<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 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
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)
06856-4500
501 Merritt 7 (Zip Code)
P.O. Box 4500
Norwalk, CT
(Address of principal executive
offices)
Registrant's telephone number, including area code: (203) 750-3000
----------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -----------------------
<S> <C>
Common Stock New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
Series A Participating Cumulative Preferred New York Stock Exchange
Stock Purchase Rights
Chicago Stock Exchange
Pacific Stock Exchange
</TABLE>
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
----------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
----------------
As of January 31, 1998, the aggregate market value of registrant's common
stock held by non-affiliates of registrant was approximately $2,077,241,166.
----------------
As of January 31, 1998, 48,789,078 shares of the registrant's common stock
were outstanding.
----------------
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED BY REFERENCE IN THIS FORM
10-K AS INDICATED HEREIN:
<TABLE>
<CAPTION>
PART OF 10-K
DOCUMENT INTO WHICH INCORPORATED
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<S> <C>
1997 Annual Report to Shareholders of Olin Parts I, II, and IV
Proxy Statement relating to Olin's 1998 Part III
Annual Meeting of Shareholders
</TABLE>
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<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Olin Corporation is a Virginia corporation, incorporated in 1892, having its
principal executive offices in Norwalk, Connecticut. It is a manufacturer
concentrated in chemicals, metals and ammunition. The chemicals segment is
divided into three areas or divisions: Chlor-alkali, Chemicals and
Microelectronic Materials. Chlor-alkali includes chlor-alkali products, sodium
hydrosulfite and high strength bleach products. Chemicals includes pool
chemicals, biocides, sulfuric acid, hydrazine, polyols and propylene glycols.
Microelectronic Materials includes image-forming and related specialty
chemicals and electronic interconnect materials and services. The metals and
ammunition segment is divided into two divisions: the Brass Division and the
Winchester Division. Products in the metals and ammunition segment include
copper and copper alloy sheet, strip, rod, wire, tube and fabricated parts,
stainless steel strip and sporting ammunition.
Information as to the sales and assets attributable to each of Olin's
industry segments for each of the last three fiscal years appears on page 24
of the 1997 Annual Report to Shareholders of Olin ("Shareholders Report") and
in Exhibit 13 hereto. Such information in Exhibit 13 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 on page 24 of the Shareholders Report and in Exhibit 13
hereto is incorporated herein by reference as contained in Exhibit 13.
The term "Olin" as used herein means Olin Corporation and its subsidiaries
unless the context indicates otherwise.
- --------
* Except for material that is both contained in Exhibit 13 hereto and
incorporated herein by reference herein, the Shareholders Report is not
"filed" as part of this Report.
2
<PAGE>
PRODUCTS AND SERVICES
The following is a list of the principal and certain other products and
services provided by Olin and its affiliates as of December 31, 1997 within
each industry segment. Principal products on the basis of annual sales are
highlighted in bold face.
CHEMICALS
<TABLE>
<CAPTION>
MAJOR RAW MATERIALS
PRODUCT LINE OR & COMPONENTS FOR
DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES
- --------------- ------------------- ---------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Chlor-alkali
Chlor-alkali CHLORINE/CAUSTIC Pulp & paper Augusta, GA salt,
SODA processing, Charleston, TN electricity
chemical McIntosh, AL
manufacturing, Niagara Falls,
water NY
purification,
manufacture of
vinyl chloride,
bleach, swimming
pool chemicals &
urethane
chemicals
- -----------------------------------------------------------------------------------------------
Other Chlor- Sodium Paper, textile & Augusta, GA caustic soda,
alkali Hydrosulfite clay bleaching Charleston, TN sulfur dioxide
Products Salto, Brazil
-----------------------------------------------------------------------------------
HyPure(TM) Industrial & Charleston, TN chlorine,
products institutional caustic
cleaners, soda
textile
bleaching
- -----------------------------------------------------------------------------------------------
Chemicals
Pool HTH(R), SOCK- Residential & Charleston, TN chlorine, lime,
Chemicals IT(R) commercial pool Igarassu, Brazil caustic soda
PULSAR(R), SUPER sanitizing, (Nordesclor
SOCK-IT(R), water S.A.)
DURATION(R) & purification Salto, Brazil
CCH(R) CALCIUM Kempton Park,
HYPOCHLORITE S. Africa
(Aquachlor
(Proprietary)
Ltd.)
-----------------------------------------------------------------------------------
PACE(R) Residential & Anaheim, CA chlorine,
CHLORINATED commercial pool Amboise, France caustic
ISOCYANURATES** sanitizing, soda, urea
water
purification
- -----------------------------------------------------------------------------------------------
Biocides Omacide(R), Antidandruff Rochester, NY pyridine, zinc
IPBC, agents Swords, Ireland & copper salts,
Triadine(R) in shampoo; pre- chlorine,
Biocides, servative in iodine
Zinc Omadine(R), metal working
Copper fluids, coat-
Omadine(R) & ings, adhesives
Sodium & plastics; an-
Omadine(R) tifouling agent
Biocides in marine
paints; archi-
tectural paints
& coatings
-----------------------------------------------------------------------------------
Custom chemicals Finished Rochester, NY
manufacturing products for
agricultural,
photo-
graphic, hair
dye & general
chemical
industries
- -----------------------------------------------------------------------------------------------
Performance Flexible polyols Intermediate for Punta Camacho, propylene
Urethanes & flexible foam Venezuela oxide,
Organics used in ethylene oxide,
furniture, glycerine
bedding, carpet
underlay,
transportation,
packaging
-----------------------------------------------------------------------------------
Specialty Elastomers, Brandenburg, KY propylene
polyols adhesives, Punta Camacho, oxide,
coatings, Venezuela ethylene oxide,
sealants & rigid glycerine
foam
-----------------------------------------------------------------------------------
Urethane systems Packaging & Salto, Brazil polyols,
insulation methylene
diphenyl
diisocyanate
</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.
** Product is distributed and not manufactured.
3
<PAGE>
CHEMICALS (CONT'D)
<TABLE>
<CAPTION>
MAJOR RAW MATERIALS
PRODUCT LINE OR & COMPONENTS FOR
DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES
--------------- ------------------- ------------------- -------------------- -------------------
<C> <C> <S> <C> <C>
Glycols & glycol Household, Brandenburg, KY ethylene oxide,
Ethers industrial & propylene oxide,
institutional nonylphenol
cleaners, alcohols
personal care
products &
antifreeze
----------------------------------------------------------------------------------------
Nonionic Household, Punta Camacho, ethylene oxide
surfactants industrial & Venezuela
institutional
cleaners, Oil
field chemicals
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Contract Various Brandenburg, KY
manufacturing
- ----------------------------------------------------------------------------------------------------
Hydrazine Hydrazine Intermediate in Lake Charles, LA chlorine,
solutions & blowing agents & McIntosh, AL caustic
hydrazine-based agricultural soda, ammonia,
propellants chemicals; dimethylamine,
boiler water monomethylamine
treatment,
rocket &
satellite
propellants
- ----------------------------------------------------------------------------------------------------
Acids Virgin & Petroleum Beaumont, TX sulfur, oxygen
regenerated refining, pulp & Shreveport, LA
sulfuric acid paper chemicals
- ----------------------------------------------------------------------------------------------------
Microelectronic Materials
Electronic High purity Used as process Chandler, AZ various acids
Chemicals acids & aids in Mesa, AZ & solvents,
solvents, semiconductor Seward, IL ammonia-based
dopants, manufacturing Zwijndrecht, etchants
vapor deposition Belgium
chemicals,
specialty
etchants,
chemical
management
services
----------------------------------------------------------------------------------------------
Photoresists & Used as Brandenburg, KY diazo compounds,
polyimides semiconductor East Providence, rubber polymers,
components RI novolak
and/or as Tempe, AZ polymers,
process aids in Zwijndrecht, solvents,
semiconductor Belgium photoinitiators,
manufacturing & Shizuoka, Japan polyimide
flat panel (FUJIFILM OLIN polymers
displays Co., Ltd.)
