<PAGE> 1
Filed pursuant to Rule 424(b)(3)
Registration Nos. 33-52771 and 33-4479
PRELIMINARY AND SUBJECT TO COMPLETION AND AMENDMENT
PRELIMINARY PROSPECTUS SUPPLEMENT DATED MAY 4, 1994
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 4, 1994)
1,750,000 SHARES
OLIN CORPORATION
COMMON STOCK
------------------------
All of the shares of Common Stock offered hereby will be sold by Olin
Corporation (the "Company" or "Olin"). The Common Stock is traded on the New
York, Pacific and Chicago Stock Exchanges under the symbol "OLN". On May 3,
1994, the last sale price of the Common Stock as reported on the New York Stock
Exchange was $51 7/8 per share. See "Price Range of Common Stock and Dividend
Information".
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share......................... $ $ $
- --------------------------------------------------------------------------------------------------
Total (3)......................... $ $ $
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting".
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted the Underwriters an option, exercisable within 30
days of the date hereof, to purchase up to an aggregate of 262,500
additional shares of Common Stock solely to cover over-allotments, if any.
If such option is exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting".
------------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Common Stock will be made in New York, New York on or
about May , 1994.
------------------------
MERRILL LYNCH & CO. LEHMAN BROTHERS
------------------------
The date of this Prospectus Supplement is May , 1994.
<PAGE> 2
OLIN AT A GLANCE
<TABLE>
<CAPTION>
BUSINESS MAJOR
SEGMENT BUSINESS UNIT PRIMARY CUSTOMERS
<S> <C> <C> <C>
( Chemicals Manufacturers of flexible polyurethane foam for furniture,
( carpet underlay and automotive seat cushioning;
( residential and commercial pool and spa owners; drinking
( water treatment facilities; manufacturers of anti-dandruff
( shampoos, metalworking fluids and agricultural chemicals;
CHEMICALS ( industrial boiler operators, spacecraft manufacturers and
( space agencies, U.S. Air Force; users of rigid foam for
( thermal insulation; formulators of coatings, elastomers,
( adhesives and sealants; manufacturers of household,
( industrial and institutional cleaning products.
(
( Chlor-alkali products Manufacturers of vinyl, bleach, textiles, pulp and paper;
( water purification and chemical manufacturing firms.
(
( Electronic materials Worldwide semiconductor and systems manufacturers for
( computer, telecommunications, defense/aerospace, medical,
( instrumentation and automotive products.
( Winchester Hunters and recreational shooters worldwide; law
( enforcement agencies; U.S. military and allied
( governments.
(
( Ordnance U.S. Department of Defense, NASA, Department of Energy and
( other government R&D agencies/laboratories; and allied
( governments.
DEFENSE AND (
AMMUNITION (
(
( Aerospace Satellite, aircraft and missile contractors; other
( defense/aerospace subsystems and systems contractors; NASA
( and other government R&D agencies/laboratories.
( Olin Brass Major manufacturers and suppliers in automotive,
( electronics, electrical and communications industries;
( U.S. Mint and foreign mints; U.S. Department of Defense
METALS ( and sporting ammunition manufacturers; decorative and
( builders' hardware producers.
<CAPTION>
BUSINESS
SEGMENT PRODUCTS AND SERVICES
<S> <C> <C>
( TDI (toluene diisocyanate), Luxate aliphatic
( diisocyanates, specialty and custom polyols, flexible
( polyols, rigid polyols; HTH calcium hypochlorite and Pace
( chlorinated isocyanurates, Pulsar II automatic pool
( chemical feeder; Omadine biocides, custom chemicals,
CHEMICALS ( hydrazine solutions, hydrazine-based propellants,
( surfactants, organic intermediates, acids (sulfuric,
( nitric).
(
( Chlorine and caustic soda, Reductone and Hydrolin sodium
( hydrosulfite, muriatic acid (HCl), HyPure hypochlorous
( acid, and sodium hypochlorite.
(
( Photoresists, polyimides, high-purity acids and solvents,
( dopants, vapor deposition chemicals, specialty cleaners,
( fluxes and strippers; metal packages for integrated and
( hybrid circuits, integrated circuit packaging materials.
( Winchester sporting ammunition, canister powder, reloading
( components; small caliber military ammunition; management
( of government arsenals; industrial cartridges.
(
( Medium and large caliber ammunition for aircraft,
( artillery, mortars, tanks, warships; liquid propellant for
( large caliber gun systems; Ball Powder propellant for
DEFENSE AND ( small, medium and large caliber ammunition; management of
AMMUNITION ( government arsenals and other facilities;
( demilitarization/recycling of munitions.
(
( Rocket engines, attitude control thrusters, electric
( propulsion, propulsion systems, inflation systems, gas
( generators, advanced warheads, pulsed power systems;
( simulated nuclear weapons effects, power supplies,
( airborne and space electronics, and ground support
( equipment.
( Alloy sheet and strip, copper, brass, leaded brass, tin
( brass, phosphor bronze, cupronickel, nickel silver,
( high-performance copper alloy strip, coinage metal,
METALS ( seamless and welded copper alloy tube, copper alloy rod
( and wire, stamped forms, printed circuit copper, beryllium
( copper, stainless steel strip; network of metals service
( centers in U.S. and Puerto Rico.
</TABLE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK, PACIFIC OR CHICAGO
STOCK EXCHANGES OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
Italicized words identifying products in this Prospectus Supplement are
trademarks or servicemarks of Olin Corporation or its subsidiaries or
affiliates.
<PAGE> 3
SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus Supplement and accompanying Prospectus.
THE COMPANY
Olin Corporation, a Virginia corporation incorporated in 1892 (the
"Company" or "Olin"), is a manufacturer of chemicals, metals and ammunition and
defense-related products which it markets to commercial and governmental
customers. According to the April 18, 1994 issue of Fortune, the Company ranks
in the 200 largest United States industrial corporations, based on total sales
which were $2.4 billion in 1993.
Chemicals. In Chemicals, its largest segment, its principal product
lines are: chlor-alkali, urethanes and pool chemicals. The Company is a
leading producer of chlorine and caustic soda in the southeastern United
States and has one of the largest production capacities in the United
States for toluene diisocyanate ("TDI"), a key component in the production
of urethane foam used in the manufacture of automotive seating, carpet
underlay, mattresses and furniture. In pool chemicals, the Company believes
it has the largest production capacity for calcium hypochlorite in the
United States. Much of its calcium hypochlorite is sold under the HTH brand
name.
Metals. The Company is a leading brass and copper alloy manufacturer
in the United States. The Company, through sales of its Posit-Bond clad
metal, produced by a unique cladding process, is a supplier of metal to the
U.S. Mint.
Defense and Ammunition. The Company believes its Winchester Division
is a leading United States producer of ammunition for recreational
shooters, hunters, law enforcement agencies and the United States armed
forces. The Company's Ordnance Division is a supplier of medium and large
caliber ammunition to the United States and certain foreign governments. In
addition, the Company's Aerospace Division provides advanced technology
products to the defense and aerospace industry.
THE OFFERING
The offering of 1,750,000 shares of Common Stock is referred to herein as
the "Offering". Unless otherwise indicated, all information included in this
Prospectus Supplement assumes the Underwriters' over-allotment option is not
exercised.
<TABLE>
<S> <C>
Common Stock offered by the Company.......... 1,750,000 Shares
Common Stock to be outstanding after the
Offering(a)................................ 20,870,481 Shares
Use of Proceeds.............................. The net proceeds from the Offering will be
used by the Company to reduce outstanding
short-term, floating rate indebtedness ($28
million of which was incurred for the Aerojet
Acquisition (as defined below) with the
remainder incurred for working capital
purposes).
New York Stock Exchange Symbol............... OLN
</TABLE>
- ------------
(a) Excludes shares issuable under outstanding stock options and in connection
with other employee or director benefit plans of the Company.
S-3
<PAGE> 4
RECENT DEVELOPMENTS
First Quarter Results. The Company reported first quarter net income of
$15.3 million, compared with first quarter 1993 net income of $11.7 million.
Primary earnings were $0.62 per share in the first quarter of 1994, compared
with $0.45 in the first quarter of 1993. Sales for the 1994 first quarter were
$605 million, compared with $592 million in the prior-year period. Contributing
to the 38% comparative increase in earnings per share were a 48% increase in the
metals segment's ("Metals") net income reflecting strong demand for Olin's
metals in automotive and housing industries and a strong commercial ammunition
market, an 8% increase in the chemicals segment's ("Chemicals") net income
reflecting improved performance in flexible urethanes and strong sales from
Olin's electronics materials businesses, and the effects of the cost reduction
and restructuring actions announced in December 1993. (See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--First
Quarter 1994 Compared to First Quarter 1993" and "--1993 Compared to 1992".)
Acquisition. On April 30, 1994, the Company completed the previously
announced acquisition of the Aerojet Ordnance Division (the "Aerojet
Acquisition") from GenCorp. Inc., which will significantly expand the Company's
medium caliber military ammunition line. The Aerojet Acquisition complements
Olin's existing medium caliber business, adding sales of 25 and 30 millimeter
ammunition to Olin's line. This acquisition will increase capacity utilization
of existing Olin facilities as well as enable the Company to bid on a greater
number of government ammunition contracts, both domestically and abroad.
Restructuring Charge, Other Charges and Personnel Reductions. In December
1993, Olin announced that it was taking charges for personnel reductions,
business restructurings involving consolidations and realignments within
divisions, future costs at sites of discontinued businesses, future
environmental liabilities and other charges. These charges totaled $132 million
after tax. The Company intends to reduce its salaried staff by approximately 600
employees, or 10 percent. While all segments of the Company have experienced
employee reductions, the Metals and Defense and Ammunition segments have
experienced the greatest portion of these reductions. Through March 31, 1994,
approximately 350 employees or 58 percent of the 600 positions had been
eliminated. Incremental staff reductions were made in April. The Company
anticipates that the cash savings resulting from workforce reductions and
business restructurings will approximate, on a pretax basis, $25 million in 1994
and $40 million annually thereafter.
USE OF PROCEEDS
The net proceeds from the sale of the Common Stock offered hereby,
estimated to be approximately $ , will be used by the Company to reduce
outstanding short-term, floating rate indebtedness ($28 million of which was
incurred for the Aerojet Acquisition with the remainder incurred for working
capital purposes).
S-4
<PAGE> 5
CAPITALIZATION
The following table sets forth the capitalization of the Company at March
31, 1994 and as adjusted to give effect to the Aerojet Acquisition, the issuance
of the Common Stock offered hereby and the use of proceeds from the sale of the
Common Stock to retire short-term indebtedness of the Company.
<TABLE>
<CAPTION>
AS
ACTUAL ADJUSTED
------ --------
(IN MILLIONS)
<S> <C> <C>
Short-Term Debt (including current installments
of Long-Term Debt)...................................................... $ 150 $
------ --------
Long-Term Debt:
Senior Debt............................................................. $ 325 $325
Subordinated Debt....................................................... 125 125
------ --------
Total Long-Term Debt............................................ $ 450 $450
------ --------
Shareholders' Equity:
Preferred Stock, par value $1 per share; authorized 10 million shares
Series A Conversion Preferred Stock (outstanding
2.76 million shares)............................................... $ 3 $ 3
ESOP Preferred Stock (outstanding 1.2 million shares)................ 91 91
Guaranteed ESOP Obligation.............................................. (44) (44)
Common Stock, par value $1 per share; authorized
60 million shares; outstanding 19.1 million shares................... 19
Additional Paid-in Capital.............................................. 297
Cumulative Translation Adjustment....................................... (7) (7)
Retained Earnings....................................................... 239 239
------ --------
Total Shareholders' Equity................................................ $ 598 $
------ --------
Total Capitalization...................................................... $1,198 $
------ --------
------ --------
</TABLE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND INFORMATION
The following table sets forth for the periods indicated the low and high
sales prices of the Common Stock on the New York Stock Exchange Composite Tape.
<TABLE>
<CAPTION>
MARKET PRICE
-------------
LOW HIGH
---- ----
<S> <C> <C>
1992
First Quarter.................................................... $39 3/8 $54 1/2
Second Quarter................................................... 43 3/4 54 3/4
Third Quarter.................................................... 39 1/2 47 3/4
Fourth Quarter................................................... 37 1/4 46
1993
First Quarter.................................................... 40 3/8 46 1/4
Second Quarter................................................... 42 3/8 46 1/4
Third Quarter.................................................... 39 7/8 45 1/4
Fourth Quarter................................................... 41 3/4 50 1/2
1994
First Quarter.................................................... 47 1/2 51 5/8
Second Quarter (through May 3)................................... 46 5/8 53 1/4
</TABLE>
A quarterly cash dividend of $0.55 per share has been paid on the Common
Stock since June 1990 and the Company has paid cash dividends on its Common
Stock in each fiscal quarter since 1926. Future dividends will be determined by
the Company's Board of Directors after consideration of the earnings and
financial condition of the Company, the Company's needs for funds and other
factors which the Company's Board of Directors deems relevant. The Company's
note agreements contain restrictions relating to the payment of dividends and
acquisition of the Company's capital stock. At March 31, 1994, retained earnings
of approximately $97 million were not so restricted under such agreements.
