<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1995
------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
---------------------------
Commission file number 1-1070
--------------------------------------
OLIN CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Virginia 13-1872319
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
120 Long Ridge Road, Stamford CT 06904
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(203) 356-2000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Former name, former address, and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
As of July 31, 1995 there were outstanding 24,370,564 shares of the registrant's
common stock.
<PAGE>
Part I - Financial Information
Item 1. Financial Statements.
<TABLE>
<CAPTION>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Balance Sheets
(In millions)
June 30, December 31,
1995 1994
-------- ------------
<S> <C> <C>
ASSETS
- ------
Cash $ 3.7 $ 7.0
Accounts receivable, net 545.2 414.3
Inventories 415.0 386.2
Other current assets 68.9 72.4
-------- --------
Total current assets 1,032.8 879.9
Investments and advances 102.4 103.1
Property, plant and equipment
(less accumulated depreciation
of $1,685.7 and $1,624.4) 893.6 879.0
Goodwill 106.3 108.8
Other assets 54.0 58.8
-------- --------
Total assets $2,189.1 $2,029.6
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Short-term borrowings and current
installments of long-term debt $ 160.3 $ 29.0
Accounts payable 267.5 332.2
Other current liabilities 284.3 257.0
-------- --------
Total current liabilities 712.1 618.2
Long-term senior debt 300.7 292.8
Long-term subordinated debt 125.0 125.0
Deferred income taxes 1.4 -
Other liabilities 248.3 244.5
Shareholders' equity:
Preferred stock, par value $1 per share:
Authorized 10.0 shares.
Series A Conversion Preferred Stock
Issued 2.76 shares in 1994 - 2.8
ESOP Preferred Stock
Issued 1.1 shares 83.7 85.6
Guaranteed ESOP obligations (26.0) (27.0)
Common stock, par value $1 per share:
Authorized 60.0 shares.
Issued 24.3 shares (21.5 in 1994) 24.3 21.5
Additional paid-in capital 403.7 400.7
Cumulative translation adjustment (1.8) (3.1)
Retained earnings 317.7 268.6
-------- --------
Total shareholders' equity 801.6 749.1
-------- --------
Total liabilities and
shareholders' equity $2,189.1 $2,029.6
======== ========
</TABLE>
___________________________________
The accompanying Notes to Condensed Financial Statements are an integral
part of the condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Income
(In millions, except per share amounts)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sales $803.7 $708.1 $1,569.8 $1,313.0
Operating expenses:
Cost of goods sold 632.7 567.2 1,245.7 1,054.7
Selling and administration 87.3 81.4 166.7 158.2
Research and development 7.1 8.8 14.4 17.3
------ ------ -------- --------
Operating income 76.6 50.7 143.0 82.8
Interest expense 11.2 10.1 21.5 19.5
Interest and other income 2.3 2.0 5.7 3.2
------ ------ -------- --------
Income before taxes 67.7 42.6 127.2 66.5
Income taxes 24.1 15.0 45.2 23.6
------ ------ -------- --------
Net income 43.6 27.6 82.0 42.9
Preferred dividends 1.6 1.8 3.2 3.5
------ ------ -------- --------
Net income available to
common shareholders $ 42.0 $ 25.8 $ 78.8 $ 39.4
====== ====== ======== ========
Per share of common stock:
Primary $ 1.74 $ 1.16 $ 3.26 $ 1.78
Fully diluted $ 1.66 $ 1.10 $ 3.12 $ 1.72
Dividends $ 0.60 $ 0.55 $ 1.20 $ 1.10
====== ====== ======== ========
Average common shares outstanding 24.3 20.3 24.3 19.8
====== ====== ======== ========
</TABLE>
___________________________________
The accompanying Notes to Condensed Financial Statements are an integral
part of the condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Cash Flows
(In millions)
Six Months
Ended June 30,
-----------------
1995 1994
------ ------
<S> <C> <C>
Operating activities
- --------------------
Net income $ 82.0 $ 42.9
Depreciation and amortization 69.6 69.4
Changes in:
Receivables (127.4) (93.5)
Inventories (25.6) (4.7)
Other current assets 3.5 1.8
Current liabilities (44.9) (37.9)
Noncurrent liabilities 7.5 8.9
Deferred taxes 8.9 5.6
Other operating activities (1.6) 11.2
------- ------
