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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED] For the fiscal year ended December 31,1994
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED] For the transition period from to
Commission file number 1-1070
OLIN CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 13-1872319
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
120 Long Ridge Road Stamford, 06904 (Zip Code)
Connecticut (Address of principal
executive offices)
Registrant's telephone number, including area code: (203) 356-2000
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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<S> <C>
Common Stock New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
</TABLE>
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
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As of January 31, 1995, the aggregate market value of registrant's voting
stock held by non-affiliates of registrant was approximately $1,137,958,000.
The appraised value of the ESOP Preferred Shares as indicated in the most
recent independent appraiser's quarterly report was used in determining the
market value of such Shares.
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As of January 31, 1995, 21,518,831 shares of the registrant's common stock were
outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED BY REFERENCE IN THIS FORM
10-K AS INDICATED HEREIN:
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PART OF 10-K
DOCUMENT INTO WHICH INCORPORATED
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<S> <C>
1994 Annual Report to Shareholders of Olin Parts I, II, and IV
Proxy Statement relating to Olin's 1995 Part III
Annual Meeting of Shareholders
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PART I
ITEM 1. BUSINESS
GENERAL
Olin Corporation is a Virginia corporation, incorporated in 1892, having its
principal executive offices in Stamford, Connecticut. It is a manufacturer
concentrated in chemicals, metals, defense-related products and services, and
ammunition. The chemicals segment is divided into three areas or divisions:
Chemicals, Chlor-Alkali and Electronic Materials. Chemicals includes flexible
urethanes, pool chemicals, biocides, acids, performance urethanes, and
surfactants and fluids. Chlor-alkali includes chlor-alkali products, sodium
hydrosulfite and high strength bleach products. Electronic Materials includes
image-forming and related specialty chemicals and electronic interconnect
materials and services. Products in the metals segment include copper and
copper alloy sheet, strip, rod, wire, tube and fabricated parts and stainless
steel strip. The defense and ammunition segment includes small, medium and
large caliber military ammunition, sporting ammunition and advanced technology
products and services for aerospace and defense customers.
Information as to the sales and assets attributable to each of Olin's
industry segments for each of the last ten fiscal years appears on page 19 of
the 1994 Annual Report to Shareholders of Olin ("Shareholders Report") and in
Exhibit 13 hereto. Such information with respect to the last three fiscal years
is incorporated by reference in this Report.* Information as to operating
income of Olin's industry segments for each of the last three fiscal years
contained in the Note "Segment Information" of the Notes to Financial
Statements on page 28 of the Shareholders Report and in Exhibit 13 hereto is
incorporated herein by reference.
The term "Olin" as used herein means Olin Corporation and its subsidiaries
unless the context indicates otherwise.
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* Except for material contained in Exhibit 13, the Shareholders Report is not
"filed" as part of this Report.
1
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PRODUCTS AND SERVICES
The following is a list of the principal and certain other products and
services provided by Olin and its affiliates as of December 31, 1994 within
each industry segment. Principal products on the basis of annual revenues are
highlighted in bold face.
CHEMICALS
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MAJOR RAW MATERIALS
PRODUCT LINE & COMPONENTS FOR
OR DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES
------------ ---------------------------- ----------------------- ---------------------------- ---------------------
<C> <C> <S> <C> <C>
Chlor-alkali
Chlor-alkali CHLORINE/CAUSTIC SODA Pulp & paper Augusta, GA salt, electricity
processing, chemical Charleston, TN
manufacturing, water McIntosh, AL
purification, Niagara Falls, NY (Niachlor)
manufacture of vinyl
chloride, bleach
- ------------------------------------------------------------------------------------------------------------------------------------
Other Chlor-alkali Sodium Hydrosulfite Paper, textile & clay Augusta, GA caustic soda,
Products bleaching Charleston, TN sulfuric acid,
Salto, Brazil sulfur dioxide
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HyPure(TM) products Industrial & Charleston, TN chlorine, caustic
institutional cleaners, soda
textile bleaching
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Chemicals
Urethanes TOLUENE DIISOCYANATE Lake Charles, LA di-nitrotoluene,
(TDI) Intermediate for Fukuoka, Japan (Kyodo chlorine, ammonia,
flexible foam used in TDI Limited Company) natural gas
------------------------ furniture, --------------------------------------------------------
Flexible polyols bedding, carpet Brandenburg, KY propylene oxide,
underlay, Punta Camacho, Venezuela ethylene oxide
transportation, (Etoxyl, C.A.)
packaging Ibaraki-ken, Japan
(Asahi-Olin Ltd.)
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Urethane systems Packaging & insulation Ibaraki-ken, Japan polyols, methylene
(Asahi-Olin Ltd.) diphenyl diisocyanate
Salto, Brazil
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Industrial CDB(R)** Chlorinated Sanitizers for S. Charleston, WV** chlorine, caustic
Isocyanurates isocyanurates industrial & household Salto, Brazil soda, urea
cleaners
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Virgin & regenerated Petroleum refining, Beaumont, TX sulfur, oxygen,
sulfuric acid, nitric acid agricultural chemicals Lake Charles, LA ammonia
Shreveport, LA
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Pool Chemicals HTH(R), SOCK-IT(R), Residential & Charleston, TN chlorine, lime,
PULSAR(R), SUPER SOCK-IT(R), commercial pool Igarassu, Brazil (Nordesclor caustic soda
DURATION(R) & CCH(R) sanitizing, water S.A.)
CALCIUM HYPOCHLORITE purification Kempton Park, S. Africa
(Aquachlor
(Proprietary) Ltd.)
Brisbane, Australia
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PACE(R), SUN(R)** Residential & Anaheim, CA chlorine, caustic
CHLORINATED commercial pool Livonia, MI** soda, urea
ISOCYANURATES sanitizing, water S. Charleston, WV**
purification Amboise, France
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Performance Aliphatic isocyanates Coatings, elastomers, Lake Charles, LA chlorine, specialty
Urethanes adhesives & sealants aliphatic amines
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Specialty polyols Elastomers, adhesives, Brandenburg, KY propylene oxide,
coatings, sealants & Ibaraki-ken, Japan ethylene oxide
rigid foam (Asahi-Olin Ltd.)
</TABLE>
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* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated. Sites
manufacture, distribute or market one or more of the identified products or
services.
** Subject to sale. See "Recent Developments."
2
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CHEMICALS (CONT'D)
<TABLE>
<CAPTION>
MAJOR RAW MATERIALS
PRODUCT LINE PRODUCTS PLANTS & COMPONENTS FOR
OR DIVISION & SERVICES MAJOR END-USES & FACILITIES* PRODUCTS/SERVICES
------------ ------------------------- ------------------------ -------------------------------- -------------------
<C> <C> <S> <C> <C>
Hydrazine Hydrazine solutions & Intermediate in blowing Lake Charles, LA chlorine, caustic
hydrazine-based agents & agricultural McIntosh, AL soda, ammonia,
propellants chemicals; boiler water dimethylamine,
treatment, rocket & monomethylamine
satellite propellants
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Biocides Omadine(R) Antidandruff agents Rochester, NY pyridine, zinc
IPBC Biocide, in shampoo, preservative Swords, Ireland salts, chlorine
Triadine(R) Biocide, in metal working fluids,
Zinc Omadine(R) coatings,
Biocide & Sodium adhesives, plastics, an-
Omadine(R) Biocide tifouling agent in
marine paints
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Custom chemicals Chemical intermediates Rochester, NY
manufacturing
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Organics Anionic & nonionic Household, industrial & Brandenburg, KY ethylene oxide,
surfactants, glycols, institutional cleaners, Punta Camacho, propylene oxide
glycol ethers, fluids basestocks for water Venezuela
based metal-
working/hydraulic fluids
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Electronic Materials
Electronic High purity acids & Used as process aids in Chandler, AZ various acids
Chemicals solvents, dopants, semi-conductor Nazareth, PA & solvents,
vapor deposition manufacturing Seward, IL ammonia-based
chemicals, specialty etchants
etchants
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Photoresists & polyimides Used as semiconductor Brandenburg, KY diazo compounds,
components and/or as East Providence, RI (OCG rubber polymers,
process aids in Microelectronic novolak polymers,
semiconductor Materials, Inc.) solvents,
manufacturing Tempe, AZ (OCG photoinitiators,
Microelectronic polyimide polymers
Materials, Inc.)
Zwijndrecht, Belgium (OCG
Microelectronic Materials N.V.)
Shizuoka, Japan (Fuji-Hunt
Electronics Technology
Co., Ltd.)
Basle, Switzerland (OCG
Microelectronic Materials AG)
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Dry liquid toner systems Used in electrostatic Berea, OH resins,
printers and offset Kallo, Belgium hydrocarbons
platemaking systems
</TABLE>
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* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated. Sites
manufacture, distribute or market one or more of the identified products or
services.
3
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CHEMICALS (CONT'D)
<TABLE>
<CAPTION>
MAJOR RAW MATERIALS
PRODUCT LINE PRODUCTS PLANTS & COMPONENTS FOR
OR DIVISION & SERVICES MAJOR END-USES & FACILITIES* PRODUCTS/SERVICES
------------ ------------------------ ------------------------ ------------------------- ---------------------
<C> <C> <S> <C> <C>
Interconnect High performance Integrated circuits & Manteca, CA specialty aluminum
Materials integrated circuit multi-chip modules for alloys & specialty
packaging materials computer, adhesives
telecommunications,
instrumentation &
automotive products
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High performance, All industry market New Bedford, MA all metals, metal
high reliability, segments; computer, (Aegis, Inc.) alloys, metal
hermetic metal communications, medical, matrix composites,
packages for the industrial, special alloys and
microelectronics instrumentation, glasses
industry automotive, consumer,
aerospace and military
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METALS
Olin Brass COPPER & COPPER ALLOY Electronic connectors, Bryan, OH copper, zinc &
SHEET & STRIP lead frames, electrical East Alton, IL other nonferrous
(STANDARD & HIGH components, Indianapolis, IN metals
PERFORMANCE) communications, Waterbury, CT
automotive, builders' Iwata, Japan (Yamaha-Olin
hardware, coinage Metal Corporation)
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Network of metals Electronic connectors, Alliance, OH copper & copper alloy
service centers electrical components, Caguas, PR sheet, strip, rod,
communications, Carol Stream, IL tube & steel &
automotive, builders' Allentown, PA aluminum strip
hardware, household Warwick, RI
products Watertown, CT
Yorba Linda, CA
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Beryllium copper strip High performance East Alton, IL beryllium copper
electronic applications
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POSIT-BOND(R) CLAD METAL Coinage strip & blanks East Alton, IL cupronickel,
copper & aluminum
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ROLLED COPPER FOIL, Printed circuit boards, Waterbury, CT copper, zinc
COPPERBOND(R) FOIL, electrical & electronic, & other nonferrous
STAINLESS STEEL STRIP automotive metals, stainless
steel
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COPPER ALLOY SEAMLESS Utility condensers, Cuba, MO copper, zinc & other
& WELDED TUBE industrial heat Indianapolis, IN nonferrous metals
exchangers,
refrigeration & air
conditioning, builders'
hardware, automotive
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Fabricated products Builders' hardware, East Alton, IL brass & stainless
cartridge cases, shaped Coventry, U.K. steel strip
charge cones, (Techniche Olin Limited)
transportation,
household & recreational
products
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Copper & copper alloy Fasteners, electrical Indianapolis, IN copper, zinc & other
rod & wire connectors, nonferrous metals
transportation, plumbing
& builders' hardware
</TABLE>
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* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated. Sites
manufacture, distribute or market one or more of the identified products or
services.
4
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DEFENSE AND AMMUNITION
<TABLE>
<CAPTION>
MAJOR RAW MATERIALS
PRODUCT LINE PRODUCTS PLANTS & COMPONENTS FOR
OR DIVISION & SERVICES MAJOR END-USES & FACILITIES* PRODUCTS/SERVICES
------------ ------------------------ ------------------------ -------------------- ---------------------------
<C> <C> <S> <C> <C>
Ordnance LARGE CALIBER MILITARY Used by tanks & Marion, IL various metals,
AMMUNITION, PROJECTILES artillery Red Lion, PA propellants,
& COMPONENTS St. Marks, FL sub-contracted
St. Petersburg, FL components
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MEDIUM CALIBER MILITARY Used by ground Downey, CA Ball Powder(R) propellant,
AMMUNITION & COMPONENTS vehicles, ships, Marion, IL explosives, various metals,
helicopters & aircraft sub-contracted components
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BALL POWDER(R) Small caliber commercial St. Marks, FL nitrocellulose
PROPELLANT, EXPLOSIVES ammunition, small,
& research & development medium & large caliber
for propulsion systems military ammunition
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Demilitarization of Contracts for disposal Marion, IL Government supplied
medium & large caliber of U.S. Government St. Petersburg, FL ammunition & rocket
ammunition & rocket surplus ammunition & motors
motors rocket motors
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Government-owned Maintenance of U.S. Army Baraboo, WI sub-contracted &
arsenal operations laid-away production government-supplied
(GOCO) plant components
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Gas generators Specialty solid- Marion, IL various metals, solid
propellant gas propellant ingredients
generators for missiles & subcontracted
& aircraft components
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Aerospace Pulsed power systems Pulsed high voltage gen- San Leandro, CA sub-contracted
erators, nuclear radia- components,
tion simulators, accel- including capacitors
erators, high frequency
modulators, military
hardware survivability
assessment, high power
microwave systems, flash
x-ray products
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Anti-armor systems Design, development & San Leandro, CA various metals,
testing of advanced Tracy, CA sub-contracted
antiarmor warhead sys- Lucerne, Switzerland components, explosive
tems for various anti- ingredients
tank missiles; volume
production of missile-
body metal parts; load,
assembly & pack of vari-
ous explosive devices
------------------------------------------------------------------------------------------------------------
Low-voltage power Design, development, Redmond, WA electronic piece
conditioning & test & production of parts, printed
controlling devices; aircraft, missile, wireboards, formed
digital test equipment; spacecraft, shipboard & metal parts
airborne electronic van-mounted power
products equipment & control
devices for military &
commercial applications;
design, development,
test & production of
microprocessor-based
stores test equipment
for military aircraft
</TABLE>
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* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated. Sites
manufacture, distribute or market one or more of the identified products or
services.
5
<PAGE>
DEFENSE AND AMMUNITION (CONT'D)
<TABLE>
<CAPTION>
MAJOR RAW MATERIALS
PRODUCT LINE PRODUCTS PLANTS & COMPONENTS FOR
OR DIVISION & SERVICES MAJOR END-USES & FACILITIES* PRODUCTS/SERVICES
------------ ------------------------ ------------------------ ------------------ -----------------------
<C> <C> <S> <C> <C>
Aerospace Hydrazine rocket Directional control Moses Lake, WA various metals,
(continued) engines; advanced rockets & propulsion Redmond, WA sub-contracted
propulsion systems & systems for satellite & components,
components; inflation space vehicles, launch hydrazine liquid
systems; specialty vehicles, tactical propellant, ammonium
solid-propellant missiles & projectiles; nitrate-, sodium
devices specialty solid- azide- and non-sodium
propellant gas azide based solid
generator-based devices propellant
for munitions ingredients
dispensing, fire
suppression, flotation &
other inflation systems
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Winchester(R) WINCHESTER(R) SPORTING Hunters & recreational East Alton, IL brass, lead, steel,
AMMUNITION (SHOT- shooters, law Geelong, Australia plastic, Ball Powder(R)
SHELLS, SMALL CALIBER enforcement agencies propellant,
CENTERFIRE & explosives
RIMFIRE AMMUNITION)
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Small caliber military Infantry and mounted East Alton, IL brass, lead, Ball
ammunition weapons Powder(R) propellant,
explosives
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Government-owned Maintenance and Independence, MO brass, lead, Ball
arsenal operation (GOCO) operation of U.S. Army Powder(R) propellant,
small caliber military explosives,
ammunition production government supplied
plant components
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Industrial products (8 Maintenance applications East Alton, IL brass, lead,
gauge loads & powder- in power & concrete Geelong, Australia plastic, Ball
actuated tool loads) industries, powder- Powder(R) propellant,
actuated tools in explosives
construction industry
</TABLE>
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* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated. Sites
manufacture, distribute or market one or more of the identified products or
services.
6
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RECENT DEVELOPMENTS
In April 1994, Olin acquired the medium caliber ammunition business of
GenCorp's Aerojet--General Corporation's Ordnance Division. The acquisition
expanded Olin's medium caliber ammunition family and positioned Olin with a
complete line of improved 20MM, 25MM and 30MM ammunition as well as air
dispensed munitions products.
In May 1994, Olin issued approximately 2.2 million shares of its common stock
in an underwritten public offering at $46 per share. The net proceeds of the
offering were used to fund the aforementioned acquisition and to retire short
term debt.
In August 1994, Olin sold its conductive materials business to Acheson
Industries, including Olin's manufacturing facility in Ontario, California.
This business provided electrically conductive inks and coatings for membrane
switches and circuitry used in the electronics industry.
In December 1994, Olin sold its trichloroisocyanurate production facility in
Lake Charles, Louisiana to BioLab Inc., a subsidiary of Great Lakes Chemical
Corp.
In February 1995, Olin signed an agreement to sell its isocyanurate plant at
South Charleston, West Virginia and its Livonia, Michigan repackaging facility
to subsidiaries of Israel Chemicals Ltd. Previously, Olin entered into an
agreement to sell to Aqua Clear Industries, Inc. of Watervliet, New York, the
Sun(R) brand of swimming pool chemicals. Olin is required by an order of the
Federal Trade Commission (FTC) more fully discussed in Item 3(c) of this Form
10K, to divest itself of these assets. These sales are subject to the approval
of the FTC, among other things.
On March 1, 1995, the 2.76 million shares of Olin's Series A Conversion
Preferred Stock (PERCS(R)) converted into shares of Olin's Common Stock on a
one-for-one basis.
INTERNATIONAL OPERATIONS
Olin has sales offices and subsidiaries in various countries which support
the worldwide export of products from the United States as well as overseas
production facilities. In addition, Olin has manufacturing interests, both
direct and through joint ventures, in several foreign countries.
An Olin subsidiary in Ireland manufactures biocides for personal care and
industrial applications; a Brazilian subsidiary manufactures urethane systems
and Reductone(R) sodium hydrosulfite. An electronic materials subsidiary
located in Belgium packages toners which are marketed throughout Europe.
Hydrochim, S.A., a wholly-owned subsidiary, is a French isocyanurate repacking
operation. Etoxyl, C.A., a Venezuelan subsidiary, manufactures urethane polyols
and other specialty chemicals.
OCG Microelectronic Materials, a group of companies owned by Ciba-Geigy
Limited and Olin, markets photoresists, polyimides and other image forming
chemicals throughout Europe. A joint venture of OCG Microelectronic Materials,
Inc. and Fuji Photo Film Co., Ltd. manufactures photoresists in Japan and
markets them throughout the Far East.
Nordesclor S.A., a joint venture with S.A. Industrias Votorantim, a Brazilian
company, manufactures calcium hypochlorite. Through a joint venture with
Sentrachem Limited, Olin has an interest in a plant in South Africa for the
production of HTH(R) pool chemicals.
Olin has an interest in a plant in Japan for the production of urethane
polyols and other specialty chemicals through a joint venture with Asahi Glass
Company Ltd. Olin also has an interest in a plant in Venezuela for the
production of ethylene oxide and ethylene glycol through a joint venture with
Corimon, C.A., S.A.C.A., Petroquimica de Venezuela S.A. and the International
Finance Corporation. A joint venture of Olin and Asahi Glass Company Ltd. has
an interest in a TDI production plant in Japan with Mitsui Toatsu.
7
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Yamaha-Olin Metal Corporation, a joint venture with Yamaha Corporation,
manufactures high-performance copper alloys in Japan for sale to the
electronics industry throughout the Far East.
Techniche Olin Limited, a joint venture with a U.K. company, manufactures
shaped charge cones in Coventry, England and markets them to prime contractors
for inclusion in armor piercing munitions for certain West European countries.
An Olin subsidiary loads and packs sporting and industrial ammunition in
Australia. The geographic segment data contained in the Note "Segment
Information" of the Notes to Financial Statements on page 28 of the
Shareholders Report and Exhibit 13 hereto are incorporated by reference in this
Report.
CUSTOMERS AND DISTRIBUTION
During 1994, no single nongovernmental customer accounted for more than 1.5%
of Olin's total consolidated sales and U.S. government sales accounted for 14%
of Olin's total consolidated sales. Products which Olin sells to industrial or
commercial users or distributors for use in the production of other products
constitute a major part of Olin's total sales. Some of its products, such as
pool chemicals, sporting ammunition and brass, are sold to a large number of
users or distributors, while others, such as certain industrial chemicals, are
sold in substantial quantities to a relatively small number of industrial
users.
Most of Olin's products and services are marketed primarily through its sales
force and sold directly to various industrial customers, the U.S. Government
and its prime contractors, to wholesalers and other distributors.
Chemicals. Principal customers of Olin's chemicals products include the pulp
and paper industries, vinyl chloride manufacturers, household and industrial
cleaner suppliers, municipal and industrial wastewater treatment companies,
specialty chemical manufacturers, flexible and rigid foam suppliers, automotive
companies, packaging suppliers, the refrigeration industry, manufacturers of
adhesives, coatings, elastomers and sealants, suppliers of various consumer
products including shampoos and swimming pool sanitizers, semiconductor
manufacturers, non-impact computer printer manufacturers and defense
contractors. Principal customers of Olin's interconnect materials business are
suppliers to semiconductor manufacturers and major computer and
telecommunications manufacturers.
Metals. Principal customers of Olin's copper and copper alloy strip, sheet,
rod, wire and seamless and welded tube include producers of electrical and
electronic equipment, builders' hardware and appliances, the plumbing,
automotive and air-conditioning industries and manufacturers of a variety of
consumer goods.
Olin manufactures cartridge brass for its ammunition business and for other
ammunition makers. Olin also serves numerous high-technology markets through a
thin-gauge reroll operation that produces stainless steels, high-temperature
alloys and glass sealing alloys, in addition to copper and copper alloys.
Posit-Bond(R) clad metal has made Olin a major supplier of metal to the U.S.
Mint. Olin also sells various alloys to foreign governments for coinage
purposes.
The metal products business is also focused on the electronics market,
providing high performance and high quality materials needed by the electronics
industry and other advanced technology customers. These materials include Olin-
developed proprietary alloys and Copperbond(TM) treated copper foil marketed to
the printed circuit industry.
Fabricated products are principally sold to ammunition manufacturers, the
U.S. Armed Forces, building product suppliers, household product manufacturers
and automotive manufacturers.
8
<PAGE>
Defense and Ammunition. The principal customers of the Ordnance division are
the U.S. Department of Defense and certain foreign governments. Principal
customers of the Aerospace division are the U.S. Government, major defense
contractors, aerospace companies, telecommunications companies and certain
foreign governments. The principal users of the Winchester division's products
are recreational shooters, hunters, law enforcement agencies, the power and
concrete industries, the construction industry, the U.S. Armed Forces and
certain foreign governments.
GOVERNMENT SALES
U.S. Government sales were approximately $379 million in 1994, $354 million
in 1993 and $409 million in 1992.
Approximately 91% of such 1994 sales were to the Department of Defense or
agencies thereof. In addition, Olin operates certain Government owned plants,
including the Lake City Army Ammunition Plant in Independence, Missouri, for
which Olin receives fee income. Products and services sold to the Government,
to Government contractors or friendly foreign governments include ammunition,
propellant and specialty defense products and services. Olin also manufactures
and blends hydrazine based fuels for the Government for use as a propellant for
the Space Shuttle, satellites and expendable launch vehicles. The U.S. Mint
purchases cupronickel for nickels and Posit-Bond(R) clad metal for other U.S.
coins. Ammunition cups and strip are sold to Government contractors for
ultimate delivery to the Government.
Olin's Government business is performed under both cost reimbursement and
fixed price contracts. Cost reimbursement contracts provide for the
reimbursement of allowable costs plus the payment of a fixed fee, an incentive
fee based upon actual performance as compared to contractual targets, or an
award fee based upon unilateral evaluation by the Government. Olin's fixed
price contracts are either firm fixed price contracts or incentive contracts
under which Olin shares certain savings or overruns with the Government.
Government contracts generally have provisions for audit by the Government,
and cost reimbursement contracts have limitations on reimbursable costs.
Contracts may be terminated at the Government's convenience upon payment of
certain termination costs and, in some cases, profits.
Because several of its divisions engage in government contracting activities
and make sales to the U.S. Government, Olin is subject to extensive and complex
U. S. government procurement laws and regulations. These laws and regulations
provide for government audits and reviews of contract procurement, performance
and administration. Failure to comply, even inadvertently, with these laws and
regulations and with laws governing the export of munitions and other
controlled products and commodities, could subject Olin or one or more of its
businesses to civil and criminal penalties, and under certain circumstances,
suspension and debarment from future government contracts for a specified
period of time.
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 Olin in future
years, including its income, liquidity, capital resources and financial
condition. The precise impact of these decisions will depend upon the timing
and size of changes and decisions, and Olin's ability to mitigate their impact
with new business, business consolidations or cost reductions. Olin currently
provides services to the U.S. 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 Olin, may not be indicative of future
performance.
9
<PAGE>
COMPETITION
Olin is in active competition with businesses producing the same or similar
products, as well as, in some instances, with businesses producing different
products designed for the same uses. With respect to certain product groups,
such as ammunition and copper alloys, and with respect to certain individual
products, such as pool chemicals, chlor-alkali and urethane products, Olin is
one of the largest manufacturers or distributors in the United States. With
respect to its many other products, Olin's share of total domestic sales varies
greatly.
EMPLOYEES
As of December 31, 1994, Olin had approximately 12,800 employees (excluding
approximately 1,300 employees at Government owned contractor operated
facilities), approximately 12,300 of whom were working in the United States and
approximately 500 of whom were working in foreign countries. A majority of the
hourly paid employees are represented, for purposes of collective bargaining,
by various labor unions. Some labor contracts extend for as long as four years,
but during each year new agreements must be negotiated in a number of Olin's
plants. One major labor contract was renewed in 1994. Five major collective
bargaining agreements at its East Alton, Illinois facility will expire in 1995.
While relations between Olin and its employees and their various
representatives are generally considered satisfactory, there can be no
assurance that new labor contracts can be concluded without work stoppages. No
major work stoppages have occurred in the last three years.
RESEARCH ACTIVITIES; PATENTS
Olin's research activities are conducted both on a product group and
corporate-wide basis at a number of facilities. Company sponsored research
expenditures were approximately $35 million during 1994, $41 million during
1993 and $39 million during 1992. Customer sponsored research expenditures
(primarily U.S. Government) were approximately $79 million in 1994, $88 million
in 1993 and $84 million in 1992.
Olin owns, or is licensed under, a number of patents, patent applications and
trade secrets covering its products and processes. Olin believes that, in the
aggregate, the rights under such patents and licenses are important to its
operations, but does not consider any patent or license or group thereof
related to a specific process or product to be of material importance when
viewed from the standpoint of Olin's total business.
RAW MATERIALS AND ENERGY
Olin purchases the major portion of its raw material requirements. The
principal basic raw materials required by Olin for its production of chemicals
are various hydrocarbons, salt, lime, electricity, propylene oxide, ethylene
oxide, natural gas, toluene, sulfur, ammonia and urea. Copper, zinc and various
other nonferrous metals are required for the metals business. Lead, brass and
propellant are the principal raw materials used in the ammunition business.
Olin's principal basic raw materials are typically purchased pursuant to
multiyear contracts. In addition, Olin uses many chemicals produced in its own
operations as raw materials, intermediates or processing agents in the
production of various other chemical products. In the manufacture of
ammunition, Olin uses a substantial percentage of its own output of smokeless
powder and cartridge brass. Additional information with respect to specific raw
materials is set forth in the table above under the caption entitled "Products
and Services."
Electricity is the predominant energy source for Olin's manufacturing
facilities. Most of Olin's facilities are served by utilities which generate
electricity principally from coal and nuclear power.
10
<PAGE>
ENVIRONMENTAL AND TOXIC SUBSTANCES CONTROLS
The establishment and implementation of federal, state and local standards to
regulate air, water and land quality has affected and will continue to affect
substantially all of Olin's plants. Facilities and equipment to protect the
environment do not inherently produce any significant increase in product
capacity, efficiency or revenue, and their operation generally entails
additional expense and energy consumption. Federal legislation providing for
regulation of the manufacture, transportation, use and disposal of hazardous
and toxic substances has imposed additional regulatory requirements on
industry, particularly the chemicals industry. In addition, implementation of
environmental laws, such as the Resource Conservation and Recovery Act and the
Clean Air Act, has required and will continue to require new capital
expenditures and will increase operating costs. Olin employs waste minimization
and pollution prevention programs at its manufacturing sites. In order to help
finance the cleanup of waste disposal sites, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("Superfund"), imposes a tax on the
sale of various chemicals, including chlorine, caustic and certain other
chemicals produced by Olin, and on the disposal of certain hazardous wastes.
Olin is party to various governmental and private environmental actions
associated with waste disposal sites and manufacturing facilities. Associated
costs of investigatory and remedial activities are provided for in accordance
with generally accepted accounting principles governing probability and the
ability to reasonably estimate future costs. Environmental provisions charged
to income amounted to $17 million in 1994, $85 million in 1993 and $17 million
in 1992. The significant increase in 1993 resulted from expanded volumes of
contaminants uncovered while remediating a particular site, at which excavation
is now complete, 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
1994, 1993 and 1992 and may be material to net income in future years.
Cash outlays for environmental-related activities totalled $82 million in
1994 as compared with $93 million in 1993 and $103 million in 1992. During
1994, $45 million of these cash outlays were directed towards normal plant
operations for the disposal of waste and the installation, operation and
maintenance of pollution control equipment and facilities to ensure compliance
with mandated and voluntarily imposed environmental quality standards.
Comparable spending for 1993 and 1992 was $49 million and $62 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 both 1994 and 1993 and $25 million in 1992. The 1992
environmental capital expenditures include construction costs for a waste water
treatment facility at Olin's Lake Charles plant. Historically, Olin has funded
its environmental capital expenditures through cash flow from operations and
expects to do so in the future.
Cash outlays for remedial and investigatory activities associated with former
waste sites and past operations were $37 million in 1994, $44 million in 1993
and $41 million in 1992. These amounts were not charged to income but instead
were charged to reserves established for such costs identified and expensed to
income in prior years.
Olin's estimated environmental liability at the end of 1994 was attributable
to 78 sites, 33 of which were on the National Priority List ("NPL"). Twelve
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. Six
of these twelve sites were in the investigatory stage of the remediation
process. In this stage, remedial investigation and feasibility studies are
conducted by either Olin, the United States Environmental Protection Agency
("EPA") or other potentially responsible parties ("PRP's") and a Record of
Decision ("ROD") or its equivalent has not been issued. At another three of the
twelve sites, a ROD or its equivalent has been issued by either the EPA or
responsible state agency and Olin either
11
<PAGE>
alone, or as a member of a PRP group, was engaged in performing the remedial
measures required by that ROD. At the remaining three of the twelve sites, part
of the site is subject to a ROD and another part is still in the investigative
stage of remediation. All twelve sites were either former manufacturing
facilities or waste sites containing contamination generated by those
facilities.
Total environmental-related cash outlays for 1995 are estimated to be $93
million, of which $53 million is expected to be spent on normal plant
operations, including $15 million on capital projects, and $40 million on
investigatory and remedial efforts.
Annual environmental-related cash outlays for capital projects, site
investigation and remediation, and normal plant operations are expected to
range between $90-$105 million over the next several years. While Olin 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 Olin'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 Olin.
See also Item 3, Legal Proceedings below, the Note "Environmental" of the
Notes to Financial Statements contained in the Shareholders Report and Exhibit
13 hereto, and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" incorporated in this Report for additional information
regarding environmental matters affecting Olin.
ITEM 2. PROPERTIES
Olin has plants at 34 separate locations in 20 states and 4 plants in 4
foreign countries. Most plants are owned; a number of small plants and portions
of one major plant are leased. Listed under Item 1 above in the table set forth
under the caption "Products and Services" are the locations at or from which
Olin's products and services are manufactured, distributed or marketed by
segment.
Olin leases warehouses, terminals and distribution offices and space for
executive and branch sales offices and service departments throughout the
country and overseas.
ITEM 3. LEGAL PROCEEDINGS
(a) In December 1979, an action was commenced in the U.S. District Court in
New York by the United States against Occidental Chemical Corporation (then
known as Hooker Chemical & Plastics Corporation) ("Oxychem"), certain related
companies, Olin and the City of Niagara Falls, New York, alleging that chemical
wastes are migrating in violation of environmental laws or regulations from a
site in Niagara Falls where Oxychem and Olin own adjacent, inactive chemical
waste landfills. The United States is seeking injunctive relief and an order
requiring Oxychem and Olin, among other things, to secure the landfill site,
install a leachate collection system and treat whatever leachate is collected,
as well as an order requiring Oxychem and Olin to place $16.5 million in trust
or provide a bond to ensure that the site will be secured. The United States is
also seeking civil penalties for each day of alleged violation of the Clean
Water Act which currently has a maximum daily penalty of $25,000.
In November 1980, the State of New York filed a complaint as co-plaintiff in
the same action based upon essentially the same factual allegations as in the
suit brought by the United States. The State is seeking $100 million
compensatory damages and $100 million punitive damages. The State is seeking
$100 million compensatory damages and $100 million punitive damages. The State
is also requesting
12
<PAGE>
a court order to abate the alleged nuisance and penalties of $10,000 per day
for alleged violations of each of four provisions of New York's Environmental
Conservation Law. In 1983, the State filed a motion to amend its complaint to
include a count under CERCLA (Comprehensive Environmental Response,
Compensation and Liability Act of 1980) alleging damage to natural resources.
In 1986, the Department of Justice filed a motion to amend its complaint to
include a CERCLA and SARA (Superfund Amendments and Reauthorization Act of
1986) count. Oxychem and Olin have filed in opposition to the motions and the
court has deferred a ruling on both motions.
The U.S. Environmental Protection Agency ("EPA") notified Olin and Oxychem of
an aggregate of $3,050,000 in agency oversight costs on the project.
Under a stipulation entered into by all parties in 1984, Olin and Oxychem
undertook a site remedial investigation which was completed in October 1988.
Subsequently, the parties entered into a further stipulation under which
Oxychem and Olin conducted a feasibility study of possible remedial measures.