Hsin-chu, Taiwan
(FUJIFILM OLIN
Taiwan Co.,
Ltd.)
- ----------------------------------------------------------------------------------------------------
Interconnect High performance Integrated Manteca, CA specialty
Materials integrated circuits & aluminum
circuit multi-chip alloys &
packaging modules for specialty
materials computer, adhesives
telecommunications,
instrumentation
& automotive
products
----------------------------------------------------------------------------------------------
High All industry New Bedford, MA all metals,
performance, market segments; metal
high computer, alloys, metal
reliability, communications, matrix
hermetic metal medical, composites,
packages for the industrial, special alloys
microelectronics instrumentation, and
industry automotive, glasses
consumer,
aerospace and
military
</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
<PAGE>
METALS AND AMMUNITION
<TABLE>
<CAPTION>
MAJOR RAW MATERIALS
PRODUCT LINE OR & COMPONENTS FOR
DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES
--------------- ------------------- ---------------- -------------------- -------------------
<C> <C> <S> <C> <C>
Olin Brass COPPER & COPPER Electronic Bryan, OH copper, zinc &
ALLOY SHEET & connectors, lead East Alton, IL other
STRIP frames, Indianapolis, IN nonferrous
(STANDARD & electrical Waterbury, CT metals
HIGH components, Iwata, Japan
PERFORMANCE) communications, (Yamaha-Olin
automotive, Metal
builders' Corporation)
hardware,
coinage,
ammunition
------------------------------------------------------------------------------------------
Network of Electronic Allentown, PA copper & copper
metals connectors, Alliance, OH alloy sheet,
service centers electrical Caguas, PR strip, rod,
components, Carol Stream, IL tube & steel &
communications, Warwick, RI aluminum strip
automotive, Watertown, CT
builders' Yorba Linda, CA
hardware,
household
products
------------------------------------------------------------------------------------------
Beryllium High performance East Alton, IL beryllium
copper strip electronic copper
applications
------------------------------------------------------------------------------------------
POSIT-BOND(R) Coinage strip & East Alton, IL cupronickel,
CLAD METAL blanks copper &
aluminum
------------------------------------------------------------------------------------------
ROLLED COPPER Printed circuit Waterbury, CT copper, zinc &
FOIL, boards, other
COPPERBOND(R) electrical & nonferrous
FOIL, electronic, metals,
STAINLESS STEEL automotive stainless steel
STRIP
------------------------------------------------------------------------------------------
COPPER ALLOY Utility Cuba, MO copper, zinc &
SEAMLESS & condensers, Indianapolis, IN other
WELDED TUBE industrial heat nonferrous
exchangers, metals
refrigeration &
air
conditioning,
builders'
hardware,
automotive
------------------------------------------------------------------------------------------
Fabricated Builders' East Alton, IL brass &
products hardware, stainless
cartridge cases, steel strip
shaped charge
cones,
transportation,
household &
recreational
products
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Copper & copper Fasteners, Indianapolis, IN copper, zinc &
alloy rod & electrical & other
wire electronic nonferrous
connectors, metals
transportation,
plumbing &
builders'
hardware
- ------------------------------------------------------------------------------------------------
Winchester WINCHESTER(R) Hunters & East Alton, IL brass, lead,
SPORTING recreational Geelong, steel,
AMMUNITION shooters, law Australia plastic,
(SHOT- enforcement propellant,
SHELLS, SMALL agencies explosives
CALIBER
CENTERFIRE &
RIMFIRE
AMMUNITION)
------------------------------------------------------------------------------------------
Small caliber Infantry and East Alton, IL brass, lead,
military mounted weapons propellant,
ammunition explosives
------------------------------------------------------------------------------------------
Government- Maintenance and Independence, MO brass, lead,
owned operation of propellant,
arsenal U.S. Army small explosives,
operation (GOCO) caliber military government-
ammunition supplied
production plant components
-------------------------------------------------------------------
Maintenance of Baraboo, WI subcontracted &
U.S. Army laid- government-
away production supplied
plant components
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Industrial Maintenance East Alton, IL brass, lead,
products (8 applications in Geelong, plastic,
gauge loads & power & concrete Australia propellant,
powder-actuated industries, explosives
tool loads) powder-actuated
tools in
construction
industry
</TABLE>
- --------------------------------------------------------------------------------
* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated.
Sites manufacture, distribute or market one or more of the identified
products or services.
5
<PAGE>
1997 DEVELOPMENTS
On October 22, 1997, Olin announced that it had entered into an agreement to
sell its surfactants, fluids, non-urethane polypropylene glycol and
polyethylene glycol businesses at its Doe Run facility in Brandenburg,
Kentucky to BASF. This sale was concluded in November 1997. Olin will continue
to produce certain of these products for BASF under a three-year supply
agreement.
On October 7, 1997, Olin and Asahi Glass Company announced that they have
established separate ownership of two joint ventures the companies had
previously formed in polyols and microelectronic packaging systems. Olin is
now the sole owner of Aegis, Inc., a Massachusetts-based manufacturer of metal
hermetic packages, and Asahi Glass Company is the sole owner of the former
Asahi-Olin joint venture in polyols that was established in Kashima, Japan.
This former Japanese joint venture manufactures flexible polyols which are
used in conjunction with toluene diisocyanate (TDI) in the creation of
polyurethane foams for furniture cushioning, carpet padding and related uses.
On February 10, 1997, Olin announced it completed its planned purchase of
DuPont's remaining 50% share of the two companies' Niachlor joint venture
chlor-alkali plant in Niagara Falls, New York.
In October 1996, the Board of Directors of Olin authorized the purchase of
up to 5 million shares, or approximately 10%, of the outstanding common stock
under a share repurchase program which began in January 1997. During 1997,
Olin repurchased 3,827,100 shares.
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 solution sodium hydrosulfite. A microelectronic materials subsidiary
located in Belgium manufactures certain chemicals for the semiconductor
industry. Hydrochim, S.A., a French subsidiary, is an isocyanurate repacking
operation that distributes swimming pool chemicals to the trade. Etoxyl, C.A.,
a Venezuelan subsidiary, manufactures urethane polyols, surfactants and other
specialty chemicals.
A group of Olin subsidiaries markets photoresists, polyimides and other
image-forming chemicals throughout Europe. A joint venture with Fuji Photo
Film Co., Ltd. manufactures photoresists, developers and flat panel display
chemicals 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 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.
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.
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 36 of the
Shareholders Report and contained in Exhibit 13 hereto are incorporated by
reference in this Report as contained in Exhibit 13.
6
<PAGE>
CUSTOMERS AND DISTRIBUTION
During 1997, no single customer accounted for more than 2.1% 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, 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, and defense
contractors. Principal customers of Olin's interconnect materials business are
suppliers to semiconductor manufacturers and major computer and
telecommunications manufacturers.
Metals and Ammunition. 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(R) 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.
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
allied governments.
Because several of its businesses 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 ongoing 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 and the exporting of products for a specified period of
time.
7
<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, anti-dandruff agents, caustic soda and
chlorine, Olin is among the large 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, 1997, Olin had approximately 9,800 employees (excluding
approximately 1,100 employees at Government-owned, contractor-operated
facilities and excluding employees of disposed businesses), approximately
9,100 of whom were working in the United States and approximately 700 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 five years, but during each year
new agreements must be negotiated in a number of Olin's plants. Olin is
currently engaged in negotiations for a new labor agreement at its Niachlor
facility in Niagara Falls, NY. In addition, Olin has one major labor contract
scheduled to expire in 1998. 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 $29 million during 1997, $39 million during
1996 and $34 million during 1995.
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 purchased by Olin for its production of
chemicals are various hydrocarbons and derivatives, salt, lime, electricity,
propylene oxide, ethylene oxide, sulfur, pyridine and ammonia. 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 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, hydro and nuclear power.
