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                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549



                                 FORM 10-Q



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




               FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004

                       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



     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 checkmark  whether the Registrant is an accelerated  filer
(as defined in Rule 12b-2 of the Act). [x]

     At April 30, 2004, there were 70,373,118 shares of Registrant's Common
Stock  outstanding.  One  Right to  purchase  one-thousandth  of a share of
Series  A  Participating   Cumulative   Preferred  Stock  accompanies  each
outstanding share of Registrant's Common Stock.


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                         PART I - FINANCIAL STATEMENTS
                         -----------------------------

ITEM 1. FINANCIAL STATEMENTS


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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME

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                                                                                   Three months ended          Six months ended
                                                                                        March 31                   March 31
                                                                                 -----------------------    ------------------------
(In millions except per share data)                                                   2004         2003           2004         2003
--------------------------------------------------------------------------------------------------------    ------------------------
                                                                                                              
REVENUES
      Sales and operating revenues                                               $   1,812    $   1,644     $    3,735    $   3,382
      Equity income                                                                     18           29             56           64
      Other income                                                                       9           10             22           28
                                                                                 ----------   ----------    -----------   ----------
                                                                                     1,839        1,683          3,813        3,474
COSTS AND EXPENSES
      Cost of sales and operating expenses                                           1,453        1,322          2,971        2,695
      Selling, general and administrative expenses                                     328          334            643          668
      Depreciation, depletion and amortization                                          48           51             97          103
                                                                                 ----------   ----------    -----------   ----------
                                                                                     1,829        1,707          3,711        3,466
                                                                                 ----------   ----------    -----------   ----------
OPERATING INCOME (LOSS)                                                                 10          (24)           102            8
      Net interest and other financial costs                                           (29)         (32)           (59)         (65)
                                                                                 ----------   ----------    -----------   ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS
      BEFORE INCOME TAXES                                                              (19)         (56)            43          (57)
      Income taxes                                                                       8           19            (16)          19
                                                                                 ----------   ----------    -----------   ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS                                               (11)         (37)            27          (38)
      Results from discontinued operations (net of income taxes) - Note B               (5)          (2)           (10)         (93)
                                                                                 ----------   ----------    -----------   ----------
NET INCOME (LOSS)                                                                $     (16)   $     (39)    $       17    $    (131)
                                                                                 ==========   ==========    ===========   ==========

BASIC EARNINGS (LOSS) PER SHARE - Note A
      Income (loss) from continuing operations                                   $    (.16)   $    (.54)    $      .39    $    (.56)
      Results from discontinued operations                                            (.07)        (.03)          (.14)       (1.35)
                                                                                 ----------   ----------    -----------   ----------
      Net income (loss)                                                          $    (.23)   $    (.57)    $      .25    $   (1.91)
                                                                                 ==========   ==========    ===========   ==========

DILUTED EARNINGS (LOSS) PER SHARE - Note A
      Income (loss) from continuing operations                                   $    (.16)   $    (.54)    $      .39    $    (.56)
      Results from discontinued operations                                            (.07)        (.03)          (.14)       (1.35)
                                                                                 ----------   ----------    -----------   ----------
      Net income (loss)                                                          $    (.23)   $    (.57)    $      .25    $   (1.91)
                                                                                 ==========   ==========    ===========   ==========

DIVIDENDS PAID PER COMMON SHARE                                                  $    .275    $    .275     $      .55    $     .55



SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                                                   2






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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

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                                                                                     March 31       September 30          March 31
(In millions)                                                                            2004               2003              2003
------------------------------------------------------------------------------------------------------------------------------------


                                       ASSETS
                                       ------
                                                                                                            
CURRENT ASSETS
      Cash and cash equivalents                                                 $         180      $         223     $         106
      Accounts receivable                                                               1,180              1,170             1,073
      Allowance for doubtful accounts                                                     (39)               (35)              (38)
      Inventories - Note A                                                                475                441               484
      Deferred income taxes                                                               114                142                85
      Assets of discontinued operations held for sale                                       -                  -               201
      Other current assets                                                                137                144               145
                                                                                --------------     --------------    --------------
                                                                                        2,047              2,085             2,056
INVESTMENTS AND OTHER ASSETS
      Investment in Marathon Ashland Petroleum LLC (MAP)                                2,349              2,448             2,315
      Goodwill                                                                            524                523               514
      Asbestos insurance receivable (noncurrent portion)                                  396                399               394
      Other noncurrent assets                                                             390                340               342
                                                                                --------------     --------------    --------------
                                                                                        3,659              3,710             3,565
PROPERTY, PLANT AND EQUIPMENT
      Cost                                                                              2,988              2,959             2,931
      Accumulated depreciation, depletion and amortization                             (1,792)            (1,748)           (1,683)
                                                                                --------------     --------------    --------------
                                                                                        1,196              1,211             1,248
                                                                                --------------     --------------    --------------

                                                                                $       6,902      $       7,006     $       6,869
                                                                                ==============     ==============    ==============


                        LIABILITIES AND STOCKHOLDERS' EQUITY
                        ------------------------------------

CURRENT LIABILITIES
      Debt due within one year                                                  $         206      $         102     $         243
      Trade and other payables                                                          1,262              1,371             1,236
      Liabilities of discontinued operations held for sale                                  -                  -                34
      Income taxes                                                                         17                 11                15
                                                                                --------------     --------------    --------------
                                                                                        1,485              1,484             1,528
NONCURRENT LIABILITIES
      Long-term debt (less current portion)                                             1,353              1,512             1,568
      Employee benefit obligations                                                        402                385               480
      Deferred income taxes                                                               221                291               170
      Reserves of captive insurance companies                                             192                168               186
      Asbestos litigation reserve (noncurrent portion)                                    565                560               530
      Other long-term liabilities and deferred credits                                    354                353               351
      Commitments and contingencies - Notes D and F
                                                                                --------------     --------------    --------------
                                                                                        3,087              3,269             3,285

COMMON STOCKHOLDERS' EQUITY                                                             2,330              2,253             2,056
                                                                                --------------     --------------    --------------

                                                                                $       6,902      $       7,006     $       6,869
                                                                                ==============     ==============    ==============



SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       3





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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CONSOLIDATED COMMON STOCKHOLDERS' EQUITY

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                                                                                                          Accumulated
                                                                                                                other
                                                   Common           Paid-in          Retained           comprehensive
(In millions)                                       stock           capital          earnings                    loss         Total
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                            
BALANCE AT OCTOBER 1, 2002                       $     68          $    338          $  1,961           $        (194)     $  2,173
      Total comprehensive income (loss) (1)                                              (131)                     44           (87)
      Cash dividends                                                                      (37)                                  (37)
      Issued common stock under stock
        incentive and other plans                                         7                                                       7
                                                 ---------         ---------         ---------          --------------     ---------
BALANCE AT MARCH 31, 2003                        $     68          $    345          $  1,793           $        (150)     $  2,056
                                                 =========         =========         =========          ==============     =========


BALANCE AT OCTOBER 1, 2003                       $     68          $    350          $  1,961           $        (126)     $  2,253
      Total comprehensive income (1)                                                       17                      35            52
      Cash dividends                                                                      (38)                                  (38)
      Issued common stock under stock
        incentive and other plans                       2                61                                                      63
                                                 ---------         ---------         ---------          --------------     ---------
BALANCE AT MARCH 31, 2004                        $     70          $    411          $  1,940           $         (91)     $  2,330
                                                 =========         =========         =========          ==============     =========

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(1)      Reconciliations of net income (loss) to total comprehensive income
         (loss) follow.



                                                                      Three months ended                   Six months ended
                                                                           March 31                             March 31
                                                              --------------------------------     ---------------------------------
      (In millions)                                                    2004              2003               2004               2003
      ------------------------------------------------------------------------------------------------------------------------------
                                                                                                               
      Net income (loss)                                            $    (16)         $    (39)          $     17           $   (131)
      Minimum pension liability adjustment                                -                19                  -                 19
          Related tax expense                                             -                (7)                 -                 (7)
      Unrealized translation adjustments                                  4                24                 34                 32
          Related tax benefits                                            -                 -                  1                  -
                                                                   ---------         ---------          ---------          ---------
      Total comprehensive income (loss)                            $    (12)         $     (3)          $     52           $    (87)
                                                                   =========         =========          =========          =========

      ------------------------------------------------------------------------------------------------------------------------------

      At March 31, 2004, the accumulated  other  comprehensive  loss of $91
      million (after tax) was comprised of net unrealized translation gains
      of $25 million and a minimum pension liability of $116 million.


SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       4




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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS

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                                                                                                               Six months ended
                                                                                                                   March 31
                                                                                                            ------------------------
(In millions)                                                                                                 2004           2003
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     
CASH FLOWS FROM OPERATIONS
      Income (loss) from continuing operations                                                              $   27         $  (38)
      Expense (income) not affecting cash
          Depreciation, depletion and amortization                                                              97            103
          Deferred income taxes                                                                                 (1)            22
          Equity income from affiliates                                                                        (56)           (64)
          Distributions from equity affiliates                                                                 153             98
          Other items                                                                                            1             (1)
      Change in operating assets and liabilities (1)                                                          (163)           (22)
                                                                                                            -------       --------
                                                                                                                58             98
CASH FLOWS FROM FINANCING
      Proceeds from issuance of common stock                                                                    54              1
      Repayment of long-term debt                                                                              (70)          (161)
      Increase in short-term debt                                                                               17            165
      Dividends paid                                                                                           (38)           (37)
                                                                                                            -------       --------
                                                                                                               (37)           (32)
CASH FLOWS FROM INVESTMENT
      Additions to property, plant and equipment                                                               (86)           (52)
      Purchase of operations - net of cash acquired                                                             (4)            (5)
      Proceeds from sale of operations                                                                          10              6
      Other - net                                                                                               21             (7)
                                                                                                            -------       --------
                                                                                                               (59)           (58)
                                                                                                            -------       --------
CASH PROVIDED (USED) BY CONTINUING OPERATIONS                                                                  (38)             8
      Cash provided (used) by discontinued operations                                                           (5)             8
                                                                                                            -------       --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                               (43)            16

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                                                223             90
                                                                                                            -------       --------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                                                   $  180        $   106
                                                                                                            =======       ========

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(1) Excludes changes resulting from operations acquired or sold.


SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       5





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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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NOTE A - SIGNIFICANT ACCOUNTING POLICIES

INTERIM FINANCIAL REPORTING

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted  accounting  principles
for interim  financial  reporting and  Securities  and Exchange  Commission
regulations.  Although such  statements  are subject to any year-end  audit
adjustments  which may be  necessary,  in the  opinion of  management,  all
adjustments  (consisting of normal recurring accruals) considered necessary
for a fair  presentation  have been included.  These  financial  statements
should be read in conjunction with Ashland's Annual Report on Form 10-K for
the fiscal year ended September 30, 2003 (as amended to include the audited
financial  statements of Marathon Ashland  Petroleum LLC for the year ended
December 31, 2003).  Results of operations  for the periods ended March 31,
2004,  are  not  necessarily  indicative  of  results  to be  expected  for
Ashland's fiscal year ending September 30, 2004.

INVENTORIES


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                                                                       March 31      September 30          March 31
(In millions)                                                              2004              2003              2003
--------------------------------------------------------------------------------------------------------------------
                                                                                             
Chemicals and plastics                                            $         366     $         333     $         360
Construction materials                                                       70                67                78
Petroleum products                                                           67                66                64
Other products                                                               48                48                47
Supplies                                                                      5                 5                 5
Excess of replacement costs over LIFO carrying values                       (81)              (78)              (70)
                                                                  --------------    --------------    --------------
                                                                  $         475     $         441     $         484
                                                                  ==============    ==============    ==============

EARNINGS PER SHARE

The  following  table  sets  forth the  computation  of basic  and  diluted
earnings (loss) per share (EPS) from continuing operations.


------------------------------------------------------------------------------------------------------------------------
                                                                        Three months ended          Six months ended
                                                                             March 31                   March 31
                                                                      ------------------------   -----------------------
(In millions except per share data)                                        2004          2003         2004         2003
------------------------------------------------------------------------------------------------------------------------
                                                                                                  
NUMERATOR
Numerator for basic and diluted EPS - Income (loss)
      from continuing operations                                      $     (11)   $      (37)   $      27    $     (38)
                                                                      ==========   ===========   ==========   ==========
DENOMINATOR
Denominator for basic EPS - Weighted average
      common shares outstanding                                              69            68           69           68
Common shares issuable upon exercise of stock options                         -             -            1            -
                                                                      ----------   -----------   ----------   ----------
Denominator for diluted EPS - Adjusted weighted
      average shares and assumed conversions                                 69            68           70           68
                                                                      ==========   ===========   ==========   ==========

EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS
      Basic                                                           $    (.16)   $     (.54)   $     .39    $    (.56)
      Diluted                                                         $    (.16)   $     (.54)   $     .39    $    (.56)


                                       6





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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE B - DISCONTINUED OPERATIONS

Ashland is subject to  liabilities  from claims  alleging  personal  injury
caused  by  exposure  to  asbestos.   Such  claims  result  primarily  from
indemnification  obligations undertaken in 1990 in connection with the sale
of Riley Stoker Corporation, a former subsidiary.  During the quarter ended
December 31, 2002,  Ashland  increased  its reserve for asbestos  claims by
$390  million  to cover  litigation  defense  and  claim  settlement  costs
expected to be paid  through  December  2012.  Because  insurance  provides
reimbursements  for most of these  costs and  coverage-in-place  agreements
exist with the insurance  companies that provide  substantially  all of the
coverage being accessed, the increase in the asbestos reserve was offset in
part by probable insurance recoveries valued at $235 million. The resulting
$155 million pretax charge to income,  net of deferred  income tax benefits
of $60  million,  was  reflected  as an  after-tax  loss from  discontinued
operations of $95 million in the Statement of  Consolidated  Income for the
three  months  ended  December  31,  2002.  Additional  reserves  have been
provided  since then to maintain the reserve to cover the expected costs on
a rolling  ten-year basis.  See Note F for further  discussion of Ashland's
asbestos-related litigation.

On August 29, 2003, Ashland sold the net assets of its Electronic Chemicals
business  and  certain  related  subsidiaries  in a  transaction  valued at
approximately $300 million before tax.  Electronic  Chemicals was a part of
Ashland  Specialty  Chemical,  providing  ultra  pure  chemicals  and other
products  and  services  to  the  worldwide  semiconductor  industry,  with
revenues of $215 million in 2003,  $217 million in 2002 and $212 million in
2001. The sale reflects Ashland's strategy to optimize its business mix and
focus  greater  attention  on the  remaining  chemical  and  transportation
construction operations where it can achieve strategic advantage. Ashland's
after-tax  proceeds  were used  primarily  to reduce  debt.  All assets and
liabilities of Electronic  Chemicals are classified as current in the March
31, 2003 balance  sheet.  Assets of $201  million were  composed of current
assets of $52 million,  investments  and other  assets of $27 million,  and
property,  plant and equipment of $122 million.  Liabilities of $34 million
were  composed  of  current  liabilities  of  $21  million  and  noncurrent
liabilities of $13 million.

Components  of  amounts  reflected  in the  income  statements  related  to
discontinued operations are presented in the following table.


-------------------------------------------------------------------------------------------------------------------------
                                                                         Three months ended          Six months ended
                                                                              March 31                   March 31
                                                                       ------------------------   -----------------------
(In millions)                                                               2004          2003         2004         2003
-------------------------------------------------------------------------------------------------------------------------
                                                                                                   
PRETAX INCOME (LOSS) FROM DISCONTINUED OPERATIONS
      Reserves for asbestos-related litigation                         $      (7)   $       (7)   $     (15)   $    (162)
      Electronic Chemicals
          Results of operations                                                -             3            -            7
          Loss on disposal                                                     -             -           (1)           -
INCOME TAXES
      Reserves for asbestos-related litigation                                 2             3            6           63
      Electronic Chemicals
          Results of operations                                                -            (1)           -           (1)
          Loss on disposal                                                     -             -            -            -
                                                                       ----------   -----------   ----------   ----------
RESULTS FROM DISCONTINUED OPERATIONS (NET OF INCOME TAXES)             $      (5)   $       (2)   $     (10)   $     (93)
                                                                       ==========   ===========   ==========   ==========


                                       7




--------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE C - UNCONSOLIDATED AFFILIATES

Under  Rule  3-09  of  Regulation  S-X,  Ashland  filed  audited  financial
statements  for  Marathon  Ashland  Petroleum  LLC (MAP) for the year ended
December 31, 2003,  on a Form 10-K/A on March 19,  2004.  Unaudited  income
statement information for MAP is shown below.

MAP is  organized  as a limited  liability  company  that has elected to be
taxed as a partnership.  Therefore,  the parents are responsible for income
taxes  applicable  to their share of MAP's taxable  income.  The net income
reflected  below for MAP does not include any  provision  for income  taxes
that will be incurred by its parents.


------------------------------------------------------------------------------------------------------------------------
                                                                       Three months ended          Six months ended
                                                                            March 31                   March 31
                                                                     ------------------------   ------------------------
(In millions)                                                              2004         2003         2004          2003
------------------------------------------------------------------------------------------------------------------------
                                                                                                  
Sales and operating revenues                                         $    9,060    $   8,254    $  18,618     $  15,333
Income from operations                                                       49           82          149           176
Net income                                                                   46           77          142           169
Ashland's equity income                                                      13           25           45            56



On March 19, 2004,  Ashland  announced  the signing of an  agreement  under
which  it  would  transfer  its 38%  interest  in MAP and two  wholly-owned
businesses to Marathon in a transaction structured to be generally tax free
and valued at  approximately  $3.0 billion.  The two other  businesses  are
Ashland's  maleic  anhydride  business and 61 Valvoline  Instant Oil Change
(VIOC) centers.  The transaction is subject to several previously disclosed
conditions,   including  approval  by  Ashland's  shareholders,   customary
antitrust  review,  consent  from  public  debt  holders  and  receipt of a
favorable  private  letter  ruling from the Internal  Revenue  Service with
respect  to the tax  treatment.  While  there is  meaningful  risk that the
transaction  will not receive the  favorable  ruling from the IRS, in which
case the transaction  would not close,  Ashland  believes it is more likely
than not that this  transaction  will  receive a favorable  ruling.  If the
conditions are met, the  transaction is expected to close by the end of the
2004 calendar year.