Olin does not expect these stipulations to have any further effect on the
outcome of this matter. The remedial investigation and feasibility study was
completed in July 1990. On September 24, 1990, EPA issued a Proposed Remedial
Action Plan and on September 29, 1990 a Record of Decision ("ROD"). The EPA
selected remedy was estimated to cost $30 million. On September 30, 1991, the
EPA issued an administrative order directing Olin and Oxychem to implement the
remedy identified in the September 29, 1990 Record of Decision. Olin and
Oxychem have agreed to perform the remedy identified on such order. The cost of
any remedy is expected to be shared by Olin and Oxychem in an agreed-upon
proportion. Olin believes that any liability incurred by it in this matter will
not be materially adverse to its financial condition.
(b) In June 1987, the EPA issued a ROD recommending remedial actions and
ecological studies with respect to mercury contamination at the site of Olin's
former mercury cell chlor-alkali plant in Saltville, Virginia. In August 1987,
EPA, under Section 122 of CERCLA, asked Olin to undertake the work called for
in the ROD, and Olin agreed to do so. Olin's commitment was required to be
incorporated into a Consent Decree to be filed with a federal district court.
EPA's draft of the Consent Decree included a proposed $1.4 million Clean Water
Act penalty for past unpermitted discharges from a muck pond at the site, as
well as $570,000 in reimbursement of past EPA costs. In response to Olin's
request, EPA has agreed to reduce the costs to $456,000 and to sever the
penalty from the CERCLA action, making it the subject of separate negotiations
after execution of the Consent Decree. In 1988, the proposed $1.4 million Clean
Water Act penalty was severed from the Consent Decree entered into by Olin and
filed with the U.S. District Court for the Western District of Virginia, and
the EPA has taken no further action with respect to any proposed penalty.
Pursuant to the Decree, in November, 1988 Olin submitted to EPA, Region III, a
work plan for remedial action, including additional stormwater run-on control
around Pond #5 and construction of a wastewater treatment plant for the outfall
from Pond #5. Olin also submitted for EPA approval a work plan for further
remedial investigation of the impact of mercury from the site on groundwater
flowing into the North Fork Holston River and its sediment from the site to a
point twenty-seven miles downstream at the Tennessee border. During 1989 work
plans pursuant to the Consent Decree between EPA and Olin were approved by EPA.
Final payment of past EPA costs of $228,000 plus interest was made on November
21, 1989, in accordance with the Consent Decree.
On September 5, 1991, EPA advised Olin of potential liability for
contaminated soils which were being removed in conjunction with construction of
the Rte. 634 bridge in Saltville. Olin and EPA signed a Consent Order
authorizing Olin to do the soil removal, which has been completed.
Olin has completed the remedial investigation and feasibility study of the
former plant site, including Ponds # 5 and 6. On January 18, 1995, EPA issued a
Proposed Remedial Action Plan for a 30-day public comment period. The plan
calls for a cap to be constructed over Pond #5, and the excavation of soil and
sediment from the former chlorine plant site. Olin will be filing comments with
EPA in support of less expensive but it believes equally effective alternatives
for remediating the site.
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On August 29, 1994, EPA notified Olin of the company's potential liability
with respect to the "Graveyard Dump Site", located north of the former plant
site. The site is relatively small, occupying about one half acre. EPA's
investigation found about 20 capacitors and miscellaneous debris scattered
around the site as well as evidence of PCB contamination in the soils.
Negotiations with EPA ensued and Olin and EPA signed an Administrative Order
by Consent, effective January 5, 1995, in which Olin agreed to perform certain
response activities at the site, primarily the removal and disposal of PCB
contaminated electrical equipment and soils. Planning for the work is underway
and it is expected that the work will take place in the winter/spring of 1995.
Olin believes that any liability incurred by it in this matter will not be
materially adverse to its financial condition.
(c) In December 1987, a Federal Trade Commission ("FTC") administrative law
judge ruled that Olin must divest the chlorinated isocyanurates business
acquired in 1985, which includes an isocyanurates manufacturing facility in
South Charleston, West Virginia, a packaging facility in Livonia, Michigan and
the Sun(R) brand trademark. The ruling stated that the acquisition was likely
to lessen competition in markets for chlorinated isocyanurates and calcium
hypochlorite dry swimming pool sanitizers. Olin appealed this decision to the
FTC. In July 1990, the FTC announced that it had issued an order denying Olin's
appeal and requiring Olin to divest itself of such business within one year of
the order becoming final following appeal. Olin appealed the FTC decision to
the U.S. Court of Appeals. The U.S. Court of Appeals upheld the FTC decision on
February 26, 1993. Olin petitioned for review by the U.S. Supreme Court and
such petition was denied. Olin unsuccessfully attempted to modify the FTC order
by proposing to the FTC that Olin sell its trichloroisocyanurate production
facility in Lake Charles, Louisiana to BioLab, Inc. (a sale which it ultimately
consummated in 1994) instead of selling its South Charleston facilities. Olin
is in the process of divesting the assets of this business to various entities
in compliance with the FTC order.
Olin believes that the divestment of this business will not be materially
adverse to its financial condition or results of operations.
(d) As part of the continuing environmental investigation by Federal, state
and local governments of waste disposal sites, Olin has entered into a number
of settlement agreements requiring it to contribute to the cost of the
investigation and cleanup of a number of sites. This process of investigation
and cleanup is expected to continue.
(e) Olin and its subsidiaries are defendants in various other legal actions
arising out of their normal business activities, none of which is considered by
management to be material.
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<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the three months
ended December 31, 1994.
Executive Officers of Olin Corporation as of March 1, 1995
<TABLE>
<CAPTION>
SERVED AS AN
OLIN
NAME AND AGE OFFICE OFFICER SINCE
- ------------ ------ -------------
<S> <C> <C>
John W. Johnstone, Jr.
(62)..................... Chairman of the Board and Chief 1980
Executive Officer
Donald W. Griffin (57).... President and Chief Operating Officer 1983
Joseph M. Gaffney (48).... Senior Vice President, Corporate 1981
Planning and Development
James G. Hascall (56)..... Senior Vice President and President, 1985
Brass Group
James A. Riggs (58)....... Senior Vice President and Chief 1986
Financial Officer
Leon B. Anziano (52)...... Vice President and President, Chlor- 1993
Alkali Products Division
Gerald W. Bersett (54).... Vice President and President, 1993
Winchester Division
Robert A. Beyerl (52)..... Vice President and Controller 1994
Michael E. Campbell (47).. Vice President and President, Olin 1987
Electronic Materials Division
Angelo A. Catani (62)..... Vice President and President, Ordnance 1993
Division
Patrick J. Davey (51)..... Vice President and President, 1993
Chemicals Division
George B. Erensen (51).... Vice President, Taxes and Risk 1990
Management
Johnnie M. Jackson, Jr.
(49)..................... Vice President, General Counsel and 1995
Secretary
Peter C. Kosche (52)...... Vice President, Human Resources 1993
Janet M. Pierpont (47).... Vice President and Treasurer 1990
William M. Schmitt (53)... Vice President and President, Latin 1987
America and South Africa
William W. Smith (60)..... Vice President and President, 1993
Aerospace Division
</TABLE>
No family relationship exists between any of the above named executive
officers or between any of them and any Director of Olin. Such officers were
elected to serve as such, subject to the By-Laws, until their respective
successors are chosen.
Each of the above-named executive officers, except L. B. Anziano, G. W.
Bersett, A. A. Catani, P. J. Davey, G. B. Erensen, P. C. Kosche, J. M.
Pierpont, R. A. Beyerl and W. W. Smith, has served Olin as an executive officer
for not less than the past five years.
Leon B. Anziano was elected a Corporate Vice President on April 29, 1993.
Prior to that time, since 1988, he has served Olin in the following management
capacities: Group Vice President & General Manager, Industrial Chemicals; Group
Vice President & General Manager, Urethanes; and President, Basic Chemicals
Division.
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<PAGE>
Gerald W. Bersett was elected a Corporate Vice President on April 29, 1993.
Prior to that time, since 1988, he has served Olin in the following management
capacities: Division Vice President and General Manager, Winchester and
President, Winchester Division.
Robert A. Beyerl was elected a Corporate Vice President and Controller on
April 26, 1994. Prior to that time, since 1989, he has served Olin in the
following management capacities: Director of Internal Audit; the Financial
Officer for the Defense Systems Group; and the Financial Officer for the
Chemicals Group.
Angelo A. Catani was elected a Corporate Vice President on April 29, 1993.
Prior to that time, since 1988, he has served Olin in a management capacity as
President, Ordnance Division.
Patrick J. Davey was elected a Corporate Vice President on April 29, 1993.
Prior to that time, since 1988, he has served Olin in the following management
capacities: Group Vice President, Water Products & Services; and President,
Performance Chemicals Division.
George B. Erensen was elected a Corporate Vice President on April 26, 1990.
Prior to that time, since 1988, he has served Olin in a management capacity as
Staff Vice President, Taxes and Risk Management.
Johnnie M. Jackson, Jr. was appointed a Corporate Vice President on February
23, 1995. Prior to that time, since 1989, he has served Olin in the following
capacities: General Counsel--Corporate and Secretary, Associate General
Counsel--Corporate Resources and Secretary and Deputy General Counsel.
Peter C. Kosche was elected a Corporate Vice President on April 29, 1993.
Prior to that time, since 1988, he has served Olin in the following management
capacities: General Manager, Pool Chemicals; and Division Vice President,
Materials Management.
Janet M. Pierpont was elected a Corporate Vice President and Treasurer on
April 26, 1990. Prior to that time, since 1988, she has served Olin in a
management capacity as Assistant Treasurer.
William W. Smith was elected a Corporate Vice President on April 29, 1993.
Prior to that time, since 1988, he has served Olin in a management capacity as
President, Aerospace Division.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
As of January 31, 1995, there were approximately 12,100 record holders of
Olin Common Stock.
Olin Common Stock is traded on the New York, Chicago and Pacific Stock
Exchanges.
Information concerning the high and low sales prices of Olin Common Stock and
dividends paid on Olin Common Stock during each quarterly period in 1994, 1993,
and 1992 appears on page 32 of the Shareholders Report and in Exhibit 13 hereto
and is incorporated herein by reference.
Among the provisions of Olin's agreements with its long-term lenders are
restrictions relating to payment of dividends and acquisition of common stock.
At December 31, 1994, retained earnings of approximately $224 million were not
so restricted.
ITEM 6. SELECTED FINANCIAL DATA
The information relating to the last five fiscal years contained under the
caption "Ten-Year Financial Summary" appearing on page 20 of the Shareholders
Report and in Exhibit 13 hereto is incorporated by reference in this Report.
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<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing on pages 12 through 18 of the Shareholders Report (but
excluding the balloon graphs appearing on such pages) and in Exhibit 13 hereto
is incorporated by reference in this Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of Olin Corporation and subsidiaries
and the related notes thereto together with the report thereon of KPMG Peat
Marwick LLP dated January 26, 1995, appearing on pages 21 through 30 of the
Shareholders Report and in Exhibit 13 hereto are incorporated by reference in
this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The biographical information relating to Olin's Directors under the heading
"Item 1--Election of Directors" in the Proxy Statement relating to Olin's 1995
Annual Meeting of Shareholders ("Proxy Statement") is incorporated by reference
in this Report. See also the list of executive officers following Item 4 of
this Report. The information regarding compliance with Section 16 of the
Securities Exchange Act of 1934, as amended, contained in the last paragraph
under the heading "Security Ownership of Directors and Officers" in the Proxy
Statement is incorporated by reference in this Report.
ITEM 11. EXECUTIVE COMPENSATION
The information under the heading "Executive Compensation" in the Proxy
Statement (but excluding the Report of the Compensation and Nominating
Committee on Executive Compensation appearing on pages 11 through 14 of the
Proxy Statement and the graphs appearing on page 18 of the Proxy Statement) is
incorporated by reference in this Report. The information under the headings
"Additional Information Regarding the Board of Directors--Compensation of
Directors", and "Additional Information Regarding the Board of Directors--
Directors Retirement Plan" in the Proxy Statement is incorporated by reference
in this Report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information concerning holdings of Olin stock by certain beneficial
owners contained under the heading "Certain Beneficial Owners" in the Proxy
Statement and the information concerning beneficial ownership of Olin stock by
Directors and officers of Olin under the heading "Security Ownership of
Directors and Officers" in the Proxy Statement are incorporated by reference in
this Report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not Applicable.
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<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
Consolidated financial statements of Olin Corporation and subsidiaries and
the related notes thereto together with the report thereon of KPMG Peat Marwick
LLP dated January 26, 1995, appearing on pages 21 through 30 of the
Shareholders Report and in Exhibit 13 hereto are incorporated by reference in
this Report.
2. FINANCIAL STATEMENT SCHEDULES
Schedules not included herein are omitted because they are inapplicable or
not required or because the required information is given in the consolidated
financial statements and notes thereto.
Separate financial statements of 50% or less owned subsidiaries accounted for
by the equity method are not summarized herein and have been omitted because,
in the aggregate, they would not constitute a significant subsidiary.
3. EXHIBITS
Management contracts and compensatory plans and arrangements are listed as
Exhibits 10(a) through 10(aa) below.
<TABLE>
<C> <S>
3(a) Olin's Restated Articles of Incorporation as amended effective
January 15, 1992--Exhibit 3(a) to Olin's Form 10-K for 1991.*
(b) By-Laws of Olin as amended effective February 23, 1995.
4(a) Articles of Amendment designating ESOP Preferred Shares, par value
$1 per share--Exhibit 4 to Olin's Form 10-Q for the Quarter ended
June 30, 1989.*
(b) Rights Agreement dated as of February 27, 1986 between Olin and
Manufacturers Hanover Trust Company, Rights Agent--Exhibit 1 to
Olin's Form 8-A dated
February 28, 1986, covering Common Stock Purchase Rights.*
(c) Form of Senior Debt Indenture between Olin and Chemical Bank--
Exhibit 4(a) to Form 8-K dated June 15, 1992; Supplemental
Indenture dated as of March 18, 1994 between Olin and Chemical
Bank--Exhibit 4(c) to Registration Statement No. 33-52771; and
Prospectus Supplement dated June 17, 1992 to Prospectus dated June
16, 1992, with respect to Olin's 8% Senior Notes Due 2002 filed
under Registration Statement No. 33-4479.*
(d) Form of Subordinated Debt Indenture between Olin and Bankers Trust
Company--Exhibit 4(i) to Registration No. 33-4479; and Prospectus
Supplement dated June 17, 1987 to Prospectus dated February 3,
1987, with respect to Olin's 9 1/2% Subordinated Notes Due 1997
filed under Registration Statement No. 33-4479.*
(e) Credit Agreement, dated as of September 30, 1993, among Olin and
the banks named therein--Exhibit 4 to Olin's Form 10-Q for the
Quarter ended September 30, 1993.*
(f) Letters, dated December 15, 1993, amending the Credit Agreement,
dated as of September 30, 1993--Exhibit 4(f) to Olin's Form 10-K
for 1993.*
</TABLE>
- --------
* Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-1070 unless otherwise
indicated.
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<PAGE>
Olin is party to a number of other instruments defining the rights of holders
of long-term debt. No such instrument authorizes an amount of securities in
excess of 10% of the total assets of Olin and its subsidiaries on a
consolidated basis. Olin agrees to furnish a copy of each instrument to the
Commission upon request.
<TABLE>
<C> <S>
10(a) 1980 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries, as amended--Exhibit 10(a) to Olin's Form 10-K for
1991.*
(b) 1988 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries as amended through February 23, 1995.
(c) Olin Corporation Performance Unit Plan, as amended April 24,
1986--Exhibit 10(a) to Olin's Form 10-Q for Quarter ended March
31, 1986.*
(d) Olin Corporate Incentive Compensation Plan--Exhibits 1(b) and 2(b)
to Registration No. 2-64811.*
(e) Olin Deferred Salary Plan, effective January 1, 1983--Exhibit
10(f) to Olin's Form 10-K for 1993.*
(f) Form of Directors' deferral plan--Exhibit 10(g) to Olin's Form 10-
K for 1993.*
(g) Amendments to Olin Corporation Performance Unit Plan, Corporate
Incentive Compensation Plan, Deferred Salary Plan and Directors'
deferral plan, adopted September 29, 1988--Exhibit 10(j) to Olin's
Form 10-K for 1988.*
(h) Amendment to Olin Corporation Performance Unit Plan, adopted May
25, 1989--Exhibit 10(b) to Olin's Form 10-Q for Quarter ended June
30, 1989.*
(i) Amendment to Olin Corporation Performance Unit Plan, adopted
September 26, 1991--Exhibit 10(j) to Olin's Form 10-K for 1991.*
(j) Amendment to Olin Corporation Performance Unit Plan, adopted
December 16, 1993--Exhibit 10(k) to Olin's Form 10-K for 1993.*
(k) Deferral elections with respect to certain acquisitions or "change
of control events"--Exhibit 10(h) to Olin's Form 10-K for 1986.*
(l) Olin Senior Executive Pension Plan with amendments.
(m) Olin Supplementary Contributing Employee Ownership Plan, effective
January 1, 1990 with amendments.
(n) Form of arrangement to credit 100 shares of Olin Common Stock to
certain Directors in each year from 1985 through 1994.
(o) Olin Corporation Key Executive Life Insurance Program--Exhibit
10(b) to Olin's
Form 10-Q for Quarter ended March 31, 1986.*
(p) Form of Olin Corporation Endorsement Split Dollar Agreement
(effective January 1, 1993)--Exhibit 10(s) to Olin's Form 10-K for
1992.*
(q) Form of executive agreement between Olin and certain executive
officers.
(r) Form of special severance agreement provided to certain employees
to become operative upon a "change in control event."
(s) Retirement Plan for Non-Employee Directors of Olin Corporation, as
amended through December 12, 1991--Exhibit 10(u) to Olin's Form
10-K for 1991.*
(t) Change in Control elections regarding both the Directors' deferral
plan and the arrangement to credit 100 shares of Olin Common Stock
to certain Directors--
Exhibit 10(z) to Olin's Form 10-K for 1989.*
(u) Olin 1991 Long Term Incentive Plan, as amended through February
23, 1995.
(v) Description of 1991 Performance Unit Awards granted under the Olin
1991 Long Term Incentive Plan--Exhibit 10(w) to Olin's Form 10-K
for 1991.*
</TABLE>
- --------
* Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-1070 unless otherwise
indicated.
19
<PAGE>
<TABLE>
<C> <S>
(w) Description of 1992 Performance Unit Awards granted under the
Olin 1991 Long Term Incentive Plan--Exhibit 10(z) to Olin's Form
10-K for 1992.*
(x) Description of Performance Share Awards granted under the Olin
1991 Long Term Incentive Plan--Exhibit 10 to Olin's Form 10-Q for
the quarter ended June 30, 1993.*
(y) Board Resolution adopted April 25, 1991 regarding payment of
deferred amounts--Exhibit 10(y) to Olin's Form 10-K for 1991.*
(z) Olin Corporation 1994 Stock Plan for Non-employee Directors--
Exhibit 10(a) to Olin's Form 10-Q for Quarter ended March 31,
1994.*
(aa) Olin Senior Management Incentive Compensation Plan--Exhibit 10(b)
to Olin's
Form 10-Q for Quarter ended March 31, 1994.*
11. Computation of Per Share Earnings.
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).
13. Excerpts from the 1994 Annual Report to Shareholders.
21. List of Subsidiaries.
23. Consent of KPMG Peat Marwick LLP dated March 9, 1995.
27. Financial Data Schedule.
</TABLE>
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended December 31, 1994.
- --------
* Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-1070 unless otherwise
indicated.
20
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Olin Corporation
Date: February 23, 1995 /s/ John W. Johnstone, Jr.
By...................................
JOHN W. JOHNSTONE, JR.
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/
John W. Johnstone, Jr.
.....................................
JOHN W. JOHNSTONE, JR. Chairman of the Board, Chief Executive
Officer and Director (Principal Executive
Officer)
/s/
Robert R. Frederick
.....................................
ROBERT R. FREDERICK Director
/s/
Donald W. Griffin
.....................................
DONALD W. GRIFFIN Director
/s/
William W. Higgins
.....................................
WILLIAM W. HIGGINS Director
/s/
Robert Holland, Jr.
.....................................
ROBERT HOLLAND, JR. Director
/s/
Suzanne D. Jaffe
.....................................
SUZANNE D. JAFFE Director
.....................................
JACK D. KUEHLER Director
/s/
H. William Lichtenberger
.....................................
H. WILLIAM LICHTENBERGER Director
/s/
G. Jackson Ratcliffe, Jr.
.....................................
G. JACKSON RATCLIFFE, JR. Director
/s/
William L. Read
.....................................
WILLIAM L. READ Director
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/
John P. Schaefer
.....................................
JOHN P. SCHAEFER Director
/s/
Irving Shain
.....................................
IRVING SHAIN Director
/s/
Robert A. Beyerl
.....................................
ROBERT A. BEYERL Vice President and Controller
(Chief Accounting Officer)
/s/
James A. Riggs
.....................................
JAMES A. RIGGS Senior Vice President and Chief Financial
Officer (Principal Financial Officer)
</TABLE>
Date: February 23, 1995
S-2
<PAGE>
LOGO PRINTED ON RECYCLED PAPER
<PAGE>
Exhibit
No. Description
_______________
3(a) Olin's Restated Articles of Incorporation as amended effective
January 15, 1992-Exhibit 3(a) to Olin's Form 10-K for 1991.*
3(b) By-Laws of Olin as amended effective February 23, 1995.
4(a) Articles of Amendment designating ESOP Preferred Shares, par value
$1 per share-Exhibit 4 to Olin's Form 10-Q for the Quarter ended June 30,
1989.*
4(b) Rights Agreement dated as of February 27, 1986 between Olin and
Manufacturers Hanover Trust Company, Rights Agent-Exhibit 1 to Olin's
Form 8-A dated February 28, 1986, covering Common Stock Purchase Rights.*
4(c) Form of Senior Debt Indenture between Olin and Chemical Bank-Exhibit
4(a) to Olin's Form 8-K dated June 15, 1992; Supplemental Indenture dated
as of March 18, 1994 between Olin and Chemical Bank -- Exhibit 4(c) to
Registration Statement No. 33-52771; and Prospectus Supplement dated June
17, 1992 to Prospectus dated June 16, 1992, with respect to Olin's 8%
Senior Notes Due 2002 filed under Registration Statement No. 33-4479.*
4(d) Form of Subordinated Debt Indenture between Olin and Bankers Trust
Company-Exhibit 4(i) to Registration No. 33-4479; and Prospectus
Supplement dated June 17, 1987 to Prospectus dated February 3, 1987,
with respect to Olin's 9 1/2% Subordinated Notes Due 1997-filed under
Registration Statement No. 33-4479.*
4(e) Credit Agreement, dated as of September 30, 1993, among Olin and the
banks named therein-Exhibit 4 to Olin's Form 10-Q for the Quarter ended
September 30, 1993.*
4(f) Letters, dataed December 15, 1993, amending Credit Agreement, dated
as of September 30, 1993-Exhibit 4(f) to Olin's Form 10-K for 1993.*
10(a) 1980 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries, as amended-Exhibit 10(a) to Olin's Form 10-K for 1991.*
10(b) 1988 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries as amended through February 23, 1995.
10(c) Olin Corporation Performance Unit Plan, as amended April 24, 1986-
Exhibit 10(a) to Olin's Form 10-Q for Quarter ended March 31, 1986.*
10(d) Olin Corporation Incentive Compensation Plan-Exhibits 1(b) and 2(b)
to Registration No. 2-64811.*
10(e) Olin Deferred Salary Plan, effective January 1, 1983-Exhibit 10(f)
to Olin's Form 10-K for 1993.*
10(f) Form of Directors' deferral plan-Exhibit 10(g) to Olin's Form 10-k
for 1993.*
10(g) Amendments to Olin Corporation Performance Unit Plan, Corporate
Incentive Compensation Plan, Deferred Salary Plan and Directors' deferral
plan, adopted September 29, 1988-Exhibit 10(j) to Olin's Form 10-K for
1988.*
10(h) Amendment to Olin Corporation Performance Unit Plan, adopted May 25,
1989-Exhibit 10(b) to Olin's Form 10-Q for Quarter ended June 30, 1989.*
____
*Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-1070 unless
otherwise indicated.
<PAGE>
Exhibit
No. Description
_______________
10(i) Amendment to Olin Corporation Performance Unit Plan, adopted
September 26, 1991-Exhibit 10(j) to Olin's Form 10-K for 1991.*
10(j) Amendment to Olin Corporation Performance Unit Plan, adopted
December 16, 1993-Exhibit 10(k) to Olin's Form 10-K for 1993.*
10(k) Deferral elections with respect to certain acquisitions or "change
of control events"-Exhibit 10(h) to Olin's Form 10-K for 1986.*
10(l) Olin Senior Executive Pension Plan with amendments.
10(m) Olin Supplementary Contributing Employee Ownership Plan, effective
January 1, 1990 with amendments.
10(n) Form of arrangement to credit 100 shares of Olin Common Stock to
certain Directors in each year from 1985 through 1994.
10(o) Olin Corporation Key Executive Life Insurance Program-Exhibit 10(b)
to Olin's Form 10-Q for Quarter ended March 31, 1986.*
10(p) Form of Olin Corporation Endorsement Split Dollar Agreement
(effective January 1, 1993)-Exhibit 10(s) to Olin's Form 10-K for 1992.*
10(q) Form of executive agreement between Olin and certain executive
officers
10(r) Form of special severance agreement provided to certain employees to
become operative upon "change in control event"
10(s) Retirement Plan for Non-Employee Directors of Olin Corporation, as
amended through December 12, 1991-Exhibit 10(u) to Olin's Form 10-K for
1991.*
10(t) Change in Control elections regarding both the Directors' deferral
plan and the arrangement to credit 100 shares of Olin Common Stock to
certain Directors-Exhibit 10(z) to Olin's Form 10-K for 1989.*
10(u) Olin 1991 Long Term Incentive Plan, as amended through February 23, 1995.
____
*Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-1070 unless otherwise
indicated.
<PAGE>
Exhibit
No. Description
_______________
10(v) Description of 1991 Performance Unit Awards granted under the Olin
1991 Long Term Incentive Plan-Exhibit 10(w) to Olin's Form 10-K for
1991.*
10(w) Description of 1992 Performance Unit Awards granted under the Olin 1991
Long Term Incentive Plan-Exhibit 10(z) to Olin's Form 10-K for 1992.*
10(x) Description of Performance Share Awards granted under the Olin 1991
Long Term Incentive Plan-Exhibit 10 to Olin's Form 10-Q for the Quarter
ended June 30, 1993.*
10(y) Board Resolution adopted April 25, 1991 regarding payment of
deferred amounts-Exhibit 10(y) to Olin's Form 10-K for 1991.*
10(z) Olin Corporation 1994 Stock Plan for Non-Employee Directors-Exhibit
10(a) to Olin's Form 10-Q for the Quarter ended March 31, 1994.*
10(aa) Olin Senior Management Incentive Compensation Plan-Exhibit 10(b) to
Olin's Form 10-Q for the Quarter ended March 31, 1994.*
11 Computation of Per Share Earnings.
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).
13 Excerpts from the 1994 Annual Report to Shareholders.
21 List of Subsidiaries.
23 Consent of KPMG Peat Marwick LLP, dated March 9, 1995.
27 Financial Data Schedule.
____
*Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-1070 unless otherwise
indicated.
<PAGE>
EXHIBIT 3(B)
BY-LAWS
OF
OLIN CORPORATION
--------------------------
ARTICLE I.
MEETINGS OF SHAREHOLDERS.
SECTION 1. PLACE OF MEETINGS. All meetings of the shareholders of
------------------
Olin Corporation (hereinafter called the "Corporation") shall be held at such
place, either within or without the Commonwealth of Virginia, as may from time
to time be fixed by the Board of Directors of the Corporation (hereinafter
called the "Board").
SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders
----------------
of the Corporation for the election of directors and for the transaction of such
other business as may properly come before the meeting shall be held on the last
Thursday in April in each year (or, if that day shall be a legal holiday, then
on the next succeeding business day), or on such other day and/or in such other
month as may be fixed by the Board, at such hour as may be specified in the
notice thereof.
SECTION 3. SPECIAL MEETINGS. A special meeting of the shareholders
-----------------
for any purpose or purposes, unless otherwise provided by law or in the Articles
of Incorporation of the Corporation as from time to time amended (hereinafter
called the "Articles"), may be held at any time upon the call of the Board, the
Chairman of the Board, the President or the holders of a majority of the shares
of the issued and outstanding stock of the Corporation entitled to vote at the
meeting.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by law or
-------------------
the Articles, not less than ten nor more than sixty days notice in writing of
the place, day, hour and purpose or purposes of each meeting of the
shareholders, whether annual or special, shall be given to each shareholder of
record of the Corporation entitled to vote at such meeting, either by the
delivery thereof to such shareholder personally or by the mailing thereof to
such shareholder in a postage prepaid envelope addressed to such shareholder at
his address as it appears on the stock transfer books of the Corporation;
provided, however, that in the case of a special meeting of shareholders called
by the shareholders, such notice shall be given at least fifty days before the
date of the meeting. Notice of any meeting of shareholders shall not be required
to be given to any shareholder who shall attend the meeting in person or by
proxy, unless attendance is for the express purpose of objecting to the
transaction of any business because the meeting was not lawfully called or
convened, or who shall waive notice thereof in writing signed by the shareholder
before, at or after such -meeting. Notice of any adjourned meeting need not be
given, except when expressly required by law.
<PAGE>
SECTION 5. QUORUM. Shares representing a majority of the votes entitled to
-------
be cast on a mattter by all classes or series which are entitled to vote thereon
and be counted together collectively, represented in person or by proxy at any
meeting of the shareholders, shall constitute a quorum for the transaction of
business thereat with respect to such matter, unless otherwise provided by law
or the Articles. In the absence of a quorum at any such meeting or any
adjournment or adjournments thereof, shares representing a majority of the votes
cast on the matter of adjournment, either in person or by proxy, may adjourn
such meeting from time to time until a quorum is obtained. At any such
adjourned meeting at which a quorum has been obtained, any business may be
transacted which might have been transacted at the meeting as originally called.
SECTION 6. VOTING. Unless otherwise provided by law or the Articles, at
-------
each meeting of the shareholders each shareholder entitled to vote at such
meeting shall be entitled to one vote for each share of stock standing in his
name on the books of the Corporation upon any date fixed as hereinafter
provided, and may vote either in person or by proxy in writing. Unless demanded
by a shareholder present in person or represented by proxy at any meeting of the
shareholders and entitled to vote thereon or so directed by the chairman of the
meeting, the vote on any matter need not be by ballot. On a vote by ballot, each
ballot shall be signed by the shareholder voting or his proxy, and it shall show
the number of shares voted.
SECTION 7. JUDGES. One or more judges or inspectors of election for any
-------
meeting of shareholders may be appointed by the chairman of such meeting, for
the purpose of receiving and taking charge of proxies and ballots and deciding
all questions as to the qualification of voters, the validity of proxies and
ballots and the number of votes properly cast.
SECTION 8. CONDUCT OF MEETING. The chairman of the meeting at each meeting
-------------------
of shareholders shall have all the powers and authority vested in presiding
officers by law or practice, without restriction, as well as the authority to
conduct an orderly meeting and to impose reasonable limits on the amount of time
taken up in remarks by any one shareholder.
ARTICLE II.
BOARD OF DIRECTORS.
SECTION 1. NUMBER. CLASSIFICATION. TERM. ELECTION. The property, business
---------------------------------------
and affairs of the Corporation shall be managed under the direction of the Board
as from time to time constituted. The Board shall consist of thirteen
directors, but the number of directors may be increased to any number, not more
than eighteen directors, or decreased to any number, not less than three
directors, by amendment of these By-laws, provided that any increase or decrease
by more than thirty percent of the number of directors last elected by the
shareholders may only be effected by the shareholders. No director need be a
shareholder. The Board shall be divided into three classes, Class I, Class II
and
- 2 -
<PAGE>
Class III, as nearly equal in number as possible, with the members of each
class to serve for the respective terms of office provided in the Articles, and
until their respective successors shall have been duly elected or until death or
resignation or until removal in the manner hereinafter provided. In case the
number of directors shall be increased, the additional directors to fill the
vacancies caused by such increase shall be elected in accordance with the
provisions of Section 4 of Article VI of these By-laws. Any increase or
decrease in the number of directors shall be so apportioned among the classes by
the Board as to make all classes as nearly equal in number as possible.
Subject to the rights of holders of any Preferred Stock outstanding,
nominations for the election of directors may be made by the Board or a
committee appointed by the Board or by any shareholder entitled to vote in the
election of directors generally. However, any shareholder entitled to vote in
the election of directors generally may nominate one or more persons for
election as directors at a meeting only if it is a meeting of shareholders for
the purposes of electing directors and written notice of such shareholder's
intent to make such nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Corporation not later than (i) with respect to an election to be held at an
annual meeting of shareholders, 90 days in advance of such meeting and (ii) with
respect to an election to be held at a special meeting of shareholders for the
election of directors, the close of business on the seventh day following the
date on which notice of such meeting is first given to shareholders. Each such
notice shall set forth: (a) the name and address of the shareholder who intends
to make the nomination and of the person or persons to be nominated; (b) a
representation that the shareholder is a holder of record of shares of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the shareholder; (d) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission; and (e)
the consent of each nominee to serve as a director of the Corporation if so
elected.
SECTION 2. COMPENSATION. Each director, in consideration of his serving as
-------------
such, shall be entitled to receive from the Corporation such amount per annum or
such fees for attendance at Board and Committee meetings, or both, in cash or
other property, including securities of the Corporation, as the Board shall from
time to time determine, together with reimbursements for the reasonable expenses
incurred by him in connection with the performance of his duties. Nothing
contained herein shall preclude any director from serving the Corporation, or
any subsidiary or affiliated corporation, in any other capacity and receiving
proper compensation therefor. If the Board adopts a resolution to that effect,
any director may elect to defer all or any part of the annual and other fees
hereinabove referred to for such period and on such terms and conditions as
shall be permitted by such resolution.
- 3 -
<PAGE>
SECTION 3. PLACE OF MEETINGS. The Board may hold its meetings at such
------------------
place or places within or without the Commonwealth of Virginia as it may from
time to time by resolution determine or as shall be specified orfixed in the
respective notices or waivers of notice thereof .
SECTION 4. ORGANIZATION MEETING. After each annual election of directors,
---------------------
as soon as conveniently may be, the newly constituted Board shall meet for the
purposes of organization. At such organization meeting, the newly constituted
Board shall elect officers of the Corporation and transact such other business
as shall come before the meeting. Notice of organization meetings of the Board
need not be given. Any organization meeting may be held at any other time or
place which shall be specified in a notice given as hereinafter provided for
special meetings of the Board, or in a waiver of notice thereof signed by all
the directors.