8
<PAGE>
ENVIRONMENTAL AND TOXIC SUBSTANCES CONTROLS
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Cash Outlays:
Remedial and Investigatory Spending...................... $31 $30 $25
Capital Spending......................................... 5 6 8
Plant Operations......................................... 23 35 34
--- --- ---
Total Cash Outlays......................................... $59 $71 $67
=== === ===
</TABLE>
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 manufacturing locations. 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 is enrolled in the United States Environmental Protection Agency's
Voluntary Industrial Toxics Reduction Program. Olin employs waste minimization
and pollution prevention programs at its manufacturing sites.
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. Charges to income for
investigatory and remedial efforts were material to operating results in 1997,
1996 and 1995 and may be material to net income in future years. Such charges
to income were $19 million, $70 million and $24 million in 1997, 1996 and
1995, respectively.
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 years. Cash outlays for normal plant operations for the
disposal of waste and the operation and maintenance of pollution control
equipment and facilities to ensure compliance with mandated and voluntarily
imposed environmental quality standards were charged to income. Historically,
Olin has funded its environmental capital expenditures through cash flow from
operations and expects to do so in the future.
Olin's estimated environmental liability at the end of 1997 was attributable
to 46 sites, 18 of which were on the National Priority List ("NPL"). Ten sites
accounted for approximately 81% of such liability and, of the remaining sites,
no one site accounted for more than 2% of such liability. One of these ten
sites is 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 ("PRPs") and a Record of Decision ("ROD") or its
equivalent has not been issued. At another seven of the ten sites, a ROD or
its equivalent has been issued by either the EPA or responsible state agency
and Olin, either alone or as a member of a PRP group, was engaged in
performing the remedial measures required by that ROD. At the remaining two of
the ten sites, part of the site is subject to a ROD and another part is still
in the investigative stage of remediation. All ten sites were either former
manufacturing facilities or waste sites containing contamination generated by
those facilities.
Total environmental-related cash outlays for 1998 are estimated to be $65
million, of which $30 million is expected to be spent on remedial and
investigatory efforts, $8 million on capital projects and $27 million on
normal plant operations.
Annual environmental-related cash outlays for site investigation and
remediation, capital projects and normal plant operations are expected to
range between $65-90 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
9
<PAGE>
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 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 Olin. At December 31, 1997, Olin had estimated additional
environmental contingent liabilities of $41 million.
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 manufacturing sites at 27 separate locations in 16 states and
Puerto Rico and six manufacturing sites in six foreign countries. Most
manufacturing sites are owned although a number of small sites 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 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 sought 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 also sought civil penalties for each day of alleged
violation of the Clean Water Act which currently has a maximum daily penalty
of $27,500.
In 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 in
compensatory damages and $100 million in punitive damages. The State also
requested 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 an opposition
to the motions and the court deferred a ruling on both motions.
Under stipulations, Olin and Oxychem conducted a remedial investigation and
feasibility study. In 1990, EPA issued a Proposed Remedial Action Plan
followed by a Record of Decision ("ROD"). The EPA selected remedy was
estimated to cost $30 million. In 1991, the EPA issued an administrative order
directing Olin and Oxychem to implement the remedy identified in the ROD. Olin
and Oxychem have commenced performance of the remedy identified in such order.
Olin and Oxychem are currently
10
<PAGE>
negotiating with the U.S. Environmental Protection Agency ("EPA") to resolve
EPA's claim for oversight costs on the project. Olin and Oxychem will share
the cost of the remedy 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 or liquidity and, with respect to non-environmental
claims, its results of operations. See "Environmental Matters" contained in
Item 7--Management's Discussion and Analysis and Financial Condition and
Results of Operations.
(b) In 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. EPA, under
Section 122 of CERCLA, asked Olin to undertake the work called for in the ROD,
and Olin agreed to do so. In November 1988, Olin submitted to EPA, 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 then implemented that remedial action.
Olin completed the remedial investigation and feasibility study of the
former chlorine plant site, including Ponds # 5 and 6, in 1994. EPA issued a
Record of Decision in 1995, calling for covering the former waste ponds,
treatment of runoff from the ponds, and additional monitoring and
investigation. In 1997, Olin negotiated a consent decree with the EPA under
which Olin is implementing the Record of Decision. The ROD does not address
remediation of the former chlorine plant site or the Holston River, which are
the subject of the additional studies.
Olin has completed clean-up activities at two small locations near Olin's
former plant site, the Graveyard Dump Site and the former power plant.
Olin has agreed with the site's Natural Resources Trustees to assess whether
there are any natural resource damages to the Holston River associated with
releases from the site.
Olin believes that any liability incurred by it in this matter will not be
materially adverse to its financial condition or liquidity. See "Environmental
Matters" contained in Item 7--Management's Discussion and Analysis of
Financial Condition and Results of Operations.
(c) 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. See "Environmental Matters" contained in
Item 7--Management's Discussion and Analysis of Financial Condition and
Results of Operations.
(d) 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.
11
<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, 1997.
Executive Officers of Olin Corporation as of March 1, 1998
<TABLE>
<CAPTION>
SERVED AS
AN OLIN
NAME AND AGE OFFICE OFFICER SINCE
- ------------ ------ -------------
<S> <C> <C>
Donald W. Griffin (61).. Chairman of the Board, President and Chief 1983
Executive Officer
Michael E. Campbell
(50)................... Executive Vice President 1987
Peter C. Kosche (55).... Senior Vice President 1993
Anthony W. Ruggiero
(56)................... Senior Vice President and Chief Financial 1995
Officer
Leon B. Anziano (55).... Vice President and President, Chlor-Alkali 1993
Products Division
Thomas M. Gura (52)..... Vice President and President, Winchester 1997
Division
George B. Erensen (54).. Vice President and General Tax Counsel 1990
Johnnie M. Jackson, Jr. Vice President, General Counsel and 1995
(52)................... Secretary
Sarah Y. Kienzle (39)... Vice President, Planning and Development 1997
Louis S. Massimo (40)... Vice President and Controller 1996
Janet M. Pierpont (50).. Vice President and Treasurer 1990
Joseph D. Rupp (47)..... Vice President and President, Brass 1996
Division
Steven T. Warshaw (49).. Vice President and President, Olin 1996
Microelectronic Materials 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, T.M. Gura,
J.M. Jackson, Jr., S.Y. Kienzle, P.C. Kosche, L.S. Massimo, A.W. Ruggiero,
J.D. Rupp and S.T. Warshaw, 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.
Thomas M. Gura was elected a Corporate Vice President on September 25, 1997.
He was appointed President of the Winchester Division on August 19, 1997.
Prior to that time, he served as Vice President, Marketing and Sales of the
Brass Division.
Johnnie M. Jackson, Jr. was elected a Corporate Vice President on April 27,
1995 and Corporate Secretary on April 29, 1993. Prior to that time, since
1989, he has served Olin in the following capacities: General Counsel--
Corporate Resources and Secretary, Associate General Counsel--Corporate
Resources and Secretary and Deputy General Counsel.
Sarah Y. Kienzle was elected a Corporate Vice President on September 25,
1997. Prior to that time, since August 1996, she was a Vice President of SRI
Consulting. Since 1994, she was employed as a manager and later a principal of
A.T. Kearney, Inc., a consulting firm, and prior to that she held various
managerial positions at Amoco Chemical Company.
12
<PAGE>
Peter C. Kosche was elected a Corporate Senior Vice President on January 1,
1996 and had been a Corporate Vice President since 1993. Prior to 1993 and
since 1988, he has served Olin in the following management capacities: General
Manager, Pool Chemicals; and Division Vice President, Materials Management.
Louis S. Massimo was elected Controller effective April 1, 1996 and, in
addition, a Corporate Vice President effective January 1, 1997. Since November
1994 until April 1996, he had served as Olin's Director of Corporate
Accounting. Prior to that time, he was an Audit Senior Manager for KPMG Peat
Marwick LLP.