Net operating activities (28.0) 3.7
------- ------
Investing activities
- --------------------
Capital expenditures (84.0) (44.2)
Business acquired in purchase - (25.4)
transaction
Other investments 2.1 (0.8)
Other investing activities 3.9 7.2
------- ------
Net investing activities (78.0) (63.2)
------- ------
Financing activities
- --------------------
Long-term debt:
Borrowings 50.0 -
Repayments (8.0) (15.5)
Short-term borrowings (repayments) 91.7 (0.8)
Issuance of common stock - 98.0
Repayment from ESOP 1.0 10.0
Dividends paid (33.3) (29.5)
Other financing activities 1.3 -
------- ------
Net financing activities 102.7 62.2
------- ------
Net (decrease) increase in cash (3.3) 2.7
Cash, beginning of period 7.0 3.3
------- ------
Cash, end of period $ 3.7 $ 6.0
======= ======
</TABLE>
___________________________________
The accompanying Notes to Condensed Financial Statements are an integral part of
the condensed financial statements.
<PAGE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. The condensed financial statements included herein have been prepared by the
company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission and, in the opinion of the company,
reflect all adjustments (consisting only of normal accruals) which are
necessary to present fairly the results for interim periods. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations; however, the company believes that the disclosures are adequate
to make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements, accounting policies and the notes thereto and management's
discussion and analysis of financial condition and results of operations
included in the company's Annual Report on Form 10-K for the year ended
December 31, 1994.
2. Inventories are valued principally by the dollar value last-in, first-out
(LIFO) method of inventory accounting. It is not practicable, therefore, to
separate the inventory into its components (raw materials, work-in-process
and finished products). Inventories under the LIFO method are based on
annual determination of quantities and costs as of the year-end; therefore,
the consolidated financial statements at June 30, 1995, reflect certain
estimates relating to inventory quantities and costs at December 31, 1995.
3. An Employee Stock Ownership Plan (ESOP) was established in June 1989. The
ESOP purchased from the company approximately 1.3 million shares ($100
million) of a newly-authorized 1.75 million share series of the company's
ESOP preferred stock, financed by $60 million of notes guaranteed by the
company(of which $26 million is outstanding at June 30, 1995), and $40
million of borrowings from the company.
At June 30, 1995 there were approximately 1.1 million shares of ESOP
preferred stock outstanding at a value of $78.25 per share. The quarterly
fixed dividend rate is $1.4925 per share. The ESOP preferred stock is
convertible by the holder into the company's common stock on a one-for-one
basis, subject to anti-dilutive adjustments and may be redeemed at the option
of the company, or at the option of the plan under certain circumstances
(including upon payment of withdrawing plan participant accounts or if
required to meet the plan's debt payments). The company reserves the right to
satisfy the redemption in cash, marketable obligations or common stock. The
ESOP preferred stock is included in shareholders' equity because the company
intends to redeem the outstanding ESOP preferred stock solely with shares of
the company's common stock, and has the ability to do so.
4. Primary earnings per share are computed by dividing net income less the ESOP
preferred dividend requirement by the weighted average number of common
shares outstanding, plus an equivalent number (one-for-one) of common shares,
assuming the conversion of the Series A Stock in 1994. Fully diluted
earnings per share reflect the dilutive effect of stock
<PAGE>
options and assume the conversion of outstanding ESOP preferred stock into an
equivalent number of common shares. Net income was reduced by an additional
ESOP contribution (differential between the common and the ESOP preferred
dividend rates under an assumed conversion) necessary to satisfy the debt
service requirement.
