<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER 31,1993
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-1070
OLIN CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 13-1872319
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
120 LONG RIDGE ROAD STAMFORD, 06904 (ZIP CODE)
CONNECTICUT (ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (203) 356-2000
----------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -----------------------
<S> <C>
Common Stock New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
Series A Conversion Preferred Stock New York Stock Exchange
</TABLE>
----------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
----------------
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO .
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [X]
----------------
AS OF JANUARY 31, 1994, THE AGGREGATE MARKET VALUE OF REGISTRANT'S VOTING
STOCK HELD BY NON-AFFILIATES OF REGISTRANT WAS APPROXIMATELY $1,005,776,656.
THE APPRAISED VALUE OF THE ESOP PREFERRED SHARES AS INDICATED IN THE MOST
RECENT INDEPENDENT APPRAISER'S QUARTERLY REPORT WAS USED IN DETERMINING THE
MARKET VALUE OF SUCH SHARES.
----------------
AS OF JANUARY 31, 1994, 19,110,486 SHARES OF THE REGISTRANT'S COMMON STOCK WERE
OUTSTANDING.
----------------
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED BY REFERENCE IN THIS FORM
10-K AS INDICATED HEREIN:
<TABLE>
<CAPTION>
PART OF 10-K
DOCUMENT INTO WHICH INCORPORATED
-------- -----------------------
<S> <C>
1993 Annual Report to Shareholders of Olin Parts I, II, and IV
Proxy Statement relating to Olin's 1994 Part III
Annual Meeting of Shareholders
</TABLE>
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<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Olin Corporation is a Virginia corporation, incorporated in 1892, having its
principal executive offices in Stamford, Connecticut. It is a manufacturer
concentrated in chemicals, metals, defense-related products and services, and
ammunition. The chemicals segment is divided into three areas or divisions:
Chemicals, Chlor-Alkali and Electronic Materials. Chemicals includes industrial
isocyanurates and acids, flexible urethanes, pool chemicals, performance
urethanes, biocides and surfactants and fluids. Chlor-alkali includes chlor-
alkali products, sodium hydrosulfite and high strength bleach products.
Electronic Materials includes image-forming and related specialty chemicals and
electronic interconnect materials and services. Products in the metals segment
include copper and copper alloy sheet, strip, rod, tube and fabricated parts
and stainless steel strip. The defense and ammunition segment includes small,
medium and large caliber military ammunition, sporting ammunition and advanced
technology products and services for aerospace and defense customers.
Information as to the sales and assets attributable to each of Olin's
industry segments for each of the last ten fiscal years appears on page 19 of
the 1993 Annual Report to Shareholders of Olin ("1993 Shareholders Report") and
in Exhibit 13 hereto. Such information with respect to the last three fiscal
years is incorporated by reference in this Report. Information as to operating
income of Olin's industry segments for each of the last three fiscal years
contained in the Note "Segment Information" of the Notes to Financial
Statements on pages 28 and 29 of the 1993 Shareholders Report and in Exhibit 13
hereto is incorporated herein by reference.
The term "Olin" as used herein means Olin Corporation and its subsidiaries
unless the context indicates otherwise.
1
<PAGE>
PRODUCTS AND SERVICES
The following is a list of the principal and certain other products and
services provided by Olin and its affiliates as of December 31, 1993 within
each industry segment. Principal products on the basis of annual revenues are
highlighted in bold face.
CHEMICALS
<TABLE>
<CAPTION>
MAJOR RAW MATERIALS
PRODUCT LINE & COMPONENTS FOR
OR DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES
------------ ------------------------- ------------------------ ---------------------------- ---------------------
<C> <C> <S> <C> <C>
Chlor-alkali
Chlor-alkali CHLORINE/CAUSTIC SODA Pulp & paper processing, Augusta, GA salt, electricity
chemical manufacturing, Charleston, TN
water purification, McIntosh, AL
manufacture of vinyl Niagara Falls, NY (Niachlor)
chloride, bleach
- ------------------------------------------------------------------------------------------------------------------------------------
Other Chlor-alkali Sodium Hydrosulfite Paper, textile & clay Augusta, GA caustic soda,
Products bleaching Charleston, TN sulfuric acid,
Salto, Brazil sulfur dioxide
---------------------------------------------------------------------------------------------------------------
HyPure(TM) products Industrial & Charleston, TN chlorine, caustic
institutional cleaners, soda
textile bleaching
- ------------------------------------------------------------------------------------------------------------------------------------
Chemicals
Urethanes TOLUENE DIISOCYANATE Lake Charles, LA di-nitrotoluene,
(TDI) Intermediate for Fukuoka, Japan (Kyodo chlorine, ammonia,
flexible foam used in TDI Limited Company) natural gas
furniture,
Flexible polyols bedding, carpet Brandenburg, KY propylene oxide,
underlay, Punta Camacho, Venezuela ethylene oxide
transportation, (Etoxyl, C.A.)
packaging Ibaraki-ken, Japan
(Asahi-Olin Ltd.)
---------------------------------------------------------------------------------------------------------------
Urethane systems Packaging & insulation Ibaraki-ken, Japan polyols, methylene
(Asahi-Olin, Ltd.) diphenyl diisocyanate
Salto, Brazil
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial CDB(R) Chlorinated Sanitizers for S. Charleston, WV chlorine, caustic
Isocyanurates isocyanurates industrial & household Lake Charles, LA soda, urea
cleaners Salto, Brazil
---------------------------------------------------------------------------------------------------------------
Virgin & regenerated Petroleum refining, Beaumont, TX sulfur, oxygen
sulfuric acid agricultural chemicals Shreveport, LA
- ------------------------------------------------------------------------------------------------------------------------------------
Pool Chemicals HTH(R), SOCK-IT(R), Residential & commercial Charleston, TN chlorine, lime,
PULSAR(R), SUN-BURST(TM), pool sanitizing, water Igarassu, Brazil (Nordesclor caustic soda
DURATION(R) & CCH(R) purification S.A.)
CALCIUM HYPOCHLORITE Kempton Park, S. Africa
(Aquachlor
(Proprietary) Ltd.)
Brisbane, Australia
---------------------------------------------------------------------------------------------------------------
PACE(R), SUN(R) Residential & commercial Lake Charles, LA chlorine, caustic
CHLORINATED pool sanitizing, water Livonia, MI soda, urea
ISOCYANURATES purification S. Charleston, WV
Amboise, France
(Hydrochim, S.A.)
- ------------------------------------------------------------------------------------------------------------------------------------
Performance Aliphatic isocyanates Coatings, elastomers, Lake Charles, LA chlorine, specialty
Urethanes adhesives & sealants aliphatic amines
---------------------------------------------------------------------------------------------------------------
Specialty polyols Elastomers, adhesives, Brandenburg, KY propylene oxide,
coatings, sealants & Ibaraki-ken, Japan ethylene oxide
rigid foam (Asahi-Olin, Ltd.)
</TABLE>
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* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated. Sites
manufacture, distribute or market one or more of the identified products or
services.
2
<PAGE>
CHEMICALS (CONT'D)
<TABLE>
<CAPTION>
MAJOR RAW MATERIALS
PRODUCT LINE PRODUCTS PLANTS & COMPONENTS FOR
OR DIVISION & SERVICES MAJOR END-USES & FACILITIES* PRODUCTS/SERVICES
------------ ------------------------- ------------------------ -------------------------------- -------------------
<C> <C> <S> <C> <C>
Hydrazine Hydrazine solutions & Intermediate in blowing Lake Charles, LA chlorine, caustic
hydrazine-based agents & agricultural McIntosh, AL soda, ammonia,
propellants chemicals; boiler water dimethylamine,
treatment, rocket & monomethylamine
satellite propellants
- -----------------------------------------------------------------------------------------------------------------------
Biocides Zinc Omadine(R) Biocide Antidandruff agents Rochester, NY pyridine, zinc
& Sodium Omadine(R) in shampoo, preservative Swords, Ireland salts, chlorine
Biocide in metal working fluids,
coatings,
adhesives, plastics, an-
tifouling agent in
marine paints
-----------------------------------------------------------------------------------------------------------------
Custom chemicals Chemical intermediates Rochester, NY
manufacturing
- -----------------------------------------------------------------------------------------------------------------------
Organics Anionic & nonionic Household, industrial & Brandenburg, KY ethylene oxide,
surfactants, glycols, institutional cleaners, Punta Camacho, propylene oxide
glycol ethers, fluids basestocks for water Venezuela (Etoxyl, C.A.)
based metal-
working/hydraulic fluids
- -----------------------------------------------------------------------------------------------------------------------
Electronic Materials
Electronic High purity acids & Used as process aids in Chandler, AZ various acids
Chemicals solvents, dopants, semi-conductor Nazareth, PA & solvents,
vapor deposition manufacturing Seward, IL ammonia-based
chemicals, specialty etchants
etchants
-----------------------------------------------------------------------------------------------------------------
Photoresists & polyimides Used as semiconductor Brandenburg, KY diazo compounds,
components and/or as East Providence, RI (OCG rubber polymers,
process aids in Microelectronic novolak polymers,
semiconductor Materials, Inc.) solvents,
manufacturing Tempe AZ (OCG photoinitiators,
Microelectronic polyimide polymers
Materials, Inc.)
Zwijndrecht, Belgium (OCG
Microelectronic Materials N.V.)
Shizuoka, Japan (Fuji-Hunt
Electronics Technology
Co., Ltd.)
Basle, Switzerland (OCG
Microelectronic Materials AG)
-----------------------------------------------------------------------------------------------------------------
Conductive coatings & Membrane keyboards, Ontario, CA various precious
adhesives, polymer medical devices, defense metals
thick film electronics
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Toners, developers Used in computer Berea, OH resins,
printers Kallo, Belgium hydrocarbons
</TABLE>
- --------------------------------------------------------------------------------
* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated. Sites
manufacture, distribute or market one or more of the identified products or
services.
3
<PAGE>
CHEMICALS (CONT'D)
<TABLE>
<CAPTION>
MAJOR RAW MATERIALS
PRODUCT LINE PRODUCTS PLANTS & COMPONENTS FOR
OR DIVISION & SERVICES MAJOR END-USES & FACILITIES* PRODUCTS/SERVICES
------------ ------------------------ ------------------------ ------------------------- ---------------------
<C> <C> <S> <C> <C>
Interconnect High performance, All industry market New Bedford, MA all metals, metal
Materials high reliability, segments; computer, (Aegis, Inc.) alloys, metal
hermetic metal communications, medical, matrix composites,
packages for the industrial, special alloys and
microelectronics instrumentation, glasses
industry automotive, consumer,
aerospace and military
-----------------------------------------------------------------------------------------------------------
High performance Integrated circuits & Manteca, CA specialty aluminum
integrated circuit multi-chip modules for alloys & specialty
packaging materials computer, adhesives
telecommunications,
instrumentation &
automotive products
METALS
Olin Brass COPPER & COPPER ALLOY Electronic connectors, Bryan, OH copper, zinc &
SHEET & STRIP lead frames, electrical East Alton, IL other nonferrous
(STANDARD & HIGH components, Indianapolis, IN metals
PERFORMANCE) communications, Waterbury, CT
automotive, builders' Iwata, Japan (Yamaha-Olin
hardware, coinage Metal Corporation)
-----------------------------------------------------------------------------------------------------------
Network of metals Electronic connectors, Alliance, OH copper & copper alloy
service centers electrical components, Caguas, PR sheet, strip, rod,
communications, Carol Stream, IL tube & steel &
automotive, builders' Allentown, PA aluminum strip
hardware, household Warwick, RI
products Watertown, CT
Yorba Linda, CA
-----------------------------------------------------------------------------------------------------------
Beryllium copper strip High performance East Alton, IL beryllium copper
electronic applications
-----------------------------------------------------------------------------------------------------------
POSIT-BOND(R) CLAD METAL Coinage strip & blanks East Alton, IL cupronickel,
copper & aluminum
-----------------------------------------------------------------------------------------------------------
ROLLED COPPER FOIL, Printed circuit boards, Waterbury, CT copper, zinc
COPPERBOND(R) FOIL, electrical & electronic, & other nonferrous
STAINLESS STEEL STRIP automotive metals, stainless
steel
-----------------------------------------------------------------------------------------------------------
COPPER ALLOY SEAMLESS Utility condensers, Cuba, MO copper, zinc & other
& WELDED TUBE industrial heat Indianapolis, IN nonferrous metals
exchangers,
refrigeration & air
conditioning, builders'
hardware, automotive
-----------------------------------------------------------------------------------------------------------
Fabricated products Builders' hardware, East Alton, IL brass & stainless
cartridge cases, shaped Coventry, U.K. steel strip
charge cones, (Techniche Olin Limited)
transportation,
household & recreational
products
-----------------------------------------------------------------------------------------------------------
Copper & copper alloy Fasteners, electrical Indianapolis, IN copper, zinc & other
rod & wire connectors, nonferrous metals
transportation, plumbing
& builders' hardware
</TABLE>
- --------------------------------------------------------------------------------
* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated. Sites
manufacture, distribute or market one or more of the identified products or
services.
4
<PAGE>
DEFENSE AND AMMUNITION
<TABLE>
<CAPTION>
MAJOR RAW MATERIALS
PRODUCT LINE PRODUCTS PLANTS & COMPONENTS FOR
OR DIVISION & SERVICES MAJOR END-USES & FACILITIES* PRODUCTS/SERVICES
------------ ------------------------ ------------------------ -------------------- ---------------------------
<C> <C> <S> <C> <C>
Ordnance LARGE CALIBER MILITARY Used by tanks & Marion, IL various metals,
AMMUNITION, MORTARS, artillery Red Lion, PA propellants,
PROJECTILES & St. Marks, FL fibre products, sub-
COMPONENTS St. Petersburg, FL contracted components
------------------------------------------------------------------------------------------------------------
MEDIUM CALIBER MILITARY Used by ground Marion, IL Ball Powder(R) propellant,
AMMUNITION & COMPONENTS vehicles, ships, explosives, various metals,
helicopters & aircraft sub-contracted components
------------------------------------------------------------------------------------------------------------
BALL POWDER(R) Small caliber commercial St. Marks, FL nitrocellulose
PROPELLANT, EXPLOSIVES ammunition, small,
& research & development medium & large caliber
for propulsion systems military ammunition
------------------------------------------------------------------------------------------------------------
Demilitarization of Contracts for disposal Marion, IL Government supplied
medium & large caliber of U.S. Government ammunition & rocket
ammunition & rocket surplus ammunition & motors
motors rocket motors
------------------------------------------------------------------------------------------------------------
Government-owned Maintenance of U.S. Army Baraboo, WI sub-contracted &
arsenal operations production plant & laid- Idaho Falls, ID government-supplied
(GOCO) & management away plant & management (Babcock & Wilcox components
operations (M&O) of U.S. Energy Idaho, Inc.)
Department plant
------------------------------------------------------------------------------------------------------------
Gas generators Specialty solid- Marion, IL various metals, solid
propellant gas propellant ingredients
generators & for & subcontracted
missiles & aircraft components
- ------------------------------------------------------------------------------------------------------------------
Aerospace Pulsed power systems Pulsed high voltage gen- San Leandro, CA sub-contracted
erators, nuclear radia- components,
tion simulators, accel- including capacitors
erators, high frequency
modulators, military
hardware survivability
assessment, high power
microwave systems
------------------------------------------------------------------------------------------------------------
Anti-armor systems Design, development & San Leandro, CA various metals,
testing of advanced Tracy, CA sub-contracted
antiarmor warhead sys- Lucerne, Switzerland components, explosive
tems for various anti- ingredients
tank missiles; volume
production of missile-
body metal parts; load,
assembly & pack of vari-
ous explosive devices
------------------------------------------------------------------------------------------------------------
Low-voltage power Design, development, Redmond, WA electronic piece
conditioning & test & production of parts, printed
controlling devices; aircraft, missile, wireboards, formed
digital test equipment; spacecraft, shipboard & metal parts
airborne electronic van-mounted power
products equipment for military &
commercial applications;
design, development,
test & production of
microprocessor-based
stores test equipment
for military aircraft
</TABLE>
- --------------------------------------------------------------------------------
* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated. Sites
manufacture, distribute or market one or more of the identified products or
services.
5
<PAGE>
DEFENSE AND AMMUNITION (CONT'D)
<TABLE>
<CAPTION>
MAJOR RAW MATERIALS
PRODUCT LINE PRODUCTS PLANTS & COMPONENTS FOR
OR DIVISION & SERVICES MAJOR END-USES & FACILITIES* PRODUCTS/SERVICES
------------ ------------------------ ------------------------ ------------------ -----------------------
<C> <C> <S> <C> <C>
Aerospace Hydrazine rocket Directional control Moses Lake, WA various metals,
(continued) engines; advanced rockets & propulsion Redmond, WA sub-contracted
propulsion systems & systems for satellite & components,
components; inflation space vehicles, launch hydrazine liquid
systems; specialty vehicles, tactical propellant, ammonium
solid-propellant missiles & projectiles; nitrate- and sodium
devices specialty solid- azide-based solid
propellant gas propellant
generator-based devices ingredients
for munitions
dispensing, fire
suppression, flotation &
other inflation systems
- -------------------------------------------------------------------------------------------------------------
Winchester(R) WINCHESTER(R) SPORTING Hunters & recreational East Alton, IL brass, lead, steel,
AMMUNITION (SHOT- shooters, law Geelong, Australia plastic, Ball Powder(R)
SHELLS, SMALL CALIBER enforcement agencies propellant,
CENTERFIRE & explosives
RIMFIRE AMMUNITION)
-------------------------------------------------------------------------------------------------------
Small caliber military Infantry and mounted East Alton, IL brass, lead, Ball
ammunition weapons Powder(R) propellant,
explosives
-------------------------------------------------------------------------------------------------------
Government-owned Maintenance and Independence, MO brass, lead, Ball
arsenal operation (GOGO) operation of U.S. Army Powder(R) propellant,
small caliber military explosives,
ammunition production government supplied
plant components
-------------------------------------------------------------------------------------------------------
Industrial products (8 Maintenance applications East Alton, IL brass, lead,
gauge loads & powder- in power & concrete Geelong, Australia plastic, Ball
actuated tool loads) industries, powder- Powder(R) propellant,
actuated tools in explosives
construction industry
</TABLE>
- --------------------------------------------------------------------------------
* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated. Sites
manufacture, distribute or market one or more of the identified products or
services.
6
<PAGE>
1993 DEVELOPMENTS
In December 1993, Olin announced a series of strategic actions, consisting of
personnel reductions, business restructurings, including consolidations and re-
alignments within divisions, provisions for costs at sites of discontinued
businesses, future environmental liabilities and other charges. As a result of
these actions, Olin recorded a pre-tax charge to earnings of $213 million ($132
million aftertax) in the fourth quarter of 1993.
On October 1, 1993, Olin sold its interest in Langenberg Kupfer und
Messingwerke GmbH & Co KG to its partner, Wieland-Werke AG, and in so doing
dissolved their four-year old German joint venture partnership. The companies
will continue joint research and development activities, and Wieland will
market certain Olin alloys in Europe.
In July 1993, Olin and GenCorp Inc. announced that they are holding
discussions regarding the possible acquisition by Olin of certain assets of the
medium caliber ordnance business of GenCorp Inc. To date, the companies have
not reached a definitive agreement. Discussions are continuing and any
agreement would be subject to a number of conditions including approval by the
boards of directors of both companies.
INTERNATIONAL OPERATIONS
Olin has sales offices and subsidiaries in various countries which support the
worldwide export of products from the United States as well as overseas
production facilities. In addition, Olin has manufacturing interests, both
direct and through joint ventures, in several foreign countries.
An Olin subsidiary in Ireland manufactures biocides for personal care and
industrial applications; a Brazilian subsidiary manufactures urethane systems
and Reductone(R) sodium hydrosulfite. An Olin Hunt subsidiary located in
Belgium packages toners which are marketed throughout Europe. OCG
Microelectronic Materials, a group of companies owned by Ciba-Geigy Limited and
Olin, markets photoresists, polyimides and other image forming chemicals
throughout Europe. A joint venture of OCG Microelectronic Materials, Inc. and
Fuji Photo Film Co., Ltd. manufactures photoresists in Japan and markets them
throughout the Far East.
Nordesclor S.A., a joint venture with S.A. Industrias Votorantim, a Brazilian
company, manufactures calcium hypochlorite. Through a joint venture with
Sentrachem Limited, Olin has an interest in a plant in South Africa for the
production of HTH(R) pool chemicals. Olin holds a 100% interest in Hydrochim,
S.A. a French chloroisocyanurate repacking operation.
Olin has interests in plants in Japan and Venezuela for the production of
urethane polyols and other specialty chemicals through joint ventures with
Asahi Glass Company Ltd. and Corimon, C.A.S.A.C.A., respectively. Olin also has
an interest in a plant recently completed in Venezuela for the production of
ethylene oxide and ethylene glycol through a joint venture with Corimon,
C.A.S.A.C.A., Petroquimica de Venezuela S.A. and the International Finance
Corporation. A joint venture of Olin and Asahi Glass Company Ltd. has an
interest in a TDI production plant in Japan with Mitsui Toatsu.
Yamaha-Olin Metal Corporation, a joint venture with Yamaha Corporation,
manufactures high-performance copper alloys in Japan for sale to the
electronics industry throughout the Far East.
Techniche Olin Limited, a joint venture with a U.K. company, manufactures
shaped charge cones in Coventry, England and markets them to prime contractors
for inclusion in armor piercing munitions for certain West European countries.
An Olin subsidiary loads and packs sporting and industrial ammunition in
Australia.
7
<PAGE>
The geographic segment data contained in the Note "Segment Information" of
the Notes to Financial Statements on pages 28 and 29 of the 1993 Shareholders
Report and Exhibit 13 hereto are incorporated by reference in this Report.
CUSTOMERS AND DISTRIBUTION
During 1993, no single nongovernmental customer accounted for more than 2% of
Olin's total consolidated sales and U. S. government sales accounted for 15% of
Olin's total consolidated sales. Products which Olin sells to industrial or
commercial users or distributors for use in the production of other products
constitute a major part of Olin's total sales. Some of its products, such as
pool chemicals, sporting ammunition and brass, are sold to a large number of
users or distributors, while others, such as certain industrial chemicals, are
sold in substantial quantities to a relatively small number of industrial
users.
Most of Olin's products and services are marketed primarily through its sales
force and sold directly to various industrial customers, the U.S. Government
and its prime contractors to wholesalers and other distributors.
Chemicals. Principal customers of Olin's chemicals products include the pulp
and paper industries, vinyl chloride manufacturers, household and industrial
cleaner suppliers, municipal and industrial wastewater treatment companies,
specialty chemical manufacturers, flexible and rigid foam suppliers, automotive
companies, packaging suppliers, the refrigeration industry, manufacturers of
adhesives, coatings, elastomers and sealants, suppliers of various consumer
products including shampoos and swimming pool sanitizers, semiconductor
manufacturers, non-impact computer printer manufacturers and defense
contractors. Principal customers of Olin's interconnect materials business are
suppliers to semiconductor manufacturers and major computer and
telecommunications manufacturers.
Metals. Principal customers of Olin's copper and copper alloy strip, sheet
and rod and seamless and welded tube include producers of electrical and
electronic equipment, builders' hardware and appliances, the plumbing,
automotive and air-conditioning industries and manufacturers of a variety of
consumer goods.
Olin manufactures cartridge brass for its ammunition business and for other
ammunition makers. Olin also serves numerous high-technology markets through a
thin-gauge reroll operation that produces stainless steels, high-temperature
alloys and glass sealing alloys, in addition to copper and copper alloys.
Posit-Bond(R) clad metal has made Olin a major supplier of metal to the U.S.
Mint. Olin also sells various alloys to foreign governments for coinage
purposes.
The metal products business is also focused on the electronics market,
providing high performance and high quality materials needed by the electronics
industry and other advanced technology customers. These materials include Olin-
developed proprietary alloys and Copperbond(TM) treated copper foil marketed to
the printed circuit industry.
Fabricated products are principally sold to ammunition manufacturers, the
U.S. Armed Forces, building product suppliers, household product manufacturers
and automotive manufacturers.
Defense and Ammunition. The principal customers of the Ordnance division are
the U.S. Department of Defense and certain foreign governments. Principal
customers of the Aerospace division are the U.S. Government, major defense
contractors, aerospace companies and certain foreign governments. The principal
users of the Winchester division's products are recreational shooters, hunters,
law enforcement agencies, the power and concrete industries, the construction
industry, the U.S. Armed Forces and certain foreign governments.
8
<PAGE>
GOVERNMENT SALES
U.S. Government sales were approximately $354 million in 1993, $409 million
in 1992 and $453 million in 1991.
Approximately 89% of such 1993 sales were to the Department of Defense or
agencies thereof. In addition, Olin operates certain Government owned plants,
including the Lake City Army Ammunition Plant in Independence, Missouri, for
which Olin receives fee income. Products and services sold to the Government,
to Government contractors or friendly foreign governments include ammunition,
propellant and specialty defense products and services. Olin also manufactures
and blends hydrazine based fuels for the Government for use as a propellant for
the Space Shuttle, satellites and expendable launch vehicles. The U.S. Mint
purchases cupronickel for nickels and Posit-Bond(R) clad metal for other U.S.
coins. Ammunition cups and strip are sold to Government contractors for
ultimate delivery to the Government.
Olin's Government business is performed under both cost reimbursement and
fixed price contracts. Cost reimbursement contracts provide for the
reimbursement of allowable costs plus the payment of a fixed fee, an incentive
fee based upon actual performance as compared to contractual targets, or an
award fee based upon unilateral evaluation by the Government. Olin's fixed
price contracts are either firm fixed price contracts or incentive contracts
under which Olin shares certain savings or overruns with the Government.
Government contracts generally have provisions for audit by the Government,
and cost reimbursement contracts have limitations on reimbursable costs.
Contracts may be terminated at the Government's convenience upon payment of
certain termination costs and, in some cases, profits. Olin's Government
business is subject to Government procurement regulations.
Continuing reductions in the levels of defense procurement are currently
adversely affecting the Defense and Ammunition segment's performance and may
continue to do so in future years. Consequently, these reductions may also
adversely affect, to a lesser extent, Olin's financial performance in future
years, including its income, liquidity, capital resources and financial
condition. In addition, changes in the strategic direction of defense spending
and the timing of defense procurement may also adversely affect this segment
and Olin. The precise impact of defense spending cutbacks will depend on the
level of cutbacks, the extent to which these cutbacks are in the conventional
ammunition area and Olin's ability to mitigate the impact of the cutbacks with
new business or by business consolidations. Olin currently provides services to
the U.S. Government in facilities management and is pursuing other business
areas such as ordnance demilitarization. In view of continuing spending
cutbacks of the Department of Defense, the historical financial information of
the Defense and Ammunition segment and, to a lesser extent, of Olin, may not be
indicative of future performance.
COMPETITION
Olin is in active competition with businesses producing the same or similar
products, as well as, in some instances, with businesses producing different
products designed for the same uses. With respect to certain product groups,
such as ammunition and copper alloys, and with respect to certain individual
products, such as pool chemicals, chlor-alkali and urethane products, Olin is
one of the largest manufacturers or distributors in the United States. With
respect to its many other products, Olin's share of total domestic sales varies
greatly.
EMPLOYEES
As of December 31, 1993, Olin had approximately 12,438 employees (excluding
approximately 1,529 employees at Government owned contractor operated
facilities), approximately 11,878 of whom
9
<PAGE>
were working in the United States and approximately 560 of whom were working in
foreign countries. A majority of the hourly paid employees are represented, for
purposes of collective bargaining, by various labor unions. Some labor
contracts extend for as long as four years, but during each year new agreements
must be negotiated in a number of Olin's plants. Two major labor contracts were
renewed in 1993. One major collective bargaining agreement will expire in 1994.