Anthony W. Ruggiero joined Olin on August 30, 1995 and was elected a
Corporate Senior Vice President and Chief Financial Officer on September 29,
1995. From 1990 to 1995, he served as Senior Vice President and Chief
Financial Officer of The Reader's Digest Association, Inc.
Joseph D. Rupp was elected a Corporate Vice President on January 1, 1996 and
also serves as President, Brass Division. Prior to that time, since 1985, he
served as Vice President, Manufacturing and Engineering for the Brass
Division.
Steven T. Warshaw was elected a Corporate Vice President on January 1, 1996
and serves as President, Olin Microelectronic Materials Division. Prior to
that time, since 1990, he has served Olin as Senior Vice President and General
Manager, Olin Electronic Materials, President, OCG Microelectronic Materials,
Vice President and General Manager, Performance Urethanes.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
As of January 31, 1998, there were approximately 10,533 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 1997
and 1996 appears on page 38 of the Shareholders Report and in Exhibit 13
hereto and is incorporated herein by reference as contained in Exhibit 13.
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, 1997, retained earnings of approximately $220 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 25 of the Shareholders
Report and in Exhibit 13 hereto is incorporated by reference in this Report as
contained in Exhibit 13.
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 17 through 23 of the Shareholders Report and in
Exhibit 13 hereto is incorporated by reference in this Report as contained in
Exhibit 13.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
13
<PAGE>
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 29, 1998, appearing on pages 26 through 39 of the
Shareholders Report and in Exhibit 13 hereto, are incorporated by reference in
this Report as contained in Exhibit 13.
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 1998
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 paragraph
entitled "Section 16(a) Beneficial Ownership Reporting Compliance" 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 Committee on Executive
Compensation appearing on pages 11 through 12 of the Proxy Statement and the
graph appearing on page 15 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" 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.
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 29, 1998,
14
<PAGE>
appearing on pages 26 through 39 of the Shareholders Report and in Exhibit 13
hereto are incorporated by reference in this Report as contained in Exhibit
13.
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(w) below.
<TABLE>
<C> <S>
3(a) Olin's Restated Articles of Incorporation as amended effective
May 8, 1997--Exhibit 3 to Olin's Form 10-Q for the Quarter ended
March 31, 1997.*
(b) By-Laws of Olin as amended effective January 1, 1998.
4(a) Articles of Amendment designating Series A Participating
Cumulative Preferred Stock, par value $1 per share--Exhibit 2 to
Olin's Form 8-A dated February 21, 1996, covering Series A
Participating Cumulative Preferred Stock Purchase Rights.*
(b) Rights Agreement dated as of February 27, 1996 between Olin and
Chemical Mellon Shareholder Services, LLP, Rights Agent--Exhibit
1 to Olin's Form 8-A dated February 21, 1996, covering Series A
Participating Cumulative Preferred 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;
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; and Prospectus
Supplement dated May 26, 1995 to Prospectus dated May 4, 1994
relating to Medium Term Notes, Series A filed under Registration
Statement No. 33-52771.*
(d) Form of Subordinated Debt Indenture between Olin and Bankers
Trust Company--Exhibit 4(i) to Registration 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.*
(g) Amendment, dated April 11, 1995, to Credit Agreement, dated as of
September 30, 1993--Exhibit 4 to Olin's Form 10-Q for the Quarter
ended June 30, 1995.*
(h) Second Amendment, dated October 26, 1996, amending the Credit
Agreement, dated as of September 30, 1993--Exhibit 4(h) to Olin's
Form 10-K for 1996.*
(i) Third Amendment, dated November 12, 1997, amending the Credit
Agreement, dated as of September 30, 1993.
(j) Fourth Amendment, dated November 12, 1997, amending the Credit
Agreement, dated as of September 30, 1993.
</TABLE>
- --------
* Previously filed as indicated and incorporated herein by reference.
Exhibits incorporated by reference are located in SEC File No. 1-1070
unless otherwise indicated.
15
<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--Exhibit 10(b)
to Olin's Form 10-K for 1994.*
(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 Corporation Employee Deferral Plan, effective November 1,
1997.
(e) Amendments to Olin Corporation Performance Unit Plan, adopted
September 29, 1988--Exhibit 10(j) to Olin's Form 10-K for 1988.*
(f) 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.*
(g) Amendment to Olin Corporation Performance Unit Plan, adopted
September 26, 1991--Exhibit 10(j) to Olin's Form 10-K for 1991.*
(h) Amendment to Olin Corporation Performance Unit Plan, adopted
December 16, 1993--Exhibit 10(k) to Olin's Form 10-K for 1993.*
(i) Olin Senior Executive Pension Plan with amendments--Exhibit 10(l)
to Olin's Form 10-K for 1994.*
(j) Olin Supplemental Contributing Employee Ownership Plan, effective
January 1, 1990 with amendments incorporated through January 30,
1998.
(k) Olin Corporation Key Executive Life Insurance Program--Exhibit
10(b) to Olin's Form 10-Q for Quarter ended March 31, 1986.*
(l) Form of Olin Corporation Endorsement Split Dollar Agreement
(effective January 1, 1993)--Exhibit 10(s) to Olin's Form 10-K
for 1992.*
(m) Form of executive agreement between Olin and certain executive
officers as amended December 11, 1997.
(n) Form of special severance agreement provided to certain employees
to become operative upon a "change in control event".
(o) Olin 1991 Long Term Incentive Plan, as amended through February
23, 1995--Exhibit 10(u) to Olin's Form 10-K for 1994.*
(p) 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.*
(q) 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.*
(r) 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.*
(s) Olin Corporation 1997 Stock Plan for Non-employee Directors as
amended and restated effective October 2, 1997.
</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.
16
<PAGE>
<TABLE>
<C> <S>
(t) Olin Senior Management Incentive Compensation Plan as amended
April 27, 1995--Exhibit 10(b) to Olin's Form 10-Q for Quarter
ended March 31, 1995.*
(u) Description of Restricted Stock Unit Awards granted under the
Olin 1991 Long Term Incentive Plan--Exhibit 10(bb) to Olin's Form
10-K for 1995.*
(v) Form of EVA Incentive Plan (Management Incentive Compensation
Plan) --Exhibit 10(dd) to Olin's Form 10-K for 1996.*
(w) 1996 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries--Exhibit A to Olin's 1996 Proxy Statement dated
March 12, 1996.*
(x) Assumption of Liabilities and Indemnity Agreement, dated December
31, 1996, between Olin Corporation and Primex Technologies, Inc.
--Exhibit 10(ii) to Olin's Form 10-K for 1996.*
11. Computation of Per Share Earnings (unaudited)
12. Computation of Ratio of Earnings to Fixed Charges (unaudited).
13. Excerpts from the 1997 Annual Report to Shareholders.
21. List of Subsidiaries.
23. Consent of KPMG Peat Marwick LLP dated March 10, 1998.
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, 1997.
- --------
* Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-1070 unless
otherwise indicated.
17
<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: March 10, 1998 /s/ Donald W. Griffin
By...................................
DONALD W. GRIFFIN
CHAIRMAN OF THE BOARD, PRESIDENT
AND
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Donald W. Griffin Chairman of the Board, President and Chief
..................................... Executive Officer and Director (Principal
DONALD W. GRIFFIN Executive Officer)
/s/ Richard E. Cavanagh Director
.....................................
RICHARD E. CAVANAGH
/s/ William W. Higgins Director
.....................................
WILLIAM W. HIGGINS
/s/ Suzanne Denbo Jaffe Director
.....................................
SUZANNE DENBO JAFFE
/s/ John W. Johnstone, Jr. Director
.....................................
JOHN W. JOHNSTONE, JR.
/s/ Jack D. Kuehler Director
.....................................
JACK D. KUEHLER
/s/ Randall W. Larrimore Director
.....................................