NOTE D - LEASES AND OTHER COMMITMENTS

LEASES

Under various operating leases, Ashland has made guarantees with respect to
the residual  value of the  underlying  property.  If Ashland had cancelled
those leases at March 31, 2004, its maximum  obligations under the residual
value  guarantees  would have  amounted to $95  million.  Ashland  does not
expect to incur any significant  charge to earnings under these guarantees,
$22 million of which  relates to real estate.  These lease  agreements  are
with   unrelated   third  party  lessors  and  Ashland  has  no  additional
contractual or other commitments to any party to the leases.

OTHER COMMITMENTS

Ashland  has  guaranteed  38% of  MAP's  payments  for  certain  crude  oil
purchases,  up to a maximum  guarantee of $95  million.  At March 31, 2004,
Ashland's  contingent  liability  under  this  guarantee  amounted  to  $73
million.  Although  Ashland  has not made and does not  expect  to make any
payments  under  this  guarantee,  it has  recorded  the fair  value of the
guarantee obligation, which is not significant.

                                     8



--------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE E - EMPLOYEE BENEFIT PLANS

On January 12, 2004, the Financial  Accounting Standards Board issued Staff
Position No. FAS 106-1,  "Accounting and Disclosure Requirements Related to
the Medicare Prescription Drug, Improvement and Modernization Act of 2003."
In accordance  with that Staff  Position,  Ashland has elected to defer the
impact of the Medicare Prescription Drug, Improvement and Modernization Act
of 2003 (Act) until authoritative  guidance on the accounting is issued. As
a result, the accumulated postretirement benefit obligation or net periodic
postretirement  benefit costs in the financial  statements or  accompanying
notes do not reflect the effects of the Act,  which are not yet  reasonably
determinable.

Presently,  Ashland  anticipates  contributing  $128 million to its pension
plans  during  fiscal  2004.   As  of  March  31,  2004,   $64  million  of
contributions have been made.

The  following   tables   detail  the   components  of  pension  and  other
postretirement benefit costs.



------------------------------------------------------------------------------------------------------------------------
                                                                                                 Other postretirement
                                                                       Pension benefits                benefits
                                                                    ------------------------   -------------------------
(In millions)                                                            2004          2003          2004          2003
------------------------------------------------------------------------------------------------------------------------
                                                                                                 
THREE MONTHS ENDED MARCH 31
Service cost                                                        $      12     $      11    $        3    $        3
Interest cost                                                              17            16             6             6
Expected return on plan assets                                            (15)          (13)            -             -
Other amortization and deferral                                             7             8            (4)           (2)
                                                                    ----------    ----------   -----------   -----------
                                                                    $      21     $      22    $        5    $        7
                                                                    ==========    ==========   ===========   ===========

SIX MONTHS ENDED MARCH 31
Service cost                                                        $      24     $      20    $        7    $        6
Interest cost                                                              33            31            12            12
Expected return on plan assets                                            (30)          (24)            -             -
Other amortization and deferral                                            15            14            (8)           (3)
                                                                    ----------    ----------   -----------   -----------
                                                                    $      42     $      41    $       11    $       15
                                                                    ==========    ==========   ===========   ===========


NOTE F - LITIGATION, CLAIMS AND CONTINGENCIES

ASBESTOS-RELATED LITIGATION

Ashland is subject to  liabilities  from claims  alleging  personal  injury
caused  by  exposure  to  asbestos.   Such  claims  result  primarily  from
indemnification  obligations undertaken in 1990 in connection with the sale
of Riley Stoker Corporation  (Riley),  a former subsidiary.  Although Riley
was neither a producer  nor a  manufacturer  of  asbestos,  its  industrial
boilers  contained some  asbestos-containing  components  provided by other
companies.

A  summary  of  asbestos  claims  activity  follows.   Because  claims  are
frequently  filed and  settled  in large  groups,  the amount and timing of
settlements,   as  well  as  the  number  of  open  claims,  can  fluctuate
significantly from period to period.


                                       9




--------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE F - LITIGATION, CLAIMS AND CONTINGENCIES (CONTINUED)


----------------------------------------------------------------------------------------------------------------------
                                                  Six months ended
                                                      March 31                      Years ended September 30
                                             ---------------------------    ------------------------------------------
(In thousands)                                     2004            2003           2003            2002           2001
----------------------------------------------------------------------------------------------------------------------
                                                                                            
Open claims - beginning of period                   198             160            160             167            118
New claims filed                                     16              35             66              45             52
Claims settled                                       (3)             (4)            (7)            (15)            (2)
Claims dismissed                                    (11)            (13)           (21)            (37)            (1)
                                             -----------     -----------    -----------     -----------    -----------
Open claims - end of period                         200             178            198             160            167
                                             ===========     ===========    ===========     ===========    ===========


Since  October 1, 2000,  Riley has been  dismissed as a defendant in 72% of
the  resolved  claims.  Amounts  spent  on  litigation  defense  and  claim
settlements  totaled $24 million for the six months  ended March 31,  2004,
compared to $26 million for the six months ended March 31, 2003, and annual
costs of $45 million in 2003, $38 million in 2002 and $15 million in 2001.

During the  December  2002  quarter,  Ashland  increased  its  reserve  for
litigation defense and claim settlement costs related to asbestos claims by
$390 million.  After that increase,  Ashland's asbestos reserve covered the
costs expected to be paid through  December  2012, and additional  reserves
have been provided since then to maintain the reserve to cover the expected
costs on a rolling ten-year basis. Prior to December 31, 2002, the asbestos
reserve was based on the  estimated  costs that would be incurred to settle
open claims. The estimates of future asbestos claims and related costs were
developed  with the  assistance of Hamilton,  Rabinovitz & Alschuler,  Inc.
(HR&A),  nationally recognized experts in that field. Ashland's reserve for
asbestos claims on an undiscounted  basis amounted to $615 million at March
31, 2004, compared to $580 million at March 31, 2003.

The  methodology  used by HR&A to project  future  asbestos costs was based
largely  on  Ashland's  recent  experience,   including   claim-filing  and
settlement  rates,  disease mix, open claims,  and  litigation  defense and
claim  settlement  costs.  Ashland's  claim  experience was compared to the
results of previously  conducted  epidemiological  studies  estimating  the
number of people likely to develop asbestos-related diseases. Those studies
were  undertaken in connection  with  national  analyses of the  population
expected to have been exposed to  asbestos.  Using that  information,  HR&A
estimated the number of future  claims that would be filed,  as well as the
related costs that would be incurred in resolving those claims.

Projecting future asbestos costs is subject to numerous  variables that are
extremely   difficult   to  predict.   In   addition  to  the   significant
uncertainties  surrounding  the number of claims  that  might be  received,
other  variables  include the type and  severity of the disease  alleged by
each claimant,  the long latency period associated with asbestos  exposure,
dismissal rates, costs of medical treatment,  the impact of bankruptcies of
other companies that are co-defendants in claims, uncertainties surrounding
the litigation  process from  jurisdiction to jurisdiction and from case to
case,  and the impact of  potential  changes  in  legislative  or  judicial
standards. Furthermore, any predictions with respect to these variables are
subject to even greater uncertainty as the projection period lengthens.  In
light of these inherent  uncertainties,  Ashland believes that ten years is
the most reasonable  period for recognizing a reserve for future costs, and
that costs  that might be  incurred  after that  period are not  reasonably
estimable.

                                       10




--------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE F - LITIGATION, CLAIMS AND CONTINGENCIES (CONTINUED)

Ashland has insurance coverage for most of the litigation defense and claim
settlement  costs  incurred in  connection  with its asbestos  claims,  and
coverage-in-place  agreements  exist  with  the  insurance  companies  that
provide  substantially all of the coverage  currently being accessed.  As a
result,  increases  in the asbestos  reserve  have been  largely  offset by
probable  insurance  recoveries.  The amounts not recoverable are generally
due from insurers that are insolvent,  rather than as a result of uninsured
claims or the exhaustion of Ashland's insurance coverage.

Ashland  retained  the  services  of  Tillinghast-Towers  Perrin  to assist
management  in  the  estimation  of  probable  insurance  recoveries.  Such
recoveries are based on assumptions and estimates surrounding the available
insurance  coverage;  one assumption of which is that all solvent insurance
carriers  remain  solvent.  Although  coverage  limits are  resolved in the
coverage-in-place agreement with Equitas Limited (Equitas) and other London
companies,  which collectively  provide a significant  portion of Ashland's
insurance coverage for asbestos claims,  there is a disagreement with these
companies   over  the  timing  of   recoveries.   The  resolution  of  this
disagreement  could  have a  material  effect  on the  value  of  insurance
recoveries  from  those  companies.  In  estimating  the  value  of  future
recoveries,  Ashland has used the least  favorable  interpretation  of this
agreement,  which results in a significant  discount being applied to value
those  recoveries.  Ashland will continue to apply this  methodology  until
such time as the disagreement is resolved.

At March 31,  2004,  Ashland's  receivable  for  recoveries  of  litigation
defense  and claim  settlement  costs from its  insurers  amounted  to $426
million, of which $29 million relates to costs previously paid. Receivables
from insurance  companies amounted to $419 million at March 31, 2003. About
35% of the  estimated  receivables  from  insurance  companies at March 31,
2004,  are expected to be due from Equitas and other London  companies.  Of
the  remainder,  over 90% is expected to come from companies or groups that
are rated A or higher by A. M. Best.