S-5
<PAGE> 6
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following consolidated financial data have been derived from, and
should be read in conjunction with, the detailed information and consolidated
financial statements contained in the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1994 and the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993 and incorporated by
reference herein. The data for interim periods are based on unaudited financial
statements which include all adjustments that, in the opinion of management of
the Company, are necessary for a fair presentation of such data. The interim
data are not necessarily indicative of results for the full year.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------- ------------------------------------------
1994 1993 1993(A) 1992(B) 1991(C) 1990 1989
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales:
Chemicals.................................... $ 285 $ 280 $1,117 $ 996 $ 960 $1,269 $1,302
Metals....................................... 180 177 660 676 562 566 542
Defense & Ammunition......................... 140 135 646 704 753 757 665
Consolidated................................. 605 592 2,423 2,376 2,275 2,592 2,509
Net Income (Loss):
Chemicals.................................... 8 7 (94) 21 (38) 42 106
Metals....................................... 9 6 14 29 17 35 19
Defense & Ammunition......................... 4 4 10 29 35 36 31
Corporate & Other............................ (6) (5) (22) (70) (27) (29) (32)
Consolidated................................. 15 12 (92) 9 (13) 84 124
Net Income (Loss)
Available for Common Shareholders............ 14 10 (99) 1 (18) 76 120
PER SHARE OF COMMON STOCK DATA:
Net Income (Loss)
Primary...................................... .62 .45 (4.52) .06 (.92) 4.03 6.02
Fully Diluted................................ .62 .45 (d) (d) (d) 3.88 5.85
Cash Dividends................................. .55 .55 2.20 2.20 2.20 2.15 1.95
Average Shares Outstanding (000s).............. 19,113 19,072 19,080 19,050 19,001 19,053 20,004
Fully Diluted Weighted Average Shares (000s)... 23,502 23,549 23,487 23,235 20,618 20,554 20,799
BALANCE SHEET DATA (AT END OF PERIOD):
Working Capital................................ $ 153 $ 212 $ 136 $ 179 $ 85 $ 212 $ 205
Total Assets................................... 1,950 2,046 1,930 2,030 2,012 1,866 1,904
Total Debt..................................... 600 540 570 578 698 570 656
Shareholders' Equity........................... 598 736 596 741 666 715 665
</TABLE>
- ---------------
(a) The 1993 results include a $132 million after-tax charge recorded in the
fourth quarter for personnel reductions, business restructurings involving
consolidations and re-alignments within divisions, costs at sites of
discontinued businesses, future environmental liabilities, and other
charges. Segment allocation of this charge was $106 million to Chemicals,
$12 million to Metals and $14 million to Defense and Ammunition.
(b) The 1992 results include a $46 million after-tax charge (allocated to
Corporate & Other) for the adoption of Financial Accounting Standards Board
Statements No. 106 and No. 109, retroactive to the first quarter of 1992.
(c) The 1991 results include a $80 million after-tax charge recorded in the
first quarter to cover losses on disposition and write-down of certain
businesses and costs of personnel reductions. Segment allocation of this
charge was $73 million to Chemicals and $7 million to Metals.
(d) Fully diluted loss per share is not presented as the amount is
anti-dilutive.
S-6
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
First Quarter 1994 Compared to First Quarter 1993
First quarter sales and net income data by industry segment are presented
below:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
-----------------
1994 1993
------ ------
(IN MILLIONS)
<S> <C> <C>
Sales:
Chemicals................................................ $285.2 $280.1
Metals................................................... 179.5 176.4
Defense and Ammunition................................... 140.2 135.4
------ ------
Total............................................... $604.9 $591.9
------ ------
------ ------
Net Income:
Chemicals................................................ $ 7.8 $ 7.2
Metals................................................... 8.9 6.0
Defense and Ammunition................................... 4.2 4.3
Corporate and Other...................................... (5.6) (5.8)
------ ------
Total............................................... $ 15.3 $ 11.7
------ ------
------ ------
</TABLE>
CHEMICALS
Although Chemicals segment sales were slightly ahead of 1993's quarter,
1994 net income increased 8% to $7.8 million as some of the Company's chemicals
businesses benefited from an improving economy. Operating results of flexible
urethanes improved significantly over 1993's level as a result of lower
manufacturing costs and the absence of a TDI plant maintenance turnaround which
occurred in 1993's first quarter. Chlor-alkali's financial performance was
adversely affected by declining caustic soda prices. Higher manufacturing costs
and brand promotional expenses in 1994 were the main factors contributing to
pool chemicals profit decline. Electronic materials' profits were significantly
ahead of last year due to increased demand for its products and services and
lower manufacturing costs.
METALS
Metals segment sales increased slightly over 1993's level, while net income
was 48% ahead of the same period last year. Higher volumes from increased
demand, particularly in the automotive and housing industries, as well as a
strong commercial ammunition market, contributed to the strong profit
improvement over 1993's first quarter. The 1994 sales increase resulting from
these higher volumes was offset in part by lower metal values. In addition,
losses from the German joint venture, which was sold in October 1993, adversely
impacted this segment's 1993 net income.
DEFENSE AND AMMUNITION
Defense and Ammunition segment sales in 1994 increased slightly from the
prior year period, while net income was marginally less than 1993's first
quarter. Winchester's net income was slightly behind last year's level as lower
fees for managing the Lake City Army Ammunition plant more than offset the
profits from higher commercial ammunition sales. Aerospace's sales and net
income were ahead of last year's levels due to higher sales from certain
Aerospace programs, lower manufacturing costs and additional royalty income.
Lower sales of medium caliber ammunition and Ball Powder propellant were the
main contributors to the 1994 decrease in Ordnance's financial performance.
S-7
<PAGE> 8
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 Department of Defense, 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.
Additional brand promotional expenses relating to pool chemicals, increased
market development expenses to support the expansion of the biocides product
line and a higher provision for doubtful accounts contributed to the 1994
increase in selling and administration expenses. The 1994 decrease in interest
and other income was due primarily to income earned in 1993 for the removal of
salt from a leased brine cavity. The 1994 first quarter effective tax rate of
36%, compared to 34.6% for the comparable 1993 period, reflected an increased
Federal income tax rate, which was legislated into law in 1993.
LIQUIDITY AND INVESTMENT ACTIVITY
In 1994 cash flow from operations and the use of credit facilities were
used to finance the Company's seasonal working capital requirements, capital
expenditures and dividends. At March 31, 1994, the Company maintained committed
credit facilities with banks of $367 million of which $191 million was
available. The Company believes that these credit facilities are adequate to
satisfy its liquidity needs for the near future. In 1994 cash flow from
operations improved significantly from 1993's level. In the first three months
of 1993 cash flow was used to significantly reduce December 31, 1992 accounts
payable balances. The unusually high level of capital spending in the 1992
fourth quarter and the timing of payment of invoices relating to various
purchase commitments resulted in the increased level of accounts payable at
year-end 1992 as compared to year-end 1993.
Concerning the Company's investing activities in the first quarter, capital
spending of $20.4 million in 1994 was 33% lower than 1993 due to higher levels
of spending in 1993 for additional brass strip capacity and the sulfuric acid
regeneration plant. Total year capital spending, including environmental capital
spending of $10 million, is estimated to increase 10% from 1993 mainly to
support the consolidations of some electronic materials businesses and provide
additional capacity for selected product lines. Historically, the Company has
funded its environmental capital spending through cash flow from operations and
expects to do so in the future. Investment spending in the first quarter of 1993
was attributed primarily to the new ethylene oxide facility in Latin America.
During the 1993 first quarter the Company sold the facility and assets of
its contract integrated circuit assembly operation and its brake fluid and
certain formulated functional fluid product lines. These divestitures generated
proceeds of $10.4 million.
At March 31, 1994, the percent of total debt to total capitalization
(excluding the reduction in equity for the Contributing Employee Ownership Plan)
was 48.3%, up from 47.1% at year-end 1993 and 45.5% at March 31, 1993. The
increase from year-end 1993 is attributable to higher short-term borrowings to
finance seasonal working capital requirements.
In the 1994 first quarter, the Company spent approximately $6 million for
investigatory and clean-up activities associated with former waste sites and
past operations. Spending for environmental investigatory and remedial efforts
for the full year 1994 is estimated to be $40 million, compared to $44 million
in 1993. The amounts spent were not charged to income but instead were charged
to reserves established for such costs identified and expensed to income in
prior years. Associated costs of investigatory and remedial activities are
provided for in accordance with generally accepted accounting principles
governing probability and the ability
S-8
<PAGE> 9
to reasonably estimate future costs. Charges to income for investigatory and
remedial efforts were material to operating results in 1991, 1992 and 1993 and
are expected to be material to net income in 1994 and future years.
Annual environmental-related cash outlays for capital projects, site
investigation and remediation, and normal plant operations are expected to range
from $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 identifications 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 the 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.
The Company's consolidated balance sheets include reserves for future
environmental expenditures to investigate and remediate known sites amounting to
$129 million at March 31, 1994 and $131 million at December 31, 1993, of which
$89 million and $91 million were classified as other noncurrent liabilities,
respectively. Included in the reserve at March 31, 1994 and 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. Environmental 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.
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 1993 Form 10-K Annual Report and in other filings of the Company with the
Securities and Exchange Commission, which are incorporated herein by reference.
1993 Compared to 1992
Although the economy had shown some recent signs of improvement as of the
end of 1993, the recession 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 the prior 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.
S-9
<PAGE> 10
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 by 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.
Speciality and organic chemicals sales in 1993 were equal to 1992 levels,
while profits in 1993 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 in 1993 were well ahead of 1992 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 turn-around
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 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.
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METALS
Metals sales of $660 million declined 2% on lower metal values and reduced
levels of utility and defense-related business. The Company's 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 in 1993 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) and 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 declining U.S. defense budgets.
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.
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U.S. Government sales amounted to $354 million in 1993, $409 million in
1992 and $453 million in 1991. Approximately 89% of 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
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, 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 two years beginning in
January 1994 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 discussed
below. 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 mentioned above were the main
contributors to the increase. Research and
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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 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 1991 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
1991 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 in 1992 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% in 1992 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.
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In the specialty and organic chemicals business, sales and profits in 1992
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 in 1992 than 1991. 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
in 1992 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 volumes, the recognition of losses on certain contracts and
expenses incurred in connection with the proposed 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.
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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. These
efforts 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 in 1991 through 1993, 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 prior years. The completion and close-out of
certain government contracts also 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
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Singapore-based electronic chemicals and the ethylene oxide unit were sold as
part of the streamlining program. 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
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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 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.
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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 are incorporated herein by reference.
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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<PAGE> 19
THE COMPANY
Olin Corporation, a Virginia corporation incorporated in 1892, is a
manufacturer of chemicals, metals, and ammunition and defense-related products
which it markets to commercial and governmental customers. Results for the
Company are reported in three operating segments: Chemicals, Metals, and Defense
and Ammunition. The Company has recognized brand names in each of these
segments, including Olin pool chemicals sold under the brand names HTH and Pace,
metal products sold under the brand name Olin Brass and sporting ammunition sold
under the brand names Winchester and Super-X.
References to the Company or Olin in this section include the Company and
its subsidiaries and affiliates. Olin's principal executive offices are located
at 120 Long Ridge Road, Stamford, Connecticut 06904, telephone (203) 356-2000.
OLIN STRATEGY
Olin's fundamental strategy is to build and maintain market leadership
positions in its existing businesses. In implementing this strategy, Olin seeks
to achieve its objectives by satisfying its customers and by focusing its
resources, human and capital, in areas where the Company has an acceptable
competitive position. Olin will concentrate on cost reductions and continuous
operational improvement to achieve excellence in its businesses and improve
earnings performance. The Company intends to review selective strategic
transactions in its markets as opportunities arise.
While Olin will seek to achieve substantial sales growth over a ten-year
period, the Company's primary emphasis will be on market leadership and
profitability, based on Olin's commitments to total quality, continual
operational improvement, ensuring customer satisfaction and achieving
commensurate financial rewards.
The Company seeks to improve the competitive position of its core
businesses in order to achieve enhanced earnings and returns. It concentrates on
improving cost effectiveness and capitalizing on growth opportunities while
maintaining prudent debt levels.
Market Leadership. The Company believes that maintaining its market
position in such businesses as pool chemicals, chlor-alkali, TDI, brass,
Winchester and military ammunition is an important element of its strategy. The
Company intends to provide capital to these businesses to maintain its market
position and competitiveness.
Cost Effectiveness. In order to achieve or maintain low cost producer
status, Olin invests in new equipment to improve the productivity of its plants
and the quality of its products. The Company also invests in new technologies to
improve its plant processes and products. In addition, through its six-year-old
Total Quality Management process, Olin has made both incremental and significant
changes to manufacturing and business processes to reduce costs and working
capital while trying to better serve the external customer.
New Opportunities. The Company continually evaluates opportunities for
growth in its core businesses by acquiring or developing complementary products,
services and businesses. Over the last several years, the Company has expanded
its operations in several markets including brass, urethanes, biocides and
electronic materials. The Company believes these expansion opportunities and
strategic transactions, such as the Oster acquisition in 1991 and the recent
Aerojet Acquisition, can provide potential for future growth and increased
profitability.
