for the years 2004-2008 is $6 million, $5 million, $4
million, $4 million and $3 million, respectively.


NOTE M - SHORT-TERM DEBT

MAP had a $350 million short-term revolving credit facility that terminated
in July 2003.  During 2003, MAP borrowed and repaid $615 million under this
revolving credit facility.  This facility also provided for the issuance of
letters of credit in aggregate amounts not to exceed $75 million.  A letter
of  credit  of  $40  million  was   outstanding   at  December   31,  2002.
Additionally,  MAP  has a $500  million  revolving  credit  agreement  with
Ashland and Marathon  and a $350 million  uncommitted  note  facility  with
Marathon  that was replaced by a $350 million  committed  revolving  credit
facility with MOC, as discussed in Note D. At December 31, 2003, there were
no borrowings against any of these facilities.


                                    19

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE N - LONG-TERM DEBT
<TABLE>
<CAPTION>
                                                                                                             December 31
                                                                                                     ---------------------------
                                                                                                              (Millions)
                                                                                                         2003           2002
                                                                                                     -----------     -----------
<S>                                                                                                  <C>             <C>

Capital lease obligations due 2004-2018                                                              $       46      $        6
5% Promissory Note due 2009                                                                                  --               1
                                                                                                     -----------     -----------
              Total (a)                                                                                      46               7
Amounts due within one year                                                                                  (2)             (1)
                                                                                                     -----------     -----------
              Long-term debt due after one year                                                      $       44      $        6
                                                                                                     ===========     ===========
</TABLE>

(a)      Required  payments of long-term debt for the years 2005-2008,  are
         $2 million, $2 million, $3 million and $3 million, respectively.


NOTE O - SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
                                                                                                 Year Ended December 31
                                                                                      ------------------------------------------
                                                                                                       (Millions)

                                                                                          2003           2002            2001
                                                                                      -----------    ------------    -----------
<S>                                                                                   <C>            <C>             <C>
CASH PROVIDED FROM OPERATING ACTIVITIES INCLUDES:
       Interest and other financing costs paid                                        $       (2)    $       (1)     $       (2)
       Income taxes paid to taxing authorities                                                (3)            (7)             (5)
NON-CASH INVESTING AND FINANCING ACTIVITIES:
       Notes received in asset disposal transactions                                          --              5              --
       Net assets contributed to joint ventures                                               42             --             246
       Member capital contributions                                                           14             26              15
       Capital lease obligation - asset acquired                                              41             --              --

</TABLE>
NOTE P - LEASES

Future  minimum   commitments  for  capital  and  operating  leases  having
remaining noncancelable lease terms in excess of one year are as follows:
<TABLE>
<CAPTION>
                                                                       Capital          Operating
                                                                       Leases            Leases
                                                                     ----------       -----------
                                                                                (Millions)
<S>                                                                  <C>              <C>
2004                                                                 $        5       $       69
2005                                                                          5               50
2006                                                                          5               38
2007                                                                          5               15
2008                                                                          6               10
Later years                                                                  45               37
Sublease rentals                                                             --               (1)
                                                                     -----------      -----------

       Total minimum lease payments                                  $       71       $      218
                                                                                      ===========

Less imputed interest costs                                                  25
                                                                     -----------
       Present value of net minimum lease payments
       included in long-term debt                                    $       46
                                                                     ===========

</TABLE>

                                    20


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE P - LEASES - CONTINUED
<TABLE>
<CAPTION>

                                                                                                 Year Ended December 31
                                                                                      ------------------------------------------
                                                                                                       (Millions)
                                                                                          2003           2002           2001
                                                                                      -----------    -----------     -----------

<S>                                                                                   <C>            <C>             <C>

OPERATING LEASE RENTAL EXPENSE WAS:
       Minimum rental                                                                 $       85     $       97      $       73
       Contingent rental                                                                      12             13              13
       Sublease rentals                                                                       --             (2)             (2)
                                                                                      -----------    -----------     -----------
              Net rental expense                                                      $       97     $      108      $       84
                                                                                      ===========    ===========     ===========

</TABLE>

MAP leases a wide  variety of  facilities  and  equipment  under  operating
leases,  including  land and  building  space,  office  equipment,  storage
facilities and  transportation  equipment.  Most  long-term  leases include
renewal options and, in certain leases, purchase options.