SECTION 5. REGULAR MEETINGS. Regular meetings of the Board may be held at
-----------------
such time and place as may from time to time be specified in a resolution
adopted by the Board then in effect; and, unless otherwise required by such
resolution, or by law, notice of any such regular meeting need not be given.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board shall be held
-----------------
whenever called by the Chief Executive Officer, or by the Secretary at the
request of any three directors. Notice of a special meeting shall be mailed to
each director, addressed to him at his residence or usual place of business, not
later than the second day before the day on which such meeting is to be held, or
shall be sent addressed to him at such place by telegraph, cable or wireless, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the Board need be
specified in the notice of such meeting, unless required by the Articles.
SECTION 7. QUORUM. At each meeting of the Board the presence of a majority
-------
of the number of directors fixed by these By-laws shall be necessary to
constitute a quorum. The act of a majority of the directors present at a
meeting at which a quorum shall be present shall be the act of the Board, except
as may be otherwise provided by law or by these By-laws. Any meeting of the
Board may be adjourned by a majority vote of the directors present at such
meeting. Notice of any adjourned meeting need not be given.
SECTION 8. WAIVERS OF NOTICE OF MEETINGS. Anything in these By-laws or in
------------------------------
any resolution adopted by the Board to the contrary notwithstanding, notice of
any meeting of the Board need not be given to any director if such notice shall
be waived in writing signed by such director before, at or after the meeting, or
if such director shall be present at the meeting. Any meeting of the Board shall
be a legal meeting without any notice having been given or regardless of the
giving of any notice or the adoption of any resolution in reference thereto, if
every member of the Board shall be present thereat. Except as otherwise
provided by law or these By-laws, waivers of notice of any meeting of the Board
need not contain any statement of the purpose of the meeting.
- 4 -
<PAGE>
SECTION 9. TELEPHONE MEETINGS. Members of the Board or any committee may
-------------------
participate in a meeting of the Board or such committee by means of a conference
telephone or other means of communications whereby all directors participating
may simultaneously hear each other during the meeting, and participation by such
means shall constitute presence in person at such meeting.
SECTION 10. ACTIONS WITHOUT MEETINGS. Any action that may be taken at a
-------------------------
meeting of the Board or of a committee may be taken without a meeting if a
consent in writing, setting forth the action, shall be signed, either before or
after such action, by all of the directors or all of the members of the
committee, as the case may be. Such consent shall have the same force and
effect as a unanimous vote.
ARTICLE III. *
INDEMNIFICATION. AND LIMIT ON LIABILITY
(a) Every person who is or was a director, officer or employee of the
Corporation, or who, at the request of the Corporation, serves or has served in
any such capacity with another corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise shall be indemnified by the
Corporation against any and all liability and reasonable expense that may be
incurred by him in connection with or resulting from any claim, action or
proceeding (whether brought in the right of the Corporation or any such other
corporation, entity, plan or otherwise), civil or criminal, in which he may
become involved, as a party or otherwise, by reason of his being or having been
a director, officer or employee of the Corporation, or such other corporation,
entity or plan while serving at the request of the Corporation, whether or not
he continues to be such at the time such liability or expense shall have been
incurred, unless such person engaged in willful misconduct or a knowing
violation of the criminal law.
As used in this Article III: (i) the terms "liability" and "expense" shall
include, but shall not be limited to, counsel fees and disbursements and amounts
of judgments, fines or penalties against, and amounts paid in settlement by, a
director, officer or employee; (ii) the terms "director", "officer" and
"employee," unless the context otherwise requires, include the estate or
personal representative of any such person; (iii) a person is considered to be
serving an employee benefit plan as a director, officer or employee of the plan
at the Corporation's request if his duties to the Corporation also impose duties
on, or otherwise involve services by, him to the plan or, in connection with the
plan, to participants in or beneficiaries of the plan; (iv) the term
"occurrence" means any act or
* [Compilers Note: This Article III was adopted by the shareholders at the
Annual Meeting of Shareholders, April 28, 1994.]
- 5 -
<PAGE>
failure to act, actual or alleged, giving rise to a claim, action or proceeding;
and (v) service as a trustee or as a member of a management or similar committee
of a partnership or joint venture shall be considered service as a director,
officer or employee of the trust, partnership or joint venture.
The termination of any claim, action or proceeding, civil or criminal, by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that a director, officer or employee
did not meet the standards of conduct set forth in this paragraph (a). The
burden of proof shall be on the Corporation to establish, by a preponderance of
the evidence, that the relevant standards of conduct set forth in this paragraph
(a) have not been met.
(b) Any indemnification under paragraph (a) of this Article shall be made
unless (i) the Board, acting by a majority vote of those directors who were
directors at the time of the occurrence giving rise to the claim, action or
proceeding involved and who are not at the time parties to such claim, action or
proceeding (provided there are at least five such directors), finds that the
director, officer or employee has not met the relevant standards of conduct set
forth in such paragraph (a), or (ii) if there are not at least five such
directors, the Corporation's principal Virginia legal counsel, as last
designated by the Board as such prior to the time of the occurrence giving rise
to the claim, action or proceeding involved, or in the event for any reason such
Virginia counsel is unwilling to so serve, then Virginia legal counsel mutually
acceptable to the Corporation and the person seeking indemnification, deliver to
the Corporation their written advice that, in their opinion, such standards have
not been met.
(c) Expenses incurred with respect to any claim, action or proceeding of
the character described in paragraph (a) shall, except as otherwise set forth in
this paragraph (c), be advanced by the Corporation prior to the final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Article III. No security shall be
required for such undertaking and such undertaking shall be accepted without
reference to the recipient's financial ability to make repayment.
Notwithstanding the foregoing, the Corporation may refrain from, or suspend,
payment of expenses in advance if at any time before delivery of the final
finding described in paragraph (b), the Board or Virginia legal counsel, as the
case may be, acting in accordance with the procedures set forth in paragraph
(b), find by a preponderance of the evidence then available that the officer,
director or employee has not met the relevant standards of conduct set forth in
paragraph (a)
(d) No amendment or repeal of this Article III shall adversely affect or
deny to any director, officer or employee the rights of indemnification provided
in this Article III with respect to any liability or expense arising out of a
claim, action or proceeding based in whole or substantial part on an occurrence
the inception of which takes place before or while this Article III, as adopted
by the shareholders of the Corporation at the 1986 Annual Meeting of the
Corporation, is in effect. The provisions of this paragraph (d) shall apply to
- 6 -
<PAGE>
any such claim, action or proceeding whenever commenced, including any such
claim, action or proceeding commenced after any amendment or repeal to this
Article III.
(e) The rights of indemnification provided in this Article III shall be in
addition to any rights to which any such director, officer or employee may
otherwise be entitled by contraction or as a matter of law.
(f) In any proceeding brought by or in the right of the Corporation or
brought by or on behalf of shareholders of the Corporation, no director or
officer of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages with respect to any transaction, occurrence or
course of conduct, whether prior or subsequent to the effective date of this
Article lll, except for liability resulting from such person's having engaged in
willful misconduct or a knowing violation of the criminal law or any federal or
state securities law.
(g) An amendment to this Article iii shall be approved only by a majority
of the votes entitled to be cast by each voting group entitled to vote thereon.
ARTICLE IV.
COMMITTEES.
SECTION 1. EXECUTIVE AND FINANCE COMMITTEE. The Board may, by resolution
--------------------------------
or resolutions adopted by a majority of the number of directors fixed by these
By-laws, appoint two or more directors to constitute an Executive and Finance
Committee, each member of which shall serve as such during the pleasure of the
Board, and may designate for such Committee a Chairman, who shall continue as
such during the pleasure of the Board.
All completed action by the Executive and Finance Committee shall be
reported to the Board at its meeting next succeeding such action or at its
meeting held in the month following the taking of such action, and shall be
subject to revision or alteration by the Board; provided, that no acts or rights
of third parties shall be affected by any such revision or alteration.
The Executive and Finance Committee shall fix its own rules of procedure
and shall meet where and as provided by such rules or by resolution of the
Board. At all meetings of the Executive and Finance Committee, a majority of the
full number of members of such Committee shall constitute a quorum, and in every
case the affirmative vote of a majority of members present at any meeting of the
Executive and Finance Committee at which a quorum is present shall be necessary
for the adoption of any resolution.
During the intervals between the meetings of the Board, the Executive and
Finance Committee shall possess and may exercise all the power and authority of
the Board
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<PAGE>
(including, without limitation, all the power and authority of the Board in the
management, control and direction of the financial affairs of the Corporation)
except with respect to those matters reserved to the Board by Virginia law, in
such manner as the Executive and Finance Committee shall deem best for the
interests of the Corporation, in all cases in which specific directions shall
not have been given by the Board.
SECTION 2. OTHER COMMITTEES. To the extent permitted by law, the Board may
-----------------
from time to time by resolution adopted by a majority of the number of directors
fixed by these By-laws create such other committees of directors, officers,
employees or other persons designated by it as the Board shall deem advisable
and with such limited authority, functions and duties as the Board shall by
resolution prescribe. The Board shall have the power to change the members of
any such committee at any time, to fill vacancies, and to discharge any such
committee, either with or without cause, at any time.
ARTICLE V.
OFFICERS.
SECTION 1. NUMBER. TERM. ELECTION. The officers of the Corporation shall
-----------------------
be a Chief Executive Officer, a Chairman of the Board, a President, one or more
Vice Presidents, a Treasurer, a Controller and a Secretary. The Board may
appoint such other officers and such assistant officers and agents with such
powers and duties as the Board may find necessary or convenient to carry on the
business of the Corporation. Such officers and assistant officers shall serve
until their successors shall be chosen, or as otherwise provided in these By-
laws. Any two or more offices may be held by the same person.
SECTION 2. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall,
------------------------
subject to the control of the Board and the Executive and Finance Committee,
have full authority and responsibility for directing the conduct of the
business, affairs and operations of the Corporation. In addition to acting as
Chief Executive Officer of the Corporation, he shall perform such other duties
and exercise such other powers as may from time to time be prescribed by the
Board and shall see that all orders and resolutions of the Board and the
Executive and Finance Committee are carried into effect. In the event of the
inability of the Chief Executive Officer to act, the Board will designate an
officer of the Corporation to perform the duties of that office.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside
----------------------
at all meetings of the Board and of the shareholders and, in the absence of the
Chairman of the Executive and Finance Committee, at all meetings of the
Executive and Finance Committee. He shall perform such other duties and
exercise such other powers as may from time to time be prescribed by the Board
or, if he shall not be the Chief Executive Officer, by the Chief Executive
Officer.
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<PAGE>
SECTION 4. PRESIDENT. The President shall have such powers and perform
----------
such duties as may from time to time be prescribed by the Board or, if he shall
not be the Chief Executive Officer, by the Chief Executive Officer.
SECTION 5. VICE PRESIDENTS. Each Vice President shall have such powers and
----------------
perform such duties as may from time to time be prescribed by the Board, the
Chief Executive Officer or any officer to whom the Chief Executive Officer may
have delegated such authority.
SECTION 6. TREASURER. The Treasurer shall have the general care and
----------
custody of the funds and securities of the Corporation. He shall perform such
other duties and exercise such other powers as may from time to time be
prescribed by the Board, the Chief Executive Officer or any officer to whom the
Chief Executive Officer may have delegated such authority. If the Board shall so
determine, he shall give a bond for the faithful performance of his duties, in
such sum as the Board may determine to be proper, the expense of which shall be
borne by the Corporation. To such extent as the Board shall deem proper, the
duties of the Treasurer may be performed by one or more assistants, to be
appointed by the Board.
SECTION 7. CONTROLLER. The Controller shall be the accounting officer of
-----------
the Corporation. He shall keep full and accurate accounts of all assets,
liabilities, receipts and disbursements and other transactions of the
Corporation and cause regular audits of the books and records of the Corporation
to be made. He shall also perform such other duties and exercise such other
powers as may from time to time be prescribed by the Board, the Chief Executive
Officer or any officer to whom the Chief Executive Officer may have delegated
such authority. If the Board shall so determine, he shall give a bond for the
faithful performance of his duties, in such sum as the Board may determine to be
proper, the expense of which shall be borne by the Corporation. To such extent
as the Board shall deem proper, the duties of the Controller may be performed by
one or more assistants, to be appointed by the Board.
SECTION 8. SECRETARY. The Secretary shall keep the minutes of meetings of
----------
shareholders, of the Board, and, when requested, of Committees of the Board; and
he shall attend to the giving and serving of notices of all meetings thereof.
He shall keep or cause to be kept such stock and other books, showing the names
of the shareholders of the Corporation, and all other particulars regarding
them, as may be required by law. He shall also perform such other duties and
exercise such other powers as may from time to time be prescribed by the Board,
the Chief Executive Officer or any officer to whom the Chief Executive Officer
may have delegated such authority. To such extent as the Board shall deem
proper, the duties of the Secretary may be performed by one or more assistants,
to be appointed by the Board.
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<PAGE>
ARTICLE VI.
REMOVALS, RESIGNATIONS AND VACANCIES
SECTION 1. REMOVAL OF DIRECTORS. Any director may be removed at any time
---------------------
but only with cause, by the affirmative vote of the holders of record of a
majority of the shares of the Corporation entitled to vote on the election of
directors, given at a special meeting of the shareholders called expressly for
the purpose.
SECTION 2. REMOVAL OF OFFICERS. Any officer, assistant officer or agent of
--------------------
the Corporation may be removed at any time, either with or without cause, by the
Board in its absolute discretion. Any such removal shall be without prejudice to
the recovery of damages for breach of the contract rights, if any, of the
officer, assistant officer or agent removed. Election or appointment of an
officer, assistant officer or agent shall not of itself create contract rights.
SECTION 3. RESIGNATION. Any director, officer or assistant officer of the
------------
Corporation may resign as such at any time by giving written notice of his
resignation to the Board, the Chief Executive Officer or the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein
or, if no time is specified therein, at the time of delivery thereof, and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 4. VACANCIES. Any vacancy in the Board caused by death,
----------
resignation, disqualification, removal, an increase in the number of directors,
or any other cause, may be filled (a) by the holders of shares of the
Corporation entitled to vote on the election of directors, but only at an annual
meeting of shareholders, or (b) by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board at any regular or
special meeting thereof. Each director so elected by the Board shall hold
office until the next annual election of directors, and each director so elected
by the shareholders shall hold office for a term expiring at the annual meeting
of shareholders at which the term of the class to which he has been elected
expires, and, in each case, until his successor shall be elected, or until his
death, or until he shall resign, or until he shall have been removed in the
manner hereinabove provided. Any vacancy in the office of any officer or
assistant officer caused by death, resignation, removal or any other cause, may
be filled by the Board for the unexpired portion of the term.
ARTICLE VII.
CONTRACTS, LOANS, CHECKS, DRAFTS, DEPOSITS, ETC.
SECTION 1. EXECUTION OF CONTRACTS. Except as otherwise provided by law or
-----------------------
by these By-laws, the Board (i) may authorize any officer, employee or agent of
the Corporation to execute and deliver any contract, agreement or other
instrument in writing in the name and on behalf of the Corporation, and (ii) may
authorize any officer, employee or agent of the Corporation so authorized by the
Board to delegate such authority by
- 10 -
<PAGE>
written instrument to other officers, employees or agents of the Corporation.
Any such authorization by the Board may be general or specific and shall be
subject to such limitations and restrictions as may be imposed by the Board. Any
such delegation of authority by an officer, employee or agent may be general or
specific, may authorize re-delegation, and shall be subject to such limitations
and restrictions as may be imposed in the written instrument of delegation by
the person making such delegation.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
------
Corporation and no negotiable paper shall be issued in its name unless
authorized by the Board. When authorized by the Board, any officer, employee or
agent of the Corporation may effect loans and advances at any time for the
Corporation from any bank, trust company or other institution, or from any fir
corporation or individual, and for such loans and advances may make, execute and
deliver promissory notes, bonds or othe certificates or evidences of
indebtedness of the Corporation and when so authorized may pledge, hypothecate
or transfer securities or other property of the Corporation as security for any
such loans or advances. Such authority may be general or confined to specific
instances.
SECTION 3. CHECKS. DRAFTS. ETC. All checks, drafts and other orders for
--------------------
the payment of money out of the funds of the Corporation and all notes or other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by the
Board.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise employed
---------
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositaries as the Board may select or as may
be selected by the Treasurer or any other officer, employee or agent of the
Corporation to whom such power may from time to time be delegated by the Board.
SECTION 5. VOTING OF SECURITIES. Unless otherwise provided by the Board,
---------------------
the Chief Executive Officer may from time to time appoint an attorney or
attorneys, or agent or agents of the Corporation, in the name and on behalf of
the Corporation, to cast the votes which the Corporation may be entitled to cast
as the holder of stock or other securities in any other corporation, any of
whose stock or other securities may be held by the Corporation, at meetings of
the holders of the stock or other securities of such other corporation, or to
consent in writing, in the name of the Corporation as such holder, to any action
by such other corporation, and may instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent, and may execute
or cause to be executed in the name and on behalf of the Corporation and under
its corporate seal, or otherwise, all such written proxies or other instruments
as such officer may deem necessary or proper in the premises.
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<PAGE>
ARTICLE VIII.
CAPITAL STOCK.
SECTION 1. CERTIFICATES. Every shareholder shall be entitled to a
-------------
certificate, or certificates, in such form as shall be approved by the Board,
signed by the Chairman of the Board, the President or a Vice President and the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
or any other officer authorized by these By-laws or a resolution of the Board,
certifying the number of shares owned by him in the Corporation. Any such
certificate may, but need not, bear the seal of the Corporation or a facsimile
thereof. If any such certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation or an employee of the
Corporation, the signatures of any of the officers above specified upon such
certificate may be facsimiles. In case any such officer who shall have signed
or whose facsimile signature shall have been placed upon such certificate shall
have ceased to be such before such certificate is issued, it may be issued by
the Corporation with the same effect as if such officer had not ceased to be
such at the date of its issue.
SECTION 2. TRANSFERS. Shares of stock of the Corporation shall be
----------
transferable on the stock books of the Corporation by the holder in person or by
his attorney thereunto authorized by power of attorney duly executed and filed
with the Secretary or the transfer agent, but, except as hereinafter provided in
the case of loss, destruction or mutilation of certificates, no transfer of
stock shall be entered until the previous certificate, if any, given for the
same shall have been surrendered and cancelled. Except as otherwise provided by
law, no transfer of shares shall be valid as against the Corporation, its
shareholders or creditors, for any purpose, until it shall have been entered in
the stock records of the Corporation by an entry showing from and to whom
transferred. The Board may also make such additional rules and regulations as it
may deem expedient concerning the issue and transfer of certificates
representing shares of the capital stock of the Corporation.
SECTION 3. RECORD DATE. For the purpose of determining shareholders
------------
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
may fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than seventy days prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment thereof unless the Board fixes
a new record date, which it shall do if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.
SECTION 4. LOST. DESTROYED OR MUTILATED CERTIFICATES. In case of loss,
------------------------------------------
destruction or mutilation of any certificate of stock, another may be issued in
its place upon proof of such loss, destruction or mutilation and upon the giving
of a bond of
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<PAGE>
indemnity to the Corporation in such form and in such sum as the Board may
direct; provided that a new certificate may be issued without requiring any bond
when, in the judgment of the Board, it is proper so to do.
SECTION 5. RESTRICTIONS ON TRANSFER. To the extent that the Rights
-------------------------
Agreement dated as of February 27, 1986, between the Corporation and
Manufacturers Hanover Trust Company may be deemed to impose restrictions on the
transfer of securities of the Corporation, such restrictions are hereby
authorized.
ARTICLE IX.
INSPECTION OF RECORDS.
The Board from time to time shall determine whether, to what extent, at
what times and places, and under what conditions and regulations the accounts
and books and papers of the Corporation, or any of them, shall be open for the
inspection of the shareholders, and no shareholder shall have any right to
inspect any account or book or paper of the Corporation except as expressly
conferred by statute or by these By-laws or authorized by the Board.
ARTICLE X.
AUDITOR.
The Board shall annually appoint an independent accountant who shall
carefully examine the books of the Corporation. One such examination shall be
made immediately after the close of the fiscal year and be ready for
presentation at the annual meeting of shareholders of the Corporation, and such
other examinations shall be made as the Board may direct.
ARTICLE XI.
SEAL.
The seal of the Corporation shall be circular in form and shall bear the
name of the Corporation and the year "1892."
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<PAGE>
ARTICLE XII.
FISCAL YEAR.
The fiscal year of the Corporation shall end on the 3lst day of December in
each year.
ARTICLE XIII.
AMENDMENTS.
The By-laws of the Corporation may be altered, amended or repealed and new
By-laws may be adopted by the Board (except as Section 1 of Article II may
otherwise require), or by the holders of the outstanding shares of the
Corporation entitled to vote generally at any annual or special meeting of the
shareholders when notice thereof shall have been given in the notice of the
meeting of shareholders.
EMERGENCY BY-LAWS.
SECTION 1. DEFINITIONS. As used in these Emergency By-laws,
------------
(a) the term "period of emergency" shall mean any period during which a
quorum of the Board cannot readily be assembled because of some catastrophic
event.
(b) the term "incapacitated" shall mean that the individual to whom such
term is applied shall not have been determined to be dead but shall be missing
or unable to discharge the responsibilities of his office; and
(c) the term "senior officer" shall mean the Chairman of the Board, the
President, any corporate Vice President, the Treasurer, the Controller and the
Secretary, and any other person who may have been so designated by the Board
before the emergency.
SECTION 2. APPLICABILITY. These Emergency By-laws, as from time to time
--------------
amended, shall be operative only during any period of emergency. To the extent
not inconsistent with these Emergency By-laws, all provisions of the regular By-
laws of the Corporation shall remain in effect during any period of emergency.
No officer, director or employee shall be liable for actions taken in good
faith in accordance with these Emergency By-laws.
SECTION 3. BOARD OF DIRECTORS. (a) A meeting of the Board may be called by
-------------------
any director or senior officer of the Corporation. Notice of any meeting of the
Board need be given only to such of the directors as it may be feasible to reach
at the time and by such means as may be feasible at the time, including
publication or radio, and at a time less
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<PAGE>
than twenty-four hours before the meeting if deemed necessary by the person
giving notice.
(b) At any meeting of the Board, three directors in attendance shall
constitute a quorum. Any act of a majority of the directors present at a
meeting at which a quorum shall be present shall be the act of the Board. If
less than three directors should be present at a meeting of the Board, any
senior officer of the Corporation in attendance at such meeting shall serve as a
director for such meeting, selected in order of rank and within the same rank in
order of seniority.
(c) In addition to the Board's powers under the regular By-laws of the
Corporation to fill vacancies on the Board, the Board may elect any individual
as a director to replace any director who may be incapacitated and to serve
until the latter ceases to be incapacitated or until the termination of the
period of emergency, whichever first occurs. In considering officers of the
Corporation for election to the Board, the rank and seniority of individual
officers shall not be pertinent.
(d) The Board, during as well as before any such emergency, may change the
principal office or designate several alternative offices or authorize the
officers to do so.
SECTION 4. APPOINTMENT OF OFFICERS. In addition to the Board's powers
------------------------
under the regular By-laws of the Corporation with respect to the election of
officers, the Board may elect any individual as an officer to replace any
officer who may be incapacitated and to serve until the latter ceases to be
incapacitated.
SECTION 5. AMENDMENTS. These Emergency By-laws shall be subject to repeal
-----------
or change by further action of the Board of Directors or by action of the
shareholders, except that no such repeal or change shall modify the provisions
of the second paragraph of Section 2 with regard to action or inaction prior to
the time of such repeal or change. Any such amendment of these Emergency By-laws
may make any further or different provision that may be practical and necessary
for the circumstances of the emergency.
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<PAGE>
EXHIBIT 10(B)
1988 STOCK OPTION PLAN
FOR KEY EMPLOYEES OF
OLIN CORPORATION AND SUBSIDIARIES
(AS AMENDED THROUGH FEBRUARY 23, 1995)
1. PURPOSE OF THE PLAN. The general purpose of the 1988 Stock Option
Plan for Key Employees of Olin Corporation and Subsidiaries (the "Plan") is to
aid in attracting, maintaining and developing a management capable of assuring
the future success of Olin Corporation ("Olin") by providing to key employees of
Olin and its subsidiaries additional incentive to enlarge their proprietary
interest in Olin, to continue and increase their efforts on Olin's behalf and to
remain in the employ of Olin or its subsidiaries.
2. SHARES SUBJECT TO THE PLAN. Options may be granted from time to time
under the Plan in respect of an aggregate of not exceeding 1,100,000 shares of
Common Stock of Olin (subject to the provisions in paragraph 15 hereof). If any
option granted under the Plan shall expire or terminate for any reason other
than its surrender pursuant to paragraph 7 (including, without limitation, by
reason of its surrender or cancellation, in whole or in part, or the
substitution therefor of a new option) without having been exercised in full,
the unpurchased shares subject thereto shall (unless the Plan shall have been
terminated) again be available for other options to be granted under the plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a
Committee on Stock Options (the "Committee") appointed by the Board of Directors
of Olin and consisting of not less than three of those members of the Board of
Directors who are not eligible to participate in the Plan or who shall have
advised the Board of Directors in writing that they irrevocably waive any rights
under the Plan.
The Committee shall have plenary authority in its discretion, but subject
to the express provisions of the Plan, to determine the purchase price of the
Common Stock covered by each option, the employees to whom, and the time or
times at which, options shall be granted and the number of shares to be covered
by each option; to interpret the Plan; to prescribe, amend and rescind rules and
regulations relating to it; to determine the terms and provisions (and
amendments thereof) of the respective option agreements (which need not be
identical), including, if the Committee shall determine that a particular option
is to conform to the requirements of any provision of the Internal Revenue Code
as amended from time to time, such terms and provisions (and amendments) as
shall be requisite in the judgment of the Committee to provide therefor or to
conform to any change in any law or regulation applicable thereto; and to make
all other determinations deemed necessary or advisable for the administration of
the Plan. The Committee's determination on the foregoing matters shall be
conclusive.
The Committee shall select one of its members as its chairman and shall
hold its meetings at such times and places as it shall deem advisable. A
majority of its members shall constitute a
<PAGE>
quorum. All determinations of the Committee shall be made by not less than a
majority of its members. A decision or determination reduced to writing and
signed by a majority of the members shall be fully as effective as if it had
been made by a majority vote at a meeting duly called and held. The Committee
may appoint a secretary, shall keep minutes of its meetings and shall make such
rules and regulations for the conduct of its business as it shall deem
advisable. The Committee may designate the Secretary of Olin or other employees
of Olin to assist the Committee in the administration of the Plan and may grant
authority to such persons to execute option agreements or other documents on
behalf of the Committee.
4. ELIGIBILITY; FACTORS TO BE CONSIDERED IN GRANTING OPTIONS. Options
may be granted only to regular employees (including officers) of Olin and of its
present and future subsidiary corporations ("subsidiaries"). A Director of Olin
or of a subsidiary who is not also such an employee will not be eligible to
receive an option. In determining the employees to whom options shall be granted
and the number of shares to be covered by each option, the Committee may take
into account the nature of the services rendered by the respective employees,
their present and potential contributions to the success of Olin, and such other
factors as the Committee in its discretion shall deem relevant. An employee who
has been granted an option under the Plan or under any prior stock option plan
of Olin may be granted an additional option or options if the Committee shall so
determine. Nothing contained in the Plan shall be construed to limit the right
of Olin to grant or assume options otherwise than under the Plan in connection
with the acquisition by purchase, lease, merger, consolidation or otherwise of
the business and assets of any corporation, firm or association, including
options granted to employees thereof who become employees of Olin or a
subsidiary, or for other proper corporate purposes.
5. OPTION PRICES. The purchase price of the Common Stock covered by each
option shall be determined by the Committee but shall not be less than 100% of
the fair market value of the Common Stock at the time of granting the option.
Such fair market value shall be determined by the Committee and shall be taken
at no less than the mean of the high and low sales prices of the Common Stock as
reported on the consolidated transaction reporting system for New York Stock
Exchange issues on such date or, if the Common Stock was not traded on such
date, on the first preceding day on which the Common Stock was traded.
6. EXERCISE OF OPTIONS. The Committee shall have authority in its
discretion to prescribe in any option agreement that the option will be
exercisable in full at any time or from time to time during the term of the
option, or to provide for the exercise thereof in such installments at such
times during said term as the Committee may determine. An option may be
exercised, at any time or from time to time during the term of the option, as to
any or all full shares which have become purchasable under the provisions of the
option but not as to less than 25 shares at any one time. The option price
shall be paid in full in cash or its equivalent at the time the option is
exercised; provided, however, that the Committee may elect to permit such option
price to be paid in shares of Common Stock of Olin, or a combination of cash and
shares of Common Stock of Olin, the fair market value of such Common Stock to be
determined for such purpose in such manner as shall be selected by the
Committee, but not at more than the mean of the high and low sales prices of the
Common Stock as reported on the consolidated transaction reporting system for
New York Stock Exchange issues on the date on which the optionee's written
notice of
<PAGE>
exercise is received by Olin, or if the Common Stock was not traded on such day,
on the first preceding day on which the Common Stock was traded. The term of
each option shall be not more than ten years from the date of granting thereof,
or such shorter period as is prescribed in paragraphs 11, 13 and 14 hereof.
Except as provided in said paragraphs 11, 13 and 14 hereof, no option may be
exercised at any time unless the holder thereof is then a regular employee of
Olin or one of its subsidiaries. The holder of an option shall not have any of
the rights of a stockholder with respect to the shares covered by his or her
option until such shares shall be issued to him or her upon the due exercise of
the option.
In lieu of requiring an optionee to pay in cash such federal, state or
local income taxes as may be applicable to exercise of an option ("withholding
taxes"), the Committee may elect to permit withholding taxes to be paid by the
optionee in shares of Common Stock of Olin or in a combination of cash and
shares of Common Stock of Olin, the fair market value of such Common Stock to be
determined for such purpose as provided in the next preceding paragraph with
respect to the use of Common Stock of Olin in payment of the option price.
Shares delivered in payment of an option price or for withholding taxes may
be shares withheld by Olin upon exercise of an option or shares already owned by
the optionee.
7. STOCK APPRECIATION RIGHTS. The Committee shall have authority in its
discretion to grant a stock appreciation right ("SAR") to an optionee which
shall relate to and have the same terms and conditions as a specific option
granted to the optionee under the Plan (the "related option") together with such
additional terms and conditions, if any, as the Committee in its discretion may
prescribe. An SAR may be granted at the same time as the related option is
granted or, except as otherwise provided herein, at any time thereafter prior to
the last day on which the related option may be exercised. Each SAR shall be
evidenced by written agreement in such form as the committee shall approve'. An
SAR shall entitle the optionee, upon surrender of an exercisable related option
or an exercisable portion thereof, to receive a payment, at the election of the
Committee in cash, shares of Common Stock of Olin (and such other shares as may
be deliverable as a result of an adjustment pursuant to paragraph 15
("adjustment shares")) or a combination of cash and shares of Common Stock of
olin (and adjustment shares) equivalent to the appreciated value of the shares
that the optionee would have been entitled to purchase pursuant to the related
option or portion thereof surrendered. Such appreciated value shall be the
difference between the option price of such shares (as adjusted pursuant to
paragraph 15) and the fair market value of such shares (as defined in paragraph
5) on the date on which the optionee's notice of exercise is received by Olin.
If all or a portion of such payment is made in shares of Common Stock of Olin
(or adjustment shares), the shares shall be valued for purposes of such payment
at their fair market value, as defined in paragraph 5, on the date on which the
optionee's written notice of exercise is received by Olin. No fractional shares
shall be issued as a result of exercising an SAR.
An SAR shall be exercisable only during the period when the related option
is also exercisable. In no event shall an SAR or the related option held by an
optionee who is subject to the limitations of Section 16(b) of the Securities
Exchange Act be exercisable during the first six months following its date of
grant, provided that this restriction shall not apply in the event of the
<PAGE>
death or disability of the optionee prior to the expiration of such six-month
period. If an SAR is exercised, the related option shall cease to be exercisable
to the extent of the number of shares with respect to which the SAR was
exercised. Upon the exercise or termination of a related option, the SAR granted
with respect thereto shall terminate to the extent of the number of shares as to
which the related option was exercised or terminated.
In lieu of requiring an optionee to pay cash and receive certificates for
shares of Common Stock of Olin (and adjustment shares) upon the exercise of an
option, if the option agreement so provides, initially or by amendment, the
Committee may elect to require the optionee to surrender the option to Olin for
cancellation as to all or any portion of the number of shares covered by the
intended exercise and receive in exchange for such surrender a payment, at the
election of the Committee, in cash, in shares of Common Stock of Olin (and
adjustment shares), or a combination of cash and shares of Common Stock of Olin
(and adjustment shares) equivalent to the appreciated value of the shares
covered by the option surrendered for cancellation. Such appreciated value
shall be the difference between the option price of such shares (as adjusted
pursuant to paragraph 15) and the fair market value of such shares, as defined
in paragraph 5, on the date on which the optionee's notice of exercise is
received by Olin. If all or any part of such payment shall be in shares of
Common Stock of Olin (or adjustment shares), the shares shall be valued for
purposes of such payment at their fair market value, as defined in paragraph 5,
on the date on which the optionee's notice of exercise is received by Olin.
Upon delivery to Olin of a notice of exercise of option, the Committee may avail
itself of its right to require the optionee to surrender the option to Olin for
cancellation as to shares covered by such intended exercise. The Committee's
right of election shall expire, if not exercised, at the close of business on
the fifth business day following the delivery to Olin of such notice. Should
the Committee not exercise such right of election, the delivery of the aforesaid
notice of exercise shall constitute an exercise by the optionee of the option to
the extent therein set forth, and payment for the shares covered by such
exercise shall become due immediately.
8. CHANGE IN CONTROL. In the event of a change in Control of Olin, as
defined below, each option then outstanding shall become immediately and fully
exercisable, notwithstanding any provision therein for the exercise of such
option in installments and unless an SAR shall already have been granted with
respect to such option, the optionee shall be deemed to hold an SAR related to
such option, exercisable in accordance with and subject to all of the terms and
conditions of the first two paragraphs of paragraph 7, for the number of shares
exercisable under such option after giving effect to such acceleration. Such
SAR may, but need not be, evidenced by separate written agreement. For the
purposes of this paragraph 8, a Change in Control shall mean that any of the
following events shall have occurred:
(i) the Corporation ceases to be publicly owned with at least 1,000
stockholders;
(ii) a person, partnership, joint venture, corporation or other entity,
or two or more of any of the foregoing acting as a group (or a "person"
within the meaning of Sections 13(d)(3) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Act")), other than the Corporation,
a majority-owned subsidiary of the Corporation or an employee benefit plan
of the Corporation or such subsidiary, become(s) the "beneficial owner" (as
<PAGE>
defined in Rule 13(d)(3) under the Act) of 20% or more of the then
outstanding voting stock of the Corporation;
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Corporation's Board of Directors
(together with any new Director whose election by the Corporation's Board
of Directors or whose nomination for election by the Corporation's
stockholders, was approved by a vote of at least two-thirds of the
Directors then still in office who either were Directors at the beginning
of such period or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the Directors
then in office; or
(iv) the Corporation's Board of Directors determines that a tender
offer for the Corporation's shares indicates a serious intention by the
offeror to acquire control of the Corporation.