5. In June 1995, the company signed a letter of intent to acquire from Ciba-
Geigy its remaining 50% interest in OCG Microelectronic Materials, a joint
venture formed by these two companies in 1990.
6. In June 1995, the company sold $50 million of 7.11% notes due June 2005. The
proceeds from this issue were used to reduce short-term debt incurred for
working capital purposes.
7. On March 1, 1995, 2.76 million shares of the company's $1 par value Series A
Conversion Preferred Stock were converted into shares of common stock on a
one-for-one basis. The last dividend on these preferred shares was paid in
March 1995.
8. Effective January 1, 1995, the company acquired the remaining 51% of Etoxyl,
C.A., a Latin American joint venture. The purchase price is contingent upon
the future earnings of this entity. The acquisition was accounted for as a
purchase and accordingly, its results of operations, which were not material,
are included in the consolidated financial statements from the date of
acquisition.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations.
----------------------
Segment operating data for the 1995 second quarter and year-to-date period
compared with corresponding prior year periods are set forth in the following
table:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
---------------- --------------------
(In millions) 1995 1994 1995 1994
------- ------- --------- ---------
<S> <C> <C> <C> <C>
Sales:
Chemicals $397.8 $338.4 $ 748.7 $ 623.6
Metals 219.9 186.5 459.5 366.0
Defense and Ammunition 186.0 183.2 361.6 323.4
------ ------ -------- --------
Total $803.7 $708.1 $1,569.8 $1,313.0
====== ====== ======== ========
Net Income:
Chemicals $ 36.1 $ 14.9 $ 58.4 $ 22.7
Metals 10.6 9.4 25.6 18.3
Defense and Ammunition 3.7 9.0 10.9 13.2
Corporate and Other (6.8) (5.7) (12.9) (11.3)
------ ------ -------- --------
Total $ 43.6 $ 27.6 $ 82.0 $ 42.9
====== ====== ======== ========
</TABLE>
Chemicals sales for the quarter and six-month period increased 18% and 20%,
respectively, with a significant increase in net income from 1994. Chlor/Alkali
and urethanes businesses were the major contributors to the segment's
improvement. Chlor-Alkali's improved financial performance was driven by
continuing strong demand for chlorine and caustic along with higher caustic
pricing. Strong demand for certain products and higher TDI prices, especially in
the foreign markets, more than offset the impact of higher raw material and
manufacturing costs and contributed to urethanes improved financial performance.
In the other chemical businesses, such as biocides, industrial chemicals and
hydrazine improved performance was due primarily to additional sales volumes.
Pool chemicals sales increased over 1994's levels; pool's operating results were
comparable to last year's quarter and ahead for the six-month period. Continued
strong demand from the semiconductor industry contributed to increased financial
performance of the electronic materials business.
Metals sales for the quarter and six-month period increased 18% and 26%,
respectively, while net income increased 13% and 40%, respectively, from 1994.
Increased shipments to the automotive, housing and ammunition markets along
with higher metals values contributed to the sales increase. The profit
improvement resulted from the additional volumes along with higher profit
margins associated with a favorable product mix and improved pricing.
Defense and Ammunition sales increased slightly for the quarter and 12% for the
six-month period with a significant decrease in net income due primarily to
Winchester's lower commercial ammunition shipments. Winchester's financial
performance was adversely impacted by dealers and distributors adjusting
commercial ammunition levels downward as consumer demand lessened, and by
increased raw material costs, primarily copper. Aerospace's financial
performance was ahead of 1994 due to its in-flight
<PAGE>
entertainment business and solid propellant programs. Ordnance's sales for the
quarter and six-month period increased over 1994. Ordnance's operating results
for the quarter were down from 1994 due to lower Ball Powder(R) propellant
volumes and continuing performance issues relating to certain medium caliber
ammunition. The Ball Powder(R) propellant business, favorable cost performance
on tank ammunition programs and the operating results of the medium caliber
ammunition business contributed to Ordnance's improved year-to-date performance.