ENVIRONMENTAL PROCEEDINGS

Ashland is subject to various federal,  state and local  environmental laws
and  regulations  that  require  environmental  assessment  or  remediation
efforts (collectively  environmental remediation) at multiple locations. At
March 31,  2004,  such  locations  included 99 waste  treatment or disposal
sites where Ashland has been identified as a potentially  responsible party
under Superfund or similar state laws, approximately 130 current and former
operating  facilities  (including certain operating  facilities conveyed to
MAP) and about 1,220 service  station  properties.  Ashland's  reserves for
environmental  remediation  amounted to $169 million at March 31, 2004, and
$174 million at March 31, 2003. Such amounts reflect Ashland's estimates of
the most  likely  costs that will be incurred  over an  extended  period to
remediate  identified   conditions  for  which  the  costs  are  reasonably
estimable,  without  regard  to  any  third-party  recoveries.  Engineering
studies,  probability  techniques,  historical experience and other factors
are used to  identify  and  evaluate  remediation  alternatives  and  their
related  costs in  determining  the  estimated  reserves for  environmental
remediation.

Environmental   remediation  reserves  are  subject  to  numerous  inherent
uncertainties  that affect  Ashland's  ability to estimate its share of the
costs. Such uncertainties involve the nature and extent of contamination at
each  site,  the  extent  of  required   cleanup   efforts  under  existing
environmental  regulations,  widely  varying  costs  of  alternate  cleanup
methods,  changes in  environmental  regulations,  the potential  effect of
continuing  improvements  in  remediation  technology,  and the  number and
financial strength of other potentially  responsible  parties at multiparty
sites. Ashland regularly adjusts its reserves as environmental  remediation
continues.

                                       11




--------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE F - LITIGATION, CLAIMS AND CONTINGENCIES (CONTINUED)

No  individual  remediation  location is material to Ashland as its largest
reserve  for any site is less  than 10% of the  remediation  reserve.  As a
result,  Ashland's  exposure to adverse  developments  with  respect to any
individual  site is not  expected  to be  material,  and these sites are in
various stages of ongoing remediation.  Although environmental  remediation
could  have a  material  effect on  results  of  operations  if a series of
adverse developments occurs in a particular quarter or fiscal year, Ashland
believes that the chance of such developments occurring in the same quarter
or fiscal year is remote.

OTHER LEGAL PROCEEDINGS

In addition  to the  matters  described  above,  there are various  claims,
lawsuits  and  administrative  proceedings  pending or  threatened  against
Ashland  and its  current and former  subsidiaries.  Such  actions are with
respect to commercial matters, product liability, toxic tort liability, and
other environmental  matters, which seek remedies or damages, some of which
are for substantial amounts. While these actions are being contested, their
outcome is not predictable.



                                       12





------------------------------------------------------------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
INFORMATION BY INDUSTRY SEGMENT

------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Three months ended           Six months ended
                                                                                         March 31                    March 31
                                                                                ------------------------     -----------------------
(In millions)                                                                       2004          2003          2004         2003
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             
REVENUES
    Sales and operating revenues
       APAC                                                                     $    408     $     374      $  1,058     $    932
       Ashland Distribution                                                          785           712         1,482        1,348
       Ashland Specialty Chemical                                                    318           278           629          562
       Valvoline                                                                     324           301           614          582
       Intersegment sales
          Ashland Distribution                                                        (4)           (5)           (9)         (10)
          Ashland Specialty Chemical                                                 (19)          (16)          (38)         (31)
          Valvoline                                                                    -             -            (1)          (1)
                                                                                ----------   -----------    ----------   ----------
                                                                                   1,812         1,644         3,735        3,382
    Equity income
       APAC                                                                            3             2             8            4
       Ashland Specialty Chemical                                                      2             2             4            4
       Valvoline                                                                       -             -            (1)           -
       Refining and Marketing                                                         13            25            45           56
                                                                                ----------   -----------    ----------   ----------
                                                                                      18            29            56           64
    Other income
       APAC                                                                            7            (1)           11            2
       Ashland Distribution                                                            2             4             7           14
       Ashland Specialty Chemical                                                      3             3             5            6
       Valvoline                                                                       -             1             1            2
       Refining and Marketing                                                         (4)            1            (5)           1
       Corporate                                                                       1             2             3            3
                                                                                ----------   -----------    ----------   ----------
                                                                                       9            10            22           28
                                                                                ----------   -----------    ----------   ----------
                                                                                $  1,839     $   1,683      $  3,813     $  3,474
                                                                                ==========   ===========    ==========   ==========
OPERATING INCOME
    APAC                                                                        $    (33)    $     (57)     $     (2)    $    (56)
    Ashland Distribution                                                              19             7            32           15
    Ashland Specialty Chemical                                                        19             5            42           18
    Valvoline                                                                         24            18            45           32
    Refining and Marketing (1)                                                         2            21            27           45
    Corporate                                                                        (21)          (18)          (42)         (46)
                                                                                ----------   -----------    ----------   ----------
                                                                                $     10     $     (24)     $    102     $      8
                                                                                ==========   ===========    ==========   ==========

------------------------------------------------------------------------------------------------------------------------------------

(1)      Includes Ashland's equity income from MAP, amortization related to
         Ashland's   excess   investment  in  MAP,  and  other   activities
         associated with refining and marketing.


                                       13





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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
INFORMATION BY INDUSTRY SEGMENT

------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Three months ended          Six months ended
                                                                                        March 31                   March 31
                                                                                -----------------------    --------------------
                                                                                     2004         2003          2004         2003
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            
OPERATING INFORMATION
APAC
    Construction backlog at March 31 (millions) (1)                                                        $   1,897    $   1,800
    Net construction job revenues (millions) (2)                                $     207    $     198     $     573    $     503
    Hot-mix asphalt production (million tons)                                         4.4          4.1          12.9         11.2
    Aggregate production (million tons)                                               6.1          5.0          12.9         12.1
    Ready-mix concrete production (million cubic yards)                               0.5          0.4           0.9          0.9
Ashland Distribution (3)
    Sales per shipping day (millions)                                           $    12.3    $    11.3     $    11.8    $    10.8
    Gross profit as a percent of sales                                               14.6%        15.0%         14.7%        15.4%
Ashland Specialty Chemical (3)
    Sales per shipping day (millions)                                           $     4.7    $     4.4     $     4.8    $     4.5
    Gross profit as a percent of sales                                               33.0%        33.4%         33.2%        34.2%
Valvoline
    Lubricant sales (million gallons)                                                47.5         48.6          91.9         92.9
    Premium lubricants (percent of U.S. branded volumes)                             21.4%        18.8%         20.4%        17.9%
Refining and Marketing (4)
    Refinery runs (thousand barrels per day)
       Crude oil refined                                                              789          853           844          842
       Other charge and blend stocks                                                  196           96           190          130
    Refined product yields (thousand barrels per day)
       Gasoline                                                                       552          483           582          525
       Distillates                                                                    235          257           266          268
       Asphalt                                                                         57           66            63           65
       Other                                                                          155          143           135          115
                                                                                 --------     --------      --------     --------
       Total                                                                          999          949         1,046          973
    Refined product sales (thousand barrels per day) (5)                            1,307        1,280         1,331        1,293
    Refining and wholesale marketing margin (per barrel) (6)                    $    1.44    $    1.71     $    1.58    $    1.82
    Speedway SuperAmerica (SSA)
       Retail outlets at March 31                                                                              1,773        2,005
       Gasoline and distillate sales (million gallons)                                763          829         1,569        1,726
       Gross margin - gasoline and distillates (per gallon)                     $   .1145    $   .1166     $   .1145    $   .1085
       Merchandise sales (millions) (7)                                         $     521    $     522     $   1,068    $   1,105
       Merchandise margin (as a percent of sales)                                    25.3%        25.5%         25.1%        24.8%

------------------------------------------------------------------------------------------------------------------------------------

(1)      Includes   APAC's   proportionate   share   of  the   backlog   of
         unconsolidated joint ventures.
(2)      Total construction job revenues, less subcontract costs.
(3)      Sales are defined as sales and operating revenues. Gross profit is
         defined as sales and  operating  revenues,  less cost of sales and
         operating expenses,  and depreciation and amortization relative to
         manufacturing assets.
(4)      Amounts represent 100% of MAP's operations,  in which Ashland owns
         a 38% interest.
(5)      Total average  daily volume of all refined  product sales to MAP's
         wholesale, branded and retail (SSA) customers.
(6)      Sales revenue less cost of refinery inputs, purchased products and
         manufacturing expenses, including depreciation.
(7)      Effective January 1, 2003, SSA adopted EITF 02-16,  "Accounting by
         a  Customer  (Including  a  Reseller)  for  Certain  Consideration
         Received from a Vendor," which requires rebates from vendors to be
         recorded as  reductions  to cost of sales.  Rebates  from  vendors
         recorded in SSA merchandise  sales for periods prior to January 1,
         2003 have not been  restated  and  included $46 million in the six
         months ended March 31, 2003.