RANDALL W. LARRIMORE
/s/ H. William Lichtenberger Director
.....................................
H. WILLIAM LICHTENBERGER
/s/ G. Jackson Ratcliffe, Jr. Director
.....................................
G. JACKSON RATCLIFFE, JR.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Richard M. Rompala Director
.....................................
RICHARD M. ROMPALA
/s/ John P. Schaefer Director
.....................................
JOHN P. SCHAEFER
/s/ Louis S. Massimo Vice President and Controller
..................................... (Principal Accounting Officer)
LOUIS S. MASSIMO
/s/ Anthony W. Ruggiero Senior Vice President and Chief Financial
..................................... Officer (Principal Financial Officer)
ANTHONY W. RUGGIERO
</TABLE>
Date: March 10, 1998
19
<PAGE>
LOGO PRINTED ON RECYCLED PAPER
<PAGE>
Exhibit 3(b)
================================================================================
BY-LAWS
OF
OLIN CORPORATION
As Amended
Effective
January 1, 1998
================================================================================
<PAGE>
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.
SECTION 5. Quorum. Shares representing a majority of the votes entitled
------
to be cast on a matter by all classes or series which are entitled to vote
thereon and be counted
-2-
<PAGE>
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 twelve 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 of all classes immediately
following the most recent election of directors by the shareholders may only be
effected by the shareholders. No director need be a shareholder. The Board
shall be divided into three classes, Class I, Class II and Class III, as nearly
equal in number as possible, with the members of each class to serve for the
respective terms of
-3-
<PAGE>
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.
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SECTION 3. Place of Meetings. The Board may hold its meetings at such
-----------------
place or places within or without the Commonwealth of Virginia as it may from
time to time by resolution determine or as shall be specified or fixed in the
respective notices or waivers of notice thereof.
SECTION 4. Organization Meeting. After each annual election of directors,
--------------------
as soon as conveniently may be, the newly constituted Board shall meet for the
purposes of organization. At such organization meeting, the newly constituted
Board shall elect officers of the Corporation and transact such other business
as shall come before the meeting. Notice of organization meetings of the Board
need not be given. Any organization meeting may be held at any other time or
place which shall be specified in a notice given as hereinafter provided for
special meetings of the Board, or in a waiver of notice thereof signed by all
the directors.
SECTION 5. Regular Meetings. Regular meetings of the Board may be held at
----------------
such time and place as may from time to time be specified in a resolution
adopted by the Board then in effect; and, unless otherwise required by such
resolution, or by law, notice of any such regular meeting need not be given.
SECTION 6. Special Meetings. Special meetings of the Board shall be held
----------------
whenever called by the Chief Executive Officer, or by the Secretary at the
request of any three directors. Notice of a special meeting shall be mailed to
each director, addressed to him at his residence or usual place of business, not
later than the second day before the day on which such meeting is to be held, or
shall be sent addressed to him at such place by telegraph, cable or wireless, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the Board need be
specified in the notice of such meeting, unless required by the Articles.
SECTION 7. Quorum. At each meeting of the Board the presence of a
------
majority of the number of directors fixed by these By-laws shall be necessary to
constitute a quorum. The act of a majority of the directors present at a
meeting at which a quorum shall be present shall be the act of the Board, except
as may be otherwise provided by law or by these By-laws. Any meeting of the
Board may be adjourned by a majority vote of the directors present at such
meeting. Notice of any adjourned meeting need not be given.
SECTION 8. Waivers of Notice of Meetings. Anything in these By-laws or in
-----------------------------
any resolution adopted by the Board to the contrary notwithstanding, notice of
any meeting of the Board need not be given to any director if such notice shall
be waived in writing signed by such director before, at or after the meeting, or
if such director shall be present at the meeting. Any meeting of the Board shall
be a legal meeting without any notice having been given or regardless of the
giving of any notice or the adoption of any resolution in reference thereto, if
every member of the Board shall be present thereat. 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.
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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
* [Compiler's Note: This Article III was adopted by the shareholders at the
Annual Meeting of Shareholders, April 28, 1994.]
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
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<PAGE>
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
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.
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<PAGE>
(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 (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
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<PAGE>
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.
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.
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<PAGE>
SECTION 5. Vice Presidents. Each Vice President shall have such powers
---------------
and perform such duties as may from time to time be prescribed by the Board, the
Chief Executive Officer or any officer to whom the Chief Executive Officer may
have delegated such authority.
SECTION 6. Treasurer. The Treasurer shall have the general care and
---------
custody of the funds and securities of the Corporation. He shall perform such
other duties and exercise such other powers as may from time to time be
prescribed by the Board, the Chief Executive Officer or any officer to whom the
Chief Executive Officer may have delegated such authority. If the Board shall
so determine, he shall give a bond for the faithful performance of his duties,
in such sum as the Board may determine to be proper, the expense of which shall
be borne by the Corporation. To such extent as the Board shall deem proper, the
duties of the Treasurer may be performed by one or more assistants, to be
appointed by the Board.
SECTION 7. Controller. The Controller shall be the accounting officer of
----------
the Corporation. He shall keep full and accurate accounts of all assets,
liabilities, receipts and disbursements and other transactions of the
Corporation and cause regular audits of the books and records of the Corporation
to be made. He shall also perform such other duties and exercise such other
powers as may from time to time be prescribed by the Board, the Chief Executive
Officer or any officer to whom the Chief Executive Officer may have delegated
such authority. If the Board shall so determine, he shall give a bond for the
faithful performance of his duties, in such sum as the Board may determine to be
proper, the expense of which shall be borne by the Corporation. To such extent
as the Board shall deem proper, the duties of the Controller may be performed by
one or more assistants, to be appointed by the Board.
SECTION 8. Secretary. The Secretary shall keep the minutes of meetings of
---------
shareholders, of the Board, and, when requested, of Committees of the Board; and
he shall attend to the giving and serving of notices of all meetings thereof.
He shall keep or cause to be kept such stock and other books, showing the names
of the shareholders of the Corporation, and all other particulars regarding
them, as may be required by law. He shall also perform such other duties and
exercise such other powers as may from time to time be prescribed by the Board,
the Chief Executive Officer or any officer to whom the Chief Executive Officer
may have delegated such authority. To such extent as the Board shall deem
proper, the duties of the Secretary may be performed by one or more assistants,
to be appointed by the Board.
ARTICLE VI.
REMOVALS, RESIGNATIONS AND VACANCIES.
SECTION 1. Removal of Directors. Any director may be removed at any time
--------------------
but only with cause, by the affirmative vote of the holders of record of a
majority of the shares of the Corporation entitled to vote on the election of
directors, given at a special meeting of the shareholders called expressly for
the purpose.
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<PAGE>
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 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.
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<PAGE>
SECTION 2. Loans. No loans shall be contracted on behalf of the
-----
Corporation and no negotiable paper shall be issued in its name unless
authorized by the Board. When authorized by the Board, any officer, employee or
agent of the Corporation may effect loans and advances at any time for the
Corporation from any bank, trust company or other institution, or from any firm,
corporation or individual, and for such loans and advances may make, execute and
deliver promissory notes, bonds or other certificates or evidences of
indebtedness of the Corporation and when so authorized may pledge, hypothecate
or transfer any securities or other property of the Corporation as security for
any such loans or advances. 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 depositories 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.
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
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<PAGE>
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 canceled. Except as otherwise provided by
law, no transfer of shares shall be valid as against the Corporation, its
shareholders or creditors, for any purpose, until it shall have been entered in
the stock records of the Corporation by an entry showing from and to whom
transferred. The Board may also make such additional rules and regulations as
it may deem expedient concerning the issue and transfer of certificates
representing shares of the capital stock of the Corporation.
SECTION 3. Record Date. For the purpose of determining shareholders
-----------
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
may fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than seventy days prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment thereof unless the Board fixes
a new record date, which it shall do if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.
