<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
------------------------------------------
COMMISSION FILE NUMBER 1-1070
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OLIN CORPORATION
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(Exact name of registrant as specified in its charter)
Virginia 13-1872319
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification no.)
501 Merritt 7, Norwalk, CT 06851
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(Address of principal executive offices) (Zip Code)
(203) 750-3000
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(Registrant's telephone number, including area code)
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(Former name, former address, and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X NO
----- -----
As of October 31, 1997 there were outstanding 49,315,789 shares of the
registrant's common stock.
<PAGE>
Part I - Financial Information
Item 1. Financial Statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Balance Sheets
(In millions)
<TABLE>
<CAPTION>
Unaudited
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 36.0 $ 523.5
Short-term investments 2.0 87.3
Accounts receivable, net 411.2 320.5
Inventories 338.9 314.9
Other current assets 92.3 89.6
--------- ----------
Total current assets 880.4 1,335.8
Investments and advances 137.1 173.8
Property, plant and equipment
(less accumulated depreciation
of $1,509.0 and $1,353.1) 746.7 657.3
Other assets 140.0 172.5
--------- ----------
Total assets $ 1,904.2 $ 2,339.4
========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Short-term borrowings and current
installments of long-term debt $ 7.2 $ 138.8
Accounts payable 221.2 267.9
Income taxes payable 3.0 127.4
Accrued liabilities 251.8 292.3
--------- ----------
Total current liabilities 483.2 826.4
Long-term senior debt 268.0 276.3
Other liabilities 255.9 290.7
Commitments and contingencies
Shareholders' equity:
Common stock, par value $1 per share:
Authorized 120.0 shares.
Issued 49.5 shares (52.2 in 1996) 49.5 52.2
Additional paid-in capital 378.4 493.8
Guaranteed ESOP obligations - (5.0)
Cumulative translation adjustment (16.8) (8.6)
Retained earnings 486.0 413.6
--------- ----------
Total shareholders' equity 897.1 946.0
--------- ----------
Total liabilities and
shareholders' equity $ 1,904.2 $ 2,339.4
========= ==========
</TABLE>
- -----------------------------------
The accompanying Notes to Condensed Financial Statements are an integral
part of the condensed financial statements.
<PAGE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Income (Unaudited)
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------ ---------------------------
1997 1996 1997 1996
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Sales $ 607.9 $ 652.0 $ 1,831.5 $ 2,046.6
Operating expenses:
Cost of goods sold 469.9 501.1 1,411.4 1,558.7
Selling and administration 71.7 76.8 219.1 240.7
Research and development 7.6 9.8 22.2 29.6
-------- -------- --------- ---------
Operating income 58.7 64.3 178.8 217.6
Interest expense 5.9 7.0 20.4 22.9
Interest income 1.1 0.4 9.8 1.3
Other income 4.2 3.2 12.6 19.3
-------- -------- --------- ---------
Income from continuing operations before taxes 58.1 60.9 180.8 215.3
Income taxes 20.1 20.1 62.4 73.1
-------- -------- --------- ---------
Income from continuing operations 38.0 40.8 118.4 142.2
Loss from discontinued operations, net of taxes - (3.0) - (7.7)
-------- -------- --------- ---------
Net income 38.0 37.8 118.4 134.5
Preferred dividends - 1.5 - 4.4
-------- -------- --------- ---------
Net income available to common shareholders $ 38.0 $ 36.3 $ 118.4 $ 130.1
======== ======== ========= =========
Net income (loss) per common share:
Primary:
Continuing operations $ 0.76 $ 0.78 $ 2.32 $ 2.76
Discontinued operations - (0.06) - (0.16)
-------- -------- --------- ---------
Total net income $ 0.76 $ 0.72 $ 2.32 $ 2.60
-------- -------- --------- ---------
Fully diluted:
Continuing operations $ 0.75 $ 0.75 $ 2.30 $ 2.67
Discontinued operations - (0.05) - (0.14)
-------- -------- --------- ---------
Total net income $ 0.75 $ 0.70 $ 2.30 $ 2.53
-------- -------- --------- ---------
Dividends $ 0.30 $ 0.30 $ 0.90 $ 0.90
Average common shares outstanding - primary 49.9 49.8 51.0 49.8
Average common shares outstanding - fully diluted 50.3 52.4 51.4 52.2
</TABLE>
- ------------------------------------
The accompanying Notes to Condensed Financial Statements are an integral
part of the condensed financial statements.