9. EMPLOYEE'S AGREEMENT TO SERVE. Each employee receiving an option
shall, as one of the terms of the option agreement, agree that he or she will,
during employment, devote his or her entire time, energy and skill to the
service of Olin or a subsidiary and the promotion of its interests, subject to
vacations, sick leave and other absences in accordance with the regular policies
of, or other reasons satisfactory to, Olin and its subsidiaries. Such
employment shall (subject to the terms of any contract between Olin or any such
subsidiary and such employee) be at the pleasure of Olin or such subsidiary, and
shall be at such compensation as Olin or such subsidiary shall determine from
time to time. Upon termination of such employee's employment either (a) for
cause or (b) voluntarily on the part of the employee and without the written
consent of Olin, any option or options held by him or her under the Plan, to the
extent not theretofore exercised, shall forthwith terminate. Retirement
pursuant to any retirement plan of Olin or of a subsidiary shall be deemed to be
a termination of employment with Olin's consent.
10. NON-TRANSFERABILITY OF OPTIONS. No option granted prior to February
23, 1995, under the Plan shall be transferable otherwise than by will or the
laws of descent and distribution, and an option may be exercised, during the
lifetime of the holder thereof, only by him or her. For options granted on or
after February 23, 1995, the following sentences shall apply: No option granted
under the Plan on or after February 23, 1995 shall be transferable otherwise
than by will or the laws of descent and distribution, except an option may be
transferred by gift to any member of the optionee's immediate family or to a
trust for the benefit of the one or more of such immediate family members if
prior to its granting the Committee shall have adopted a resolution indicating
that such option is transferable. During the lifetime of an optionee, and
option shall be exercisable only by the optionee unless it has been transferred
as permitted hereby, in which case it shall be exercisable only by such
transferee. For the purpose of this Paragraph 10 on optionee's "immediate
family" shall mean the optionee's spouse, children and grandchildren.
11. TERMINATION OF EMPLOYMENT. In the event the employment of an
employee to whom an option has been granted under the Plan shall be terminated
(otherwise than by reason of death), such option may, subject to the provisions
of the next to last sentence of paragraph 9 and to the provisions of paragraph
12, be exercised (to the extent of the number of shares that the
<PAGE>
employee was entitled to purchase under such option at the termination of
employment) at any time within three months after such termination (which three-
month period may be extended by the Committee), but in no event shall such
three-month period or any such extension permit the exercise of an option after
the expiration date of the option specified in the option agreement therefor.
Options granted under the Plan shall not be affected by any change of duties or
position so long as the optionee continues to be an employee of Olin or of a
subsidiary. Nothing in the Plan or in any option granted pursuant thereto shall
confer on any employee any right to continue in the employ of Olin or any of its
subsidiaries or affect in any way the right of Olin or any of its subsidiaries
to terminate his or her employment at any time.
12. CONDITIONS TO ENJOYMENT OF OPTIONS. The following conditions shall
apply to the grant and exercise of options:
(i) The optionee shall not render services for any organization or
engage, directly or indirectly, in any business which, in the judgment of
the Committee or, if delegated to the Chief Executive Officer, in the
judgment by such Officer, is or becomes competitive with Olin or any
subsidiary, or which is or becomes otherwise prejudicial to or in conflict
with the interests of Olin or any subsidiary. Such judgment shall be based
on the optionee's positions and responsibilities while employed by Olin or
any subsidiary, the optionee's post-employment responsibilities and
position with the other organization or business, the extent of past,
current and potential competition or conflict between Olin or a subsidiary
and the other organization or business, the effect on customers, suppliers
and competitors of the optionee's assuming the post-employment position,
the guidelines established in the then current edition of Olin's Code of
Business Conduct, and such other considerations as are deemed relevant
given the applicable facts and circumstances. The optionee shall be free,
however, to purchase as an investment or otherwise, stock or other
securities of such organization or business so long as they are listed upon
a recognized securities exchange or traded over the counter, and such
investment does not represent a substantial investment to the optionee or a
greater than 10% equity interest in the organization or business.
(ii) The optionee shall not, without prior written authorization from
Olin, disclose to anyone outside Olin, or use in other than Olin's
business, any secret or confidential information, knowledge or data,
relating to the business of Olin or a subsidiary in violation of his or her
agreement with Olin or the subsidiary.
(iii) The optionee, pursuant to his or her agreement with Olin or a
subsidiary, shall disclose promptly and assign to Olin or the subsidiary
all right, title, and interest in any invention or idea, patentable or not,
made or conceived by the optionee during employment by Olin or the
subsidiary, relating in any manner to the actual or anticipated business,
research or development work of Olin or the subsidiary and shall do
anything reasonably necessary to enable Olin or the subsidiary to secure a
patent where appropriate in the United States and in foreign countries.
Notwithstanding any other provision of the Plan, the Committee in its sole
discretion, which may be delegated to the Chief Executive Officer of Olin, may
cancel any option at any time
<PAGE>
prior to the exercise thereof, if the employment of the optionee shall be
terminated, other than by reason of death, unless the conditions in this
paragraph 12 are met.
Failure to comply with the conditions of this paragraph 12 prior to, or
during the six months after, any exercise shall constitute a rescission of the
exercise. The difference between the fair market value (as defined in paragraph
5) on date of exercise of the shares exercised and the option price shall be
returned to Olin by the optionee, in cash, within 10 days after notice of the
rescission has been given to the optionee by Olin's Chief Executive Officer,
chief legal officer or chief personnel officer. Such notice may be given at any
time within two years of the date of exercise.
Upon exercise of an option, the optionee shall certify on a form acceptable
to the Committee that he or she is in compliance with the terms and conditions
of the Plan.
13. DEATH OF AN EMPLOYEE. If an employee to whom an option has been
granted under the Plan shall die while employed by Olin or a subsidiary or after
the termination of such employment, such option may, subject to the provisions
of the next to the last sentence of paragraph 9 and to the provisions of
paragraph 12, be exercised by the legatee or legatees of the employee under his
or her last will, or by his or her personal representatives or distributes, as
follows: if an employee dies while so employed, at any time within one year
after the employee's death (which one-year period may be extended by the
Committee), to the extent of the remaining shares covered by such option,
whether or not such shares had become purchasable by the employee at the date of
his or her death; and if an employee dies after termination of employment and
within the period an option remains exercisable, at any time within the longer
of (i) the period that he or she could have exercised the option had he or she
not died or (ii) one year after the date of death (which one-year period may be
extended by the Committee), in either case, to the extent of the number of
shares purchasable by such employee pursuant to the provisions of paragraph 11
at the date of his or her death. Notwithstanding the provisions of this
paragraph 13, no option shall be exercisable after the expiration date specified
in the option agreement therefor.
14. DISABILITY OF AN EMPLOYEE. If an employee to whom an option has been
granted under the Plan shall become totally and permanently disabled, as that
term is now defined in Section 105(d)(4) of the Internal Revenue Code, as such
Section may be amended from time to time, and the employee's employment with
Olin or a subsidiary is terminated as a result, such option may be exercised by
such employee within one year after the date of termination of employment,
provided that no option shall be exercisable after the expiration date specified
in the option agreement therefor nor for more shares than that which could have
been purchased thereunder on the date of termination of employment.
15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any
change in the outstanding Common Stock of Olin by reason of stockdividends,
stock splits, recapitalization, mergers, consolidations, combinations or
exchanges of shares, split-ups, split-offs, spin-offs, liquidations or other
similar changes in capitalization, or any distributions to common shareholders
other than cash dividends, the numbers, class and prices of shares covered by
outstanding options granted under the Plan and the aggregate number and class of
shares available under the
<PAGE>
Plan, shall be appropriately adjusted by the Committee, whose determination
shall be conclusive. Without limiting the foregoing, in the event of any split-
up, split-off, spin-off or other distribution to shareholders of shares
representing a part of Olin's business, properties and assets, the Committee
may, with the consent of an optionee, modify an outstanding option or options so
that such option or options shall thereafter relate to shares of Common Stock of
Olin and shares of capital stock of the corporation owning the business,
properties and assets so split-up, split-off, spun-off or otherwise distributed
to shareholders of Olin in the same ratio in which holders of the Common Stock
of Olin became entitled to receive shares of capital stock of the corporation
owning the business, properties and assets so splitup, split-off, spun-off or
otherwise distributed.
16. EFFECTIVENESS OF THE PLAN. The Plan became effective on April 28,
1988.
17. TIME OF GRANTING OF OPTIONS. The granting of an option pursuant to
the Plan shall take place on the date established by the Committee. However, no
option may be exercised if the employee to whom the option is granted shall fail
to execute and deliver a copy of the option agreement to the Committee or Olin
within 60 days after delivery of the option agreement to such employee.
18. CONSENT OF EMPLOYEE. Every employee who accepts an option under the
Plan shall be bound by the terms and restrictions of the Plan and his or her
acceptance of an option shall constitute an agreement between him or her and
Olin and its subsidiaries and any successors in interest to any of them.
19. TERMINATION AND AMENDMENT. Unless the Plan theretofore has been
terminated as hereinafter provided, it shall terminate on, and no option shall
be granted thereunder after, April 30, 1998. The Board of Directors of Olin may
at any time prior to that date terminate the Plan, or make such modification
thereof as it shall deem advisable; provided, however, that the Board of
Directors may not, without further approval by shareholders of Olin, (a)
increase the maximum number of shares for which options may be granted under the
Plan, (b) change the manner of determining the minimum option prices, other than
to change the manner of determining the fair market value of the Common Stock as
stated in paragraph 5 above to conform to any then applicable provisions of the
Internal Revenue Code or regulations thereunder, or (c) increase the period
during which options may be granted. No termination, modification or amendment
of the Plan may, without the consent of the employee to whom any option shall
theretofore have been granted, adversely affect the rights of such employee
under such option.
20. INCENTIVE STOCK OPTION LIMITATION. The aggregate fair market value
(determined at the time an option is granted) of Common Stock of Olin with
respect to which incentive stock options (as defined in Section 422A of the
Internal Revenue Code) are exercisable for the first time by an individual
during any calendar year (under the Plan and any other stock option plan of the
individual's employer corporation and its parent and subsidiary corporations)
shall not exceed $100,000.
<PAGE>
Exhibit 10(l)
OLIN SENIOR EXECUTIVE PENSION PLAN
----------------------------------
(As adopted by the Board of Directors
on September 27, 1984)
1. Purposes
--------
The purposes of the Olin Senior Executive Pension Plan ("Plan") are to enable
Olin Corporation ("Olin") to attract and maintain a management group capable of
assuring Olin's future success.
2. Definitions
-----------
"Committee" means the Compensation and Stock Option Committee of Olin's Board of
Directors. The Committee shall administer the Plan.
"Participant" means an employee of Olin or a subsidiary ("Employing Company")
whose job is rated at 2,000 Hay points (or equivalent) or over and who is
selected by the Committee to participate in the Plan. As provided in paragraph
4, the Committee may remove any Participant from the Plan, whether or not he or
she has begun to receive benefits hereunder.
"Salaried Plan" means the Olin Salaried Pension Plan.
The terms "Average Compensation", "Years of Benefit Service", "Retirement
Allowance" and "Primary Social Security Benefit" are used as defined in the
Salaried Plan.
"Spouse Retirement Allowance" shall be an annual benefit equal to 50% of the
Participant's Retirement Allowance (as defined below), except that if the spouse
is more than four years younger than the Participant, the Spouse Retirement
Allowance shall be reduced so that the present value of the spouses expected
lifetime benefit is the same as it would have been if he or she was four years
younger than the Participant and entitled to receive an annual benefit equal to
50% of the Participant's Retirement Allowance.
The "Participant's Retirement Allowance shall be an annual retirement benefit
equal to the lesser of
(A x B) - (D + E)
or
(C) - (D + E + F)
where
A = Average Compensation (.03 x Years of Benefit Service with 2,000 or
more Hay Points + .015 x Years of Benefit Service with less than
2,000 Hay Points)
<PAGE>
Exhibit 10(l)
B = 100%, except that if the Participant begins receiving benefits prior
to age 62, B shall be reduced by 1/3 of 1% for each month between the
month in which benefits begin and the month of the Participant's 62nd
birthday.
C = .5 Average Compensation.
D = Annual retirement allowance from all Olin pension plans, including,
without limitation, the Salaried Plan, and the equivalent actuarial
value of any other arrangement with Olin which the Committee , in
its sole discretion, determines to be a form of pension supplement.
E = 50% of the Participant's Primary Social Security Benefit.
F = Annual retirement allowance from all pension plans of the
Participant's previous employers.
D and F shall be calculated assuming that the Participant selected a 50% joint
and survivor annuity under such plans and began receiving benefits thereunder at
the same time as under the Plan.
3. Payment of Benefits
-------------------
(a) Except as set forth in the last sentence of this paragraph (a), or
unless the Committee otherwise determines in its sole discretion, each
Participant entitled to receive benefits under the Salaried Plan must
elect to retire and begin to receive benefits hereunder at the same
time as under the Salaried Plan. Subject to the provisions of
paragraph 4, a Participant may retire or elect early retirement under
the Plan in the same manner as provided in the Salaried plan without
meeting the service requirements of the Salaried Plan. A Participant
who leaves the employ of an Employing Company before age 55 may not
elect to receive benefits under the Plan prior to age 65; benefits
payable under the Plan to such Participant will assume that the
Participant did not retire under the Salaried Plan until age 65,
although he or she may retire under the Salaried Plan at such times as
are permitted thereunder.
(b) Subject to the provisions of paragraphs 3(c) and 4:
(i) Upon the Participant's retirement under the Plan, the
Participant's Retirement Allowance shall be paid in the manner and for
the period that it would have been payable if it were a retirement
allowance under the Salaried Plan.
(ii) Upon the death of a Participant receiving benefits under the
Plan, his or her spouse shall be paid the Spouse Retirement Allowance
in the manner and for the period that it would have been payable if it
were a joint and survivor allowance under the Salaried Plan.
<PAGE>
Exhibit 10(l)
(iii) Upon the death of a Participant, if the Participant and his or
her spouse meet the criteria set forth in the Salaried Plan for a pre-
retirement spouse benefit (other than the 10 year creditable service
requirement), the spouse shall be paid the Spouse Retirement Allowance
in the manner and for the period that it would have been payable if it
were a pre-retirement spouse benefit under the Salaried Plan.
(iv) The total and permanent disability provisions of the Plan shall
be the same as those of the Salaried Plan.
(v) Unless otherwise determined by the Committee in its sole
--
discretion, layoff rights under the Plan shall be the same as
under the Salaried Plan.
(c) Notwithstanding any other provision of the Plan, in the event of any
ambiguity in Plan provisions, the Committee shall in its sole
discretion interpret the provisions so as to conform with the intent
as well as the terms of the Plan.
4. Removal from the Plan; Non-Payment of Benefits
----------------------------------------------
(a) Any Participant may be removed from the Plan by the Committee at any
time for cause, as determined by the Committee in its sole discretion,
whether or not the Participant has begun to receive payments under the
plan, and whether or not the Participant's employment has been
terminated. "Cause" shall include, without limitation, rendering
services in any capacity to a competitor of Olin without the
Committee's consent. Neither the Participant nor his or her spouse
shall be entitled to receive any payments from the Plan from and after
the date of the removal of the Participant nor have any cause of
action as a result of such removal. The Participant or spouse shall
not be required to return any payments made prior to removal of the
Participant from the Plan.
(b) No benefits shall be parable under the Plan if the Participant
voluntarily terminates employment without the Committee's consent,
whether or not under retirement provisions of the Salaried Plan or
other Olin pension plan.
(c) The Committee may notify a Participant that he or she is being suspended
from the Plan as a result of job performance which the Committee in its sole
discretion deems unsatisfactory. From and after the date of such notification
and notwithstanding the Participant's actual Hay Points, he or she will not be
deemed to have 2,000 or more Ray Points for purposes of calculating the
Participant's Retirement Allowance. Any prior years of Service shall not be
affected by such suspension.
<PAGE>
Exhibit 10(l)
5. Liability for Payment
---------------------
Each Employing Company shall pay any benefits payable hereunder with respect to
Participants formerly employed by it. (In the case of a participant who was
employed by more than one Employing Company, the Committee shall allocate the
cost of such benefits among such Employing Companies in such manner as it deems
equitable.) The obligations of the Employing Companies hereunder shall not be
funded in any manner. The rights of any person to receive benefits under the
Plan are limited to those of a general creditor of the Employing Company liable
for such benefits.
6. Employment Rights
-----------------
Nothing in the Plan shall be construed as giving any Participant the right to be
retained in the employ of any Employing Company. Each Employing Company
expressly reserves the right to dismiss any Participant at any time without
liability for the effect which such dismissal might have upon him or her
hereunder.
7. Amendment and Termination
-------------------------
The plan may be amended or terminated at any time or from time to time by Olin's
Board of Directors without adversely affecting rights, if any, of Participants
accrued prior to the date of such amendment or termination.
8. Assignability
-------------
No right to payment or any other interest under the Plan shall be assignable or
subject to attachment, execution or levy of any kind.
9. Governing Law
-------------
The Plan and all actions taken hereunder shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE>
Exhibit 10(l)
TECHNICAL CORRECTION TO
OLIN SENIOR EXECUTIVE PENSION PLAN
----------------------------------
The fourth paragraph of paragraph 2 of the Plan is corrected to read in its
entirety as follows, effective September 27, 1984:
The terms "Average Compensation", "Years of Benefit Service", "Retirement
Allowance" and "Primary Social Security Benefit" are used as defined in the
Salaried Plan, except that deferred payments of regular salary and deferred
awards under Employing Company incentive compensation plans shall be
included in the computation of "Average Compensation."
<PAGE>
Exhibit 10(l)
RESOLVED that the Olin Senior Executive Pension Plan be, and it hereby is,
amended by adding thereto the following provisions:
"10. Lump Sum Payment. Notwithstanding any other provision of the Plan,
----------------
upon a Change in Control, each Participant covered by the Plan shall
automatically be paid a lump sum amount in cash by Olin equal to the
actuarial present value of the Participant's accrued benefits under the
Plan, calculated as if his employment had terminated on the date of the
Change in Control, discounted to present value at a discount rate of 120%
of the then applicable Federal Rate determined under Section 1274(d) of the
Internal Revenue Code, compounded semiannually, applied to each future
payment from the time it ordinarily would have become payable to the date
of the Change in Control. Such actuarial present value shall be determined
by the actuary then providing actuarial services to the Olin Salaried
Pension Plan. Such lump sum payment shall be made immediately upon a Change
in Control regardless of the age of the individual at the time and shall be
in lieu of any benefits under the Plan which might otherwise become due
thereafter. Such lump sum payment shall not in and of itself terminate the
Plan.
"A `Change in Control' for purposes of the Plan shall be deemed to have
occurred if (i) Olin shall cease to be a publicly owned corporation having
its outstanding Common Stock listed on a national securities exchange or
traded in the NASDAQ market system; (ii) a `person', or `group' (within the
meaning of the Securities Exchange Act of 1934, as amended), other than an
employee benefit plan of Olin, becomes the `beneficial owner' (as defined
by regulation under such Act) of more than 20% of the combined voting power
of the outstanding securities of Olin ordinarily entitled to vote in
elections of Directors; or (iii) during any period of two consecutive years
(not including any period prior to July 1, 1987), individuals who at the
beginning of such period constitute the Board of Directors of Olin
(together with any new Director whose election by the Board or whose
nomination for election by Olin's stockholders was approved by a vote of at
least two-thirds of the Directors of Olin then still in office who either
were Directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Directors then in office; provided that the
events referred to in clauses (i) and (ii) above shall not constitute a
`Change in Control' if they are arranged for, or consummated with, the
prior approval of the Board of Directors of Olin, and provided further that
the event referred to in clause (iii) shall not constitute a `Change in
Control' if it occurs after an event described in clause (i) or (ii) above
which has been authorized by, or consummated with, the prior approval of
the Board of Directors of Olin.
"11. Arbitration. Any dispute or controversy arising under or in
-------------
connection with the Plan subsequent to a Change in Control shall be settled
exclusively by arbitration in New York City, New York in accordance with
the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having jurisdiction.
<PAGE>
Exhibit 10(l)
RESOLVED that the Olin Senior Executive Pension Plan be, and it hereby is,
amended by adding the following at the end of paragraph 2 thereof:
" 'Spouse' means a Participant's spouse at the date of his or her death.
Notwithstanding this or any other provision of the Plan, if a husband or
wife of a Participant at the date of the Participants death was not such
husband or wife at the date the Participant was selected by the Committee
to participate in the Plan, no Spouse Retirement Allowance shall be payable
unless the Participant shall have notified Olin's Pension Department in
writing of his or her remarriage within 90 days thereof."
<PAGE>
Exhibit 10(l)
RESOLVED that the Olin Senior Executive Pension Plan ("Senior Plan") be, and it
hereby is, amended as follows:
(a) By changing the fourth paragraph of paragraph 2 of the Senior Plan to read
as follows:
The terms `Average Compensation', `Years of Benefit Service', `Retirement
Allowance' and `Primary Social Security Benefit' are used as defined in the
Salaried Plan, except that (a) deferred amounts of regular salary and
deferred awards otherwise due under Employing Company incentive
compensation plans shall be included in the computation of `Average
Compensation' and, in calculating `Average Compensation', an `Executive
Severance'. payment to a Participant under an employment agreement with
Olin shall be treated as if it was paid over the number of months of salary
used to calculated such Executive Severance, notwithstanding that it is
paid to the Participant in a lump sum, and (b) `Years of Benefit Service'
shall include the number of months of salary used to calculate an
`Executive Severance' payment to the Participant under an employment
agreement with Olin, notwithstanding that such Executive Severance payment
is made to the Participant in a lump sum."
(b) By adding to the third sentence of Paragraph 5 of the Senior Plan the
phrase "except under a so-called `Rabbi' or similar trust to be fully
funded, or by annuities to be purchased, in the event of a Change in
Control".
(c) By changing paragraph 10 of the Senior Plan to read as follows:
10. Change in Control. Notwithstanding any other provision of the Plan:
------------------
(a) upon a Change in Control, each Participant covered by the Plan shall
automatically be paid a lump sum amount in cash by Olin sufficient to
purchase an annuity which, together with the monthly payment, if any,
provided to the Participant under a `Rabbi' or other trust arrangement
established by Olin to make payments hereunder in the event of a Change in
Control and/or pursuant to any other annuity purchased by the Corporation
for the Participant to make payments hereunder, shall provide the
Participant with the same monthly after-tax benefit as he would have
received under the Plan based on benefits accrued to the Participant
hereunder to the date, of the Change in Control. Payment under this
paragraph shall not in and of itself terminate the Plan, but such payment
shall be taken into account in calculating benefits under the Plan which
may otherwise become due the Participant thereafter."
(b) removal for any reason of a Participant from the Plan after a Change in
Control shall not affect any Years of Benefit Service accrued prior to such
removal or the payment of benefits with respect thereto.
<PAGE>
Exhibit 10(l)
A Change in Control for purposes of the Plan shall mean that any of the
following events have occurred:
"(i) the Corporation ceases to be publicly owned with at least 1,000
stockholders; (ii) a person, partnership, joint venture, corporation or
other entity, or two or more of any of the foregoing acting as a group (or
a `person' within the meaning of Sections 13(d)(3) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the `Act')), other than the
Corporation, a majority-owned subsidiary of the Corporation or an employee
benefit plan of the Corporation or such subsidiary, become(s) the
`beneficial owner', (as defined in Rule 13d-3 under the Act) of 20% or more
of the then outstanding voting stock of the Corporation; (iii) during any
period of two consecutive years, individuals who at the beginning of such
period constitute the Corporation's Board of Directors (together with any
new Director whose election by the Corporation's Board of Directors or
whose nomination for election by the Corporation's stockholders, was
approved by a vote of at least two-thirds of the Directors then still in
office who either were Directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Directors then in office; or
(iv) the Corporation's Board of Directors determines that a tender offer
for the Corporation's shares indicates a serious intention by the offeror
to acquire control of the Corporation."
<PAGE>
Exhibit 10(l)
Amendment to Olin Senior Executive Pension Plan
RESOLVED that effective May, 1990 the definition of "Salaried Plan" in
the Senior Executive Pension Plan of the Corporation shall be amended
to refer to the "Non Bargaining Employees Pension Plan of Olin
Corporation (and any successor plan)."
<PAGE>
Exhibit 10(m)
OLIN SUPPLEMENTAL CONTRIBUTING EMPLOYEE OWNERSHIP PLAN
EFFECTIVE JANUARY 1, 1990
1. Establishment. Olin Corporation ("Olin") hereby establishes the Olin
-------------
Supplemental Contributing Ownership Plan (the "Plan" or "SCEOP Plan"), effective
January 1, 1990.
2. Purpose. The purpose of this Plan is to provide certain eligible
-------
employees who are limited under Sections 401(a)(17) and 415(c)(1) of the
Internal Revenue Code of 1986 and the regulations promulgated thereunder (the
"Code") in making contributions to the Olin Corporation Contributing Employee
Ownership Plan (as from time to time amended, the "CEO Plan") with certain
supplemental benefits to make up for such Code-imposed limitations.
3. Definitions. Except as otherwise provided herein, the terms defined in
-----------
the CEO Plan are used herein with the meanings ascribed to them in the CEO Plan.
In addition, when used herein, the following definitions shall apply:
"Dividend Equivalents" means with respect to a number of Phantom Shares,
the dollar amount of regular or special dividends
actually paid in cash from time to time on an equivalent number of shares of
Common Stock.
"CEOP Percentage" means with respect to a SCEOP Participant the annual
percentage by which such participant reduces his received Compensation on either
a before-tax or after-tax basis in calculating Contributions made to the CEO
Plan; provided, however if such percentage exceeds 6%, the SCEOP Participant may
elect for purposes of this Plan to reduce such percentage to 6% and if such
election is made, for purposes of this Plan the CEOP Percentage shall be 6%.
"Excess Company Matching Allocation" means with respect to a SCEOP
Participant the percentage used in calculating the Company Matching Allocation
(in excess of $25 per month) (as of the date hereof, 50%), as such percentage
changes from time to time, multiplied by the annual Supplemental Plan
Contribution for that participant; provided that if the participant's CEOP
Percentage exceeds 6%, the Supplemental Plan Contribution will be calculated
using 6% for the CEOP Percentage when calculating the Excess Company Matching
Contribution.
"Excess Performance Allocation" means with respect to a SCEOP Participant
for a calendar year the percentage used in calculating the Performance Matching
Allocation, if any, for such year multiplied by the Supplemental Plan
Contribution of that participant for such year; provided that if such
participant's CEOP Percentage exceeds 6%, the Supplemental Plan Contribution
will be calculated using 6% for the CEOP Percentage when calculating the Excess
Performance Allocation.
<PAGE>
"Maximum Eligible Compensation" means the maximum amount of Compensation
under Section 401(a)(17) of the Code from which a Participant is permitted to
make Contributions to the CEO Plan, as such maximum amount is adjusted from time
to time under the Code.
"Phantom Shares" means phantom shares of the Common Stock.
"SCEOP Participant" with respect to a month in a Plan Year shall mean a
Participant who has his or her contributions to the CEO Plan reduced as a result
of the limitations set forth in the Sections 401(a)(17) or 415(c)(1) of the Code
and who has filed an election to participate in the SCEOP with the Committee.
"Special Deferral Account" for a SCEOP Participant shall mean the account
established under the SCEOP for such participant.
"Supplemental Plan Contribution" with respect to a SCEOP Participant
shall mean the annual amount by which the SCEOP Participant has elected to
reduce his base salary under this Plan, such amount being equal to the CEOP
Percentage multiplied by the difference between (i) the Maximum Eligible
Compensation and (ii) such participant's annual base salary.
4. Deferrals and Accounts. Each SCEOP Participant who so elects for a
----------------------
calendar year shall defer, and his or her Compensation shall be appropriately
reduced on a pre-tax basis, the Supplemental Plan Contribution. An election to
defer shall be made by December 1 prior to the calendar year for which
Compensation would otherwise be earned. For each SCEOP Participant, a Special
Deferral Account will be established. The account will contain sub-accounts for
each type of contribution credited to the Special Deferral Account. For each
Plan Year during which a person is a SCEOP Participant and making deferrals, the
Participating Employer will credit to the Special Deferral Account of each SCEOP
Participant the number of Phantom Shares equal to the sum of (1) the
Supplemental Plan Contribution plus (2) the Excess Company Matching Allocation.
The Company shall credit such amounts monthly on a prorata basis unless it
elects otherwise for all SCEOP Participants. In addition, each year beginning
with the 1990 calendar year, the Company will credit in the following calendar
year to the Special Deferral Account in the form of Phantom Shares the Excess
Performance Allocation, if any; such crediting shall occur at the time the
Performance Matching Allocation is made. The Special Deferral Account will also
be credited in the form of additional Phantom Shares with Dividend Equivalents
from time to time when dividends are paid on the Common Stock.
For purposes of calculating the number of Phantom Shares to be credited
to the Special Deferral Account, the SCEOP shall use the Current Market Value
for Common Stock as calculated under the CEO Plan. Phantom Shares will be
credited in fractional amounts up to three decimal places.
-2-
<PAGE>
An election to defer Compensation under this Plan must be made by the
December 1 prior to the calendar year for which such Compensation would
otherwise be earned.
5. Distribution. Distributions to SCEOP Participants of the Special
------------
Deferral Accounts shall be made only in the form of cash. The value of the
amount of any distribution shall be based on the Current Market Value as of the
Common Stock as calculated in accordance with the CEO Plan for distributions
thereunder. Notwithstanding the foregoing, such value shall be determined at the
close of business on the day for which the distribution is effective.
6. Plan Provisions. Except as otherwise expressly provided herein, all of
---------------
the provisions of the CEO Plan contained in Articles VII, X, XII and Sections
15.04, 15.05, 15.07, 15.08, 15.10 and 15.11 shall apply to the SCEOP; provided
any SCEOP Participant who is vested or becomes vested in the CEO Plan shall
automatically be vested in the Special Deferred Account.
7. Benefits. Upon becoming a SCEOP Participant, such SCEOP Participant shall
--------
elect to receive the value of his Special Deferred Account in the manner
provided in Article X of the CEO Plan and shall elect a payment option described
in Article X of the CEO Plan with respect to the payment of benefits payable
under this SCEOP, except all payments made from the SCEOP shall be made in cash
and only (1) upon a fixed date or dates at least six months after an election
for payment is made or (2) incident to death, retirement, disability or
termination of employment. A SCEOP Participant may change such election upon
notice to the Company provided no such change shall be effective if the SCEOP
Participant becomes eligible for a distribution from this Plan within six months
of such change.
8. Liability for Payment. Each Participating Employer shall pay the
---------------------
benefits provided hereunder with respect to SCEOP Participants who are employed
or were formerly employed by it during their participation in the Plan. In the
case of a SCEOP Participant who was employed by more than one Participating
Employers, the Committee shall allocate the cost of such benefits among such
Participating Employers in such manner as it deems equitable. The obligations
of the Participating Employer hereunder shall not be funded in any manner. The
rights of any person to receive benefits under this Plan are limited to those of
a general creditor of the Participating Employer liable for such benefits
hereunder.
9. Employment Rights. Nothing in the SCEOP shall be construed as giving any
-----------------
employee the right to be retained in the employ of any Participating Employer.
Each Participating Employer expressly reserves the right to dismiss any employee
at any time without liability for the effect which such dismissal might have
upon him or her hereunder.
10. Administration. The SCEOP shall be administered by the Committee in the
--------------
same manner and with the same effect as the CEO Plan to the extent not
inconsistent with the provisions hereof.
-3-
<PAGE>
11. Amendment and Termination. The SCEOP may be amended, or may be
-------------------------
terminated, in whole or in part at any time and from time to time by the Board
of Directors (or any committee authorized by such Board). Any Participating
Employer may withdraw from participation in the SCEOP at any time. The
foregoing provisions of this section notwithstanding, no amendment or
termination of the CEO Plan or the SCEOP or withdrawal therefrom by a
Participating Employer shall adversely affect the vested benefits payable
hereunder on account of any person in respect of service rendered prior to the
effective date of such amendment, termination or withdrawal.
12. Spendthrift. No SCEOP Participant or beneficiary thereof shall have the
-----------
right to assign, transfer, encumber or otherwise subject to any lien any payment
or any other interest under the SCEOP nor shall such payment or interest be
subject to attachment, execution or levy of any kind.
13. Section 16. This Plan is not intended to give rise to any equity or
----------
derivative security under Section 16 of the Securities Exchange Act of 1934 and
the regulations promulgated thereunder. This Plan shall be construed,
interpreted and operated at all times in a manner as to exempt it from the
application of such Section 16 notwithstanding any provision of this Plan.
14. Unfunded Plan. The Plan shall be unfunded. All payments to a SCEOP
-------------
Participant under the Plan shall be made from the general assets of the
Participating Employer of such participant. The rights of any SCEOP Participant
to payment shall be those of any unsecured general creditor of such
Participating Employer.
15. Service of Process and Plan Administrator. The Secretary of Olin shall
-----------------------------------------
be the agent for service of legal process. Olin shall constitute the Plan
Administrator.
16. Governing Law. The SCEOP and all actions taken hereunder shall be
-------------
governed by and construed in accordance with the laws of
the State of Connecticut.
IN WITNESS WHEREOF, Olin Corporation has caused this Plan to be executed
by its duly authorized officer as of January 1, 1990.
OLIN CORPORATION
By: /s/Michael E. Campbell
-----------------------------
Vice President-Human Resources
-4-
<PAGE>
Exhibit 10(m)
FIRST AMENDMENT TO OLIN SUPPLEMENTAL
CONTRIBUTING EMPLOYEE OWNERSHIP PLAN
This First Amendment is made as of this 6th day of May 1994, by Colin
Corporation ("Olin").
WITNESSETH
WHEREAS, Olin has established the Olin Supplemental Contributing
Ownership Plan (the "Plan"), effective January 1, 1990, providing certain
eligible employees who are limited under certain sections of the Internal
Revenue Code with certain supplemental benefits;
WHEREAS, Olin intends to amend Section 7, entitled, "Benefits" of the
Plan;
NOW, THEREFORE, IT IS AGREED as follows:
1. Incorporation of Definitions Used in the Plan
---------------------------------------------
Capitalized terms utilized in the Plan that are not defined in this
Amendment are hereby incorporated by reference into this Amendment.