NOTE Q - DERIVATIVE INSTRUMENTS

The  following  table sets forth  quantitative  information  by category of
derivative  instruments  at December 31, 2003 and 2002.  These  amounts are
reflected on a gross basis by individual derivative instrument. The amounts
exclude the variable  margin  deposit  balances  held in various  brokerage
accounts.  MAP did not  have any  foreign  currency  contracts  in place at
December 31, 2003 or 2002.
<TABLE>
<CAPTION>
                                                                                     Year Ended December 31
                                                                  -------------------------------------------------------
                                                                                          (Millions)
                                                                              2003                          2002
                                                                  ---------------------------    ------------------------
                                                                  Assets(a)   (Liabilities)(a)   Assets (a) (Liabilities)(a)
                                                                  ------      -------------      ------     -------------
<S>                                                               <C>         <C>                <C>        <C>
NON-HEDGE DESIGNATION:
       Exchange-traded commodity futures                          $     77    $       (83)       $    9     $        (46)
       Exchange-traded commodity options                                 5            (11)            9              (11)
       OTC commodity swaps                                               7            (12)            3               (5)
       OTC commodity options                                             4             (3)            1               --

NONTRADITIONAL INSTRUMENTS (b)                                          70            (61)           53              (39)
</TABLE>

(a)      The fair value and carrying  value of derivative  instruments  are
         the same.  The fair value  amounts for OTC  positions are based on
         various   indices   or   dealer   quotes.   The  fair   values  of
         exchange-traded  positions are based on market quotes derived from
         major exchanges.  MAP's consolidated balance sheet is reflected on
         a net  asset/(liability)  basis by brokerage firm, as permitted by
         the master netting agreements.

(b)      Nontraditional  derivative  instruments are created due to netting
         of  physical   receipts  and   delivery   volumes  with  the  same
         counterparty.


MAP  recorded  a net  derivative  loss  of $162  million  in  2003,  with a
derivative  loss of  $129  million  recorded  in  cost  of  revenues  and a
derivative loss of $33 million recorded in revenue. In 2002, MAP recorded a
net derivative loss of $124 million,  with a derivative loss of $76 million
recorded in cost of revenues and a derivative loss of $48 million  recorded
in revenue.  In 2001, MAP recorded a net  derivative  gain of $209 million,
with a derivative  gain of $226 million  recorded in cost of revenues and a
derivative loss of $17 million recorded in revenues.


NOTE R - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying  value of most financial  instruments  are based on historical
costs.  The  carrying  values  of cash and cash  equivalents,  receivables,
payables,  long-term  receivables and long-term debt approximate their fair
value.

MAP's unrecognized  financial  instruments consist of financial  guarantees
and  commitments  to extend  credit.  For  details  relating  to  financial
guarantees, see Note S.


                                    21


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE S - CONTINGENCIES AND COMMITMENTS

MAP is the subject of, or party to, a number of pending or threatened legal
actions,  contingencies  and  commitments  involving  a variety of matters,
including  laws and  regulations  relating to the  environment.  Certain of
these  matters  are  discussed  below.  The  ultimate  resolution  of these
contingencies could, individually or in the aggregate, be material to MAP's
consolidated  financial statements.  However,  management believes that MAP
will remain a viable and competitive  enterprise even though it is possible
that these contingencies could be resolved unfavorably.