<PAGE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Cash Flows (Unaudited)
(In millions)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
-----------------------------
1997 1996
--------- ----------
<S> <C> <C>
Operating activities
- --------------------
Income from continuing operations $ 118.4 $ 142.2
Earnings of non-consolidated affiliates (7.4) (6.9)
Depreciation and amortization 90.2 96.3
Deferred taxes 21.8 8.7
Change in assets and liabilities net of
sale and purchase of businesses:
Receivables (95.4) (17.0)
Inventories (20.3) (5.7)
Other current assets (2.6) (5.1)
Accounts payable and accrued liabilities (109.0) (80.6)
Noncurrent liabilities (10.1) 7.6
Other operating activities 14.9 0.6
--------- ----------
Net cash and cash equivalents provided by operating
activities of continuing operations 0.5 140.1
Discontinued operations:
Net loss - (7.7)
Change in net assets - 0.7
--------- ----------
Net operating activities 0.5 133.1
--------- ----------
Investing activities
- --------------------
Capital expenditures (74.4) (68.0)
Disposition of property, plant and equipment 1.8 23.0
Business acquired in purchase transaction (2.0) -
Proceeds from sale of business - 5.5
Taxes paid on sale of businesses (116.4) -
Purchase of short-term investments (84.9) -
Proceeds from sale of short-term investments 170.2 -
Investments and advances-affiliated companies at equity (77.0) (13.1)
Other investing activities (4.0) (2.0)
--------- ----------
Net investing activities (186.7) (54.6)
--------- ----------
Financing activities
- --------------------
Long-term debt repayments (138.5) (58.8)
Short-term debt (repayments) borrowings (1.5) 8.7
Purchase of Olin common stock (127.1) -
Repayment from ESOP 5.0 12.0
Stock options exercised 8.6 6.3
Dividends paid (46.1) (49.2)
Other financing activities (1.7) 0.3
--------- ----------
Net financing activities (301.3) (80.7)
--------- ----------
Net decrease in cash and cash equivalents (487.5) (2.2)
Cash and cash equivalents, beginning of period 523.5 7.5
--------- ----------
Cash and cash equivalents, end of period $ 36.0 $ 5.3
========= ==========
</TABLE>
- ------------------------------------
The accompanying Notes to Condensed Financial Statements are an
integral part of the condensed financial statements.
<PAGE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. The condensed financial statements included herein have been prepared by the
company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission and, in the opinion of the company,
reflect all adjustments (consisting only of normal accruals) which are
necessary to present fairly the results for interim periods. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations; however, the company believes that the disclosures are adequate
to make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements, accounting policies and the notes thereto and management's
discussion and analysis of financial condition and results of operations
included in the company's Annual Report on Form 10-K for the year ended
December 31, 1996.
2. Inventory consists of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
-------------- -------------
<S> <C> <C>
Raw materials and supplies $ 165.0 $ 152.9
Work in process 144.7 144.6
Finished goods 184.2 171.8
------- -------
493.9 469.3
LIFO reserve (155.0) (154.4)
------- -------
Inventory, net $ 338.9 $ 314.9
======= =======
</TABLE>
Inventories are valued principally by the dollar value last-in, first-out
(LIFO) method of inventory accounting; in aggregate, such valuations are not
in excess of market. Elements of costs in inventories include raw material,
direct labor and manufacturing overhead. Inventories under the LIFO method
are based on annual determination of quantities and costs as of the year-end;
therefore, the condensed financial statements at September 30, 1997, reflect
certain estimates relating to inventory quantities and costs at December 31,
1997.
3. Primary earnings per share are computed by dividing net income less the ESOP
preferred dividend requirement (to the date of its redemption in 1996) and
the redemption adjustment (excess of fair value over book value of ESOP
shares redeemed) by the weighted average number of common shares outstanding.
In December 1996, the company reacquired the ESOP preferred stock with shares
of common stock of equivalent value. Fully diluted earnings per share
reflect the dilutive effect of stock options and assume the conversion of
outstanding ESOP preferred stock, until its redemption in December 1996, 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.
<PAGE>
4. The company is party to various governmental and private environmental
actions associated with waste disposal sites and manufacturing facilities.
Environmental provisions charged to income amounted to $12 million for the
nine months ended September 30, 1997 and 1996. Charges to income for
investigatory and remedial efforts were material to operating results in 1996
and may be material to operating results in 1997. The consolidated balance
sheets include reserves for future environmental expenditures to investigate
and remediate known sites amounting to $135 million at September 30, 1997 and
$148 million at December 31, 1996, of which $100 million and $113 million are
classified as other noncurrent liabilities, respectively.
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 length
of time 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.
5. The company and Asahi Glass Company have established separate ownership of
two joint ventures the companies had previously formed in polyols and
microelectronic packaging systems. The company is now the sole owner of
Aegis, Inc., a manufacturer of metal hermetic packages that was established
in 1986. Conversely, Asahi Glass Company is now the sole owner of the former
Asahi-Olin joint venture in polyols that was established in 1974.
6. In October 1997, the company announced that it will sell its surfactants,
fluids, non-urethane polypropylene glycol and polyethylene glycol businesses
to BASF. This transaction has been approved by the boards of directors of
both companies and has passed appropriate regulatory reviews. The companies
are expected to complete this transaction by the end of November 1997. The
company will also manufacture product for BASF at its Doe Run facility as
part of a supply agreement. The company does not expect that this transaction
will have a material effect on its results of operations.