                                       14




ITEM 2.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS

--------------------------------------------------------------------------------

RESULTS OF OPERATIONS

CURRENT  QUARTER  -  Ashland  reported  a net loss of $16  million  for the
quarter ended March 31, 2004, compared to a net loss of $39 million for the
quarter  ended  March 31,  2003.  Ashland  reported a loss from  continuing
operations of $11 million for the quarter ended March 31, 2004, compared to
a loss of $37 million for the quarter  ended March 31,  2003.  Results from
discontinued  operations,  consisting  primarily  of charges  for  asbestos
liabilities,  accounted  for the  difference  in net income and income from
continuing operations.

A 10%  increase  in  sales  revenues  and a lower  overall  cost  structure
contributed  to  improved  operating  income from  wholly-owned  businesses
compared to the  previous  winter  quarter,  which is  typically  Ashland's
weakest due to the seasonality of its businesses. Combined operating income
for the Chemicals  sector (which  includes  Ashland  Distribution,  Ashland
Specialty  Chemical  and  Valvoline)  totaled $62 million in the March 2004
quarter,  compared to $30 million for the March 2003  quarter.  Each of the
Chemicals  sector  divisions  achieved record March quarters - results from
Ashland  Distribution  nearly tripled,  Ashland  Specialty  Chemical nearly
quadrupled  and  Valvoline  was  up  33  percent.   In  the  Transportation
Construction sector,  Ashland Paving And Construction,  Inc. (APAC) reduced
its  quarter-over-quarter  operating loss by 42%. Higher  manufacturing and
crude oil costs resulted in lower profits from refining and marketing.

YEAR-TO-DATE  - Ashland  reported  net  income of $17  million  for the six
months ended March 31, 2004, compared to a net loss of $131 million for the
six months ended March 31, 2003.  Ashland  reported  income from continuing
operations of $27 million for the six months ended March 31, 2004, compared
to a loss of $38 million for the six months ended March 31,  2003.  Results
from discontinued operations,  consisting primarily of charges for asbestos
liabilities,  accounted  for the  difference  in net income and income from
continuing operations.

Management was pleased by Ashland's performance during the first six months
of fiscal 2004.  Chemicals sector operating income totaled $119 million for
the first six months of fiscal  2004,  compared to $65 million for the 2003
period.  Record March quarter  results from Ashland  Distribution,  Ashland
Specialty   Chemical  and  Valvoline   indicate  that  the  plan  to  drive
efficiency,  manage capital and grow value-creating  businesses is working.
In the Transportation  Construction sector, APAC lowered its operating loss
to $2 million for the 2004 period, compared to a loss of $56 million in the
2003  period,  reflecting  closer-to-normal  weather  and  a  reduced  cost
structure.  Higher  manufacturing  and crude oil  costs  resulted  in lower
profits from  refining and  marketing.  An analysis of operating  income by
industry segment follows.

APAC

CURRENT  QUARTER - APAC  reported an operating  loss of $33 million for the
March 2004  quarter,  compared  to a loss of $57 million for the March 2003
quarter.  The  improvement  reflected  more normal  weather  conditions,  a
reduced cost structure and a program  instituted to minimize winter losses.
Net  construction  job revenues  (total  construction  job  revenues,  less
subcontract  costs)  increased  5%  from  the  prior  year  period,   while
production  of  hot-mix  asphalt  increased  7%  and  aggregate  production
increased 22%.  Liquid  asphalt costs per ton declined 6%. Lower  equipment
costs  reflected  reorganization  and other cost cutting  efforts.  For the
March  quarter,  APAC  initiated an aggressive  program to minimize  winter
losses by shutting down certain  operations and reducing work crews.  Costs
associated with Project PASS, APAC's process

                                     15




--------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS

--------------------------------------------------------------------------------

APAC (CONTINUED)

redesign initiative, were $4 million in the March 2004 quarter, compared to
$6 million in the March 2003 quarter.

YEAR-TO-DATE  - APAC  reported an operating  loss of $2 million for the six
months ended March 31, 2004,  compared to a loss of $56 million for the six
months  ended March 31,  2003.  The  improvement  reflects the same factors
described in the current quarter comparison.  Net construction job revenues
increased  14% from the prior  year  period,  while  production  of hot-mix
asphalt  increased  15%  and  aggregate   production  increased  7%.  Costs
associated  with Project PASS were $8 million in the 2004 period,  compared
to $10 million in the 2003 period.

Looking  ahead to the summer  construction  season - during  which APAC has
historically  reported  the  majority of its  earnings - the  division  has
continued to increase its construction backlog, or jobs awarded but not yet
completed.  APAC increased the backlog by 5% to a record $1.9 billion as of
March 31, 2004. Of this amount, approximately $280 million was bid at lower
energy  prices,  and income to be recognized on the completion of this work
is expected  to be  substantially  less than  originally  anticipated.  The
completion  of  Project  Pass is on  schedule,  with  about $2  million  of
remaining costs expected to be incurred in the June 2004 quarter.

ASHLAND DISTRIBUTION

CURRENT  QUARTER -  Ashland  Distribution  reported  record  March  quarter
operating income of $19 million,  compared to $7 million for the March 2003
quarter.  Improved  customer  service  capabilities,   increased  operating
efficiency and effective cost management  enabled  Ashland  Distribution to
improve  sales per  shipping  day by 9% (of which 3%  resulted  from volume
increases)  compared  to the 2003  quarter.  The  favorable  effects of the
higher  sales were  partially  offset by a lower gross  profit  percentage,
reflecting lower margins for chemicals,  European  plastics,  environmental
services and methanol.  Selling, general and administrative (SG&A) expenses
were down $5 million  compared  to the prior year  period,  reflecting  the
Top-Quartile Cost Structure (TQCS) initiative.

YEAR-TO-DATE - Ashland Distribution reported record operating income of $32
million for the six months  ended March 31,  2004,  compared to $15 million
for the six months ended March 31, 2003. The improvement  reflects the same
factors described in the current quarter comparison. Sales per shipping day
were up 9%, including 4% from volume increases. The gross profit percentage
declined  from 15.4% to 14.7%,  reflecting  lower  margins for all business
units except domestic  plastics and composites.  SG&A expenses declined $12
million.  Income from litigation settlements and asset sales amounted to $4
million in the 2004 period compared to $7 million in the 2003 period.

ASHLAND SPECIALTY CHEMICAL

CURRENT QUARTER - Ashland Specialty  Chemical reported record March quarter
operating income of $19 million,  compared to $5 million for the March 2003
quarter.  Results from the thermoset core  businesses  (Casting  Solutions,
Composite  Polymers and  Specialty  Polymers & Adhesives)  increased  143%,
while the water treatment core businesses (Drew Industrial and Drew Marine)
increased  15%.  Higher sales  revenues and a reduced cost structure led to
the improvement,  despite slight margin pressure due to higher raw material
costs.  Sales per  shipping  day  increased  7%.  Results  of the  domestic
thermoset  businesses included four additional shipping days,  reflecting a
move to a  calendar  month end for  revenue  recognition,  which  increased
revenues by $9 million and operating income by $4 million.

                                     16




--------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS

--------------------------------------------------------------------------------

ASHLAND SPECIALTY CHEMICAL (CONTINUED)

YEAR-TO-DATE  - Operating  income for Ashland  Specialty  Chemical  was $42
million for the six months  ended March 31,  2004,  compared to $18 million
for the six months ended March 31, 2003.  Results from the  thermoset  core
businesses  increased  67%,  while  the  water  treatment  core  businesses
increased 22%. The improvement  reflects the same factors  described in the
current quarter comparison.

VALVOLINE

CURRENT QUARTER - Valvoline  reported record March quarter operating income
of $24 million,  a 33% increase  from the 2003  quarter.  Valvoline's  core
lubricant  business improved with premium product sales volumes  increasing
5%. Valvoline  Instant Oil Change (VIOC) increased  non-oil change revenues
by 6% and premium  lubricant oil changes by 3%.  Valvoline's  international
operations  improved due in large part to a 4% increase in lubricant  sales
volumes and strengthening foreign currencies.

YEAR-TO-DATE - Valvoline  reported record  operating  income of $45 million
for the six months  ended March 31, 2004,  a 41%  improvement  over the $32
million  reported for the same period in 2003.  Valvoline's  core lubricant
business  improved  with an 11%  increase  in  sales  volumes  for  premium
products.  VIOC reported  record  earnings due in part to an 8% increase in
non-oil  change  revenues,  and a 5% increase in premium  oil  changes.  In
addition, results from Valvoline's international operations improved due to
a  4%  increase  in  lubricant  sales  volumes  and  strengthening  foreign
currencies.