While relations between Olin and its employees and their various
representatives are generally considered satisfactory, there can be no
assurance that new labor contracts can be concluded without work stoppages. No
major work stoppages have occurred in the last three years.
RESEARCH ACTIVITIES; PATENTS
Olin's research activities are conducted both on a product group and
corporate-wide basis at a number of facilities. Company sponsored research
expenditures were approximately $41 million during 1993, $39 million during
1992 and $41 million during 1991. Customer sponsored research expenditures
(primarily U.S. Government) were approximately $88 million in 1993, $84 million
in 1992 and $71 million in 1991.
Olin owns, or is licensed under, a number of patents, patent applications and
trade secrets covering its products and processes. Olin believes that, in the
aggregate, the rights under such patents and licenses are important to its
operations, but does not consider any patent or license or group thereof
related to a specific process or product to be of material importance when
viewed from the standpoint of Olin's total business.
RAW MATERIALS AND ENERGY
Olin purchases the major portion of its raw material requirements. The
principal basic raw materials required by Olin for its production of chemicals
are various hydrocarbons, salt, lime, electricity, proplylene oxide, ethylene
oxide, natural gas, toluene, sulfur, ammonia and urea. Copper, zinc and various
other nonferrous metals are required for the metals business. Lead, brass and
propellant are the principal raw materials used in the ammunition business.
Olin's principal basic raw materials are typically purchased pursuant to
multiyear contracts. In addition, Olin uses many chemicals produced in its own
operations as raw materials, intermediates or processing agents in the
production of various other chemical products. In the manufacture of
ammunition, Olin uses a substantial percentage of its own output of smokeless
powder and cartridge brass. Additional information with respect to specific raw
materials is set forth in the table above under the caption entitled "Products
and Services."
Electricity is the predominant energy source for Olin's manufacturing
facilities. Olin's facilities are served by utilities which generate
electricity principally from coal and natural gas.
ENVIRONMENTAL AND TOXIC SUBSTANCES CONTROLS
The establishment and implementation of federal, state and local standards to
regulate air, water and land quality has affected and will continue to affect
substantially all of Olin's plants. Facilities and equipment to protect the
environment do not inherently produce any significant increase in product
capacity, efficiency or revenue, and their operation generally entails
additional expense and energy consumption. Federal legislation providing for
regulation of the manufacture, transportation, use and disposal of hazardous
and toxic substances has imposed additional regulatory requirements on
industry, particularly the chemicals industry. In addition, implementation of
environmental laws, such as the Resource Conservation and Recovery Act and the
Clean Air Act, has required and will continue to require new capital
expenditures and will increase operating costs. Olin employs waste minimization
and pollution prevention programs at its manufacturing sites. In order to help
finance the cleanup of waste disposal sites, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("Superfund"),
10
<PAGE>
imposes a tax on the sale of various chemicals, including chlorine, caustic and
certain other chemicals produced by Olin, and on the disposal of certain
hazardous wastes.
Olin is party to various governmental and private environmental actions
associated with waste disposal sites and manufacturing facilities. Associated
costs of investigatory and remedial activities are provided for in accordance
with generally accepted accounting principles governing probability and the
ability to reasonably estimate future costs. Environmental provisions charged
to income amounted to $85 million in 1993, $17 million in 1992, and $18 million
in 1991. The significant increase in 1993 resulted from expanded volumes of
contaminants uncovered while remediating a particular site, combined with the
availability of more definitive data from progressing investigatory activities
concerning both the nature and extent of contamination and remediation
alternatives at other sites. Charges to income for investigatory and remedial
efforts were material to operating results in 1993, 1992, and 1991 and may be
material to net income in future years.
Cash outlays for environmental-related activities totalled $93 million in
1993 as compared with $103 million in 1992 and $90 million in 1991. During
1993, $49 million of these cash outlays were directed towards normal plant
operations for the disposal of waste and the installation, operation and
maintenance of pollution control equipment and facilities to ensure compliance
with mandated and voluntarily imposed environmental quality standards.
Comparable spending for 1992 and 1991 was $62 million and $65 million,
respectively. Included in the costs for normal plant operations were
environmental capital expenditures for pollution control equipment and
pollution abatement facilities. Spending for environmental capital expenditures
was $11 million in 1993 and $25 million in both 1991 and 1992. The 1991 and
1992 environmental capital expenditures include construction costs for a waste
water treatment facility at the company's Lake Charles plant. Historically,
Olin has funded its environmental capital expenditures through cash flow from
operations and expects to do so in the future.
Cash outlays for remedial and investigatory activities associated with former
waste sites and past operations were $44 million in 1993, $41 million in 1992
and $25 million in 1991. These amounts were not charged to income but instead
were charged to reserves established for such costs identified and expensed to
income in prior years.
Olin's estimated environmental liability at the end of 1993 was attributable
to 70 sites, 34 of which were on the National Priority List ("NPL"). Ten sites
accounted for approximately 75% of such liability and, of the remaining sites,
no one site accounted for more than three percent of such liability. Four of
these ten sites were in the investigatory stage of the remediation process. In
this stage, remedial investigation and feasibility studies are conducted by
either Olin, the United States Environmental Protection Agency ("EPA") or other
potentially responsible parties ("PRP's"). At another four of the ten sites, a
Record of Decision ("ROD") or its equivalent has been issued by either the EPA
or responsible state agency and Olin either alone, or as a member of a PRP
group, was engaged in performing the remedial measures required by that ROD. At
the remaining two of the ten sites, part of the site is subject to a ROD and
another part is still in the investigative stage of remediation. All ten sites
were either former manufacturing facilities or waste sites containing
contamination generated by those facilities.
Total environmental-related cash outlays for 1994 are estimated to be $90
million, of which $50 million is expected to be spent on normal plant
operations, including $10 million on capital projects, and $40 million on
investigatory and remedial efforts.
Annual environmental-related cash outlays for capital projects, site
investigation and remediation, and normal plant operations are expected to
range between $90-$105 million over the next several years. While the company
does not anticipate a material increase in the projected annual level of its
environmental-related costs, there is always the possibility that such
increases may occur in the future
11
<PAGE>
in view of the uncertainties associated with environmental exposures.
Environmental exposures are difficult to assess for numerous reasons, including
the identification of new sites, developments at sites resulting from
investigatory studies, advances in technology, changes in environmental laws
and regulations and their application, the scarcity of reliable data pertaining
to identified sites, the difficulty in assessing the involvement and financial
capability of other potentially responsible parties and the company's ability
to obtain contributions from other parties and the time periods (sometimes
lengthy) over which site remediation occurs. It is possible that some of these
matters (the outcome of which is subject to various uncertainties) may be
decided unfavorably against Olin.
See also Item 3, Legal Proceedings below, the Note "Environmental" of the
Notes to Financial Statements contained in the 1993 Shareholders Report and
Exhibit 13 hereto, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" incorporated in this Report for additional
information regarding environmental matters affecting Olin.
ITEM 2. PROPERTIES
Olin has plants at 35 separate locations in 20 states and 3 plants in 3
foreign countries. Most plants are owned; a number of small plants and portions
of one major plant are leased. Listed under Item 1 above in the table set forth
under the caption "Products and Services" are the locations at or from which
Olin's products and services are manufactured, distributed or marketed by
segment.
Olin leases warehouses, terminals and distribution offices and space for
executive and branch sales offices and service departments throughout the
country and overseas.
ITEM 3. LEGAL PROCEEDINGS
(a) In December 1979, an action was commenced in the U.S. District Court in
New York by the United States against Occidental Chemical Corporation (then
known as Hooker Chemical & Plastics Corporation) ("Oxychem"), certain related
companies, Olin and the City of Niagara Falls, New York, alleging that chemical
wastes are migrating in violation of environmental laws or regulations from a
site in Niagara Falls where Oxychem and Olin own adjacent, inactive chemical
waste landfills. The United States is seeking injunctive relief and an order
requiring Oxychem and Olin, among other things, to secure the landfill site,
install a leachate collection system and treat whatever leachate is collected,
as well as an order requiring Oxychem and Olin to place $16.5 million in trust
or provide a bond to ensure that the site will be secured. The United States is
also seeking civil penalties for each day of alleged violation of the Clean
Water Act which currently has a maximum daily penalty of $25,000.
In November 1980, the State of New York filed a complaint as co-plaintiff in
the same action based upon essentially the same factual allegations as in the
suit brought by the United States. The State is seeking $100 million
compensatory damages and $100 million punitive damages. The State is also
requesting a court order to abate the alleged nuisance and penalties of $10,000
per day for alleged violations of each of four provisions of New York's
Environmental Conservation Law. In 1983, the State filed a motion to amend its
complaint to include a count under CERCLA (Comprehensive Environmental
Response, Compensation and Liability Act of 1980) alleging damage to natural
resources. In 1986, the Department of Justice filed a motion to amend its
complaint to include a CERCLA and SARA (Superfund Amendments and
Reauthorization Act of 1986) count. Oxychem and Olin have filed in opposition
to the motions and the court has deferred a ruling on both motions.
The U.S. Environmental Protection Agency ("EPA") notified Olin and Oxychem of
an aggregate of $3,050,000 in agency oversight costs on the project.
Under a stipulation entered into by all parties in 1984, Olin and Oxychem
undertook a site remedial investigation which was completed in October 1988.
Subsequently, the parties entered into a further
12
<PAGE>
stipulation under which Oxychem and Olin conducted a feasibility study of
possible remedial measures. Olin does not expect these stipulations to have any
further effect on the outcome of this matter. The remedial investigation and
feasibility study was completed in July 1990. On September 24, 1990, EPA issued
a Proposed Remedial Action Plan and on September 29, 1990 a Record of Decision
("ROD"). The EPA selected remedy was estimated to cost $30 million. On
September 30, 1991, the EPA issued an administrative order directing Olin and
Oxychem to implement the remedy identified in the September 29, 1990 Record of
Decision. Olin and Oxychem have agreed to perform the remedy identified on such
order. The cost of any remedy is expected to be shared by Olin and Oxychem in
an agreed-upon proportion. Olin believes that any liability incurred by it in
this matter will not materially affect its financial condition.
(b) In June 1987, the EPA issued a ROD recommending remedial actions and
ecological studies with respect to mercury contamination at the site of Olin's
former mercury cell chlor-alkali plant in Saltville, Virginia. In August 1987,
EPA, under Section 122 of CERCLA, asked Olin to undertake the work called for
in the ROD, and Olin agreed to do so. Olin's commitment was required to be
incorporated into a Consent Decree to be filed with a federal district court.
EPA's draft of the Consent Decree included a proposed $1.4 million Clean Water
Act penalty for past unpermitted discharges from a muck pond at the site, as
well as $570,000 in reimbursement of past EPA costs. In response to Olin's
request, EPA has agreed to reduce the costs to $456,000 and to sever the
penalty from the CERCLA action, making it the subject of separate negotiations
after execution of the Consent Decree. In 1988, the proposed $1.4 million Clean
Water Act penalty was severed from the Consent Decree entered into by Olin and
filed with the U.S. District Court for the Western District of Virginia, and
the EPA has taken no further action with respect to any proposed penalty.
(c) In December 1987, a Federal Trade Commission ("FTC") administrative law
judge ruled that Olin must divest the chlorinated isocyanurates business
acquired from FMC Corporation in 1985, which includes isocyanurates
manufacturing and packaging and the Sun(R) brand trademark. The ruling stated
that the acquisition lessened competition in markets for chlorinated
isocyanurates and calcium hypochlorite dry swimming pool sanitizers. Olin
appealed this decision to the FTC. In July 1990, the FTC announced that it had
issued an order denying Olin's appeal and requiring Olin to divest itself of
such business within one year of the order becoming final following appeal.
Olin has appealed the FTC decision to the U.S. Court of Appeals. The U.S. Court
of Appeals upheld the FTC decision on February 26, 1993 and Olin's petition for
en banc review was denied. Olin petitioned for review by the U.S. Supreme Court
and such petition was denied.
Olin believes that a divestment of this business would not materially affect
its financial condition or results of operations.
(d) In late 1991, the EPA brought a civil action in the U.S. District Court
in Tennessee against Olin alleging violations of the Clean Air Act and
regulations thereunder with respect to mercury emissions at Olin's Charleston,
Tennessee plant. The complaint alleges, among other things, that Olin failed to
maintain a mercury cell in a manner to minimize leakage of mercury and mercury
contaminated material for a period of approximately 17 months. EPA claims civil
penalties of $25,000 per day for each alleged violation. Olin and EPA have
reached a settlement in principle in this matter pursuant to which Olin will
pay $1 million in penalties.
Olin believes that any liability incurred by it in this matter will not
materially affect its financial condition.
(e) As part of the continuing environmental investigation by Federal, state
and local governments of waste disposal sites, Olin has entered into a number
of settlement agreements requiring it to contribute to the cost of the
investigation and cleanup of a number of sites. This process of investigation
and cleanup is expected to continue.
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<PAGE>
(f) On November 21, 1989, a Massachusetts state trial court ruled in Augat,
Inc. and Isotronics v. Aegis, Inc., et al. that Aegis, Inc. ("Aegis") (a
Massachusetts corporation wholly owned by Olin-Asahi Interconnect Technologies)
and a certain individual were liable to plaintiffs on matters dealing with
employee solicitation and use of certain confidential information, which the
trial court found were violations of the Massachusetts Unfair Competition
statute. On January 16, 1991, the Supreme Judicial Court of Massachusetts
upheld in part and overturned in part the lower court decision. That court held
that the defendants were liable to the plaintiffs on the narrow ground that
they had induced an employee to breach his fiduciary duty to plaintiffs in
soliciting four other Isotronics employees to join Aegis while he was still
general manager. As a result the court ruled that defendants were liable to
plaintiffs for the Isotronics losses caused by problems arising from the
departure of key managerial employees who were approached by the employee while
he and they were still employed by Isotronics, provided that the losses were
caused by events occurring before Isotronics reasonably should have replaced
the departed managerial employees with competent people. The case was remanded
to the lower court for trial on damages.
After a trial on damages, the lower court entered a judgment on December 14,
1992 and subsequently modified, awarding plaintiffs $14 million in compensatory
damages, $14 million in non-compensatory damages, $10.7 million in interest,
$1.2 million in attorneys' fees, and $377,000 in costs. The judgment bears
interest at the rate of 12% per year. Defendants and plaintiffs have both
appealed. The Massachusetts Supreme Judicial Court agreed to hear the
defendants' appeal directly from the trial court and the parties are awaiting
the decision of such court.
Aegis was acquired in 1987 by Olin-Asahi Interconnect Technologies, a
partnership equally owned by subsidiaries and joint ventures of Olin and Asahi
Glass Co., Ltd., of Japan.
Although no allegation of wrongdoing has been made against Olin, Olin has
been named a "reach and apply" defendant under Massachusetts law in an attempt
by the plaintiffs to secure rights under a contractual obligation which may
result in a payment by Olin or one of its affiliates of a portion of whatever
the judgment is ultimately determined to be after appeal.
(g) Olin and its subsidiaries are defendants in various other legal actions
arising out of their normal business activities, none of which is considered by
management to be material.
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<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the three months
ended December 31, 1993.
Executive Officers of Olin Corporation as of March 1, 1994
<TABLE>
<CAPTION>
SERVED AS AN
OLIN
NAME AND AGE OFFICE OFFICER SINCE
- ------------ ------ -------------
<S> <C> <C>
John W. Johnstone, Jr. Chairman of the Board and Chief 1980
(61)..................... Executive Officer
Donald W. Griffin (56).... President and Chief Operating Officer 1983
Joseph M. Gaffney (47).... Senior Vice President, Corporate 1981
Planning and Development
James G. Hascall (55)..... Senior Vice President and President, 1985
Brass Group
James A. Riggs (57)....... Senior Vice President and Chief 1986
Financial Officer
Leon B. Anziano (51)...... Vice President and President, Chlor- 1993
Alkali Products Division
Gerald W. Bersett (53).... Vice President and President, 1993
Winchester Division
Michael E. Campbell (46).. Vice President and President, Olin 1987
Electronic Materials Division
Angelo A. Catani (61)..... Vice President and President, Ordnance 1993
Division
Patrick J. Davey (50)..... Vice President and President, 1993
Chemicals Division
Emanuel J. DiTeresi (48).. Vice President and Controller 1990
George B. Erensen (50).... Vice President, Taxes and Risk 1990
Management
Peter C. Kosche (51)...... Vice President, Human Resources 1993
Janet M. Pierpont (46).... Vice President and Treasurer 1990
William M. Schmitt (52)... Vice President and President, Latin 1987
America and South Africa
William W. Smith (59)..... Vice President and President, 1993
Aerospace Division
</TABLE>
No family relationship exists between any of the above named executive
officers or between any of them and any Director of Olin. Such officers were
elected to serve as such, subject to the By-Laws, until their respective
successors are chosen.
Each of the above-named executive officers, except L. B. Anziano, G. W.
Bersett, A. A. Catani, P. J. Davey, E. J. DiTeresi, G. B. Erensen, P. C.
Kosche, J. M. Pierpont and W. W. Smith, has served Olin in an executive
capacity for not less than the past five years.
Leon B. Anziano was elected a Corporate Vice President on April 29, 1993.
Prior to that time, since 1988, he has served Olin in the following management
capacities: Group Vice President & General Manager, Industrial Chemicals; Group
Vice President & General Manager, Urethanes; and President, Basic Chemicals
Division.
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<PAGE>
Gerald W. Bersett was elected a Corporate Vice President on April 29, 1993.
Prior to that time, since 1988, he has served Olin in the following management
capacities: Division Vice President and General Manager, Winchester and
President, Winchester Division.
Angelo A. Catani was elected a Corporate Vice President on April 29, 1993.
Prior to that time, since 1988, he has served Olin in a management capacity as
President, Ordnance Division.
Patrick J. Davey was elected a Corporate Vice President on April 29, 1993.
Prior to that time, since 1988, he has served Olin in the following management
capacities: Group Vice President, Water Products & Services; and President,
Performance Chemicals Division.
Emanuel J. DiTeresi was elected a Corporate Vice President and Controller on
April 26, 1990. Prior to that time, since 1988, he has served Olin in a
management capacity as Group Financial Officer, Chemicals.
George B. Erensen was elected a Corporate Vice President on April 26, 1990.
Prior to that time, since 1988, he has served Olin in a management capacity as
Staff Vice President, Taxes and Risk Management.
Peter C. Koche was elected a Corporate Vice President on April 29, 1993.
Prior to that time, since 1988, he has served Olin in the following management
capacities: General Manager, Pool Chemicals; and Division Vice President,
Materials Management.
Janet M. Pierpont was elected a Corporate Vice President and Treasurer on
April 26, 1990. Prior to that time, since 1988, she has served Olin in a
management capacity as Assistant Treasurer.
William W. Smith was elected a Corporate Vice President on April 29, 1993.
Prior to that time, since 1988, he has served Olin in a management capacity as
President, Aerospace Division.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
As of January 31, 1994, there were approximately 12,900 record holders of
Olin Common Stock.
Olin Common Stock is traded on the New York, Chicago and Pacific Stock
Exchanges.
Information concerning the high and low sales prices of Olin Common Stock and
dividends paid on Olin Common Stock during each quarterly period in 1993, 1992,
and 1991 appears on page 32 of the 1993 Shareholders Report and in Exhibit 13
hereto and is incorporated herein by reference.
Among the provisions of Olin's agreements with its long-term lenders are
restrictions relating to payment of dividends and acquisition of common stock.
At December 31, 1993, retained earnings of approximately $96 million were not
so restricted.
ITEM 6. SELECTED FINANCIAL DATA
The information relating to the last five fiscal years contained under the
caption "Ten-Year Financial Summary" appearing on page 20 of the 1993
Shareholders Report and in Exhibit 13 hereto is incorporated by reference in
this Report.
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<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing on pages 12 through 18 of the 1993 Shareholders Report
(but excluding the bar graphs appearing on such pages) and in Exhibit 13 hereto
is incorporated by reference in this Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of Olin Corporation and subsidiaries
and the related notes thereto together with the report thereon of KPMG Peat
Marwick dated January 27, 1994, appearing on pages 21 through 30 of the 1993
Shareholders Report and in Exhibit 13 hereto are incorporated by reference in
this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The biographical information relating to Olin's Directors under the heading
"Election of Directors" in the Proxy Statement relating to Olin's 1994 Annual
Meeting of Shareholders ("1994 Proxy Statement") is incorporated by reference
in this Report. See also the list of executive officers following Item 4 of
this Report. The information regarding compliance with Section 16 of the
Securities Exchange Act of 1934, as amended, contained in the last paragraph
under the heading "Security Ownership of Directors and Officers" in the 1994
Proxy Statement is incorporated by reference in this Report.
ITEM 11. EXECUTIVE COMPENSATION
The information under the heading "Executive Compensation" in the 1994 Proxy
Statement (but excluding the Report of the Compensation and Stock Option
Committee on Executive Compensation appearing on pages 11 through 13 of the
1994 Proxy Statement and the graphs appearing on page 17 of the 1994 Proxy
Statement) is incorporated by reference in this Report. The information under
the headings "Additional Information Regarding the Board of Directors--
Compensation of Directors", "Additional Information Regarding the Board of
Directors--Compensation Committee Interlocks and Insider Participation" and
"Additional Information Regarding the Board of Directors--Directors Retirement
Plan" in the 1994 Proxy Statement is incorporated by reference in this Report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information concerning holdings of Olin stock by certain beneficial
owners contained under the heading "Certain Beneficial Owners" in the 1994
Proxy Statement and the information concerning beneficial ownership of Olin
stock by Directors and officers of Olin under the heading "Security Ownership
of Directors and Officers" in the 1994 Proxy Statement are incorporated by
reference in this Report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the heading "Additional Information Regarding
the Board of Directors--Compensation Committee Interlocks and Insider
Participation" in the 1994 Proxy Statement is incorporated by reference in this
Report.
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<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
Consolidated financial statements of Olin Corporation and subsidiaries and
the related notes thereto together with the report thereon of KPMG Peat Marwick
dated January 27, 1994, appearing on pages 21 through 30 of the 1993
Shareholders Report and in Exhibit 13 hereto are incorporated by reference in
this Report.
2. FINANCIAL STATEMENT SCHEDULES
The following additional information is filed as part of this Report and
should be read in conjunction with the financial statements incorporated herein
by reference:
<TABLE>
<CAPTION>
FORM
10-K
PAGE
NO.
----
<C> <S> <C>
Report of Independent Auditors on Schedules to Financial Statements....... F-1
Financial Statement Schedules for the three years ended December 31, 1993
V Property, Plant and Equipment...................................... F-2
VI Accumulated Depreciation of Property, Plant and Equipment.......... F-3
VIII Valuation and Qualifying Accounts.................................. F-4
IX Short-Term Borrowings.............................................. F-5
</TABLE>
Schedules not included herein are omitted because they are inapplicable or
not required or because the required information is given in the consolidated
financial statements and notes thereto.
Separate financial statements of 50% or less owned subsidiaries accounted for
by the equity method are not summarized herein and have been omitted because,
in the aggregate, they would not constitute a significant subsidiary.
3. EXHIBITS
Management contracts and compensatory plans and arrangements are listed as
Exhibits 10(a) through 10(ee) below.
<TABLE>
<C> <S>
3(a) Olin's Restated Articles of Incorporation as amended effective
January 15, 1992--Exhibit 3(a) to Olin's Form 10-K for 1991.*
(b) By-Laws of Olin as amended effective March 1, 1994.
4(a) Articles of Amendment designating ESOP Preferred Shares, par value
$1 per share--Exhibit 4 to Olin's Form 10-Q for the Quarter ended
June 30, 1989.*
(b) Articles of Amendment designating Series A Conversion Preferred
Stock, par value $1 per share--Exhibit 4(b) to Olin's Form 10-K
for 1991.*
(c) Rights Agreement dated as of February 27, 1986 between Olin and
Manufacturers Hanover Trust Company, Rights Agent--Exhibit 1 to
Olin's Form 8-A dated February 28, 1986, covering Common Stock
Purchase Rights.*
(d) Form of Senior Debt Indenture between Olin and Chemical Bank--
Exhibit 4(a) to Olin's Form 8-K dated June 15, 1992; and
Prospectus Supplement dated June 17, 1992 to Prospectus dated June
16, 1992, with respect to Olin's 8% Senior Notes Due 2002 filed
under Registration Statement No. 33-4479.*
</TABLE>
- --------
* Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-1070 unless otherwise
indicated.
18
<PAGE>
<TABLE>
<C> <S>
(e) Form of Subordinated Debt Indenture between Olin and Bankers Trust
Company--Exhibit 4(i) to Registration No. 33-4479; and Prospectus
Supplement dated June 17, 1987 to Prospectus dated February 3,
1987, with respect to Olin's 9 1/2% Subordinated Notes Due 1997--
filed under Registration Statement No. 33-4479.*
(f) Credit Agreement, dated as of September 30, 1993, among Olin and
the banks named therein--Exhibit 4 to Olin's Form 10-Q for the
Quarter ended September 30, 1993.*
(g) Letters, dated December 15, 1993, amending the Credit Agreement,
dated as of September 30, 1993.
Olin is party to a number of other instruments defining the rights of holders
of long-term debt. No such instrument authorizes an amount of securities in
excess of 10% of the total assets of Olin and its subsidiaries on a consolidated
basis. Olin agrees to furnish a copy of each instrument to the Commission upon
request.
10(a) 1980 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries, as amended--Exhibit 10(a) to Olin's Form 10-K for
1991.*
(b) 1988 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries--Exhibit A to Olin's Proxy Statement relating to its
1988 Annual Meeting of Shareholders.*
(c) Amendments to 1988 Stock Option Plan and to 1980 Stock Option
Plan, adopted May 25, 1989--Exhibit 10(c) to Olin's Form 10-Q for
Quarter ended June 30, 1989.*
(d) Olin Corporation Performance Unit Plan, as amended April 24,
1986--Exhibit 10(a) to Olin's Form 10-Q for Quarter ended March
31, 1986.*
(e) Olin Corporate Incentive Compensation Plan--Exhibits 1(b) and 2(b)
to Registration No. 2-64811.*
(f) Olin Deferred Salary Plan, effective January 1, 1983.
(g) Form of Directors' deferral plan.
(h) Amendments to Olin Corporation Performance Unit Plan, Corporate
Incentive Compensation Plan, Deferred Salary Plan and Directors'
deferral plan, adopted September 29, 1988--Exhibit 10(j) to Olin's
Form 10-K for 1988.*
(i) Amendment to Olin Corporation Performance Unit Plan, adopted May
25, 1989--Exhibit 10(b) to Olin's Form 10-Q for Quarter ended June
30, 1989.*
(j) Amendment to Olin Corporation Performance Unit Plan, adopted
September 26, 1991--Exhibit 10(j) to Olin's Form 10-K for 1991.*
(k) Amendment to Olin Corporation Performance Unit Plan, adopted
December 16, 1993.
(l) Deferral elections with respect to certain acquisitions or "change
of control events"--Exhibit 10(h) to Olin's Form 10-K for 1986.*
(m) Olin Senior Executive Pension Plan--Exhibit 10(k) to Olin's Form
10-K for 1984; Exhibit 19 to Olin's Form 10-Q for Quarter ended
September 30, 1985.*
(n) Amendment to Senior Executive Pension Plan, adopted December 17,
1987--Exhibit 10(k) to Olin's Form 10-K for 1987.*
(o) Amendment to Senior Executive Pension Plan, adopted September 29,
1988--Exhibit 10(n) to Olin's Form 10-K for 1988.*
(p) Amendments to Olin Senior Executive Pension Plan, adopted May 25,
1989--Exhibit 10(a) to Olin's Form 10-Q for Quarter ended June 30,
1989.*
(q) Amendment to Olin Senior Executive Pension Plan, adopted September
30, 1993.