7. At the annual shareholders' meeting in April 1997, the shareholders approved
an amendment to the Restated Articles of Incorporation to increase the number
of authorized shares of common stock from 60 million shares to 120 million
shares. The board of directors had approved this amendment in January 1997.
The amendment was effective May 8, 1997.
8. In February 1997, the company completed its purchase of the remaining 50% of
Niachlor with a final payment of $2 million to E.I. du Pont de Nemours and
Company (DuPont). In December 1996, the company made an advance payment of
$75 million to DuPont. This acquisition was accounted for as a purchase in
1997 and consists primarily of property, plant and equipment.
<PAGE>
9. In December 1996, all outstanding shares of ESOP preferred stock were
reacquired with common stock of equivalent value. The notes guaranteed by
the company have been repaid in full and the related guarantee of this debt
has expired as of March 31, 1997.
10. In December 1996, the company sold its isocyanates businesses for $565
million in cash. The company's results of operations for the three and nine
months ended September 30, 1996 include sales of $70 million and $228
million and operating income of $14 million and $43 million, respectively,
from the isocyanates businesses.
11. On December 31, 1996, the company completed the spin-off of its Ordnance and
Aerospace businesses as Primex Technologies, Inc. ("Primex"). Under the
terms of the spin-off, the company distributed to its holders of common
stock as of the close of business on December 19, 1996, one Primex common
share for every ten shares of Olin common stock. The historical operating
results of these businesses are shown net of tax as discontinued operations
in the condensed statements of income.
12. In January 1996, the company sold its corporate headquarters. This
transaction generated a gain of approximately $7 million, which was reported
in Other Income. In March 1996, the company sold its electrostatics
business. This transaction did not have a material impact on the company's
results of operations.
13. 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 dollar, Belgian
franc, Canadian dollar and Japanese yen) and relating to particular
anticipated but not yet committed sales expected to be denominated in those
currencies. All of the currency derivatives expire within one year and are
for United States dollar equivalents. The counterparties to the options and
contracts are major financial institutions. In accordance with Statement of
Financial Accounting Standards No. 52, Foreign Currency Translation (SFAS
52), a transaction is classified as a hedge when the foreign currency
transaction is designated as, and is effective as, a hedge of a foreign
currency commitment and the foreign currency commitment is firm. If a
transaction does not meet the criteria to qualify as a hedge, it is
considered to be speculative. For foreign currency commitments that are
classified as a hedge, any gain or loss on the commitment is deferred until
it matures. Any unrealized gains or losses associated with foreign currency
commitments that are classified as speculative are recognized in the current
period. Foreign currency gains and losses realized are included in the
income statement in Selling and Administration. If a foreign currency
transaction previously considered as a hedge is terminated before the
transaction date of the related commitment, any deferred gain or loss shall
continue to be deferred until the transaction date of the commitment.
<PAGE>
During 1992, the company swapped interest payments on $50 million principal
amount of its 8% notes due 2002 to a floating rate (5.961% at September 30,
1997). In June 1995, the company offset this transaction by swapping
interest payments to a fixed rate of 6.485%. Counterparties to the interest
rate swap contracts are major financial institutions. The risk of loss to
the company in the event of nonperformance by a counterparty is not
significant. The company records the net difference between the interest
spreads as Interest Expense in the income statement.
<PAGE>
2. Management's Discussion and Analysis of Financial Condition and Results of
---------------------------------------
Operations.
----------
RESULTS OF OPERATIONS
(in millions, except per share data)
CONSOLIDATED
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------------------- --------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Sales $607.9 $652.0 $1,831.5 $2,046.6
Gross Margin 138.0 150.9 420.1 487.9
Selling & Administration 71.7 76.8 219.1 240.7
Interest Income 1.1 0.4 9.8 1.3
Other Income 4.2 3.2 12.6 19.3
Income from Continuing Operations,
Net of Taxes 38.0 40.8 118.4 142.2
Net Income 38.0 37.8 118.4 134.5
Per Common Share:
Primary
Income from Continuing Operations .76 .78 2.32 2.76
Net Income .76 .72 2.32 2.60
Fully Diluted
Income from Continuing Operations .75 .75 2.30 2.67
Net Income .75 .70 2.30 2.53
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO 1996
Sales decreased 7%. On a comparable basis, excluding the sales contributed by
the isocyanates businesses which were sold in December 1996, sales increased 4%
due to a 6% increase in volumes, a 1% increase in metal values and a 1% increase
from the inclusion of the sales from the Niachlor acquisition (February 1997)
offset by a 4% decrease in selling prices.
Gross margin percentage was 23%, equal to last year's gross margin percentage
excluding the impact of the isocyanates businesses in 1996.