Prudent Debt Levels. Olin's long-term objective is to achieve a ratio of
total debt to total capitalization of approximately 35% to 40% in order to be in
a position to capitalize on opportunities as they arise and to respond to
changes in the Company's markets.
------------------------
General Economic Conditions and Product Demand. The Company believes it
has significant operating leverage (i.e., a disproportionately greater impact on
earnings resulting from a change in revenues), particularly in Chemicals,
because of the fixed nature of certain production costs and other aspects of the
Company's operations. Accordingly, a continuing improvement in economic
conditions and an increase in
S-19
<PAGE> 20
demand for the Company's products may have a significant positive effect on the
Company's earnings. Conversely, a deterioration in such economic activity or
demand may have a significant negative effect on its earnings.
CHEMICALS
In its largest segment, the Company manufactures and markets three major
product lines: chlor-alkali, urethanes and pool chemicals. In addition, it
produces a number of other chemical products described below.
Chlor-Alkali. The Company is a leading producer of chlorine and caustic
soda in the southeastern United States, with facilities at McIntosh, Alabama,
Charleston, Tennessee, and Augusta, Georgia. In addition, Niachlor, a
partnership formed between the Company and E.I. duPont de Nemours & Company,
produces chlorine and caustic soda at a Niagara Falls, New York facility.
Chlorine and caustic soda are co-products of the electrolysis of salt.
Chlorine is used as a bleaching agent in pulp and paper manufacturing and as a
raw material in the production of polyvinyl chloride. It is also used in the
manufacture of bleach and in water purification and in general inorganic and
organic chemical manufacturing. Caustic soda is used in petroleum refining and
in the manufacturing of pulp and paper, aluminum, detergents, soap and in a
variety of other organic and inorganic chemical products.
While the Company has historically marketed chlorine to pulp and paper
manufacturers in the southeastern United States, environmental concerns have
resulted in the decreased usage of chlorine in pulp bleaching. As a result, the
Company has shifted its chlorine business mix to other markets, including
manufacturers of ethylene dichloride and vinyl chloride monomer, as well as
other industrial customers. Approximately 30% of the Company's chlorine is used
captively for the manufacture of pool chemicals, TDI and other uses.
The Clinton Administration has recommended amendments to the Clean Water
Act which, among other things, would seek funding of a proposed 2 1/2-year study
of the impacts and benefits of chlorine and chlorinated compounds. In addition,
a bill was introduced in the United States Congress in 1993 which would propose
to eliminate discharges of chlorine compounds into navigable waters and require
zero discharge limits for certain toxic substances, including certain
chlorinated compounds. It is impossible to predict what legislation or other
initiatives, if any, may be adopted regarding chlorine and what effect, if any,
such action may have on the Company.
Urethanes. The Company has one of the largest production capacities in the
United States for TDI, a key component in the production of urethane foam which
is used in products such as automotive seating, furniture, mattresses and
padding. The Company sells TDI and an array of polyether polyols to intermediate
and final manufacturers of urethane foam products. The Company's polyols are
used to produce urethane products that are known as flexible urethanes, rigid
urethanes, and non-foam urethanes.
In addition, the Company is a supplier of specialty polyols used in
adhesives, coatings, elastomers and sealants. These products are sold to
intermediate and end use manufacturers.
Pool Chemicals. The Company manufactures or markets a wide array of
swimming pool chemicals and accessory products. It has two widely recognized
brand names in the U.S. pool chemicals industry: HTH and Pace. The Company sells
its pool chemical products to mass merchandisers, pool professionals,
distributors and pool chemical repackers. In addition, the Company participates
in the worldwide pool chemicals market through joint ventures in Brazil and
South Africa. Pool chemicals are manufactured using chlorine and caustic soda,
which can be directly sourced from the Company's own production. The Company
believes it has the largest production capacity for calcium hypochlorite in the
United States. Much of its calcium hypochlorite is sold under the HTH brand
name. The pool business assets acquired from FMC Corporation in 1985, which
include one of the Company's two isocyanurate manufacturing facilities, its
packaging facility and the Sun trademark, are subject to a final Federal Trade
Commission order requiring divestiture no later than February 22, 1995.
S-20
<PAGE> 21
Other Chemical Products. The Company manufactures a large number of
additional chemical products which are sold to intermediate and end use
manufacturers, such as zinc Omadine additive used in anti-dandruff shampoos;
sulfuric acid used in petroleum refining and in manufacturing agricultural
chemicals; hydrazine solutions used as an intermediate in plastics manufacturing
and agricultural chemicals; hydrazine-based rocket propellants; Reductone brand
sodium hydrosulfite used in paper, textile and clay bleaching; and surfactants
and fluids used in industrial and institutional detergents and hydraulic fluids.
In 1993, the Company added 130,000 tons of annual sulfuric acid regeneration
capacity to help it serve the growing market for more environmentally sound
gasoline.
Olin recently constructed an aliphatic di-isocyanate ("ADI") plant at Lake
Charles, Louisiana. The products manufactured at the ADI plant are used by
manufacturers of products such as automotive topcoats, premium paints and marine
and metal appliance finishes.
The Company, through Olin Hunt Specialty Products, Inc., a wholly-owned
subsidiary, and OCG Microelectronic Materials ("OCG"), affiliated joint venture
companies owned by the Company and CIBA-GEIGY Limited, develops, manufactures
and markets image-forming and other specialty electronic chemicals. In
particular, OCG produces and markets worldwide photoresist and polyimide
products, both of which are basic materials for manufacturing semiconductors.
METALS
The Company is a leading brass and copper alloy manufacturer in the United
States and rerolls and forms other metals. It is an active participant in the
worldwide market for these products, selling directly to large volume customers
and through distributors. The Company, through sales of its Posit-Bond clad
metal, produced by a unique cladding process, is a supplier of metal to the U.S.
Mint. The Company also sells various alloys to foreign governments for coinage
purposes.
While the end use markets for the Company's metal products vary from year
to year, principal markets include automotive (for connectors and radiators);
electronics (for lead frames, connectors and wiring); ammunition; coinage
metals; and other applications such as builder's hardware and plumbing supplies
and seamless and welded tube (for utility condensers and industrial heat
exchangers). The Company uses a portion of its ammunition cartridge cup
production captively in its Winchester sporting ammunition and also sells this
brass product to other ammunition makers.
In 1988, the Company acquired the former Bridgeport Brass Corporation of
Indianapolis, with primary manufacturing operations in Indianapolis, Indiana and
Bryan, Ohio, which significantly increased the Company's brass manufacturing
capacity.
In 1991, the Company acquired A. J. Oster Company ("Oster"), a distributor
of copper and copper-based alloy products, steel products, aluminum strip and
aluminum foil. Oster has a network of metal service centers located in several
states and Puerto Rico.
In 1993, the Company installed at its East Alton, Illinois facility an
advanced rolling mill contributing to improved quality and productivity.
The Company has a joint venture with Yamaha of Japan, which sells high
performance alloys into the Far East market. The joint venture's local
manufacturing presence has enabled Olin Brass to participate in the Japanese
market for such products.
DEFENSE AND AMMUNITION
The Company produces small, medium and large caliber ammunition for sale to
commercial and military customers. The Company believes its Winchester Division
is a leading U.S. producer of ammunition for recreational shooters, hunters, law
enforcement agencies and the U.S. Armed Forces. The Company's Ordnance Division
provides medium and large caliber ammunition to governmental customers. In
addition, the Company's Aerospace Division provides advanced technology products
to the defense and aerospace industries.
S-21
<PAGE> 22
Winchester. The Winchester brand name is widely recognized. The Company's
product line includes all major sizes of shotgun shells and rimfire and
centerfire ammunition for pistols and rifles. These products are sold to mass
merchandisers, distributors and the U.S. Government. This ammunition is
manufactured in East Alton, Illinois.
In 1993, the Company completed its eighth year of managing the Lake City
Army Ammunition Plant at Independence, Missouri. This government-owned,
contractor-operated ("GOCO") facility is the largest small caliber ammunition
facility in the United States.
Ordnance. The Company's Ordnance Division provides medium (20, 25 and 30
millimeter) and large (105 and 120 millimeter) caliber ammunition to the United
States and certain foreign governments. Olin Ordnance is a major supplier of
ammunition for the Abrams M1A1 tank which was utilized in the Persian Gulf War.
Ball Powder propellant and other propellants for Winchester ammunition and U.S.
Government ammunition production are sourced from the Company's Ball Powder
propellant plant in St. Marks, Florida.
This division utilizes its project and program management capabilities as
both a prime and subcontractor on contracts in which other defense suppliers
participate. The Company seeks to exploit these capabilities to acquire
additional GOCO work and to bid on other project management work. The Company
believes there are also opportunities in the area of weapons demilitarization.
Aerospace. The Company's Aerospace Division is comprised of two
subsidiaries: Olin Aerospace Company ("OAC") and Physics International Company.
Customers for these subsidiaries include satellite, aircraft and missile
contractors, other defense/aerospace subsystems and systems contractors, the
National Aeronautics and Space Administration and other government research and
development agencies and laboratories.
OAC is recognized as a major manufacturer of small rocket motors and
control thrusters used in satellites and other spacecraft such as Voyager II and
Magellan. It has been a leader in this technology for more than 20 years and
more recently has become a leader in advanced electric propulsion technology and
systems for satellites and spacecraft. OAC also manufactures inflators used in
various flotation devices, military munitions dispensing systems and aircraft
escape systems, as well as low voltage power conditioning and controlling
devices, digital test equipment and airborne electronic products.
Physics International Company's pulsed power systems are used in nuclear
radiation simulators and other electromagnetic applications. In addition, it
designs, tests and manufactures advanced, high performance anti-armor warhead
systems.
DESCRIPTION OF COMMON STOCK
GENERAL
The authorized capital stock of the Company consists of 60,000,000 shares
of common stock, par value $1 per share (the "Common Stock"), and 10,000,000
shares of preferred stock, par value $1 per share (the "Preferred Stock"),
issuable in series. On March 31, 1994, there were approximately 19,120,481
shares of Common Stock, 1,171,790 shares of ESOP Preferred Stock and 2,760,000
shares of Series A Conversion Preferred Stock outstanding.
The following statements with respect to the capital stock of the Company
are subject to the detailed provisions of the Company's Restated Articles of
Incorporation, as amended (the "Restated Articles"), and by-laws (the "By-Laws")
as currently in effect. These statements do not purport to be complete, or to
give full effect to the provisions of statutory or common law, and are subject
to, and are qualified in their entirety by reference to, the terms of the
Restated Articles, By-Laws and the Rights Agreement, dated as of February 27,
1986 between the Company and Manufacturers Hanover Trust Company (now known as
Chemical Bank), which are filed as Exhibits to the Registration Statement of
which this Prospectus Supplement is a part.
COMMON STOCK
Holders of Common Stock are entitled to dividends as declared by the Board
of Directors from time to time after payment of, or provision for, full
cumulative dividends on and any required redemptions of shares of Preferred
Stock then outstanding. Holders of Common Stock are entitled to one vote per
share and may not
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<PAGE> 23
cumulate votes for the election of directors. Holders of Common Stock have no
preemptive or subscription rights and have no liability for further calls or
assessments. In the event of the liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to receive pro rata all the
remaining assets of the Company available for distribution, after satisfaction
of the prior preferential rights of the Preferred Stock and the satisfaction of
all debts and liabilities of the Company.
The Transfer Agent and Registrar for the Common Stock is Chemical Bank.
See the accompanying Prospectus for additional information regarding the
Common Stock under the heading "Description of Capital Stock".
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), among the Company and each of the Underwriters
named below (the "Underwriters"), the Company has agreed to sell to each of the
Underwriters, and each of the Underwriters, for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Lehman Brothers Inc. are acting as
representatives (the "Representatives"), has severally agreed to purchase from
the Company, the number of shares of Common Stock set forth opposite its name
below.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
------------------------------------------------------------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..........................................
Lehman Brothers Inc................................................
---------
Total................................................. 1,750,000
---------
---------
</TABLE>
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<PAGE> 24
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth in the Underwriting Agreement, to
purchase all of the shares of Common Stock being sold pursuant to the
Underwriting Agreement if any of such shares of Common Stock being sold pursuant
to such Underwriting Agreement are purchased. Under certain circumstances, the
commitments of the non-defaulting Underwriters may be increased.
The Representatives have advised the Company that the Underwriters propose
initially to offer the shares of Common Stock to the public at the public
offering price set forth on the cover page of this Prospectus Supplement, and to
certain dealers at such price less a concession of not in excess of $ per share
of Common Stock. The Underwriters may allow, and such dealers may reallow, a
discount not in excess of $ per share of Common Stock on sales to certain other
dealers. After the public offering, the public offering price, concession and
discount may be changed.
The Company has granted the Underwriters an option, exercisable during the
30-day period after the date of this Prospectus Supplement, to purchase up to an
aggregate of 262,500 additional shares of Common Stock at the public offering
price set forth on the cover page of this Prospectus Supplement, less the
underwriting discount. The Underwriters may exercise this option only to cover
over-allotments, if any, made on the sale of the Common Stock offered hereby. To
the extent the Underwriters exercise this option, each Underwriter will be
obligated, subject to certain conditions, to purchase the number of additional
shares of Common Stock proportionate to such Underwriter's initial amount
reflected in the foregoing table.