ENVIRONMENTAL MATTERS - MAP is subject to federal, state, local and foreign
laws and  regulations  relating to the  environment.  These laws  generally
provide for control of pollutants released into the environment and require
responsible  parties to undertake  remediation of hazardous  waste disposal
sites.  Penalties  may be imposed for  noncompliance.  Marathon and Ashland
have retained the  liabilities,  subject to certain  thresholds,  for costs
associated  with  remediating  properties  conveyed  to MAP for  conditions
existing  prior to  January  1,  1998.  The  costs  associated  with  these
thresholds are not expected to be material to the MAP financial statements.
At December 31, 2003 and 2002,  MAP's accrued  liabilities  for remediation
totaled $23  million and $14  million,  respectively.  It is not  presently
possible to estimate  the  ultimate  amount of all  remediation  costs that
might be incurred or the  penalties  that may be imposed.  Receivables  for
recoverable  costs from certain states,  under programs to assist companies
in cleanup efforts related to underground storage tanks at retail marketing
outlets,  were $13 million  and $9 million at  December  31, 2003 and 2002,
respectively.

MAP has made substantial capital  expenditures to bring existing facilities
into  compliance  with various laws relating to the  environment.  In 2003,
2002 and 2001, such capital expenditures for environmental controls totaled
$323 million, $119 million and $79 million,  respectively.  MAP anticipates
making  additional  such  expenditures  in the future;  however,  the exact
amounts  and  timing of such  expenditures  are  uncertain  because  of the
continuing evolution of specific regulatory requirements.

On May  11,  2001,  MAP  entered  into  a  consent  decree  with  the  U.S.
Environmental Protection Agency which commits it to complete certain agreed
upon  environmental  programs over an eight-year  period primarily aimed at
reducing air  emissions at its seven  refineries.  The court  approved this
consent  decree on August 28, 2001.  The total  one-time  expenditures  for
these  environmental  projects  are  approximately  $330  million  over the
eight-year  period,  with about $170 million  incurred through December 31,
2003.  In  addition,   MAP  has  nearly   completed   certain  agreed  upon
supplemental  environmental  projects  as  part of  this  settlement  of an
enforcement  action for alleged Clean Air Act  violations,  at a cost of $9
million.  MAP believes that this settlement will provide MAP with increased
permitting and operating  flexibility while achieving  significant emission
reductions.

GUARANTEES - MAP has issued the following guarantees:
<TABLE>
<CAPTION>
                                                                                                       Undiscounted Payments
                                                                           Term                        As of December 31, 2003
                                                                          ------                       -----------------------
                                                                                                               (Millions)
<S>                                                            <C>                                     <C>
Indebtedness of equity investees:
      LOCAP commercial paper (a)                               Perpetual-Loan Balance Varies                    $      23
      LOOP Series 1991A Notes (a)                                          2008                                         7
      LOOP Series 1992A Notes (a)                                          2008                                        34
      LOOP Series 1992B Notes (a)                                          2004                                         9
      LOOP Series 1997 Notes (a)                                           2017                                        13
      LOOP revolving credit agreement (a)                      Perpetual-Loan Balance Varies                           25
      LOOP Series 2003 Notes (a)                                        2004 - 2023                                    81
      Centennial Notes (b)                                              2008 - 2024                                    70
      Centennial revolving credit agreement (b)                  2004-Loan Balance Varies                               5

Other:
      Centennial catastrophic event (c)                                 Indefinite                                     50
      Mobile transportation equipment leases (d)                        2004 - 2008                                     6