2. Amendment
---------
The first sentence of Section 7 of the Plan is hereby amended to read in
its entirety as follows:
"Upon becoming a SCEOP Participant, such SCEOP Participant shall
elect to receive the value of his Special Deferred Account from
among the payment options described in Article X of the CEO Plan
with respect to the payment of benefits payable under this SCEOP,
except all payments made from the SCEOP shall be made in cash and
only incident to death, retirement, disability or termination of
employment."
3. Miscellaneous
-------------
This amendment shall be effective as of the day written above. Except as
amended by Section 2 above, the Plan remains in full force and effect.
IN WITNESS WHEREOF, OLIN CORPORATION has caused this Amendment to be
executed as of the date first above written.
OLIN CORPORATION
By: /s/ Peter C. Kosche
---------------------
Vice President - Human Resources
<PAGE>
Exhibit 10(n)
ARRANGEMENT CREDITING
100 SHARES OF OLIN COMMON STOCK
TO CERTAIN DIRECTORS
--------------------
Effective January 1, 1985, each Olin Director entitled to fees for service
as a Director was credited with 100 shares of Olin Common Stock, payment of
which was deferred until after the Director retires from the Board. Such
deferred shares will be credited with dividend equivalents, payment of which may
also be deferred in the form of Common Stock if elected by the Director.
<PAGE>
Exhibit 10(q)
EXECUTIVE AGREEMENT
-------------------
Agreement between Olin Corporation, a Virginia corporation ("Olin"), and
__________ (the "Executive"), dated as of July 1, 1994.
Olin and the Executive agree as follows:
1. Definitions
As used in this Agreement:
(a) "Cause" means the willful and continued failure of the
Executive to substantially perform his duties; the willful engaging by the
Executive in gross misconduct significantly and demonstrably injurious to Olin;
or conduct by the Executive in the course of his employment which is a felony or
fraud. No act or failure to act on the part of the Executive will be considered
"willful" unless done or omitted not in good faith and without reasonable belief
that the action or omission was in the interests of Olin or not opposed to the
interests of Olin.
(b) "Change in Control" means:
(i) Olin ceases to be, directly or indirectly, owned
by at least 1,000 stockholders ;
(ii) A person, partnership, joint venture,
corporation or other entity, or two or more of any of the foregoing acting as a
"person" within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Act"), other than Olin, a majority-owned subsidiary of
Olin or an employee benefit plan of Olin or such subsidiary, become(s) the
"beneficial owner" (as defined in Rule 13d-3 under such Act) of 20% or more of
the then outstanding voting stock of Olin ;
(iii) During any period of two consecutive years,
individuals who at the beginning of such period constitute Olin's Board of
Directors (together with any new Director whose election by Olin's Board of
Directors or whose nomination for election by Olin's stockholders was approved
by a vote of at least two-thirds of the Directors then still in office who
either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the directors then in office; or
(iv) All or substantially all of the business of Olin
is disposed of pursuant to a merger, consolidation or other transaction in which
the Company is not the surviving corporation or Olin combines with another
company and is the surviving corporation (unless the shareholders of Olin
immediately following such merger, consolidation, combination, or other
transaction beneficially own, directly or indirectly, more than 50% of the
voting stock or other ownership interests of (x) the entity or entities, if any,
that succeed to the business of the Company or (y) the combined company).
(c) "Disability" means that the Executive has suffered an
incapacity due to physical or mental illness which meets the criteria for
disability established at the time under Olin's short-term disability plan.
<PAGE>
2
(d) "Executive Severance" means:
(i) twelve months of the Executive's then current
monthly salary (without taking into account any reductions which may have
occurred at or after the date of a Change in Control); plus
(ii) an amount equal to the greater of the
Executive's average annual award under Olin's management incentive compensation
plan ("MICP") for the three years immediately preceding the date of Termination
or the Executive's then current MICP standard annual award.
(iii) The Executive will not be entitled to receive any
other severance otherwise payable to the Executive under any other severance
plan of Olin.
(iv) If on the Termination date the Executive is
eligible and is receiving payments under any then existing Olin disability plan,
then the Executive agrees that all such payments may, and will be, suspended and
offset for 12 months following the Termination date. If after such period the
Executive remains eligible to receive disability payments, then such payments
shall resume in the amounts and in accordance with the provisions of the
applicable Olin disability plan.
(e) "Potential Change in Control" means:
(i) Olin has entered into an agreement the
consummation of which would result in a Change in Control;
(ii) any person (including Olin) publicly announces
an intention to take or to consider taking actions which if consummated would
constitute a Change in Control;
(iii) Olin learns that any person (other than an
employee benefit plan of Olin or a subsidiary of Olin) has become the beneficial
owner directly or indirectly of securities of Olin representing 9.5% or more of
the combined voting power of Olin's then outstanding securities ordinarily
entitled to vote in elections of directors; or
(iv) the Board of Directors of Olin adopts a
resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control of Olin has occurred.
(f) "Termination" means:
(i) The Executive is discharged by Olin other than
for Cause;
(ii) The Executive terminates his or her employment
in the event that:
(1) Olin requires the Executive to relocate
the Executive's then office to an area which is not within reasonable commuting
distance, on a daily basis, from the Executive's then residence, except that a
requirement to relocate the Executive's office to Olin's corporate headquarters
is not a basis for Termination;
(2) Olin reduces the Executive's base salary or
fails to increase the Executive's base salary on a basis consistent (as to
frequency and amount) with Olin's exempt salary system as then in effect or, in
the event of a Change in Control, as in effect immediately prior to the Change
in Control;
(3) Olin fails to continue the Executive's
participation in its benefit plans (including incentive compensation and stock
options) on substantially the same basis, both in terms of the amount of the
benefits provided (other than due to Olin's or a relevant operation's earnings
performance) and the level of the Executive's participation relative to other
participants as exists on the date hereof; provided that, with respect to annual
<PAGE>
3
and long term incentive compensation plans, the basis with which the amount of
benefits and level of participation of the Executive shall be compared shall be
the average benefit awarded to the Executive under the relevant plan during the
three years immediately preceding the date of Termination;
(4) The Executive suffers a Disability which
prevents the Executive from performing the Executive's duties with Olin for a
period of at least 180 consecutive days;
(5) Following a Change in Control, Olin fails to
substantially maintain its benefit plans as in effect at the time of the Change
in Control, unless reasonably equivalent arrangements (embodied in an on-going
substitute or alternative plan) have been made with respect to such plans; or
(6) The Executive's duties, position or
reporting responsibilities are diminished.
2. Previous Executive Agreement. This Agreement supersedes and
replaces the Executive Agreement dated as of between Olin and the Executive,
upon the expiration of such agreement on July 1, 1994.
3. Term/Executive's Duties.
(a) This Agreement expires at the close of business on September
30, 1999, unless prior to that date there is a Change in Control, in which case
this Agreement will expire on the later of the close of business on September
30, 1999 or three years following the date of the Change in Control. In the
event of the Executive's death while employed by Olin, this Agreement shall
terminate and be of no further force or effect on the date of his or her death.
(b) During the period of the Executive's employment by Olin,
the Executive shall devote his or her full time efforts during normal business
hours to Olin's business and affairs, except during reasonable vacation periods
and periods of illness or incapacity. Nothing in this Agreement will preclude
the Executive from devoting reasonable periods required for service as a
director or a member of any organization involving no conflict of interest with
Olin's interest, provided that no additional position as director or member
shall be accepted by the Executive during the period of his employment with Olin
without its prior consent.
(c) The Executive agrees that in the event of a Potential
Change in Control of Olin occurring after the date hereof, the Executive will
remain in the employ of Olin for a period of six months from the occurrence of
such Potential Change in Control, during which period the Executive will have an
office, title, duties an d responsibilities substantially consistent with those
applicable immediately prior to the Potential Change in Control.
4. Executive Severance Payment
(a) In the event of a Termination occurring before the
expiration of this Agreement, Olin will pay the Executive a lump sum in an
amount equal to the Executive Severance. The payment will be made within 30 days
of the Termination.
(b) In the event of a Termination after a Change in Control has
occurred, in addition to the Executive Severance paid under Paragraph 4(a)
above, Olin will pay a Change
<PAGE>
4
in Control severance premium to the Executive in an amount equal to one* times
the Executive Severance. The Change in Control severance premium, if it becomes
due, will be made within 30 days of the Termination.
(c) The amount due under paragraph 4(a) or 4(b) will be
reduced to the extent that, if the amounts were paid in monthly installments, no
installment would be paid after the Executive's sixty-fifth birthday.
(d) The Executive will not be required to mitigate the amount of
any payment provided for in paragraph 4(a) or 4(b) by seeking other employment
or otherwise, nor shall any compensation received by the Executive from a third
party reduce such payment. Except as may otherwise be expressly provided herein,
nothing in this Agreement will be deemed to reduce or limit the rights which the
Executive may have under any employee benefit plan, policy or arrangement of
Olin.
5. Other Benefits
(a) If the Executive becomes entitled to payment under paragraph
4(a), the Executive will receive 12 months service credit under all Olin pension
plans for which the Executive was eligible at the time of the Termination (i.e.,
under Olin's qualified pension plans to the extent permitted under then
applicable law, otherwise such credit will be reflected in a supplementary
pension payment from Olin to be due at the times and in the manner payments are
due the Executive under such qualified pension plans), and for 12 months from
the date of the Termination the Executive will continue to enjoy coverage under
all Olin medical, dental, and life insurance plans to the extent the Executive
was enjoying such coverage immediately prior to the Termination. The Executive
shall accrue no vacation during the 12 months following the date of Termination
but shall be entitled to payment for accrued and unused vacation for the then
current year. The Executive shall not be entitled to an MICP award for the
calendar year of Termination if Termination occurs during the first calendar
quarter. If Termination occurs during or after the second calendar quarter, the
Executive shall be entitled to a prorated MICP award for the calendar year of
Termination which shall be determined by multiplying his or her then current
MICP standard by a fraction the numerator of which is the number of weeks in the
calendar year prior to the Termination and the denominator of which is 52. The
Executive shall accrue no MICP award during the 12 months following the date of
Termination .
(b) If the Executive receives payment under paragraph 4(b),
the pension credit and insurance coverage provided for in paragraph 5(a) will be
for an additional 12-month** period.
(c) Notwithstanding the foregoing paragraphs (a) and (b), no
such service credit or insurance coverage will be afforded by this Agreement
with respect to any period after the Executive's sixty-fifth birthday.
(d) In the event of a Termination, the Executive will be
entitled at Olin's expense to outplacement counseling and associated services in
accordance with Olin's customary practice at the time (or, if a Change in
Control shall have occurred, in accordance
*In the case of Chief Executive Officer and the President, "two".
**In the case of the Chief Executive Officer and the President, "24-month".
<PAGE>
5
with such practice immediately prior thereto) with respect to its senior
executives who have been terminated other than for cause. It is understood that
the counseling and services contemplated by this paragraph 5(d) are intended to
facilitate the obtaining by the Executive of other employment following a
Termination, and payments or benefits by Olin in lieu thereof will not be
available to the Executive.
(e) Notwithstanding the provisions of Section 10 of the Olin
Senior Executive Pension Plan (the "Senior Plan"), if the Executive is in active
employment with Olin at the date of a Change in Control but has not attained age
55 at such date, the Executive shall (if then a Participant in the Senior Plan)
nevertheless automatically be paid the lump sum amount called for by such
Section 10, except that such lump sum amount will be calculated first, by
calculating the sum equal to the annual benefit which would otherwise be payable
to the Executive at age 65 under all Olin pension plans assuming the Executive
had terminated his or her employment with Olin on the date of the Change in
Control, second, by multiplying such sum by the percentage then applicable in
the calculation of benefits paid to employees retiring from active service with
Olin at age 55 under the early retirement provisions of the Olin Salaried
Pension Plan (72% as at July, 1994), third, by determining the then lump sum
actuarial value of the product resulting from the second step, and fourth, by
deducting from such lump sum actuarial value the then lump sum actuarial value
of the Executive's accrued annual benefits under all other Olin pension plans. A
lump sum payment under this paragraph (e) will be used to reduce any payments
under the Senior Plan which may become due to the Executive thereafter.
6. Participation in Change in Control/Section 4999 of Internal
Revenue Code
(a) In the event that the Executive participates or agrees to
participate by loan or equity investment (other than through ownership of less
than 1% of publicly traded securities of another company) in a transaction
("acquisition") which would result in an event described in paragraph 1(b)(i) or
(ii), the Executive must promptly disclose such participation or agreement to
Olin. If the Executive so participates or agrees to participate, no payments due
under this Agreement or by virtue of any Change in Control provisions contained
in any compensation or benefit plan of Olin will be paid to the Executive until
the acquiring group in which the Executive participates or agrees to participate
has completed the acquisition. In the event the Executive so participates or
agrees to participate and fails to disclose his participation or agreement, the
Executive will not be entitled to any payments under this Agreement or by virtue
of Change in Control provisions in any Olin compensation or benefit plan,
notwithstanding any of the terms hereof or thereof.
(b) Any payments made pursuant to this Agreement or by virtue of
Change in Control provisions in any Olin compensation or benefit plan which are
subject to tax under Section 4999 of the Internal Revenue Code or a successor
provision ("4999") will be increased so that after paying the tax imposed by
4999 and the income tax on the amount of the increase provided by this paragraph
(b), the Executive will have received a net payment equal to that which he would
have received if 4999 did not apply.
7. Successors; Binding Agreement
(a) Olin will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of Olin, by agreement, in form and substance satisfactory
to the Executive, expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that Olin would
<PAGE>
6
be required to perform if no such succession had taken place. Failure of Olin to
obtain such assumption and agreement prior to the effectiveness of any such
succession will be a breach of this Agreement and entitle the Executive to
compensation from Olin in the same amount and on the same terms as the Executive
would be entitled to hereunder had a Termination occurred on the succession
date. As used in this Agreement, "Olin" means Olin as defined in the preamble to
this Agreement and any successor to its business or assets which executes and
delivers the agreement provided for in this paragraph 7 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law or otherwise.
(b) This Agreement shall be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
8. Notices. For the purpose of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
If to the Company: Olin Corporation
120 Long Ridge Road
Stamford, CT 06904
Attention: Corporate Secretary
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
9. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Connecticut.
10. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in writing signed by the Executive and Olin. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same Agreement.
12. Withholding of Taxes. Olin may withhold from any benefits payable
under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
<PAGE>
7
13. Non-assignability. This Agreement is personal in nature and
neither of the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder, except as
provided in paragraph 7 above. Without limiting the foregoing, the Executive's
right to receive payments hereunder shall not be assignable or transferable,
whether by pledge, creation of a security interest or otherwise, other than a
transfer by his will or by the laws of descent or distribution, and, in the
event of any attempted assignment or transfer by the Executive contrary to this
Section, Olin shall have no liability to pay any amount so attempted to be
assigned or transferred.
14. No Employment Right. This Agreement shall not be deemed to confer
on the Executive a right to continued employment with Olin.
15. Disputes/Arbitration.
(a) Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration at Olin's
corporate headquarters in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction; provided, however, that the Executive shall be
entitled to seek specific performance of the Executive's right to be paid during
the pendency of any dispute or controversy arising under or in connection with
this Agreement.
(b) Olin shall pay all reasonable legal fees and expenses which
the Executive may incur to enforce this Agreement unless the Executive had no
reasonable basis for his claim. Should Olin dispute the entitlement of the
Executive to such fees and expenses, the burden of proof shall be on Olin to
establish that the Executive had no reasonable basis for his claim.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year first above set forth.
OLIN CORPORATION
By: ______________________
John W. Johnstone, Jr.
Chairman of the Board and
Chief Executive Officer
_________________________
(Name of Executive)
<PAGE>
Exhibit 10(r)
(Date)
(Name & Address)
Dear ___________:
The following supersedes and replaces in its entirety our letter agreement
of ____________ with you relating to severance in the event of a Change in
Control of Olin Corporation ("Olin").
1. This agreement shall be binding immediately upon its execution and
delivery, but it shall not be operative unless and until there has been a Change
in Control of Olin, as defined below. In the event that this agreement shall not
have become operative by September 30, 1999, it shall not thereafter become
operative or be of any force or effect, notwithstanding the occurrence of a
Change in Control, unless the Board of Directors of Olin shall have taken action
expressly to reapprove this agreement.
2. For purposes of this agreement, the following definitions apply:
(a) "Change in Control" means:
(i) Olin ceases to be, directly or indirectly, owned by at
least 1,000 stockholders;
(ii) a person, partnership, joint venture, corporation or
other entity, or two or more of any of the foregoing
acting as a "person" within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Act"), other than Olin, a majority-owned
subsidiary of Olin or an employee benefit plan of Olin or
such subsidiary, become(s) the "beneficial owner" (as
defined in Rule 13d-3 under the Act) of 20% or more of
the outstanding voting stock of Olin;
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constitute Olin's
Board of Directors (together with any new Director whose
election by Olin's Board of Directors or whose nomination
for election by Olin's stockholders, was approved by a
vote of at least two-thirds of the Directors then still
in office who either were Directors at the beginning of
such period or whose election or nomination for election
was previously so approved, cease for
<PAGE>
2
any reason to constitute a majority of the
Directors then in office; or
(iv) all or substantially all of the business of Olin
is disposed of pursuant to a merger, consolidation
or other transaction in which the Company is not
the surviving corporation or Olin combines with
another company and is the surviving corporation
(unless the shareholders of Olin immediately
following such merger, consolidation, combination,
or other transaction beneficially own, directly or
indirectly, more than 50% of the voting stock or
other ownership interests of (x) the entity or
entities, if any, that succeed to the business of
the Company or (y) the combined company).
(b) "Cause includes dishonesty, misconduct, insubordination
or violation of, or extended deviation from, any
reasonable Olin rule or policy.
(c) "Olin" includes a successor of Olin Corporation (whether
direct or indirect) by purchase, merger, consolidation or
otherwise.
(d) "Termination" means termination by Olin of your
employment within 18 months following a Change in Control
other than for Cause. Anything herein to the contrary
notwithstanding, the following shall also be deemed a
"Termination" for purposes of this agreement:
(i) termination of your employment with Olin at your
election within 24 months following a Change in
Control, because Olin shall have changed your
position within Olin to a position involving a
diminution in your status, level of reporting, or
compensation as in effect immediately prior to the
Change in Control, or to a position which requires
a relocation on your part and Olin shall not have
offered to reimburse you fully for all of your
relocation costs;
(ii) termination of your employment with Olin at your
election within 24 months following a Change in
Control, if at the time you are at least 55 and
have at least 10 years of creditable service under
an Olin retirement plan and Olin shall have
required you to relocate your principal office to
a location outside of the general area in which it
was located immediately prior to the Change in
Control.
3. (a) In the event of your Termination, Olin will pay you an
amount ("Special Severance") equal to the sum of:
<PAGE>
3
(i) 12 months salary at the higher of your base rate
of salary in effect at Olin immediately prior to
the Change in Control or on the date of
Termination; plus
(ii) an amount equal to the greater of (a) the average
of your bonus awards under Olin's incentive
compensation plan for the three calendar years
immediately preceding the year in which
Termination occurs or (b) your standard award for
the year in which Termination occurs.
(b) During the 12-month period following your Termination,
you and your dependents shall continue to be entitled to
coverage under the medical and dental insurance plans of
Olin, and you shall continue to be entitled to coverage
under the life insurance plans (other than
travel/accident) of Olin, in which you participated prior
to Termination.
(c) Payment of Special Severance will be made to you (i) over
a twelve month period in equal monthly installments
commencing with the month following the month in which
your Termination occurs or (ii) at your election, within
30 days of the date of your Termination in a lump sum
discounted to present value at a discount rate of 7-1/2%
per annum applied to each future payment from the time it
would have ordinarily become payable pursuant to clause
(i) to the date of your Termination; provided, however,
there shall be deducted from amounts payable to you under
paragraph (a) all amounts in the nature of severance paid
to you under the applicable severance policy of Olin or
under any special arrangements which may have been
entered into by you with Olin with respect to termination
of your Olin employment.
(d) Nothing in this Agreement shall be deemed to limit any
provision of the Performance Unit Plan, a stock option
plan or other employee benefit plan of Olin which may
apply in the event of a Change in Control.
(e) You shall accrue no vacation during the 12 months
following the date of Termination but shall be entitled
to payment for accrued and unused vacation for the then
current year.
(f) You shall not be entitled to an MICP award for the
calendar year of Termination if Termination occurs during
the first calendar quarter. If Termination occurs during
or after the second calendar quarter, you shall be
entitled to prorated MICP award for the calendar year of
Termination which shall be determined by multiplying your
then current MICP standard by a fraction the numerator of
which is the
<PAGE>
4
number of weeks in the calendar year prior to the
Termination and the denominator of which is 52. You shall
accrue no MICP award during the 12 months following the
date of Termination.
4. The amount of payments provided for in this agreement shall not be
reduced by the amount of compensation, if any, which you may receive from other
employers following your Termination.
5. In the event that after a Change in Control your operating unit is to
be sold and you are to be transferred to the purchaser of such operating unit,
and your prospective new employer will not agree to assume this agreement in its
entirety, then you shall be entitled to terminate your employment with Olin
prior to the sale and receive from Olin the payments contemplated by paragraph 3
above, unless Olin shall have agreed to pay you the difference between the
amount of such payments your prospective new employer is prepared to assume and
the amount payable hereunder.
6. Anything in this agreement to the contrary notwithstanding:
(a) In the event that you cease to be employed by Olin for any
reason, whether at your election or that of Olin, prior to a Change in Control,
this agreement shall not thereafter become operative or be of any force or
effect notwithstanding the occurrence of a Change in Control.
7. No Employment Rights. This Agreement shall not be deemed to confer
---------------------
upon you a right to continued employment with Olin.
8. Disputes/Arbitration.
--------------------
(a) Any dispute or controversy arising under or in connection with
this agreement shall be settled exclusively by arbitration at Olin's corporate
headquarters in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction; provided, however, that you shall be entitled to
seek specific performance of your right to be paid during the pendency of any
dispute or controversy arising under or in connection with this agreement.
<PAGE>
5
(b) Olin shall pay all reasonable legal fees and expenses which you
may incur to enforce this agreement unless you had no reasonable basis for the
claim. Should Olin dispute your entitlement to such fees and expenses, the
burden of proof shall be on Olin to establish that you had no reasonable basis
for the claim.
Very truly yours,
OLIN CORPORATION
Donald W. Griffin
President and Chief Operating Officer
Agreed:
_____________________
Signature
_____________________
Please Print Name
<PAGE>
EXHIBIT 10(U)
OLIN 1991 LONG TERM INCENTIVE PLAN
(As Amended through February 23, 1995)
Section 1. Purpose
-------
The purposes of the Olin 1991 Long Term Incentive Plan (the "Plan") are to
encourage selected salaried employees of Olin Corporation (together with any
successor thereto, "Olin") and its Affiliates (as defined below) to acquire a
proprietary interest in Olin's growth and performance, to generate an increased
incentive to contribute to Olin's future success and to enhance the ability of
Olin and its Affiliates to attract and retain qualified individuals.
Section 2. Definitions
-----------
As used in the Plan:
(a) "Affiliate" means (i) any entity that, directly or through one or more
intermediaries, is controlled by Olin and (ii) any entity in which Olin
has a significant equity interest as determined by the Committee.
(b) "Award" means any Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, Performance Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.
(c) "Award Agreement" means any written agreement or other instrument or
document evidencing an Award granted under the Plan. The terms of any
plan or guideline adopted by the Board or the Committee and applicable to
an Award shall be deemed incorporated in and a part of the related Award
Agreement.
(d) "Board" means the Board of Directors of Olin.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(f) "Committee" means a committee of the Board designated by the Board to
administer the Plan and composed of not less than three directors, each
of whom is qualified to administer the Plan as contemplated by Rule 16b-
3.
(g) "Dividend Equivalent" means any right granted under Section 6(f)(iv) of
the Plan.
(h) "Fair Market Value" means, with respect to any property (including,
without limitation, Shares or other securities), the fair market value
of such property determined by such methods or procedures as shall be
established from time to time by the Committee.
(i) "Incentive Stock Option" means an option to purchase Shares granted
under Section 6(a) of the Plan that is intended to meet the
<PAGE>
-2-
requirements of Section 422 of the Code or a successor provision
thereto.
(j) "Non-Qualified Stock Option" means an option to purchase Shares granted
under Section 6(a) of the Plan that is not intended to be an Incentive
Stock Option.
(k) "Option" means an Incentive Stock Option or a Non-Qualified Stock
Option.
(l) "Other Stock-Based Award" means any right granted under Section 6(e) of
the Plan.
(m) "Participant" means a Salaried Employee granted an Award under the Plan.
(n) "Performance Award" means any right granted under Section 6(d) of the
Plan.
(o) "Person" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, or government
or political subdivision thereof.
(p) The "1988 Plan" means the 1988 Stock Option Plan for Key Employees of
Olin Corporation and Subsidiaries.
(q) "Released Securities" means securities that were Restricted Securities
with respect to which all applicable restrictions imposed under the
terms of the relevant Award have expired, lapsed or been waived or
satisfied.
(r) "Restricted Securities" means Awards of Restricted Stock or other Awards
under which outstanding Shares are held subject to certain restrictions.
(s) "Restricted Stock" means any Share granted under Section 6(c) of the
Plan.
(t) "Restricted Stock Unit" means any right granted under Section 6(c) of
the Plan that is denominated in Shares.
(u) "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, or any
successor rule.
(v) "Salaried Employee" means any salaried employee of Olin or of an
Affiliate.
(w) "Shares" means the Common Stock of Olin and such other securities or
property as may become the subject of Awards pursuant to an adjustment
made under Section 4(b) of the Plan.
(x) "Stock Appreciation Right" means any right granted under Section 6(b) of
the Plan.
<PAGE>
-3-
Section 3. Administration
--------------
The Plan shall be administered by the Committee which shall have full power and
authority to: (i) designate Participants; (ii) determine the Awards to be
granted to Participants; (iii) determine the number of Shares (or securities
convertible into Shares) to be covered by Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards, or other property, or canceled, substituted, forfeited
or suspended, and the method or methods by which Awards may be settled,
exercised, canceled, substituted, forfeited or suspended; (vi) determine
whether, to what extent, and under what circumstances cash, Shares, other
securities, other Awards, other property and other amounts payable with respect
to an Award under the Plan shall be deferred either automatically or at the
election of the Participant or of the Committee; (vii) interpret and administer
the Plan and any instrument or agreement relating to, or Award made under, the
Plan; (viii) establish, amend, suspend or waive such rules and guidelines and
appoint such agents as it shall deem appropriate for the administration of the
Plan; and (ix) make any other determination and take any other action that it
deems necessary or desirable for such administration. All designations,
determinations, interpretations and other decisions with respect to the Plan or
any Award shall be within the sole discretion of the Committee and shall be
final, conclusive and binding upon all Persons, including Olin, any Affiliate,
any Participants, any holder or beneficiary of any Award, any shareholder and
any employee of Olin or of any Affiliate. The Committee's powers include the
adoption of modifications, amendments, procedures, subplans and the like as are
necessary to comply with provisions of the laws of other countries in which Olin
or an Affiliate may operate in order to assure the viability of Awards granted
under the Plan and to enable Participants employed in such other countries to
receive benefits under the Plan and such laws.
Section 4. Shares Available for Awards
---------------------------
(a) Shares Available. Subject to adjustment as provided in Section 4(b) of the
----------------
Plan:
(i) The aggregate number of Shares available for granting Awards under
the Plan shall be 500,000, provided that in the event the 1988 Plan
shall terminate or be cancelled prior to April 30, 1998 (its stated
expiration date), the number of Shares available for the grant of
Awards under the Plan shall be increased by the sum (not to exceed
800,000) of (a) the number of shares which were available for the
grant of options under the 1988 Plan immediately prior to the date
of such termination or cancellation and (b) the aggregate number of
shares which were subject to options under the 1988 Plan on such
date and were not subsequently issued because such options
terminated, expired or were forfeited without the delivery to
optionees of Shares or other consideration. If an Award is
denominated in or relates to a security of Olin convertible into its
Common Stock, the number of shares of
<PAGE>
-4-
Common Stock into which such security shall be convertible
(calculated as of the date of grant of the Award, subject to
adjustment as provided in Section 4(b) hereof or under the terms of
such security) shall be deemed denominated in Shares and counted
against the aggregate number of Shares available for the granting of
Awards under the Plan. If, after the effective date of the Plan,
Shares subject to an Award granted under the Plan (other than
Restricted Securities) are forfeited, or the Award otherwise
terminates without the delivery of Shares or of other consideration,
then the Shares subject to such Award or the number of Shares
otherwise counted against the aggregate number of Shares available
under the Plan with respect to such Award, to the extent of such
forfeiture or termination, shall again be available for granting
Awards under the Plan." Any Award (other than a Dividend Equivalent)
denominated in Shares shall be counted against the aggregate number
of Shares available for granting Awards under the Plan even though
the Award is ultimately paid in cash, provided that, notwithstanding
the foregoing, an Award shall not be deemed denominated in Shares if
the dollar amount of the Award is fixed at the time of grant by
reference to the market value of Shares or otherwise.
(ii) For purposes of this Section 4:
(A) If an Award (other than a Dividend Equivalent) is denominated
in Shares, the number of Shares covered by such Award, or to
which such Award relates, shall be counted on the date of grant
of such Award against the aggregate number of Shares available
for granting Awards under the Plan; and
(B) Dividend Equivalents paid in Shares and Awards not denominated
in Shares but paid in Shares shall be counted against the
aggregate number of Shares available for granting Awards under
the Plan in such amount and at such time as the Committee shall
determine under procedures adopted by the Committee consistent
with the purposes of the Plan;
provided, however, that Awards that operate in tandem with, or that
-------- -------
are substituted for, other Awards may be counted or not counted under
procedures adopted by the Committee in order to avoid double counting. Any
Shares that are delivered by Olin, and any Awards that are granted by, or
become obligations of, Olin, through the assumption by Olin or an Affiliate
of, or in substitution for, outstanding awards previously granted by an
acquired company shall not, except in the case of Awards granted to
Salaried Employees who are officers or directors of Olin for purposes of
Section 16 of the Securities Exchange Act of 1934, as amended, be counted
against the Shares available for granting Awards under the Plan.
<PAGE>
-5-
(b) Adjustments. In the event that the Committee determines that any
-----------
dividend or other distribution, recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of Olin,
issuance of warrants or other rights to purchase Shares or other securities
of Olin, or other similar corporate transaction or event affects the Shares
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits intended to be
made available under the Plan, then the Committee shall, in such manner as
it may deem equitable, adjust any or all of (i) the number and type of
Shares (or other securities or property) which thereafter may be made the
subject of Awards, (ii) the number and type of Shares (or other securities
or property) subject to outstanding Awards, and (iii) the grant, purchase
or exercise price with respect to any Award, or, if the Committee deems it
appropriate, make provision for a cash payment to the holder of an
outstanding Award; provided, however, that with respect to Awards of
-------- -------
Incentive Stock Options, no such adjustment shall be authorized to the
extent that such authority would cause the Plan to violate Section 422 of
the Code or any successor provision thereto. Notwithstanding the
foregoing, a Participant to whom Dividend Equivalents or dividend units
have been awarded shall not be entitled to receive a special or
extraordinary dividend or distribution unless the Committee shall have
expressly authorized such receipt.
(c) Notwithstanding anything contained in this Plan to the contrary, grants to
any one Participant of Awards which represent or are designated in Shares
shall not exceed 60,000 Shares in any calendar year.
Section 5. Eligibility
-----------
Any Salaried Employee, including any officer or employee- director of Olin or an
Affiliate, who is not a member of the Committee shall be eligible to be
designated a Participant.
Section 6. Awards
------
(a) Options. The Committee is authorized to grant Options to Participants
-------
with the following terms and conditions and with such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the
Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable
--------------
under an Option shall be determined by the Committee; provided,
--------
however, that such purchase price shall not be less than the Fair
-------
Market Value of a Share on the date of grant of such Option.
<PAGE>
-6-
(ii) Option Term. The term of each Option shall be fixed by
-----------
the Committee, provided that in no event shall the term of an
Option exceed a period of ten years from the date of its grant.
(iii) Exercise. The Committee shall determine the time or
--------
times at which an Option may be exercised in whole or in part (but
in no event shall an Option be exercisable before the expiration
of six months from the date of its grant, subject to Section 9
thereof, or after the expiration of ten years from the date of its
grant), and the method or methods by which, and the form or forms
(including, without limitation, cash, Shares, other Awards or
other property, or any combination thereof, having a Fair Market
Value on the exercise date equal to the relevant exercise price)
in which, payment of the exercise price with respect thereto may
be made; provided that no Shares may be used by a Participant in
payment of the exercise price of an Option unless such Shares have
been held by the Participant for at least six months.
(iv) Incentive Stock Options. The terms of any Incentive Stock Option
-----------------------
granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, or any successor provision
thereto, and any regulations promulgated thereunder. Without
limiting the preceding sentence, the aggregate Fair Market Value
(determined at the time an option is granted) of Shares with
respect to which Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year (under the
Plan and any other plan of the Participant's employer corporation
and its parent and subsidiary corporations providing for Options)
shall not exceed such dollar limitation as shall be applicable to
Incentive Stock Options under Section 422 of the Code or a
successor provision.
(b) Stock Appreciation Rights. The Committee is authorized to grant Stock
-------------------------
Appreciation Rights to Participants which may but need not relate to a
specific Option granted under Section 6(a). Subject to the terms of the
Plan and any applicable Award Agreement, each Stock Appreciation Right
granted under the Plan shall confer on the holder thereof a right to
receive, upon exercise thereof, up to the excess of (i) the Fair Market
Value of one Share on the date of exercise over (ii) the exercise price
of the right as specified by the Committee, which shall not be less than
the Fair Market Value of one Share on the date of grant of the Stock
Appreciation Right. Subject to the terms of the Plan and any applicable
Award Agreement, the exercise price, term, methods of exercise, methods
of payment or settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee, except that
Stock Appreciation Rights related to Incentive Stock Options shall have
the same terms and conditions as such Options, and in no event shall the
term of a Stock Appreciation Right exceed a period of
<PAGE>
-7-
ten years from the date of its grant. In the case of any Stock Appreciation
Right related to an Option, the Stock Appreciation Right or applicable
portion thereof shall terminate and no longer be exercisable upon the
termination or exercise of the related Option, except that a Stock
Appreciation Right granted with respect to less than the full number of
Shares covered by a related Option shall not be reduced until the exercise
or termination of the related Option exceeds the number of shares not
covered by the Stock Appreciation Right and then only to the extent of the
excess. Any Option related to a Stock Appreciation Right shall no longer be
exercisable to the extent the related Stock Appreciation Right has been
exercised.
(c) Restricted Stock and Restricted Stock Units.
-------------------------------------------
(i) Issuance. The Committee is authorized to grant Awards
--------
of Restricted Stock and Restricted Stock Units to
Participants.