Changes in the strategic direction of defense spending, the timing of defense
procurements and specific defense program appropriation decisions may adversely
affect the performance of the Defense and Ammunition segment and the company in
future years, including its income, liquidity, capital resources and financial
condition. The precise impact of these decisions will depend on the timing and
size of changes and decisions, and the company's ability to mitigate their
impact with new business, business consolidations or cost reductions. The
company currently provides services to the US Government in facilities
management and ordnance demilitarization and continues to pursue other business
areas. In view of continuing uncertainty regarding the strategy and priorities
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.
Selling and administration expenses as a percent of sales was 10.9% and 10.6%
for quarter and six-month period, respectively (16.5% and 12.0%, respectively
in 1994). The decrease was attributable to the increased sales. Selling and
administration expenses increased in amount due to higher legal costs,
investments in data processing capabilities, higher costs related to incentive
compensation programs and the inclusion of the 1994 medium caliber acquisition
offset in part by cost reduction programs. Interest expense increased over 1994
due to higher average interest rates on higher average borrowings. Interest and
other income increased due to the favorable performance of nonconsolidated
affiliates. The effective tax rate was comparable for both 1995 and 1994
periods.
Cash used for operating activities amounted to $28.0 million in 1995 while cash
flow from operating activities was $3.7 million in 1994. The decrease was
primarily attributable to higher receivables and inventory levels and was
partially offset by higher operating income. Additional funds were invested in
inventories to support higher level of business activity. The increase in
receivables was due to the termination of a program under which an undivided
interest in a designated pool of receivables was sold.
Cash used for investing activities amounted to $78.0 million and $63.2 million
for the first six months of 1995 and 1994, respectively. Capital spending of
$84.0 million in 1995 was ahead of 1994. Total year capital spending, including
environmental capital spending of $15 million, is estimated to increase 30% from
1994 mainly to provide additional capacity and product quality 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.
In April 1994, the company purchased certain assets of the medium caliber
ordnance business of Aerojet for approximately $25 million.
On March 1, 1995, the outstanding Series A Conversion Preferred stock converted
automatically into shares of common stock on a one-for-one basis. The last
dividend on these preferred shares was paid in March 1995. Commencing with first
<PAGE>
quarter of 1995, the quarterly common stock dividend increased to $.60 per
share. In May 1994, the company issued 2.2 million shares of common stock at a
price of $46.00. The net proceeds of $98 million were used to reduce short-term
floating-rate debt, some of which was incurred to finance the acquisition of the
medium caliber ammunition business.
In 1987, a Federal Trade Commission (FTC) judge ruled that the company must
divest the chlorinated isocyanurates business acquired in 1985, which included
an isocyanurates manufacturing facility in South Charleston, WV, a packaging
facility in Livonia, MI and the SUN(R) brand trademark. Over the years, the
company has been unsuccessful in overturning this ruling. In February 1995, the
company executed an agreement to sell its South Charleston and Livonia
facilities to subsidiaries of Israel Chemicals Ltd. In August, the company
received FTC approval on these transactions. On August 7, 1995 the company
completed the sale of the Sun(R) brand trademark to Aqua Clear Industries, Inc.
The company expects to finalize the sale to Israel Chemicals Ltd. by the end of
the 1995 third quarter. These transactions are not expected to have a material
adverse effect on the results of operations in 1995.
In June 1995, the company has signed a letter of intent with Ciba-Geigy A.G. to
acquire Ciba's 50% share of OCG Microelectronics Materials, a joint venture
formed by the two companies in 1990. OCG is a leading supplier of specialty
chemicals and advanced microelectronic materials to the global semiconductor
industry. It is expected that the acquisition will be funded with cash generated
from operations and from the sale of the South Charleston and Livonia
facilities.