Selling and administration expenses as a percentage of sales was 12% in 1997
and 1996. Selling and administrative expenses, which were 13% as a percentage of
sales in 1996 after excluding the selling and administration expense of the
isocyanates businesses ($3.5), decreased in amount due to lower administration
expenses.
Research and development expenses, excluding the research and development
expense of the isocyanates businesses ($2.5), were about equal.
The effective tax rate increased to 34.5% from 33.0% in 1996. The increase was
attributable primarily to reduced tax benefits associated with foreign sales.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO 1996
Sales decreased 11%. On a comparable basis, excluding the sales contributed by
the isocyanates businesses, sales were about equal to last year as lower selling
prices offset higher volumes and the inclusion of the sales from the Niachlor
acquisition.
Gross margin percentages in 1997 and 1996 were about equal excluding the
impact of the isocyanates businesses in 1996.
Selling and administration expenses as a percentage of sales was 12% in 1997
and 1996. Selling and administrative expenses, which were 13% as a percentage of
sales in 1996 after excluding the selling and administration expense of the
isocyanates businesses ($12.5), decreased in amount due to lower administration
expenses.
Research and development expenses, excluding the impact of the sale of the
isocyanates businesses ($6.5), decreased slightly.
The increase in interest income is due to the income earned on the proceeds
from the sale of the isocyanates businesses.
Other income in 1996 includes the $7 million gain on the sale of the company's
corporate headquarters.
The effective tax rate increased slightly to 34.5% from 34.0% in 1996.
<PAGE>
CHEMICALS
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------------ ------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales
Continuing Businesses $331.3 $306.6 $1,023.5 $1,003.0
Businesses Sold (a) - 70.0 - 228.0
------- ------- --------- ---------
Total Sales $331.3 $376.6 $1,023.5 $1,231.0
======= ======= ========= =========
Operating Income
Continuing Businesses $ 43.1 $ 36.1 $ 138.5 $ 133.2
Businesses Sold (a) - 14.0 - 43.0
------- ------- --------- ---------
Total Operating Income $ 43.1 $ 50.1 $ 138.5 $ 176.2
======= ======= ========= =========
</TABLE>
(a) Represents the sales and operating income of the isocyanates businesses
which were sold on December 4, 1996.
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO 1996 ON A CONTINUING BUSINESS
BASIS
Sales were 8% ahead of last year as higher volumes and the inclusion of the
sales from the Niachlor acquisition more than offset lower selling prices.
Operating income increased 19%. Chlor Alkali's operating income increased
slightly as higher sales volumes offset lower prices. Microelectronic Materials
operating results improved over last year because of higher sales caused by
stronger industry demand that has recovered from last year's downturn. In Pool
Products, operating results were equal to last year as higher pricing was offset
by lower volumes. In Biocides, higher sales volumes of antidandruff agents
improved operating results. Higher sales volumes contributed to Hydrazine and
Propellants' improved performance. Increased raw material costs more than offset
the profit impact from higher volumes and improved domestic prices in ethylene
oxide/propylene oxide derivative products. In Sulfuric Acid, unfavorable
manufacturing costs due to higher raw material usage and additional maintenance
expenses more than offset the additional profits from increased sales.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO 1996 ON A CONTINUING BUSINESS
BASIS
Sales increased 2% as a 3% increase in volumes and a 2% increase due to the
inclusion of the sales from the Niachlor acquisition offset a 3% decrease in
selling prices. Operating income increased 4%. In Chlor-Alkali, operating
income decreased from last year as lower caustic prices more than offset the
impact of the additional sales from Niachlor and the impact of lower utility
costs. Improved pricing contributed to Pool Products' increased operating
income. Biocides' improved performance was primarily due to higher volumes of
antidandruff agents and marine antifoulant agents. Higher propellant volumes
contributed to the increase in Hydrazine and Propellants' sales and operating
income. Microelectronic Materials' operating income declined due to an
unfavorable product mix and higher manufacturing costs. In Sulfuric Acid,
operating income was behind last year due to higher manufacturing costs.
METALS AND AMMUNITION
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------------ ------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $276.6 $275.4 $808.0 $815.6
Operating Income 15.6 14.2 40.3 41.4
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO 1996
Sales were about equal to last year as an increase in metal values in Brass
offset lower shipments in Winchester. Operating income increased 10%. Brass'
operating income increased due to strong demand for brass strip products and
higher earnings from A.J. Oster Company which more than offset the impact of the
lower volumes associated with the new tube mill at Indianapolis, IN.
Winchester's sales and operating results were about equal to last year as
reduced military ammunition shipments offset lower manufacturing costs.
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO 1996
Sales and operating income were slightly below last year. Lower metal values
along with reduced ammunition shipments in Winchester contributed to the sales
decrease. Higher Brass volumes and increased earnings at A.J. Oster more than
offset the start-up costs and lower volumes associated with the new tube mill at
Indianapolis, IN. Winchester's sales and operating results were behind last
year. Reduced military ammunition shipments was the main contributor to the
decrease in Winchester's financial performance.