(ii) Restrictions. Shares of Restricted Stock and
------------
Restricted Stock Units shall be subject to such restrictions
as the Committee may impose (including, without limitation,
any limitation on the right to vote a Share of Restricted
Stock or the right to receive any dividend or other right or
property), which restrictions may lapse separately or in
combination at such time or times, in such installments or
otherwise, as the Committee may deem appropriate, provided
that in order for a participant to vest in Awards of
Restricted Stock or Restricted Stock Units, the participant
must remain in the employ of Olin or an Affiliate for a period
of not less than six months commencing on the date of grant of
the Award, subject to Section 9 hereof and subject to relief
for specified reasons as may be approved by the Committee.
(iii) Registration. Any Restricted Stock granted under the
------------
Plan may be evidenced in such manner as the Committee may deem
appropriate, including, without limitation, book-entry
registration or issuance of a stock certificate or
certificates. In the event any stock certificate is issued in
respect of Shares of Restricted Stock granted under the Plan,
such certificate shall be registered in the name of the
Participant and when delivered to the Participant shall bear
an appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Stock.
(iv) Forfeiture. Except as otherwise determined by the
----------
Committee, upon termination of employment for any reason
during the applicable restriction period, all Shares of
Restricted Stock and all Restricted Stock Units still subject
-------------
to restriction shall be forfeited and reacquired by Olin;
--------------------------------------------------------
provided, however, that the Committee may, in its sole
-------- -------
discretion, waive in whole or in part any or all
<PAGE>
-8-
remaining restrictions with respect to Shares of Restricted Stock
or Restricted Stock Units. Unrestricted Shares, evidenced in such
manner as the Committee shall deem appropriate, shall be delivered
to the holder of Restricted Stock promptly after such Restricted
Stock shall become Released Securities.
(d) Performance Awards. The Committee is authorized to grant Performance
------------------
Awards to Participants. Subject to the terms of the Plan and any applicable
Award Agreement, a Performance Award granted under the Plan (i) may be
denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, other Awards or other property and
(ii) shall confer on the holder thereof rights valued as determined by the
Committee and payable to, or exercisable by, the holder of the Performance
Award, in whole or in part, upon the achievement of such performance goals
during such performance periods as the Committee shall establish. Subject
to the terms of the Plan and any applicable Award Agreement, the
performance goals to be achieved during any performance period, the length
of any performance period, the amount of any Performance Award granted, and
the amount of any payment or transfer to be made pursuant to any
Performance Award shall be determined by the Committee, provided that a
performance period shall be at least six months, subject to Section 9
thereof.
(e) Other Stock-Based Awards. The Committee is authorized to grant to
------------------------
Participants such other awards denominated or payable in, valued in whole
or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, phantom Shares, securities convertible into
Shares and dividend units), as are deemed by the Committee to be consistent
with the purposes of the Plan, provided that such grants shall comply with
Rule 16b-3 to the extent applicable and applicable law. Subject to the
terms of the Plan and any applicable Award Agreement, the Committee shall
determine the terms and conditions of such Awards. Shares or other
securities delivered pursuant to a purchase, exchange or conversion right
granted under this Section 6(e) shall be issued for such consideration,
which may be paid by such method or methods and in such form or forms,
including, without limitation, cash, Shares, other securities, other
Awards, or other property, or any combination thereof, as the Committee
shall determine, the value of which consideration, as established by the
Committee, shall not be less than the Fair Market Value of such Shares or
other securities as of the date such purchase, exchange or conversion right
is granted.
Other Stock-based Award Agreements shall contain provisions dealing with
the disposition of such Award in the event of termination of the
Participant's employment prior to exercise, realization or payment of the
Award.
<PAGE>
-9-
(f) General.
-------
(i) No Cash Consideration for Awards. Participants shall
--------------------------------
not be required to make any cash payment for the granting of
an Award except for such minimum consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards
--------------------------------------------
may be granted either alone or in addition to, in tandem with,
or in substitution for any other Award or any award or benefit
granted under any other plan or arrangement of Olin or any
Affiliate, or as payment for or to assure payment of an award
or benefit granted under any such other such plan or
arrangement, provided that the purchase or exercise price
under an Award encompassing the right to purchase Shares shall
not be reduced by the cancellation of such Award and the
substitution of another Award. Awards so granted may be
granted either at the same time as or at a different time from
the grant of such other Awards or awards or benefits.
(iii) Forms of Payment Under Awards. Subject to the terms of the
-----------------------------
Plan and of any applicable Award Agreement, payments to be
made by Olin or an Affiliate upon the grant, exercise, or
payment of an Award may be made in such form or forms as the
Committee shall determine, including, without limitation,
cash, Shares, other securities, other Awards, or other
property or any combination thereof, and may be made in a
single payment or transfer, in installments, or on a deferred
basis, in each case in accordance with rules and procedures
established by the Committee.
(iv) Dividend Equivalents or Interest. Subject to the terms of the
--------------------------------
Plan and any applicable Award Agreement, a Participant,
including the recipient of a deferred Award, shall, if so
determined by the Committee, be entitled to receive, currently
or on a deferred basis, interest or dividends or interest or
dividend equivalents, with respect to the Shares covered by
the Award. The Committee may provide that any such amounts
shall be deemed to have been reinvested in additional Shares
or otherwise reinvested. Notwithstanding the award of Dividend
Equivalents or dividend units, a Participant shall not be
entitled to receive a special or extraordinary dividend or
distribution unless the Committee shall have expressly
authorized such receipt.
(v) Limits on Transfer of Awards. No Award (other than
----------------------------
Released Securities) or right thereunder shall be assignable
or transferable by a Participant, other than (unless limited
in the Award Agreement) by will or the laws of descent and
distribution (or, in the case of an
<PAGE>
-10-
Award of Restricted Securities, to Olin), except that an
Option may be transferred by gift to any member of the
holder's immediate family or to a trust for the benefit of one
or more of such immediate family members, if permitted in the
applicable Award Agreement; provided, however, that, if so
-------- -------
determined by the Committee, a Participant may, in the manner
established by the Committee, designate a beneficiary or
beneficiaries with respect to any Award to exercise the rights
of the Participant, and to receive any property distributable,
upon the death of the Participant. Each Award, and each right
under any Award, shall be exercisable, during the
Participant's lifetime, only by the Participant or, if
permissible under applicable law by the Participant's guardian
or legal representative unless it has been transferred to a
member of the holder's immediate family or to a trust for the
benefit of one or more of such immediate family members, in
which case it shall be exercisable only by such transferee.
For the purposes of this provision, a holder's "immediate
family" shall mean the holder's spouse, children and
grandchildren. No Award (other than Released Securities), and
no right under any such Award, may be pledged, attached or
otherwise encumbered other than in favor of Olin, and any
purported pledge, attachment, or encumbrance thereof other
than in favor of Olin shall be void and unenforceable against
Olin or any Affiliate.
(vi) Term of Awards. Except as otherwise expressly
--------------
provided in the Plan, the term of each Award shall be for such
period as may be determined by the Committee.
(vii) Rule 16b-3 Six-Month Limitations. To the extent required in
--------------------------------
order to satisfy the requirements for exemption under Rule
16b-3 only, any equity security offered pursuant to the Plan
may not be sold for at least six months after acquisition (or
such other period as may be required by Rule 16b-3), except in
the case of death or disability, and any derivative security
issued pursuant to the Plan shall not be exercisable for at
least six months (or such other period as may be required by
Rule 16b-3), except in case of death or disability. Terms used
in the preceding sentence shall, for the purposes of such
sentence only, have the meanings, if any, assigned or
attributed to them under Rule 16b-3.
(viii) No Rights to Awards. No Salaried Employee, Participant or
-------------------
other Person shall have any claim to be granted an Award, and
there is no obligation for uniformity of treatment of Salaried
Employees, Participants or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards need not be
the same with respect to each recipient. The prospective
recipient of any Award
<PAGE>
-11-
under the Plan shall not, with respect to such Award, be
deemed to have become a Participant, or to have any rights
with respect to such Award, until and unless such recipient
shall have executed an agreement or other instrument accepting
the Award and delivered a fully executed copy thereof to the
Company, and otherwise complied with the then applicable terms
and conditions.
(ix) Delegation. Notwithstanding any provision of the Plan
----------
to the contrary, the Committee may delegate to one or more
officers or managers of Olin or any Affiliate, or a committee
of such officers or managers, the authority, subject to such
terms and limitations as the Committee shall determine, to
grant Awards to, or to cancel, modify, waive rights or
conditions with respect to, alter, discontinue, suspend, or
terminate Awards held by, Salaried Employees who are not
officers or directors of Olin for purposes of Section 16 of
the Securities Exchange Act of 1934, as amended.
(x) Withholding. Olin or any Affiliate may withhold from
-----------
any Award granted or any payment due or transfer made under
any Award or under the Plan the amount (in cash, Shares, other
securities, other Awards, or other property) of withholding
taxes due in respect of an Award, its exercise or any payment
under such Award or under the Plan, and take such other action
as may be necessary in the opinion of Olin or Affiliate to
satisfy all obligations for the payment of such taxes.
(xi) Other Compensation Arrangements. Nothing contained in
-------------------------------
the Plan shall prevent Olin or any Affiliate from adopting or
continuing in effect other or additional compensation
arrangements, and such arrangements may be either generally
applicable or applicable only in specific cases.
(xii) No Right to Employment. The grant of an Award shall
----------------------
not be construed as giving a Participant the right to be
retained in the employ of Olin or any Affiliate. Nothing in
the Plan or any Award Agreement shall limit the right of Olin
or an Affiliate at any time to dismiss a Participant from
employment, free from any liability or any claim under the
Plan or the Award Agreement.
(xiii) Governing Law. The validity, construction and effect of the
-------------
Plan and any rules and regulations relating to the Plan shall
be determined in accordance with the laws of the State of
Connecticut and applicable Federal law.
(xiv) Severability. If any provision of the Plan or any Award is
------------
determined to be invalid, illegal or unenforceable in any
jurisdiction, or as to any Person or Award, or would
disqualify the Plan or any Award under any law deemed
<PAGE>
-12-
applicable by the Committee, such provision shall be construed
or deemed amended to conform to applicable laws, or, if it
cannot be so construed or deemed amended without, in the
determination of the Committee, materially altering the intent
of the Plan or the Award, such provision shall be stricken as
to such jurisdiction, Person or Award, and the remainder of
the Plan and any such Award shall remain in full force and
effect.
(xv) No Trust or Fund Created. Neither the Plan nor any
------------------------
Award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between
Olin or any Affiliate and a Participant or any other Person.
To the extent that any Person acquires a right to receive
payments from Olin or any Affiliate pursuant to an Award, such
right shall be no greater than the right of any unsecured
general creditor of Olin or any Affiliate.
(xvi) No Fractional Shares. No fractional Shares shall be
--------------------
issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash, other securities or
other property shall be paid or transferred in lieu of any
fractional Shares, or whether such fractional Shares or any
rights thereto shall be canceled, terminated or otherwise
eliminated.
(xvii) Share Certificates. All certificates for Shares or
------------------
other securities delivered under the Plan pursuant to any
Award or the exercise thereof shall be subject to such stop
transfer orders and other restrictions as the Committee may
deem advisable under the Plan or the rules, regulations and
other requirements of the Securities and Exchange Commission,
any stock exchange upon which such Shares or other securities
are then listed, and any applicable Federal or state
securities laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate
reference to such restrictions.
(xviii) Conflict with Plan. In the event of any inconsistency or
------------------
conflict between the terms of the Plan and an Award Agreement,
the terms of the Plan shall govern.
(xix) Notwithstanding any provision in this Plan to the contrary,
Awards granted under Sections 6(c), 6(d) or 6(e) after January
1, 1994 and designated by the Committee as being performance-
based shall have as performance measures Return on Equity and
Total Return to Shareholders. For purposes of the Plan,
"Return on Equity" shall mean consolidated income of Olin
after taxes and before the after-tax effect of any special
charge or gain and any cumulative effect of any change in
accounting, divided by average shareholders equity and "Total
Return to
<PAGE>
-13-
Shareholders" shall mean for the performance period total
return to shareholders of $100 worth of Shares for such period
assuming reinvestment of dividends on a quarterly basis. The
Committee shall determine the performance goals for each such
performance measure with respect to each such Award.
Section 7. Amendment and Termination
-------------------------
(a) Amendments to the Plan. The Board may amend, suspend, discontinue or
----------------------
terminate the Plan, including, without limitation, any amendment,
suspension, discontinuation or termination that would impair the rights of
any Participant, or any other holder or beneficiary of any Award
theretofore granted, without the consent of any shareholder, Participant,
-------------------------
other holder or beneficiary of an Award, or other Person; provided,
------------------------------------------------------------------
however, that, notwithstanding any other provision of the Plan or any Award
-------
Agreement, without the approval of the shareholders of Olin, no such
amendment, suspension, discontinuation or termination shall be made that
would:
(i) increase the total number of Shares available for Awards under
the Plan, except as provided in Section 4 hereof; or
(ii) permit any Award encompassing rights to purchase Shares to be
granted with per Share purchase or exercise prices of less
than the Fair Market Value of a Share on the date of grant
thereof; and
provided further that no amendment, suspension, discontinuation or
-------- -------
termination (i) that would impair the rights of such Participant, holder or
beneficiary shall be made with respect to Section 9 of the Plan after a
Change in Control, as defined therein and (ii) may increase the amount of
payment of any Award to any Participant.
(b) Amendments to Awards. The Committee may waive any conditions or rights
--------------------
with respect to, or amend, alter, suspend, discontinue, or terminate, any
unexercised Award theretofore granted, prospectively or retroactively,
without the consent of any relevant Participant or holder or beneficiary of
an Award, provided that no amendment, alteration, suspension,
--------
discontinuation or termination of an Award that would impair the rights of
such Participant, holder or beneficiary shall be made after a Change in
Control, as defined in Section 9; provided further that the Committee may
not increase the payment of any Award granted any Participant.
(c) Adjustments of Awards Upon Certain Acquisitions. In the event Olin or
-----------------------------------------------
any Affiliate shall assume outstanding employee awards or the right or
obligation to make future such awards in connection with the acquisition of
another business or another company, the Committee may make such
adjustments, not inconsistent with the terms of the Plan, in the terms of
Awards as it shall deem appropriate.
<PAGE>
-14-
(d) Adjustments of Awards Upon the Occurrence of Certain Unusual or
---------------------------------------------------------------
Nonrecurring Events. The Committee may make adjustments in the terms and
- -------------------
conditions of Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 4(b) hereof)
affecting Olin, any Affiliate, or the financial statements of Olin or any
Affiliate, or of changes in applicable laws,regulations, or accounting
principles, whenever the Committee determines that statements of Olin or any
Affiliate, or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits to be
made available under the Plan.
Section 8. Additional Conditions to Enjoyment of Awards.
--------------------------------------------
(a) The Committee may cancel any unexpired, unpaid or deferred Awards if at any
time the Participant is not in compliance with all applicable provisions of
the Award Agreement, the Plan and the following conditions:
(i) A Participant shall not render services for any organization
or engage, directly or indirectly, in any business which, in
the judgment of the Committee or, if delegated by the
Committee to the Chief Executive Officer, in the judgment of
such Officer, is or becomes competitive with Olin or any
Affiliate, or which is or becomes otherwise prejudicial to or
in conflict with the interests of Olin or any Affiliate. Such
judgment shall be based on the Participant's positions and
responsibilities while employed by Olin or an Affiliate, the
Participant's post-employment responsibilities and position
with the other organization or business, the extent of past,
current and potential competition or conflict between Olin or
an Affiliate and the other organization or business, the
effect on customers, suppliers and competitors of the
Participant's assuming the post-employment position, the
guidelines established in the then current edition of Olin's
Code of Business Conduct, and such other considerations as
are deemed relevant given the applicable facts and
circumstances. The Participant shall be free, however, to
purchase as an investment or otherwise, stock or other
securities of such organization or business so long as they
are listed upon a recognized securities exchange or traded
over the counter, and such investment does not represent a
substantial investment to the Participant or a greater than
1% equity interest in the organization or business.
(ii) Participant shall not, without prior written authorization
from Olin, disclose to anyone outside Olin, or use in other
than Olin's business, any secret or confidential information,
knowledge or data, relating to the business of Olin or an
Affiliate in violation of his or her agreement with Olin or
the Affiliate.
<PAGE>
-15-
(iii) A Participant, pursuant to his or her agreement with Olin or an
Affiliate, shall disclose promptly and assign to Olin or the
Affiliate all right, title and interest in any invention or idea,
patentable or not, made or conceived by the Participant during
employment by Olin or the Affiliate, relating in any manner to the
actual or anticipated business, research or development work of Olin
or the Affiliate and shall do anything reasonably necessary to
enable Olin or the Affiliate to secure a patent where appropriate in
the United States and in foreign countries.
(b) Notwithstanding any other provision of the Plan, the Committee in its sole
discretion may cancel any Award at any time prior to the exercise thereof,
if the employment of the Participant shall be terminated, other than by
reason of death, unless the conditions in this Section 8 are met.
(c) Failure to comply with the conditions of this Section 8 prior to, or during
the six months after, any exercise, payment or delivery pursuant to an
Award shall cause the exercise, payment or delivery to be rescinded. Olin
shall notify the Participant in writing of any such rescission within two
years after such exercise payment or delivery and within 10 days after
receiving such notice, the Participant shall pay to Olin the amount of any
gain realized or payment received as a result of the exercise, payment or
delivery rescinded. Such payment shall be made either in cash or by
returning to Olin the number of Shares that the Participant received in
connection with the rescinded exercise, payment or delivery.
(d) Upon exercise, payment or delivery pursuant to an Award, the Committee may
require the Participant to certify on a form acceptable to the Committee,
that he or she is in compliance with the terms and conditions of the Plan.
(e) Nothing herein shall be interpreted to limit the obligations of a
Participant under his or her employee agreement or any other agreement with
Olin.
Section 9. Change in Control
-----------------
(a) Except as the Board or the Committee may expressly provide otherwise prior
to a Change in Control of Olin (as defined below) and subject to the
provisions of Section 6(f)(vii) hereof, in the event of a Change in Control
of Olin:
(i) all Options and Stock Appreciation Rights then outstanding
shall become immediately and fully exercisable,
notwithstanding any provision therein for the exercise in
installments;
(ii) unless a Stock Appreciation Right shall have already been
granted with respect to an outstanding Option, the
<PAGE>
-16-
Participant holding such Option shall be deemed also to hold
a Stock Appreciation Right related to such Option,
exercisable in accordance with and subject to the terms and
conditions of Section 6(b) for the number of Shares
exercisable under such Option after giving effect to such
acceleration, which Stock Appreciation Right may, but need
not be, evidenced by separate written agreement;
(iii) all restrictions and conditions of all Restricted Stock and
Restricted Stock Units then outstanding shall be deemed
satisfied as of the date of the Change in Control; and
(iv) all Performance Awards shall become vested, deemed earned in
full and promptly paid to the Participants, cash units in
cash and phantom stock units in the Shares represented
thereby or such other securities, property or cash as may be
deliverable in respect of Shares as a result of a Change in
Control, without regard to payment schedules and
notwithstanding that the applicable performance cycle or
retention cycle shall not have been completed.
(b) A Change in Control of Olin shall have occurred in the event that:
(i) Olin ceases to be publicly owned with at least 1,000
stockholders;
(ii) a person, partnership, joint venture, corporation or other
entity, or two or more of any of the foregoing acting as a
group (or a "person" within the meaning of Sections 13(d)(3)
and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Act"), other than Olin, a majority-owned
subsidiary of Olin or an employee benefit plan of Olin or
such subsidiary, become(s) the "beneficial owner" (as defined
in Rule 13d-3 under the Act) of 20% or more of the then
outstanding voting stock of Olin;
(iii) during any period of two consecutive years, individuals who
at the beginning of such period constitute Olin's Board of
Directors (together with any new Director whose election by
Olin's Board of Directors or whose nomination for election by
Olin's shareholders, was approved by a vote of at least two-
thirds of the Directors then still in office who either were
Directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Directors then
in office; or
(iv) Olin's Board of Directors determines that a tender offer for
Olin's shares indicates a serious intention by the offeror to
acquire control of Olin.
Section 10. Effective Date of the Plan
--------------------------
<PAGE>
-17-
The Plan shall be effective as of the date of its approval by the shareholders
of Olin.
Section 11. Term of the Plan
----------------
No Award shall be granted under the Plan after April 30, 2001, but unless
otherwise expressly provided in the Plan or in an applicable Award Agreement,
any Award theretofore granted may extend beyond such date.
<PAGE>
EXHIBIT 11
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
Primary earnings per share are computed by dividing net income less the ESOP
preferred stock dividend requirement by the weighted average number of common
shares outstanding plus an equivalent number (one-for-one) of common shares
assuming the conversion of Series A stock (PERCS). Fully diluted earnings per
share reflect the dilutive effect of stock options and assume the conversion of
outstanding ESOP preferred stock into an equivalent number of common shares at
the date of issuance. Net income was reduced by an additional ESOP contribution
(differential between the common and ESOP preferred dividend rates under an
assumed conversion) necessary to satisfy the debt service requirement.
<TABLE>
<CAPTION>
(In thousands) Years Ended December 31,
-----------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Weighted average number of common shares outstanding and
common stock equivalents 23,303 21,840 21,598
Common shares issuable assuming the conversion of outstanding
ESOP preferred stock at the date of issuance 1,440 1,623 1,597
Common shares issuable under outstanding stock options and
additional remuneration agreements which have a dilutive
effect on per share earnings 82 24 40
------ ------ ------
Adjusted number of common shares outstanding 24,825 23,487 23,235
====== ====== ======
<CAPTION>
(In millions)
<S> <C> <C> <C>
Net income (loss) $91 $(92) $9
Less ESOP preferred dividend (7) (7) (8)
------ ------ ------
Net income (loss) adjusted for primary earnings (loss) per share $84 $(99) $1
====== ====== ======
Primary earnings (loss) per share (1) $3.65 $(4.52) $0.06
====== ====== ======
Net income (loss) $91 $(92) $9
Less additional ESOP contribution (3) (2) (3)
------ ------ ------
Net income (loss) adjusted for fully diluted earnings (loss)
per share $88 $(94) $6
====== ====== ======
Fully diluted earnings (loss) per share (1)(2) $3.54 $(4.01) $0.26
====== ====== ======
</TABLE>
Notes:
(1) Under the common stock equivalent method, primary loss per share would have
been $5.70 and $.39 for 1993 and 1992. PERCS dividends in 1993 and 1992 were
$10 million and $9 million, respectively, while average PERCS shares
outstanding in 1993 and 1992 were 2.76 million and 2.55 million,
respectively.
(2) Fully diluted income or loss per share in 1993 and 1992 was anti-dilutive
and therefore, was not reported on the Income Statement.
<PAGE>
Exhibit 12(a)
OLIN CORPORATION
Computation of Ratio of Earnings to Fixed Charges
(Unaudited)
(In millions)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Earnings:
Income (loss) before taxes $141 $(150) $88 $(25) $116
Add (deduct):
Income taxes of 50% owned affiliates 4 3 1 3 (4)
Equity in (earnings) loss of less than
50% owned affiliates 2 4 5 - (5)
Dividends received from less than
50% owned affiliates - - - - 1
Interest capitalized, net of amortization 1 (1) (4) (1) (2)
Fixed charges as described below 56 56 58 63 72
-------- -------- -------- ------- --------
Total $204 $(88) $148 $40 $178
======== ======== ======== ======= ========
Fixed charges:
Interest expense 38 41 45 50 57
Estimated interest factor in rent expense 18 15 13 13 15
------- -------- ------- ------- -------
Total $56 $56 $58 $63 $72
======= ======== ======= ======= =======
Ratio of earnings to fixed charges (a) 3.6 - 2.6 0.6 2.5
======= ======== ======= ======= =======
</TABLE>
_______________________________________________________________________________
(a) In the twelve months ended December 31, 1993 and December 31, 1991,
earnings were inadequate to cover fixed charges by $144 million and $23
million, respectively. In 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.
<PAGE>
Exhibit 12(b)
OLIN CORPORATION
Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends
(Unaudited)
<TABLE>
<CAPTION>
(In millions) Years Ended December 31,
-------------------------------------------------
1994 1993 1992 1991 1990
------- -------- ------ ------ --------
<S> <C> <C> <C> <C> <C>
Earnings:
Income (loss) before taxes $141 $(150) $88 $(25) $116
Add (deduct):
Income taxes of 50% owned affiliates 4 3 1 3 (4)
Equity in (earnings) loss of less than
50% owned affiliates 2 4 5 - (5)
Dividends received from less than
50% owned affiliates - - - - 1
Interest capitalized, net of amortization 1 (1) (4) (1) (2)
Fixed charges as described below 56 56 58 63 72
-------- -------- -------- ------- --------
Total $204 $(88) $148 $40 $178
======== ======== ======== ======= ========
Fixed charges and preferred stock dividends:
Interest expense 38 41 45 50 57
Estimated interest factor in rent expense 18 15 13 13 15
Preferred stock dividend requirement 28 28 26 13 13
------- ------- ------- ------- -------
Total $84 $84 $84 $76 $85
======= ======= ======= ======= =======
Ratio of earnings to combined fixed charges
and preferred stock dividends (a)(b) 2.4 - 1.8 0.5 2.1
======= ======= ======= ======= ========
</TABLE>
________________________________________________________________________________
(a) In the twelve months ended December 31, 1993 and December 31, 1991,
earnings were inadequate to cover combined fixed charges and preferred stock
dividends by $172 million and $36 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.
(b) The ratio of earnings to combined fixed charges and preferred stock
dividends has been computed based upon income before taxes and fixed charges
included in income (loss) after eliminating the amortization of capitalized
interest and the undistributed (earnings) losses of less than 50%-owned
affiliates. Fixed charges include interest and that portion of rental expense
deemed to represent interest.
<PAGE>
EXHIBIT 13
Olin Corporation is a Fortune 200 company whose businesses are concentrated
in chemicals, materials and metals, defense, sporting ammunition and
aerospace.
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
1994 Compared to 1993
The selective investments made over the past several years, strategic actions
taken in 1993 and a stronger economy contributed to the company's improved
financial performance over 1993. In 1994, all divisions exceeded 1993 profit
levels with record earnings achieved in Metals, Winchester and Electronic
Materials.
Net income increased to $91 million, or $3.65 per share, from a net loss of
$92 million, or $4.52 per share, which included a charge of $132 million. Sales
in 1994 were a record $2.7 billion, up 10% from 1993, attributed primarily to
strong customer demand for most major products.
Chemicals
Sales of $1,195 million for 1994 increased 7% over 1993, while segment net
income was $42 million compared to 1993's net income of $12 million,
excluding $106 million of the 1993 charge. Improved economic conditions
favorably impacted many of the chemicals businesses. Improved pricing and
lower manufacturing costs in chlor-alkali and higher volumes in pool products
and urethanes contributed to the 1994 increase in net income from 1993.
Chlor-alkali's sales were 11% ahead of last year due to strong demand and
increased pricing. These factors along with lower manufacturing costs (raw
materials and plant fixed costs) and the implementation of profit improvement
programs resulting from reengineered processes, contributed to chlor-alkali's
improved profit performance.
In the urethanes business, strong domestic demand for polyols contributed
to the 1994 sales increase. TDI volumes were comparable to 1993's levels. The
specialty urethanes coating product line experienced higher sales volumes as
this relatively new business continued to expand internationally. Operating
results in 1994 improved as the higher volumes more than offset increases in raw
material costs and the effect of the production outage at the Lake Charles, La.
facility.
Pool products sales increased over 1993's levels as higher volumes more
than offset the impact of competitive pricing pressures. Domestic brand and bulk
volumes as well as export shipments exceeded last year's levels. Reduction in
administrative expenses were offset by additional expenditures for advertising
and promotional efforts to support brand products.
Operating results of specialty chemicals exceeded last year. Worldwide
volumes increased as a result of higher foreign sales and the introduction of
new products. The profit impact from these additional volumes was offset in part
by higher operating costs relating to toxicology studies on new products and
additional administrative personnel at foreign affiliates.
Strong demand from the semiconductor industry for the company's high-purity
electronic chemicals and its MQUAD microelectronic packaging system accounted
-----
for the improvement in sales and profitability of the electronic chemicals
business.
Chemicals sales and net income are expected to increase from 1994's level
due to higher volumes and improved pricing, offset in part by higher raw
material costs. Chlor-alkali's performance is expected to improve due to
continuing strong demand for caustic. Although additional volumes are estimated
to increase specialty chemicals sales, new product introductions and market
entry costs are expected to negate the profit impact from the additional
volumes. In the electronic chemicals business, volume gains due to continuing
demand from the semiconductor industry are expected to enhance 1995's
performance.
In the past, there have been legislative initiatives to study the dangers
and benefits of chlorine and 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.
Metals
Sales in 1994 were a record $750 million, and improved 14% over 1993 on higher
metal values and increased levels of commercial shipments, as all operations
recorded higher volumes than the previous year. Net income increased to $39
million from $26 million in 1993, excluding $12 million of the 1993 charge. The
record financial performance benefited from higher demand; additional
investments in equipment to expand capacity, improve yields and reduce
manufacturing costs; the implementation of profit improvement programs including
a reduction in the salaried workforce; and the absence of operating losses from
a joint venture disposed of in the fourth quarter of 1993.
12
<PAGE>
With an improved economy in 1994, the demand for strip products from the
automotive, housing and ammunition markets, was exceptionally strong. The
industry has not seen demand for strip reach 1994 levels in the last ten years.
The 1993 expansion of the East Alton, Ill. mill provided additional capacity to
meet this demand. Shipments of other products, such as stainless steel and
fineweld tube, also exceeded 1993's levels.
In 1995, it is expected that the economy will remain strong throughout the
year and that Metals will operate at near capacity production levels to support
the demand for brass strip. Sales are expected to increase slightly as increased
sales volumes in certain operations and higher metal values are expected to
offset lower coinage requirements. There is still excess domestic capacity,
which may lower industry operating rates and create a very competitive pricing
environment. Segment net income is estimated to be comparable to last year.
Defense and Ammunition
Sales in 1994 were $713 million, 10% ahead of 1993 due to increased shipments of
Winchester commercial ammunition and Ball Powder propellants and the inclusion
-----------
of sales of the newly acquired medium caliber business. Net income in 1994
increased to $32 million from $24 million, excluding $14 million of the 1993
charge. The increased volumes, along with the profit contribution from the
acquisition, additional royalty income and the savings from the reduction in the
salaried workforce, contributed to the increase in segment net income.
Winchester's domestic commercial ammunition sales were exceptionally strong
throughout the year. Heavy consumer buying due in part to the fear of
restrictive legislation and taxation accounted for Winchester's record sales
level and offset decreases in military export ammunition sales. The related
profit impact from higher sales more than offset lower fees associated with
lower production volumes at the Lake City Army Ammunition Plant and accounted
for the division's record profits in 1994.
In the Ordnance Division, the integration of the newly acquired business
was implemented successfully and expanded the company's medium caliber
ammunition line of products. Ordnance's sales and profits improved over 1993 due
to the acquisition and increased Ball Powder propellant shipments. Tank
-----------
ammunition volumes in 1994 were comparable to the prior year.
Aerospace Division sales were comparable to 1993's amount. Sales of new
products were offset by delays/cancellations of certain government funded
programs. Increased margins on certain rocket engine programs, new products and
additional royalty income contributed to higher divisional profits in 1994.
In 1995, sales for the Defense and Ammunition segment are expected to
increase with net income comparable to 1994. Demand for Winchester's commercial
ammunition is expected to remain strong, while its military ammunition shipments
are expected to surpass 1994's level. Increases in commodity costs, especially
copper, and lower fees related to reduced production volumes at Lake City are
estimated to offset the profit impact from the sales increases. Higher shipments
of large and medium caliber ammunition along with sales of new Aerospace
products are expected to more than offset lower Ball Powder propellant volumes.
-----------
U.S. government sales amounted to $379 million in 1994, $354 million in
1993 and $409 million in 1992. Approximately 91% of 1994 sales were to the
Department of Defense (DoD) or agencies thereof. 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
this segment and the company in future years, including its income, liquidity,
capital resources and financial condition. The precise impact of these decisions
will depend upon 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 U.S. government
in facilities management and ordnance demilitarization and continues to pursue
other business areas. In view of the continuing uncertainty regarding the
strategy and priorities 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 1993, the company recorded a pretax charge for a series of strategic actions
consisting of personnel reductions, business restructurings including
consolidations and realignments within divisions, provision for costs at sites
of discontinued businesses, future environmental liabilities, and other charges.
As of December 31, 1994, the planned personnel reductions had been approximately
80% completed. The remaining reductions are anticipated to occur in 1995 at an
estimated cost of $18 million. Various actions within the business restructuring
phase of the 1993 charge had been completed as of December 31, 1994. The
remaining actions, primarily the restructuring of the electronic materials
businesses, are expected to be finalized within the next two years at an
estimated cost of $18 million.
The savings resulting from the workforce reductions and business
restructurings were approximately $20 million in 1994. The expected additional
savings from the remaining actions are estimated to be $15 million on an
annualized basis thereafter.
Gross margin percentage was 19% for 1994, an increase of 1% from 1993,
excluding the charge. The increase was driven by increased volumes and cost
reduction programs (including an early retirement incentive program), but was
offset in part by increased commodity costs (copper and lead) and higher raw
materials costs.
13
<PAGE>
Selling and administration expenses as a percentage of sales decreased to
11.4% in 1994 from 12.4% in 1993. The impact from cost reduction programs and
other personnel reductions was offset by operating expenses relating to the
acquisition and higher administrative expenses. Research and development
expenditures decreased as efforts were concentrated on the company's core
businesses and on new products and technologies related to such businesses.
The decrease in 1994 average domestic short-term borrowings more than
offset the impact of increasing short-term interest rates and contributed to the
decrease in interest expense from 1993.
The effective tax rate for 1994 was 35.5%, compared to 36.5% in 1993,
excluding the effect of the charge. At December 31, 1994, the company had net
deferred tax assets of $61 million, principally comprised of alternative minimum
tax credits of $30 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 years to allow for
the realization of these tax benefits. Taxable income required for such
realization currently approximates $280 million.
In December 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, W.
Va., a packaging facility in Livonia, Mich. and the SUN brand trademark. Over
---
the years, the company has been unsuccessful in its efforts to appeal. The
company unsuccessfully attempted to modify the FTC order by proposing to the FTC
that the company sell its trichloroisocyanurate production facility in Lake
Charles, La. to BioLab, Inc. (a sale which it ultimately consummated in 1994)
instead of selling its South Charleston facility. The company entered into an
agreement in principle, in 1994, to sell the SUN brand of isocyanurates. In
---
February 1995, the company signed a letter of intent for the sale of its South
Charleston and Livonia facilities to subsidiaries of Israel Chemicals Ltd. These
transactions did not have a material impact on the company's results of
operations in 1994 and are not expected to have a material adverse effect on the
results of operations for 1995.
