Please turn to Slide 3 for our second quarter highlights. Reported earnings per share from continuing operations were $1.13 in the March 2012 quarter. When adjusted for key items which I will cover shortly, EPS was $1.52 as compared with $0.97 in a year ago quarter. Let me note that the $0.97 in the prior year does not include the results of ISP or the related financing cost. This is the only time this morning that we will present data in this manner. For the rest of the presentation and to aide in your analysis we will present results on a pro forma basis which includes the results of ISP in prior periods.Sales totaled $2.1 billion a 2% increase over the prior year on a pro forma basis. Operating margin was consistent between all periods roughly 10.5% of sales. Our adjusted EBITDA was $329 million 2% above the $322 million of pro forma adjusted EBITDA in the prior year quarter. EBITDA as a percent of sales was nearly 16%. Once again Specialty Ingredients turned in the strongest performance during the quarter increasing earnings by more than 10% on a pro forma basis. We generated $141 million of free cash flow during the quarter due to a combination of good business performance and improvement in our trade working capital as a percent of sales. Slide 4 details our key items. In total three key items had a net unfavorable EPS impact on continuing operations of $0.39 in the March 2012 quarter. The first key item is a $3 million after-tax charge or a negative $0.03 per share related to stepped up inventory values from the ISP acquisition. This key item arose from a refinement of our original purchase accounting calculations. The second key item is a $12 million after-tax charge or a negative $0.16 per share related to the ISP integration and cost restructuring efforts we previously described. The majority of this charge stem from the consolidation of facilities in the Wilmington, Delaware area. The resultant savings now complete the strategic cost portion of our overall cost reduction program. This key item also included a small benefit related to an update for our Water Technologies severance accrual. But previously described 6 to $7 million cost reduction project in Water Technologies has been completed with the cost to achieve these savings being somewhat reduced.
The last key item is a $16 million after-tax charge or a negative $0.20 per share related to a write-off of pre-construction cost for a previously planned Greenfield manufacturing facility in the north of China. This write-off includes cost associated with upfront planning and design, initial engineering and land. This project has been suspended since 2008 as we evaluated the projects benefits and the projected returns. The decision to write-off this upfront cost will allow us to avoid an estimated $35 million in additional cost while shipping our capital investment focused to higher return projects.In year ago quarter four key items combined for a net favorable impact on earnings of $1.29 per share. With the largest item being the call out of our actuarial gain on pension and [no PEP] expenses, while pension adjustments will typically occur only in the fourth quarter, the sale of Ashland distribution led to a pension re-measurement in the year ago quarter and to the callout item shown here, to aide in your analysis first that the peer group, Ashland’s results included $29 million of intangible amortization expense during the March 2012 quarter. We carry higher than average amortization due to our corporate transformation and prior acquisitions. Without this amortization earnings would be roughly $0.25 higher or $1.77 per share. Please turn to Slide 5 for Ashland’s adjusted pro forma results. As a reminder results are presented on a pro forma basis which includes a full quarter of ISP in the March 2011 quarter. The year ago quarter also includes stepped up depreciation and amortization related to purchase accounting. As such Ashland’s March quarter sales increased 2% over the prior year to $2.1 billion, excluding currency sales would have been up roughly 3%. Read the rest of this transcript for free on seekingalpha.com