ENVIRONMENTAL
In the first nine months of 1997, the company spent approximately $25 million
for investigatory and remediation activities associated with former waste sites
and past operations. Spending for environmental investigatory and remedial
efforts for the full year 1997 is estimated to be $35 million. Cash outlays for
remedial and investigatory activities associated with former waste sites and
past operations were not charged to income but instead were charged to reserves
established for such costs identified and expensed to income in prior periods.
Associated costs of investigatory and remedial activities are provided for in
accordance with generally accepted accounting principles governing probability
and the ability to reasonably estimate future costs. Charges to income for
investigatory and remedial activities were $12 million for the nine months ended
September 30, 1997. Charges to income for investigatory and remedial efforts
were material to operating results in 1996 and may be material to operating
results in 1997 and future years.
The company's consolidated balance sheets included liabilities for future
environmental expenditures to investigate and remediate known sites amounting to
$135 million and $148 million at September 30, 1997 and December 31, 1996, of
which $100 million and $113 million was classified as other noncurrent
liabilities, respectively. Those amounts 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 site investigation and
remediation, capital projects and normal plant operations are expected to range
between $75-$90 million over the next several years. While the company does not
anticipate a material increase in the projected annual level of its
environmental-related costs, there is always the possibility that such increases
may occur in the future in view of the uncertainties associated with
environmental exposures. Environmental exposures are difficult to assess for
numerous reasons, including the identification of new sites, developments at
sites resulting from investigatory studies, advances in technology, changes in
environmental laws and regulations and their application, the scarcity of
reliable data pertaining to identified sites, the difficulty in assessing the
involvement and the financial capability of other potentially responsible
parties and the company's ability to obtain contributions from other parties and
the lengthy time periods 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.
LIQUIDITY, INVESTMENT ACTIVITY AND OTHER FINANCIAL DATA
CASH FLOW DATA
Provided by (used for) (in millions)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
---------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
Net Operating Activities $ .5 $133.1
Capital Expenditures (74.4) (68.0)
Net Investing Activities (186.7) (54.6)
Net Financing Activities (301.3) (80.7)
</TABLE>
Operating income and cash and cash equivalents on hand were used to finance the
company's seasonal working capital requirements, long-term debt repayments,
capital and investment projects, dividends, the purchase of Olin common stock
and tax payments on the sale of the isocyanates businesses.
<PAGE>
OPERATING ACTIVITIES
The decrease in cash provided by operating activities was due to lower operating
income and an increased investment in working capital. Higher receivable levels
associated with the Niachlor acquisition, the increased demand from the
semiconductor industry, higher Winchester receivables due to the discontinuation
of an ammunition prepayment program and an unusually low Brass accounts
receivable level at year-end 1996 along with lower levels of accounts payable
and accrued liabilities in 1997 were the major contributors to the increased
investment in working capital.
INVESTING ACTIVITIES
Capital spending of $74.4 million in 1997 was 21% higher than 1996, excluding
$6.5 million of capital spending of the isocyanates businesses which were sold
in December 1996. For the full year 1997, capital spending is estimated to
increase approximately 20-25% from 1996 (excluding $10.2 million of capital
spending of the isocyanates businesses) to provide additional capacity for
certain Chemicals product lines. In Microelectronic Materials, there are two
major projects: an ultra high-purity chemical plant and distribution center in
Zwijndrecht, Belgium to better serve the semiconductor industry in Europe and a
photoresist facility in North Kingston, RI to support the rapid
commercialization of advanced photoresists products. Both projects are expected
to be completed in 1998. In addition, the company announced plans to construct a
new biocides facility in China to support increasing demand in China and the
rest of Asia for antidandruff shampoos and other personal care products that use
biocides. This plant is scheduled to be on-stream during the year 2000.
In February 1997, the company completed its purchase of the remaining 50% of
Niachlor with a final payment of $2 million to E.I. du Pont de Nemours and
Company (DuPont). In December 1996, the company made an advance payment of $75
million to DuPont. This acquisition was accounted for as a purchase in 1997 and
consists primarily of property, plant and equipment.
Investment spending in 1997 was primarily attributable to the Sunbelt project (a
joint venture formed by the Geon Company and the company in 1996). The plant
start-up associated with this venture is estimated to be in late November. The
company and its venture partner are pursuing a financing by the joint venture of
approximately $200 million.
During the first nine months of 1997, the company paid taxes of approximately
$116 million relating to the sale of its isocyanates businesses in December
1996.
The company and Asahi Glass Company have established separate ownership of two
joint ventures the companies had previously formed in polyols and
microelectronic packaging systems. The company is now the sole owner of Aegis,
Inc., a manufacturer of metal hermetic packages that was established in 1986.