The Company has agreed that, for a period of 90 days after the date of this
Prospectus Supplement, it will not offer, sell or contract to sell or otherwise
dispose of directly or indirectly, or announce the offering of, any shares of
Common Stock or any securities convertible into, or exchangeable for, Common
Stock without the prior written consent of the Representatives (except for the
shares of Common Stock offered in connection with this Offering, any securities
issued in connection with or pursuant to any employee or non-employee director
benefit or incentive plan or arrangement, stock ownership plan or dividend
reinvestment plan or Common Stock purchase rights plan in effect on the date of
this Prospectus Supplement and any shares of Common Stock issuable upon the
conversion of securities outstanding on the date of this Prospectus Supplement).
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Johnnie M. Jackson, Jr., Esq., General
Counsel-Corporate Resources and Secretary of the Company, and by Cravath, Swaine
& Moore, New York, New York, and for the Underwriters by Fried, Frank, Harris,
Shriver & Jacobson (a partnership which includes professional corporations), New
York, New York, each of whom will rely as to matters of Virginia law upon the
opinion of Hunton & Williams, Richmond, Virginia. Each of Hunton & Williams and
Cravath, Swaine & Moore has in the past represented and continues to represent
the Company in other matters on a regular basis.
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<PAGE> 25
PROSPECTUS
OLIN CORPORATION
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
------------------------
Olin Corporation ("Olin" or the "Company") intends to issue from time to
time its (i) unsecured debt securities, which may either be senior (the "Senior
Securities") or subordinated (the "Subordinated Securities"; the Senior
Securities and the Subordinated Securities being referred to collectively as the
"Debt Securities"), (ii) warrants to purchase the Debt Securities (the "Debt
Warrants"), (iii) shares of preferred stock, par value $1 per share (the
"Preferred Stock"), (iv) warrants to purchase shares of Preferred Stock
("Preferred Stock Warrants"), (v) shares of common stock, par value $1 per share
(the "Common Stock") and (vi) warrants to purchase shares of Common Stock
("Common Stock Warrants"; the Debt Warrants, Preferred Stock Warrants and Common
Stock Warrants being referred to herein collectively as the "Securities
Warrants"), having an aggregate initial public offering price not to exceed
$400,000,000 or the equivalent thereof in one or more foreign currencies or
composite currencies, including European Currency Units, on terms to be
determined at the time of sale. The Debt Securities, Preferred Stock, Common
Stock and Securities Warrants offered hereby (collectively, the "Offered
Securities") may be offered, separately or as units with other Offered
Securities, in separate series in amounts, at prices and on terms to be
determined at the time of sale and to be set forth in a supplement to this
Prospectus (a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered, such as, where applicable, (i) in the case of
Debt Securities, the specific designation, aggregate principal amount, currency,
denomination, maturity, priority, interest rate (which may be variable or
fixed), time of payment or interest, terms of redemption at the option of the
Company or repayment at the option of the holder or for sinking fund payments,
the designation of the Trustee acting under the applicable Indenture and the
initial public offering price; (ii) in the case of Preferred Stock, the specific
title and stated value, number of shares or fractional interests therein, and
the dividend, liquidation, redemption, conversion, voting and other rights and
the initial public offering price; (iii) in the case of Common Stock, the
initial offering price; (iv) in the case of Securities Warrants, the duration,
offering price, exercise price and detachability thereof; and (v) in the case of
all Offered Securities, whether such Offered Security will be offered separately
or as a unit with other Offered Securities, will be set forth in the
accompanying Prospectus Supplement.
The Prospectus Supplement will also contain information, where applicable,
about certain United States Federal income tax considerations relating to, and
any listing on a securities exchange of, the Offered Securities covered by the
Prospectus Supplement.
The Offered Securities may be sold directly by the Company, or through
agents designated from time to time, or through underwriters or dealers. If any
agent of the Company, or any underwriters are involved in the sale of Offered
Securities, the names of such agents or underwriters and any applicable fees,
commissions or discounts and the net proceeds to the Company from such sale will
be set forth in the applicable Prospectus Supplement. The Company may also issue
the Offered Securities to one or more persons in exchange for outstanding
securities of the Company acquired by such persons from third parties in open
market transactions or in privately negotiated transactions. The newly issued
Offered Securities in such cases may be offered pursuant to this Prospectus and
the applicable Prospectus Supplement by such persons acting as principal for
their own accounts, at market prices prevailing at the time of sale, at prices
otherwise negotiated or at fixed prices. Unless otherwise indicated in the
applicable Prospectus Supplement, the Company will only receive outstanding
securities and will not receive cash proceeds in connection with such exchanges
or sales. See "Plan of Distribution".
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF OFFERED SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS MAY 4, 1994
<PAGE> 26
IN CONNECTION WITH AN OFFERING, THE UNDERWRITERS, IF ANY, FOR SUCH OFFERING
MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICES OF THE OFFERED SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
TABLE OF CONTENTS
PAGE
<TABLE>
<S> <C>
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
The Company............................ 3
Use of Proceeds........................ 5
Consolidated Ratios.................... 5
Description of Debt Securities......... 6
Description of Capital Stock........... 13
Description of Securities Warrants..... 18
Plan of Distribution................... 19
Legal Matters.......................... 20
Experts................................ 20
</TABLE>
AVAILABLE INFORMATION
Olin is subject to the information requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information filed by Olin with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the
Commission at Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New
York 10048. In addition, copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Such reports, proxy statements and other information
concerning Olin can also be inspected at the offices of The New York Stock
Exchange, 20 Broad Street, New York, New York 10005, The Pacific Stock Exchange,
301 Pine Street, San Francisco, California 94104, and The Chicago Stock
Exchange, 440 South LaSalle Street, Chicago, Illinois 60605.
Olin has filed with the Commission a Registration Statement on Form S-3
under the Securities Act of 1933 (the "Securities Act") with respect to the
securities offered hereby. For further information with respect to Olin and the
Offered Securities, reference is made to such Registration Statement and to the
exhibits thereto. Statements contained herein concerning the provisions of
certain documents are not necessarily complete and, in each instance, reference
is made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Olin's Annual Report on Form 10-K for the fiscal year ended December 31,
1993, Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1994
and Current Report on Form 8-K, dated January 10, 1994, filed pursuant to
Section 13 or 15(d) of the Exchange Act (File No. 1-1070) is hereby incorporated
by reference into this Prospectus. All documents filed by Olin with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of the offering
made hereby shall be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein or in any Prospectus Supplement modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
Olin will provide without charge to each person to whom a copy of this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents referred to above which have been or may be
incorporated by reference into this Prospectus, other than certain exhibits to
such documents. Copies of the Indentures summarized below are also available
upon request. Requests for such copies should be directed to Secretary, Olin
Corporation, 120 Long Ridge Road, Stamford, Connecticut 06904 (Telephone: (203)
356-3126).
2
<PAGE> 27
THE COMPANY
Olin Corporation, a Virginia corporation incorporated in 1892, is a
manufacturer of chemicals, metals, and ammunition and defense-related products
which it markets to commercial and governmental customers. Results for the
Company are reported in three operating segments: chemicals, metals, and defense
and ammunition. The Company has recognized brand names in each of these
segments, including Olin pool chemicals sold under the brand names HTH(R) and
Pace(R), metal products sold under the brand name Olin(R) Brass and sporting
ammunition sold under the brand names Winchester(R) and Super-X(R).
References to the Company or Olin in this section include the Company and
its subsidiaries and affiliates. Olin's principal executive offices are located
at 120 Long Ridge Road, Stamford, Connecticut 06904, telephone (203) 356-2000.
CHEMICALS
In its largest segment, the Company manufactures and markets three major
product lines: chlor-alkali, urethanes and pool chemicals. In addition, it
produces a number of other chemical products described below.
Chlor-Alkali. The Company is a leading producer of chlorine and caustic
soda in the southeastern United States, with facilities at McIntosh, Alabama,
Charleston, Tennessee, and Augusta, Georgia. In addition, Niachlor, a
partnership formed between the Company and E.I. duPont de Nemours & Company,
produces chlorine and caustic soda at a Niagara Falls, New York facility.
Chlorine and caustic soda are co-products of the electrolysis of salt.
Chlorine is used as a bleaching agent in pulp and paper manufacturing and as a
raw material in the production of polyvinyl chloride. It is also used in the
manufacture of bleach and in water purification and in general inorganic and
organic chemical manufacturing. Caustic soda is used in petroleum refining and
in the manufacturing of pulp and paper, aluminum, detergents, soap and in a
variety of other organic and inorganic chemical products.
While the Company has historically marketed chlorine to pulp and paper
manufacturers in the southeastern United States, environmental concerns have
resulted in the decreased usage of chlorine in pulp bleaching. As a result, the
Company has shifted its chlorine business mix to other markets, including
manufacturers of ethylene dichloride and vinyl chloride monomer, as well as
other industrial customers. Approximately 30% of the Company's chlorine is used
captively for the manufacture of pool chemicals, toluene di-isocyanate ("TDI")
and other uses.
Urethanes. The Company has one of the largest production capacities in the
United States for TDI, a key component in the production of urethane foam which
is used in products such as automotive seating, furniture, mattresses and
padding. The Company sells TDI and an array of polyether polyols to intermediate
and final manufacturers of urethane foam products. The Company's polyols are
used to produce urethane products that are known as flexible urethanes, rigid
urethanes, and non-foam urethanes.
In addition, the Company is a supplier of specialty polyols used in
adhesives, coatings, elastomers and sealants. These products are sold to
intermediate and end use manufacturers.
Pool Chemicals. The Company manufactures or markets a wide array of
swimming pool chemicals and accessory products. It has two widely recognized
brand names in the U.S. pool chemicals industry: HTH(R) and Pace(R). The Company
sells its pool chemical products to mass merchandisers, pool professionals,
distributors and pool chemical repackers. In addition, the Company participates
in the worldwide pool chemicals market through joint ventures in Brazil and
South Africa. Pool chemicals are manufactured using chlorine and caustic soda,
which can be directly sourced from the Company's own production. The Company
believes it has the largest production capacity for calcium hypochlorite in the
United States. Much of its calcium hypochlorite is sold under the HTH(R) brand
name. The pool business assets acquired from FMC Corporation in 1985, which
include one of the Company's two isocyanurate manufacturing facilities, its
packaging facility and the Sun(R) trademark, are subject to a final Federal
Trade Commission divestiture order requiring divestiture no later than February
22, 1995.
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<PAGE> 28
Other Chemical Products. The Company manufactures a large number of
additional chemical products which are sold to intermediate and end use
manufacturers, such as zinc Omadine(R) additive used in anti-dandruff shampoos;
sulfuric acid used in petroleum refining and in manufacturing agricultural
chemicals; hydrazine solutions used as an intermediate in plastics manufacturing
and agricultural chemicals; hydrazine-based rocket propellants; Reductone(R)
brand sodium hydrosulfite used in paper, textile and clay bleaching; and
surfactants and fluids used in industrial and institutional detergents and
hydraulic fluids. In 1993, the Company added 130,000 tons of annual sulfuric
acid regeneration capacity to help it serve the growing market for
environmentally sounder gasoline.
Olin recently constructed an aliphatic di-isocyanate ("ADI") plant at Lake
Charles, Louisiana. The products manufactured at the ADI plant are used by
manufacturers of products such as automotive topcoats, premium paints and marine
and metal appliance finishes.
The Company, through Olin Hunt Specialty Products, Inc., a wholly-owned
subsidiary, and OCG Microelectronic Materials ("OCG"), affiliated joint venture
companies owned by the Company and CIBA-GEIGY Limited, develops, manufactures
and markets image-forming and other specialty electronic chemicals. In
particular, OCG produces and markets worldwide photoresist and polyimide
products, both of which are basic materials for manufacturing semiconductors.
METALS
The Company is a leading brass and copper alloy manufacturer in the United
States and rerolls and forms other metals. It is an active participant in the
worldwide market for these products, selling directly to large volume customers
and through distributors. The Company, through sales of its Posit-Bond(R) clad
metal, produced by a unique cladding process, is a supplier of metal to the U.S.
Mint. The Company also sells various alloys to foreign governments for coinage
purposes.
While the end use markets for the Company's metal products vary from year
to year, principal markets include automotive (for connectors and radiators);
electronics (for lead frames, connectors and wiring); ammunition; coinage
metals; and other applications such as builder's hardware and plumbing supplies
and seamless and welded tube (for utility condensers and industrial heat
exchangers). The Company uses a portion of its ammunition cartridge cup
production captively in its Winchester(R) sporting ammunition and also sells
this brass product to other ammunition makers.
In 1988, the Company acquired the former Bridgeport Brass Corporation of
Indianapolis, with primary manufacturing operations in Indianapolis, Indiana and
Bryan, Ohio, which significantly increased the Company's brass manufacturing
capacity.
In 1991, the Company acquired A. J. Oster Company ("Oster"), a distributor
of copper and copper-based alloy products, steel products, aluminum strip and
aluminum foil. Oster has a network of metal service centers located in several
states and Puerto Rico.
The Company has a joint venture with Yamaha of Japan, which sells high
performance alloys into the Far East market. The joint venture's local
manufacturing presence has enabled Olin Brass to participate in the Japanese
market for such products.