</TABLE>
- --------
* Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-1070 unless otherwise
indicated.
19
<PAGE>
<TABLE>
<C> <S>
(r) Olin Supplementary Contributing Employee Ownership Plan,
effective January 1, 1990--Exhibit 10(p) to Olin's Form 10-K for
1992.*
(s) Form of arrangement to credit 100 shares of Olin Common Stock to
certain Directors in each year from 1985 through 1993--Exhibit
10(m) to Olin's Form 10-K for 1984.*
(t) Olin Corporation Key Executive Life Insurance Program--Exhibit
10(b) to Olin's Form 10-Q for Quarter ended March 31, 1986.*
(u) Form of Olin Corporation Endorsement Split Dollar Agreement
(effective January 1, 1993)--Exhibit 10(s) to Olin's Form 10-K
for 1992.*
(v) Form of executive agreement between Olin and certain executive
officers--Exhibit 10(a) to Olin's Form 10-Q for Quarter ended
September 30, 1989.*
(w) Form of special severance agreement dated November 1, 1989,
provided to certain executives to become operative upon "change
in control event"--Exhibit 10(b) to Olin's Form 10-Q for Quarter
ended September 30, 1989.*
(x) Retirement Plan for Non-Employee Directors of Olin Corporation,
as amended through December 12, 1991--Exhibit 10(u) to Olin's
Form 10-K for 1991.*
(y) Change in Control elections regarding both the Directors'
deferral plan and the arrangement to credit 100 shares of Olin
Common Stock to certain Directors--Exhibit 10(z) to Olin's Form
10-K for 1989.*
(z) Olin 1991 Long Term Incentive Plan, as amended through January
30, 1992--Exhibit 10(w) to Olin's Form 10-K for 1991.*
(aa) Description of 1991 Performance Unit Awards granted under the
Olin 1991 Long Term Incentive Plan--Exhibit 10(w) to Olin's Form
10-K for 1991.*
(bb) Description of 1992 Performance Unit Awards granted under the
Olin 1991 Long Term Incentive Plan--Exhibit 10(z) to Olin's Form
10-K for 1992.*
(cc) Description of Performance Share Awards granted under the Olin
1991 Long Term Incentive Plan--Exhibit 10 to Olin's Form 10-Q for
the quarter ended June 30, 1993.*
(dd) Board Resolution adopted April 25, 1991 regarding payment of
deferred amounts--Exhibit 10(y) to Olin's Form 10-K for 1991.*
(ee) Amendments to Olin 1991 Long Term Incentive Plan, adopted January
27, 1994.
11. Computation of Per Share Earnings.
12. Computation of Ratio of Earnings to Fixed Charges (unaudited).
13. Excerpts from the 1993 Annual Report to Shareholders.
21. List of Subsidiaries.
23. Consent of KPMG Peat Marwick dated March 14,1994.
</TABLE>
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended December 31, 1993.
- --------
* Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-1070 unless otherwise
indicated.
20
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Olin Corporation
Date: February 24, 1994 /s/ John W. Johnstone, Jr.
By...................................
JOHN W. JOHNSTONE, JR.
CHAIRMAN OF THE BOARD, PRESIDENT
AND
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ John W. Johnstone, Jr.
.....................................
JOHN W. JOHNSTONE, JR. Chairman of the Board, President, Chief
Executive Officer and Director (Principal
Executive Officer)
/s/ Robert R. Frederick
.....................................
ROBERT R. FREDERICK Director
/s/ Donald W. Griffin
.....................................
DONALD W. GRIFFIN Director
/s/ William W. Higgins
.....................................
WILLIAM W. HIGGINS Director
/s/ Robert Holland, Jr.
.....................................
ROBERT HOLLAND, JR. Director
/s/ Jack D. Kuehler
.....................................
JACK D. KUEHLER Director
/s/ H. William Lichtenberger
.....................................
H. WILLIAM LICHTENBERGER Director
/s/ G. Jackson Ratcliffe, Jr.
.....................................
G. JACKSON RATCLIFFE, JR. Director
/s/ William L. Read
.....................................
WILLIAM L. READ Director
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ John P. Schaefer
.....................................
JOHN P. SCHAEFER Director
/s/Irving Shain
.....................................
IRVING SHAIN Director
/s/ Eugene F. Williams, Jr.
.....................................
EUGENE F. WILLIAMS, JR. Director
/s/ Robert L. Yohe
.....................................
ROBERT L. YOHE Director
/s/ James A. Riggs
.....................................
JAMES A. RIGGS Senior Vice President and Chief Financial
Officer (Principal Financial Officer)
/s/ Emanuel J. DiTeresi
.....................................
EMANUEL J. DITERESI Vice President and Controller (Principal
Accounting Officer)
</TABLE>
Date: February 24, 1994
S-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF OLIN CORPORATION:
Under date of January 27, 1994, we reported on the consolidated balance
sheets of Olin Corporation and subsidiaries as of December 31, 1993 and 1992,
and the related consolidated statements of income, shareholders' equity and
cash flows for each of the years in the three-year period ended December 31,
1993, as contained in the 1993 Annual Report to Shareholders. Our report refers
to a change in accounting for postretirement benefits other than pensions and
income taxes in 1992. These consolidated financial statements and our report
thereon are incorporated by reference in the annual report on Form 10-K for the
year 1993. In connection with our audits of the aforementioned consolidated
financial statements, we also have audited the related financial statement
schedules as listed in Item 14(a)2 of the annual report on Form 10-K for the
year 1993. These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK
Stamford, Connecticut
January 27, 1994
F-1
<PAGE>
SCHEDULE V
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
PROPERTY, PLANT, AND EQUIPMENT
THREE YEARS ENDED DECEMBER 31, 1993
(IN MILLIONS)
<TABLE>
<CAPTION>
BALANCE AT BALANCE
BEGINNING ADDITIONS RETIREMENTS RECLASSI- AT END
CLASSIFICATION OF PERIOD AT COST(1) OR SALES FICATIONS OF PERIOD(2)
-------------- ---------- ---------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
1993:
Land and improvements
to land............... $ 119 $ -- $ 2 $ 10 $ 127
Buildings and building
equipment............. 295 -- 10 11 296
Machinery and
equipment............. 1,885 3 92 155 1,951
Leasehold improvements. 30 -- 10 2 22
Construction in
progress.............. 163 132 4 (178) 113
------ ---- ---- ----- ------
$2,492 $135 $118 $ -- $2,509
====== ==== ==== ===== ======
1992:
Land and improvements
to land............... $ 99 $ -- $ -- $ 20 $ 119
Buildings and building
equipment............. 287 -- 5 13 295
Machinery and
equipment............. 1,819 1 103 168 1,885
Leasehold improvements. 28 -- -- 2 30
Construction in
progress.............. 197 172 3 (203) 163
------ ---- ---- ----- ------
$2,430 $173 $111 $ -- $2,492
====== ==== ==== ===== ======
1991:
Land and improvements
to land............... $ 101 $ 1 $ -- $ (3) $ 99
Buildings and building
equipment............. 288 4 8 3 287
Machinery and
equipment............. 1,742 23 60 114 1,819
Leasehold improvements. 21 1 -- 6 28
Construction in
progress.............. 145 172 -- (120) 197
------ ---- ---- ----- ------
$2,297 $201 $ 68 $ -- $2,430
====== ==== ==== ===== ======
</TABLE>
- --------
(1) Additions include in 1993 assets of previously nonconsolidated affiliate
and assets of business acquired in 1991 as of the date of acquisition.
(2) Depreciation is computed on the straight line basis over the estimated
useful lives of the related assets resulting in the following ranges of
annual depreciation rates:
<TABLE>
<S> <C>
Improvements to land............................... 5 to 10%
Buildings and building equipment................... 4 to 10%
Machinery and equipment............................ 8 to 33%
</TABLE>
F-2
<PAGE>
SCHEDULE VI
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT, AND EQUIPMENT
THREE YEARS ENDED DECEMBER 31, 1993
(IN MILLIONS)
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS OTHER CHANGES BALANCE
BEGINNING CHARGED TO RETIREMENTS AND RECLASSI- AT END
DESCRIPTION OF PERIOD INCOME OR SALES FICATIONS(1) OF PERIOD
----------- ---------- ---------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C>
1993:
Improvements to land... $ 34 $ 4 $ -- $-- $ 38
Buildings and building
equipment............. 132 12 7 -- 137
Machinery and
equipment............. 1,379 114 56 1 1,438
Leasehold improvements. 13 1 3 -- 11
------ ---- ---- --- ------
$1,558 $131 $66 $ 1 $1,624
====== ==== ==== === ======
1992:
Improvements to land... $ 31 $ 3 $ -- $-- $ 34
Buildings and building
equipment............. 125 12 5 -- 132
Machinery and
equipment............. 1,360 101 82 -- 1,379
Leasehold improvements. 15 1 3 -- 13
------ ---- ---- --- ------
$1,531 $117 $90 $-- $1,558
====== ==== ==== === ======
1991:
Improvements to land... $ 29 $ 2 $ -- $-- $ 31
Buildings and building
equipment............. 122 11 10 2 125
Machinery and
equipment............. 1,304 98 50 8 1,360
Leasehold improvements. 13 2 -- -- 15
------ ---- ---- --- ------
$1,468 $113 $60 $10 $1,531
====== ==== ==== === ======
</TABLE>
- --------
(1) Other changes include in 1993 accumulated depreciation of previously
nonconsolidated affiliate and accumulated depreciation of business acquired
in 1991 as of the date of acquisition.
F-3
<PAGE>
SCHEDULE VIII
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1993
(IN MILLIONS)
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS BALANCE
BEGINNING CHARGED AT END
DESCRIPTION OF PERIOD TO INCOME DEDUCTIONS OF PERIOD
----------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
1993:
Reserves deducted from assets:
Doubtful receivables................ $10 $ 3 $ 1(1) $12
=== === === ===
1992:
Reserves deducted from assets:
Doubtful receivables................ $13 $ 3 $ 6(1) $10
=== === === ===
1991:
Reserves deducted from assets:
Doubtful receivables................ $12 $ 5 $4(1) $13
=== === === ===
</TABLE>
- --------
(1) Principally bad debts written off, net of recoveries.
F-4
<PAGE>
SCHEDULE IX
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
SHORT-TERM BORROWINGS
THREE YEARS ENDED DECEMBER 31, 1993
(IN MILLIONS)
<TABLE>
<CAPTION>
MAXIMUM AVERAGE WEIGHTED
WEIGHTED AMOUNT AMOUNT AVERAGE
CATEGORY OF BALANCE AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM AT END INTEREST DURING THE DURING THE DURING THE
BORROWINGS(1) OF PERIOD RATE PERIOD PERIOD(2) PERIOD(3)
------------- --------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
1993:
Commercial paper....... $ 30 3% $108 $ 59 3%
Bank loans............. 64 4% $207 122 3%
---- ----
Total short-term
borrowings........... $94 $239 $181
==== ====
1992:
Commercial paper....... $ -- -- $170 $ 49 4%
Bank loans............. 72 5% $262 156 5%
---- ----
Total short-term
borrowings........... $ 72 $377 $205
==== ====
1991:
Commercial paper....... $108 5% $147 $76 6%
Bank loans............. 54 9% $131 100 7%
---- ----
Total short-term
borrowings........... $162 $212 $176
==== ====
</TABLE>
- --------
(1) Commercial paper and bank loans are generally for terms of 30 to 90 days
and are non-renewable. Bank loans include borrowings by foreign
subsidiaries from local banks.
(2) Represents an average of daily balances for commercial paper and primarily
an average of daily balances for bank loans.
(3) Average amount outstanding during the period compared to total interest
expense incurred during the year.
F-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
3(a) Olin's Restated Articles of Incorporation as amended effective January
15, 1992--Exhibit 3(a) to Olin's Form 10-K for 1991.*
3(b) By-Laws of Olin as amended effective March 1, 1994.
4(a) Articles of Amendment designating ESOP Preferred Shares, par value $1
per share--Exhibit 4 to Olin's Form 10-Q for the Quarter ended June
30, 1989.*
4(b) Articles of Amendment designating Series A Conversion Preferred Stock,
par value $1 per share--Exhibit 4(b) to Olin's Form 10-K for 1991.*
4(c) Rights Agreement dated as of February 27, 1986 between Olin and
Manufacturers Hanover Trust Company, Rights Agent--Exhibit 1 to Olin's
Form 8-A dated February 28, 1986, covering Common Stock Purchase
Rights.*
4(d) Form of Senior Debt Indenture between Olin and Chemical Bank--Exhibit
4(a) to Olin's Form 8-K dated June 15, 1992; Prospectus Supplement
dated June 17, 1992 to Prospectus dated June 16, 1992, with respect to
Olin's 8% Senior Notes Due 2002 filed under Registration Statement No.
33-4479.*
4(e) Form of Subordinated Debt Indenture between Olin and Bankers Trust
Company--Exhibit 4(i) to Registration No. 33-4479; and Prospectus
Supplement dated June 17, 1987 to Prospectus dated February 3, 1987,
with respect to Olin's 9 1/2% Subordinated Notes Due 1997--filed under
Registration Statement No. 33-4479.*
4(f) Credit Agreement, dated as of September 30, 1993, among Olin and the
banks named therein--Exhibit 4 to Olin's Form 10-Q for the Quarter
ended September 30, 1993.*
4(g) Letters, dated December 15, 1993, amending Credit Agreement, dated as
of September 30, 1993.
10(a) 1980 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries, as amended--Exhibit 10(a) to Olin's Form 10-K for 1991.*
10(b) 1988 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries--Exhibit A to Olin's Proxy Statement relating to its 1988
Annual Meeting of Shareholders.*
10(c) Amendments to 1988 Stock Option Plan and to 1980 Stock Option Plan,
adopted May 25, 1989--Exhibit 10(c) to Olin's Form 10-Q for Quarter
ended June 30, 1989.*
10(d) Olin Corporation Performance Unit Plan, as amended April 24, 1986--
Exhibit 10(a) to Olin's Form 10-Q for Quarter ended March 31, 1986.*
10(e) Olin Corporate Incentive Compensation Plan--Exhibits 1(b) and 2(b) to
Registration No. 2-64811.*
10(f) Olin Deferred Salary Plan, effective January 1, 1983.
10(g) Form of Directors' deferral plan.
10(h) Amendments to Olin Corporation Performance Unit Plan, Corporate
Incentive Compensation Plan, Deferred Salary Plan and Directors'
deferral plan, adopted September 29, 1988--Exhibit 10(j) to Olin's
Form 10-K for 1988.*
10(i) Amendment to Olin Corporation Performance Unit Plan, adopted May 25,
1989--Exhibit 10(b) to Olin's Form 10-Q for Quarter ended June 30,
1989.*
10(j) Amendment to Olin Corporation Performance Unit Plan, adopted September
26, 1991--Exhibit 10(j) to Olin's Form 10-K for 1991.*
10(k) Amendment to Olin Corporation Performance Unit Plan, adopted December
16, 1993.
</TABLE>
- --------
* Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-1070 unless otherwise
indicated.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10(l) Deferral elections with respect to certain acquisitions or "change of
control events"--Exhibit 10(h) to Olin's Form 10-K for 1986.*
10(m) Olin Senior Executive Pension Plan--Exhibit 10(k) to Olin's Form 10-K
for 1984; Exhibit 19 to Olin's Form 10-Q for Quarter ended September
30, 1985.*
10(n) Amendment to Senior Executive Pension Plan, adopted December 17,
1987--Exhibit 10(k) to Olin's Form 10-K for 1987.*
10(o) Amendment to Senior Executive Pension Plan, adopted September 29,
1988--Exhibit 10(n) to Olin's Form 10-K for 1988.*
10(p) Amendments to Olin Senior Executive Pension Plan, adopted May 25,
1989--Exhibit 10(a) to Olin's Form 10-Q for Quarter ended June 30,
1989.*
10(q) Amendment to Olin Senior Executive Pension Plan, adopted September 30,
1993.
10(r) Olin Supplementary Contributing Employee Ownership Plan, effective
January 1, 1990--Exhibit 10(p) to Olin's Form 10-K for 1992.*
10(s) Form of arrangement to credit 100 shares of Olin Common Stock to
certain Directors in each year from 1985 through 1993--Exhibit 10(m)
to Olin's Form 10-K for 1984.*
10(t) Olin Corporation Key Executive Life Insurance Program--Exhibit 10(b)
to Olin's Form 10-Q for Quarter ended March 31, 1986.*
10(u) Form of Olin Corporation Endorsement Split Dollar Agreement (effective
January 1, 1993)--Exhibit 10(s) to Olin's Form 10-K for 1992.*
10(v) Form of executive agreement between Olin and certain executive
officers--Exhibit 10(a) to Olin's Form 10-Q for Quarter ended
September 30, 1989.*
10(w) Form of special severance agreement dated November 1, 1989, provided
to certain executives to become operative upon "change in control
event"--Exhibit 10(b) to Olin's Form 10-Q for Quarter ended September
30, 1989.*
10(x) Retirement Plan for Non-Employee Directors of Olin Corporation, as
amended through December 12, 1991--Exhibit 10(u) to Olin's Form 10-K
for 1991.*
10(y) Change in Control elections regarding both the Directors' deferral
plan and the arrangement to credit 100 shares of Olin Common Stock to
certain Directors--Exhibit 10(z) to Olin's form 10-K for 1989.*
10(z) Olin 1991 Long Term Incentive Plan, as amended through January 30,
1992--Exhibit 10(w) to Olin's Form 10-K for 1991.*
10(aa) Description of 1991 Performance Unit Awards granted under the Olin
1991 Long Term Incentive Plan--Exhibit 10(w) to Olin's Form 10-K for
1991.*
10(bb) Description of 1992 Performance Unit Awards granted under the Olin
1991 Long Term Incentive Plan--Exhibit 10(z) to Olin's Form 10-K for
1992.*
10(cc) Description of Performance Share Awards granted under the Olin 1991
Long Term Incentive Plan--Exhibit 10 to Olin's Form 10-Q for the
Quarter ended June 30, 1993.*
10(dd) Board Resolution adopted April 25, 1991 regarding payment of deferred
amounts--Exhibit 10(y) to Olin's Form 10-K for 1991.*
10(ee) Amendments to Olin 1991 Long Term Incentive Plan, adopted January 27,
1994.
11 Computation of Per Share Earnings.
12 Computation of Ratio of Earnings to Fixed Charges (unaudited).
13 Excerpts from the 1993 Annual Report to Shareholders.
21 List of Subsidiaries.
23 Consent of KPMG Peat Marwick, dated March 14, 1994.
</TABLE>
- --------
* Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-1070 unless otherwise
indicated.
<PAGE>
EXHIBIT 3(B)
BY-LAWS OF OLIN CORPORATION EFFECTIVE MARCH 1, 1994
-------------------------
ARTICLE I. MEETINGS OF SHAREHOLDERS.
SECTION 1. PLACE OF MEETINGS. All meetings of the shareholders of Olin
Corporation (hereinafter called the "Corporation") shall be held at such place,
either within or without the Commonwealth of Virginia, as may from time to time
be fixed by the Board of Directors of the Corporation (hereinafter called the
"Board").
SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders of the
Corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting shall be held on the last
Thursday in April in each year (or, if that day shall be a legal holiday, then
on the next succeeding business day), or on such other day and/or in such other
month as may be fixed by the Board, at such hour as may be specified in the
notice thereof.
SECTION 3. SPECIAL MEETINGS. A special meeting of the shareholders for any
purpose or purposes, unless otherwise provided by law or in the Articles of
Incorporation of the Corporation as from time to time amended (hereinafter
called the "Articles"), may be held at any time upon the call of the Board, the
Chairman of the Board, the President or the holders of a majority of the shares
of the issued and outstanding stock of the Corporation entitled to vote at the
meeting.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by law or the
Articles, not less than ten nor more than sixty days notice in writing of the
place, day, hour and purpose or purposes of each meeting of the shareholders,
whether annual or special, shall be given to each shareholder of record of the
Corporation entitled to vote at such meeting, either by the delivery thereof to
such shareholder personally or by the mailing thereof to such shareholder in a
postage prepaid envelope addressed to such shareholder at his address as it
appears on the stock transfer books of the Corporation; provided, however, that
in the case of a special meeting of shareholders called by the shareholders,
such notice shall be given at least fifty days before the date of the meeting.
Notice of any meeting of shareholders shall not be required to be given to any
shareholder who shall attend the meeting in person or by proxy, unless
attendance is for the express purpose of objecting to the transaction of any
business because the meeting was not lawfully called or convened, or who shall
waive notice thereof in writing signed by the shareholder before, at or after
such meeting. Notice of any adjourned meeting need not be given, except when
expressly required by law.
SECTION 5. QUORUM. Shares representing a majority of the votes entitled to be
cast on a matter by all classes or series which are entitled to vote thereon
and be counted together collectively, represented in person or by proxy at any
meeting of the shareholders, shall constitute a quorum for the transaction of
business thereat with respect to such matter, unless otherwise provided by law
or the Articles. In the absence of a quorum at any such meeting or any
adjournment or adjournments thereof, shares representing a majority of the
votes cast on the matter of adjournment, either in person or by proxy, may
adjourn such meeting from time to time until a quorum is obtained. At any such
adjourned meeting at which a quorum has been obtained, any business may be
transacted which might have been transacted at the meeting as originally
called.
SECTION 6. VOTING. Unless Otherwise provided by law or the Articles, at each
meeting of the shareholders each shareholder entitled to vote at such meeting
shall be entitled to one vote for each
3(b)-1
<PAGE>
share of stock standing in his name on the books of the Corporation upon any
date fixed as hereinafter provided, and may vote either in person or by proxy
in writing. Unless demanded by a shareholder present in person or represented
by proxy at any meeting of the shareholders and entitled to vote thereon or so
directed by the chairman of the meeting, the vote on any matter need not be by
ballot. On a vote by ballot, each ballot shall be signed by the shareholder
voting or his proxy, and it shall show the number of shares voted.
SECTION 7. JUDGES. One or more judges or inspectors of election for any
meeting of shareholders may be appointed by the chairman of such meeting, for
the purpose of receiving and taking charge of proxies and ballots and deciding
all questions as to the qualification of voters, the validity of proxies and
ballots and the number of votes properly cast.
SECTION 8. CONDUCT OF MEETING. The chairman of the meeting at each meeting of
shareholders shall have all the powers and authority vested in presiding
officers by law or practice, without restriction, as well as the authority to
conduct an orderly meeting and to impose reasonable limits on the amount of
time taken up in remarks by any one shareholder.
ARTICLE II. BOARD OF DIRECTORS.
SECTION 1. NUMBER. CLASSIFICATION. TERM. ELECTION. The property, business and
affairs of the Corporation shall be managed under the direction of the Board as
from time to time constituted. The Board shall consist of thirteen directors,
but the number of directors may be increased to any number, not more than
eighteen directors, or decreased to any number, not less than three directors,
by amendment of these By-laws, provided that any increase or decrease by more
than thirty percent of the number of directors last elected by the shareholders
may only be effected by the shareholders. No director need be a shareholder.
The Board shall be divided into three classes, Class I, Class II and Class III,
as nearly equal in number as possible, with the members of each class to serve
for the respective terms of office provided in the Articles, and until their
respective successors shall have been duly elected or until death or
resignation or until removal in the manner hereinafter provided. In case the
number of directors shall be increased, the additional directors to fill the
vacancies caused by such increase shall be elected in accordance with the
provisions of Section 4 of Article VI of these By-laws. Any increase or
decrease in the number of directors shall be so apportioned among the classes
by the Board as to make all classes as nearly equal in number as possible.
Subject to the rights of holders of any Preferred Stock outstanding,
nominations for the election of directors may be made by the Board or a
committee appointed by the Board or by any shareholder entitled to vote in the
election of directors generally. However, any shareholder entitled to vote in
the election of directors generally may nominate one or more persons for
election as directors at a meeting only if it is a meeting of shareholders for
the purposes of electing directors and written notice of such shareholder's
intent to make such nomination or nominations has been given, either by
personal delivery or by United States mail, postage prepaid, to the Secretary
of the Corporation not later than (i) with respect to an election to be held at
an annual meeting of shareholders, 90 days in advance of such meeting and (ii)
with respect to an election to be held at a special meeting of shareholders for
the election of directors, the close of business of the seventh day following
the date on which notice of such meeting is first given to shareholders. Each
such notice shall set forth: (a) the name and address of the shareholder who
intends to make the nomination and of the person or persons to be nominated;
(b) a representation that the shareholder is a holder of record of shares of
the Corporation entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings between
the shareholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the shareholder; (d) such other
3(b)-2
<PAGE>
information regarding each nominee proposed by such shareholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission; and (e) the consent of each nominee
to serve as a director of the Corporation if so elected.
SECTION 2. COMPENSATION. Each director, in consideration of his serving as
such, shall be entitled to receive from the Corporation such amount per annum
or such fees for attendance at Board and Committee meetings, or both, in cash
or other property, including securities of the Corporation, as the Board shall
from time to time determine, together with reimbursements for the reasonable
expenses incurred by him in connection with the performance of his duties.
Nothing contained herein shall preclude any director from serving the
Corporation, or any subsidiary or affiliated corporation, in any other capacity
and receiving proper compensation therefor. If the Board adopts a resolution to
that effect, any director may elect to defer all or any part of the annual and
other fees hereinabove referred to for such period and on such terms and
conditions as shall be permitted by such resolution.
SECTION 3. PLACE OF MEETINGS. The Board may hold its meetings at such place
or places within or without the Commonwealth of Virginia as it may from time to
time by resolution determine or as shall be specified or fixed in the
respective notices or waivers of notice thereof.
SECTION 4. ORGANIZATION MEETING. After each annual election of directors, as
soon as conveniently may be, the newly constituted Board shall meet for the
purposes of organization. At such organization meeting, the newly constituted
Board shall elect officers of the Corporation and transact such other business
as shall come before the meeting. Notice of organization meetings of the Board
need not be given. Any organization meeting may be held at any other time or
place which shall be specified in a notice given as hereinafter provided for
special meetings of the Board, or in a waiver of notice thereof signed by all
the directors.
SECTION 5. REGULAR MEETINGS. Regular meetings of the Board may be held at
such time and place as may from time to time be specified in a resolution
adopted by the Board then in effect; and, unless otherwise required by such
resolution, or by law, notice of any such regular meeting need not be given.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board shall be held
whenever called by the Chief Executive Officer, or by the Secretary at the
request of any three directors. Notice of a special meeting shall be mailed to
each director, addressed to him at his residence or usual place of business,
not later than the second day before the day on which such meeting is to be
held, or shall be sent addressed to him at such place by telegraph, cable or
wireless, or be delivered personally or by telephone, not later than the day
before the day on which such meeting is to be held. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
need be specified in the notice of such meeting, unless required by the
Articles.
SECTION 7. QUORUM. At each meeting of the Board the presence of a majority of
the number of directors fixed by these By-laws shall be necessary to constitute
a quorum. The act of a majority of the directors present at a meeting at which
a quorum shall be present shall be the act of the Board, except as may be
otherwise provided by law or by these By-laws. Any meeting of the Board may be
adjourned by a majority vote of the directors present at such meeting. Notice
of any adjourned meeting need not be given.