Conversely, Asahi Glass Company is now the sole owner of the former Asahi-Olin
joint venture in polyols that was established in 1974.
After an extensive review of a variety of options regarding its ethylene
oxide/propylene oxide derivative products businesses at its Doe Run facility in
Brandenburg, KY, the company has concluded that the maximum economic value would
be realized from the retention of the non-foam polyol business, and re-
positioning or selling some of the other businesses (surfactants, glycols,
flexible polyols and disulfonates). In October 1997, the company announced that
it will sell its surfactants, fluids, non-urethane polypropylene glycol and
polyethylene glycol businesses to BASF. This transaction has been approved by
the boards of directors of both companies and has passed appropriate regulatory
reviews. The companies are expected to complete this transaction by the end of
November 1997. The company will also manufacture product for BASF at its Doe Run
facility as part of a supply agreement. The company does not expect that this
transaction will have a material effect on its results of operations.
Proceeds in 1996 from the sale of assets including the corporate headquarters
and the divestment of the electrostatics business approximated $30 million.
FINANCING ACTIVITIES
At September 30, 1997, the company maintained committed credit facilities with
banks of $258 million, all of which was available. The company believes that
these credit facilities are adequate to satisfy its liquidity needs for the near
future.
<PAGE>
In 1996, the board of directors authorized the company to purchase up to 10% of
the company's common stock. A portion of the proceeds from the 1996 sales of
businesses will be used for this program which began in January 1997. During the
first nine months of 1997, the company used $127 million to repurchase
approximately 3.1 million shares of its common stock.
At September 30, 1997, the percent of total debt to total capitalization
(excluding the reduction in equity for the Contributing Employee Ownership Plan
at year-end 1996 and September 30, 1996) was 23.5%, down from 30.4% at year-end
1996 and 33.5% at September 30, 1996. The decrease from September 30, 1996 was
due the reduction in domestic short-term borrowings and the repayment of the
9.5% subordinated notes ($125 million).
NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share," which
specifies the computation, presentation and disclosure requirements for earnings
per share. This statement is effective for both interim and annual periods
ending after December 15, 1997. The company does not expect that the
application of this standard will have a material effect on its present method
of calculating and reporting earnings per share.
In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information," which established standards for the way
that segment information is to be disclosed in the financial statements along
with additional information on products and services, geographic areas and major
customers. The company is still assessing the disclosure requirements of this
standard which is effective for periods beginning after December 15, 1997.
YEAR 2000 COMPUTER SYSTEMS
The company is currently studying the impact of upgrading its information
technology systems, including its related costs, relating to the Year 2000. The
company is reviewing all internal processes and hardware and software issues,
and is also discussing with its vendors and customers the possibility of any
interface difficulties which may affect the company. To date, no significant
concerns have been identified.
CAUTIONARY STATEMENT
Cautionary Statement under Federal Securities Laws: The information in this
Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements that are based on management's
beliefs, certain assumptions made by management and current expectations,
estimates and projections about the markets and economy in which the company and
its various divisions operate. Words such as "expects," "believes," "should,"
"plans," "will," "estimates," and variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions ("Future Factors") which are difficult to predict.
Therefore, actual outcomes and results may differ materially from what is
expected or forecasted in such forward-looking statements. The company
undertakes no obligation to update publicly any forward-looking statements,
whether as a result of future events, new information or otherwise. Information
on Future Factors which could cause actual results to differ materially from
those discussed in these sections appears within such sections and in the last
sentence of the section "1997 Outlook -- Cautionary Statement under Federal
Securities Laws" contained in Item 7 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations of the company's 1996 Form 10-K
(page 20 of the 1996 Annual Report to Shareholders), such last sentence being
incorporated by reference herein.
<PAGE>
Part II - Other Information
Item 2. Changes in Securities and Use of Proceeds.
-----------------------------------------
On July 1, 1997, Olin issued 122 shares of its Common Stock to a retired
director in connection with a deferred director compensation plan pursuant to a
Section 4(2) exemption from the Securities Act of 1933, as amended.
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits
--------
10. Form of Executive Agreement, effective October 3, 1997.
11. Computation of Per Share Earnings (Unaudited).
12. Computation of Ratio of Earnings to Fixed Charges (Unaudited).
27. Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended
September 30, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OLIN CORPORATION
(Registrant)
By: /s/ A.W. Ruggiero
------------------------------
A.W. Ruggiero
Senior Vice President and
Chief Financial Officer
(Authorized Officer)
Date: November 13, 1997
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
10. Form of Executive Agreement, effective October 3, 1997.
11. Computation of Per Share Earnings (Unaudited).
12. Computation of Ratio of Earnings to Fixed Charges (Unaudited).
27. Financial Data Schedule.
<PAGE>
EXHIBIT 10
FORM OF
--------
EXECUTIVE AGREEMENT
-------------------
Agreement between Olin Corporation, a Virginia corporation ("Olin"), and
_______ (the "Executive"), dated as of __________, 199_.
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 financially injurious to Olin; or
willful misconduct 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
(or the plan's related trust) 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
<PAGE>
2
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 Olin 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 aggregate voting stock or other
ownership interests of (x) the entity or entities, if any, that succeed to the
business of Olin 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.