DEFENSE AND AMMUNITION
The Company produces small, medium and large caliber ammunition for sale to
commercial and military customers. The Company believes its Winchester Division
is a leading U.S. producer of ammunition for recreational shooters, hunters, law
enforcement agencies and the U.S. Armed Forces. The Company's Ordnance Division
provides medium and large caliber ammunition to governmental customers. In
addition, the Company's Aerospace Division provides advanced technology products
to the defense and aerospace industries.
Winchester. The Winchester(R) brand name is widely recognized. The
Company's product line includes all major sizes of shotgun shells and rimfire
and centerfire ammunition for pistols and rifles. These products
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<PAGE> 29
are sold to mass merchandisers, distributors and the U.S. Government. This
ammunition is manufactured in East Alton, Illinois.
In 1993, the Company completed its eighth year of managing the Lake City
Army Ammunition Plant at Independence, Missouri. This government-owned,
contractor-operated ("GOCO") facility is the largest small caliber ammunition
facility in the United States.
In 1993, the Company installed at its East Alton, Illinois facility an
advanced rolling mill contributing to improved quality and productivity.
Ordnance. The Company's Ordnance Division provides medium (20, 25 and 30
millimeter) and large (105 and 120 millimeter) caliber ammunition to the United
States and certain foreign governments. Olin Ordnance is a major supplier of
ammunition for the Abrams M1A1 tank which was utilized in the Persian Gulf War.
Ball Powder(R) propellant and other propellants for Winchester(R) ammunition and
U.S. Government ammunition production are sourced from the Company's Ball
Powder(R) propellant plant in St. Marks, Florida.
This division utilizes its project and program management capabilities as
both a prime and subcontractor on contracts in which other defense suppliers
participate. The Company seeks to exploit these capabilities to acquire
additional GOCO work and to bid on other project management work. The Company
believes there are additional opportunities in the area of weapons
demilitarization.
Aerospace. The Company's Aerospace Division is comprised of two
subsidiaries: Olin Aerospace Company ("OAC") and Physics International Company.
Customers for these subsidiaries include satellite, aircraft and missile
contractors, other defense/aerospace subsystems and systems contractors, the
National Aeronautics and Space Administration and other government research and
development agencies and laboratories.
OAC is recognized as a major manufacturer of small rocket motors and
control thrusters used in satellites and other spacecraft such as Voyager II and
Magellan. It has been a leader in this technology for more than 20 years and
more recently has become a leader in advanced electric propulsion technology and
systems for satellites and spacecraft. OAC also manufactures inflators used in
various flotation devices, military munitions dispensing systems and aircraft
escape systems, as well as low voltage power conditioning and controlling
devices, digital test equipment and airborne electronic products.
Physics International Company's pulsed power systems are used in nuclear
radiation simulators and other electromagnetic applications. In addition, it
designs, tests and manufactures advanced, high performance anti-armor warhead
systems.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement, the net
proceeds from the sale of the Offered Securities will be used for general
corporate purposes, which may include additions to working capital, capital
expenditures, stock repurchases, repayment of indebtedness and acquisitions.
CONSOLIDATED RATIOS
The following table sets forth the consolidated ratio of earnings to fixed
charges for the Company:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ----------------------------------------
1993 1992 1991 1990 1989
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
- --* 2.6 0.6 * 2.5 3.6
</TABLE>
- ---------------
*In 1993 and 1991, earnings were inadequate to cover fixed charges by $144
million and $23 million, respectively.
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<PAGE> 30
The following table sets forth the consolidated ratio of earnings to
combined fixed charges and preferred stock dividends for the Company:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ----------------------------------------
1993 1992 1991 1990 1989
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
- --* 1.8 0.5* 2.1 3.3
</TABLE>
- ---------------
*In 1993 and 1991, earnings were inadequate to cover combined fixed charges and
preferred stock dividends by $172 million and $38 million, respectively.
In 1993, 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.
For purposes of computing these consolidated ratios, earnings represent
income before income taxes with certain adjustments, primarily for capitalized
interest, plus fixed charges. Fixed charges consist of interest expense
(including capitalized interest), amortization of debt discount and expense, and
the estimated interest factor reflected in rental expense. For the consolidated
ratio of earnings to combined fixed charges and preferred stock dividends, fixed
charges are then aggregated with preferred stock dividend requirements on the
outstanding preferred stock.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Debt Securities so offered will be described
in the Prospectus Supplement relating to such Debt Securities. Accordingly, for
a description of the terms of a particular issue of Debt Securities, reference
must be made to both the Prospectus Supplement relating thereto and to the
following description.
Senior Securities were and may be issued under an Indenture dated as of
June 15, 1992, as supplemented ("Senior Indenture"), between Olin and Chemical
Bank. Subordinated Securities may be issued under an Indenture ("Subordinated
Indenture") between Olin and a commercial bank to be selected (collectively, the
Senior Indenture and the Subordinated Indenture are referred to as the
"Indentures"). Copies of the Indentures have been filed as exhibits to the
Registration Statement filed with the Commission. Chemical Bank will serve as
Trustee for series of Senior Securities and a commercial bank to be selected
will serve as Trustee for any series of Subordinated Securities which may be
issued. The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the Indentures including the definition
therein of certain terms.
GENERAL
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder. The Debt Securities may be issued in
one or more series as may be authorized from time to time by Olin. Reference is
made to the applicable Prospectus Supplement for the following terms of the Debt
Securities: (i) the designation, aggregate principal amount and authorized
denominations of the Debt Securities; (ii) the percentage of their principal
amount at which such Debt Securities will be issued; (iii) the date on which the
Debt Securities will mature; (iv) the rate or rates (which may be fixed or
variable) per annum, if any, or the method of determining such rate or rates, at
which the Debt Securities will bear interest; (v) the times at which any such
interest will be payable; (vi) the currency or currencies or units of two or
more currencies in which the Debt Securities are denominated and principal and
interest may be payable, and for which the Debt Securities may be purchased,
which may be in United States dollars, a foreign currency or currencies or units
of two or more foreign currencies; (vii) whether such Debt Securities are to be
Senior
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<PAGE> 31
Securities or Subordinated Securities; (viii) any redemption or sinking fund
terms or certain other specific terms; (ix) any Event of Default or covenant
with respect to the Debt Securities of a particular series, if not set forth
herein, and (x) any other terms of such series (which terms shall not be
inconsistent with the provisions of the Subordinated Indenture or the Senior
Indenture, as the case may be). Unless otherwise indicated in the applicable
Prospectus Supplement, principal, premium, if any, and interest, if any, will be
payable and the Debt Securities will be transferable at the corporate trust
office of the respective Trustee, provided that payment of interest may be made
at the option of Olin by check mailed to the address of the person entitled
thereto as it appears in the respective Debt Securities register.
The Debt Securities will be unsecured. Senior Securities will rank on a
parity with all other unsecured and unsubordinated indebtedness of Olin.
Subordinated Securities will be subordinated to certain present and future
superior indebtedness of Olin. See "Subordination of Subordinated Securities"
below.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities will be issued only in fully registered form without coupons and
in denominations of $1,000 or any integral multiple thereof. No service charge
will be made for any transfer or exchange of such Debt Securities, but Olin may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Special federal income tax and other considerations relating to Debt
Securities denominated in foreign currencies or units of two or more foreign
currencies will be described in the applicable Prospectus Supplement.
Debt Securities may be issued as discounted Debt Securities (bearing no
interest or interest at a rate which at the time of issuance is below market
rates) to be sold at a substantial discount below their stated principal amount.
Federal income tax consequences and other special considerations applicable to
any such discounted Debt Securities will be described in the Prospectus
Supplement relating thereto.
Unless otherwise indicated in the applicable Prospectus Supplement, the
covenants contained in the Indentures and the Debt Securities will not afford
holders of Debt Securities protection in the event of a highly leveraged
transaction involving the Company.
GLOBAL SECURITIES
The Debt Securities of a series issued under the Indentures may be issued
in whole or in part in the form of one or more global securities (the "Global
Securities") that will be deposited with, or on behalf of, a depositary (the
"Depositary") identified in the Prospectus Supplement relating to such series.
Global Securities may be issued only in fully registered form and in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for the individual Debt Securities represented thereby, a Global Security
may not be transferred except as a whole by the Depositary for such Global
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by the Depositary or
any nominee to a successor Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. Olin anticipates that the following provisions will generally apply
to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book-entry registration and transfer
system, the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary. Such accounts shall be designated by the dealers,
underwriters or agents with respect to such Debt Securities or by Olin if such
Debt Securities are offered and sold directly by Olin. Ownership of beneficial
interests in a Global Security will be limited to persons that have accounts
with the applicable Depositary ("participants") or persons that may hold
interests through participants. Ownership of beneficial interests in such Global
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the applicable Depositary or its nominee
(with respect to interests of participants) and the records of participants
(with respect to interests of persons other than participants). The laws of some
states require that certain purchasers of securities take physical delivery of
such securities in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interests in a Global Security.
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<PAGE> 32
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture governing such Debt Securities. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have any of
the individual Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Debt Securities of such series in definitive form and will
not be considered the owners or holders thereof under the Indenture governing
such Debt Securities.
Payments of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a Global Security registered in the
name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Debt Securities. Neither Olin, the Trustee for such Debt
Securities, any paying agent (a "Paying Agent"), nor the Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made by the Depository or any participants on
account of beneficial ownership interests of the Global Security for such Debt
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Olin expects that the Depositary for a series of Debt Securities or its
nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Debt Securities,
immediately will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security for such Debt Securities as shown on the records of such
Depositary or its nominee. Olin also expects that payments by participants to
owners of beneficial interests in such Global Security held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name". Such payments will be the responsibility of
such participants.
If the Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by Olin within 90 days, Olin will issue individual Debt Securities of
such series in exchange for the Global Security or Securities representing such
series of Debt Securities. In addition, Olin may at any time and in its sole
discretion, subject to any limitations described in the Prospectus Supplement
relating to such Debt Securities, determine not to have any Debt Securities of a
series represented by one or more Global Securities and, in such event, will
issue individual Debt Securities of such series in exchange for the Global
Security or Securities representing such series of Debt Securities. Further, if
Olin so specifies with respect to the Debt Securities of a series, an owner of a
beneficial interest in a Global Security representing Debt Securities of such
series may, on terms acceptable to Olin, the Trustee, and the Depositary for
such Global Security, receive individual Debt Securities of such series in
exchange for such beneficial interests, subject to any limitations described in
the Prospectus Supplement relating to such Debt Securities. In any such
instance, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery of individual Debt Securities of the series
represented by such Global Security equal in principal amount to such beneficial
interest and to have such Debt Securities registered in its name. Individual
Debt Securities of such series so issued will be issued in denominations, unless
otherwise specified by Olin, of $1,000 and integral multiples thereof.
SUBORDINATION OF SUBORDINATED SECURITIES
The payment of the principal of, premium, if any, and interest on the
Subordinated Securities, including sinking fund payments, if any, is
subordinated in right of payment, as set forth in the Subordinated Indenture, to
the prior payment in full of all Superior Indebtedness of Olin. Superior
Indebtedness is defined as (a) the principal of, premium, if any, and accrued
and unpaid interest on (whether outstanding on the date of execution of the
Subordinated Indenture or thereafter created, incurred or assumed) (i)
indebtedness of Olin for money borrowed (other than the Subordinated
Securities), (ii) guarantees by Olin of indebtedness for money borrowed of any
other person, (iii) indebtedness evidenced by notes, debentures, bonds or other
instruments of indebtedness for the payment of which Olin is responsible or
liable, by guarantees or otherwise,
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<PAGE> 33
(iv) obligations of Olin under any agreement relating to any interest rate or
currency swap, interest rate cap, interest rate collar, interest rate future,
currency exchange or forward currency transaction, or any similar interest rate
or currency hedging transaction, whether outstanding on the date of the
Subordinated Indenture or thereafter created, incurred or assumed, and (v)
obligations of Olin under any agreement to lease, or any lease of, any real or
personal property which, in accordance with generally accepted accounting
principles, is classified on Olin's balance sheet as a liability, and (b)
modifications, renewals, extensions and refundings of any such indebtedness,
liability, obligation or guarantee; unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such indebtedness, liability, obligation or guarantee, or such
modification, renewal, extension or refunding thereof, is not superior in right
of payment to the Subordinated Securities; provided, however, that Superior
Indebtedness shall not be deemed to include (i) any obligation of Olin to any
subsidiary and (ii) any other indebtedness, guarantee or obligation of Olin of
the type set forth above which is subordinate or junior in ranking in any
respect to any other indebtedness, guarantee or obligation of Olin.