SECTION 8. WAIVERS OF NOTICE OF MEETINGS. Anything in these By-laws or in any
resolution adopted by the Board to the contrary notwithstanding, notice of any
meeting of the Board need not be given to any director if such notice shall be
waived in writing signed by such director before, at or after the meeting, or
if such director shall be present at the meeting. Any meeting of the Board
shall be a legal meeting without any notice having been given or regardless of
the giving of any notice or the adoption of any resolution in reference
thereto, if every member of the Board shall be present thereat.
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Except as otherwise provided by law or these By-laws, waivers of notice of any
meeting of the Board need not contain any statement of the purpose of the
meeting.
SECTION 9. TELEPHONE MEETINGS. Members of the Board or any committee may
participate in a meeting of the Board or such committee by means of a
conference telephone or other means of communications whereby all directors
participating may simultaneously hear each other during the meeting, and
participation by such means shall constitute presence in person at such
meeting.
SECTION 10. ACTIONS WITHOUT MEETINGS. Any action that may be taken at a
meeting of the Board or of a committee may be taken without a meeting if a
consent in writing, setting forth the action, shall be signed, either before or
after such action, by all of the directors or all of the members of the
committee, as the case may be. Such consent shall have the same force and
effect as a unanimous vote.
ARTICLE III. INDEMNIFICATION.
(a) Every person who is or was a director, officer or employee of the
Corporation, or who, at the request of the Corporation, serves or has
served in any such capacity with another corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise shall be
indemnified by the Corporation against any and all liability and reasonable
expense that may be incurred by him in connection with or resulting from
any claim, action or proceeding (whether brought in the right of the
Corporation or any such other corporation, entity, plan or otherwise),
civil or criminal, in which he may become involved, as a party or
otherwise, by reason of his being or having been a director, officer or
employee of the Corporation, or such other corporation, entity or plan
while serving at the request of the Corporation, whether or not he
continues to be such at the time such liability or expense shall have been
incurred, provided that such person acted in good faith and believed that
his conduct was in the best interests of the Corporation or such other
corporation or entity or, in the case of an employee benefit plan, was in
the best interests of the participants in or beneficiaries of the plan; and
provided further that no person may be indemnified in connection with a
proceeding charging improper personal benefit to him from the Corporation
(or such other corporation, entity or plan) in which he was adjudged liable
on the basis that such benefit was improperly received by him, or in
respect of any amount recovered from him by the Corporation (or such other
corporation) or voluntarily paid by him in respect of any claim arising
under Section 16(b) of the Securities Exchange Act of 1934, as amended, or
in respect of any expense incurred by him in his assertion of any claim
against any person.
As used in this Article III: (i) the terms "liability" and "expense" shall
include, but shall no be limited to, counsel fees and disbursements and amounts
of judgments, fines or penalties against, and amounts paid in settlement by, a
director, officer or employee; (ii) the terms "director", "officer" and
"employee," unless the context otherwise requires, include the estate or
personal representative of any such person; (iii) a person is considered to be
serving an employee benefit plan as a director, officer or employee of the plan
at the Corporation's request if his duties to the Corporation also impose on
duties on, or otherwise involve services by, him to the plan or, in connection
with the plan, to participants in or beneficiaries of the plan; (iv) the term
"occurrence" means any act or failure to act, actual or alleged, giving rise to
a claim, action or proceeding; and (v) service as a trustee or as a member of a
management or similar committee of a partnership or joint venture shall be
considered service as a director, officer or employee of the trust, partnership
or joint venture.
The termination of any claim, action or proceeding, civil or criminal, by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that a director, officer or employee
did not meet the standards of conduct set forth in this paragraph (a). The
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burden of proof shall be on the Corporation to establish, by a preponderance of
the evidence, that the relevant standards of conduct set forth in this
paragraph (a) have not been met.
(b) Any indemnification under paragraph (a) of this Article shall be made
unless (i) the Board, acting by a majority vote of those directors who were
directors at the time of the occurrence giving rise to the claim, action or
proceeding involved and who are not at the time parties to such claim,
action or proceeding (provided there are at least five such directors),
finds that the director, officer or employee has not met the relevant
standards of conduct set forth in such paragraph (a), or (ii) if there are
not at least five such directors, the Corporation's principal Virginia
legal counsel, as last designated by the Board as such prior to the time of
the occurrence giving rise to the claim, action or proceeding involved, or
in the event for any reason such Virginia legal counsel is unwilling to so
serve, then Virginia legal counsel mutually acceptable to the Corporation
and the person seeking indemnification, deliver to the Corporation their
written advice that, in their opinion, such standards have not been met.
(c) Expenses incurred with respect to any claim, action or proceeding of the
character described in paragraph (a) shall, except as otherwise set forth
in this paragraph (c), be advanced by the Corporation prior to the final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is
not entitled to indemnification under this Article III. No security shall
be required for such undertaking and such undertaking shall be accepted
without reference to the recipient's financial ability to make repayment.
Notwithstanding the foregoing, the Corporation may refrain from, or
suspend, payment of expenses in advance if at any time before delivery of
the final finding described in paragraph (b), the Board or Virginia legal
counsel, as the case may be, acting in accordance with the procedures set
forth in paragraph (b), find by a preponderance of the evidence then
available that the officer, director or employee has not met the relevant
standards of conduct set forth in paragraph (a).
(d) No amendment or repeal of this Article III shall adversely affect or deny
to any director, officer or employee the rights of indemnification provided
in this Article III with respect to any liability or expense arising out of
a claim, action or proceeding based in whole or substantial part on an
occurrence the inception of which takes place before or while this Article
III, as adopted by the shareholders of the Corporation at the 1986 Annual
Meeting or the Corporation, is in effect. The provisions of this paragraph
(d) shall apply to any such claim, action or proceeding whenever commenced,
including any such claim, action or proceeding commenced after any
amendment or repeal of this Article III.
(e) The rights of indemnification provided in this Article III shall be in
addition to any rights to which any such director, officer or employee may
otherwise be entitled by contract or as a matter of law.
(f) Notwithstanding any other provisions of this Article III, the rights of
indemnification provided for in this Article III shall not exceed those
permitted by Section 13.1-704 of the Virginia Stock Corporation Act.
ARTICLE IV. COMMITTEES.
SECTION 1. EXECUTIVE AND FINANCE COMMITTEE. The Board may, by resolution or
resolutions adopted by a majority of the number of directors fixed by these By-
laws, appoint two or more directors to constitute an Executive and Finance
Committee, each member of which shall serve as such during the pleasure of the
Board, and may designate for such Committee a Chairman, who shall continue as
such during the pleasure of the Board.
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All completed action by the Executive and Finance Committee shall be reported
to the Board at its meeting next succeeding such action or at its meeting held
in the month following the taking of such action, and shall be subject to
revision or alteration by the Board; provided, that no acts or rights of third
parties shall be affected by any such revision or alteration.
The Executive and Finance Committee shall fix its own rules of procedure and
shall meet where and as provided by such rules or by resolution of the Board.
At all meetings of the Executive and Finance Committee, a majority of the full
number of members of such Committee shall constitute a quorum, and in every
case the affirmative vote of a majority of members present at any meeting of
the Executive and Finance Committee at which a quorum is present shall be
necessary for the adoption of any resolution.
During the intervals between the meetings of the Board, the Executive and
Finance Committee shall posses and may exercise all the power and authority of
the Board (including, without limitation, all the power and authority of the
Board in the management, control and direction of the financial affairs of the
Corporation) except with respect to those matters reserved to the Board by
Virginia law, in such manner as the Executive and Finance Committee shall deem
best for the interests of the Corporation, in all cases in which specific
directions shall not have been given by the Board.
SECTION 2. OTHER COMMITTEES. To the extent permitted by law, the Board may
from time to time by resolution adopted by a majority of the number of
directors fixed by these By-laws create such other committees of directors,
officers, employees or other persons designated by it as the Board shall deem
advisable and with such limited authority, functions and duties as the Board
shall by resolution prescribe. The Board shall have the power to change the
members of any such committee at any time, to fill vacancies, and to discharge
any such committee, either with or without cause, at any time.
ARTICLE V. OFFICERS.
SECTION 1. NUMBER. TERM. ELECTION. The officers of the Corporation shall be a
Chief Executive Officer, a Chairman of the Board, a President, one or more Vice
Presidents, a Treasurer, a Controller and a Secretary. The Board may appoint
such other officers and such assistant officers and agents with such powers and
duties as the Board may find necessary or convenient to carry on the business
of the Corporation. Such officers and assistant officers shall serve until
their successors shall be chosen, or as otherwise provided in these By-laws.
Any two or more offices may be held by the same person.
SECTION 2. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall,
subject to the control of the Board and the Executive and Finance Committee,
have full authority and responsibility for directing the conduct of the
business, affairs and operations of the Corporation. In addition to acting as
Chief Executive Officer of the Corporation, he shall perform such other duties
and exercise such other powers as may from time to time be prescribed by the
Board and shall see that all orders and resolutions of the Board and the
Executive and Finance Committee are carried into effect. In the event of the
inability of the Chief Executive Officer to act, the Board will designate an
officer of the Corporation to perform the duties of that office.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at
all meetings of the Board and of the shareholders and, in the absence of the
Chairman of the Executive and Finance Committee, at all meetings of the
Executive and Finance Committee. He shall perform such other duties and
exercise such other powers as may from time to time be prescribed by the Board
or, if he shall not be the Chief Executive Officer, by the Chief Executive
Officer.
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SECTION 4. PRESIDENT. The President shall have such powers and perform such
duties as may from time to time be prescribed by the Board or, if he shall not
be the Chief Executive Officer, by the Chief Executive Officer.
SECTION 5. VICE PRESIDENTS. Each Vice President shall have such powers and
perform such duties as may from time to time be prescribed by the Board, the
Chief Executive Officer or any officer to whom the Chief Executive Officer may
have delegated such authority.
SECTION 6. TREASURER. The Treasurer shall have the general care and custody
of the funds and securities of the Corporation. He shall perform such other
duties and exercise such other powers as may from time to time be prescribed by
the Board, the Chief Executive Officer or any officer to whom the Chief
Executive Officer may have delegated such authority. If the Board shall so
determine, he shall give a bond for the faithful performance of his duties, in
such sum as the Board may determine to be proper, the expense of which shall be
borne by the Corporation. To such extent as the Board shall deem proper, the
duties of the Treasurer may be performed by one or more assistants, to be
appointed by the Board.
SECTION 7. CONTROLLER. The Controller shall be the accounting officer of the
Corporation. He shall keep full and accurate accounts of all assets,
liabilities, receipts and disbursements and other transactions of the
Corporation and cause regular audits of the books and records of the
Corporation to be made. He shall also perform such other duties and exercise
such other powers as may from time to time be prescribed by the Board, the
Chief Executive Officer or any officer to whom the Chief Executive Officer may
have delegated such authority. If the Board shall so determine, he shall give a
bond for the faithful performance of his duties, in such sum as the Board may
determine to be proper, the expense of which shall be borne by the Corporation.
To such extent as the Board shall deem proper, the duties of the Controller may
be performed by one or more assistants, to be appointed by the Board.
SECTION 8. SECRETARY. The Secretary shall keep the minutes of meetings of
shareholders, of the Board, and, when requested, of Committees of the Board;
and he shall attend to the giving and serving of notices of all meetings
thereof. He shall keep or cause to be kept such stock and other books, showing
the names of the shareholders of the Corporation, and all other particulars
regarding them, as may be required by law. He shall also perform such other
duties and exercise such other powers as may from time to time be prescribed by
the Board, the Chief Executive Officer or any officer to whom the Chief
Executive Officer may have delegated such authority. To such extent as the
Board shall deem proper, the duties of the Secretary may be performed by one or
more assistants, to be appointed by the Board.
ARTICLE VI. REMOVALS, RESIGNATIONS AND VACANCIES
SECTION 1. REMOVAL OF DIRECTORS. Any director may be removed at any time but
only with cause, by the affirmative vote of the holders of record of a majority
of the shares of the Corporation entitled to vote on the election of directors,
given at a special meeting of the shareholders called expressly for the
purpose.
SECTION 2. REMOVAL OF OFFICERS. Any officer, assistant officer or agent of
the Corporation may be removed at any time, either with or without cause, by
the Board in its absolute discretion. Any such removal shall be without
prejudice to the recovery of damages for breach of the contract rights, if any,
of the officer, assistant officer or agent removed. Election or appointment of
an officer, assistant officer or agent shall not of itself create contract
rights.
SECTION 3. RESIGNATION. Any director, officer or assistant officer of the
Corporation may resign as such at any time by giving written notice of his
resignation to the Board, the Chief Executive Officer
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or the Secretary of the Corporation. Such resignation shall take effect at the
time specified therein or, if no time is specified therein, at the time of
delivery thereof, and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 4. VACANCIES. Any vacancy in the Board caused by death, resignation,
disqualification, removal, an increase in the number of directors, or any other
cause, may be filled (a) by the holders of shares of the Corporation entitled
to vote on the election of directors, but only at an annual meeting of
shareholders, or (b) by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board at any regular or special
meeting thereof. Each director so elected by the Board shall hold office until
the next annual election of directors, and each director so elected by the
shareholders shall hold office for a term expiring at the annual meeting of
shareholders at which the term of the class to which he has been elected
expires, and, in each case, until his successor shall be elected, or until his
death, or until he shall resign, or until he shall have been removed in the
manner hereinabove provided. Any vacancy in the office of any officer or
assistant officer caused by death, resignation, removal or any other cause, may
be filled by the Board for the unexpired portion of the term.
ARTICLE VII. CONTRACTS, LOANS, CHECKS, DRAFTS, DEPOSITS, ETC.
SECTION 1. EXECUTION OF CONTRACTS. Except as otherwise provided by law or by
these By-laws, the Board (i) may authorize any officer, employee or agent of
the Corporation to execute and deliver any contract, agreement or other
instrument in writing in the name and on behalf of the Corporation, and (ii)
may authorize any officer, employee or agent of the Corporation so authorized
by the Board to delegate such authority by written instrument to other
officers, employees or agents of the Corporation. Any such authorization by the
Board may be general or specific and shall be subject to such limitations and
restrictions as may be imposed by the Board. Any such delegation of authority
by an officer, employee or agent may be general or specific, may authorize re-
delegation, and shall be subject to such limitations and restrictions as may be
imposed in the written instrument of delegation by the person making such
delegation.
SECTION 2. LOANS. No loans shall be contracted on behalf of the Corporation
and no negotiable paper shall be issued in its name unless authorized by the
Board. When authorized by the Board, any officer, employee or agent of the
Corporation may effect loans and advances at any time for the Corporation from
any bank, trust company or other institution, or from any firm, corporation or
individual, and for such loans and advances may make, execute and deliver
promissory notes, bonds or other certificates or evidences of indebtedness of
the Corporation and when so authorized may pledge, hypothecate or transfer any
securities or other property of the Corporation as security for any such loans
or advances.
SECTION 3. CHECKS. DRAFTS. ETC. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all notes or other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by the
Board.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositaries as the Board may select or as may
be selected by the Treasurer or any other officer, employee or agent of the
Corporation to whom such power may from time to time be delegated by the Board.
SECTION 5. VOTING OF SECURITIES. Unless otherwise provided by the Board, the
Chief Executive Officer may from time to time appoint an attorney or attorneys,
or agent or agents of the
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Corporation, in the name and on behalf of the Corporation, to cast the votes
which the Corporation may be entitled to cast as the holder of stock or other
securities in any other corporation, any of whose stock or other securities may
be held by the Corporation, at meetings of the holders of the stock or other
securities of such other corporation, or to consent in writing, in the name of
the Corporation as such holder, to any action by such other corporation, and
may instruct the person or persons so appointed as to the manner of casting
such votes or giving such consent, and may execute or cause to be executed in
the name and on behalf of the Corporation and under its corporate seal, or
otherwise, all such written proxies or other instruments as such officer may
deem necessary or proper in the premises.
ARTICLE VIII. CAPITAL STOCK.
SECTION 1. CERTIFICATES. Every shareholder shall be entitled to a
certificate, or certificates, in such form as shall be approved by the Board,
signed by the Chairman of the Board, the President or a Vice President and the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
or any other officer authorized by these By-laws or a resolution of the Board,
certifying the number of shares owned by him in the Corporation. Any such
certificate may, but need not, bear the seal of the Corporation or a facsimile
thereof. If any such certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation or an employee of the
Corporation, the signatures of any of the officers above specified upon such
certificate may be facsimiles. In case any such officer who shall have signed
or whose facsimile signature shall have been placed upon such certificate shall
have ceased to be such before such certificate is issued, it may be issued by
the Corporation with the same effect as if such officer had not ceased to be
such at the date of its issue.
SECTION 2. TRANSFERS. Shares of stock of the Corporation shall be
transferable on the stock books of the Corporation by the holder in person or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary or the transfer agent, but, except as hereinafter
provided in the case of loss, destruction or mutilation of certificates, no
transfer of stock shall be entered until the previous certificate, if any,
given for the same shall have been surrendered and cancelled. Except as
otherwise provided by law, no transfer of shares shall be valid as against the
Corporation, its shareholders or creditors, for any purpose, until it shall
have been entered in the stock records of the Corporation by an entry showing
from and to whom transferred. The Board may also make such additional rules and
regulations as it may deem expedient concerning the issue and transfer of
certificates representing shares of the capital stock of the Corporation.
SECTION 3. RECORD DATE. For the purpose of determining shareholders entitled
to notice of or to vote at any meeting of shareholders or any adjournment
thereof, or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board may fix
in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than seventy days prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment thereof unless the Board
fixes a new record date, which it shall do if the meeting is adjourned to a
date more than 120 days after the date fixed for the original meeting.
SECTION 4. LOST. DESTROYED OR MUTILATED CERTIFICATES. In case of loss,
destruction or mutilation of any certificate of stock, another may be issued in
its place upon proof of such loss, destruction or mutilation and upon the
giving of a bond of indemnity to the Corporation in such form and in such sum
as the Board may direct; provided that a new certificate may be issued without
requiring any bond when, in the judgment of the Board, it is proper so to do.
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SECTION 5. RESTRICTIONS ON TRANSFER. To the extent that the Rights Agreement
dated as of February 27, 1986, between the Corporation and Manufacturers
Hanover Trust Company may be deemed to impose restrictions on the transfer of
securities of the Corporation, such restrictions are hereby authorized.
ARTICLE IX. INSPECTION OF RECORDS.
The Board from time to time shall determine whether, to what extent, at what
times and places, and under what conditions and regulations the accounts and
books and papers of the Corporation, or any of them, shall be open for the
inspection of the shareholders, and no shareholder shall have any right to
inspect any account or book or paper of the Corporation except as expressly
conferred by statute or by these By-laws or authorized by the Board.
ARTICLE X. AUDITOR.
The Board shall annually appoint an independent accountant who shall
carefully examine the books of the Corporation. One such examination shall be
made immediately after the close of the fiscal year and be ready for
presentation at the annual meeting of shareholders of the Corporation, and such
other examinations shall be made as the Board may direct.
ARTICLE XI. SEAL.
The seal of the Corporation shall be circular in form and shall bear the name
of the Corporation and the year "1892."
ARTICLE XII. FISCAL YEAR.
The fiscal year of the Corporation shall end on the 3lst day of December in
each year.
ARTICLE XIII. AMENDMENTS.
The By-laws of the Corporation may be altered, amended or repealed and new
By-laws may be adopted by the Board (except as Section 1 of Article II may
otherwise require), or by the holders of the outstanding shares of the
Corporation entitled to vote generally at any annual or special meeting of the
shareholders when notice thereof shall have been given in the notice of the
meeting of shareholders.
EMERGENCY BY-LAWS.
SECTION 1. DEFINITIONS. As used in these Emergency By-laws,
(a) the term "period of emergency" shall mean any period during which a quorum
of the Board cannot readily be assembled because of some catastrophic
event.
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(b) the term "incapacitated" shall mean that the individual to whom such term
is applied shall not have been determined to be dead but shall be missing
or unable to discharge the responsibilities of his office; and
(c) the term "senior officer" shall mean the Chairman of the Board, the
President, any corporate Vice President, the Treasurer, the Controller and
the Secretary, and any other person who may have been so designated by the
Board before the emergency.
SECTION 2. APPLICABILITY. These Emergency By-laws, as from time to time
amended, shall be operative only during any period of emergency. To the extent
not inconsistent with these Emergency By-laws, all provisions of the regular
By-laws of the Corporation shall remain in effect during any period of
emergency.
No officer, director or employee shall be liable for actions taken in good
faith in accordance with these Emergency By-laws.
SECTION 3. BOARD OF DIRECTORS.
(a) A meeting of the Board may be called by any director or senior officer of
the Corporation. Notice of any meeting of the Board need be given only to
such of the directors as it may be feasible to reach at the time and by
such means as may be feasible at the time, including publication or radio,
and at a time less than twenty-four hours before the meeting if deemed
necessary by the person giving notice.
(b) At any meeting of the Board, three directors in attendance shall constitute
a quorum. Any act of a majority of the directors present at a meeting at
which a quorum shall be present shall be the act of the Board. If less than
three directors should be present at a meeting of the Board, any senior
officer of the Corporation in attendance at such meeting shall serve as a
director for such meeting, selected in order of rank and within the same
rank in order of seniority.
(c) In addition to the Board's powers under the regular By-laws of the
Corporation to fill vacancies on the Board, the Board may elect any
individual as a director to replace any director who may be incapacitated
and to serve until the latter ceases to be incapacitated or until the
termination of the period of emergency, whichever first occurs. In
considering officers of the Corporation for election to the Board, the rank
and seniority of individual officers shall not be pertinent.
(d) The Board, during as well as before any such emergency, may change the
principal office or designate several alternative offices or authorize the
officers to do so.
SECTION 4. APPOINTMENT OF OFFICERS. In addition to the Board's powers under
the regular By-laws of the Corporation with respect to the election of
officers, the Board may elect any individual as an officer to replace any
officer who may be incapacitated and to serve until the latter ceases to be
incapacitated.
SECTION 5. AMENDMENTS. These Emergency By-laws shall be subject to repeal or
change by further action of the Board of Directors or by action of the
shareholders, except that no such repeal or change shall modify the provisions
of the second paragraph of Section 2 with regard to action or inaction prior to
the time of such repeal or change. Any such amendment of these Emergency By-
laws may make any further or different provision that may be practical and
necessary for the circumstances of the emergency.
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EXHIBIT 4(G)
December 15, 1993
Bank of Boston Connecticut c/o Bank of Boston Large Corporate New England 100
Federal Street Boston, MA 02110
Ladies/Gentlemen:
We refer to the Credit Agreement, dated as of September 30, 1993 ("Credit
Agreement"), among Olin Corporation ("Olin"), Bank of Boston Connecticut,
Chemical Bank, Citibank, N.A., Credit Suisse, Morgan Guaranty Trust Company of
New York, The Boatmen's National Bank of St. Louis and The Chase Manhattan
Bank, N.A.
We refer also to the charge in the amount of $131.8 million after taxes (the
"Charge"), relating to (a) personnel reductions, (b) business restructurings,
(c) environmental exposures, (d) closed sites, and (e) long term disability
(SFAS 112) and miscellaneous asset write-offs proposed to be taken by Olin in
the fourth quarter of 1993.
Kindly confirm below the bank's agreement that, for purposes of calculating
"EBIT", as defined in the Credit Agreement, the Charge shall be excluded from
the determination of net income.
Very truly yours,
OLIN CORPORATION
By _________________________________
Vice President and Treasurer
Confirmed:
BANK OF BOSTON CONNECTICUT
By _________________________________
Name: Title:
<PAGE>
EXHIBIT 4(G)
December 15, 1993
Chemical Bank 270 Park Avenue New York, NY 10017
Ladies/Gentlemen:
We refer to the Credit Agreement, dated as of September 30, 1993 ("Credit
Agreement"), among Olin Corporation ("Olin"), Bank of Boston Connecticut,
Chemical Bank, Citibank, N.A., Credit Suisse, Morgan Guaranty Trust Company of
New York, The Boatmen's National Bank of St. Louis and The Chase Manhattan
Bank, N.A.
We refer also to the charge in the amount of $131.8 million after taxes (the
"Charge"), relating to (a) personnel reductions, (b) business restructurings,
(c) environmental exposures, (d) closed sites, and (e) long term disability
(SFAS 112) and miscellaneous asset write-offs proposed to be taken by Olin in
the fourth quarter of 1993.
Kindly confirm below the bank's agreement that, for purposes of calculating
"EBIT", as defined in the Credit Agreement, the Charge shall be excluded from
the determination of net income.
Very truly yours,
OLIN CORPORATION
By _________________________________
Vice President and Treasurer
Confirmed:
CHEMICAL BANK
By _________________________________
Name: Title:
<PAGE>
EXHIBIT 4(G)
December 15, 1993
Citibank, N.A. 399 Park Avenue 8th Floor New York, NY 10043
Ladies/Gentlemen:
We refer to the Credit Agreement, dated as of September 30, 1993 ("Credit
Agreement"), among Olin Corporation ("Olin"), Bank of Boston Connecticut,
Chemical Bank, Citibank, N.A., Credit Suisse, Morgan Guaranty Trust Company of
New York, The Boatmen's National Bank of St. Louis and The Chase Manhattan
Bank, N.A.
We refer also to the charge in the amount of $131.8 million after taxes (the
"Charge"), relating to (a) personnel reductions, (b) business restructurings,
(c) environmental exposures, (d) closed sites, and (e) long term disability
(SFAS 112) and miscellaneous asset write-offs proposed to be taken by Olin in
the fourth quarter of 1993.
Kindly confirm below the bank's agreement that, for purposes of calculating
"EBIT", as defined in the Credit Agreement, the Charge shall be excluded from
the determination of net income.
Very truly yours,
OLIN CORPORATION
By _________________________________
Vice President and Treasurer
Confirmed:
CITIBANK, N.A.
By _________________________________
Name: Title:
<PAGE>
EXHIBIT 4(G)
December 15, 1993
Credit Suisse 12 East 49th Street New York, NY 10017
Ladies/Gentlemen:
We refer to the Credit Agreement, dated as of September 30, 1993 ("Credit
Agreement"), among Olin Corporation ("Olin"), Bank of Boston Connecticut,
Chemical Bank, Citibank, N.A., Credit Suisse, Morgan Guaranty Trust Company of
New York, The Boatmen's National Bank of St. Louis and The Chase Manhattan
Bank, N.A.
We refer also to the charge in the amount of $131.8 million after taxes (the
"Charge"), relating to (a) personnel reductions, (b) business restructurings,
(c) environmental exposures, (d) closed sites, and (e) long term disability
(SFAS 112) and miscellaneous asset write-offs proposed to be taken by Olin in
the fourth quarter of 1993.
Kindly confirm below the bank's agreement that, for purposes of calculating
"EBIT", as defined in the Credit Agreement, the Charge shall be excluded from
the determination of net income.
Very truly yours,
OLIN CORPORATION
By _________________________________
Vice President and Treasurer
Confirmed:
CREDIT SUISSE
By _________________________________
Name: Title:
<PAGE>
EXHIBIT 4(G)
December 15, 1993
Morgan Guaranty Trust Company of New York 60 Wall Street New York, NY 10260-
0060
Ladies/Gentlemen:
We refer to the Credit Agreement, dated as of September 30, 1993 ("Credit
Agreement"), among Olin Corporation ("Olin"), Bank of Boston Connecticut,
Chemical Bank, Citibank, N.A., Credit Suisse, Morgan Guaranty Trust Company of
New York, The Boatmen's National Bank of St. Louis and The Chase Manhattan
Bank, N.A.