SECTION 4. Lost, Destroyed or Mutilated Certificates. In case of loss,
-----------------------------------------
destruction or mutilation of any certificate of stock, another may be issued in
its place upon proof of such loss, destruction or mutilation and upon the giving
of a bond of indemnity to the Corporation in such form and in such sum as the
Board may direct; provided that a new certificate may be issued without
requiring any bond when, in the judgment of the Board, it is proper so to do.
SECTION 5. Control Share Acquisitions. Article 14.1 of Chapter 9 of Title
--------------------------
13.1 of the Code of Virginia shall not apply to acquisitions of shares of the
Corporation.
ARTICLE IX.
INSPECTION OF RECORDS.
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<PAGE>
The Board from time to time shall determine whether, to what extent, at
what times and places, and under what conditions and regulations the accounts
and books and papers of the Corporation, or any of them, shall be open for the
inspection of the shareholders, and no shareholder shall have any right to
inspect any account or book or paper of the Corporation except as expressly
conferred by statute or by these By-laws or authorized by the Board.
ARTICLE X.
AUDITOR.
The Board shall annually appoint an independent accountant who shall
carefully examine the books of the Corporation. One such examination shall be
made immediately after the close of the fiscal year and be ready for
presentation at the annual meeting of shareholders of the Corporation, and such
other examinations shall be made as the Board may direct.
ARTICLE XI.
SEAL.
The seal of the Corporation shall be circular in form and shall bear the
name of the Corporation and the year "1892."
ARTICLE XII.
FISCAL YEAR.
The fiscal year of the Corporation shall end on the 31st 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.
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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 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.
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(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.
-16-
<PAGE>
Exhibit 4(i)
November 12, 1997
BankBoston, N.A.
Corporate Banking
1 Landmark Square
Stamford, CT 06901
Attention: Jo Ann Keller, Director
The Chase Manhattan Bank
Global Chemicals and Related Industries
270 Park Avenue - 38th Floor
New York, NY 10017-2070
Attention: Robert T. Sacks, Managing Director
Citibank, N.A.
399 Park Avenue, 4th Floor, Zone 16
New York, NY 10043
Attention: Joronne J. Jeter, Vice President
Credit Suisse First Boston
New York Branch
11 Madison Avenue - 20th Floor
New York, NY 10010-3629
Attention: Lynn Allegaert
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260-0060
Attention: Martin R. Atkin, Managing Director
<PAGE>
2
NationsBank, N.A.
Corporate Finance Group
767 Fifth Avenue
New York, NY 10153-0083
Attention: George F. Van, Senior Vice President
Wachovia Bank, N.A.
152 West 57th Street, 37th Floor
New York, NY 10019
Attention: John Paul Mathis, Vice President
Re: Third Amendment
---------------
Dear Sirs:
We refer to the Credit Agreement, dated as of September 30, 1993, as
amended through October 26, 1996 ("Credit Agreement"), among Olin Corporation
("Borrower"), Bank of Boston Connecticut (now known as BankBoston, N.A.), The
Chase Manhattan Bank, Citibank, N.A., Credit Suisse First Boston, Morgan
Guaranty Trust Company of New York and NationsBank, N.A. Capitalized terms
utilized but not defined herein have the meanings specified in the Credit
Agreement.
The following sets forth the agreement of the undersigned:
1. Upon effectiveness of this third amendment, (i) the Commitment of
BankBoston, N.A. will be terminated and BankBoston, N.A. will no longer be a
"Bank", lender, or a party to, the Credit Agreement, (ii) the Commitment of The
Chase Manhattan Bank will be reduced from $90,000,000 to $70,000,000 and (iii)
Wachovia Bank, N.A. will become a party to the Agreement as a "Bank" with its
Commitment being $40,000,000 with its address as set forth in Schedule 1 hereto.
2. Except as amended hereby, the provisions of the Credit Agreement remain in
full force and effect.
3. This third amendment shall become effective immediately prior to the
effectiveness of the fourth amendment to the Credit Agreement attached hereto as
Exhibit A.
4. This third amendment may be executed in any number of counterparts and each
counterpart shall be deemed to be an original document.
<PAGE>
3
The Borrower confirms that the representations and warranties contained in
Section 4.01 of the Credit Agreement are correct as though made on and as of the
date hereof (for this purpose the term "Agreement" as used in Section 4.01 shall
mean the Credit Agreement as amended hereby).
Kindly confirm by your signature below your agreement to the foregoing.
BORROWER
OLIN CORPORATION
By /s/J. M. Pierpont
-----------------------------------
Title: Vice President and Treasurer
Commitment BANKS
- ---------- -----
$ 20,000,000 BANKBOSTON, N.A.
(formerly known as Bank of Boston
Connecticut)
By: /s/JoAnn Keller
------------------------------
Name: JoAnn Keller
Title: Senior Vice President
$ 50,000,000 CITIBANK, N.A.
By: /s/James N. Simpson
-------------------------------
Name: James N. Simpson
Title: Attorney-in-Fact
$ 20,000,000 CREDIT SUISSE FIRST BOSTON
By: /s/Lynn Allegaert
-------------------------------
Name: Lynn Allegaert
Title: Vice President
By: /s/Daniel R. Wenger
-------------------------------
Name: Daniel R. Wenger
Title: Associate
<PAGE>
4
$ 40,000,000 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/Penelope J. B. Cox
-------------------------------
Name: Penelope J. B. Cox
Title: Vice President
$ 30,000,000 NATIONSBANK, N.A.
By: /s/Eileen C. Higgins
------------------------------
Name: Eileen C. Higgins
Title: Vice President
$ 90,000,000 THE CHASE MANHATTAN BANK
By: /s/Robert T. Sacks
------------------------------
Name: Robert T. Sacks
Title: Managing Director
$250,000,000 Total of the Commitments
AGREED TO:
WACHOVIA BANK, N.A.
By: /s/James McCreary
-----------------------------
Name: James F. McCreary
Title: Senior Vice President
<PAGE>
5
Schedule 1
Eurodollar
Domestic Lending Lending
Name of Bank Office CD Lending Office Office
- ------------ ---------------- ----------------- ----------
Wachovia Bank, N.A. 191 Peachtree St. NE Same Same
28th Floor
Atlanta, GA 30303
All Notices and A/B Advance Payments
------------------------------------
Wachovia Bank, N.A.
152 West 57th Street
37th Floor
New York, NY 10019
Attention: John Paul Mathis
Wire Instructions (A/B Advance Payments)
----------------------------------------
Wachovia Bank, N.A.
191 Peachtree Street, NE
Atlanta, GA 30303
ABA# 061000010
FW Money Transfer Suspense
Account No. 18171498
Attention: Complex Unit
Re: Olin
<PAGE>
Exhibit 4(j)
November 12, 1997
The Chase Manhattan Bank
Global Chemicals and Related Industries
270 Park Avenue - 38th Floor
New York, NY 10017-2070
Attention: Robert T. Sacks, Managing Director
Citibank, N.A.
399 Park Avenue, 4th Floor, Zone 16
New York, NY 10043
Attention: Joronne J. Jeter, Vice President
Credit Suisse First Boston
New York Branch
11 Madison Avenue - 20th Floor
New York, NY 10010
Attention: Lynn Allegaert
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260-0060
Attention: Martin R. Atkin, Managing Director
<PAGE>
2
NationsBank, N.A.
Corporate Finance Group
767 Fifth Avenue
New York, NY 10153-0083
Attention: George F. Van, Senior Vice President
Wachovia Bank, N.A.
152 West 57th Street, 37th Floor
New York, NY 10019
Attention: John Paul Mathis, Vice President
Re: Fourth Amendment
----------------
Dear Sirs:
We refer to the Credit Agreement, dated as of September 30, 1993, as
amended through October 26, 1996 ("Credit Agreement"), among Olin Corporation
("Borrower"), The Chase Manhattan Bank, Citibank, N.A., Credit Suisse First
Boston, Morgan Guaranty Trust Company of New York, NationsBank, N.A. and
Wachovia Bank, N.A. Capitalized terms utilized but not defined herein have the
meanings specified in the Credit Agreement.