REFINING AND MARKETING

CURRENT  QUARTER - Operating  income from  Refining  and  Marketing,  which
consists  primarily of equity income from Ashland's 38% ownership  interest
in MAP,  amounted  to $2 million  for the  quarter  ended  March 31,  2004,
compared  to $21  million for the March 2003  quarter.  Equity  income from
MAP's  refining and wholesale  marketing  operations  declined $13 million,
reflecting a decline of 27 cents per barrel in MAP's refining and wholesale
marketing  margin,  due to higher  manufacturing  and crude oil costs.  MAP
completed a substantial  amount of planned refinery  maintenance during the
quarter and expects to run at full capacity  moving into the spring driving
season. In addition,  MAP completed a number of other projects  including a
multi-year  improvement  project at its  Catlettsburg,  Ky., refinery and a
13,000 barrels per day (bpd)  expansion of the crude oil processing unit at
its Garyville,  La.,  refinery.  The latter project increased MAP's overall
crude oil  capacity  from 935,000 bpd to 948,000  bpd.  Equity  income from
MAP's retail  operations  (Speedway  SuperAmerica and a 50% interest in the
Pilot  Travel  Centers  joint  venture)  increased  $1 million,  reflecting
decreased operating and administrative  expenses.  Ashland's administrative
and other costs related to Refining and Marketing  were  unusually high due
to  mark-to-market  charges of $4 million on margin hedges and  transaction
costs of $2 million  associated with the proposed transfer of Ashland's 38%
interest in MAP to Marathon Oil Corporation (Marathon).

On March 19, 2004,  Ashland  announced  the signing of an  agreement  under
which  it  would  transfer  its 38%  interest  in MAP and two  wholly-owned
businesses to Marathon in a transaction structured to be generally tax free
and valued at  approximately  $3.0 billion.  The two other  businesses  are
Ashland's maleic anhydride business and 61 VIOC centers. The transaction is
subject to several previously disclosed  conditions,  including approval by
Ashland's  shareholders,  customary  antitrust review,  consent from public
debt  holders  and receipt of a favorable  private  letter  ruling from the
Internal Revenue Service with respect to the tax treatment.  While there is
meaningful risk that the transaction  will not receive the favorable ruling
from the IRS,  in which  case the  transaction  would  not  close,  Ashland
believes it is more likely than not that this  transaction  will  receive a
favorable ruling. If the conditions are met, the transaction is expected to
close by the end of the 2004 calendar year.

                                     17




--------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS

--------------------------------------------------------------------------------

REFINING AND MARKETING (CONTINUED)

YEAR-TO-DATE - Operating income from Refining and Marketing amounted to $27
million for the six months  ended March 31,  2004,  compared to $45 million
for the 2003  period.  Equity  income  from MAP's  refining  and  wholesale
marketing operations declined $16 million, reflecting a 24 cents per barrel
decline in MAP's refining and wholesale  marketing margin,  due to the same
factors  described in the current  quarter  comparison.  Equity income from
MAP's retail  operations  increased  $2 million,  due to the net effects of
higher product and merchandise  margins,  partially offset by lower volumes
reflecting the sale of SSA's 190 southern stores in May 2003. Equity income
from MAP's  transportation  operations  increased  $4 million due to higher
throughput  and lower  expenses in the  December  2003  quarter.  Ashland's
administrative and other costs increased $6 million due to the same factors
described in the current quarter comparison.

CORPORATE

Corporate  expenses  amounted to $21 million in the quarter ended March 31,
2004,  compared  to $18  million  in the  March  2003  quarter,  reflecting
increased deferred  compensation costs.  Corporate expenses amounted to $42
million for the six months  ended March 31,  2004,  compared to $46 million
for the 2003  period.  The  decrease  reflects an $8 million  charge in the
December 2002 quarter for severance and other  transition  costs related to
Ashland's  program to reduce general and  administrative  costs,  partially
offset by higher deferred compensation costs in the 2004 period.

NET INTEREST AND OTHER FINANCIAL COSTS

Net interest and other financial costs declined to $29 million in the March
2004 quarter,  compared to $32 million in the March 2003  quarter.  For the
six months ended March 31, 2004,  net  interest and other  financial  costs
amounted to $59 million,  compared to $65 million for the 2003 period.  The
declines reflect a reduction in the average level of debt outstanding.

DISCONTINUED OPERATIONS

As  described  in  Notes B and F to the  Condensed  Consolidated  Financial
Statements,  Ashland's results from discontinued operations include charges
associated  with  estimated  future  asbestos   liabilities  less  probable
insurance  recoveries,   as  well  as  net  income  from  the  discontinued
operations  of  its  Electronic   Chemicals  business.   Such  amounts  are
summarized in the following table.


-------------------------------------------------------------------------------------------------------------------------
                                                                         Three months ended          Six months ended
                                                                              March 31                   March 31
                                                                       ------------------------   -----------------------
(In millions)                                                               2004          2003         2004         2003
-------------------------------------------------------------------------------------------------------------------------
                                                                                                   
PRETAX INCOME (LOSS) FROM DISCONTINUED OPERATIONS
      Reserves for asbestos-related litigation                         $      (7)   $       (7)   $     (15)   $    (162)
      Electronic Chemicals
          Results of operations                                                -             3            -            7
          Loss on disposal                                                     -             -           (1)           -
INCOME TAXES
      Reserves for asbestos-related litigation                                 2             3            6           63
      Electronic Chemicals
          Results of operations                                                -            (1)           -           (1)
          Loss on disposal                                                     -             -            -            -
                                                                       ----------   -----------   ----------   ----------
RESULTS FROM DISCONTINUED OPERATIONS (NET OF INCOME TAXES)             $      (5)   $       (2)   $     (10)   $     (93)
                                                                       ==========   ===========   ==========   ==========


                                     18




--------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS

--------------------------------------------------------------------------------

FINANCIAL POSITION

LIQUIDITY

Cash flows from operations, a major source of Ashland's liquidity, amounted
to $58 million for the six months  ended  March 31,  2004,  compared to $98
million for the six months ended March 31, 2003.  Cash  distributions  from
MAP amounted to $146 million in the 2004 period  compared to $93 million in
the 2003  period.  This  increase  was more than  offset by $64  million in
contributions to Ashland's pension plans in the 2004 period, compared to no
such  contributions  in the 2003  period,  and a $32  million  increase  in
federal tax  payments.  Ashland's  capital  requirements  for net  property
additions and dividends  exceeded cash flows from operations by $50 million
for the six months ended March 31, 2004.  Ashland  anticipates  meeting its
remaining 2004 capital  requirements  for property  additions and dividends
from  internally   generated  funds.   Under  the  terms  of  the  proposed
transaction with Marathon,  MAP will not make quarterly cash  distributions
to Ashland and Marathon until the closing of the transaction.

Ashland's  financial  position  has  enabled it to obtain  capital  for its
financing needs and to maintain investment grade ratings on its senior debt
of Baa2 from Moody's and BBB from Standard & Poor's (S&P).  In August 2003,
S&P revised its outlook on Ashland to  negative  from  stable,  and lowered
Ashland's  commercial paper rating to A-3 from A-2. In March 2004,  Moody's
took a similar action after the  announcement  of the proposed  transaction
with  Marathon and lowered  Ashland's  commercial  paper rating to P-3 from
P-2. These actions materially restrict,  and could at times eliminate,  the
availability of the commercial  paper market to Ashland.  However,  Ashland
was able to utilize  such  markets in the March  2004  quarter  and had $17
million of commercial paper outstanding at March 31, 2004.  Ashland has two
revolving credit agreements providing for up to $350 million in borrowings.
Although  Ashland  borrowed  $175 million  under these  agreements to repay
commercial  paper shortly  after the S&P  downgrade,  the revolving  credit
agreements  were not used during the six months  ended March 31,  2004.  In
April 2004,  Ashland  executed an additional $150 million  revolving credit
agreement  which  expires  March  31,  2005.  Ashland  intends  to use this
facility  to fund  currently  maturing  long-term  debt and  certain  lease
payments.  While the revolving credit agreements contain covenants limiting
new borrowings based on Ashland's  stockholders'  equity,  these agreements
would have permitted an additional  $1.9 billion of borrowings at March 31,
2004. Additional  permissible  borrowings are increased (decreased) by 150%
of any increase (decrease) in stockholders' equity.

At March 31, 2004,  working  capital  (excluding  debt due within one year)
amounted to $768  million,  compared to $703 million at September 30, 2003,
and $771 million at March 31, 2003.  The amount at March 31, 2003  included
net  assets  of  $167  million  of  the  discontinued  Electronic  Chemical
operations held for sale.  Ashland's working capital is affected by its use
of  the  LIFO  method  of  inventory  valuation.  The  LIFO  method  valued
inventories below their replacement costs by $81 million at March 31, 2004,
compared to $78 million at September 30, 2003, and $70 million at March 31,
2003.  Liquid  assets  (cash,  cash  equivalents  and accounts  receivable)
amounted to 89% of current  liabilities at March 31, 2004,  compared to 92%
at September 30, 2003,  and 75% at March 31, 2003. The  improvements  since
last March  reflect a  combination  of an  increase  of $98 million in cash
equivalents  and a  reduction  of $158  million  in  short-term  debt  that
resulted principally from the sale of the Electronic Chemicals business.

                                     19



--------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS

--------------------------------------------------------------------------------

CAPITAL RESOURCES

For the six months ended March 31, 2004, property additions amounted to $86
million, compared to $52 million for the 2003 period. The increase reflects
a $33 million  buyout of an operating  lease for a portion of the buildings
on Ashland's Dublin, Ohio campus.