We refer also to the charge in the amount of $131.8 million after taxes (the
"Charge"), relating to (a) personnel reductions, (b) business restructurings,
(c) environmental exposures, (d) closed sites, and (e) long term disability
(SFAS 112) and miscellaneous asset write-offs proposed to be taken by Olin in
the fourth quarter of 1993.
Kindly confirm below the bank's agreement that, for purposes of calculating
"EBIT", as defined in the Credit Agreement, the Charge shall be excluded from
the determination of net income.
Very truly yours,
OLIN CORPORATION
By _________________________________
Vice President and Treasurer
Confirmed:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By _________________________________
Name: Title:
<PAGE>
EXHIBIT 4(G)
December 15, 1993
The Boatmen's National Bank of St. Louis 800 Market Street St. Louis, MO 63101
Ladies/Gentlemen:
We refer to the Credit Agreement, dated as of September 30, 1993 ("Credit
Agreement"), among Olin Corporation ("Olin"), Bank of Boston Connecticut,
Chemical Bank, Citibank, N.A., Credit Suisse, Morgan Guaranty Trust Company of
New York, The Boatmen's National Bank of St. Louis and The Chase Manhattan
Bank, N.A.
We refer also to the charge in the amount of $131.8 million after taxes (the
"Charge"), relating to (a) personnel reductions, (b) business restructurings,
(c) environmental exposures, (d) closed sites, and (e) long term disability
(SFAS 112) and miscellaneous asset write-offs proposed to be taken by Olin in
the fourth quarter of 1993.
Kindly confirm below the bank's agreement that, for purposes of calculating
"EBIT", as defined in the Credit Agreement, the Charge shall be excluded from
the determination of net income.
Very truly yours,
OLIN CORPORATION
By _________________________________
Vice President and Treasurer
Confirmed:
THE BOATMEN'S NATIONAL BANK
OF ST. LOUIS
By _________________________________
Name: Title:
<PAGE>
EXHIBIT 4(G)
December 15, 1993
The Chase Manhattan Bank, N.A. One Chase Plaza New York, NY 10081
Ladies/Gentlemen:
We refer to the Credit Agreement, dated as of September 30, 1993 ("Credit
Agreement"), among Olin Corporation ("Olin"), Bank of Boston Connecticut,
Chemical Bank, Citibank, N.A., Credit Suisse, Morgan Guaranty Trust Company of
New York, The Boatmen's National Bank of St. Louis and The Chase Manhattan
Bank, N.A.
We refer also to the charge in the amount of $131.8 million after taxes (the
"Charge"), relating to (a) personnel reductions, (b) business restructurings,
(c) environmental exposures, (d) closed sites, and (e) long term disability
(SFAS 112) and miscellaneous asset write-offs proposed to be taken by Olin in
the fourth quarter of 1993.
Kindly confirm below the bank's agreement that, for purposes of calculating
"EBIT", as defined in the Credit Agreement, the Charge shall be excluded from
the determination of net income.
Very truly yours,
OLIN CORPORATION
By _________________________________
Vice President and Treasurer
Confirmed:
THE CHASE MANHATTAN BANK, N.A.
By _________________________________
Name:
Title:
<PAGE>
EXHIBIT 10(F)
OLIN DEFERRED SALARY PLAN
(Effective January 1, 1983)
The Olin Deferred Salary Plan ("Plan") is adopted by Olin Corporation
("Olin") to formalize the practice of permitting management employees to defer
salary to be received from Olin.
PARTICIPATION AND FUNDING
Participation in the Plan is limited to the select group of management and
highly compensated employees currently deferring salary and to those
participants in the Olin Corporate Incentive Compensation Plan and Performance
Compensation Programs who, after the effective date hereof, elect to defer
salary. The Plan shall be unfunded and payments to participants shall be made
from Olin's general assets.
CONDITIONS OF DEFERRAL
Salary which Olin and the employee agree to defer shall be deferred in
accordance with the provisions of the attached form of Deferred Salary
Agreement or such other form of agreement presently in effect between Olin and
the participant.
MISCELLANEOUS
Olin may amend, suspend or terminate the Plan at any time. Participation in
the Plan does not give any employee the right to continued employment by Olin.
<PAGE>
DEFERRED SALARY AGREEMENT
AGREEMENT made as of ____________________ between OLIN CORPORATION, a Virginia
(Date)
corporation ("Olin"), and ____________________________________ ("Employee"), an
(Employee's Name)
employee of Olin.
W I T N E S S E T H:
1. Employee's employment will continue for such period of time and at such
rate of salary as Olin shall determine.
2. Employee has elected to defer $ ___________________ per month of his or her
(Amount Deferred)
salary from Olin on the terms stated below.
3. Such deferred salary shall be deferred in the form of
( ) cash
( ) Olin common stock.
4. If the deferral is in the form of cash, interest on such deferred salary
will accrue from the last calendar day of the month in which such deferred
salary was earned to the date of payment provided for below, and subject to
change from time to time by the Olin Board of Directors or its Compensation
and Stock Option Committee ("Committee"), will be at a rate equal to Olin's
after-tax cost of borrowing as determined from time to time by the
Committee, the Chief Financial Officer, the Treasurer or the Comptroller of
Olin. Such officers or committee shall also determine from time to time
whether or not interest is to be compounded and the times of any
compounding.
5. If the deferral is in the form of Olin common stock, Employee's deferred
salary account will be credited with phantom Olin common stock valued at
the "fair market value"* of Olin common stock on a date or dates selected
by Olin. Employee will also be credited with additional shares of phantom
Olin common stock by treating as having been invested in such stock at its
"fair market value"* on the relevant dividend record date the cash dividend
which would have been paid on the shares of phantom Olin common stock
credited to Employee's deferred salary account if those shares were then
outstanding.
6. Employee's deferred salary account established under this Agreement will be
payable in installments on the following dates:
(a) the first installment will be on (specify January 15 or July 15 of a
specific year or "the next January 15 or July 15 following termination
of employment"); and
(b) an installment will be paid on each anniversary of the first installment
over the next _____________________________________________________ years
(No.
Yrs.)
for a total of ** installments.
7. Each such installment will consist of an amount equal to %*** of the
following:
(a) in the case of a deferral in the form of cash, the total deferred salary
accumulated for Employee hereunder during the period of his or her
employment plus the interest on such installment accumulated in
accordance with paragraph 4 to the date of payment; and
- -----------
*Fair market value means the average of the high and low sales prices of Olin
common stock on the relevant date as reported on the consolidated transaction
reporting system for New York Stock Exchange issues, or similar method of
valuation selected by Olin.
**Maximum of 20.
***Percent multiplied by total number of installments should equal 100%.
<PAGE>
(b) in the case of a deferral in the form of Olin common stock, the total
deferred stock account accumulated for Employee hereunder during the
period of his or her employment, including shares credited to Employee's
deferred salary account to reflect Olin dividends with a record date
occurring after the date hereof and prior to the date of payment.
Deferrals in the form of Olin common stock may, at the discretion of Olin,
be paid in stock or cash, or both. Should a deferral in the form of stock
be paid in cash, the portion of the deferred salary account to be paid will
be valued at the "fair market value"* of Olin common stock on the fifth
business day before payment is due. No fractional shares will be issued to
Employee; cash based on such "'fair market value" will be paid in lieu
thereof. Under certain circumstances, shares of Olin Common Stock delivered
to Employee hereunder may be "restricted" and may only be sold under SEC
Rule 144 or other exemption; if so, the stock certificate(s) will bear a
legend to that effect.
8. If Employee should die any time during the period of employment covered by
this Agreement or prior to the time that he or she has received full
payment of his or her deferred salary account hereunder, the remaining
unpaid installments will be paid to the beneficiary designated in the
Employee's will or, in the event a beneficiary has not been so designated,
to his or her estate. At Olin's sole option, any unpaid installments of
Employee's deferred salary account, including interest or dividend credits,
as the case may be, may be paid to such beneficiary or estate in one lump
sum.
9. Deferral of future salary payments may be terminated in whole or in part at
any time by either Olin or Employee by written notice to the other, and, in
that event, such salary shall be paid currently (without interest or
dividend credits) as earned. Termination of deferral shall be effective
only with respect to salary not yet earned at the time such written notice
is given.
10. If Employee desires to change the amount deferred, written notice of the
change, on a form supplied by Olin, must be received by Olin's corporate
staff department responsible for compensation matters (the "Olin
Department") no later than the last business day of the month preceding the
month in which the change is to be effective. Such notice will constitute
an amendment of paragraph 2.
11. If Employee desires to change the distribution commencement date or the
number of installments provided in paragraph 6, written notice of the
change, on a form supplied by Olin, must be received by the Olin Department
at least six months prior to the distribution commencement date. The
distribution commencement date may only be postponed to a later date. Such
notice will constitute an amendment of paragraphs 6 and 7.
12. If deferral under this Agreement of a part of Employee's salary should
result in a reduction in the amount of pension which would otherwise be
payable under the Olin Salaried Pension Plan, Olin will, in accordance with
and subject to the terms and provisions of the Olin Deferral Benefit
Pension Plan, pay a "Deferral Benefit" as provided in the latter Plan to
Employee in the form of a supplemental pension; it being understood that
the total pension benefit payable to Employee under the Olin Salaried
Pension Plan and the Olin Deferral Benefit Pension Plan will not exceed
that which would have been payable under the Olin Salaried Pension Plan if
Employee had deferred no portion of his or her salary.
- -----------
*Fair market value means the average of the high and low sales prices of Olin
common stock on the relevant date as reported on the consolidated transaction
reporting system for New York Stock Exchange issues, or similar method of
valuation selected by Olin.
<PAGE>
13. Employee understands that his or her deferred salary account is not
assignable (except in the event of his or her death), or subject to pledge
by Employee, and that Olin will refuse to recognize any assignment or
pledge by Employee.
14. In the event of a Change in Control, as defined below, all further
deferrals hereunder shall cease, and the balance in Employee's deferred
salary account shall, as Olin elects, forthwith be paid in a lump sum to
Employee or deposited under a "Rabbi" or other trust established by Olin
which shall assume the obligations of Olin under this Agreement; provided,
however, that Olin shall not be relieved from such obligations except to
the extent such trust performs the same.
"Change in control" as used in the preceding paragraph shall mean (i) Olin
ceases to be publicly owned with at least 1,000 stockholders; (ii) a person,
partnership, joint venture, corporation or other entity, or two or more of
any of the foregoing acting as a group (or a "person" within the meaning of
Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Act")), other than Olin, a majority-owned subsidiary of Olin
or an employee benefit plan of Olin or such subsidiary, become(s) the
"beneficial owner" (as defined in Rule 13d-3 under the Act) of 20% or more
of the then outstanding voting stock of Olin; (iii) during any period of two
consecutive years, individuals who at the beginning of such period
constitute Olin's Board of Directors (together with any new Director whose
election by Olin's Board of Directors or whose nomination for election by
Olin's stockholders, was approved by a vote of at least two-thirds of the
Directors then still in office who either were Directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Directors
then in office; or (iv) Olin's Board of Directors determines that a tender
offer for Olin's shares indicates a serious intention by the offeror to
acquire control of Olin.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date first above written.
OLIN CORPORATION
By ___________________________________
___________________________________
Employee
<PAGE>
EXHIBIT 10(G)
Date:
Olin Corporation 120 Long Ridge Road Stamford, CT 06904
Attention: Secretary
In accordance with the resolution regarding Directors' deferred compensation
adopted by the Board of Directors of Olin Corporation ("Olin") at the March 31,
1977 meeting, as amended by the Board on February 26, 1981, I hereby elect to
defer of my Director's annual fee and attendance fees as provided in such
resolution, such deferral to be effective as to all such fees accruing after
the date hereof until termination by Olin or me of this election as to future
fees.
In connection with such deferral, you are instructed as follows:
1. I wish to defer payment of all such fees until the following date
("deferral period"):
[_] the earlier of my death or termination of my service as a Director of
Olin.
[_] the earlier of my death or
_____________________________________________________________________ .
2. I wish to have the amount so deferred, together with deferred interest
credited thereon, paid on an annual basis:
[_] over a period of year following the deferral period;
[_] over a period equal to one year for each year or part thereof I shall
have served as an Olin Director when the deferral period ends.
3. I wish to have the amount so deferred, together with such deferred
interest, paid to me or in the event of my death to
_____________________________________________________________________ .
(Named Beneficiary or Estate)
No change in these instructions can be made unless it is made in a year prior
to the year in which payment would otherwise commence, except that I can change
any beneficiary designated in Item 3 by a notice in writing to the Secretary of
Olin.
I understand that if the deferral period ends in the first six months of a
year, the first installment of deferred amounts will be paid on July 15 of that
year and remaining installments on July 15 of each year thereafter; if such
period ends in the last six months of a year, the first installment will be
paid on January 15 of the following year and remaining installments on January
15 of each year thereafter.
____________________________________
Director
<PAGE>
BOARD OF DIRECTORS MEETING December 16, 1993 EXHIBIT 10(K)
Amendment to Olin Corporation Performance Unit Plan
RESOLVED that the Olin Corporation Performance Unit Plan, as amended, is
hereby amended by adding the following paragraph (e) to Section 11
thereof:
"(e) Olin shall withhold from the payment of Payment Values the amount
necessary to satisfy the Participant's U.S. Federal and, where
applicable, state and local tax withholding requirements."
<PAGE>
BOARD OF DIRECTORS MEETING September 30, 1993 EXHIBIT 10(Q)
Amendment to Olin Senior Executive Pension Plan
RESOLVED that effective May, 1990 the definition of "Salaried Plan" in
the Senior Executive Pension Plan of the Corporation shall be amended to
refer to the "Non Bargaining Employees Pension Plan of Olin Corporation
(and any successor plan)."
<PAGE>
EXHIBIT 10(EE)
BOARD OF DIRECTORS MEETING
January 27, 1994
AMENDMENTS TO THE OLIN 1991 LONG TERM INCENTIVE PLAN
RESOLVED that the Olin 1991 Long Term Incentive Plan (the "1991 Plan") is
hereby amended as follows:
(1) The proviso clause following clause (ii) of Section 7(a) of the 1991
Plan is amended to read in its entirety as follows:
"provided further that no amendment, suspension, discontinuation or
termination (i) that would impair the rights of such Participant, holder or
beneficiary shall be made with respect to Section 9 of the Plan after a
Change of Control, as defined therein and (ii) may increase the amount of
payment of any Award to any Participant."
(2) Section 7(b) of the 1991 Plan is amended to add the following after the
words "Section 9" and before the period:
"; provided further that the Committee may not increase the payment of any
Award granted any Participant."
<PAGE>
EXHIBIT 11
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF PER SHARE
EARNINGS
Primary earnings per share are computed by dividing net income less the ESOP
preferred stock dividend requirement by the weighted average number of common
shares outstanding plus an equivalent number (one-for-one) of common shares
assuming the conversion of Series A stock. Fully diluted earnings per share
reflect the dilutive effect of stock options and assume the conversion of
outstanding ESOP preferred stock into an equivalent number of common shares at
the date of issuance. Net income was reduced by an additional ESOP contribution
(differential between the common and ESOP preferred dividend rates under an
assumed conversion) necessary to satisfy the debt service requirement.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
(IN THOUSANDS) 1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Weighted average number of common shares
outstanding
and common stock equivalents.................... 21,840 21,598 19,001
Common shares issuable assuming the conversion of
outstanding ESOP preferred stock at the date of
issuance........................................ 1,623 1,597 1,569
Common shares issuable under outstanding stock
options and additional remuneration agreements
which have a dilutive effect on per share
earnings, computed by the "treasury stock"
method.......................................... 24 40 48
-------- -------- --------
Adjusted number of common shares outstanding..... 23,487 23,235 20,618
======== ======== ========
<CAPTION>
(IN MILLIONS)
<S> <C> <C> <C>
Net income (loss)................................ $ (92) $ 9 $ (13)
Less ESOP preferred dividend..................... (7) (8) (5)
-------- -------- --------
Net income (loss) adjusted for primary earnings $ (99) $ 1 $ (18)
(loss) per share.................................
======== ======== ========
Primary earnings (loss) per share................ $ (4.52) $ 0.06 $ (0.92)
======== ======== ========
Net income (loss)................................ $ (92) $ 9 $ (13)
Less additional ESOP contribution................ (2) (3) (1)
-------- -------- --------
Net income (loss) adjusted for fully diluted $ (94) $ 6 $ (14)
earnings (loss) per share........................
======== ======== ========
Fully diluted earnings (loss) per share (1)...... $ (4.01) $ 0.26 $ (0.68)
======== ======== ========
</TABLE>
- -----------
Note:
(1) Fully diluted income or loss per share in 1993, 1992 and 1991 was anti-
dilutive and therefore was not reported on the Income Statement.
11-1
<PAGE>
EXHIBIT 12
OLIN CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
(IN MILLIONS) 1993 1992 1991 1990 1989
----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings:
Income (loss) before taxes...................... $(150) $ 88 $(25) $116 $192
Add (deduct):
Income taxes of 50% owned affiliates........... 3 1 3 (4) 1
Equity in (earnings) loss of less than 50% 4 5 -- (5) (2)
owned affiliates................................
Dividends received from less than 50% owned -- -- -- 1 --
affiliates......................................
Interest capitalized, net of amortization...... (1) (4) (1) (2) --
Fixed charges as described below............... 56 58 63 72 73
----- ---- ---- ---- ----
Total......................................... $ (88) $148 $ 40 $178 $264
===== ==== ==== ==== ====
Fixed charges:
Interest expense............................... $ 41 $ 45 $ 50 $ 57 $ 59
Estimated interest factor in rent expense...... 15 13 13 15 14
----- ---- ---- ---- ----
Total......................................... $ 56 $ 58 $ 63 $ 72 $ 73
===== ==== ==== ==== ====
Ratio of earnings to fixed charges (a).......... -- 2.6 0.6 2.5 3.6
===== ==== ==== ==== ====
</TABLE>
- -----------
(a) In the twelve months ended December 31, 1993 and December 31, 1991,
earnings were inadequate to cover fixed charges by $144 million and $23
million, respectively. In the 1993 fourth quarter, the Company recorded an
after-tax charge of $132 million for personnel reductions, business
restructurings involving consolidations and re-alignments within divisions,
costs at sites of discontinued businesses, future environmental
liabilities, and other charges. In 1991, the Company recorded an after-tax
charge of $80 million to cover losses on the disposition and write-down of
certain businesses and costs of personnel reductions.
<PAGE>
EXHIBIT 13
Excerpts from 1993 Annual Report to Shareholders
Olin Corporation is a Fortune 200 company concentrated primarily in chemicals,
materials and metals, defense, sporting ammunition and aerospace.
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
1993 Compared to 1992
Although the economy has shown some recent signs of improvement, the recession
has continued to influence some of the company's major product lines. The
lingering effects of the recession, the inability to raise prices for certain
chemical products, the declining levels of defense procurement and intense price
competition in the metals industry have adversely impacted the company's
financial performance. Also in 1993, a series of strategic actions were
announced that resulted in a pretax charge to operations of $213 million ($132
million after tax) to cover costs for personnel reductions, business
restructurings involving the consolidations and re-alignments within divisions,
costs at sites of discontinued businesses, future environmental liabilities, and
other charges. As a result, the company reported a 1993 net loss of $92 million,
equal to $4.52 per share. Net income in 1992 was $9 million or 6 cents per share
and included an after-tax charge of $46 million for the adoption of two
financial accounting standards involving retiree benefits and income taxes.
Sales for 1993 were $2.4 billion, up slightly from 1992's level.
Chemicals
Chemicals 1993 sales were $1,117 million, up 12% from last year. This increase
was attributable in part to higher performance urethanes sales, particularly for
the new specialty urethanes coatings, and sales of a previously non-consolidated
affiliate in Europe. Segment net loss for 1993 was $94 million which included
$106 million of the 1993 charge, compared to 1992's net income of $21 million.
The decline in net income was due primarily to the poor performance from the
chlor-alkali and flexible urethanes businesses.
Despite a 3% increase in the 1993 chlorine industry operating rate to 97% of
capacity, chlor-alkali financial performance was significantly behind 1992's
level. Chlorine prices increased throughout 1993 driven by strong demand from
plastic manufacturers. Conversely, demand for caustic was sluggish and adversely
affected by over-supply conditions in the marketplace. The decline in caustic
prices was greater than the increase in chlorine prices. These factors along
with higher electricity costs (caused by severe weather conditions in the
Southeast and a certain nuclear power plant shutdown) and operating problems at
the Niachlor facility were the main contributors to the 1993 decline in chlor-
alkali's financial performance.
Sales of flexible urethanes increased over 1992's level. Higher domestic TDI
volumes and prices more than offset lower international prices and contributed
to the sales increase. Flexible polyols volumes and prices were slightly ahead
of 1992's levels. Despite the sales gains, the flexible urethanes business lost
money once again in 1993. Production problems early in the year, lower
international prices and the unfavorable performance from the company's two
Venezuelan joint ventures contributed to the additional losses.
Sales of acids, sodium hydrosulfite and other industrial chemicals in 1993
were comparable to 1992 sales, while net profits were slightly higher due
primarily to the strong demand for sodium hydrosulfite by the textile and paper
industries.
In the pool products business, 1993's financial performance was comparable to
1992. Improved weather conditions combined with sales of a previously non-
consolidated European affiliate accounted for the revenue increase. Higher
product exports and market share of bulk chemicals also contributed to
mitigating the profit impact of lower pricing due to on-going competitive
pressures. The additional volumes and the improved operating results from a
Brazilian joint venture offset the profit impact of lower prices, a less
favorable product mix and higher administrative expenses.
Specialty and organic chemicals sales were equal to last year's level, while
profits increased significantly from 1992. The company expanded its biocides
products and markets in 1993, with shipments to the Far East and other
international customers more than doubling. The combination of increased
shipments and lower raw materials costs for propylene and ethylene oxide
accounted for the improvement in sales and profitability of the specialty
surfactants business.
Sales of performance urethanes were well ahead of last year while associated
operating losses declined significantly. Higher sales volumes and a lower raw
material cost were the main contributors to the improved performance of the
polyols business. In its first full year of operations in 1993, the new
specialty urethanes coatings business built market share through competitive
pricing.
The 1994 outlook for the Chemicals segment is positive. Chlor-alkali's results
are expected to be slightly improved in 1994. Continuing strong demand for
chlorine is anticipated while at the same time adding to the over-supply
position for caustic. The pricing outlook could become more complex as a
competitor is expected to bring on additional capacity early in the year.
Flexible urethane's financial performance is anticipated to be enhanced by
increased pricing and volume. The absence of a TDI plant maintenance turnaround
and more efficient plant operations are expected to improve flexible urethanes
manufacturing performance and product availability. Continuing strong demand
from the textile and paper industries, price stability and declining raw
material costs are anticipated to have a favorable impact on sodium
hydrosulfite's 1994 performance. In addition, the sulfuric acid business is
expected to benefit from the new acid regeneration plant. In the pool products
business higher sales volumes and reduced selling and administration expenses
are expected to improve 1994's performance. New product introductions in
biocides, surfactants, custom chemicals and an expanded hydrazine solutions
business are expected to increase sales and profits of the specialty and organic
chemicals business. In performance urethanes, differentiated products with
unique characteristics could permit the
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<PAGE>
company to maintain its market share in this business area and improve financial
performance. Sales of urethanes coatings products are estimated to double as
three new products are expected to be commercialized. In the electronic
materials business, increased demand for MQUAD, a proprietary metal package for
the semiconductor industry, is expected to be a significant contributor to a
1994 sales increase. The profit impact from the additional packaging business
along with volume and mix improvements in the company's high-purity electronic
chemicals businesses and joint venture operations are expected to contribute to
a year-to-year increase in profits.
Metals
Metals sales of $660 million declined 2% on lower metal values and reduced
levels of utility and defense-related business. The Indianapolis operations,
Mill Products and the Fabricating business, and A. J. Oster Co. (Oster) each
recorded higher volumes and improved product mix. Record commercial shipments of
brass strip were achieved in 1993. In addition, the expansion of the East Alton
mill was completed in mid-1993, contributing to improved quality and
productivity.
Metals net income was $14 million in 1993, compared to $29 million in 1992.
The 1993 income is net of a $12 million charge for costs associated with the
1993 strategic action plan. The profit decline resulted from lower sales to the
defense and utility industries and pricing pressures as a competitor brought
additional capacity on line. In addition, losses from the Langenberg joint
venture were significantly greater than the corresponding loss in 1992. In the
1993 fourth quarter, the company sold its interest in this venture to its
partner for approximately book value, avoiding a continuation of expected losses
in 1994. Offsetting these negative income factors to some degree were the strong
profit performance from the Oster and Indianapolis operations due to higher
shipments of brass strip.
With an expected stable-to-improving economy that will support an increased
demand for brass strip and strip-related products, the 1994 outlook for the
Metals segment is favorable. Sales are projected to increase due to higher metal
values, (primarily for copper), higher volumes and an improved product mix in
most operations. Sales of defense-related products are expected to decline due
to reduced government procurements. Excess domestic capacity may lower industry
operating rates and may create a very competitive pricing environment. Profits
from the additional volumes, cost reductions (including an early retirement
incentive program), profit improvement programs along with the absence of losses
from the German joint venture are expected to contribute to a slight increase in
segment net income.
Defense and Ammunition
Defense and Ammunition segment sales of $646 million were 8% behind 1992's level
due primarily to lower shipments of certain tank and medium caliber ammunition
and delays of awards/start-up of new Aerospace government programs. These
reduced sales volumes along with higher costs incurred on certain government
contracts in 1993 contributed to an 18% decline in segment net income, excluding
$14 million of the 1993 charge applicable to this segment.
The Ordnance division experienced lower shipments of certain large and medium
caliber ammunition due to shrinking defense procurements. Net income was further
impacted by higher severance costs as the division continued to resize,
reflecting the declining U.S. defense budgets. In 1993, the company entered into
negotiations to purchase the medium caliber ordnance business of GenCorp Inc.
The proposed acquisition would enable the company to become a full range medium
caliber ammunition manufacturer.
Winchester's 1993 sales decreased 2% from 1992 resulting from the completion
in 1992 of several foreign ammunition contracts and lower shipments of small
caliber military and export ammunition partially offset by higher domestic
sales. An improved product mix, higher domestic selling prices and favorable
manufacturing cost performance more than offset the reduced export profit
margins, resulting in a slight improvement in net income.
The Aerospace division financial results were mixed for 1993; sales declined
11% while net income increased 21%. Lower sales of certain solid propellant
products and canceled/delayed Department of Defense (DoD) contract awards
contributed to the sales decline. The related profit impact from lower sales was
more than offset by the absence of cost overruns on certain fixed-price
contracts and the costs of closing the Wadsworth facility, both in 1992, along
with lower operating expenses in 1993.
In 1994, sales for the Defense and Ammunition segment are projected to decline
as lower shipments of medium caliber and large caliber ammunition are expected
to offset higher export ammunition sales and new DoD awards in the Aerospace
division. Commercial ammunition sales are anticipated to be comparable to 1993's
level. Segment net income is projected to be slightly lower than in 1993. The
lower profit impact from the aforementioned sales and reduced revenues from
managing the Lake City Army Ammunition plant are expected to negate any profit
improvement from lower raw material costs and operating expenses.
U.S. Government sales amounted to $354 million in 1993, $409 million in 1992
and $453 million in 1991. Approximately 89% of
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<PAGE>
1993 sales were to the DoD or agencies thereof. Continuing reductions in the
levels of defense procurement are currently adversely affecting the Defense and
Ammunition segment's performance and may continue to do so in future periods.