No payment by Olin on account of principal of, premium, if any, or interest
on the Subordinated Securities, including sinking fund payments, if any, may be
made if any default or event of default with respect to any Superior
Indebtedness shall have occurred and be continuing and (unless such default or
event of default is the failure by Olin to pay principal or interest on any
instrument constituting Superior Indebtedness) written notice thereof shall have
been given to the Trustee by Olin or to Olin and the Trustee by the holders of
at least 10% in principal amount of any kind or category of any Superior
Indebtedness (or a representative or trustee on their behalf). Olin may resume
payments on the Subordinated Securities (unless otherwise prohibited by the
related Indenture) if (i) such default is cured or waived or (ii) unless such
default is the failure of Olin to pay principal or interest on any Superior
Indebtedness, 120 days pass after the notice is given if such default is not the
subject of judicial proceedings. In the event that any Subordinated Security is
declared due and payable before the date specified therein as the fixed date on
which the principal thereof is due and payable, or upon any payment or
distribution of assets of Olin to creditors upon any dissolution, winding up,
liquidation or reorganization, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all principal of (and
premium, if any) and interest due or to become due on all Superior Indebtedness
must be paid in full before the holders of Subordinated Securities are entitled
to receive or retain any payment (other than shares of stock or subordinated
indebtedness provided by a plan of reorganization or adjustment which does not
alter the rights of holders of Superior Indebtedness without such holders'
consent). Subject to the payment in full of all Superior Indebtedness, the
holders of the Subordinated Securities are to be subrogated to the rights of the
holders of Superior Indebtedness to receive payments or distributions of assets
of Olin applicable to Superior Indebtedness until the Subordinated Securities
are paid in full.
By reason of such subordination, in the event of insolvency, creditors of
Olin who are holders of Superior Indebtedness, as well as certain general
creditors of Olin, may recover more, ratably, than the holders of the
Subordinated Securities.
The Subordinated Indenture will not limit the amount of Superior
Indebtedness or securities which may be issued by Olin or any of its
subsidiaries.
CERTAIN COVENANTS OF OLIN WITH RESPECT TO SENIOR SECURITIES
Limitations on Liens. (a) Olin will agree that neither it nor any
Restricted Subsidiary (as defined below) will issue, assume or guarantee any
notes, bonds, debentures or other similar evidences of indebtedness for money
borrowed ("Debt") secured by a mortgage, lien, pledge or other encumbrance
("Mortgages") upon any Principal Property (as defined below), or upon any shares
of stock of any Restricted Subsidiary, without effectively providing that the
Senior Securities (together with, if Olin so determines, any other indebtedness
or obligation then existing or thereafter created, ranking equally with the
Senior Securities) shall be secured equally and ratably with (or, at the option
of Olin, prior to) such Debt so long as such Debt shall be so secured, except
that this restriction will not apply to (i) Mortgages existing on the date of
the Senior Indenture; (ii) Mortgages affecting property of a corporation
existing at the time it becomes a Restricted Subsidiary or at the time it is
merged into or consolidated with Olin or a Restricted Subsidiary;
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<PAGE> 34
(iii) Mortgages on property existing at the time of acquisition thereof, or to
secure payment of all or part of the purchase price thereof, or to secure Debt
incurred prior to, at the time of or within 24 months after such acquisition for
the purpose of financing all or part of the purchase price thereof, or assumed
or incurred in connection with the acquisition of property; (iv) Mortgages on
property to secure all or part of the cost of repairing, altering, constructing,
improving, exploring, drilling or developing such property, or to secure Debt
incurred to provide funds for such purpose; (v) Mortgages in connection with
non-recourse Debt; (vi) Mortgages on current assets or other personal property
(other than shares of stock or indebtedness of Subsidiaries (as defined below))
to secure loans maturing not more than one year from the date of the creation
thereof or to secure any renewal thereof for not more than one year at any one
time; (vii) Mortgages which secure indebtedness owing by a Restricted Subsidiary
to Olin or a Subsidiary; (viii) Mortgages on property of any Restricted
Subsidiary principally engaged in a financing or leasing business; (ix)
Mortgages incurred which do not in the aggregate materially detract from the
value of the property or assets affected thereby or materially impair the use of
such property or assets in the operation of its business; and (x) any extension,
renewal or replacement (or successive extensions, renewals or replacements), in
whole or in part, of any Mortgage referred to in the foregoing or of any Debt
secured thereby, provided that the principal amount of Debt secured thereby
shall not, with respect to Mortgages referred to in clauses (i) through (iv)
above, exceed the principal amount of Debt so secured at the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement Mortgage shall be limited to all or part of substantially the same
property which secured the Mortgage extended, renewed or replaced (plus
improvements on such property).
(b) Notwithstanding the above, Olin and any one or more Restricted
Subsidiaries may, without securing the Senior Securities, issue, assume or
guarantee Debt secured by Mortgages which would not be permitted by the
immediately preceding paragraph in an aggregate amount which, together with (i)
all other such Debt of Olin and its Restricted Subsidiaries which would not be
permitted under the immediately preceding paragraph and (ii) the Attributable
Debt (as defined below) in respect of Sale and Lease-Back Transactions (as
defined in the Senior Indenture) existing at such time (other than Sale and
Lease-Back Transactions in which the property involved would have been permitted
to be mortgaged under this section "Limitations on Liens" or the proceeds of
which have been applied to the retirement of long term indebtedness), does not
at the time exceed 10% of Consolidated Net Tangible Assets. The term
"Consolidated Net Tangible Assets" means the total amount of assets after
deducting therefrom (i) all current liabilities (excluding any thereof which are
by their terms extendible or renewable at the option of the obligor thereon to a
time more than 12 months after the time as of which the amount thereof is being
computed), and (ii) unamortized Debt discount and expense, goodwill, trademarks,
brand names, patents and other intangible assets, all as shown on the latest
audited consolidated financial statements of the Company at the time of the
determination.
(c) For purposes of this covenant, the following are not considered Debt
secured by a Mortgage: (i) the sale or other transfer of any interest in
property of the character commonly referred to as a "production payment" and
(ii) Mortgages in favor of governmental bodies to secure advance or progress
payments pursuant to any contract or statute or indebtedness incurred for the
purpose of financing the purchase price or cost of constructing or improving the
property subject thereto.
Sale and Lease-Back Transactions. (a) Sale and Lease-Back Transactions
with respect to Principal Property by Olin or any Restricted Subsidiary (except
for temporary leases for terms of not more than three years or between the
Company or a Subsidiary and a Restricted Subsidiary) are prohibited by the
Senior Indenture unless the proceeds of any such sale are at least equal to the
fair value of such property and either (i) Olin or such Restricted Subsidiary
would be entitled to incur, assume or guarantee Debt secured by a mortgage on
the Principal Property to be leased without equally and ratably securing the
Senior Securities or (ii) Olin applies an amount equal to the fair value of the
property so leased to the retirement of long-term indebtedness of Olin which
ranks prior to or on a par with the Senior Securities. Sale and Lease-Back
Transactions do not include arrangements with governmental bodies entered into
for the purpose of financing the purchase price or the cost of constructing or
improving the property subject thereto.
(b) Notwithstanding the provisions of the preceding paragraph (a), Olin or
any Restricted Subsidiary may enter into any Sale and Lease-Back Transaction
which would not be permitted under the immediately preceding paragraph if the
amount of the Attributable Debt in respect of Sale and Lease-Back Transactions
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for such transaction, together with (i) all Debt of Olin and its Restricted
Subsidiaries secured by a Mortgage on Principal Property and not permitted under
paragraph (a) of "Limitations on Liens" and (ii) all other Attributable Debt in
respect of Sale and Lease-Back Transactions existing at such time (other than
Sale and Lease-Back Transactions permitted because Olin would be entitled to
incur, assume or guarantee Debt secured by a Mortgage on the Principal Property
to be leased without equally and ratably securing the Senior Securities and
other than Sale and Lease-Back Transactions the proceeds of which have been
applied in accordance with clause (ii) of the immediately preceding paragraph
(a)), does not at the time exceed 10% of Consolidated Net Tangible Assets.
The term "Principal Property" means any property or plant of Olin or any
Restricted Subsidiary primarily used for the manufacture of products and located
within the United States or its territories or possessions, except any such
property or plant which the Board of Directors of Olin by resolution declares is
not of material importance to the total business conducted by Olin and its
Subsidiaries as an entity.
The term "Attributable Debt" means, as of any particular time, the present
value, discounted at a rate per annum equal to the weighted average of the
interest rate(s) of the Senior Securities, or, in the case of Original Issue
Discount Debt Securities (as defined in the Senior Indenture), the Yields to
Maturity (as defined in the Senior Indenture) (compounded semi-annually), of the
obligation of a lessee for rental payments (not including amounts payable by the
lessee for maintenance, property taxes and insurance) due during the remaining
term of any lease (including any period for which such lease has been extended
or may, at the option of the lessor, be extended).
The term "Subsidiary" means any corporation, association or other business
entity of which more than 50% of the Voting Stock (as defined in the Senior
Indenture) is at the time directly or indirectly owned by Olin. The term
"Restricted Subsidiary" means (i) any Subsidiary which owns or leases, directly
or indirectly, a Principal Property, and (ii) any Subsidiary which owns,
directly or indirectly, any stock or indebtedness of a Restricted Subsidiary;
except that the term "Restricted Subsidiary" shall not include (A) any
Subsidiary engaged primarily in financing receivables, making loans, extending
credit or other activities of a character conducted by a finance company, or (B)
any Subsidiary (1) which conducts substantially all of its business outside the
United States or its territories and possessions or (2) the principal assets of
which are stock or indebtedness of corporations which conduct substantially all
of their business outside the United States and its territories and possessions.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The following events are defined in each Indenture as "Events of Default"
with respect to a series of Debt Securities issued under such Indenture: (a)
failure to pay interest or a sinking fund installment, if any, on such series
for 30 days or to pay the principal of and premium, if any, on such series when
due, whether at maturity, upon redemption, by declaration or otherwise; (b)
failure to perform any other covenants in such Indenture for 60 days after
notice; and (c) certain events of bankruptcy, insolvency or reorganization. An
Event of Default with respect to one series of Debt Securities is not
necessarily an Event of Default for another series.
If an Event of Default described under (a) above shall have occurred and is
continuing with respect to any series of Debt Securities, unless the principal
of all the Debt Securities of such series shall have already become due and
payable, either the Trustee or the holders of not less than 25% in aggregate
principal amount of the Debt Securities of such series then outstanding may
declare the principal amount (or, if original issue discount securities, such
portion of the principal amount as specified in such series of Debt Securities)
of all Debt Securities of such series immediately due and payable. If an Event
of Default described under (b) above shall have occurred and is continuing,
unless the principal amount of all the Debt Securities of all series shall have
already become due and payable, either the Trustee or the holders of not less
than 25% in aggregate principal amount of all Debt Securities then outstanding
may declare the principal amount (or, if any series are original issue discount
securities, such portion of the principal amount as specified in such series) of
all Debt Securities then outstanding immediately due and payable.
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Each of the Indentures provides that the Trustee under such Indenture
shall, within 90 days after the occurrence of a default with respect to a series
of Debt Securities under such Indenture, give to the holders of the Debt
Securities in such series notice of all uncured defaults with respect to such
series known to it; provided that, except in the case of default in the payment
of principal of or premium, if any, or interest or the making of any sinking
fund payment on any of the Debt Securities in such series, the Trustee shall be
protected in withholding such notice if it in good faith determines that it is
in the interest of the holders of such series.
Any Event of Default with respect to a particular series of Debt Securities
may be waived by the holders of a majority in aggregate principal amount of the
Outstanding Debt Securities (as defined in the Indentures) of such series (or of
all the Outstanding Debt Securities, as the case may be), except in each case a
failure to pay principal of, premium, if any, or interest on such Debt Security.
MODIFICATION OF THE INDENTURES
Each of the Indentures and the rights of holders of Debt Securities
thereunder may be modified by Olin and the respective Trustee with the consent
of the holders of not less than 66 2/3% of the aggregate principal amount of all
series of Debt Securities under such Indenture then outstanding affected thereby
(voting as one class); provided, however, that no such modification shall extend
the fixed maturity of any Debt Securities, or reduce the principal amount
thereof or any premium thereon or the amount of any sinking fund payment, or
reduce the rate or extend the time of payment of interest thereon, or reduce any
premium payable upon the redemption thereof, or reduce the percentage required
for modification, without the consent of the holder of each Debt Security so
affected.
Each of the Indentures provides that the Company and the Trustee may enter
into supplemental indentures without the consent of the holders of Debt
Securities to: (a) evidence the assumption by a successor corporation of the
obligations of the Company, (b) add covenants for the protection of the holders
of Debt Securities, (c) cure any ambiguity or correct any inconsistency in
either of the Indentures, (d) establish the form or terms of Debt Securities of
any series, (e) modify or amend either of the Indentures to permit the
qualification of indentures supplemental thereto and (f) provide for the
issuance under either of the Indentures of Debt Securities in coupon form
exchangeable with Debt Securities issued under the Indentures.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Each of the Indentures provides that the Company may not merge or
consolidate with any other corporation or sell or convey all or substantially
all of its assets to any Person (as defined in each of the Indentures), unless
(a) the successor corporation shall be a corporation organized under the laws of
the United States of America or any State thereof and shall expressly assume the
due and punctual payment of the principal of and premium, if any, and interest
on all the Debt Securities, according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions of the
Indentures to be performed or observed by the Company, by supplemental indenture
satisfactory to the Trustee, executed and delivered to the Trustee by such
corporation, and (b) the successor corporation shall not, immediately after such
merger or consolidation, or such sale or conveyance, be in default in the
performance of any such covenant or condition.
SATISFACTION AND DISCHARGE OF THE INDENTURES; DEFEASANCE; COVENANT DEFEASANCE
The Subordinated Indenture will be discharged upon cancellation of all the
Subordinated Securities or, with certain limitations, upon deposit with the
respective Trustee of funds sufficient for the payment or redemption thereof.