Ashland's  debt  level  amounted  to $1.6  billion  at March  31,  2004 and
September 30, 2003,  and $1.8 billion at March 31, 2003.  Debt as a percent
of capital employed amounted to 40.1% at March 31, 2004,  compared to 41.7%
at  September  30, 2003,  and 46.8% at March 31,  2003.  At March 31, 2004,
Ashland's debt included $32 million of floating-rate  obligations,  and the
interest  rates on an additional  $183 million of  fixed-rate,  medium-term
notes were  effectively  converted to floating rates through  interest rate
swap agreements. In addition, Ashland's costs under its sale of receivables
program  and  various  operating  leases  are  based  on the  floating-rate
interest  costs  on $184  million  of  third-party  debt  underlying  those
transactions.   As  a  result,  Ashland  was  exposed  to  fluctuations  in
short-term  interest rates on $399 million of debt obligations at March 31,
2004.

ASBESTOS-RELATED LITIGATION AND ENVIRONMENTAL REMEDIATION

For a discussion of Ashland's asbestos-related litigation and environmental
remediation  matters,  see Note F to the Condensed  Consolidated  Financial
Statements.

FORWARD-LOOKING STATEMENTS

Management's  Discussion  and  Analysis  (MD&A)  contains   forward-looking
statements, within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the  Securities  Exchange  Act of 1934,  with respect to
various information in the Results of Operations,  Financial Position,  and
Asbestos-Related  Litigation and Environmental Remediation sections of this
MD&A.  These  statements  include  those that refer to Ashland's  operating
performance,  earnings and expectations about the MAP transaction. Although
Ashland believes its expectations are based on reasonable  assumptions,  it
cannot assure the  expectations  reflected  herein will be achieved.  These
forward-looking  statements are based upon internal  forecasts and analyses
of current and future market  conditions and trends,  management  plans and
strategies,  weather, operating efficiencies and economic conditions,  such
as prices, supply and demand, cost of raw materials,  and legal proceedings
and claims  (including  environmental and asbestos matters) and are subject
to a number of risks,  uncertainties,  and  assumptions  that  could  cause
actual  results  to  differ   materially   from  those   described  in  the
forward-looking  statements.  The  risks,  uncertainties,  and  assumptions
include the  possibility  that Ashland will be unable to fully  realize the
benefits  anticipated from the MAP transaction;  the possibility of failing
to receive a  favorable  ruling  from the  Internal  Revenue  Service;  the
possibility that Ashland fails to obtain the approval of its  shareholders;
the  possibility  that the transaction may not close or that Ashland may be
required  to modify  some aspect of the  transaction  to obtain  regulatory
approvals. Other factors and risks affecting Ashland are contained in Risks
and  Uncertainties  in Note A to the Consolidated  Financial  Statements in
Ashland's Annual Report on Form 10-K, as amended, for the fiscal year ended
September 30, 2003. Ashland undertakes no obligation to subsequently update
or revise these forward-looking statements.

                                     20




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Ashland's  market risk  exposure at March 31, 2004 is generally  consistent
with the types and amounts of market risk exposures  presented in Ashland's
Annual Report on Form 10-K, as amended, for the fiscal year ended September
30, 2003.

ITEM 4. CONTROLS AND PROCEDURES

(a)      As of the end of the  period  covered  by this  quarterly  report,
         Ashland,  under the supervision and with the  participation of its
         management,  including  Ashland's Chief Executive  Officer and its
         Chief Financial Officer,  evaluated the effectiveness of Ashland's
         disclosure  controls and procedures pursuant to Rule 13a-15(b) and
         15d-15(b)  promulgated under the Securities  Exchange Act of 1934,
         as  amended.  Based  upon that  evaluation,  the  Chief  Executive
         Officer  and  Chief  Financial  Officer  have  concluded  that the
         disclosure controls and procedures were effective.

(b)      There were no significant  changes in Ashland's  internal  control
         over  financial  reporting,  or in other  factors,  that  occurred
         during  the  period  covered by this  quarterly  report  that have
         materially  affected,  or  are  reasonably  likely  to  materially
         affect, Ashland's internal control over financial reporting.


                                     21




                        PART II - OTHER INFORMATION
                        ---------------------------

--------------------------------------------------------------------------------

     ITEM 1.  LEGAL PROCEEDINGS

     ASBESTOS-RELATED  LITIGATION - For  additional  information  regarding
liabilities  arising from  asbestos-related  litigation,  see Note F to the
Condensed  Consolidated  Financial  Statements in this quarterly  report on
Form 10-Q.

     U.S.  DEPARTMENT  OF JUSTICE  ANTITRUST  DIVISION  INVESTIGATION  - In
November  2003,  Ashland  received a subpoena  relating to a foundry resins
grand jury  investigation.  Ashland is providing  responsive records to the
subpoena.  As is  frequently  the  case  when  such  investigations  are in
progress,  a civil  action  was  filed in  federal  district  court for the
Northern  District of Illinois in April  2004.  The  plaintiff  seeks class
action  status for a class of  customers  of foundry  resins.  Ashland will
vigorously defend this action.

     ENVIRONMENTAL  PROCEEDINGS  -  (1)  Under  the  federal  Comprehensive
Environmental  Response  Compensation  and  Liability  Act (as amended) and
similar state laws,  Ashland may be subject to joint and several  liability
for  clean-up  costs in  connection  with  alleged  releases  of  hazardous
substances  at  sites  where  it  has  been  identified  as a  "potentially
responsible party" ("PRP").  As of March 31, 2004, Ashland had been named a
PRP at 99 waste  treatment  or disposal  sites.  These sites are  currently
subject to ongoing  investigation and remedial activities,  overseen by the
United States Environmental  Protection Agency ("USEPA") or a state agency,
in which  Ashland is  typically  participating  as a member of a PRP group.
Generally,  the type of relief sought includes  remediation of contaminated
soil and/or groundwater,  reimbursement for past costs of site clean-up and
administrative  oversight,  and/or  long-term  monitoring of  environmental
conditions  at the  sites.  The  ultimate  costs are not  predictable  with
assurance.  For additional information regarding  environmental matters and
reserves,  see Note F to the Condensed Consolidated Financial Statements in
this quarterly report on Form 10-Q.

     (2) On May 13, 2002,  Ashland  entered into a plea  agreement with the
U.S.  Attorney's Office for the District of Minnesota and the Environmental
Crimes Section of the U.S.  Department of Justice  regarding a May 16, 1997
sewer fire at the St. Paul Park, Minnesota refinery,  which is now owned by
MAP. As part of the plea  agreement,  Ashland  entered  guilty pleas to two
federal misdemeanors, paid a $3.5 million fine related to violations of the
Clean Air Act ("CAA"),  paid $3.55 million as  restitution to the employees
injured in the fire,  and paid $200,000 as  restitution  to the  responding
rescue units.  Ashland also agreed to complete  certain upgrades to the St.
Paul Park  refinery's  process  sewers,  junction  boxes and drains to meet
standards  established  by  Subpart  QQQ  of  the  New  Source  Performance
Standards of the CAA (the "Refinery Upgrades").

     In addition,  as part of the plea  agreement,  Ashland  entered into a
deferred prosecution agreement,  wherein prosecution of a separate count of
the indictment charging Ashland with violating Subpart QQQ was deferred for
four years.  The deferred  prosecution  agreement  provides that if Ashland
satisfies the terms and  conditions of the plea agreement and completes the
Refinery Upgrades,  the deferred  prosecution  agreement will terminate and
the United States will dismiss that count with prejudice.  If, however,  it
is  determined  by the court that  Ashland  willfully  violated any term or
condition  of the plea  agreement  during the deferral  period,  the United
States may re-initiate prosecution of the deferred count of the indictment,
using an admission  made by Ashland for purposes of the plea agreement that
Ashland  knowingly  operated  the St. Paul Park  refinery in  violation  of
certain Subpart QQQ standards.

     As part of its  sentence,  Ashland  was placed on  probation  for five
years.  The primary  condition of probation is an obligation  not to commit
future federal,  state,  or local crimes.  If Ashland were to commit such a
crime,  it would be subject not only to prosecution for that new violation,
but the  government  could  also seek to revoke  Ashland's  probation.  The
probation  office has retained an independent  environmental  consultant to
review and monitor Ashland's compliance with applicable environmental


                                     22


requirements  and the terms and  conditions  of  probation.  The court also
included  other  customary  terms  and  restrictions  of  probation  in its
probation order.

     (3)  Pursuant  to  a  1988  Resource  Conservation  and  Recovery  Act
Administrative Consent Order ("Consent Order"), Ashland is remediating soil
and groundwater at a former chemical distribution facility site in Lansing,
Michigan. The USEPA has asserted that Ashland has not complied with certain
provisions  of the  Consent  Order  and,  although  Ashland  disputes  this
assertion,  Ashland  and the USEPA  have  agreed to  resolve  the  dispute.
Ashland has agreed to payment of a $650,000  penalty,  pending agreement on
settlement  terms and  conditions.  Ashland is  continuing to work with the
USEPA to define Ashland's  continuing  obligations under the Consent Order.
No formal penalty proceeding has been initiated.

     (4) In 1990,  contamination of groundwater at Ashland's former Canton,
Ohio  refinery  (now owned and  operated by MAP) was first  identified  and
reported to Ohio's  Environmental  Protection  Agency ("OEPA").  Since that
time,  Ashland has  voluntarily  conducted  investigation  and  remediation
activities  and regularly  communicated  with OEPA  regarding  this matter.
Ashland and the state of Ohio have exchanged  Consent Order drafts and have
met to negotiate the terms of such an order. The state filed a complaint in
February  2004,  but  simultaneously  expressed  an interest in  continuing
Consent  Order  settlement   discussions.   Following  the  filing  of  the
complaint,  Ashland,  OEPA and Ohio's  Office of the Attorney  General have
continued to work to finalize a Consent  Order.  The state has advised that
it will assess a penalty as part of the overall  settlement and has made an
initial request for $650,000.