Consequently, these reductions may also adversely affect, to a lesser extent,
the company's financial performance in future years, including its income,
liquidity, capital resources and financial condition. In addition, changes in
the strategic direction of defense spending and the timing of defense
procurement may also adversely affect this segment and the company. The precise
impact of defense spending cutbacks will depend on the level of cutbacks, the
extent to which these cutbacks are in the conventional ammunition area and the
company's ability to mitigate the impact of the cutbacks with new business or by
business consolidations. The company currently provides services to the U.S.
Government in facilities management and is pursuing other business areas such as
ordnance demilitarization. In view of continuing spending cutbacks of the DoD,
the historical financial information of the Defense and Ammunition segment, and
to a lesser extent, of the company, may not be indicative of future performance.
Other Financial Data
In December 1993, the company announced a series of strategic actions consisting
of personnel reductions, business restructurings including consolidationsand re-
alignments within divisions, provisions for costs at sites of discontinued
businesses, future environmental liabilities, and other charges. As a result of
these actions, the company recorded a pretax charge to operations of $213
million ($132 million after tax) in the fourth quarter of 1993. Major components
of this charge were the following :
A. Personnel Reductions: The company expects to reduce its salaried
workforce by over 10%, or 600 people, over the next two years along with minor
reductions in the hourly workforce. An early retirement incentive program has
been put in effect for the Brass and Winchester divisions, which did not
participate in a similar program offered in 1991. The pretax charge for these
actions was $42 million.
B. Business Restructurings: The charge provided for streamlining existing
businesses by relocating and consolidating several facilities, primarily
electronic materials businesses. Additionally, a portion of the charge related
to lower estimated proceeds from asset disposals and higher costs associated
with components of the 1991 streamlining program. The company recorded a pretax
charge of $41 million for these business restructurings.
C. Discontinued Businesses and Site Maintenance Costs: The pretax charge for
discontinued businesses and site maintenance was $41 million to provide for
property maintenance, security, and product liability expenses associated with
several operations which are no longer on-going businesses. Also, a previously
decommissioned plant and warehouse will be disassembled, while associated
buildings will be modified to make them suitable for future leasing.
D. Future Environmental Liabilities: The pretax charge of $55 million
recognized future environmental liabilities resulting from additional
investigatory activities and more extensive remediation at sites. An additional
pretax charge of $24 million related to remediation costs which the company
funded and anticipated sharing with a third party, with whom the company is now
in litigation.
E. Other Charges: There were various other minor charges, including assets
write-downs and long-term disability costs, which amounted to $10 million
pretax.
The anticipated savings resulting from the workforce reductions and business
restructurings are expected to approximate $25 million in 1994 and $40 million
on an annualized basis, thereafter.
Selling and administration expenses as a percent of sales increased to 12.4%
in 1993 from 11.7% in 1992. Increased administrative, selling and promotional
efforts for new product introductions in the Chemicals and the Defense and
Ammunition segments, higher operating expenses of the electronic materials
businesses and the European affiliate were the main contributors to the
increase. Research and development expenditures, up slightly from 1992's level,
continue to be concentrated on the company's core businesses and the exploration
of new products and technologies associated with these businesses.
Interest expense in 1993 decreased slightly from 1992 due to lower short-term
interest rates in effect during 1993. The average borrowing rate on domestic
short-term debt decreased by 87 basis points from 1992.
The effective tax rate was 38.7% in 1993 and 37.5% in 1992, approximating the
combined federal and state statutory rates in each year, respectively. At
December 31,1993, the company had net deferred tax assets of $63 million,
principally comprised of alternative minimum tax credits of $40 million and
temporary differences between financial statement and tax bases of assets and
liabilities. No valuation allowance has been provided because management
believes that it is more likely than not that sufficient taxable income will be
generated in the next two to four years to allow for the realization of these
tax benefits. Such future taxable income approximates $350 million.
1992 Compared to 1991
Sales in 1992 were $2.4 billion, an increase of 4% over 1991's sales. Volumes
rose 5% as most major product lines in the Metals and Chemicals segments
experienced higher shipments while overall selling prices were 1% below 1991.
Net income for 1992 was $9 million, or 6 cents per share, which included an
after-tax charge of $46 million or $2.11 per share for the adoption of the
Statements of Financial
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Accounting Standards (SFAS) No. 106 and No. 109, retroactive to the first
quarter of 1992. The 1991 net loss of $13 million or 92 cents per share included
an after-tax charge of $80 million for a program to streamline operations and
lower costs through the sale of certain businesses and personnel reductions. The
operating results in 1992 were impacted by the weak economy, start-up and market
entry expenses for the new aliphatic diisocyanate business, delays in the
introduction of certain new chemical products and lower profitability of the
Ordnance and Aerospace businesses.
Chemicals
The 1992 sales of $996 million increased 4% over 1991 sales while segment net
income was $21 million compared to 1991's net loss of $38 million that included
an after-tax charge of $73 million for the streamlining program. Weak economic
conditions affected many of the chemicals businesses. Lower pricing and higher
costs in flexible urethanes, lower demand for specialty and organic chemicals,
the start-up and related market penetration costs of the new aliphatics business
and unfavorable results from joint ventures contributed to the 1992 decline in
net income from 1991, after excluding the charge for the streamlining program.
Chlor-alkali's financial performance was comparable to 1991. Chlor-alkali
sales were generally strong throughout 1992, although the impact of higher
volumes was offset by lower prices for chlorine and caustic soda. Related
profits were equivalent to 1991 as the impact of the lower selling prices was
offset by higher volumes and lower costs.
Flexible urethanes results were lower in 1992. Sales were 3% above 1991 as
flexible polyols sales increased and worldwide TDI volumes remained at 1991
levels. Higher raw material costs for flexible polyols more than offset the
profit contribution from additional sales. TDI profitability was impacted by
lower worldwide pricing and higher raw material costs and manufacturing
expenses.
Sales and profits of industrial chemicals were ahead of 1991 due primarily to
higher volumes. Domestic operations more than offset the unfavorable results of
the Brazilian sodium hydrosulfite facility which completed its first full year
of operations.
Pool products sales increased 8% over 1991 while profitability increased
significantly. Price increases along with higher volumes and improved mix for
certain products were the prime contributors to the stronger financial results.
Improved raw material usage and tighter control over manufacturing costs also
led to higher gross margins.
In the specialty and organic chemicals business, sales and profits were behind
1991 levels. Volume improvements in hydrazine solutions and specialty
surfactants were not sufficient to offset the sales decrease in biocides as
demand for traditional products declined due primarily to a customer adjusting
inventory levels, and the introduction of new products was delayed awaiting
toxicology and evaluation results. Costs of expanded manufacturing capacity and
operating activities for the new products in biocides and surfactants more than
offset the profit increases from hydrazine solutions and the propellant
business.
Despite a 7% increase in performance urethanes sales, operating results were
significantly worse than last year. Start-up and market-entry costs for the new
aliphatics business negated increased volumes from existing products and were
the primary factors in this product line's overall negative profit performance
on a year-to-year basis. On the positive side, quality products for the new
specialty urethanes coatings business were achieved within the first month of
operations and customer response was favorable with interest in both current
products and those under development.
Metals
Segment sales were $676 million in 1992, an increase of $114 million or 20%
above 1991, due primarily to Oster, which was acquired in August 1991, and
higher shipments of brass strip, Fineweld Tube and Somers thin-strip products.
Segment net income was $29 million, an increase of $12 million over 1991,
which included special provisions affecting a discontinued product line and
costs, primarily severance. The added profit from Oster and improved performance
from cupping, Fineweld Tube and the Indianapolis strip facility contributed to
the segment's 1992 profit increase. Segment net income was negatively impacted
by poor results from the German joint venture operations due to the depressed
European economy.
Defense and Ammunition
Defense and Ammunition sales were $704 million in 1992, down 7% from 1991 due to
contract delays/cancellations and the absence of sales from the European
sporting ammunition business which was sold in December 1991. Net income was $29
million in 1992, down 17% from 1991 due to lower profits from the Aerospace and
Ordnance divisions.
The Aerospace division sales decreased 14% due to the absence in 1992 of
production equipment sales, delays/cancellations of DoD contracts and a weak
commercial aircraft market. Net income decreased significantly from 1991. The
recognition of losses on certain government contracts, the impact of the
contract delays and the closure of a production facility contributed to the
profitability decline.
In Ordnance, tank ammunition sales were below 1991 levels which included
additional sales created by the Persian Gulf War. This decline more than offset
an increase in medium caliber sales in 1992, as Ordnance division's sales in
total lagged 1991's amounts. Net income for 1992 declined due to the reduced
tank ammunition vol-
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umes, the recognition of losses on certain contracts and expenses incurred in
connection with the Alliant Techsystems transaction. In addition, an increase in
royalty and fee income was offset by expenses associated with the clean-up of a
medium caliber test range.
Winchester's sales in 1992 increased $32 million over 1991 (after excluding
the European sporting ammunition sales) due to higher domestic and foreign
shipments. Domestic sporting ammunition sales increased over 1991 despite a very
competitive pricing environment. Military and commercial export volumes
increased significantly over last year due to new business, a weak U.S. dollar
in Europe and additional market share gains in South America and Australia.
Winchester's 1992 net income exceeded 1991's level. Strong domestic commercial
shipments did not totally offset lower commercial prices, but favorable
manufacturing performance, higher fees for managing the Lake City Army
Ammunition Plant and the profit contribution from the military and commercial
export sales increased the domestic operation's 1992 net income over 1991.
Other Financial Data
In the first quarter of 1991, the company announced a program to streamline
operations and lower costs and recorded a pretax charge of $129 million ($80
million after tax). Throughout 1991, efforts were undertaken to divest or
liquidate certain product lines and reduce personnel costs, accordingly.
Activities continued in 1992 including the divestment of several small product
lines.
Selling and administration expenses increased $17 million in 1992 to 11.7% of
sales, up slightly from 11.5% in 1991. The inclusion of Oster's operating
expenses for a full year, higher pension costs and increased selling expenses
for certain chemical products were the principal reasons for the increase on a
year-to-year basis. Research and development expenditures in 1992 decreased
slightly from 1991 levels. Customer-sponsored (contract) research increased
significantly from 1991 due to increased activities relating to new government
programs.
Interest expense in 1992 was $39 million, a decrease of $7 million or 15% from
1991, due primarily to lower average interest rates. The average interest rate
on domestic short-term debt declined to 4.2% in 1992 from 6.3% in 1991. Interest
and other income decreased by $5 million in 1992 due primarily to the
unfavorable performance of non-consolidated affiliates, particularly in South
America and Europe.
Liquidity and Investment Activity
Cash flow from operations supplemented by credit facilities and divestment
proceeds from the sale of businesses were used to finance the company's major
funding needs, namely capital projects and dividends to shareholders. Cash flow
from operating activities amounted to $137 million in 1993, $189 million in 1992
and $167 million in 1991. The decrease in 1993 was primarily attributable to
lower operating income. The effect of lower income was partially offset by
higher depreciation expense which resulted from increased capital expenditure
levels in recent years. The completion and close-out of certain government
contracts once again provided for a further liquidation of trade receivables.
Additional cash was invested in inventory in support of both realized and
anticipated expansion of the Oster business as well as introductions of new
chemical products, most notably specialty urethanes coatings. The settlement of
current liabilities other than borrowings relates to lower amounts due vendors,
increased spending for environmental remediation, and costs incurred in
executing the 1991 streamlining program. The 1992 increase in net cash generated
from operations, as compared to 1991, was attributed primarily to the collection
of receivables associated with the close-out of certain government contracts.
Net cash used for investing activities decreased from $259 million in 1991 to
$139 million in 1992 and then to $84 million in 1993. Capital spending in 1993
decreased $41 million or 24% from 1992 due to lower environmental capital
spending and the completion in 1992 of additional brass strip capacity, the new
specialty urethanes plant and the sulfuric acid regeneration plant. Capital
spending in 1992 was comparable to 1991 which included investments in the
aliphatics diisocyanate plant, the sodium hydrosulfite plant in Brazil and the
biocides expansion in Ireland. Approximately 41% of capital expenditures in 1993
and 45% in 1992 and 1991 were dedicated to new products and expansion programs.
It is expected that 1994 capital expenditures will increase approximately 10%
from 1993 mainly to support the consolidation of some electronic materials
businesses and provide additional capacity for selected product lines.
Investment spending in 1993 and 1992 was primarily for a new ethylene oxide
joint venture in Latin America, which was completed in 1993. The company's
investment in this venture and another related Latin American venture totaled
$23 million at December 31, 1993. These ventures were unprofitable in 1993 and
experienced liquidity difficulties. The company, along with its joint venture
partners, is currently attempting to resolve these difficulties in order to
protect its recorded investment. Spending in 1991 was dedicated primarily to an
expansion of the German joint venture in metals. It is expected that 1994's
investment spending will be lower than 1993's level as the expansion programs at
the company's affiliates have been completed.
During 1993 the company sold the facility and the assets of its contract
integrated circuit assembly operation (completing the divestiture phase of its
1991 streamlining program) and its interest in the German joint venture to its
partner. These divestments generated proceeds of $37 million. Throughout 1992,
several small product lines, such as urethane systems, Uralloy low profile
additives, sodium chlorite, the European and Singapore-based electronic
chemicals and the ethylene oxide unit were sold as part of the streamlining
program.
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Proceeds from the sales amounted to $42 million including $6 million
received from a prior year sale. In 1991, the company acquired Oster, a network
of metals service centers, for $80 million and sold its European sporting
ammunition business (including its shotshell manufacturing facility in Italy) to
Browning, S.A.
At December 31, 1993, the company maintained committed credit facilities with
banks of $367 million of which $208 million was available. The company believes
that these credit facilities are adequate to satisfy its liquidity needs for the
near future. In September 1993, the company entered into a new unsecured
revolving credit agreement with a group of banks, which replaced a prior $200
million credit agreement. The new agreement provides a maximum borrowing of $250
million and unless extended, expires on October 15, 1997. The company may select
various floating rate borrowing options.
In 1992, the company sold 2.76 million shares of its $1 par value Series A
Conversion Preferred Stock (Series A Stock) generating net proceeds of $111
million, which were used to reduce outstanding bank loans. In addition, the
company in 1992 sold $100 million of 8% Notes due 2002 and used the proceeds to
reduce short-term debt (most of which was incurred for working capital
purposes). The company has swapped interest payments on $50 million principal
amount of these notes to a floating rate.
In 1990, the company sold an undivided ownership interest in a designated pool
of receivables, with limited recourse, in an amount not to exceed $70 million.
An interest in new receivables is sold as collections reduce previously sold
interests. The company established certain qualifications involving the type and
term of receivables for inclusion in the pool. These qualifications had the
effect of including better-quality customer accounts in the pool, thereby
reducing the investor's risk and minimizing the likelihood of recourse. The
company's credit risk associated with the designated pool of receivables is
assessed in conjunction with the overall evaluation of trade receivables.
Reserves ascribed to these accounts are included in the "Allowance for Doubtful
Items" on the consolidated balance sheets and are not a material portion
thereof. Amounts sold were $65 million and $60 million at December 31, 1993 and
December 31, 1992, respectively.
The establishment and implementation of federal, state and local standards to
regulate air, water and land quality has affected and will continue to affect
substantially all of the company's plants. Facilities and equipment to protect
the environment do not inherently produce any significant increase in product
capacity, efficiency or revenue, and their operation generally entails
additional expense and energy consumption. Federal legislation providing for
regulation of the manufacture, transportation, use and disposal of hazardous and
toxic substances has imposed additional regulatory requirements on industry,
particularly the chemicals industry. In addition, implementation of
environmental laws, such as the Resource Conservation and Recovery Act and the
Clean Air Act, has required and will continue to require new capital
expenditures and will increase operating costs. The company employs waste
minimization and pollution prevention programs at its manufacturing sites. In
order to help finance the cleanup of waste disposal sites, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 ("Superfund"), imposes
a tax on the sale of various chemicals, including chlorine, caustic and certain
other chemicals produced by the company, and on the disposal of certain
hazardous wastes.
The company is party to various governmental and private environmental actions
associated with waste disposal sites and manufacturing facilities. Associated
costs of investigatory and remedial activities are provided for in accordance
with generally accepted accounting principles governing probability and the
ability to reasonably estimate future costs. Environmental provisions charged to
income amounted to $85 million in 1993, $17 million in 1992, and $18 million in
1991. The significant increase in 1993 resulted from expanded volumes of
contaminants uncovered while remediating a particular site, combined with the
availability of more definitive data from progressing investigatory activities
concerning both the nature and extent of contamination and remediation
alternatives at other sites. Charges to income for investigatory and remedial
efforts were material to operating results in 1993, 1992, and 1991 and may be
material to net income in future years.
Cash outlays for environmental-related activities totaled $93 million in 1993
as compared with $103 million in 1992 and $90 million in 1991. During 1993, $49
million of these cash outlays were directed towards normal plant operations for
the disposal of waste and the installation, operation and maintenance of
pollution control equipment and facilities to ensure compliance with mandated
and voluntarily imposed environmental quality standards. Comparable spending for
1992 and 1991 was $62 million and $65 million, respectively. Included in the
costs for normal plant operations were environmental capital expenditures for
pollution control equipment and pollution abatement facilities. Spending for
environmental capital expenditures was $11 million in 1993 and $25 million in
both 1991 and 1992. The 1991 and 1992 environmental capital expenditures include
construction costs for a waste water treatment facility at the company's Lake
Charles plant. Historically, the company has funded its environmental capital
expenditures through cash flow from operations and expects to do so in the
future.
Cash outlays for remedial and investigatory activities associated with former
waste sites and past operations were $44 million in 1993, $41 million in 1992
and $25 million in 1991. These amounts were not charged to income but instead
were charged to reserves established for such costs identified and expensed to
income in prior years.
The company's estimated environmental liability at the end of 1993 was
attributable to 70 sites, 34 of which were on the National Priority List (NPL).
Ten sites accounted for approximately 75% of such liability and, of the
remaining sites, no one site accounted for more than three percent of such
liability. Four of these ten sites were in the investigatory stage of the
remediation process. In this stage remedial investigation and feasibility
studies are conducted by either the company, the United States Environmental
Protection Agency (EPA) or other potentially responsible parties (PRPs). At
another four of the ten sites, a Record of Decision (ROD) or its equivalent has
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been issued by either the EPA or responsible state agency and the company either
alone, or as a member of a PRP group, was engaged in performing the remedial
measures required by that ROD. At the remaining two of the ten sites, part of
the site is subject to a ROD and another part is still in the investigative
stage of remediation. All ten sites were either former manufacturing facilities
or waste sites containing contamination generated by those facilities.
Total environmental-related cash outlays for 1994 are estimated to be $90
million, of which $50 million is expected to be spent on normal plant
operations, including $10 million on capital projects, and $40 million on
investigatory and remedial efforts.
The company's consolidated balance sheets included reserves for future
environmental expenditures to investigate and remediate known sites amounting to
$131 million at December 31, 1993 and $66 million at December 31, 1992, of which
$91 million and $39 million were classified as other noncurrent liabilities,
respectively. Included in the reserve at December 31, 1993, were liabilities
anticipated to be shared with a third party, with whom the company is currently
in litigation. Those reserves did not take into account any discounting of
future expenditures or any consideration of insurance recoveries or advances in
technology. Those liabilities are reassessed periodically to determine if
environmental circumstances have changed and/or remediation efforts and their
costs can be better estimated. As a result of these reassessments, future
charges to income may be made for additional liabilities.
Annual environmental-related cash outlays for capital projects, site
investigation and remediation, and normal plant operations are expected to range
between $90-$105 million over the next several years. While the company does not
anticipate a material increase in the projected annual level of its
environmental-related costs, there is always the possibility that such increases
may occur in the future in view of the uncertainties associated with
environmental exposures. Environmental exposures are difficult to assess for
numerous reasons, including the identification of new sites, developments at
sites resulting from investigatory studies, advances in technology, changes in
environmental laws and regulations and their application, the scarcity of
reliable data pertaining to identified sites, the difficulty in assessing the
involvement and financial capability of other potentially responsible parties
and the company's ability to obtain contributions from other parties and the
time periods (sometimes lengthy) over which site remediation occurs. It is
possible that some of these matters (the outcome of which is subject to various
uncertainties) may be decided unfavorably against the company. At December 31,
1993, the company had estimated additional contingent environmental liabilities
of $19 million which were determined in accordance with generally accepted
accounting principles.
The percent of total debt to total capitalization (excluding the reduction in
equity for the Contributing Employee Ownership Plan (ESOP)) increased to 47.1%
at December 31, 1993, from 42.0% at year-end 1992 and was 48.5% at year-end
1991. The increase in 1993 was due to the reduction of shareholders' equity
stemming from the charge taken in 1993. The 1992 decrease was due to the
repayment of bank loans using proceeds from the Series A Stock offering and
proceeds from the sales of businesses.
In 1989 the company established an ESOP. The ESOP trust borrowed $100 million
($40 million from the company) to purchase 1.3 million shares of the company's
convertible preferred stock. The proceeds received by the company from the
issuance of its preferred stock were used to acquire shares of its common stock.
In 1992 and 1991, the company received $15 million and $14 million, respectively
from the ESOP trust, which has repaid in full its original loan from the
company. This loan to the ESOP was financed by the company through a long-term
credit facility, which is classified on the December 31, 1993 balance sheet as
long-term debt.
Dividends per common share were $2.20 in 1993, 1992 and 1991. Total dividends
paid on common stock amounted to $42 million in 1993 and $41 million in 1992 and
1991, while total ESOP preferred dividends, paid at an annual dividend rate of
$5.97 per share, amounted to $7 million in 1993 and $8 million in 1992 and 1991.
Dividends paid on Series A Stock were $10 million in 1993, equal to $3.64 per
share, and $9 million in 1992.
There are a variety of legal proceedings pending or threatened against the
company. It is possible that some of these matters (the outcome of which is
subject to various uncertainties) may be decided unfavorably against the
company. Certain of these matters are discussed in Item 3, Legal Proceedings of
the Form 10-K Annual Report and in other filings of the company with the
Securities and Exchange Commission, which filings are available on request from
the company.
The company periodically evaluates risk retention and insurance levels for
product liability, property damage and other potential areas of risk. Based on
the cost and availability of insurance and the likelihood of a loss occurring,
management decides the amount of insurance coverage to purchase from
unaffiliated companies and the appropriate amount of risk to retain. The current
levels of risk retention are believed to be appropriate and are consistent with
those of other companies in the various industries in which the company
operates.
In late 1992, the Financial Accounting Standards Board issued SFAS No. 112,
"Employers' Accounting for Postemployment Benefits," effective commencing 1994.
This standard will not have a material impact on the company's financial
position and future operating results.
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Industry Segments
<TABLE>
<CAPTION>
(In millions) 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CHEMICALS
Sales $1,117 $ 996 $ 960 $1,269 $1,302 $1,386 $1,232 $1,127 $1,153 $1,191
Net Income (Loss) (94) 21 (38) 42 106 68 55 37 (153) 33
Assets 1,024 1,067 982 945 977 1,034 1,028 920 867 1,057
Capital Expenditures 75 115 131 144 95 96 83 84 105 102
Depreciation 83 73 70 75 74 77 82 83 102 118
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
METALS
Sales 660 676 562 566 542 453 304 244 232 291
Net Income 14 29 17 35 19 25 20 15 12 28
Assets 430 445 436 337 326 321 225 204 184 189
Capital Expenditures 31 33 26 19 26 30 13 24 28 33
Depreciation 27 24 22 21 22 19 18 17 14 12
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
DEFENSE AND AMMUNITION
Sales 646 704 753 757 665 469 394 361 307 225
Net Income (Loss) 10 29 35 36 31 25 20 19 (21) 11
Assets 441 465 552 544 535 516 373 365 331 209
Capital Expenditures 26 25 20 24 21 21 19 20 19 18
Depreciation 21 20 21 20 20 15 14 11 8 5
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
CORPORATE AND OTHER
Sales -- -- -- -- -- -- -- -- 68 109
Net Income (Loss) (22) (70) (27) (29) (32) (20) (17) 4 (3) 17
Assets 35 53 42 40 66 69 59 56 216 338
Capital Expenditures -- -- -- -- -- -- -- -- 2 2
Depreciation -- -- -- -- -- -- -- -- 2 2
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
CONSOLIDATED
Sales 2,423 2,376 2,275 2,592 2,509 2,308 1,930 1,732 1,760 1,816
Net Income (Loss) (92) 9 (13) 84 124 98 78 75 (165) 89
Assets 1,930 2,030 2,012 1,866 1,904 1,940 1,685 1,545 1,598 1,793
Capital Expenditures 132 173 177 187 142 147 115 128 154 155
Depreciation 131 117 113 116 116 111 114 111 126 137
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(1) Assets of Corporate and Other include
the following:
<CAPTION>
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments $ -- $ -- $ -- $ -- $ -- $ -- $ 11 $ 7 $ 12 $ 14
Discontinued Operations, Net -- -- -- -- -- -- -- -- -- 87
Other 35 53 42 40 66 69 48 49 204 237
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
$ 35 $ 53 $ 42 $ 40 $ 66 $ 69 $ 59 $ 56 $ 216 $ 338
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
(2) Intersegment sales, which are priced generally at prevailing prices and are
excluded from above, are not significant.
(3) Net income (loss) of each segment includes an allocation of Corporate
expenses.
(4) 1993 net income includes a charge for the strategic action plan of $132
million ($106 to Chemicals, $12 to Metals and $14 to Defense and Ammunition).
1992 net income includes a charge of $46 (allocated to Corporate and Other) for
the cumulative effect of the accounting changes. 1991 net income includes a
charge for the streamlining program of $80 ($73 to Chemicals and $7 to Metals).
1985 net income includes a charge of $230, allocated to various segments as
follows: Chemicals $174, Metals $1, Defense and Ammunition $35 and Corporate and
Other $20.
(5) Corporate and Other includes interest expense and Discontinued Operations
(the company's Ecusta paper and film businesses, which were sold in 1985), the
cumulative effect of the accounting changes in 1992 and, prior to 1985, certain
small businesses, which were subsequently sold or liquidated.
(6) See Notes to Financial Statements for information relative to industry
operating income and geographic segment data.