The following sets forth the agreement of the undersigned to amend the
Credit Agreement:
1. Section 1.01 is amended by changing the definitions of "Applicable Margin",
"Facility Fee Rate", "Reference Banks" and "Termination Date" therein to
read respectively as follows:
"Applicable Margin" means, as determined on the date the Adjusted CD Rate or
Eurodollar Rate, as the case may be, is determined, when the Ratings are as
set forth below, the rate per annum set forth below opposite such Ratings:
<PAGE>
3
Applicable Applicable
Ratings Eurodollar C/D Rate
Moody's S&P Margin Margin
------- --- ----------- -----------
If the Borrower has
a Moody's or S&P
rating which is
greater than or equal
to any one of: A3 or A- .12% .245%
If the Borrower has
a Moody's or S&P
rating which is equal
to any one of: Baal or BBB+ .16% .285%
Baa2 or BBB .20% .325%
Baa3 or BBB- .25% .375%
Any other Rating lower than
those set forth above .32% .445%
"Facility Fee Rate" means with respect to each day when the Ratings are as
set forth below, the rate per annum set forth below opposite such Ratings:
Ratings
Moody's S&P Facility Fee Rate
------- --- -----------------
If the Borrower has
a Moody's or S&P
rating which is
greater than or equal
to any one of: A3 or A- .08%
If the Borrower
has a Moody's or
S&P rating which
is equal to any one of: Baa1 or BBB+ .09%
Baa2 or BBB .10%
Baa3 or BBB- .12%
Any other Rating lower than
those set forth above .18%
<PAGE>
4
"Reference Banks" means The Chase Manhattan Bank and Citibank, N.A.
"Termination Date" means (i) October 15, 2002 or (ii) any date to which the
Termination Date shall have been extended pursuant to Section 2.04(b);
provided in each case of (i) and (ii), the earlier date on which the
termination in whole of the Commitments occurs pursuant to Section 2.04(a)
or 6.01.
2. The text contained in Section 5.02(d) is hereby deleted and replaced with
"(d) [Intentionally Left Blank]".
3. The definition of "Pollution Control Financing" contained in Section 1.01 is
hereby deleted. The following definition is inserted in appropriate
alphabetical order into Section 1.01:
"Tax-Exempt Financing" means a transaction with a governmental unit or
--------------------
instrumentality which involves (i) the issuance by such governmental unit or
instrumentality to Persons other than the Borrower or a Subsidiary of bonds
or other obligations on which the interest is exempt from Federal income
taxes under Section 103 of the Internal Revenue Code and the proceeds of
which are applied to finance or refinance the cost of acquisition of
equipment or facilities of the Borrower or any of its subsidiaries, and (ii)
participation in the transaction by the Borrower or a Subsidiary in any
manner permitted by this Agreement.
All other references in the Credit Agreement to "Pollution Control
Financing" are hereby deleted and replaced with the words "Tax-Exempt
Financing".
4. Section 5.02(c) of the Agreement shall be amended to read in its entirety as
follows:
(c) Mergers, Etc. (i) Merge or consolidate with or into any other Person
(other than a Subsidiary) or (ii) convey, transfer, lease or otherwise
dispose of, or permit a Subsidiary to convey, transfer, lease, or otherwise
dispose of, (whether in one transaction or in a series of related
transactions) all or substantially all of the property or assets of the
Borrower and its Subsidiaries taken as a whole (whether now owned or
hereafter acquired), directly or indirectly, to any Person, including
through a merger or consolidation of a Subsidiary with an unaffiliated
party, unless, in each case of (i) or (ii), (A) after giving effect to such
proposed transaction, no Event of Default or event which with the giving of
notice or lapse of time, or both, would constitute an Event of Default would
exist, (B) the surviving or acquiring entity is a corporation organized
under the laws of one of the United States and (C) the surviving or
acquiring corporation if other than the Borrower, expressly assumes the
performance of all the obligations of the Borrower under this Agreement and
the Notes.
5. Clause (ii) of Section 5.02(b) is hereby amended by replacing the reference
therein to "Section 5.02(b)" with the words "Section 5.02(a)."
<PAGE>
5
6. Section 7.02(e) is hereby amended by replacing the reference therein to
"Federal Revenue Bank" with the words "Federal Reserve Bank."
7. Except as amended or waived hereby, the provisions of the Credit Agreement
remain in full force and effect.
8. This fourth amendment shall become effective as of November 12, 1997
provided it is approved by the Banks as required by Section 8.01 of the
Credit Agreement at any time.
9. This fourth amendment may be executed in any number of counterparts and each
counterpart shall be deemed to be an original document.
The Borrower confirms that the representations and warranties contained in
Section 4.01 of the Credit Agreement are correct as though made on and as of the
date hereof (for this purpose the term "Agreement" as used in Section 4.01 shall
mean the Credit Agreement as amended hereby).
Kindly confirm by your signature below your agreement to the foregoing.
BORROWER
--------
OLIN CORPORATION
By /s/Janet M. Pierpont
------------------------------------
Title: Vice President and Treasurer
Commitment BANKS
- ---------- -----
$ 50,000,000 CITIBANK, N.A.
By: /s/James N. Simpson
----------------------------------
Name: James N. Simpson
Title: Attorney-in-Fact
<PAGE>
6
$ 20,000,000 CREDIT SUISSE FIRST BOSTON
By: /s/Lynn Allegaert
----------------------------------
Name: Lynn Allegaert
Title: Vice President
By: /s/Daniel R. Wenger
----------------------------------
Name: Daniel R. Wenger
Title: Associate
$ 40,000,000 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/Penelope J. B. Cox
----------------------------------
Name: Penelope J. B. Cox
Title: Vice President
$ 30,000,000 NATIONSBANK, N.A.
By: /s/Eileen C. Higgins
-----------------------------------
Name: Eileen C. Higgins
Title: Vice President
$ 70,000,000 THE CHASE MANHATTAN BANK
By: /s/Robert T. Sacks
----------------------------------
Name: Robert T. Sacks
Title: Managing Director
$ 40,000,000 WACHOVIA BANK, N.A.
By: /s/James McCreary
----------------------------------
Name: James F. McCreary
Title: Senior Vice President
$250,000,000 Total of the Commitments
<PAGE>
7
Schedule 1
Eurodollar
Domestic Lending Lending
Name of Bank Office CD Lending Office Office
- ------------ ---------------- ----------------- ----------
Wachovia Bank, N.A. 191 Peachtree St. NE Same Same
28th Floor
Atlanta, GA 30303
All Notices and A/B Advance Payments
------------------------------------
Wachovia Bank, N.A.
152 West 57th Street
37th Floor
New York, NY 10019
Attention: John Paul Mathis
Wire Instructions (A/B Advance Payments)
----------------------------------------
Wachovia Bank, N.A.
191 Peachtree Street, NE
Atlanta, GA 30303
ABA# 061000010
FW Money Transfer Suspense
Account No. 18171498
Attention: Complex Unit
Re: Olin
<PAGE>
Exhibit 10(d)
OLIN CORPORATION
EMPLOYEE DEFERRAL PLAN
1. PURPOSE
-------
The purpose of this Olin Corporation Employee Deferral Plan (the "Plan") is
to provide eligible employees of Olin Corporation and its subsidiaries and
affiliates with an opportunity to defer compensation earned or to be earned by
them as a means of saving for retirement or other future purposes.
2. DEFINITIONS
-----------
The following definitions shall be applicable throughout the Plan:
(a) "Accounting Date" means each December 31, March 31, June 30 and
September 30.
(b) "Administrator" means the Senior Vice President, Corporate Affairs or
his delegate.
(c) "Beneficiary" means the person(s) designated by the Participant in
accordance with Section 10.