At June 30, 1995, the percent of total debt to total capitalization (excluding
the reduction in equity for the Contributing Employee Ownership Plan) was 41.5%,
up from 36.5% at year-end 1994. The increase from year-end is attributable to
higher short-term borrowings to finance seasonal working capital requirements.
Cash flow from operations and the use of credit facilities financed the
company's seasonal working capital requirements, capital expenditures and
dividends. At June 30, 1995, the company maintained committed credit facilities
with banks of $298 million of which $206 million was available. The company
believes that cash flow from operations, existing credit facilities and
potential long-term borrowing capabilities are adequate to satisfy its liquidity
needs for the near future.
In the first half of 1995, the company spent approximately $9 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 1995 is estimated to be $30 million. 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. 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. Charges to income for investigatory and
remedial efforts were material to operating results in 1994 and are expected to
be material to net income in 1995 and future years.
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
<PAGE>
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 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 outcomes of which are subject to
various uncertainties) may be resolved unfavorably against the company.
The company's consolidated balance sheets include reserves for future
environmental expenditures to investigate and remediate known sites amounting to
$111 million at June 30, 1995 and December 31, 1994, of which $71 million was
classified as other noncurrent liabilities. Included in the reserve at June 30,
1995 and 1994, 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.
There are a variety of legal proceedings pending or threatened against the
company. It is possible that some of these matters (the outcomes of which are
subject to various uncertainties) may be decided unfavorably against the
company. Certain of these matters are discussed in Item 3, Legal Proceedings of
the 1994 Form 10-K Annual Report and in other filings of the company with the
Securities and Exchange Commission, which filings are available on request from
the company.
<PAGE>
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
The Company held its Annual Meeting of Shareholders on April 27, 1995. Of
the 25,371,181 shares of Common Stock and ESOP Preferred Stock entitled to vote
at such meeting, 22,926,518 shares were present for purposes of a quorum. At
the meeting, shareholders elected to the Board of Directors John W. Johnstone,
Jr., Jack D. Kuehler, William L. Read and Irving Shain as Class I Directors with
terms expiring in 1998, William J. Alley as a Class II Director with a term
expiring in 1996 and Suzanne D. Jaffe as a Class III Director with a term
expiring in 1997. Votes cast for and votes withheld in the election of
Directors were as follows:
<TABLE>
<CAPTION>
Votes For Votes Withheld
---------- --------------
<S> <C> <C>
John W. Johnstone, Jr. 22,331,282 595,236
Jack D. Kuehler 22,360,515 566,003
William L. Read 22,362,371 564,147
Irving Shain 22,332,674 593,844
William J. Alley 22,321,725 604,793
Suzanne D. Jaffe 22,326,215 600,303
</TABLE>
There were no abstentions or broker non-votes.
The shareholders also voted on and approved amendments to the Olin Senior
Management Incentive Compensation Plan. Voting for the resolution approving the
amendments were 20,397,610 shares, 1,731,676 shares were voted against and
797,232 shares abstained from voting. There were no broker non-votes.
The shareholders also voted on a shareholder proposal which requested that
the Board of Directors take the necessary steps in accordance with state law to
declassify the Board so that all directors are elected annually. The proposal
was defeated. Voting for this resolution was 8,035,773 shares, 11,302,411
shares were voted against and 1,224,449 shares abstained from voting. There
were 2,363,885 broker non-votes.
The shareholders also ratified the appointment of KPMG Peat Marwick as
independent auditors for 1995. Voting for the resolution ratifying the
appointment were 22,539,506 shares, 282,814 shares were voted against and
104,198 shares abstained from voting. There were no broker non-votes.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits
--------
4. Amendment, dated April 11, 1995, to Credit Agreement, dated as
of September 30, 1993, between Olin Corporation and several
banks.
11. Computation of Per Share Earnings (Unaudited).
12(a). Computation of Ratio of Earnings to Fixed Charges (Unaudited).
12(b). Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends (Unaudited).
27. Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
Except for Current Reports on Form 8-K dated May 23, 1995 and
May 26, 1995, and with respect to item 5 thereof, no reports on
Form 8-K were filed during the quarter ended June 30, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OLIN CORPORATION
(Registrant)
By: J. A. Riggs
-----------
J. A. Riggs
Senior Vice President
and Chief Financial Officer
(Duly authorized signatory and
Chief Financial Officer)
Date: August 11, 1995
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
4. Amendment, dated April 11, 1995, to Credit Agreement dated as of
September 30, 1993, between Olin Corporation and several banks.
11. Computation of Per Share Earnings (Unaudited).
12(a). Computation of Ratio of Earnings to Fixed Charges (Unaudited).
12(b). Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends (Unaudited).
27. Financial Data Schedule.
<PAGE>
Exhibit 4
April 11, 1995
The Boatmen's National Bank of St. Louis
P.O. Box 236
St. Louis, MO 63166
Attention: Timothy L. Drone, Vice President & Manager
Bank of Boston Connecticut
Corporate Banking
1 Landmark Square
Stamford, CT 06901
Attention: Jo Ann Keller, Director
The Chase Manhattan Bank, N.A.
One Chase Plaza
New York, NY 10081
Attention: Lawrence C. Shields, Managing Director
Chemical Bank
270 Park Avenue
New York, NY 10017
Attention: Lorraine A. Mohan, Vice President
Citibank, N.A.
399 Park Avenue, 8th Floor
New York, NY 10043
Attention: Goran Sare, Vice President
<PAGE>
2
Credit Suisse
New York Branch
12 East 49th Street
New York, NY 10017
Attention: Lynne Allegaert, Member of Senior Management
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260-0060
Attention: Martin R. Atkin, Managing Director
J. P. Morgan Delaware
902 Market Street
Wilmington, DE 19801
Attention: David J. Morris, Vice President
Dear Sirs:
We refer to the Credit Agreement, dated as of September 30, 1993
("Credit Agreement"), among Olin Corporation ("Borrower"), Bank of Boston
Connecticut, Chemical Bank, Citibank, N.A., Credit Suisse, Morgan Guaranty Trust
Company of New York, JP Morgan Delaware, The Boatmen's National Bank of St.
Louis and The Chase Manhattan Bank, N.A. The following sets forth the agreement
of the undersigned to make changes in the Applicable Margin, Facility Fee Rate
and Termination Date, to eliminate the Current Ratio as an affirmative covenant
and to make certain other changes in the Credit Agreement:
1. Section 1.01 is amended by changing the definitions of "Applicable Margin",
"Facility Fee Rate" and "Termination Date" therein to read respectively as
follows:
"Applicable Margin" means, as determined on the date the Adjusted CD Rate or
-----------------
Eurodollar Rate, as the case may be, is determined, when the Ratings are as
set forth below, the rate per annum set forth below opposite such Ratings:
<PAGE>
3
<TABLE>
<CAPTION>
Applicable Applicable
Ratings Eurodollar C/D Rate
Moody's S&P Margin Margin
-------- --- ---------- ----------
<S> <C> <C> <C> <C>
Greater than A3 or A- .1750% .3000%
or equal to
Equal to Baal and BBB+ .1850% .3100%
Baa2 and BBB+
Baa1 and BBB .2000% .3250%
Baa2 and BBB
Baa2 and BBB-
Baa3 and BBB .2700% .3950%
Baa3 and BBB-
Any other Rating lower than
those set forth above .5000% .6250%
</TABLE>
"Facility Fee Rate" means with respect to each day when the Ratings are as
-----------------
set forth below, the rate per annum set forth below opposite such Ratings:
<TABLE>
<CAPTION>
Ratings
Moody's S&P Facility Fee Rate
------- --- -----------------
<S> <C> <C> <C>
Greater than A3 or A- .1000%
or equal to
Equal to Baa1 and BBB+ .1150%
Baa2 and BBB+
Baa1 and BBB .1500%
Baa2 and BBB
Baa2 and BBB-
Baa3 and BBB .1800%
Baa3 and BBB-
Any other Rating lower than
those set forth above .2500%
</TABLE>
"Termination Date" means (i) May 8, 2000 or (ii) any date to which the
------------------
Termination Date shall have been extended pursuant to Section 2.04(b);
provided in each case of (i) and (ii), the earlier date on which the
termination in whole of the Commitments occurs pursuant to Section 2.04(a)
or 6.01.