19
<PAGE>
TEN-YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
($ in millions, except per share data) 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS
Sales $ 2,423 $ 2,376 $ 2,275 $ 2,592 $ 2,509 $ 2,308 $ 1,930 $ 1,732 $ 1,760 $ 1,816
Cost of Goods Sold 2,161 1,941 1,944 2,063 1,929 1,781 1,455 1,318 1,719 1,396
Restructuring Charge 42 -- 22 -- -- -- -- -- -- --
Selling and Administration 300 279 262 316 287 289 264 252 252 256
Research and Development 41 39 41 66 66 58 62 56 54 52
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Operating Income (Loss) (121) 117 6 147 227 180 149 106 (265) 112
Interest Expense 38 39 46 53 56 43 32 32 35 34
Interest and Other Income 9 10 15 22 21 14 10 41 18 25
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income (Loss) Before Taxes (150) 88 (25) 116 192 151 127 115 (282) 103
Income Tax Provision (Benefit) (58) 33 (12) 32 68 53 49 40 (92) 29
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income (Loss) from
Continuing Operations (92) 55 (13) 84 124 98 78 75 (190) 74
Cumulative Effect of
Accounting Changes -- (46) -- -- -- -- -- -- -- --
Discontinued Operations,
Net of Taxes(1) -- -- -- -- -- -- -- -- 25 15
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Income (Loss) (92) 9 (13) 84 124 98 78 75 (165) 89
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
FINANCIAL POSITION
Working Capital 136 179 85 212 205 184 276 210 304 367
Property, Plant and Equipment, Net 885 934 899 829 781 801 727 720 718 796
Total Assets 1,930 2,030 2,012 1,866 1,904 1,940 1,685 1,545 1,598 1,793
Capitalization:
Short-Term Debt 121 101 178 104 155 211 50 52 47 44
Long-Term Debt 449 477 520 466 501 474 392 375 354 370
Shareholders' Equity 596 741 666 715 665 683 700 654 687 867
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Capitalization 1,166 1,319 1,364 1,285 1,321 1,368 1,142 1,081 1,088 1,281
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
PER SHARE DATA
Net Income (Loss):
Primary:
Continuing Operations (4.52) 2.17 (.92) 4.03 6.02 4.63 3.38 3.36 (8.28) 3.15
Cumulative Effect of
Accounting Changes -- (2.11) -- -- -- -- -- -- -- --
Discontinued Operations(1) -- -- -- -- -- -- -- -- 1.09 .66
Net Income (Loss) (4.52) .06 (.92) 4.03 6.02 4.63 3.38 3.36 (7.19) 3.81
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Assuming Full Dilution(2):
Continuing Operations -- -- -- 3.88 5.85 4.59 3.32 3.13 -- 2.96
Discontinued Operations(1) -- -- -- -- -- -- -- -- -- .58
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Income -- -- -- 3.88 5.85 4.59 3.32 3.13 -- 3.54
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Dividends:
Common 2.20 2.20 2.20 2.15 1.95 1.70 1.60 1.525 1.50 1.365
ESOP Preferred 5.97 5.97 5.97 5.97 2.985 -- -- -- -- --
Series A Preferred (annual rate) 3.64 3.64 -- -- -- -- -- -- -- --
Shareholders' Equity(3) 27.24 33.92 35.02 37.65 34.99 33.35 31.81 30.56 29.89 37.88
Market Price of Common Stock:
High 501/2 543/4 54 605/8 681/4 60 561/4 531/4 38 331/2
Low 397/8 371/4 331/2 281/8 493/8 40 325/8 345/8 283/8 251/8
Year End 493/8 453/4 403/8 373/4 60 51 42 41 371/8 30
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
OTHER
Capital Expenditures 132 173 177 187 142 147 115 128 154 155
Depreciation 131 117 113 116 116 111 114 111 126 137
Common Dividends Paid 42 41 41 41 39 36 37 34 35 32
Purchases of Common Stock -- -- 2 6 100 84 100 83 5 33
Current Ratio 1.2 1.3 1.1 1.4 1.4 1.3 1.7 1.5 1.8 1.9
Total Debt to Total Capitalization(4) 47.1% 42.0% 48.5% 41.5% 46.2% 50.1% 38.7% 39.5% 36.9% 32.3%
Effective Tax Rate 38.7% 37.5% 48.0% 27.2% 35.4% 35.1% 38.6% 34.8% 32.6% 28.8%
Average Common Shares Outstanding 19.1 19.1 19.0 19.1 20.0 21.1 23.1 22.4 23.0 23.3
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Shareholders 13,000 13,900 14,600 15,500 16,300 17,600 20,700 20,600 22,400 24,400
Employees(5) 12,400 13,500 14,400 15,200 15,400 16,400 14,100 13,200 14,900 14,800
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(1) Represents the company's Ecusta paper and film businesses. (2) Fully diluted
income or loss per share is not presented for 1993, 1992, 1991 and 1985 as
amounts are anti-dilutive. (3) In 1993 and 1992, calculation is based on common
shares and Series A Conversion Preferred Stock outstanding. (4) Excluding
reduction to equity for the Employee Stock Ownership Plan from 1989 through
1993. (5) Employee data excludes employees who work at government-
owned/contractor-operated facilities.
20
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 ($ in millions, except share data) 1993 1992
------ ------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 3 $ 4
Receivables:
Trade, Less Allowance for Doubtful Items of $12 ($10 in 1992) 288 304
Other, Net 57 55
Inventories, Net of LIFO Reserve of $145 ($181 in 1992) 329 320
Other Current Assets 63 77
------ ------
Total Current Assets 740 760
Investments and Advances--Affiliated Companies at Equity 121 157
Property, Plant and Equipment, Net 885 934
Goodwill 114 126
Other Assets 70 53
------ ------
Total Assets $1,930 $2,030
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-Term Borrowings $ 94 $ 72
Current Installments of Long-Term Debt 27 29
Accounts Payable 232 254
Income Taxes Payable 2 1
Accrued Liabilities 249 225
------ ------
Total Current Liabilities 604 581
Long-Term Senior Debt 324 352
Long-Term Subordinated Debt 125 125
Deferred Income Taxes -- 62
Other Noncurrent Liabilities 281 169
------ ------
Total Liabilities 1,334 1,289
------ ------
SHAREHOLDERS' EQUITY:
PREFERRED STOCK, PAR VALUE $1 PER SHARE:
Authorized, 10,000,000 Shares
Series A Conversion Preferred Stock
Issued, 2,760,000 Shares 3 3
ESOP Preferred Stock
Issued, 1,194,569 Shares (1,239,328 in 1992) 92 96
ESOP Obligations (44) (60)
Common Stock, Par Value $1 Per Share:
Authorized, 60,000,000 Shares
Issued, 19,102,270 Shares (19,069,775 in 1992) 19 19
Additional Paid-In Capital 297 296
Cumulative Translation Adjustment (9) (1)
Retained Earnings 238 388
------ ------
Total Shareholders' Equity 596 741
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,930 $2,030
======= ======
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements.
21
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years ended December 31 ($ in millions, except per share amounts) 1993 1992 1991
- ----------------------------------------------------------------- ------- ------ -------
<S> <C> <C> <C>
Sales $2,423 $2,376 $2,275
Operating Expenses:
Cost of Goods Sold 2,161 1,941 1,944
Restructuring Charge 42 -- 22
Selling and Administration 300 279 262
Research and Development 41 39 41
------- ------ -------
Operating Income (Loss) (121) 117 6
Interest Expense 38 39 46
Interest and Other Income 9 10 15
------- ------ -------
Income (Loss) Before Taxes (150) 88 (25)
Income Tax Provision (Benefit) (58) 33 (12)
------- ------ -------
Income (Loss) Before Cumulative Effect of Accounting Changes (92) 55 (13)
Cumulative Effect of Accounting Changes -- (46) --
------- ------ -------
Net Income (Loss) $ (92) $ 9 $ (13)
======= ====== ========
Per Share of Common Stock
Income (Loss) Before Cumulative Effect of Accounting Changes $(4.52) $2.17 $(0.92)
Cumulative Effect of Accounting Changes -- (2.11) --
------- ------ -------
Net Income (Loss)(1) $(4.52) $0.06 $(0.92)
======= ====== =======
</TABLE>
(1) Fully diluted income or loss per share in 1993, 1992 and 1991 was anti-
dilutive.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
Common Stock Additional Cumulative
Shares Par Paid-In Translation Retained
($ in millions, except share data) Issued Value Capital Adjustment Earnings
- --------------------------------- ---------- ----- ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1991 19,001,063 $19 $180 $6 $499
Net Loss -- -- -- -- (13)
Dividends Paid:
Common Stock ($2.20 per share) -- -- -- -- (41)
ESOP Preferred Stock
($5.97 per share) -- -- -- -- (8)
Purchases and Retirements
of Stock (53,190) -- (1) -- (1)
Reduction in ESOP
Obligations -- -- -- -- --
Stock Options Exercised 46,482 -- 2 -- --
Translation Adjustment -- -- -- (3) --
Other Transactions 18,952 -- 4 -- (1)
---------- ----- ---------- ----------- --------
Balance at December 31, 1991 19,013,307 19 185 3 435
Net Income -- -- -- -- 9
Dividends Paid:
Common Stock ($2.20 per share) -- -- -- -- (41)
ESOP Preferred Stock
($5.97 per share) -- -- -- -- (8)
Series A Conversion
Preferred Stock
($3.64 per share) -- -- -- -- (9)
Issuance of Series A
Conversion Preferred Stock
(2,760,000 shares) -- -- 108 -- --
Reduction in ESOP
Obligations -- -- -- -- --
Stock Options Exercised 45,305 -- 1 -- --
Translation Adjustment -- -- -- (4) --
Other Transactions 11,163 -- 2 -- 2
---------- ----- ---------- ----------- --------
Balance at December 31, 1992 19,069,775 19 296 (1) 388
Net Loss -- -- -- -- (92)
Dividends Paid:
Common Stock ($2.20 per
share) -- -- -- -- (42)
ESOP Preferred Stock
($5.97 per share) -- -- -- -- (7)
Series A Conversion
Preferred Stock
($3.64 per share) -- -- -- -- (10)
Reduction in ESOP -- -- -- -- --
Obligations
Stock Options Exercised 19,418 -- 1 -- --
Translation Adjustment -- -- -- (3) --
Other Transactions 13,077 -- -- (5) 1
---------- ----- ---------- ----------- --------
Balance at December 31, 1993 19,102,270 $ 19 $ 297 $(9) $238
========== ===== ========== =========== ========
</TABLE>
<TABLE>
Preferred Stock
Series A ESOP ESOP
($ in millions, except share data) Par Value Par Value Obligations
- ------------------------------- --------- --------- ------------
<S> <C> <C> <C>
Balance at January 1, 1991 $-- $100 $ (89)
Net Loss -- -- --
Dividends Paid:
Common Stock ($2.20 per share) -- -- --
ESOP Preferred Stock
($5.97 Per Share) -- -- --
Purchases and Retirements of Stock -- -- --
Reduction in ESOP Obligations -- -- 14
Stock Options Exercised -- -- --
Translation Adjustment -- -- --
Other Transactions -- (1) --
--------- --------- ------------
Balance at December 31, 1991 -- 99 (75)
Net Income -- -- --
Dividends Paid:
Common Stock ($2.20 per share) -- -- --
ESOP Preferred Stock
($5.97 per share) -- -- --
Series A Conversion
Preferred Stock
($3.64 Per Share) -- -- --
Issuance of Series A Conversion
Preferred Stock
(2,760,000 shares) 3 -- --
Reduction in ESOP
Obligations -- -- 15
Stock Options Exercised -- -- --
Translation Adjustment -- -- --
Other Transactions -- (3) --
--------- --------- ------------
Balance at December 31, 1992 3 96 (60)
Net Loss -- -- --
Dividends Paid:
Common Stock ($2.20 per share) -- -- --
ESOP Preferred Stock
($5.97 per share) -- -- --
Series A Conversion
Preferred Stock
($3.64 per share) -- -- --
Reduction in ESOP -- -- 16
Obligations
Stock Options Exercised -- -- --
Translation Adjustment -- -- --
Other Transactions -- (4) --
--------- --------- ------------
Balance at December 31, 1993 $3 $92 $ (44)
========= ========= ============
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements.
22
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31 ($ in millions) 1993 1992 1991
- --------------------------------------- ------ ----- ------
<S> <C> <C> <C>
Operating Activities
Net Income (Loss) $ (92) $ 9 $ (13)
Adjustments to Reconcile Net Income (Loss) to
Net Cash
Provided by Operating Activities:
Losses (Earnings) of Non-consolidated
Affiliates 1 5 (3)
Depreciation 131 117 113
Amortization of Intangibles 8 6 7
Deferred Taxes (63) 10 (22)
Charge for 1993 Strategic Action Plan and
1991 Streamlining Program 213 -- 129
Cumulative Effect of Accounting Changes -- 46 --
Change in Assets and Liabilities Net of
Purchases and Sales of Businesses:
Receivables 13 56 1
Inventories (10) (24) (6)
Other Current Assets -- 8 (8)
Current Liabilities Other Than Borrowings (59) (60) (31)
Noncurrent Liabilities (6) 1 (8)
Other Transactions 1 15 8
------ ----- ------
Net Operating Activities 137 189 167
------ ----- ------
Investing Activities
Capital Expenditures (132) (173) (177)
Disposition of Property, Plant and Equipment 19 2 2
Business Acquired in Purchase Transaction -- -- (80)
Proceeds From Sales of Businesses 37 42 14
Other Investments (8) (10) (18)
------ ----- ------
Net Investing Activities (84) (139) (259)
------ ----- ------
Financing Activities
Long-Term Debt:
Borrowings -- 100 80
Repayments (30) (130) (43)
Short-Term Borrowings (Repayments) 22 (90) 92
Purchase of Olin Shares (4) (3) (2)
Issuance of Series A Conversion Preferred
Stock -- 111 --
Repayment from ESOP 16 15 14
Stock Options Exercised 1 1 2
Dividends Paid (59) (58) (49)
------ ----- ------
Net Financing Activities (54) (54) 94
------ ----- ------
Net (Decrease) Increase in Cash (1) (4) 2
------ ----- ------
Cash, Beginning of Year 4 8 6
------ ----- ------
Cash, End of Year $ 3 $ 4 $ 8
====== ===== ======
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements.
23
<PAGE>
Notes to Financial Statements
($ in millions, except share data)
Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of the company and
all majority-owned subsidiaries. Investments in 20-50% owned affiliates are
accounted for using the equity method of accounting under which investments are
recorded at cost and consist of the company's share of undistributed earnings or
losses of the affiliates.
Long-Term Contracts
Sales and cost of sales related to government contracts that extend beyond one
year are primarily recognized under the percentage-of-completion method of
accounting as costs are incurred. Profits expected to be realized on contracts
are based on the company's estimates of costs at completion compared to total
contract sales value. When the company believes the cost of completing a
contract will exceed contract-related revenues, the full amount of the
anticipated contract loss is recognized.
Inventories
Inventories are valued principally by the dollar value last-in, first-out (LIFO)
method of inventory accounting.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation is computed on
a straight-line basis over the estimated useful lives of the related assets.
Leasehold improvements are amortized over the term of the lease or the estimated
useful life of the improvement, whichever is less. Start-up costs are expensed
as incurred.
Income Taxes
In 1992, the company adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," (SFAS No. 109) which requires recognition of
deferred tax liabilities and assets for differences between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse.
Prior to 1992, the deferred income tax provision was based on the differences
in the timing of the recognition of transactions for financial and tax reporting
purposes.
Deferred taxes have not been provided on the undistributed earnings of foreign
subsidiaries, since the company intends to continue to reinvest these earnings.
Foreign Currency Translation
Foreign affiliates' balance sheet amounts are translated at the exchange rates
in effect at year end, and income statement amounts are translated at the
average rates of exchange prevailing during the year. Translation adjustments
are recorded as a separate component of shareholders' equity. Foreign currency
exchange losses, net of taxes, were $4 million in 1993, $3 million in 1992 and
less than $1 million in 1991.
The company has entered into foreign currency hedging transactions in order to
minimize exposure to fluctuations in foreign exchange rates. Realized and
unrealized gains and losses on hedging contracts designated as hedges of foreign
currency transactions are deferred and recognized in income in the same period
as the underlying transactions. All other realized and unrealized gains and
losses are recognized in income. At December 31, 1993 the company had $20
million in contracts to buy and $75 million in contracts to sell foreign
currencies during 1994.
Goodwill
Goodwill, the excess of the purchase price of acquired businesses over fair
value of the respective net assets, is amortized principally over 30 years on a
straight-line basis.
Financial Instruments
The fair value of the company's financial instruments approximates carrying
value. Fair values were estimated based on quoted market prices, where
available, or on current rates offered to the company for debt with similar
terms and maturities.
Earnings Per Share
Primary earnings per share are computed by dividing net income less the ESOP
preferred stock dividend requirement by the weighted average number of common
shares outstanding plus an equivalent number (one for one) of common shares,
assuming the conversion of Series A Stock. Fully diluted earnings per share
reflect the dilutive effect of stock options and assume the conversion of
outstanding ESOP preferred stock into an equivalent number of common shares at
the date of issuance. Net income was reduced by an additional ESOP contribution
(differential between the common and the ESOP preferred dividend rates under an
assumed conversion) necessary to satisfy the debt service requirement.
<TABLE>
<CAPTION>
Average Common Shares and Common Equivalents Outstanding
Assuming
Full
Years ended December 31 (In thousands) Primary Dilution
- -------------------------------------- ------- --------
<S> <C> <C>
1993 21,840 23,487
1992 21,598 23,235
1991 19,001 20,618
</TABLE>
Reclassifications
Certain reclassifications have been made to prior years' financial statements to
conform to the 1993 presentation.
Trade Receivables
In December 1990, the company entered into an agreement to sell an undivided
fractional ownership interest in a designated pool of receivables, with limited
recourse, in an amount not to exceed $70 million. At December 31, 1993 and
December 31, 1992, $65 million and $60 million of accounts receivables had been
sold under this agreement. An interest in new receivables may be sold as
collections reduce previously sold interests. The company's credit risk
associated with the designated pool of receivables was assessed in conjunction
with the overall evaluation of trade receivables. Reserves ascribed to these
accounts are included in the "Allowance for Doubtful Items" on the consolidated
balance sheets and are not a material portion thereof. Operating expenses
include fees of $2 million in 1993, 1992 and 1991 related to the sale of
receivables under this agreement.
At December 31, 1993 and December 31, 1992, trade receivables included
unbilled receivables of $73 million, related to certain government contracts
which are accounted for on the percentage-of-completion method.
Inventories
If the first-in, first-out (FIFO) method of inventory accounting had been used,
inventories would have been approximately $145 million
24
<PAGE>
and $181 million higher than reported at December 31, 1993 and December 31,
1992, respectively. It is not practicable to separate the inventory into its
components because LIFO inventory values are determined principally by the use
of the dollar value LIFO method.
<TABLE>
<CAPTION>
Property, Plant and Equipment
1993 1992
------ ------
<S> <C> <C>
Land and improvements to land $ 127 $ 119
Buildings and building equipment 296 295
Machinery and equipment 1,951 1,885
Leasehold improvements 22 30
Construction in progress 113 163
------ ------
Property, plant and equipment 2,509 2,492
Less accumulated depreciation 1,624 1,558
------ ------
Property, plant and equipment, net $ 885 $ 934
====== ======
</TABLE>
Leased assets capitalized and included above are not significant. Maintenance
and repairs charged to operations amounted to $159 million in 1993, $152 million
in 1992 and $148 million in 1991.
<TABLE>
<CAPTION>
Short-Term Borrowings
1993 1992
--------------- ---------------
Amount Rate Amount Rate
------ ----- ------ -----
<S> <C> <C> <C> <C>
Bank loans $53 3.4% $52 3.6%
Domestic commercial paper 30 3.4% -- --
Foreign 11 4-12% 20 4-12%
------ ----- ------ -----
$94 $72
====== ======
</TABLE>
At December 31, 1993, the company maintained committed credit facilities with
banks of $367 million of which $208 million was available, while the comparable
1992 amounts were $376 million and $244 million, respectively.
<TABLE>
<CAPTION>
Long-Term Debt
Due 1993 1992
----- -----
<S> <C> <C> <C>
Note agreements
95-02 7.97% notes $ 56 $ 63
95-96 8.125% notes 12 18
6/02 8% notes 100 100
Industrial development and environ-
mental improvement obligations
04-17 payable at interest rates which vary
with short-term tax exempt rates 35 29
95-08 payable at interest rates of 6% to 7% 39 44
6/96 7.144% note payable 40 40
95-09 Guarantee of ESOP debt varying
with LIBOR 29 45
9/98 10% note 11 11
95-02 Mortgage, capitalized leases and
other indebtedness 2 2
----- -----
Total long-term senior debt 324 352
6/97 9.5% subordinated notes 125 125
----- -----
Total long-term debt $ 449 $ 477
===== =====
</TABLE>
Among the provisions of the note agreements are restrictions relating to
payment of dividends and acquisition of the company's capital stock. At December
31, 1993, retained earnings of approximately $96 million were not so
restricted under the provisions.
The ESOP's purchase of preferred stock in 1989 was financed by $60 million of
notes (guaranteed by the company) and $40 million of borrowings from the
company. The loan from the company to the ESOP was financed through a long-term
credit facility. At December 31, 1993, $15 million of the Guarantee of ESOP debt
has been included in current installments of long-term debt.
In September 1993, the company entered into a new unsecured revolving credit
agreement with a group of banks, which replaced a prior $200 million credit
agreement. The new agreement provides a maximum borrowing of $250 million and
unless extended, expires on October 15, 1997. The company may select various
floating rate borrowing options.
In January 1992, the company issued 2.76 million shares of Series A Conversion
Preferred Stock. Proceeds of $111 million were used to repay bank loans
outstanding at December 31, 1991.
In June 1992, the company sold $100 million of 8% notes due 2002. The proceeds
from this issue were used to reduce outstanding short-term debt. The company
then swapped interest payments on $50 million principal amount of the notes to a
floating rate.
Annual maturities of long-term debt for the next five years are $12 million in
1994, $13 million in 1995, $53 million in 1996, $132 million in 1997 and $19
million in 1998 (excluding the expiring guarantees of ESOP debt).
Series A Preferred Stock
In January 1992, the company sold 2.76 million shares of its $1 par value Series
A Conversion Preferred Stock (Series A Stock) generating net proceeds of $111
million. Dividends on the Series A Stock are cumulative at an annual rate of
$3.64 per share. On the mandatory conversion date (March 1, 1995) each
outstanding Series A Stock will convert automatically into one share of the
company's common stock (subject to adjustment in certain events) and the right
to receive an amount of cash equal to all accrued and unpaid dividends thereon.
Automatic conversion of the outstanding Series A Stock will also occur upon
certain mergers or consolidations of the company or in connection with certain
other events. In addition, the company has the option to call the Series A
Stock, in whole or in part, for redemption prior to maturity at a predetermined
call price (payable in common stock of the company) plus an amount of cash equal
to all accrued and unpaid dividends on the Series A Stock. The predetermined
call price was $55.57 at December 31, 1993, and declines ratably to $54.18 on
January 1, 1995, and $53.95 per share thereafter.
Cost of Sales-Related Transactions
Included in cost of sales for 1993 is a pretax charge of $171 million associated
with the strategic action plan formulated during the fourth quarter. The plan
included costs of business restructurings involving the relocation and
consolidation of facilities along with lower estimated proceeds from asset
disposals and higher costs associated with components of the 1991 streamlining
program ($41 million); dismantling, product liability and on-going custodial
costs related to discontinued businesses ($41 million); future environmental
liabilities ($55 million); and other charges including asset write-downs and
long-term disability liabilities ($34 million).
25
<PAGE>
In April 1991, the company announced a comprehensive program to streamline its
operations and lower costs. The program involved the planned sale of certain
businesses, the write-down of several assets to net realizable value and the
recording of anticipated operating losses of related businesses to disposal
date. In addition, the streamlining program included salaried personnel
reductions, accomplished largely through an early retirement incentive
initiative. The program resulted in a pretax charge of $129 million ($80 million
after tax) which was recorded in the first quarter of 1991.
Restructuring Charge
Included in the restructuring charge was $42 million in 1993 for workforce
reductions and $22 million in 1991 for salaried staff reductions, both of which
were accomplished largely through an early retirement incentive initiative.
Interest Expense
Interest incurred totaled $40 million in 1993, $43 million in 1992, and $48
million in 1991, of which $2 million was capitalized in 1993 and 1991 and $4
million in 1992.
Pension Plans and Retirement Benefits
Essentially all of the company's domestic pension plans are non-contributory
final-average-pay or flat-benefit plans and all domestic employees are covered.
The company's funding policy is consistent with the requirements of federal laws
and regulations. In 1993 and 1991, the company offered to certain qualified
employees an option to receive enriched pension benefits under the early
retirement incentive program in connection with the restructuring charge.
<TABLE>
<CAPTION>
Components of Net Pension Expense
1993 1992 1991
----- ---- -----
<S> <C> <C> <C>
Service cost (benefits earned
during the period) $ 19 $ 17 $ 16
Interest cost on the projected
benefit obligation 71 65 61
Enriched pension benefit 7 -- 8
Actual return on assets (132) (62) (204)
Actual (loss) return deferred
for later recognition 53 (12) 133
Net amortization of
unrecognized transition
asset, prior service cost and
deferred gains and losses (2) (6) (4)
----- ---- -----
Net pension expense $ 16 $ 2 $ 10
===== ==== =====
</TABLE>
<TABLE>
<CAPTION>
Principal Assumptions
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Weighted average discount rate 7 1/2% 8 1/2% 8 3/4%
Weighted average rate of
compensation increase 4 1/2% 5 1/2% 5 1/2%
Long-term rate of return on assets 9 1/2% 9 1/2% 9 1/2%
</TABLE>
<TABLE>
<CAPTION>
Funded Status of the Plans
1993 1992
------ -----
<S> <C> <C>
Accumulated benefit obligation
including vested benefits of $935 and $770 $ 938 $ 774
------ -----
Plan assets at fair value, primarily equity
and fixed-income securities $ 984 $ 912
Projected benefit obligation for service
rendered to date (1,002) (836)
------ -----
Assets over (under) projected
benefit obligation (18) 76
Unrecognized net transition asset (48) (55)
Unrecognized loss (gain) 18 (40)
Unrecognized prior service cost 32 17
------ -----
Net pension liability $ (16) $ (2)
====== =====
</TABLE>
Approximately 3% of the plan assets at December 31, 1993 and December 31, 1992
represents the company's common stock.
The company's foreign subsidiaries maintain pension and other benefit plans
which are consistent with statutory practices and are not significant.
The Nonbargaining Employees Pension Plan of Olin Corporation provides that if,
within three years following a change of control of the company, any corporate
action is taken or filing made in contemplation of, among other things, a plan
termination or merger or other transfer of assets or liabilities of the plan,
and such termination, merger or transfer thereafter takes place, plan benefits
would automatically be increased for affected participants (and retired
participants) to absorb any plan surplus.
The company provides certain postretirement health care and life insurance
benefits for eligible active and retired domestic employees. Effective January
1, 1992, the company adopted Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions"
(SFAS 106). SFAS 106 requires the accrual method of accounting for
postretirement health care and life insurance benefits based on actuarially
determined costs to be recognized over the period from the date of hire to the
full eligibility date of employees who are expected to qualify for such
benefits. As of January 1, 1992, the company recognized the full amount of its
estimated accumulated postretirement benefit obligation, representing the
present value of the estimated future benefits payable to current retirees and
the earned portion of estimated benefits payable to active employees after
retirement. The pretax charge to 1992 earnings was $80 million with a net income
effect of $50 million or $2.30 per share. The net income and per share amounts
have been included in the statement of income as the cumulative effect of an
accounting change.
<TABLE>
<CAPTION>
Components of Postretirement Expense
1993 1992
<S> <C> <C>
----- -----
Service cost-benefits earned during year $2 $2
Interest cost on accumulated postretirement
benefit obligation 6 7
----- -----
Total expense $8 $9
===== =====
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Unfunded Liability for Postretirement Benefits
1993 1992
---- ----
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $38 $36
Fully eligible active plan participants 11 9
Other active participants 25 35
---- ----
Cumulative accumulated postretirement benefit
obligation 74 80
Unrecognized loss (8) --
Unrecognized prior service cost 11 --
---- ----
Net postretirement benefit liability $77 $80
==== ====
</TABLE>
The accumulated postretirement benefit obligation was determined using the
projected unit credit method and an assumed discount rate of 71/2% in 1993 and
83/4% in 1992. The assumed health care cost trend rate used for pre-65 retirees
was 131/2% in 1993 and 14% in 1992, declining 1/2% per annum to 6%. For post-65
retirees, the company provides a fixed dollar benefit which is not subject to
escalation. In 1993 the company modified certain attributes of the
postemployment medical plan including eligibility requirements, retiree
contributions and a limit (effective year 2000) on pre-65 retiree medical
coverage.