(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
actually paid under Olin's short-term annual incentive compensation plans or
programs ("ICP") for the three years immediately preceding the date of
Termination or the Executive's then current ICP 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.
<PAGE>
3
(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 (or
the plan's related trust) 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 prior to a Change in Control 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 financial or stock price performance
<PAGE>
4
provided such performance is a relevant criterion under such plan) and the level
of the Executive's participation relative to other participants as exists on the
date hereof; provided that, with respect to annual 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 Change in Control Agreement. This Agreement supersedes and
replaces the Executive Agreement dated as of ________, 199_ between Olin and the
Executive./1/
3. Term/Executive's Duties.
(a) This Agreement expires at the close of business on September 30, 2002,
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,
2002 or three years following the date of the Change in Control; provided that
the expiration of this Agreement will not affect any of the Executive's rights
resulting from a Termination prior to such expiration. 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; provided that the
Executive's death will not affect any of the Executive's rights resulting from a
Termination prior to 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
- --------------------------
/1/ If Executive had a Tier II, use the following language instead: The
Agreement supersedes and replaces the Letter Agreement (Tier II), dated
__________, 19__, between Olin and the Executive." If Executive is a new hire,
use the following: "This paragraph intentionally left blank."
<PAGE>
5
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 any Potential Change in
Control of Olin occurring from time to time after the date hereof, the Executive
will remain in the employ of Olin until the earlier of (i) the end of the six
month period following the occurrence of such Potential Change in Control and
(ii) a Change in Control during which time the Executive will have an office,
title, duties and responsibilities substantially consistent with those
applicable immediately prior to such 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 10 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 in Control severance premium to the Executive in an amount
equal to two times the Executive Severance. The Change in Control severance
premium, if it becomes due, will be made within 10 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 equal 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
<PAGE>
6
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 (including covered dependents) 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's entitlement to insurance coverage under the
Consolidated Omnibus Budget Reconciliation Act would commence at the end of the
period during which insurance coverage is provided under this Agreement. 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. If the Executive receives the Executive Severance
(including the amount referred to in paragraph 1(d)(ii)), the Executive shall
not be entitled to an ICP award for the calendar year of Termination if
Termination occurs during the first calendar quarter. Even if the Executive
receives the Executive Severance (including the amount referred to in paragraph
1(d)(ii)) and if Termination occurs during or after the second calendar quarter,
the Executive shall be entitled to a prorated ICP award for the calendar year of
Termination which shall be determined by multiplying his or her then current ICP
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 ICP award following the date of Termination. The
accrued vacation pay and ICP award, if any, shall be paid in a lump sum when the
Executive Severance is paid.
(b) If the Executive becomes entitled to payment under paragraph 4(b), the
pension credit and insurance coverage provided for in paragraph 5(a) will be for
an additional 24-month period beyond the period provided in paragraph 5(a).
(c) Notwithstanding the foregoing paragraphs 5(a) and 5(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 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.
<PAGE>
7
(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 72%, which is the current percentage
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
Employees Pension Plan, 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. The
actuarial value shall be determined as the amount needed to purchase a fixed
annuity through Metropolitan Life Insurance Company ("Metropolitan") immediately
prior to the Change in Control. In the event such annuity is not available
through Metropolitan, then Prudential Insurance Company or an insurance company
with comparable rating by A.M. Best & Company shall be substituted for
Metropolitan. A lump sum payment under this paragraph 5(e) will be used to
reduce any payments under the Senior Plan which may become due to the Executive
thereafter. The purpose of this paragraph 5(e) is to ensure that an Executive
who is less than age 55 at the time of the Change in Control receives a lump sum
payment which when combined with the value of the Executive's pension benefits
from all other Olin pension plans preserves the 72% age 55, subsidized early
retirement factor, rather than the actuarial reduction. Such lump sum payment
shall be discounted by the same interest rate used by the insurance company to
determine the actuarial value to provide for the deferral of the benefit until
the Executive reaches age 55.
(f) If the Executive becomes entitled to the payment under paragraph 4(b),
at the end of the period for insurance coverage provided in accordance with
paragraph 5(b), the Executive shall be entitled to continue in Olin's medical
and dental coverage (including dependent coverage) on terms and conditions no
less favorable to the Executive as in effect prior to the Change in Control for
the Executive until the Executive reaches age 65; provided that if the Executive
obtains other employment which offers medical or dental coverage to the
Executive and his or her dependents, the Executive shall enroll in such medical
or dental coverage, as the case may be, and the corresponding coverage provided
to the Executive hereunder shall be
<PAGE>
8
secondary coverage to the coverage provided by the Executive's new employer so
long as such employer provides the Executive with such coverage.