<PAGE>
4
2. The text contained in Section 5.01(d) is hereby deleted and replaced with
"(d) [Intentionally Left Blank]".
3. Section 5.02(a) is amended to delete the word "and" appearing after clause
(vii) thereof, to replace the period following clause (viii) thereof with
the word "and" and to add the following clause (ix) to the end of Section
5.02(a):
(ix) Liens in favor of the Olin-DNT Limited Partnership, a Delaware limited
partnership, or Air Products and Chemicals, Inc., a Delaware corporation,
or any of their respective successors and assigns, securing obligations
relating to lease agreements entered into with respect to a demonstration
DNT plant and a commercial DNT plant as set forth in and pursuant to
Precautionary Security Agreements to be filed and recorded in the
appropriate records of Calcasieu Parish, Louisiana with respect to the
property referred to therein, and with respect to real estate assets
referred to therein not to exceed in the aggregate fifteen acres of
Borrower's real estate, and extensions and renewals of such liens.
4. This amendment shall become effective as of May 1, 1995 provided it is
approval by the Borrower's Board of Directors (or authorized committee
thereof) prior to such date and by the Banks as required by Section 8.01 of
the Credit Agreement at any time.
The Borrower confirms that the representations and warranties contained in
Section 4.01 of the Credit Agreement are correct as though made on and as of
the date hereof (for this purpose the term "Agreement" as used in Section 4.01
shall mean the Credit Agreement as amended hereby and the "for the six months
ended, June 30, 1993" reference in paragraph (e) of Section 4.01 shall be
deemed to be "for the twelve months ended, December 31, 1994").
Kindly confirm by your signature below your agreement to the foregoing.
BORROWER
--------
OLIN CORPORATION
By /s/J. M. Pierpont
-----------------
Title: Vice President and Treasurer
Commitment BANKS
---------- -----
$ 20,000,000 BANK OF BOSTON CONNECTICUT
By: /s/ JoAnn Keller
----------------
Name: JoAnn Keller
Title: Director
<PAGE>
5
$ 40,000,000 CHEMICAL BANK
By: /s/Susan L. Kane
----------------
Name: Susan L. Kane
Title: Managing Director
$ 50,000,000 CITIBANK, N.A.
By: /s/Goran Sare
-------------
Name: Goran Sare
Title: Vice President
$ 20,000,000 CREDIT SUISSE
By: /s/Michael C. Mast
------------------
Name: Michael C. Mast
Title: Member of Senior Management
By: /s/Kristina Catlin
------------------
Name: Kristina Catlin
Title: Associate
$ 20,000,000 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/Penelope J. B. Cox
---------------------
Name: Penelope J. B. Cox
Title: Vice President
$ 20,000,000 JP MORGAN DELAWARE
By: /s/Philip S. Detjens
--------------------
Name: Philip S. Detjens
Title: Vice President
$ 30,000,000 THE BOATMEN'S NATIONAL BANK
OF ST. LOUIS
By: /s/Kenneth J. Schult
--------------------
Name: Kenneth J. Schult
Title: Vice President
By: /s/Timothy L. Drone
-------------------
Name: Timothy L. Drone
Title: Vice President & Manager
<PAGE>
6
$ 50,000,000 THE CHASE MANHATTAN BANK, N.A.