A one percent increase each year in the health care cost trend rate used would
have resulted in a less than $1 million increase in the aggregate service and
interest components of expense for the year 1993, and a $4 million increase in
the accumulated postretirement benefit obligation at December 31, 1993.
In 1991 the expense associated with providing these benefits was based on life
insurance premiums and medical claims paid. Such benefit costs approximated $7
million and were expensed as incurred.
Income Taxes
As disclosed in the Summary of Significant Accounting Policies, the company
adopted SFAS 109 as of January 1, 1992. The cumulative effect on prior years of
this change in accounting principle increased 1992 net income by $4 million or
$.19 per share and is reported separately in the consolidated statement of
income.
<TABLE>
<CAPTION>
Components of Pretax Income (Loss)
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Domestic $(158) $ 89 $ (36)
Foreign 8 (1) 11
----- ----- -----
$(150) $ 88 $ (25)
===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Components of Income Tax Expense (Benefit)
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Currently payable:
Federal $ (1) $ 18 $ 6
State 3 4 3
Foreign 3 1 1
----- ----- -----
5 23 10
Deferred (63) 10 (22)
----- ----- -----
$ (58) $ 33 $ (12)
===== ===== =====
</TABLE>
The following table accounts for the difference between the actual tax
provision and the amounts obtained by applying the statutory U.S. federal income
tax of 35% in 1993 and 34% in 1992 and 1991 to the income (loss) before taxes.
<TABLE>
<CAPTION>
Effective Tax Rate Reconciliation
(Percent) 1993 1992 1991
----- ---- -----
<S> <C> <C> <C>
Statutory federal tax rate (35.0) 34.0 (34.0)
Foreign income tax 2.5 (.9) (3.1)
State income taxes, net (3.4) 3.8 (4.8)
Goodwill 1.2 2.0 6.0
Equity in net income of affiliates (.5) (.3) (4.4)
Other, net (3.5) (1.1) (7.7)
----- ---- -----
Effective tax rate (38.7) 37.5 (48.0)
===== ==== =====
</TABLE>
The cumulative amount of undistributed earnings of foreign subsidiaries, if
remitted, would result in a minimal amount of tax because of available foreign
tax credits.
<TABLE>
<CAPTION>
Components of Deferred Tax Assets and Liabilities
1993 1992
----- -----
<S> <C> <C>
Deferred tax assets
Post retirement benefits $ 31 $ 30
Non-deductible reserves 150 80
Tax credit carryforwards 44 30
Other miscellaneous items 16 15
----- -----
Total deferred tax assets $ 241 $ 155
===== =====
</TABLE>
<TABLE>
<CAPTION>
1993 1992
----- -----
<S> <C> <C>
Deferred tax liabilities
Property, plant and equipment $ 133 $ 129
Other miscellaneous items 45 26
----- -----
Total deferred tax liabilities $ 178 $ 155
===== =====
</TABLE>
Included in Other Current Assets are $46 million of net current deferred
assets. Taxable income is expected to be sufficient to recover the net benefit
within the carryforward period and, therefore, no valuation allowance was
established.
As of December 31, 1993, the company had approximately $40 million of
Alternative Minimum Tax Credits available to offset future federal income taxes
on an indefinite carryforward basis.
The components of the 1991 net deferred tax benefit consisted primarily of
accelerated depreciation, alternative minimum tax and non-deductible reserves.
Supplemental Cash Flow Information
Cash payments during the years ended 1993, 1992 and 1991 included interest of
$39 million, $43 million and $49 million and income taxes, net of refunds, of $8
million, $15 million and $17 million, respectively.
In 1991, A. J. Oster Co. was acquired for $80 million in cash. The fair value
of assets acquired was $90 million and liabilities assumed or created were $10
million.
<TABLE>
<CAPTION>
Details of Businesses Sold
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Fair value of assets sold $ 37 $ 42 $ 32
Liabilities assumed by the purchaser -- 6 12
Note (paid) payable by the purchaser -- (6) 6
----- ----- -----
Net proceeds from sales of businesses $ 37 $ 42 $ 14
===== ===== =====
</TABLE>
27
<PAGE>
Employee Stock Ownership Plan
In June 1989, an amendment to the company's Thrift Plan created an Employee
Stock Ownership Plan feature and changed the name of the Thrift Plan to the
Contributing Employee Ownership Plan. The plan is a defined contribution plan
available to essentially all domestic employees which provides a match of
employee contributions. The plan purchased from the company approximately 1.3
million shares ($100 million) of a newly authorized 1.75 million share series of
the company's ESOP preferred stock, financed by $60 million of notes guaranteed
by the company and a $40 million loan from the company. This loan has been
repaid in total to the company as of December 31, 1992. At December 31, 1993
there were 1.2 million shares of ESOP preferred stock outstanding at a value of
$80.00 per share. The annual fixed dividend rate is $5.97 per share. The ESOP
preferred stock is convertible by the holder into the company's common stock on
a one-for-one basis, subject to anti-dilutive adjustments and may be redeemed at
the option of the company after July 1, 1994, or at the option of the plan under
certain circumstances (including upon payment of withdrawing plan participant
accounts or if required to meet the plan's debt payments). The company reserves
the right to satisfy the redemption in cash, marketable obligations or common
stock. Expenses related to the plan are based on ESOP preferred and common stock
allocated to participants. These costs amounted to $10 million in 1993, 1992 and
1991. Interest incurred by the plan totaled $2 million in 1993, $3 million in
1992, and $5 million in 1991, which was funded by ESOP preferred dividends. The
ESOP preferred stock is included in shareholders' equity because the company
intends to redeem the ESOP preferred stock solely with shares of the company's
common stock, and has the ability to do so.
Stock Options
Under the stock option plans, options may be granted to purchase shares of the
company's common stock at not less than fair market value at the date of grant,
and are exercisable for a period not exceeding ten years from that date. Stock
option transactions are as follows:
<TABLE>
<CAPTION>
Option Price
Shares Per Share
------- -------------
<S> <C> <C>
Outstanding at January 1, 1991 653,258 $13.24-$65.00
Granted 138,460 44.38
Exercised (46,482) 16.55-49.32
Canceled (10,214) 44.38-53.50
------- -------------
Outstanding at December 31, 1991 735,022 13.24-65.00
Granted 148,125 53.00-63.60
Exercised (45,306) 13.24-49.32
Canceled (29,805) 30.82-53.50
------- -------------
Outstanding at December 31, 1992 808,036 22.14-65.00
Granted 147,030 43.25
Exercised (19,418) 28.19-44.38
Canceled (14,159) 43.25-53.50
------- -------------
Outstanding at December 31, 1993 921,489 $22.14-$65.00
======= =============
</TABLE>
Of the outstanding options at December 31, 1993, options covering 755,449
shares are currently exercisable.
At December 31, 1993, common shares reserved for issuance under these plans
were 1,316,794 and under additional remuneration agreements were estimated to be
50,000.
Shareholder Rights Plan
In 1986, the Board of Directors adopted a Shareholder Rights Plan expiring in
1996, which is designed to prevent an acquiror from gaining control of the
company without offering a fair price to all shareholders. Each right entitles
the shareholder to buy 1/2 share of common stock of the company at an exercise
price of $50. The rights are exercisable only if a person acquires 20% or more
of the company's common stock or commences a tender or exchange offer for 30% or
more of such stock. The company can redeem the rights at $.05 per right for a
certain time period. If any person acquires 30% or more of the common stock and
in the event of certain mergers or combinations, each right will entitle the
holder to purchase stock or other property having a value of twice the exercise
price.
Segment Information
Information relative to the various industries in which the company operates
appears on page 19 and is incorporated herein by reference.
<TABLE>
<CAPTION>
Segment Operating Income (Loss)
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Chemicals $ (165) $ 26 $ (72)
Metals 29 47 26
Defense and Ammunition 15 44 52
------ ------ ------
Total operating income (loss) $ (121) $ 117 $ 6
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Geographic Segment Data
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Sales
United States $2,242 $2,222 $2,101
Foreign 181 154 174
Transfers between areas
United States 83 79 79
Foreign 16 12 11
Eliminations (99) (91) (90)
------ ------ ------
Total sales $2,423 $2,376 $2,275
====== ====== ======
Operating income (loss)
United States $ (128) $ 110 $ (6)
Foreign 6 3 8
Eliminations 1 4 4
------ ------ ------
Operating income (loss) $ (121) $ 117 $ 6
====== ====== ======
Assets
United States $1,782 $1,831 $1,824
Foreign 137 183 202
Investments 40 47 28
Corporate assets and eliminations (29) (31) (42)
------ ------ ------
Total consolidated assets $1,930 $2,030 $2,012
====== ====== ======
</TABLE>
Sales to the U.S. government were $354 million, $409 million and $453 million
in 1993, 1992 and 1991, respectively. The Defense and Ammunition segment
accounted for approximately 83% of the government sales in 1993, 1992 and 1991.
Transfers between geographic areas are priced generally at prevailing market
prices. Export sales
28
<PAGE>
from the United States to unaffiliated customers were $162 million, $172 million
and $175 million in 1993, 1992 and 1991, respectively.
Acquisitions
In 1991 the company acquired A.J. Oster Co. for $80 million. This acquisition
was accounted for as a purchase and accordingly, its results of operations,
which were not material, are included in the consolidated financial statements
from the date of acquisition. The net assets acquired included working capital
of $32 million, property, plant and equipment of $14 million and other assets of
$2 million.
Dispositions
During 1993, the Company sold the facility and the assets of its contract
integrated circuit assembly operation and its interest in the German joint
venture to its partner. These transactions generated cash proceeds of $37
million.
Throughout 1992, the company sold several small product lines such as urethane
systems, Uralloy low profile additives, sodium chlorite, the European and
Singapore-based electronic chemicals and its ethylene oxide unit. Proceeds from
these sales in 1992 amounted to $36 million.
In December 1991, the company sold its European sporting ammunition business,
including its shotshell manufacturing facility in Italy. This transaction
generated cash proceeds of $20 million, including $6 million received in 1992.
Environmental
The company is party to various governmental and private environmental actions
associated with waste disposal sites and manufacturing facilities. Associated
costs of investigatory and remedial activities are provided for in accordance
with generally accepted accounting principles governing probability and the
ability to reasonably estimate future costs. Environmental provisions charged to
income amounted to $85 million in 1993, $17 million in 1992, and $18 million in
1991. The significant increase in 1993 resulted from expanded volumes of
contaminants uncovered while remediating a particular site combined with the
availability of more definitive data from progressing investigatory activities
concerning both the nature and extent of contamination and remediation
alternatives at other sites. The consolidated balance sheets include reserves
for future environmental expenditures to investigate and remediate known sites
amounting to $131 million at December 31, 1993 and $66 million at December 31,
1992, of which $91 million and $39 million are classified as other noncurrent
liabilities, respectively. Included in the reserve at December 31, 1993 are
liabilities anticipated to be shared with a third party, with whom the company
is currently in litigation.
Environmental exposures are difficult to assess for numerous reasons,
including the identification of new sites, developments at sites resulting from
investigatory studies, advances in technology, changes in environmental laws and
regulations and their application, the scarcity of reliable data pertaining to
identified sites, the difficulty in assessing the involvement and financial
capability of other potentially responsible parties and the company's ability to
obtain contributions from other parties and the time periods (sometimes lengthy)
over which site remediation occurs. It is possible that some of these matters
(the outcome of which is subject to various uncertainties) may be decided
unfavorably against the company. At December 31, 1993, the company had estimated
additional contingent environmental liabilities of $19 million which were
determined in accordance with generally accepted accounting principles.
Commitments and Contingencies
The company leases certain properties, such as manufacturing, warehousing and
office space, data processing and office equipment and railroad cars. Leases
covering these properties generally contain escalation clauses based on
increased costs of the lessor, primarily property taxes, maintenance and
insurance and have renewal or purchase options. Total rent expense charged to
operations amounted to $45 million in 1993 and $37 million in 1992 and 1991,
(sublease income is not significant). Future minimum rent payments under
operating leases having initial or remaining noncancelable lease terms in excess
of one year at December 31, 1993 are as follows (in millions): 1994-$29; 1995-
$25; 1996-$20; 1997-$17; 1998-$13; thereafter-$58.
There are a variety of legal proceedings, contractual obligations and
environmental issues, arising out of its businesses, pending or threatened
against the company. Certain information regarding these matters can be found in
the Environmental note to the consolidated financial statements; and Item 3,
Legal Proceedings and Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations in the 1993 Form 10-K, which is available on
request from the company.
29
<PAGE>
Independent Auditors' Report
To the Board of Directors and Shareholders of Olin Corporation:
We have audited the accompanying consolidated balance sheets of Olin Corporation
and subsidiaries as of December 31, 1993 and 1992 and the related consolidated
statements of income, shareholders' equity and cash flows for each of the years
in the three-year period ended December 31, 1993. These consolidated financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements, referred to above,
present fairly, in all material respects, the financial position of Olin
Corporation and subsidiaries as of December 31, 1993 and 1992, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1993 in conformity with generally accepted accounting
principles.
As discussed in the notes to financial statements, the company changed its
methods of accounting for postretirement benefits other than pensions and income
taxes in 1992.
/s/ KPMG Peat Marwick
Stamford, Connecticut
January 27, 1994
Management Report on Financial Statements
The company has prepared the accompanying consolidated financial statements and
related information for the years ended December 31, 1993, 1992, and 1991.
Management is responsible for the integrity of the financial statements, which
were prepared in conformity with generally accepted accounting principles. In
our opinion, they contain no material misstatements attributable to fraud or
error. The financial information contained elsewhere in this annual report is
consistent with the financial statements.
The company maintains internal accounting control systems designed to provide
reliable information and reasonable assurance that assets are safeguarded from
loss or unauthorized use, that fraudulent reporting would be prevented or
detected and that all transactions are properly authorized. A well-qualified
internal audit department evaluates internal accounting control systems and
monitors compliance with the company's internal control policies and procedures.
Management believes that, as of December 31, 1993, the company's system of
internal controls is adequate to accomplish the objectives discussed herein.
Management also recognizes its responsibility for fostering a strong ethical
climate so that the company's affairs are conducted according to the highest
standards of personal and corporate conduct. This responsibility is communicated
to all employees in the company's code of business conduct, which is publicized
throughout the company. The code of conduct addresses, among other things, the
necessity of ensuring open communication within the company; potential conflicts
of interest; compliance with all domestic and foreign laws, including those
relating to financial disclosure; and the confidentiality of proprietary
information. The company maintains a systematic program to assess compliance
with these policies.
Our independent auditors are engaged to audit and to render an opinion on the
fairness in all material respects of our consolidated financial statements
presented in conformity with generally accepted accounting principles. In
performing their audit in accordance with generally accepted auditing standards,
they evaluate the effectiveness of our internal accounting control systems,
review selected transactions and carry out other auditing procedures to the
extent they consider necessary in expressing their opinion on our financial
statements.
The Audit Committee of the Board of Directors, composed solely of outside
directors, meets periodically with the independent auditors, management and the
company's internal auditors to review the work of each and to evaluate matters
pertinent to internal accounting controls and financial reporting, and the
nature, extent and results of auditing activities. The Audit Committee annually
recommends to the Board of Directors the appointment of independent auditors.
The independent auditors and the company's internal audit department have access
to the Audit Committee without management's presence.
/s/ John W. Johnstone, Jr. /s/ James A. Riggs
John W. Johnstone, Jr. James A. Riggs
Chairman and Senior Vice President and
Chief Executive Officer Chief Financial Officer
30
<PAGE>
Directors
Board of Directors
Robert R. Frederick
Former President and
Chief Executive Officer,
RCA Corporation
Donald W. Griffin
President and
Chief Operating Officer
William W. Higgins
Former Senior Vice President,
The Chase Manhattan
Bank, N.A.
Robert Holland, Jr.
Chairman, ROKHER-J, Inc.
John W. Johnstone, Jr.
Chairman and
Chief Executive Officer
Jack D. Kuehler
Former Vice Chairman,
International Business Machines
Corporation
H. William Lichtenberger
Chairman and
Chief Executive Officer,
Praxair, Inc.
G. Jackson Ratcliffe, Jr.
Chairman, President
and Chief Executive Officer,
Hubbell Incorporated
William L. Read
Vice Admiral, U.S. Navy (Ret.)
John P. Schaefer
Chairman, Research Corporation
Technologies and President,
Research Corporation
Irving Shain
Former Vice President and
Chief Scientist
Eugene F. Williams, Jr.
Former Chairman, Centerre
Trust Company of St. Louis
Robert L. Yohe
Former Vice Chairman
of the Board
Committees of the Board
Audit Committee
William W. Higgins,
Chairman
G. Jackson Ratcliffe, Jr.
William L. Read
John P. Schaefer
Irving Shain
Compensation and Stock
Option Committee
G. Jackson Ratcliffe, Jr.,
Chairman
Robert R. Frederick
Robert Holland, Jr.
Jack D. Kuehler
Eugene F. Williams, Jr.
Directors Committee
Jack D. Kuehler,
Chairman
Robert R. Frederick
William W. Higgins
Eugene F. Williams, Jr.
Executive and Finance Committee
Eugene F. Williams, Jr.,
Chairman
Robert R. Frederick
Donald W. Griffin
Robert Holland, Jr.
John W. Johnstone, Jr.
Jack D. Kuehler
Robert L. Yohe
Pension Committee
Robert R. Frederick,
Chairman
G. Jackson Ratcliffe, Jr.
William L. Read
John P. Schaefer
Irving Shain
Social Responsibility Committee
John P. Schaefer,
Chairman
William W. Higgins
Robert Holland, Jr.
William L. Read
Irving Shain
Management
Corporate Management
John W. Johnstone, Jr.
Chairman and
Chief Executive Officer
Donald W. Griffin
President and
Chief Operating Officer
Joseph M. Gaffney
Senior Vice President,
Planning and Development
James G. Hascall
Senior Vice President
James A. Riggs
Senior Vice President and
Chief Financial Officer
Emanuel J. DiTeresi
Vice President and Controller
George B. Erensen
Vice President, Taxes and
Risk Management
Johnnie M. Jackson, Jr.
General Counsel-Corporate
Resources, And Secretary
Peter C. Kosche
Vice President, Human Resources
Janet M. Pierpont
Vice President and Treasurer
Linda E. Gaza
Vice President, Public Affairs
Robert A. Beyerl
Director, Internal Audit
Operations Management
Leon B. Anziano
President, Chlor-Alkali Products,
and Corporate Vice President
Gerald W. Bersett
President, Winchester, and
Corporate Vice President
Michael E. Campbell
President, Electronic Materials,
and Corporate Vice President
Angelo A. Catani
President, Ordnance, and
Corporate Vice President
Patrick J. Davey
President, Chemicals, and
Corporate Vice President
James G. Hascall
President, Brass, and Corporate
Senior Vice President
William M. Schmitt
President, Latin America and
South Africa, and
Corporate Vice President
William W. Smith
President, Aerospace, and
Corporate Vice President
Marc A. Kolpin
President, Physics International
Robert J. Tubbs
General Counsel-Operations
31
<PAGE>
Corporate Data
Transfer Agent and Registrar
Chemical Bank
450 W. 33rd Street
New York, N.Y. 10001
Telephone: (800) 306-8594
Stock Exchange Listings
Common Stock
New York Stock Exchange
Pacific Stock Exchange
Chicago Stock Exchange
Ticker Symbol: OLN
Series A Conversion
Preferred Stock
New York Stock Exchange
Ticker Symbol: OLNPrP
Trustee for Subordinated Notes
Bankers Trust Company
Four Albany Street
New York, N.Y. 10015
Telephone: (212) 250-6112
Trustee for 8% Notes
Chemical Bank
450 W. 33rd Street
New York, N.Y. 10001
Telephone: (212) 613-7147
Commercial Paper Dealers
J.P. Morgan Securities, Inc.
60 Wall Street
New York, N.Y. 10260-0060
Telephone: (212) 648-0100
Goldman Sachs
Money Markets, L.P.
85 Broad Street
New York, N.Y. 10004
Telephone: (212) 902-8274
Dividend Reinvestment Service
Olin makes a Dividend Reinvestment Service available to its shareholders.
For information, write to:
Chemical Bank
Dividend Reinvestment Dept.
P.O. Box 24850
Church Street Station
New York, N.Y. 10249
Telephone: (800) 306-8594
Trademarks
Italicized words identifying products in this report are trademarks or
servicemarks of Olin Corporation or its subsidiaries or affiliates.
Annual Meeting
The annual meeting of the shareholders will be held on Thursday, April 28, 1994,
at 10:30 a.m., local time, at the headquarters of the corporation, 120 Long
Ridge Road, Stamford, Connecticut.
Toll Free Shareholder Information
Telephone: (800) 656-OLIN
Quarterly earnings releases, other corporate news releases, and Olin's Form 10-K
are available. Earnings are released during the third week of April, July,
October, and the fourth week of January.
Investor Contact
Richard E. Koch
Director, Investor Relations Olin Corporation
P.O. Box 1355
Stamford, CT 06904-1355
Telephone: (203) 356-3254
Credits
Design: Addison Corporate Annual Reports Inc., N.Y.C.
Photography: Jeff Smith
Printed in U.S.A. on recycled paper.
Annual Report Features
1992--Building for the Next Century
1991--The Spirit of Olin
1990--Stakeholders of Total Quality Management
1989--Building Shareholder Value
1988--Employee Dedication to Customer Service
1987--A Focus on Customer Satisfaction
<TABLE>
<CAPTION>
Quarterly Data (unaudited)
First Second Third Fourth
1993 Quarter Quarter Quarter Quarter Year
- ---- ------- ------- ------- ------- ----
<S> <C> <C> <C> <C> <C>
Sales $592 $626 $607 $598 $2,423
Cost of goods sold 484 507 508 662 2,161
Net income (loss) 12 14 5 (123) (92)
Net income (loss) per share:
Primary .45 .57 .15 (5.69) (4.52)
Assuming full dilution .45 .57 -- -- --
Common dividends .55 .55 .55 .55 2.20
Market price of
common stock*
High 46 1/4 46 1/4 45 1/4 50 1/2 50 1/2
Low 40 3/8 42 3/8 39 7/8 41 3/4 39 7/8
1992
- ----
Sales $614 $633 $577 $552 $2,376
Cost of goods sold 490 516 482 453 1,941
Income before
accounting changes 24 21 6 4 55
Accounting changes (46) -- -- -- (46)
Net income (loss) (22) 21 6 4 9
Net income (loss) per share:
Primary:
Income before
accounting changes 1.04 .88 .18 .07 2.17
Accounting changes (2.11) -- -- -- (2.11)
Net income (loss) (1.07) .88 .18 .07 .06
Assuming full dilution -- .86 -- -- --
Common dividends .55 .55 .55 .55 2.20
Market price of
common stock*
High 54 1/4 54 3/4 47 3/4 46 54 3/4
Low 39 3/8 43 3/4 39 1/2 37 1/4 37 1/4
1991
- ----
Sales $561 $568 $551 $595 $2,275
Cost of goods sold 549 454 453 488 1,944
Net income (loss) (59) 21 15 10 (13)
Net income (loss) per share:
Primary (3.20) .98 .70 .60 (.92)
Assuming full dilution -- .96 .69 .60 --
Common dividends .55 .55 .55 .55 2.20
Market price of
common stock*
High 49 5/8 53 1/2 54 47 3/4 54
Low 33 1/2 40 1/4 46 1/4 36 5/8 33 1/2
</TABLE>
* New York Stock Exchange composite transactions.
1993 fourth-quarter loss includes a $132 million charge for personnel
reductions, business restructurings involving consolidations and re-alignments
within divisions, costs at sites of discontinued businesses, future
environmental liabilities, and other charges.
1992 first-quarter loss includes a $46 million charge for cumulative effect
of Accounting Changes for the adoption of SFAS No. 106 and No. 109.
1991 first-quarter loss includes an $80 million charge to cover losses on
disposition and write-down of certain businesses and costs of personnel
reductions.
32
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF OLIN CORPORATION
(as of December 31, 1993)
<TABLE>
<CAPTION>
JURISDICTION PERCENTAGE OF DIRECT/
WHERE INDIRECT OWNERSHIP BY
SUBSIDIARY ORGANIZED OLIN OF VOTING SECURITIES
- ---------- -------------- -------------------------
<S> <C> <C>
Advanced Products, Inc./1/ California 100%
A. J. Oster Caribe, Inc. Delaware 100%
A.J. Oster Company Rhode Island 100%
A. J. Oster Foils, Inc. Delaware 100%
A. J. Oster West, Inc. Rhode Island 100%
Bridgeport Brass Corporation/2/ Indiana 100%
Bryan Metals, Inc./3/ Ohio 100%
General Defense Corporation/4/ Pennsylvania 100%
Hi-Pure Chemicals, Inc. Pennsylvania 100%
Hydrochim, S.A. France 100%
Image Technology Corporation/5/ Arizona 100%
N.V. Olin Hunt Specialty Products Belgium 100%
N.V. Olin Hunt Trading Belgium 100%
Olin Australia Limited Australia 100%
Olin Brasil Ltda. Brazil 100%
Olin Canada Inc. Canada 100%
Olin Chemicals B.V. Netherlands 100%
Olin Corporation N.Z. Limited New Zealand 100%
Olin Export Trading Corporation Virgin Islands 100%
Olin Engineered Systems, Inc. Delaware 100%
Olin Fabricated Metal Products,
Inc./6/ Delaware 100%
Olin Financial Services Inc. Delaware 100%
Olin GmbH Germany 100%
Olin Hunt Specialty Products, Inc. Delaware 100%
Olin Hunt Specialty Products S.r.l. Italy 100%
Olin Hunt Sub. I Corp. Delaware 100%
Olin Industrial (Hong Kong) Limited Hong Kong 100%
Olin Japan, Inc. Japan 100%
Olin Pte. Ltd. Singapore 100%
Olin S.A. France 100%
Olin Specialty Metals Corporation Rhode Island 100%
Olin (U.K.) Limited United Kingdom 100%
Pacific Electro Dynamics, Inc. Washington 100%
Physics International Company California 100%
Rocket Research Company Washington 100%
Superior Pool Products, Inc. Delaware 100%
</TABLE>
There are omitted from the foregoing list the names of certain subsidiaries
which, if considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary.
- --------
1. d/b/a "Olin Hunt Conductive Materials" in States of California, Indiana and
New Jersey.
2. d/b/a "Olin Brass, Indianapolis" and "Olin Brass, Indianapolis Facility" in
States of California, Illinois, Indiana, New Jersey, North Carolina, Ohio,
Pennsylvania, Rhode Island and Texas.
3. d/b/a "Bryan Metals of Ohio" in New Jersey.
4. d/b/a "Olin Ordnance" in States of Florida and Pennsylvania.
5. Corporation in process of being dissolved.
6. d/b/a "FMP Metal Products, Inc." in State of Illinois.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors Olin Corporation:
We consent to incorporation by reference in Registration Statement No. 33-
4479 on Form S-3 and Nos. 33-28593, 33-00159, 33-40346 and 33-41202 on Form S-8
of Olin Corporation of our reports dated January 27, 1994, relating to the
consolidated balance sheets of Olin Corporation and subsidiaries as of December
31, 1993 and 1992, and the related consolidated statements of income,
shareholders' equity, cash flows and related schedules for each of the years in
the three-year period ended December 31, 1993, which reports appear or are
incorporated by reference in the December 31, 1993 annual report on Form 10-K
of Olin Corporation. Our reports refer to a change in accounting for
postretirement benefits other than pensions and income taxes in 1992.
KPMG PEAT MARWICK
Stamford, Connecticut March 14, 1994