The Senior Indenture provides that Olin, at Olin's option, (a) will be
discharged from any and all obligations in respect of the Senior Securities of a
series (except for certain obligations to register the transfer or exchange of
Debt Securities, replace stolen, lost or mutilated Debt Securities, maintain
paying agencies and hold moneys for payment in trust) or (b) need not comply
with certain restrictive covenants of such Indenture (including those described
under "Certain Covenants of Olin With Respect To Senior Securities"), in each
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case if Olin deposits, in trust with the Trustee or the Defeasance Agent (as
defined in the Senior Indenture), money or U.S. Government Obligations (as
defined in the Senior Indenture), or any combination thereof, which through the
payment of interest thereon and principal thereof in accordance with their terms
will provide money, in an amount sufficient to pay all the principal (including
any mandatory sinking fund payments) of, and interest and premium, if any, on,
the Senior Securities of such series on the dates such payments are due in
accordance with the terms of such Senior Securities. To exercise any such
option, Olin is required to deliver to the Trustee and the Defeasance Agent, if
any, an opinion of counsel to the effect that (i) the deposit and related
defeasance would not cause the holders of the Senior Securities of such series
to recognize income, gain or loss for federal income tax purposes and, in the
case of a discharge pursuant to clause (a), such opinion shall be accompanied by
a private letter ruling to that effect received from the United States Internal
Revenue Service or a revenue ruling pertaining to a comparable form of
transaction to that effect published by the United States Internal Revenue
Service, and (ii) if listed on any national securities exchange, such Debt
Securities would not be delisted from such exchange as a result of the exercise
of such option.
THE TRUSTEES
Olin may maintain banking and other commercial relationships with the
Trustees and their affiliates in the ordinary course of business.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized stock of the Company consists of 60,000,000 shares of common
stock, par value $1 per share (the "Common Stock"), and 10,000,000 shares of
preferred stock, par value $1 per share (the "Preferred Stock"), issuable in
series. On March 3, 1994, there were approximately 19,116,000 shares of Common
Stock, 1,172,000 shares of ESOP Preferred Stock (the "ESOP Preferred") and
2,760,000 shares of Series A Conversion Preferred Stock (the "PERCS")
outstanding.
The following statements with respect to the capital stock of the Company
are subject to the detailed provisions of the Company's Restated Articles of
Incorporation, as amended (the "Restated Articles"), and by-laws (the "By-Laws")
as currently in effect. These statements do not purport to be complete, or to
give full effect to the terms of the provisions of statutory or common law, and
are subject to, and are qualified in their entirety by reference to, the terms
of the Restated Articles, By-Laws and the Rights Agreement, dated as of February
27, 1986 between the Company and Manufacturers Hanover Trust Company (now known
as Chemical Bank) (the "Rights Agreement"), which are filed as Exhibits to the
Registration Statement of which this Prospectus is a part.
Preferred Stock
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which a
Prospectus Supplement may relate. Specific terms of any series of the Preferred
Stock offered by a Prospectus Supplement will be described in the Prospectus
Supplement relating to such series of the Preferred Stock. The description set
forth below is subject to and qualified in its entirety by reference to the
Articles of Amendment to the Restated Articles establishing a particular series
of the Preferred Stock which will be filed with the Commission in connection
with the offering of such series of Preferred Stock.
General. Under the Restated Articles, the Board of Directors of the
Company (the "Board of Directors") is authorized, without further shareholder
action, to provide for the issuance of up to 10,000,000 shares of preferred
stock, $1 par value per share, in one or more series, with such voting powers
and with such designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions, as shall
be set forth in resolutions providing for the issue thereof adopted by the Board
of Directors or a duly authorized committee thereof. The Company may amend from
time to time its
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Restated Articles to increase the number of authorized shares of preferred
stock. Any such amendment would require the approval of the holders of a
majority of the outstanding shares of Common Stock, and the approval of the
holders of a majority of the outstanding shares of all series of preferred stock
voting together as a single class without regard to series. As of the date of
this Prospectus, the Company has two series of preferred stock outstanding,
which are described below under "Outstanding Preferred Stock".
The Preferred Stock will have the dividend, liquidation, redemption,
conversion and voting rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of the Preferred Stock.
Reference is made to the Prospectus Supplement relating to the particular series
of the Preferred Stock offered thereby for specific terms, including: (i) the
title and liquidation preference per share of such Preferred Stock and the
number of shares offered; (ii) the price at which such Preferred Stock will be
issued; (iii) the dividend rate (or method of calculation), the dates on which
dividends shall be payable, whether such dividends shall be cumulative or
noncumulative and, if cumulative, the dates from which dividends shall commence
to accumulate; (iv) any redemption or sinking fund provisions of such Preferred
Stock; (v) any conversion provisions of such Preferred Stock; and (vi) any
additional dividend, liquidation, redemption, sinking fund and other rights,
preferences, privileges, limitations and restrictions of such Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a particular
series of the Preferred Stock, each series of the Preferred Stock will rank on a
parity as to dividends and distributions in the event of a liquidation with the
outstanding preferred stock of the Company and each other series of the
Preferred Stock. See "Outstanding Preferred Stock" below.
Dividend Rights. Holders of the Preferred Stock of each series will be
entitled to receive, when, as and if declared by the Board of Directors, out of
assets of the Company legally available therefor, cash dividends at such rates
and on such dates as are set forth in the Prospectus Supplement relating to such
series of the Preferred Stock. Such rate may be fixed or variable or both. Each
such dividend will be payable to the holders of record as they appear on the
stock books of the Company on such record dates as will be fixed by the Board of
Directors or a duly authorized committee thereof. Dividends on any series of the
Preferred Stock may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating thereto. If the Board of Directors fails to
declare a dividend payable on a dividend payment date on any series of Preferred
Stock for which dividends are noncumulative, then the right to receive a
dividend in respect of the dividend period ending on such dividend payment day
will be lost, and the Company shall have no obligation to pay the dividend
accrued for that period, whether or not dividends are declared for any future
period.
If the Prospectus Supplement so provides, no full dividends will be
declared or paid or set apart for payment on the Preferred Stock of any series
ranking, as to dividends, on a parity with or junior to any other series of
preferred stock for any period unless full dividends have been or
contemporaneously are declared and paid, or declared and a sum sufficient for
the payment thereof set apart for such payment, on such other series of
preferred stock for the then-current dividend payment period and, if such other
preferred stock is cumulative, all other dividend payment periods terminating on
or before the date of payment of such full dividends. If the Prospectus
Supplement so provides, when dividends are not paid in full upon any series of
the Preferred Stock and any other preferred stock ranking on a parity as to
dividends with such series of the Preferred Stock, all dividends declared upon
such series of the Preferred Stock and any other preferred stock ranking on a
parity as to dividends will be declared pro rata so that the amount of dividends
declared per share on such series of the Preferred Stock and such other
preferred stock will in all cases bear to each other the same ratio that accrued
dividends per share on such series of the Preferred Stock and such other
preferred stock bear to each other. Except as provided in the preceding
sentence, unless full dividends, including, in the case of cumulative Preferred
Stock, accumulations, if any, in respect of prior dividend payment periods, on
all outstanding shares of any series of the Preferred Stock have been paid, no
dividends (other than in shares of Common Stock or another stock ranking junior
to such series of the Preferred Stock as to dividends and upon liquidation) will
be declared or paid or set aside for payment or other distributions made upon
the Common Stock or any other stock of the Company ranking junior to the
Preferred Stock as to dividends. If the Prospectus Supplement so provides, no
Common Stock or any other stock of the Company ranking junior to or on a parity
with such series of the Preferred Stock as to dividends or upon liquidation be
redeemed, purchased
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or otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such stock)
by the Company (except by conversion into or exchange for stock of the Company
ranking junior to such series of the Preferred Stock as to dividends and upon
liquidation).
The amount of dividends payable for each dividend period will be computed
by annualizing the applicable dividend rate and dividing by the number of
dividend periods in a year, except that the amount of dividends payable for the
initial dividend period or any period shorter than a full dividend period shall
be computed on the basis of 30-day months, a 360-day year and the actual number
of days elapsed in the period.
Each series of Preferred Stock will be entitled to dividends as described
in the Prospectus Supplement relating to such series, which may be based upon
one or more methods of determination. Different series of the Preferred Stock
may be entitled to dividends at different dividend rates or based upon different
methods of determination.
Rights Upon Liquidation. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of each
series of Preferred Stock will be entitled to receive out of the assets of the
Company available for distribution to shareholders, before any distribution of
assets is made to holders of Common Stock or any other class of stock ranking
junior to such series of Preferred Stock upon liquidation, liquidating
distributions in the amount set forth in the Prospectus Supplement relating to
such series of the Preferred Stock. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the amounts payable with
respect to the Preferred Stock of any series and any other shares of stock of
the Company ranking as to any such distribution on a parity with such series of
the Preferred Stock are not paid in full, the holders of the Preferred Stock of
such series and of such other shares will share ratably in any such distribution
of assets of the Company in proportion to the full respective preferential
amounts to which they are entitled.
Redemption. A series of the Preferred Stock may be redeemable, in whole or
in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund, in each case upon terms, at the time, the
redemption prices and for the types of consideration set forth in the Prospectus
Supplement relating to such series.
The Prospectus Supplement relating to a series of Preferred Stock which is
subject to mandatory redemption shall specify the number of shares of such
series of Preferred Stock which shall be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to any accrued and unpaid dividends
thereon to the date of redemption.
Conversion Rights. The Prospectus Supplement for any series of the
Preferred Stock will state the terms, if any, on which shares of that series are
convertible into shares of Common Stock or another series of preferred stock of
the Company. The Preferred Stock will have no preemptive rights.
Voting Rights. Except as indicated below or in the Prospectus Supplement
relating to a particular series of Preferred Stock, or except as expressly
required by applicable law, a holder of the Preferred Stock will not be entitled
to vote. Except as indicated in the Prospectus Supplement relating to a
particular series of Preferred Stock, in the event the Company issues full
shares of any series of Preferred Stock, each such share will be entitled to one
vote on matters on which holders of such series of the Preferred Stock are
entitled to vote.
The affirmative vote or consent of the holders of a majority of the
outstanding shares of any series of Preferred Stock (unless the Board of
Directors establishes a higher amount), voting as a separate class, will be
required for any amendment of the Restated Articles (or any certificate
amendatory thereof or supplemental thereto relating to any series of the
Preferred Stock) which changes any rights or preferences of such series of
Preferred Stock.
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In addition to the foregoing voting rights, under Virginia law as now in
effect, the holders of the Preferred Stock will have the voting rights set forth
under "General" above with respect to amendments to the Restated Articles which
would increase the number of authorized shares of preferred stock of the
Company.
Outstanding Preferred Stock. As of March 3, 1994, the Company had two
series of Preferred Stock outstanding, PERCS and ESOP Preferred. The PERCS and
the ESOP Preferred rank on a parity with respect to each other and rank senior
to the Common Stock with respect to payment of dividends and rights upon
liquidation.
PERCS. Subject to the rights of holders of other classes of stock ranking
on a parity with or senior to the PERCS with respect to the payment of dividends
which may from time to time be issued by the Company, the owners of the PERCS
are entitled to receive, when, as and if the Board of Directors declares a
dividend on the PERCS, cumulative preferential cash dividends accruing at the
rate of $3.64 per annum or $.91 per quarter for each share of the PERCS.
Dividends on the PERCS accrue whether or not the Company has earnings, whether
or not there are funds legally available for the payment of such dividends and
whether or not such dividends are declared. Accumulated unpaid dividends will
not bear interest.
On the Mandatory Conversion Date, March 1, 1995, the outstanding PERCS will
convert automatically into shares of Common Stock at the Common Equivalent Rate
(as described below) in effect on such date and the right to receive an amount
in cash equal to all accrued and unpaid dividends on such PERCS, subject to the
rights of the Company to call the PERCS for redemption prior to the Mandatory
Conversion Date, as described below. The Common Equivalent Rate is initially one
share of the Common Stock for each PERCS. The Common Equivalent Rate is subject
to adjustment under certain circumstances.
In addition, (x) immediately prior to the effectiveness of a merger or
consolidation of the Company that results in the conversion or exchange of the
Common Stock into, or results in holders of the Common Stock having the right to
receive, other securities or other property (whether of the Company or any other
entity) or (y) immediately prior to the close of business on the business day
immediately preceding the distribution date of the Rights associated with the
Common Stock, each outstanding share of the PERCS will convert automatically
into (i) shares of Common Stock, plus (ii) the right to receive an amount in
cash equal to the accrued and unpaid dividends on such PERCS to and including
the settlement date, plus (iii) the right to receive an amount in cash initially
equal to $4.32, declining by $.00386 on each day following the date of issue of
the PERCS to $.23 on January 1, 1995, and equal to zero thereafter. At the
option of the Company, it may deliver on the settlement date, in lieu of some or
all of the cash amounts described in clauses (i) and (iii) of the preceding
sentence, shares of Common Stock.
The PERCS are not convertible into shares of Common Stock at the option of
the holders thereof.