(g) If there is a Change in Control, Olin shall not reduce or diminish the
insurance coverage or benefits which are provided to the Executive under
paragraph 5(a), 5(b) or 5(f) during the period the Executive is entitled to such
coverage; provided the Executive makes the premium payments required by active
employees generally for such coverage, if any, under the terms and conditions of
coverage applicable to the Executive. Following a Change in Control, incentive
compensation plans in which the Executive participates shall contain reasonable
financial performance measures and shall be consistent with practice prior to
the Change in Control.
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 and employment 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.
<PAGE>
9
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 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
501 Merritt 7
P.O. Box 4500
Norwalk, CT 06856-4500
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.
<PAGE>
10
9. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Virginia (without giving effect to its conflicts of law).
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.
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
paragraph, 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
<PAGE>
11
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, as they become
due, which the Executive may incur to enforce this Agreement through arbitration
or otherwise unless the arbitrator determines that 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: _________________________
_________________________
<PAGE>
Exhibit 11
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Per Share Earnings (Unaudited)
(In millions, except per share data)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
-------------------------
1997 1996
-------- ---------
<S> <C> <C>
Primary earnings per share
- --------------------------
Primary earnings:
Continuing operations:
Income from continuing operations $ 118.4 $ 142.2
Less ESOP preferred dividend, net of tax benefit and other - (5.0)
-------- ---------
Income from continuing operations $ 118.4 $ 137.2
======== =========
Loss from discontinued operations $ - $ (7.7)
======== =========
Primary shares:
Weighted average shares outstanding 51.0 49.8
======== =========
Primary earnings (loss) per share:
Continuing operations $ 2.32 $ 2.76
Discontinued operations - (0.16)
-------- ---------
Total $ 2.32 $ 2.60
======== =========
Fully diluted earnings per share
- --------------------------------
Fully diluted earnings:
Income from continuing operations $ 118.4 $ 142.2
Less additional ESOP contribution - (2.5)
-------- ---------
Income from continuing operations $ 118.4 $ 139.7
======== =========
Loss from discontinued operations $ - $ (7.7)
======== =========
Fully diluted shares:
Weighted average number of common
shares outstanding and common
stock equivalents 51.0 49.8
Dilutive effect of:
Stock options 0.4 0.4
ESOP preferred stock - 2.0
-------- ---------
Fully diluted shares 51.4 52.2
======== =========
Fully diluted earnings (loss) per share:
Continuing operations $ 2.30 $ 2.67
Discontinued operations - (0.14)
-------- ---------
Total $ 2.30 $ 2.53
======== =========
</TABLE>
<PAGE>
Exhibit 12
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges (Unaudited)
(In millions)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
---------------------
1997 1996 (a)
-------- --------
<S> <C> <C>
Earnings:
Income from continuing operations before taxes $ 180.8 $ 215.3
Add (deduct):
Income taxes of 50% owned affiliates 2.0 2.5
Equity in income of less than 50%
owned affiliates (2.8) (2.0)
Dividends received from less
than 50% owned affiliates 1.7 1.6
Interest capitalized, net of amortization (0.2) (0.1)
Fixed charges as described below 33.1 36.8
-------- --------
Total $ 214.6 $ 254.1
======== ========
Fixed Charges:
Interest expense $ 21.0 $ 23.4
Estimated interest factor in rent expense 12.1 13.4
-------- --------
Total $ 33.1 $ 36.8
======== ========
Ratio of earnings to fixed charges 6.5 6.9
=== ===
</TABLE>
(a) Computation of ratio of earnings to fixed charges has been restated to
reflect the spin-off of Primex Technologies, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN ITEM 1 OF FORM 10-Q FOR THE PERIOD ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS. FIGURES ARE ROUNDED TO THE NEAREST 100,000 (EXCEPT EPS).
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 36,000
<SECURITIES> 2,000
<RECEIVABLES> 411,200
<ALLOWANCES> 0
<INVENTORY> 338,900
<CURRENT-ASSETS> 880,400
<PP&E> 2,255,700
<DEPRECIATION> (1,509,000)
<TOTAL-ASSETS> 1,904,200
<CURRENT-LIABILITIES> 483,200
<BONDS> 268,000
0
0
<COMMON> 49,500
<OTHER-SE> 847,600
<TOTAL-LIABILITY-AND-EQUITY> 1,904,200
<SALES> 1,831,500
<TOTAL-REVENUES> 1,831,500
<CGS> 1,411,400
<TOTAL-COSTS> 1,411,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,400
<INCOME-PRETAX> 180,800
<INCOME-TAX> 62,400
<INCOME-CONTINUING> 118,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 118,400
<EPS-PRIMARY> 2.32
<EPS-DILUTED> 2.30
</TABLE>
