Ashland ( ASH), the chemicals maker, posted a big drop in profit in its fiscal third quarter and blamed the performance, essentially, on taxes.

The company, suffering along with the chemical sector at large as the recession severely reduces demand for its products, broke down its earnings in about six different ways in its quarterly report Friday: operating income, net income, adjusted pro forma results, income from continuing operations, "unadjusted earnings," "cash flows from operating activities from continuing operations."

It was hard to keep it all straight.

What was not hard to keep straight was that the company's actual business has and will continue to be moribund. Ashland boss James O'Brien, in a prepared statement, warned that "demand could remain flat for the foreseeable future due to global macroeconomic dynamics."

That outlook, however vague, did not appear to please investors. In morning trading Friday, Ashland stock fell 12% to $27.37 on heavy volume.

Sifting through the innumerable figures for Ashland's third-quarter results, one found a bottom line of $50 million, or 66 cents a share, which would compare unfavorably -- a 31% decline -- to the year-ago period's $72 million, or $1.13 a share.

But there was, of course, a long list of special, one-time, extraordinary items to account for. For example: severance and "accelerated depreciation charges" of $16 million. Also, a non-cash charge of $10 million related to the paying down of a $750 million bridge loan. And there was an unfavorable $8 million tax judgment "in a foreign jurisdiction."

On a per-share basis, Ashland said this all added up to 33 cents a share in one-time charges.

Analysts, who often exclude these sorts of things from their projections, were looking for Ashland to post EPS for the quarter of 92 cents a share. Excluding the above 33 cents, it would appear that the company bested expectations.

Ashland's revenue was a little easier to figure out. It fell 8% to $2 billion from $2.2 billion a year ago as demand slouched amid the recession.

Ashland said only its consumer products group (which includes the Valvoline motor oil line) notched gains in sales volumes compared with a year ago. Sales there grew 3%.

"Our short-term focus continues to be on generating cash and paying down debt," O'Brien said. The company bought rival Hercules for $2.6 billion in a deal that closed in November, taking on a big debt burden in the process.

But one of the company's biggest problems, it seemed to indicate in its earnings release, was the "unfavorable adjustment to income tax expense" that the company had to suffer through in June, an adjustment it was forced to make, according to Ashland, because it's looking to book more business in the U.S.
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