By: /s/Lawrence C. Shields
----------------------
Name: Lawrence C. Shields
Title: Managing Director
$250,000,000 Total of the Commitments
<PAGE>
Exhibit 11
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Per Share Earnings (Unaudited)
(In millions)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
--------------
Primary earnings per share
- --------------------------
1995 1994
---- ----
<S> <C> <C>
Primary earnings:
Net income $82.0 $42.9
Less ESOP preferred dividend, net of tax benefit (2.8) (3.5)
----- -----
Net income $79.2 $39.4
===== =====
Primary shares:
Weighted average shares outstanding 24.3 19.8
Weighted average common share equivalents
assuming the conversion of Series A Conversion
Preferred Stock at the date of issuance - 2.7
----- -----
Primary shares 24.3 22.5
===== =====
Primary net income per common share $3.26 $1.78
===== =====
Fully diluted earnings per share
- --------------------------------
Fully diluted earnings:
Net income $82.0 $42.9
Less additional ESOP contribution (1.2) (1.5)
----- -----
Net income $80.8 $41.4
===== =====
Fully diluted shares:
Weighted average number of common
shares outstanding and common
stock equivalents 24.3 22.5
Dilutive effect of ESOP preferred stock 1.6 1.5
----- -----
Fully diluted shares 25.9 24.0
===== =====
Fully diluted net income per common share $3.12 $1.72
===== =====
</TABLE>
<PAGE>
Exhibit 12(a)
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges (Unaudited)
(In millions)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
--------------
1995 1994
---- ----
<S> <C> <C>
Earnings:
Income before taxes $127.2 $ 66.5
Add (deduct):
Income taxes of 50% owned affiliates 2.4 2.0
Equity in losses of less than 50%
owned affiliates 1.8 3.7
Dividends received from less
than 50% owned affiliates - 0.1
Interest capitalized, net of amortization (0.2) (0.1)
Fixed charges as described below 31.7 28.7
------ ------
Total $162.9 $100.9
====== ======
Fixed Charges:
Interest expense $ 22.9 $ 20.2
Estimated interest factor in rent expense 8.8 8.5
------ ------
Total $ 31.7 $ 28.7
====== ======
Ratio of earnings to fixed charges 5.1 3.5
====== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit 12(b)
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends (Unaudited)
(In millions)
Six Months
Ended June 30,
--------------
1995 1994
---- ----
<S> <C> <C>
Earnings:
Income before taxes $127.2 $ 66.5
Add (deduct):
Income taxes of 50% owned affiliates 2.4 2.0
Equity in losses of less than 50%
owned affiliates 1.8 3.7
Dividends received from less
than 50% owned affiliates - 0.1
Interest capitalized, net of amortization (0.2) (0.1)
Fixed charges as described below 31.7 28.7
------ ------
Total $162.9 $100.9
====== ======
Fixed Charges:
Interest expense $ 22.9 $ 20.2
Estimated interest factor in rent expense 8.8 8.5
Preferred stock dividend requirement 9.4 13.2
------ ------
Total $ 41.1 $ 41.9
====== ======
Ratio of earnings to combined fixed charges
and preferred stock dividends 4.0 2.4
====== ======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS IN ITEM 1 OF FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 3700
<SECURITIES> 0
<RECEIVABLES> 545200
<ALLOWANCES> 0
<INVENTORY> 415000
<CURRENT-ASSETS> 1032800
<PP&E> 2579300
<DEPRECIATION> 1685700
<TOTAL-ASSETS> 2189100
<CURRENT-LIABILITIES> 712100
<BONDS> 425700
<COMMON> 24300
0
83700
<OTHER-SE> 693600
<TOTAL-LIABILITY-AND-EQUITY> 2189100
<SALES> 1569800
<TOTAL-REVENUES> 1569800
<CGS> 1245700
<TOTAL-COSTS> 1245700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21500
<INCOME-PRETAX> 127200
<INCOME-TAX> 45200
<INCOME-CONTINUING> 82000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 82000
<EPS-PRIMARY> 3.26
<EPS-DILUTED> 3.12
</TABLE>