1993 Compared to 1992
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 had 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 consolidations and realignments 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 1992. This increase was
attributable in part to higher performance urethanes sales, particularly for the
new specialty urethanes coatings, and sales of a previously non-consolidated
affiliate in Europe. Segment net loss for 1993 was $94 million which included
$106 million of the 1993 charge, compared to 1992's net income of $21 million.
The decline in net income was due primarily to the poor performance from the
chlor-alkali and flexible urethanes businesses.
Despite a 3% increase in the 1993 chlorine industry operating rate to 97%
of capacity, chlor-alkali financial performance was significantly behind 1992's
level. Chlorine prices increased throughout 1993 driven by strong demand from
plastic manufacturers. Conversely, demand for caustic was sluggish and adversely
affected by over-supply conditions in the marketplace. The decline in caustic
prices was greater than the increase in chlorine prices. These factors along
with higher electricity costs (caused by severe weather conditions in the
Southeast and a 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 these sales gains, the flexible
urethanes business lost money once again in 1993. Production problems early in
the year, lower international prices and the unfavorable performance from the
company's two Venezuelan joint ventures contributed to the additional losses.
Sales of acids, sodium hydrosulfite and other industrial chemicals in 1993
were comparable to 1992 sales, while profits were slightly higher due primarily
to the strong demand for sodium hydrosulfite by the textile and paper
industries.
14
<PAGE>
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 ongoing competitive
pressures. The additional volumes and the improved operating results from a
Brazilian joint venture offset the profit impact of lower prices, a less
favorable product mix and higher administrative expenses.
Specialty and organic chemicals sales were equal to 1992's level, while
profits increased significantly from 1992. The company expanded its biocides
products and markets in 1993, with shipments to the Far East and other
international customers more than doubling. The combination of increased
shipments and lower raw materials costs for propylene and ethylene oxide
accounted for the improvement in sales and profitability of the specialty
surfactants business.
Sales of performance urethanes were well ahead of 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.
Metals
Metals sales of $660 million declined 2% on lower metal values and reduced
levels of utility and defense-related business. The Indianapolis operations,
Mill Products and the Fabricating business and A. J. Oster Co. (Oster) each
recorded higher volumes and improved product mix. Record commercial shipments of
brass strip were achieved in 1993. In addition, the expansion of the East Alton
mill was completed in mid-1993, contributing to improved quality and
productivity.
Metals net income was $14 million in 1993, compared to $29 million in 1992.
The 1993 income is net of a $12 million charge for costs associated with the
1993 strategic action plan. The profit decline resulted from lower sales to the
defense and utility industries and pricing pressures as a competitor brought
additional capacity on line. In addition, losses from the German 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. 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.
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.
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 profit improvement in net income.
The Ordnance Division experienced lower shipments of certain large and
medium caliber ammunition due to shrinking defense procurements. Net income was
further impacted by higher severance costs as the division continued to resize,
reflecting the declining U.S. defense budgets. In 1993, the company entered into
negotiations to purchase the medium caliber ordnance business of GenCorp Inc.
The 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 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.
Other Financial Data
In December 1993, the company announced a series of strategic actions consisting
of personnel reductions, business restructurings including consolidations and
realignments 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 expected to reduce its salaried
workforce by over 10%, or 600 people, over the next two years along with minor
reductions in the hourly workforce. An early retirement incentive program was
put in effect for the Brass and Winchester divisions, which did not participate
in a similar program offered in 1991. The pretax charge for these actions was
$42 million.
B. Business Restructurings: The charge provided for streamlining existing
businesses by relocating and consolidating several facilities, primarily
electronic materials businesses. Additionally, a portion of the charge related
to lower estimated proceeds from asset disposals and higher costs associated
with components of the 1991 streamlining program. The company recorded a pretax
charge of $41 million for these business restructurings.
C. Discontinued Businesses and Site Maintenance Costs: The pretax charge
for discontinued businesses and site maintenance was $41 million to provide for
property maintenance, security, and product liability expenses associated with
several operations which are no longer ongoing 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 asset
write-downs and long-term disability costs, which amounted to $10 million
pretax.
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
15
<PAGE>
Chemicals and the Defense and Ammunition segments, higher operating expenses of
the electronic materials businesses and the European affiliate were the main
contributors to the increase. Research and development expenditures, up slightly
from 1992's level, were 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's rate.
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. Taxable income required for such realization approximated $350
million.
Liquidity and Investment Activity
Cash flow from operations supplemented by credit facilities, proceeds from the
divestment of businesses and the issuance of common shares were used to finance
the company's major funding needs, namely capital projects, dividends to
shareholders and the acquisition. Cash flow from operating activities amounted
to $199 million in 1994, $137 million in 1993 and $189 million in 1992. The
1994 change in cash flow from operating activities was primarily due to
increased operating income. The increase in receivables and inventories to
support a higher level of business activity was offset in part by higher current
liabilities. Cash flow from operations was used for expenses incurred in
executing the 1993 strategic action plan. The decrease in cash flow from
operations in 1993 from 1992 was primarily attributable to lower operating
income. The effect of lower operating income was partially offset by higher
depreciation expense which resulted from increased capital spending levels in
prior years. The reduction in current liabilities related to lower amounts due
vendors, increased spending for environmental remediation and costs incurred in
executing the 1991 streamlining program.
Net cash used for investing activities was $127 million in 1994, $84
million in 1993 and $139 million in 1992. Capital spending in 1994 increased 13%
from the prior year mainly to support the consolidation of some medium caliber
ammunition operations, restore the trichloroisocyanurate production facility at
South Charleston, W. Va. and provide additional capacity for selected product
lines. Environmental capital spending in 1994 approximated last year's amount.
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 expenditures in 1995 are estimated to increase approximately 20%
from 1994 to provide additional capacity and product quality for selected
product lines. Three major projects account for the majority of this increase:
the completion of a manufacturing, distribution and laboratory complex in Mesa,
Ariz. for the electronic materials business; the integration and expansion of
TDI capacity at Lake Charles, La. and the modernization of the tube mill at
Indianapolis, Ind.
Investment spending in 1993 and 1992 was primarily for a new ethylene oxide
joint venture in Venezuela, which was completed in 1993. The company's
investment in this venture totaled $21 million at December 31, 1994. Throughout
1994, this venture continued to experience liquidity difficulties due to high
leverage. In Venezuela, general economic conditions have become unstable in
light of government actions. The government imposed currency exchange controls
in order to control capital flight and manage inflation. The company, along with
its venture partners, is currently attempting to resolve these difficulties in
order to protect its recorded investment.
In 1994, the company purchased certain assets of the medium caliber
ammunition business of GenCorp Inc.'s Aerojet Ordnance division for
approximately $25 million. This acquisition provided the company with a complete
line of improved medium caliber ammunition products as well as air dispensed
munition products. During 1994, the company sold its conductive materials
business including the manufacturing facility in Ontario, Cal. and its
trichloroisocyanurate production facility in Lake Charles, La. These
transactions generated proceeds of $41 million. 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 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.
At December 31, 1994, the company maintained committed credit facilities
with banks of $303 million of which $278 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 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 and finance the acquisition of the medium caliber ammunition
business. In 1992, the company sold 2.76 million shares of its $1 par value
Series A Conversion Preferred
16
<PAGE>
Stock (Series A Stock) generating net proceeds of $111 million, which were used
to reduce bank loans. On March 1, 1995, the outstanding Series A Stock will
convert automatically into shares of common stock on a one-for-one basis. 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 participated in a program in which it sold an
undivided ownership interest in a designated pool of receivables, with limited
recourse, in an amount not to exceed $70 million. Amounts sold were $25 million
and $65 million at December 31, 1994 and 1993, respectively. In January 1995,
the company ended its participation in this program.
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 $17 million in 1994, $85 million in 1993, and $17
million in 1992. 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 1994, 1993, and 1992 and
may be material to net income in future years.
Cash outlays for environmental-related activities totaled $82 million in
1994 as compared with $93 million in 1993 and $103 million in 1992. During 1994,
$45 million of these cash outlays were directed towards normal plant operations
for the disposal of waste and the installation, operation and maintenance of
pollution control equipment and facilities to ensure compliance with mandated
and voluntarily imposed environmental quality standards. Comparable spending for
1993 and 1992 was $49 million and $62 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 was $11 million in both 1994 and 1993 and $25 million in
1992. The 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 $37 million in 1994, $44 million in
1993 and $41 million in 1992. 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 1994 was
attributable to 78 sites, 33 of which were on the National Priority List (NPL).
Twelve 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. Six of these twelve 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) and a
Record of Decision (ROD) or its equivalent has not been issued. At another three
of the twelve sites, a 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 three of the twelve sites, part of the site is subject to a ROD
and another part is still in the investigative stage of remediation. All twelve
sites were either former manufacturing facilities or waste sites containing
contamination generated by those facilities.
Total environmental-related cash outlays for 1995 are estimated to be $93
million, of which $53 million is expected to be spent on normal plant
operations, including $15 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
$111 million at December 31, 1994 and $131 million at December 31, 1993, of
which $71 million and $91 million were classified as other noncurrent
liabilities, respectively. Included in the reserve at December 31, 1994 and
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.
17
<PAGE>
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 outcomes of which are subject to various uncertainties) may be resolved
unfavorably against the company. At December 31, 1994, the company had estimated
additional contingent environmental liabilities of $36 million which were
determined in accordance with generally accepted accounting principles.
The percent of total debt to total capitalization (excluding the reduction
in equity for the Contributing Employee Ownership Plan (ESOP)) decreased to
36.5% at December 31, 1994, from 47.1% at year-end 1993 and was 42.0% at year-
end 1992. Contributing to the decrease in 1994 was the issuance of the
additional 2.2 million of common shares and the liquidation of all short-term
borrowings as of December 31, 1994. The increase in 1993 was due to the
reduction of shareholders' equity stemming from the charge taken in 1993.
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, the company received $15 million 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, 1994 balance sheet as long-term debt.
Dividends per common share were $2.20 in 1994, 1993 and 1992. Total
dividends paid on common stock amounted to $44 million in 1994, $42 million in
1993 and $41 million in 1992, while total ESOP preferred dividends, paid at an
annual dividend rate of $5.97 per share, amounted to $7 million in 1994 and 1993
and $8 million in 1992. Dividends paid on Series A Stock were $10 million in
1994 and 1993, equal to $3.64 per share, and $9 million in 1992. Commencing with
the first quarter of 1995, the quarterly common stock dividend has been
increased to $.60 per share. The last dividend on the Series A Stock will be
paid in March 1995.
There are a variety of legal proceedings pending or threatened against the
company. It is possible that some of these matters (the outcomes of which are
subject to various uncertainties) may be decided unfavorably against the
company. Certain of these matters are discussed in Item 3, Legal Proceedings of
the Form 10-K Annual Report and in other filings of the company with the
Securities and Exchange Commission, which filings are available on request from
the company.
The company periodically evaluates risk retention and insurance levels for
product liability, property damage and other potential areas of risk. Based on
the cost and availability of insurance and the likelihood of a loss occurring,
management decides the amount of insurance coverage to purchase from
unaffiliated companies and the appropriate amount of risk to retain. The current
levels of risk retention are believed to be appropriate and are consistent with
those of other companies in the various industries in which the company
operates.
18
<PAGE>
Industry Segments
<TABLE>
<CAPTION>
($ in millions) 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Chemicals
Sales $1,195 $1,117 $ 996 $ 960 $1,269 $1,302 $1,386 $1,232 $1,127 $1,153
Net Income (Loss) 42 (94) 21 (38) 42 106 68 55 37 (153)
Assets 1,037 1,024 1,067 982 945 977 1,034 1,028 920 867
Capital Expenditures 91 75 115 131 144 95 96 83 84 105
Depreciation 82 83 73 70 75 74 77 82 83 102
- -----------------------------------------------------------------------------------------------------------------------------------
Metals
Sales 750 660 676 562 566 542 453 304 244 232
Net Income 39 14 29 17 35 19 25 20 15 12
Assets 446 430 445 436 337 326 321 225 204 184
Capital Expenditures 25 31 33 26 19 26 30 13 24 28
Depreciation 27 27 24 22 21 22 19 18 17 14
- -----------------------------------------------------------------------------------------------------------------------------------
Defense and Ammunition
Sales 713 646 704 753 757 665 469 394 361 307
Net Income (Loss) 32 10 29 35 36 31 25 20 19 (21)
Assets 521 441 465 552 544 535 516 373 365 331
Capital Expenditures 33 26 25 20 24 21 21 19 20 19
Depreciation 25 21 20 21 20 20 15 14 11 8
- -----------------------------------------------------------------------------------------------------------------------------------
Corporate and Other
Sales -- -- -- -- -- -- -- -- -- 68
Net Income (Loss) (22) (22) (70) (27) (29) (32) (20) (17) 4 (3)
Assets 26 35 53 42 40 66 69 59 56 216
Capital Expenditures -- -- -- -- -- -- -- -- -- 2
Depreciation -- -- -- -- -- -- -- -- -- 2
- -----------------------------------------------------------------------------------------------------------------------------------
Consolidated
Sales 2,658 2,423 2,376 2,275 2,592 2,509 2,308 1,930 1,732 1,760
Net Income (Loss) 91 (92) 9 (13) 84 124 98 78 75 (165)
Assets 2,030 1,930 2,030 2,012 1,866 1,904 1,940 1,685 1,545 1,598
Capital Expenditures 149 132 173 177 187 142 147 115 128 154
Depreciation 134 131 117 113 116 116 111 114 111 126
===================================================================================================================================
</TABLE>
(1) Intersegment sales, which are priced generally at prevailing prices and are
excluded from above, are not significant.
(2) Net income (loss) of each segment includes an allocation of Corporate
expenses.
(3) 1993 net loss includes a charge for the strategic action plan of $132 ($106
to Chemicals, $12 to Metals and $14 to Defense and Ammunition). 1992 net income
includes a charge of $46 (allocated to Corporate and Other) for the cumulative
effect of the accounting changes. 1991 net loss includes a charge for the
streamlining program of $80 ($73 to Chemicals and $7 to Metals). 1985 net loss
includes a charge of $230 ($174 to Chemicals, $1 to Metals, $35 to Defense and
Ammunition and $20 to Corporate and Other).
(4) Corporate and Other includes interest expense and Discontinued Operations
(the company's Ecusta paper and film businesses, which were sold in 1985), and
the cumulative effect of the accounting changes in 1992.
(5) See Notes to Financial Statements for information relative to industry
operating income and geographic segment data.
19
<PAGE>
Ten-Year Financial Summary
<TABLE>
<CAPTION>
($ in millions, except
per share data) 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operations
Sales $2,658 $2,423 $2,376 $2,275 $2,592 $2,509 $2,308 $1,930 $1,732 $1,760
Cost of Goods Sold 2,153 2,161 1,941 1,944 2,063 1,929 1,781 1,455 1,318 1,719
Restructuring Charge -- 42 -- 22 -- -- -- -- -- --
Selling and
Administration 302 300 279 262 316 287 289 264 252 252
Research and
Development 35 41 39 41 66 66 58 62 56 54
- ------------------------------------------------------------------------------------------------------------------------------
Operating Income (Loss) 168 (121) 117 6 147 227 180 149 106 (265)
Interest Expense 37 38 39 46 53 56 43 32 32 35
Interest and Other
Income 10 9 10 15 22 21 14 10 41 18
- ------------------------------------------------------------------------------------------------------------------------------
Income (Loss) Before
Taxes 141 (150) 88 (25) 116 192 151 127 115 (282)
Income Tax Provision
(Benefit) 50 (58) 33 (12) 32 68 53 49 40 (92)
- ------------------------------------------------------------------------------------------------------------------------------
Income (Loss) Before
Cumulative
Effect of Accounting
Changes 91 (92) 55 (13) 84 124 98 78 75 (190)
Accounting Changes/
Discontinued
Operations/(1)/ -- -- (46) -- -- -- -- -- -- 25
- ------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) 91 (92) 9 (13) 84 124 98 78 75 (165)
==============================================================================================================================
Financial Position
Working Capital 262 136 179 85 212 205 184 276 210 304
Property, Plant and
Equipment, Net 879 885 934 899 829 781 801 727 720 718
Total Assets 2,030 1,930 2,030 2,012 1,866 1,904 1,940 1,685 1,545 1,598
Capitalization:
Short-Term Debt 29 121 101 178 104 155 211 50 52 47
Long-Term Debt 418 449 477 520 466 501 474 392 375 354
Shareholders' Equity 749 596 741 666 715 665 683 700 654 687
- ------------------------------------------------------------------------------------------------------------------------------
Total Capitalization 1,196 1,166 1,319 1,364 1,285 1,321 1,368 1,142 1,081 1,088
==============================================================================================================================
Per Share Data
Net Income (Loss):
Primary:
Income (Loss)
Before Cumulative
Effect of Accounting
Changes 3.65 (4.52) 2.17 (.92) 4.03 6.02 4.63 3.38 3.36 (8.28)
Accounting Changes/
Discontinued
Operations/(1)/ -- -- (2.11) -- -- -- -- -- -- 1.09
- ------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss)/(2)/ 3.65 (4.52) .06 (.92) 4.03 6.02 4.63 3.38 3.36 (7.19)
==============================================================================================================================
Net Income--Assuming
Full Dilution/(3)/ 3.54 -- -- -- 3.88 5.85 4.59 3.32 3.13 --
==============================================================================================================================
Dividends:
Common 2.20 2.20 2.20 2.20 2.15 1.95 1.70 1.60 1.525 1.50
ESOP Preferred 5.97 5.97 5.97 5.97 5.97 2.985 -- -- -- --
Series A Preferred
(annual rate) 3.64 3.64 3.64 -- -- -- -- -- -- --
Shareholders'
Equity/(4)/ 30.86 27.24 33.92 35.02 37.65 34.99 33.35 31.81 30.56 29.89
Market Price of
Common Stock:
High 60 1/8 50 1/2 54 3/4 54 60 5/8 68 1/4 60 56 1/4 53 1/4 38
Low 46 39 7/8 37 1/4 33 1/2 28 1/8 49 3/8 40 32 5/8 34 5/8 28 3/8
Year End 51 1/2 49 3/8 45 3/4 40 3/8 37 3/4 60 51 42 41 37 1/8
==============================================================================================================================
Other
Capital Expenditures 149 132 173 177 187 142 147 115 128 154
Depreciation 134 131 117 113 116 116 111 114 111 126
Common Dividends Paid 44 42 41 41 41 39 36 37 34 35
Purchases of Common Stock -- -- -- 2 6 100 84 100 83 5
Current Ratio 1.4 1.2 1.3 1.1 1.4 1.4 1.3 1.7 1.5 1.8
Total Debt to Total
Capitalization/(5)/ 36.5% 47.1% 42.0% 48.5% 41.5% 46.2% 50.1% 38.7% 39.5% 36.9%
Effective Tax Rate 35.5% 38.7% 37.5% 48.0% 27.2% 35.4% 35.1% 38.6% 34.8% 32.6%
Average Common Shares
Outstanding 20.5 19.1 19.1 19.0 19.1 20.0 21.1 23.1 22.4 23.0
- ------------------------------------------------------------------------------------------------------------------------------
Shareholders 12,100 13,000 13,900 14,600 15,500 16,300 17,600 20,700 20,600 22,400
Employees/(6)/ 12,800 12,400 13,500 14,400 15,200 15,400 16,400 14,100 13,200 14,900
==============================================================================================================================
</TABLE>
(1) 1985 represents discontinued operations of the company's Ecusta paper and
film businesses.
(2) See Series A Preferred Stock footnote in the Notes to Financial Statements.
(3) Fully diluted income or loss per share is not presented for 1993, 1992, 1991
and 1985 as amounts are anti-dilutive.
(4) In 1994, 1993 and 1992, calculation is based on common shares and Series A
Conversion Preferred Stock outstanding.
(5) Excluding reduction to equity for the Employee Stock Ownership Plan from
1989 through 1994.
(6) Employee data excludes employees who work at government-owned/contractor-
operated facilities.
20
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31 ($ in millions, except share data) 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash $ 7 $ 3
Receivables, Net:
Trade 373 288
Other 41 57
Inventories, Net of LIFO Reserve of $178 ($145 in 1993) 386 329
Other Current Assets 73 63
- -----------------------------------------------------------------------------------------------
Total Current Assets 880 740
Investments and Advances--Affiliated Companies at Equity 103 121
Property, Plant and Equipment, Net 879 885
Goodwill 109 114
Other Assets 59 70
- -----------------------------------------------------------------------------------------------
Total Assets $2,030 $1,930
===============================================================================================
Liabilities and Shareholders' Equity
Current Liabilities:
Short-Term Borrowings $ -- $ 94
Current Installments of Long-Term Debt 29 27
Accounts Payable 332 232
Income Taxes Payable 4 2
Accrued Liabilities 253 249
- -----------------------------------------------------------------------------------------------
Total Current Liabilities 618 604
Long-Term Senior Debt 293 324
Long-Term Subordinated Debt 125 125
Other Liabilities 245 281
- -----------------------------------------------------------------------------------------------
Total Liabilities 1,281 1,334
- -----------------------------------------------------------------------------------------------
Shareholders' Equity:
Preferred Stock, Par Value $1 Per Share:
Authorized, 10,000,000 Shares
Series A Conversion Preferred Stock
Issued, 2,760,000 Shares 3 3
ESOP Preferred Stock
Issued 1,110,418 Shares (1,194,569 in 1993) 86 92
ESOP Obligations (27) (44)
Common Stock, Par Value $1 Per Share:
Authorized, 60,000,000 Shares
Issued 21,516,590 Shares (19,102,270 in 1993) 21 19
Additional Paid-In Capital 400 297
Cumulative Translation Adjustment (3) (9)
Retained Earnings 269 238
- -----------------------------------------------------------------------------------------------
Total Shareholders' Equity 749 596
- -----------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $2,030 $1,930
===============================================================================================
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements.
21
<PAGE>
Consolidated Statements of Income
<TABLE>
<CAPTION>
Years ended December 31 ($ in millions, except per share data) 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $2,658 $2,423 $2,376
Operating Expenses:
Cost of Goods Sold 2,153 2,161 1,941
Restructuring Charge -- 42 --
Selling and Administration 302 300 279
Research and Development 35 41 39
- -----------------------------------------------------------------------------------------------------------------------
Operating Income (Loss) 168 (121) 117
Interest Expense 37 38 39
Interest and Other Income 10 9 10
- -----------------------------------------------------------------------------------------------------------------------
Income (Loss) Before Taxes 141 (150) 88
Income Tax Provision (Benefit) 50 (58) 33
- -----------------------------------------------------------------------------------------------------------------------
Income (Loss) Before Cumulative Effect of Accounting Changes 91 (92) 55
Cumulative Effect of Accounting Changes -- -- (46)
- -----------------------------------------------------------------------------------------------------------------------
Net Income (Loss) $ 91 $ (92) $ 9
=======================================================================================================================
Per Share of Common Stock
Income (Loss) Before Cumulative Effect of Accounting Changes $ 3.65 $(4.52) $ 2.17
Cumulative Effect of Accounting Changes -- -- (2.11)
- -----------------------------------------------------------------------------------------------------------------------
Net Income (Loss)/(1)/ $ 3.65 $(4.52) $ 0.06
=======================================================================================================================
Fully Diluted Income (Loss) Per Share/(2)/ $ 3.54 $ -- $ --
=======================================================================================================================
</TABLE>
(1) See Series A Preferred Stock footnote in the Notes to Financial Statements.
(2) Fully diluted income or loss per share in 1993 and 1992 was anti-dilutive.
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
Common Stock Additional Cumulative Preferred Stock
Shares Par Paid-In Translation Retained Series A ESOP ESOP
($ in millions, except share data) Issued Value Capital Adjustment Earnings Par Value Par Value Obligations
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1992 19,013,307 $19 $185 $ 3 $435 $-- $99 $(75)
Net Income -- -- -- -- 9 -- -- --
Dividends Paid:
Common Stock ($2.20 per share) -- -- -- -- (41) -- -- --
ESOP Preferred Stock
($5.97 per share) -- -- -- -- (8) -- -- --
Series A Conversion Preferred Stock
($3.64 per share) -- -- -- -- (9) -- -- --
Issuance of Series A Conversion
Preferred Stock (2,760,000 shares) -- -- 108 -- -- 3 -- --
Reduction in ESOP Obligations -- -- -- -- -- -- -- 15
Stock Options Exercised 45,305 -- 1 -- -- -- -- --
Translation Adjustment -- -- -- (4) -- -- -- --
Other Transactions 11,163 -- 2 -- 2 -- (3) --
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1992 19,069,775 19 296 (1) 388 3 96 (60)
Net Loss -- -- -- -- (92) -- -- --
Dividends Paid:
Common Stock ($2.20 per share) -- -- -- -- (42) -- -- --
ESOP Preferred Stock
($5.97 per share) -- -- -- -- (7) -- -- --
Series A Conversion Preferred Stock
($3.64 per share) -- -- -- -- (10) -- -- --
Reduction in ESOP Obligations -- -- -- -- -- -- -- 16
Stock Options Exercised 19,418 -- 1 -- -- -- -- --
Translation Adjustment -- -- -- (3) -- -- -- --
Other Transactions 13,077 -- -- (5) 1 -- (4) --
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 19,102,270 19 297 (9) 238 3 92 (44)
Net Income -- -- -- -- 91 -- -- --
Dividends Paid:
Common Stock ($2.20 per share) -- -- -- -- (44) -- -- --
ESOP Preferred Stock
($5.97 per share) -- -- -- -- (7) -- -- --
Series A Conversion Preferred Stock
($3.64 per share) -- -- -- -- (10) -- -- --
Issuance of Common Stock 2,213,750 2 96 -- -- -- -- --
Reduction in ESOP Obligations -- -- -- -- -- -- -- 17
Stock Options Exercised 87,102 -- 3 -- -- -- -- --
Translation Adjustment -- -- -- 6 -- -- -- --
Other Transactions 113,468 -- 4 -- 1 -- (6) --
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 21,516,590 $21 $400 $(3) $269 $ 3 $86 $(27)
====================================================================================================================================
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements.
22
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Years ended December 31 ($ in millions) 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
- --------------------------------------------------------------------------------------------------------------------
Net Income (Loss) $ 91 $ (92) $ 9
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by Operating Activities:
Losses (Earnings) of Non-consolidated Affiliates (2) 1 5
Depreciation 134 131 117
Amortization of Intangibles 6 8 6
Deferred Taxes 2 (63) 10
Charge for 1993 Strategic Action Plan -- 213 --
Cumulative Effect of Accounting Changes -- -- 46
Change in Assets and Liabilities Net of Purchase and Sales of Businesses:
Receivables (64) 13 56
Inventories (49) (10) (24)
Other Current Assets (2) -- 8
Current Liabilities 63 (59) (60)
Noncurrent Liabilities 2 (6) 1
Other Transactions 18 1 15
- --------------------------------------------------------------------------------------------------------------------
Net Operating Activities 199 137 189
- --------------------------------------------------------------------------------------------------------------------
Investing Activities
- --------------------------------------------------------------------------------------------------------------------
Capital Expenditures (149) (132) (173)
Disposition of Property, Plant and Equipment 8 19 2
Business Acquired in Purchase Transaction (25) -- --
Proceeds from Sales of Businesses 41 37 42
Other Investments (2) (8) (10)
- --------------------------------------------------------------------------------------------------------------------
Net Investing Activities (127) (84) (139)
- --------------------------------------------------------------------------------------------------------------------
Financing Activities
- --------------------------------------------------------------------------------------------------------------------
Long-Term Debt:
Borrowings -- -- 100
Repayments (29) (30) (130)
Short-Term Borrowings (Repayments) (94) 22 (90)
Issuance of Common Stock 98 -- --
Issuance of Series A Conversion Preferred Stock -- -- 111
Repayment from ESOP 17 16 15
Dividends Paid (61) (59) (58)
Other Financing Activities 1 (3) (2)
- --------------------------------------------------------------------------------------------------------------------
Net Financing Activities (68) (54) (54)
- --------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash 4 (1) (4)
- --------------------------------------------------------------------------------------------------------------------
Cash, Beginning of Year 3 4 8
- --------------------------------------------------------------------------------------------------------------------
Cash, End of Year $ 7 $ 3 $ 4
====================================================================================================================
Cash Paid for Interest and Income Taxes:
Interest $ 37 $ 39 $ 43
Income Taxes, Net of Refunds $ 39 $ 8 $ 15
====================================================================================================================
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements.
23
<PAGE>
Notes to Financial Statements
($ in millions, except share data)
Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of the company and
all majority-owned subsidiaries. Investments in 20-50% owned affiliates are
accounted for using the equity method of accounting under which investments
are recorded at cost and consist of the company's share of undistributed
earnings or losses of the affiliates.
Long-Term Contracts
Sales and cost of sales related to government contracts that extend beyond
one year are primarily recognized under the percentage-of-completion method
of accounting as costs are incurred. Profits expected to be realized on
contracts are based on the company's estimates of costs at completion
compared to total contract sales value. When the company believes the cost of
completing a contract will exceed contract-related revenues, the full amount
of the anticipated contract loss is recognized.
Inventories
Inventories are valued principally by the dollar value last-in, first-out
(LIFO) method of inventory accounting.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation is computed
on a straight-line basis over the estimated useful lives of the related
assets. Leasehold improvements are amortized over the term of the lease or
the estimated useful life of the improvement, whichever is less. Start-up
costs are expensed as incurred.
Income Taxes
Deferred taxes are provided for differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse.
Deferred taxes have not been provided on the undistributed earnings of
foreign subsidiaries, since the company intends to continue to reinvest these
earnings.
Foreign Currency Translation
Foreign affiliates' balance sheet amounts are translated at the exchange
rates in effect at year end, and income statement amounts are translated at
the average rates of exchange prevailing during the year. Translation
adjustments are recorded as a separate component of shareholders' equity.
The company enters into forward sales and purchase contracts and currency
options to manage currency risk resulting from purchase and sale commitments
denominated in foreign currencies (principally Australian dollars, pound
sterling, Canadian dollars and Japanese yen) and relating to particular
anticipated but not yet committed sales expected to be denominated in those
currencies. Some of the contracts involve the exchange of two foreign
currencies, according to the local needs of foreign subsidiaries. All of the
currency derivatives expire within one year. At December 31, 1994, the
company had $9 million in options and contracts to buy (1993--$20 million)
and $40 million in options and contracts to sell foreign currencies (1 993--$75
million). Net unrealized gains (or losses) were less than $1 million at December
31, 1994 and 1993.
Foreign currency exchange losses, net of taxes, were $2 million in 1994, $4
million in 1993 and $3 million in 1992.
Goodwill
Goodwill, the excess of the purchase price of acquired businesses over fair
value of the respective net assets, is amortized principally over 30 years on
a straight-line basis.
Financial Instruments
The fair value of the company's financial instruments approximates carrying
value. Fair values were estimated based on quoted market prices, where
available, or on current rates offered to the company for debt with similar
terms and maturities.
Earnings Per Share
Primary earnings per share are computed by dividing net income less the ESOP
preferred stock dividend requirement by the weighted average number of common
shares outstanding plus an equivalent number (one-for-one) of common shares,
assuming the conversion of Series A Conversion Preferred Stock. Fully diluted
earnings per share reflect the dilutive effect of stock options and assume
the conversion of outstanding ESOP preferred stock into an equivalent number
of common shares at the date of issuance. Net income was reduced by an
additional ESOP contribution (differential between the common and the ESOP
preferred dividend rates under an assumed conversion) necessary to satisfy
the debt service requirement.
Average Common Shares and Common
Equivalents Outstanding
<TABLE>
<CAPTION>
Assuming
Full
Years ended December 31 (In thousands) Primary Dilution
- --------------------------------------------------------------------------
<S> <C> <C>
1994 23,303 24,825
1993 21,840 23,487
1992 21,598 23,235
==========================================================================
</TABLE>
Trade Receivables
In December 1990, the company entered into an agreement to sell an undivided
fractional ownership interest in a designated pool of receivables, with limited
recourse, in an amount not to exceed $70 million. At December 31, 1994 and 1993,
$25 million and $65 million of accounts receivables had been sold under this
agreement. The company's credit risk associated with the designated pool of
receivables was assessed in conjunction with the overall evaluation of trade
receivables. Reserves ascribed to these accounts are included in the allowance
for doubtful items and are not a material portion thereof. Operating expenses
include fees of $2 million in 1994, 1993 and 1992 related to the sale of
receivables under this agreement. In January 1995, the company ended its
participation in this program.
At December 31, 1994 and 1993, trade receivables included unbilled
receivables of $71 million, and $73 million respectively, related to certain
government contracts which are accounted for on the percentage-of-completion
method.
Allowance for doubtful items was $12 million at December 31, 1994 and 1993.
Provisions charged to operations were $2 million in 1994 and $3 million in 1993
and 1992. Bad debt write-offs, net of recoveries amounted to $2 million in 1994,
$1 million in 1993, and $6 million in 1992.
24
<PAGE>
Inventories
If the first-in, first-out (FIFO) method of inventory accounting had been
used, inventories would have been approximately $178 million and $145 million
higher than reported at December 31, 1994 and 1993, respectively. It is not
practicable to separate the inventory into its components because LIFO
inventory values are determined principally by the use of the dollar value
LIFO method.
<TABLE>
<CAPTION>
Property, Plant and Equipment
1994 1993
- ----------------------------------------------------------------------
<S> <C> <C>
Land and improvements to land $ 126 $ 127
Buildings and building equipment 293 296
Machinery and equipment 1,910 1,951
Leasehold improvements 27 22
Construction in progress 147 113
- ----------------------------------------------------------------------
Property, plant and equipment 2,503 2,509
Less accumulated depreciation 1,624 1,624
- ----------------------------------------------------------------------
Property, plant and equipment, net $ 879 $ 885
======================================================================
</TABLE>
Leased assets capitalized and included above are not significant.
Maintenance and repairs charged to operations amounted to $153 million in 1994,
$159 million in 1993 and $152 million in 1992.
Short-Term Borrowings
There were no outstanding short-term borrowings at December 31, 1994.
Short-term borrowings at December 31, 1993 consisted of domestic bank loans
of $53 million at an interest rate of 3.4%, foreign bank loans of $11 million
at interest rates ranging from 4% to 12% and domestic commercial paper of $30
million at an interest rate of 3.4%.
At December 31, 1994, the company maintained committed credit facilities
with banks of $303 million of which $278 million was available, while comparable
1993 amounts were $367 million and $208 million, respectively.