At any time and from time to time prior to the Mandatory Conversion Date,
the Company shall have the right to call, in whole or in part, the outstanding
PERCS for redemption and to deliver to the holders thereof in exchange for each
such share of the PERCS, a number of shares of Common Stock equal to the call
price in effect on the date of redemption divided by the current market price of
the Common Stock determined as of the second trading day immediately preceding
the notice date, plus an amount in cash equal to any accrued and unpaid
dividends to and including the date of redemption.
In the event of the liquidation, dissolution or winding up of the business
of the Company, whether voluntary or involuntary, the holders of the PERCS,
after payment or provision for payment of the debts and other liabilities of the
Company and before any distribution to the holders of the Common Stock or any
other stock ranking junior to the PERCS with respect to distributions upon
liquidation, dissolution or winding up, will be entitled to receive, for each
share of the PERCS, an amount equal to the sum of (i) the price to public for
each share of the PERCS and (ii) all accrued and unpaid dividends thereon, and
no more.
The holders of PERCS do not have voting rights except as required by law
and except that (i) upon the failure of the Company to pay dividends on the
PERCS in full for six quarterly dividend periods, the holders of the PERCS
(together with the holders of all other series of the Preferred Stock having
such rights) will be entitled to elect two directors to the Board of Directors
until the default is cured and (ii) any amendment of any of the provisions of
the Restated Articles which would (A) authorize or create any shares of stock
ranking
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senior to the PERCS as to dividends or as to distributions in the event of the
Company's liquidation, dissolution or winding up or (B) alter or change the
rights, preferences or limitations of the PERCS so as to affect such rights,
preferences or limitations adversely would require the affirmative vote of the
holders of at least two-thirds of the total number of outstanding shares of the
PERCS, voting together as a single voting group with any other series of the
Preferred Stock that is (x) affected in the same or substantially similar manner
and (y) entitled by law, by the Restated Articles or by resolution of the Board
of Directors to vote on such amendment.
ESOP Preferred Stock. The Board of Directors, by amendment to the Restated
Articles effective June 27, 1989, established 1,750,000 shares of ESOP
Preferred. The ESOP Preferred is issuable only to the trustee of the Olin
Corporation Contributing Employee Ownership Plan, which purchased 1,298,195
shares of such stock on June 29, 1989. The ESOP Preferred has a liquidation
value of $77.03 per share (plus accrued and unpaid dividends) and cumulative
annual dividends of $5.97 per share. Subject to Virginia law, each share of ESOP
Preferred is currently entitled to one vote and is voted with the Common Stock
as a single class on matters submitted to a vote of the Company's shareholders.
Each share of ESOP Preferred is convertible into not less than one share of
Common Stock, subject to anti-dilutive adjustments. The ESOP Preferred may be
redeemed at the option of the Company after July 1, 1994, or at the option of
the trustee of such Plan under certain circumstances (including upon payment of
withdrawing Plan participant accounts or if required to meet ESOP debt
payments). The Company may pay the redemption price with cash, marketable
securities or shares of Common Stock or in any combination of the foregoing.
Currently, the Company intends to redeem the ESOP Preferred solely with shares
of Common Stock whenever mandatory redemptions occur as a result of Plan
participants withdrawing their accounts.
Transfer Agent and Registrar. The transfer agent, registrar and dividend
disbursement agent for a series of the Preferred Stock will be selected by the
Company and be described in the applicable Prospectus Supplement. The registrar
for shares of Preferred Stock will send notices to shareholders of any meetings
at which holders of the Preferred Stock have the right to elect directors of the
Company or to vote on any other matter.
Common Stock
Holders of Common Stock are entitled to dividends as declared by the Board
of Directors from time to time after payment of, or provision for, full
cumulative dividends on and any required redemptions of shares of Preferred
Stock then outstanding. Holders of Common Stock are entitled to one vote per
share and may not cumulate votes for the election of directors. Holders of
Common Stock have no preemptive or subscription rights and have no liability for
further calls or assessments. In the event of the liquidation, dissolution or
winding up of the Company, holders of Common Stock are entitled to receive pro
rata all the remaining assets of the Company available for distribution, after
satisfaction of the prior preferential rights of the Preferred Stock and the
satisfaction of all debts and liabilities of the Company.
The Transfer Agent and Registrar for the Common Stock is Chemical Bank.
CERTAIN PROVISIONS OF THE RESTATED ARTICLES AND BY-LAWS
The Board of Directors consists of three classes as nearly equal in number
as possible, each of which serves for three years with one class being elected
each year. The total number of Directors may not exceed 18. Special meetings of
shareholders may be called only by the Board of Directors, designated officers
or the holders of a majority of the shares entitled to vote at the special
meeting. Directors may be removed only with cause, and vacancies on the Board of
Directors, including any vacancy created by an increase in the number of
Directors, may be filled only by the Board of Directors unless the vacancy is to
be filled at an annual meeting of shareholders. The By-Laws require that advance
notice of nominees for election as Directors to be made by a shareholder be
given to the Secretary of the Company, together with certain specified
information, no later than 90 days before an annual meeting of shareholders or
seven days following notice of a special meeting of shareholders for the
election of Directors. The provisions of the Restated Articles and By-Laws
described above may, in certain circumstances, make more difficult or discourage
a takeover of the Company.
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COMMON STOCK PURCHASE RIGHTS
On February 27, 1986, the Company distributed one Common Stock purchase
right ("Right") for each outstanding share of Common Stock to the shareholders
of record on March 10, 1986. Unless the Board of Directors directs otherwise,
one Right will be issued with respect to each share of Common Stock that becomes
outstanding prior to the occurrence of certain potential change-in-control
events. The Rights become exercisable upon certain potential change-in-control
events. When exercisable and upon the occurrence of certain events, the Rights
entitle holders to purchase shares of Common Stock at a substantial discount.
Exercise of the Rights will cause substantial dilution to a person or group
attempting to acquire control of the Company without the approval of the Board
of Directors. Except under certain circumstances, the Board of Directors may
cause the Company to redeem the Rights in whole, but not in part, at a price of
$.05 per Right. The Rights will not interfere with any merger or other business
combination approved by the Board of Directors. The Rights expire on February
27, 1996, if not redeemed earlier. The Rights have no voting or dividend
privileges. Until such time as the Rights become exercisable, they are attached
to and do not trade separately from the Common Stock.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Stock or Common Stock. Securities Warrants may be issued
independently or together with Debt Securities, Preferred Stock or Common Stock
offered by any Prospectus Supplement and may be attached to or separate from any
such Offered Securities. Each series of Securities Warrants will be issued under
a separate warrant agreement (a "Securities Warrant Agreement") to be entered
into between the Company and a bank or trust company, as warrant agent (the
"Securities Warrant Agent"), all as set forth in the Prospectus Supplement
relating to the particular issue of offered Securities Warrants. The Securities
Warrant Agent will act solely as an agent of the Company in connection with the
Securities Warrants and will not assume any obligation or relationship of agency
or trust for or with any holders of Securities Warrants or beneficial owners of
Securities Warrants. The following summary of certain provisions of the
Securities Warrants does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Securities
Warrant Agreements.
Reference is made to the Prospectus Supplement relating to the particular
issue of Securities Warrants offered thereby for the terms of such Securities
Warrants, including, where applicable: (i) the designation, aggregate principal
amount, currencies, denominations and terms of the series of Debt Securities
purchasable upon exercise of Securities Warrants to purchase Debt Securities and
the price at which such Debt Securities may be purchased upon such exercise;
(ii) the designation, number of shares, stated value and terms (including,
without limitation, liquidation, dividend, conversion and voting rights) of the
series of Preferred Stock purchasable upon exercise of Securities Warrants to
purchase shares of Preferred Stock and the price at which such number of shares
of Preferred Stock of such series may be purchased upon such exercise; (iii) the
number of shares of Common Stock purchasable upon the exercise of Securities
Warrants to purchase shares of Common Stock and the price at which such number
of shares of Common Stock may be purchased upon such exercise; (iv) the date on
which the right to exercise such Securities Warrants shall commence and the date
on which such right shall expire (the "Expiration Date"); (v) United States
Federal income tax consequences applicable to such Securities Warrants; and (vi)
any other terms of such Securities Warrants. Securities Warrants for the
purchase of Preferred Stock and Common Stock will be offered and exercisable for
U.S. dollars only. Securities Warrants will be issued in registered form only.
The exercise price for Securities Warrants will be subject to adjustment in
accordance with the applicable Prospectus Supplement.
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or such number of shares of Preferred Stock
or Common Stock at such exercise price as shall in each case be set forth in, or
calculable from, the Prospectus Supplement relating to the offered Securities
Warrants, which exercise price may be subject to adjustment upon the occurrence
of certain events as set forth in such Prospectus Supplement. After the close of
business on the Expiration Date (or such later date to which such Expiration
Date may be extended by the Company), unexercised Securities Warrants will
become
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void. The place or places where, and the manner in which, Securities Warrants
may be exercised shall be specified in the Prospectus Supplement relating to
such Securities Warrants.
Prior to the exercise of any Securities Warrants to purchase Debt
Securities, Preferred Stock or Common Stock, holders of such Securities Warrants
will not have any of the rights of holders of the Debt Securities, Preferred
Stock or Common Stock, as the case may be, purchasable upon such exercise,
including the right to receive payments of principal of, premium, if any, or
interest, if any, on the Debt Securities purchasable upon such exercise or to
enforce covenants in the applicable Indenture, or to receive payments of
dividends, if any, on the Preferred Stock or Common Stock purchasable upon such
exercise or to exercise any applicable right to vote.
PLAN OF DISTRIBUTION
Olin may sell the Offered Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to one or a limited number of
institutional purchasers; or (iii) through agents. The Prospectus Supplement
with respect to the Offered Securities will set forth the terms of the offering
of the Offered Securities, including the name or names of any underwriters,
dealers or agents, the price of the Offered Securities and the net proceeds to
Olin from such sale, any underwriting discounts or other items constituting
underwriters' compensation, any discounts or concessions allowed or reallowed or
paid to dealers and any securities exchanges on which the Offered Securities may
be listed.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by one or more
investment banking firms or others, as designated. Unless otherwise set forth in
the Prospectus Supplement, the obligations of the underwriters or agents to
purchase the Offered Securities will be subject to certain conditions precedent
and the underwriters will be obligated to purchase all the Offered Securities if
any are purchased. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
If a dealer is utilized in the sale of any Offered Securities in respect of
which this Prospectus is delivered, the Company will sell such Offered
Securities to the dealer, as principal. The dealer may then resell such Offered
Securities to the public at varying prices to be determined by such dealer at
the time of resale. The name of the dealer and the terms of the transaction will
be set forth in the Prospectus Supplement.
Offered Securities may be sold directly by Olin to one or more
institutional purchasers, or through agents designated by Olin from time to time
at a fixed price or prices, which may be changed, or at varying prices
determined at time of sale. Any agent involved in the offer or sale of the
Offered Securities will be named, and any commissions payable by Olin to such
agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, Olin will authorize agents,
underwriters or dealers to solicit offers by certain specified institutions to
purchase Offered Securities from Olin at the public offering price set forth in
the Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. Such contracts will be
subject only to those conditions set forth in the Prospectus Supplement and the
Prospectus Supplement will set forth the commission payable for solicitation of
such contracts.
Agents and underwriters may be entitled under agreements entered into with
Olin to indemnification by Olin against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments which the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with or perform services for Olin in the ordinary course of business.
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LEGAL MATTERS
The validity of the issuance of the Offered Securities offered hereby will
be passed upon for the Company by Johnnie M. Jackson, Jr., Esq., General
Counsel -- Corporate Resources and Secretary of the Company. Cravath Swaine &
Moore, New York, may also act as counsel for the Company and in certain cases
may represent the underwriters of any Offered Securities. Mr. Jackson and
Cravath, Swaine & Moore may rely as to matters of Virginia law upon the opinion
of Hunton & Williams, Richmond, Virginia. Each of Hunton & Williams and Cravath,
Swaine & Moore has in the past represented and continues to represent the
Company in other matters on a regular basis.
EXPERTS
The Company's consolidated financial statements and schedules as of
December 31, 1993 and 1992 and for each of the years in the three-year period
ended December 31, 1993 incorporated by reference herein have been incorporated
herein in reliance upon the reports of KPMG Peat Marwick, independent certified
public accountants, incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing. The reports of KPMG Peat
Marwick refer to a change in accounting for postretirement benefits other than
pensions and income taxes in 1992.
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES TO WHICH IT RELATES, OR AN OFFER OR SOLICITATION
OF ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Summary............................... S-3
Recent Developments................... S-4
Use of Proceeds....................... S-4
Capitalization........................ S-5
Price Range of Common Stock and
Dividend Information................ S-5
Selected Consolidated Historical
Financial Data...................... S-6
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... S-7
The Company........................... S-19
Description of Common Stock........... S-22
Underwriting.......................... S-23
Legal Matters......................... S-24
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Use of Proceeds....................... 5
Consolidated Ratios................... 5
Description of Debt Securities........ 6
Description of Capital Stock.......... 13
Description of Securities Warrants.... 18
Plan of Distribution.................. 19
Legal Matters......................... 20
Experts............................... 20
</TABLE>
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1,750,000 SHARES
OLIN CORPORATION
COMMON STOCK
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
LEHMAN BROTHERS
MAY , 1994
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