</TABLE>
                                    22


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE S - CONTINGENCIES AND COMMITMENTS - CONTINUED

(a)      MAP holds interests in an offshore oil port, LOOP, and a crude oil
         pipeline  system,  LOCAP LLC  (LOCAP).  Both  LOOP and LOCAP  have
         secured various project  financings with throughput and deficiency
         (T&D) agreements.  A T&D agreement creates a potential  obligation
         to  advance  funds in the event of a cash  shortfall.  When  these
         rights are  assigned to a lender to secure  financing,  the T&D is
         considered to be an indirect guarantee of indebtedness.  Under the
         agreements,  MAP is required to advance funds if the investees are
         unable  to  service  debt.   Any  such  advances  are   considered
         prepayments  of future  transportation  charges.  The terms of the
         agreements  vary but tend to follow  the  terms of the  underlying
         debt. In April 2003,  LOOP  refinanced  $81 million for certain of
         its series of outstanding  bonds subject to these T&D  agreements.
         The refinancing consisted of changes to maturity dates, as well as
         interest  rates.  Although  certain  series were paid down and new
         series issued, the total principal  outstanding changed by only $2
         million.  Assuming  non-payment  by  the  investees,  the  maximum
         potential  amount  of future  payments  under  the  guarantees  is
         estimated to be $193 million and $197 million at December 31, 2003
         and  2002,  respectively.  Included  in  these  amounts  is a LOOP
         revolving  credit facility of $25 million at December 31, 2003 and
         2002, and a LOCAP revolving credit facility of $20 million and $25
         million at December 31, 2003 and 2002,  respectively.  The undrawn
         portion of the revolving credit  facilities is $35 million and $28
         million as of December 31, 2003 and 2002, respectively.

(b)      MAP holds an interest in a refined products pipeline,  Centennial,
         and has  guaranteed  the  repayment  of  Centennial's  outstanding
         balance under a Master Shelf Agreement and Revolver, which expires
         in  2024.  The  guarantee   arose  in  order  to  obtain  adequate
         financing.  Prior to  expiration  of the  guarantee,  MAP could be
         relinquished  from  responsibility   under  the  guarantee  should
         Centennial meet certain financial tests. If Centennial defaults on
         its outstanding balance, the estimated maximum potential amount of
         future payments is $75 million at December 31, 2003 and 2002.

(c)      The  agreement  between  Centennial  and its  members  allows each
         member to contribute cash in lieu of Centennial procuring separate
         insurance  in the event of  third-party  liability  arising from a
         catastrophic  event. There is an indefinite term for the agreement
         and  each  member  is to  contribute  cash  in  proportion  to its
         ownership interest,  up to a maximum amount of $50 million and $33
         million at December 31, 2003 and 2002,  respectively.  In February
         2003,  MAP's  ownership  interest in Centennial  increased from 33
         percent to 50  percent.  As a result of this  modification  to the
         Centennial catastrophic event guarantee, MAP recorded a $4 million
         obligation during 2003.

(d)      These leases  contain  terminal  rental  adjustment  clauses which
         provide that MAP will  indemnify the lessor to the extent that the
         proceeds  from the sale of the asset at the end of the lease  fall
         short of the specified maximum percent of original value.


CONTRACT  COMMITMENTS  - At  December  31,  2003 and 2002,  MAP's  contract
commitments to acquire  property,  plant and equipment totaled $273 million
and $86 million, respectively.

In May 2001, MAP entered into a Transportation Agreement with Centennial in
which MAP guarantees to ship certain  volumes on the  Centennial  system or
make deficiency  payments for any volume shortfall.  Any deficiency payment
made by MAP  will be  treated  as a  prepayment  of  future  transportation
charges. In 2003, MAP made a $4 million deficiency payment to Centennial.

PUT/CALL AGREEMENT - As part of the formation of PTC, MAP and Pilot entered
into  a  Put/Call  and  Registration  Rights  Agreement  (Agreement).   The
Agreement  provides that any time after September 1, 2008,  Pilot will have
the right to sell its  interest  in PTC to MAP for an amount of cash and/or
MOC, MAP or Ashland  equity  securities  equal to the product of 90 percent
(95 percent if paid in  securities)  of the fair market value of PTC at the
time  multiplied by Pilot's  percentage  interest in PTC. At any time after
September  1, 2011,  under  certain  conditions  MAP will have the right to
purchase  Pilot's  interest in PTC for an amount of cash and/or MOC, MAP or
Ashland equity  securities equal to the product of 105 percent (110 percent
if  paid  in  securities)  of the  fair  market  value  of PTC at the  time
multiplied by Pilot's percentage interest in PTC.


                                    23

<PAGE>