     SHAREHOLDER  DERIVATIVE  LITIGATION  - On  August  16,  2002,  Central
Laborers'   Pension  Fund,   derivatively  as  a  shareholder  of  Ashland,
instituted  an action in the Circuit  Court of  Kentucky  in Kenton  County
against Ashland's then-serving Board of Directors. On motion of Ashland and
the other  defendants,  the case was removed to the United States  District
Court, Eastern District of Kentucky,  Covington Division. The case has been
remanded  to the state  court.  Ashland  has filed a Motion to Dismiss  the
Complaint.  The  action is  purportedly  filed on behalf  of  Ashland,  and
asserts the following  causes of action  against the  Directors:  breach of
fiduciary  duty,  abuse  of  control,  gross  mismanagement,  and  waste of
corporate assets.  The suit also names Paul W. Chellgren,  the then-serving
Chief  Executive  Officer  and  Chairman  of the Board,  and James R. Boyd,
former Senior Vice  President and Group  Operating  Officer,  as individual
defendants,  and it seeks to recover an unstated sum from them individually
alleging unjust enrichment from various transactions completed during their
tenure with  Ashland.  The suit further seeks an  unspecified  sum from Mr.
Chellgren   individually   based  upon  alleged   usurpation  of  corporate
opportunities.  The  suit  also  names  J.  Marvin  Quin,  Ashland's  Chief
Financial  Officer,   as  well  as  three  former  employees  of  Ashland's
wholly-owned  subsidiary,  APAC, as individual  defendants and alleges that
they  participated  in  the  preparation  and  filing  of  false  financial
statements  during fiscal years 1999 - 2001. The suit further names Ernst &
Young  LLP  ("E&Y"),  as  a  defendant,  alleging  professional  accounting
malpractice  and  negligence in the conduct of its audit of Ashland's  1999
and 2000 financial statements,  respectively,  as well as alleging that E&Y
aided and abetted the  individual  defendants  in their  alleged  breach of
duties.  The  complaint  seeks to  recover,  jointly  and  severally,  from
defendants  an unstated  sum of  compensatory  and  punitive  damages.  The
complaint seeks equitable and/or injunctive relief to avoid continuing harm
from alleged  ongoing illegal acts, and seeks a disgorgement of defendants'
alleged  insider-trading  gains,  in  addition to the  reasonable  cost and
expenses  incurred in bringing  the  complaint,  including  attorneys'  and
experts' fees.

     OTHER LEGAL  PROCEEDINGS - In addition to the matters described above,
there are various claims,  lawsuits and administrative  proceedings pending
or threatened against Ashland and its current and former subsidiaries. Such
actions are with respect to commercial  matters,  product liability,  toxic
tort liability,  and other  environmental  matters,  which seek remedies or
damages, some of which are for substantial amounts. While these actions are
being contested, their outcome is not predictable.

                                    23



     ITEM 5. OTHER INFORMATION

     On March 19, 2004, Ashland announced the signing of an agreement under
which it would transfer its 38 percent interest in MAP and two wholly-owned
businesses to Marathon Oil  Corporation  in a transaction  structured to be
generally tax free and valued at approximately $3.0 billion.  The two other
businesses are Ashland's maleic anhydride business and 61 Valvoline Instant
Oil Change centers in Michigan and northwest Ohio,  which are valued at $94
million.

     Under the terms of the agreement, Ashland's shareholders would receive
Marathon common stock with a value of $315 million (or approximately  $4.50
per  Ashland  share based on the number of shares  currently  outstanding).
Ashland   would   receive  cash  and  MAP  accounts   receivable   totaling
approximately $2.7 billion.  MAP will not make quarterly cash distributions
to Ashland  and  Marathon  between  the  signing of the  agreement  and the
closing of the  transaction.  As a result,  the final  amount  received  by
Ashland  would be  increased  by an amount  equal to 38 percent of the cash
accumulated  from  operations  during the period prior to closing.  Ashland
would use a substantial  portion of the transaction  proceeds to retire all
or most of the  company's  outstanding  debt and  certain  other  financial
obligations.  After  payment  of these  obligations,  Ashland  would have a
material net cash position.

     The  transaction  is subject  to,  among  other  things,  approval  by
Ashland's  shareholders,  customary  antitrust review,  consent from public
debt  holders  and receipt of a favorable  private  letter  ruling from the
Internal  Revenue  Service ("IRS") with respect to the tax treatment of the
transaction. There is meaningful risk that the transaction will not receive
the favorable ruling from the IRS, in which case the transaction  would not
proceed.  However,  Ashland  believes  it is more likely than not that this
transaction will receive a favorable  ruling.  If these conditions are met,
the transaction is expected to close by the end of the 2004 calendar year.

     The  foregoing  description  of the  transaction  is  qualified in its
entirety by  reference to the terms of the  agreements  which were filed as
Exhibits to Ashland's Form 8-K filed on March 22, 2004.

     ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

    (a) Exhibits
        --------

4        Amendment  No.  1  dated  as of  March  18,  2004,  to the  Rights
         Agreement,  dated as of May 16, 1996, between Ashland Inc. and the
         Rights Agent.

10.1     Amendment  No. 2 dated  as of March  17,  2004,  to the  Put/Call,
         Registration  Rights and Standstill  Agreement  among Marathon Oil
         Company, Ashland Inc. and Marathon Ashland Petroleum LLC.

10.2     Amendment  No.1 dated as of March 17,  2004,  to the  Amended  and
         Restated Limited  Liability  Company Agreement of Marathon Ashland
         Petroleum LLC.

12       Computation of Ratio of Earnings to Fixed Charges.

31.1     Certificate  of James  J.  O'Brien,  Chief  Executive  Officer  of
         Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
         18 U.S.C. Section 1350.

31.2     Certificate of J. Marvin Quin, Chief Financial  Officer of Ashland
         pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002, U.S.C.
         Section 1350.

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.

                                    24



     (b) Reports on Form 8-K
         -------------------

         During the quarter ended March 31, 2004, and between such date and
         the  filing  of  this  quarterly  report  on  Form  10-Q,  Ashland
         furnished the following reports on Form 8-K:

(1)      A report on Form 8-K dated January 7, 2004  announcing  that Garry
         M.  Higdem was  elected as Senior  Vice  President  of Ashland and
         President  of Ashland  Paving And  Construction,  Inc.,  effective
         January 12, 2004.

(2)      A report on Form 8-K dated  January 26, 2004  reporting  Ashland's
         first quarter fiscal 2004 results.

(3)      A  report  on  Form  8-K  dated  January  26,  2004  containing  a
         Regulation FD disclosure.

(4)      A  report  on Form  8-K  dated  February  24,  2004  containing  a
         Regulation FD disclosure.

(5)      A report on Form 8-K dated March 22, 2004  announcing  the signing
         of an agreement  under which Ashland would transfer its 38 percent
         interest in Marathon  Ashland  Petroleum LLC and two  wholly-owned
         businesses to Marathon Oil Corporation in a transaction structured
         to be generally tax free and valued at approximately $3.0 billion.
         The two other businesses are Ashland's  maleic anhydride  business
         and 61  Valvoline  Instant  Oil  Change  centers in  Michigan  and
         northwest Ohio.

(6)      A report on Form 8-K dated April 7, 2004  containing  a Regulation
         FD disclosure.

(7)      A report on Form 8-K dated April 15, 2004 announcing that Lamar M.
         Chambers  has  been  elected  Vice  President  and  Controller  of
         Ashland, effective May 1, 2004.

(8)      A report on Form 8-K dated April 26, 2004  containing a Regulation
         FD disclosure.

(9)      A report on Form 8-K  dated  April 26,  2004  reporting  Ashland's
         second quarter fiscal 2004 results.


                                       25





                                 SIGNATURE

     Pursuant to the  requirements 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)

Date:  May 11, 2004                        /s/ J. Marvin Quin
                                           --------------------------------
                                           J. Marvin Quin
                                           Senior Vice President and
                                           Chief Financial Officer (on behalf
                                           of the Registrant as principal
                                           financial officer)




                                     26





                               EXHIBIT INDEX

Exhibit
No.                            Description
-------  ------------------------------------------------------------------
4        Amendment  No.  1  dated  as of  March  18,  2004,  to the  Rights
         Agreement,  dated as of May 16, 1996, between Ashland Inc. and the
         Rights Agent.

10.1     Amendment  No. 2 dated  as of March  17,  2004,  to the  Put/Call,
         Registration  Rights and Standstill  Agreement  among Marathon Oil
         Company, Ashland Inc. and Marathon Ashland Petroleum LLC.

10.2     Amendment  No. 1 dated as of March 17,  2004,  to the  Amended and
         Restated Limited  Liability  Company Agreement of Marathon Ashland
         Petroleum LLC.

12       Computation of Ratio of Earnings to Fixed Charges.

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, U.S.C.
         Section 1350.


                                       27