Long-Term Debt
<TABLE>
<CAPTION>
Due 1994 1993
- ----------------------------------------------------------------------
<S> <C> <C>
Note agreements
96-02 7.97% notes $ 50 $ 56
12/96 8.125% notes 6 12
6/02 8% notes 100 100
Industrial development and environ-
mental improvement obligations
04-17 payable at interest rates of 2% to
4% which vary with short-term
tax exempt rates 35 35
96-08 payable at interest rates of 6% to 7% 39 39
6/96 7.144% note payable 40 40
96-09 Guarantee of ESOP debt varying
with LIBOR 11 29
9/05 7.75% note (10% in 1993) 11 11
96-02 Mortgage, capitalized leases and
other indebtedness 1 2
- ----------------------------------------------------------------------
Total long-term senior debt 293 324
6/97 9.5% subordinated notes 125 125
- ----------------------------------------------------------------------
Total long-term debt $418 $449
======================================================================
</TABLE>
Among the provisions of the note agreements are restrictions relating to
payment of dividends and acquisition of the company's capital stock. At December
31, 1994, retained earnings of approximately $224 million were not so restricted
under the provisions.
The ESOP's purchase of preferred stock in 1989 was financed by $60 million
of notes (guaranteed by the company) and $40 million of borrowings from the
company. The loan from the company to the ESOP was financed through a long-term
credit facility. At December 31, 1994, $16 million of the Guarantee of ESOP debt
has been included in current installments of long-term debt.
In September 1993, the company entered into an unsecured revolving credit
agreement with a group of banks, which 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 June 1992, the company sold $100 million of 8% notes due 2002. The
proceeds from this issue were used to reduce outstanding short-term debt. The
company then swapped interest payments on $50 million principal amount of the
notes to a floating rate (6.94% at December 31, 1994).
Annual maturities of long-term debt for the next five years are $13 million
in 1995, $53 million in 1996, $132 million in 1997, $7 million in 1998 and $8
million in 1999 (excluding the expiring guarantees of ESOP debt).
Series A Preferred Stock
In January 1992, the company sold 2.76 million shares of its $1 par value
Series A Conversion Preferred Stock (Series A Stock) generating net proceeds
of $111 million. Dividends on the Series A Stock are cumulative at an annual
rate of $3.64 per share. On the mandatory conversion date (March 1, 1995)
each outstanding Series A Stock will convert automatically into one share of
the company's common stock (subject to adjustment in certain events) and the
right to receive an amount of cash equal to all accrued and unpaid dividends
thereon. The company has included these shares in the computation of
earnings per share under the common stock outstanding method (one-for-one).
Beginning in 1995, the common stock equivalent method is required for new
issues of such shares. Under this method, loss per share would have been $5.70
and $.39 for 1993 and 1992, respectively.
Cost of Sales-Related Transactions
Included in cost of sales for 1993 is a pretax charge of $171 million
associated with the strategic action plan formulated during the fourth
quarter. The plan included costs of business restructurings involving the
relocation and consolidation of facilities along with lower estimated
proceeds from asset disposals and higher costs associated with components of
the 1991 streamlining program ($41 million); dismantling, product liability
and ongoing custodial costs related to discontinued businesses ($41 million);
future environmental liabilities ($55 million); and other charges including
asset write-downs and long-term disability liabilities ($34 million). Various
actions within the business restructuring phase of the 1993 charge had been
completed as of December 31, 1994. The remaining actions, primarily the
restructuring of the electronic material businesses are expected to be
finalized within the next two years at an estimated cost of $18 million.
25
<PAGE>
Restructuring Charge
The 1993 strategic action plan included a restructuring charge of $42 million
in 1993 for workforce reductions which were accomplished largely through an
early retirement incentive initiative. As of December 31, 1994, the planned
workforce reductions had been approximately 80% completed. The remaining
reductions are anticipated to occur in 1995 at an estimated cost of $18
million.
Interest Expense
Interest incurred totaled $37 million in 1994, $40 million in 1993, and $43
million in 1992, of which less than $1 million was capitalized in 1994, $2
million in 1993, and $4 million in 1992.
Pension Plans and Retirement Benefits
Essentially all of the company's domestic pension plans are non-contributory
final-average-pay or flat-benefit plans and all domestic employees are
covered. The company's funding policy is consistent with the requirements of
federal laws and regulations. In 1993, the company offered to certain
qualified employees an option to receive enriched pension benefits under the
early retirement incentive program in connection with the restructuring
charge.
Components of Net Pension Expense
<TABLE>
<CAPTION>
1994 1993 1992
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Service cost (benefits earned
during the period) $ 25 $ 19 $ 17
Interest cost on the projected
benefit obligation 68 71 65
Enriched pension benefit -- 7 --
Actual loss (return) on assets 6 (132) (62)
Actual (loss) return deferred
for later recognition (89) 53 (12)
Net amortization of unrecognized
transition asset, prior service cost
and deferred gains and losses (1) (2) (6)
- -----------------------------------------------------------------------
Net pension expense $ 9 $ 16 $ 2
=======================================================================
</TABLE>
Principal Assumptions
<TABLE>
<CAPTION>
1994 1993 1992
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average discount rate 8.5% 7.5% 8.5%
Weighted average rate of
compensation increase 4.5% 4.5% 5.5%
Long-term rate of return on assets 9.5% 9.5% 9.5%
</TABLE>
Funded Status of the Plans
<TABLE>
<CAPTION>
1994 1993
- ----------------------------------------------------------
<S> <C> <C>
Accumulated benefit obligation
including vested benefits of
$845 and $935 $ 847 $ 938
- ----------------------------------------------------------
Plan assets at fair value, primarily
equity and fixed-income securities $ 916 $ 984
Projected benefit obligation for
service rendered to date (898) (1,002)
- ----------------------------------------------------------
Assets over (under) projected
benefit obligation 18 (18)
Unrecognized net transition asset (41) (48)
Unrecognized loss (gain) (25) 18
Unrecognized prior service cost 29 32
- ----------------------------------------------------------
Net pension liability $ (19) $ (16)
==========================================================
</TABLE>
The company's common stock represents approximately 3% of the plan assets
at December 31, 1994 and 1993.
The company's foreign subsidiaries maintain pension and other benefit plans
which are consistent with statutory practices and are not significant.
The Nonbargaining Employees Pension Plan of Olin Corporation provides that
if, within three years following a change of control of the company, any
corporate action is taken or filing made in contemplation of, among other
things, a plan termination or merger or other transfer of assets or liabilities
of the plan, and such termination, merger or transfer thereafter takes place,
plan benefits would automatically be increased for affected participants (and
retired participants) to absorb any plan surplus.
The company provides certain postretirement health care and life insurance
benefits for eligible active and retired domestic employees. Effective January
1, 1992, the company adopted Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" and
recognized the full amount of its estimated accumulated postretirement benefit
obligation, representing the present value of the estimated future benefits
payable to current retirees and the earned portion of estimated benefits payable
to active employees after retirement. The pretax charge to 1992 earnings was $80
million with a net income effect of $50 million or $2.30 per share. The net
income and per share amounts have been included in the statement of income as
the cumulative effect of an accounting change.
Components of Postretirement Expense
<TABLE>
<CAPTION>
1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned
during year $ 3 $ 2 $ 2
Interest cost on accumulated
postretirement benefit obligation 5 6 7
Net amortization of unrecognized
prior service cost and deferred
gains and losses (1) -- --
Enriched postretirement benefit -- 3 --
- ------------------------------------------------------------------------------
Net postretirement expense $ 7 $11 $ 9
==============================================================================
</TABLE>
26
<PAGE>
Unfunded Liability for
Postretirement Benefits
<TABLE>
<CAPTION>
1994 1993
- ---------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $39 $41
Fully eligible active plan participants 13 11
Other active participants 21 25
- ---------------------------------------------------------------------
Cumulative accumulated postretirement benefit
obligation 73 77
Unrecognized loss (6) (8)
Unrecognized prior service cost 10 11
- ---------------------------------------------------------------------
Net postretirement benefit liability $77 $80
=====================================================================
</TABLE>
The accumulated postretirement benefit obligation was determined using the
projected unit credit method and an assumed discount rate of 8.5% in 1994, 7.5%
in 1993 and 8.75% in 1992. The assumed health care cost trend rate used for pre-
65 retirees was 13% in 1994 and 13.5% in 1993, declining one-half percent per
annum to 6%. For post-65 retirees, the company provides a fixed dollar benefit
which is not subject to escalation. In 1993 the company modified certain
attributes of the postemployment medical plan including eligibility
requirements, retiree contributions and a limit (effective year 2000) on pre-65
retiree medical coverage.
A one percent increase each year in the health care cost trend rate used
would have resulted in a less than $1 million increase in the aggregate service
and interest components of expense for the year 1994, and a $4 million increase
in the accumulated postretirement benefit obligation at December 31, 1994.
Income Taxes
The company adopted Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" as of January 1, 1992. The cumulative effect on
prior years of this change in accounting principle increased 1992 net income
by $4 million or $.19 per share and is reported separately in the
consolidated statement of income.
Components of Pretax Income (Loss)
<TABLE>
<CAPTION>
1994 1993 1992
- ----------------------------------------------------------------
<S> <C> <C> <C>
Domestic $127 $(158) $89
Foreign 14 8 (1)
- ----------------------------------------------------------------
$141 $(150) $88
================================================================
</TABLE>
Components of Income Tax Expense
(Benefit)
<TABLE>
<CAPTION>
1994 1993 1992
- ----------------------------------------------------------------
<S> <C> <C> <C>
Currently payable:
Federal $33 $ (1) $18
State 8 3 4
Foreign 7 3 1
- ----------------------------------------------------------------
48 5 23
Deferred 2 (63) 10
- ----------------------------------------------------------------
$50 $(58) $33
================================================================
</TABLE>
The following table accounts for the difference between the actual tax
provision and the amounts obtained by applying the statutory U.S. federal income
tax of 35% in 1994 and 1993 and 34% in 1992 to the income (loss) before taxes.
Effective Tax Rate Reconciliation
<TABLE>
<CAPTION>
(Percent) 1994 1993 1992
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Statutory federal tax rate 35.0 (35.0) 34.0
Foreign income tax .2 2.5 (.9)
State income taxes, net 3.1 (3.4) 3.8
Goodwill 1.2 1.2 2.0
Equity in net income of affiliates (.7) (.5) (.3)
Other, net (3.3) (3.5) (1.1)
- ----------------------------------------------------------------------
Effective tax rate 35.5 (38.7) 37.5
======================================================================
</TABLE>
The cumulative amount of undistributed earnings of foreign subsidiaries, if
remitted, would result in a minimal amount of tax because of available foreign
tax credits.
Components of Deferred Tax
Assets and Liabilities
<TABLE>
<CAPTION>
1994 1993
- ----------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets
Postretirement benefits $ 37 $ 37
Non-deductible reserves 109 144
Tax credit carryforwards 30 44
Other miscellaneous items 19 16
- ----------------------------------------------------------------------
Total deferred tax assets $195 $241
======================================================================
Deferred tax liabilities
Property, plant and equipment $117 $133
Other miscellaneous items 17 45
- ----------------------------------------------------------------------
Total deferred tax liabilities $134 $178
======================================================================
</TABLE>
Included in Other Current Assets at December 31, 1994 and 1993,
respectively, are $54 million and $46 million of net current deferred assets.
Taxable income is expected to be sufficient to recover the net benefit within
the carryforward period and, therefore, no valuation allowance was established.
As of December 31, 1994, the company had approximately $30 million of
Alternative Minimum Tax Credits available to offset future federal income
taxes on an indefinite carryforward basis.
Contributing Employee
Ownership Plan
The Contributing Employee Ownership Plan is a defined contribution plan
available to essentially all domestic employees which provides a match of
employee contributions. The plan purchased from the company approximately 1.3
million shares ($100 million) of a newly authorized 1.75 million share series
of the company's ESOP preferred stock, financed by $60 million of notes
guaranteed by the company and a $40 million loan from the company. This loan
has been repaid in total to the company as of December 31, 1992. At December
31, 1994 there were 1.1 million shares of ESOP preferred stock outstanding at
a value of $72.75 per share. The annual fixed dividend rate is $5.97 per
share. The ESOP preferred stock is convertible by the holder into the
company's common stock on a one-for-one basis, subject to anti-dilutive
adjustments and may be redeemed at the option of the company, or at the
option of the plan under certain circumstances (including upon payment of
withdrawing plan participant accounts or if required to meet the plan's debt
payments). The company reserves the right to satisfy the redemption in cash,
marketable obligations or common stock. Expenses related to the plan are
based on ESOP preferred and common stock allocated
27
<PAGE>
to participants. These costs amounted to $10 million in 1994, 1993 and 1992.
Interest incurred by the plan totaled $1 million in 1994, $2 million in 1993,
and $3 million in 1992, which was funded by ESOP preferred dividends. 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.
Stock Options
Under the stock option plans, options may be granted to purchase shares of
the company's common stock at not less than fair market value at the date of
grant, and are exercisable for a period not exceeding ten years from that
date. Stock option transactions are as follows:
<TABLE>
<CAPTION>
Option Price
Shares Per Share
- -----------------------------------------------------------------------------
<S> <C> <C>
Outstanding at January 1, 1992 735,022 $13.24-$65.00
Granted 148,125 53.00-63.60
Exercised (45,305) 13.24-49.32
Canceled (29,806) 30.82-53.50
- -----------------------------------------------------------------------------
Outstanding at December 31, 1992 808,036 22.14-65.00
Granted 147,030 43.25
Exercised (19,418) 28.19-44.38
Canceled (14,159) 43.25-53.50
- -----------------------------------------------------------------------------
Outstanding at December 31, 1993 921,489 22.14-65.00
Granted 134,074 52.00
Exercised (87,102) 22.14-53.50
Canceled (12,857) 43.25-53.50
- -----------------------------------------------------------------------------
Outstanding at December 31, 1994 955,604 $30.82-$65.00
=============================================================================
</TABLE>
Of the outstanding options at December 31, 1994, options covering 822,642
shares are currently exercisable.
At December 31, 1994, common shares reserved for issuance under these plans
were 1,726,222 and under additional remuneration agreements were estimated to be
44,000.
Shareholder Rights Plan
In 1986, the Board of Directors adopted a Shareholder Rights Plan expiring in
1996, which is designed to prevent an acquirer from gaining control of the
company without offering a fair price to all shareholders. Each right
entitles the shareholder to buy one-half share of common stock of the company
at an exercise price of $50. The rights are exercisable only if a person
acquires 20% or more of the company's common stock or commences a tender or
exchange offer for 30% or more of such stock. The company can redeem the
rights at $.05 per right for a certain time period. If any person acquires
30% or more of the common stock and in the event of certain mergers or
combinations, each right will entitle the holder to purchase stock or other
property having a value of twice the exercise price.
Segment Information
Information relative to the various industries in which the company operates
appears on page 19 and is incorporated herein by reference.
Segment Operating Income (Loss)
<TABLE>
<CAPTION>
1994 1993 1992
- --------------------------------------------------------------------
<S> <C> <C> <C>
Chemicals $ 58 $(165) $ 26
Metals 64 29 47
Defense and Ammunition 46 15 44
- --------------------------------------------------------------------
Total operating income (loss) $168 $(121) $117
====================================================================
</TABLE>
Geographic Segment Data
<TABLE>
<CAPTION>
1994 1993 1992
- --------------------------------------------------------------------
<S> <C> <C> <C>
Sales
United States $2,451 $2,242 $2,222
Foreign 207 181 154
Transfers between areas
United States 100 83 79
Foreign 16 16 12
Eliminations (116) (99) (91)
- --------------------------------------------------------------------
Total sales $2,658 $2,423 $2,376
====================================================================
Operating income (loss)
United States $ 150 $ (128) $ 110
Foreign 13 6 3
Eliminations 5 1 4
- --------------------------------------------------------------------
Operating income (loss) $ 168 $ (121) $ 117
====================================================================
Assets
United States $1,904 $1,782 $1,831
Foreign 107 137 183
Investments 34 40 47
Corporate assets and eliminations (15) (29) (31)
- --------------------------------------------------------------------
Total consolidated assets $2,030 $1,930 $2,030
====================================================================
</TABLE>
Sales to the U.S. government were $379 million, $354 million and $409
million in 1994, 1993 and 1992, respectively. The Defense and Ammunition segment
accounted for approximately 83% of the government sales in 1994, 1993 and 1992.
Transfers between geographic areas are priced generally at prevailing market
prices. Export sales from the United States to unaffiliated customers were $168
million, $162 million and $172 million in 1994, 1993 and 1992, respectively.
Acquisition
In 1994, the company acquired certain assets of the medium caliber ammunition
business of GenCorp's Aerojet Ordnance Division for approximately $25
million. The fair value of assets acquired included working capital of $11
million and property, plant and equipment of $14 million. This acquisition
was accounted for as a purchase and accordingly, its results of operations,
which were not material, are included in the consolidated financial
statements from the date of acquisition.
28
<PAGE>
Dispositions
In December 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,
W. Va., a packaging facility in Livonia, Mich. and the SUN brand trademark.
---
Over the years, the company has been unsuccessful in its efforts to appeal.
The company unsuccessfully attempted to modify the FTC order by proposing to
the FTC that the company sell its trichloroisocyanurate production facility
in Lake Charles, La. to BioLab, Inc. (a sale which it ultimately consummated
in 1994) instead of selling its South Charleston facility. The company
entered into an agreement in principle, in 1994, to sell the SUN brand of
---
isocyanurates. In February 1995, the company signed a letter of intent for
the sale of its South Charleston and Livonia facilities to subsidiaries of
Israel Chemicals Ltd. These transactions did not have a material impact on
the company's results of operations in 1994 and are not expected to have a
material adverse effect on the results of operations for 1995. In addition,
during 1994, the company sold its conductive materials business including its
manufacturing facility.
During 1993, the company sold the facility and the assets of its contract
integrated circuit assembly operation and its interest in the German joint
venture to its partner.
Throughout 1992, several small product lines were sold as part of the 1991
streamlining program.
Supplemental cash flow information on businesses sold is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Fair value of assets sold $41 $37 $42
Liabilities assumed by the purchaser -- -- 6
Note paid by the purchaser -- -- (6)
- ----------------------------------------------------------------------
Net proceeds from sales of businesses $41 $37 $42
======================================================================
</TABLE>
Environmental
The company is party to various governmental and private environmental
actions associated with waste disposal sites and manufacturing facilities.
Associated costs of investigatory and remedial activities are provided for in
accordance with generally accepted accounting principles governing
probability and the ability to reasonably estimate future costs.
Environmental provisions charged to income amounted to $17 million in 1994,
$85 million in 1993, and $17 million in 1992. The significant increase in
1993 resulted from expanded volumes of contaminants uncovered while remediating
a particular site combined with the availability of more definitive data from
progressing investigatory activities concerning both the nature and extent of
contamination and remediation alternatives at other sites. The consolidated
balance sheets include reserves for future environmental expenditures to
investigate and remediate known sites amounting to $111 million at December
31, 1994 and $131 million at December 31, 1993, of which $71 million and $91
million are classified as other noncurrent liabilities, respectively. Included
in the reserve at December 31, 1994 and 1993 are liabilities anticipated to
be shared with a third party, with whom the company is currently in
litigation.
Environmental exposures are difficult to assess for numerous reasons,
including the identification of new sites, developments at sites resulting
from investigatory studies, advances in technology, changes in environmental
laws and regulations and their application, the scarcity of reliable data
pertaining to identified sites, the difficulty in assessing the involvement
and financial capability of other potentially responsible parties and the
company's ability to obtain contributions from other parties and the time
periods (sometimes lengthy) over which site remediation occurs. It is
possible that some of these matters (the outcomes of which are subject to
various uncertainties) may be resolved unfavorably against the company. At
December 31, 1994, the company had estimated additional contingent
environmental liabilities of $36 million which were determined in accordance
with generally accepted accounting principles.
Commitments and Contingencies
The company leases certain properties, such as manufacturing, warehousing and
office space, data processing and office equipment and railroad cars. Leases
covering these properties generally contain escalation clauses based on
increased costs of the lessor, primarily property taxes, maintenance and
insurance and have renewal or purchase options. Total rent expense charged to
operations amounted to $52 million in 1994, $45 million in 1993 and $37
million in 1992, (sublease income is not significant). Future minimum rent
payments under operating leases having initial or remaining noncancelable
lease terms in excess of one year at December 31, 1994 are as follows (in
millions): 1995--$28; 1996--$24; 1997--$20; 1998--$15; 1999--$11;
thereafter--$48.
There are a variety of legal proceedings, contractual obligations and
environmental issues, arising out of its businesses, pending or threatened
against the company. Certain information regarding these matters can be found
in the Environmental note to the consolidated financial statements; and Item
3, Legal Proceedings and Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations in the 1994 Form 10-K, which is
available on request from the company.
29
<PAGE>
Independent Auditors' Report
To the Board of Directors and Shareholders of Olin Corporation:
We have audited the accompanying consolidated balance sheets of Olin
Corporation and subsidiaries as of December 31, 1994 and 1993 and the related
consolidated statements of income, shareholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1994. These
consolidated financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements, referred to above,
present fairly, in all material respects, the financial position of Olin
Corporation and subsidiaries as of December 31, 1994 and 1993, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1994 in conformity with generally
accepted accounting principles.
As discussed in the notes to financial statements, the company changed its
methods of accounting for postretirement benefits other than pensions and
income taxes in 1992.
/s/ KPMG Peat Marwick LLP
Stamford, Connecticut
January 26, 1995
Management Report on
Financial Statements
The company has prepared the accompanying consolidated financial statements and
related information for the years ended December 31, 1994, 1993, and 1992.
Management is responsible for the integrity of the financial statements, which
were prepared in conformity with generally accepted accounting principles. In
our opinion, they contain no material misstatements attributable to fraud or
error. The financial information contained elsewhere in this annual report is
consistent with the financial statements.
The company maintains internal accounting control systems designed to
provide reliable information and reasonable assurance that assets are
safeguarded from loss or unauthorized use, that fraudulent reporting would be
prevented or detected and that all transactions are properly authorized. A well-
qualified internal audit department evaluates internal accounting control
systems and monitors compliance with the company's internal control policies and
procedures. Management believes that, as of December 31, 1994, the company's
system of internal controls is adequate to accomplish the objectives discussed
herein.
Management also recognizes its responsibility for fostering a strong
ethical climate so that the company's affairs are conducted according to the
highest standards of personal and corporate conduct. This responsibility is
communicated to all employees in the company's code of business conduct, which
is publicized throughout the company. The code of conduct addresses, among other
things, the necessity of ensuring open communication within the company;
potential conflicts of interest; compliance with all domestic and foreign laws,
including those relating to financial disclosure; and the confidentiality of
proprietary information. The company maintains a systematic program to assess
compliance with these policies.
Our independent auditors are engaged to audit and to render an opinion on
the fairness in all material respects of our consolidated financial statements
presented in conformity with generally accepted accounting principles. In
performing their audit in accordance with generally accepted auditing standards,
they evaluate the effectiveness of our internal accounting control systems,
review selected transactions and carry out other auditing procedures to the
extent they consider necessary in expressing their opinion on our financial
statements.
The Audit Committee of the Board of Directors, composed solely of outside
directors, meets periodically with the independent auditors, management and
the company's internal auditors to review the work of each and to evaluate
matters pertinent to internal accounting controls and financial reporting,
and the nature, extent and results of auditing activities. The Audit
Committee annually recommends to the Board of Directors the appointment of
independent auditors. The independent auditors and the company's internal
audit department have access to the Audit Committee without management's
presence.
/s/ John W. Johnstone, Jr. /s/ James A. Riggs
John W. Johnstone, Jr. James A. Riggs
Chairman and Senior Vice President and
Chief Executive Officer Chief Financial Officer
30
<PAGE>
Directors
Board of
Directors
William J. Alley
Chairman of the Executive
Committee and Member
of the Board of Directors,
American Brands, Inc.
Robert R. Frederick
Former President and
Chief Executive Officer,
RCA Corporation
Donald W. Griffin
President and
Chief Operating Officer
William W. Higgins
Former Senior Vice President,
The Chase Manhattan
Bank, N.A.
Robert Holland, Jr.
President and
Chief Executive Officer,
Ben & Jerry's Homemade, Inc.,
and Chairman, ROKHER-J, Inc.
Suzanne Denbo Jaffe
Managing Director,
Hamilton & Company
John W. Johnstone, Jr.
Chairman and
Chief Executive Officer
Jack D. Kuehler
Former Vice Chairman,
International Business Machines
Corporation
H. William Lichtenberger
Chairman and
Chief Executive Officer,
Praxair, Inc.
G. Jackson Ratcliffe, Jr.
Chairman, President and
Chief Executive Officer,
Hubbell Incorporated
William L. Read
Vice Admiral, U.S. Navy (Ret.)
John P. Schaefer
Chairman, Research Corporation
Technologies and President,
Research Corporation
Irving Shain
Former Vice President and
Chief Scientist
Committees
of the Board
Audit Committee
William W. Higgins,
Chairman
H. William Lichtenberger
William L. Read
John P. Schaefer
Irving Shain
Compensation and
Nominating Committee
G. Jackson Ratcliffe, Jr.,
Chairman
Robert R. Frederick
Robert Holland, Jr.
Jack D. Kuehler
Executive and
Finance Committee
Robert R. Frederick,
Chairman
Donald W. Griffin
William W. Higgins
Robert Holland, Jr.
John W. Johnstone, Jr.
Jack D. Kuehler
G. Jackson Ratcliffe, Jr.
Corporate Responsibility
Committee
John P. Schaefer,
Chairman
Robert Holland, Jr.
H. William Lichtenberger
William L. Read
Irving Shain
Management
Corporate Management
John W. Johnstone, Jr.
Chairman and
Chief Executive Officer
Donald W. Griffin
President and
Chief Operating Officer
Joseph M. Gaffney
Senior Vice President,
Planning and Development
James G. Hascall
Senior Vice President
James A. Riggs
Senior Vice President and
Chief Financial Officer
Robert A. Beyerl
Vice President and Controller
George B. Erensen
Vice President, Taxes and
Risk Management
Johnnie M. Jackson, Jr.
Vice President, General
Counsel and Secretary
Peter C. Kosche
Vice President,
Human Resources
Janet M. Pierpont
Vice President and Treasurer
Linda E. Gaza
Vice President, Public Affairs
Charles W. Newton, III
Vice President, Environment
and Regulatory Affairs
Operations Management
Leon B. Anziano
President, Chlor-Alkali
Products, and Corporate
Vice President
Gerald W. Bersett
President, Winchester, and
Corporate Vice President
Michael E. Campbell
President, Electronic
Materials, and Corporate
Vice President
Angelo A. Catani
President, Ordnance, and
Corporate Vice President
Patrick J. Davey
President, Chemicals, and
Corporate Vice President
James G. Hascall
President, Brass, and
Corporate Senior
Vice President
William M. Schmitt
President, Latin America and
South Africa, and
Corporate Vice President
William W. Smith
President, Aerospace, and
Corporate Vice President
Marc A. Kolpin
President, Physics International
31
<PAGE>
Corporate Data
Transfer Agent and Registrar
Chemical Bank
450 W. 33rd Street
New York, N.Y. 10001
Telephone: (800) 306-8594
Stock Exchange Listings
Common Stock
New York Stock Exchange
Pacific Stock Exchange
Chicago Stock Exchange
Ticker Symbol: OLN
Trustee for Subordinated Notes
Bankers Trust Company
Four Albany Street
New York, N.Y. 10015
Telephone: (212) 250-6112
Trustee for 8% Notes
Chemical Bank
450 W. 33rd Street
New York, N.Y. 10001
Telephone: (800) 648-8380
Commercial Paper Dealers
J.P. Morgan Securities, Inc.
60 Wall Street
New York, N.Y. 10260-0060
Telephone: (212) 648-0100
Goldman Sachs
Money Markets, L.P.
85 Broad Street
New York, N.Y. 10004
Telephone: (212) 902-8279
Dividend Reinvestment Service
Olin makes a Dividend
Reinvestment Service available
to its shareholders.
For information, write to:
Chemical Bank
JAF Building
P.O. Box 3069
New York, N.Y. 10116-3069
Trademarks
Underlined words identifying
products in this report are trade-
marks or servicemarks of Olin
Corporation or its subsidiaries
or affiliates.
Annual Meeting
The annual meeting of the share-
holders will be held on Thursday,
April 27, 1995, at 10:30 a.m.,
local time, at the headquarters of
the corporation, 120 Long Ridge
Road, Stamford, Connecticut.
Toll Free Shareholder
Information
Telephone: (800) 656-OLIN
Quarterly earnings releases and
other corporate news releases are
available. Earnings are released
during the third week of April,
July, October, and the fourth week
of January.
Form 10-K Available
A copy of Olin's Form 10-K, con-
taining additional information of
possible interest to shareholders
and filed with the Securities and
Exchange Commission in March
each year, will be sent without
charge to any shareholder who
requests it. Write to:
Richard E. Koch
Director, Investor Relations
Olin Corporation
P.O. Box 1355
Stamford, CT 06904-1355
Telephone: (203) 356-3254
Quarterly Data (unaudited)
<TABLE>
<CAPTION>
First Second Third Fourth
1994 Quarter Quarter Quarter Quarter Year
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $605 $708 $667 $678 $2,658
Cost of goods sold 488 567 543 555 2,153
Net income 15 28 22 26 91
Net income per share:
Primary .62 1.16 .86 1.01 3.65
Assuming full dilution .62 1.10 .85 .97 3.54
Common dividends .55 .55 .55 .55 2.20
Market price of
common stock*
High 51 5/8 54 1/4 59 7/8 60 1/8 60 1/8
Low 47 1/2 46 1/4 53 3/4 50 1/4 46 1/4
<CAPTION>
1993
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $592 $626 $607 $598 $2,423
Cost of goods sold 484 507 508 662 2,161
Net income (loss) 12 14 5 (123) (92)
Net income (loss) per share:
Primary .45 .57 .15 (5.69) (4.52)
Assuming full dilution .45 .57 -- -- --
Common dividends .55 .55 .55 .55 2.20
Market price of
common stock*
High 46 1/4 46 1/4 45 1/4 50 1/2 50 1/2
Low 40 3/8 42 3/8 39 7/8 41 3/4 39 7/8
<CAPTION>
1992
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $614 $633 $577 $552 $2,376
Cost of goods sold 490 516 482 453 1,941
Income before
accounting changes 24 21 6 4 55
Accounting changes (46) -- -- -- (46)
Net income (loss) (22) 21 6 4 9
Net income (loss) per share:
Primary:
Income before
accounting changes 1.04 .88 .18 .07 2.17
Accounting changes (2.11) -- -- -- (2.11)
Net income (loss) (1.07) .88 .18 .07 .06
Assuming full dilution -- .86 -- -- --
Common dividends .55 .55 .55 .55 2.20
Market price of
common stock*
High 54 1/4 54 3/4 47 3/4 46 1/4 54 3/4
Low 39 3/8 43 3/4 39 1/2 37 1/4 37 1/4
==================================================================================================
</TABLE>
*New York Stock Exchange composite transactions.
1993 fourth-quarter loss includes a $132 million charge for personnel
reductions, business restructurings involving consolidations and realignments
within divisions, costs at sites of discontinued businesses, future
environmental liabilities, and other charges.
1992 first-quarter loss includes a $46 million charge for cumulative effect
of Accounting Changes for the adoption of SFAS No. 106 and No. 109.
32
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF OLIN CORPORATION
--------------------------------
(as of December 31, 1994)
<TABLE>
<CAPTION>
JURISDICTION PERCENTAGE OF DIRECT/
------------ ---------------------
WHERE INDIRECT OWNERSHIP BY
----------- ------------------------
SUBSIDIARY ORGANIZED OLIN OF VOTING SECURITIES
- ----------- ----------- -------------------------
<S> <C> <C>
A.J. Oster Caribe, Inc. Delaware 100%
A.J. Oster Company Rhode Island 100%
A.J. Oster Foils, Inc. Delaware 100%
A.J. Oster West, Inc. Rhode Island 100%
Bridgeport Brass Corporation/1/ Indiana 100%
Bryan Metals, Inc./2/ Ohio 100%
General Defense Corporation/3/ Pennsylvania 100%
Hi-Pure Chemicals, Inc. Pennsylvania 100%
Hydrochim, S.A. France 100%
N.V. Olin Hunt Specialty Products Belgium 100%
N.V. Olin Hunt Trading Belgium 100%
Olin Aerospace Company Washington 100%
Olin Australia Limited Australia 100%
Olin Brasil Ltda. Brazil 100%
Olin Canada Inc. Canada 100%
Olin Chemicals B.V. Netherlands 100%
Olin Corporation N.Z. Limited New Zealand 100%
Olin Engineered Systems, Inc. Delaware 100%
Olin Export Trading Corporation Virgin Islands 100%
Olin Financial Services, Inc. Delaware 100%
Olin GmbH Germany 100%
Olin Hunt Specialty Products, Inc. Delaware 100%
Olin Hunt Sub. I Corp. Delaware 100%
Olin Industrial (Hong Kong) Limited Hong Kong 100%
Olin Japan, Inc. Japan 100%
Olin Pte. Ltd. Singapore 100%
Olin S.A. France 100%
Olin (U.K.) Limited United Kingdom 100%
Physics International Company California 100%
Superior Pool Products, Inc. Delaware 100%
U.S. Ordnance Company/4/ Delaware 100%
</TABLE>
There are omitted from the foregoing list the names of certain subsidiaries
which, if considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary.
_______
1. d/b/a "Olin Brass, Indianapolis" and "Olin Brass, Indianapolis Facility"
in States of California, Illinois, Indiana, New Jersey, North Carolina,
Ohio, Pennsylvania, Rhode Island and Texas
2. d/b/a "Bryan Metals of Ohio" in New Jersey.
3. d/b/a "Olin Ordnance" in States of Florida and Pennsylvania.
4. d/b/a "Olin Ordnance" in Los Angeles County, California.
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Olin Corporation:
We consent to incorporation by reference in Registration Statements No. 33-4479
and No. 33-52771 on Form S-3 and Nos. 33-28593, 33-40346, 33-55187 and 33-52681
on Form S-8 of Olin Corporation of our report dated January 26, 1995, relating
to the consolidated balance sheets of Olin Corporation and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1994, which report is incorporated by reference in the
December 31, 1994 annual report on Form 10-K of Olin Corporation. Our report
refers to a change in accounting for postretirement benefits other than pensions
and income taxes in 1992.
KPMG PEAT MARWICK LLP
Stamford, Connecticut
March 9, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Financial Statements contained in Item 8 of Form 10-K for the period ended
December 31, 1994 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
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<PERIOD-END> DEC-31-1994
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<BONDS> 418
<COMMON> 21
0
89
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<SALES> 2,658
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<CGS> 2,153
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<INCOME-TAX> 50
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</TABLE>