(d) "Board" means the Board of Directors of the Company.
(e) "Cash Account" means an account established under the Plan for a
Participant to which compensation has been or is to be credited in the form of
cash and which is to earn interest at the Rate of Interest as provided herein.
(f) "Change in Control" means that any of the following events shall have
occurred:
(i) the Company ceases to be, directly or indirectly, owned by at
least 1,000 shareholders;
(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 Section 13(d)(3) of the Act), other than the Company, a
majority-owned subsidiary of the Company or an employee benefit plan (or related
trust) of the Company or such subsidiary, become(s) the "beneficial owner" (as
defined in Rule 13(d)(3) under the Act) of 20% or more of the then outstanding
voting stock of the Company;
<PAGE>
2
(iii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Company's Board of Directors
(together with any new Director whose election by the Company's Board of
Directors or whose nomination for election by the Company'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 Company's Board of Directors determines that a tender offer
for the Company's shares indicates a serious intention by the offeror to acquire
control of the Company.
(g) "Committee" means the Compensation Committee (or its successor) of the
Board.
(h) "Common Stock" means the Company's common stock, $1.00 par value per
share.
(i) "Company" means Olin Corporation, a Virginia corporation, its divisions
and subsidiaries.
(j) "Compensation" means any employee compensation which represents salary,
severance pay, bonus, or any other incentive plan payout, in the form of cash or
stock, including but not limited to payouts or payment distributions from the
EVA Incentive Plan, Performance Unit Plan and 1991 Olin Long Term Incentive Plan
but excluding stock resulting from employee stock option exercises and excluding
other incentive payouts which the Administrator determines prospectively not
eligible to be deferred under this Plan.
(k) "Compensation Account" means the account established under the Plan to
which the Participant's Deferred Compensation is credited, including the Cash
Account, Stock Account, and such other investment accounts as the Committee may
establish from time to time.
(l) "Corporate Human Resources" means the Corporate Human Resources
Department of the Company.
(m) "Credit Date" means with respect to Deferred Compensation, such date as
designated by Corporate Human Resources that Deferred Compensation shall be
credited to the Compensation Account.
(n) "Deferred Compensation" means the Compensation elected by the
Participant to be deferred pursuant to the Plan.
(o) "Election" means a Participant's delivery of a written notice of
election to Corporate Human Resources electing to defer payment of all or a
portion of his or her Compensation.
<PAGE>
3
(p) "Employee" means a full-time, active salaried employee (which term
shall be deemed to include officers) of the Company and its affiliates who has
at least 1182 Hay Points and who has been selected by the Administrator or the
Committee to participate in this Plan.
(q) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(r) "Fair Market Value" means, with respect to a date, on a per share
basis, the average of the high and the low price of a share of Common Stock
reported on the consolidated tape of the New York Stock Exchange on such date or
if the New York Stock Exchange is closed on such date, the next succeeding date
on which it is open.
(s) "Fiscal Year" means that annual period commencing January 1 and ending
the following December 31.
(t) "Participant" means an Employee selected by the Administrator to
participate in the Plan and who has elected to defer payment of all or a portion
of his or her Compensation under the Plan. "Participant" shall also include any
person who had an account under the Prior Plans which has been transferred to
this Plan.
(u) "Plan" means this Olin Corporation Employee Deferral Plan.
(v) "Rate of Interest" means the rate of interest for the quarterly period
ending with the Accounting Date equal to (i) the Company's before-tax cost of
borrowing as determined from time to time by the Chief Financial Officer,
Controller or Treasurer (or in the event there is no such borrowing, the Federal
Reserve A1/P1 Composite rate for 90-day commercial paper plus 10 basis points as
determined by such officer) or (ii) such other rate as the Board or the
Committee may select prospectively from time to time.
(w) "Prior Plans" mean the deferral plans and arrangements utilized by
present and past employees or consultants for the deferral of payouts or
distributions of salary, bonuses (other than Bonus bank amounts under the EVA
Incentive Plan), performance shares, performance units and retention units, all
which are being replaced by this Plan as of the effective date of this Plan
identified in Section 16.
(x) "Section 16(b) Employee" means an Employee or former Employee who is
subject to Section 16(b) of the Exchange Act.
(y) "Stock-based Compensation" means Compensation that is being paid out in
the form of shares of Common Stock (excluding stock options), such as retention
stock units, performance shares and restricted stock units.
(z) "Stock Account" means an account established under the Plan to which
shares of Common Stock have been or are to be credited in the form of phantom
stock.
<PAGE>
4
(aa) "Stock Unit(s)" means the share equivalents credited to the Stock
Account of a Participant's Compensation Account pursuant to Section 6, with one
Stock Unit equal to one share of Common Stock.
(bb) "Termination" means retirement from the Company or termination of
services as an Employee for any other reason.
3. SHARES; ADJUSTMENTS IN EVENT OF CHANGES IN CAPITALIZATION
---------------------------------------------------------
(a) Shares Authorized for Issuance. There shall be reserved for issuance
under the Plan 100,000 shares of Common Stock, subject to adjustment pursuant to
subsection (b) below.
(b) Adjustments in Certain Events. In the event of any change in the
outstanding Common Stock of the Company by reason of any stock split, share
dividend, recapitalization, merger, consolidation, reorganization, combination,
or exchange or reclassification of shares, split-up, split-off, spin-off,
liquidation or other similar change in capitalization, or any distribution to
common shareholders other than cash dividends, the number or kind of shares or
Stock Units that may be issued or credited under the Plan may be adjusted by the
Committee so that the proportionate interest of the Participants shall be
maintained as before the occurrence of such event. Such adjustment shall be
conclusive and binding for all purposes of the Plan.
4. ELIGIBILITY
-----------
The Administrator shall have the authority to select among any Employees
those Employees who shall be eligible to participate in the Plan. Deferrals to
a Stock Account by Section 16(b) Employees must be approved by the Committee.
5. ADMINISTRATION
--------------
Full power and authority to construe, interpret and administer the Plan
shall be vested in the Committee. This power and authority includes, but is not
limited to, selecting compensation eligible for deferral, establishing deferral
terms and conditions and adopting modifications, amendments and procedures as
may be deemed necessary, appropriate or convenient by the Committee. Decisions
of the Committee shall be final, conclusive and binding upon all parties. Day-
to-day administration of the Plan shall be the responsibility of Corporate Human
Resources.
6. PARTICIPANT ACCOUNTS
--------------------
Upon election to participate in the Plan, there shall be established a
Compensation Account for the Participant to which there shall be credited any
Deferred Compensation as of the Credit Date for such deferral. For each type of
Compensation to be deferred, the Plan shall provide for a Cash Account and a
Stock Account. Stock-based Compensation may only be deferred to a Stock
Account. The Committee may establish from time to time other types of
Compensation Accounts reflecting different investment options. Each
Participant's
<PAGE>
5
Compensation Account shall be credited (or debited) on each Accounting Date with
income (or loss) based on a hypothetical investment in any one or more of the
investment options available under the Plan, as prescribed by the Plan or the
Committee. Gains, losses and other elements of determining value shall be
determined substantially on the basis of a hypothetical investment in the
various investment options, as determined and applied in the manner deemed
appropriate by the Committee.
If a Participant elects to invest all or any portion of his or her Deferred
Compensation in the Stock Account, that portion of the Participant's
Compensation Account shall be credited on the Credit Date with Stock Units equal
to the number of shares of Common Stock (including fractions of a share
determined to three decimal places) that could have been purchased with the
amount of such Deferred Compensation at the Fair Market Value on the Credit
Date; provided in the case of Stock-based Compensation, the Stock Account shall
be credited with the number of Stock Units equal to the number of shares being
paid out as the Stock-based Compensation.
Each time a cash dividend is paid on the Common Stock, a Participant who
has shares credited to his or her Stock Account shall receive a credit in Stock
Units for such dividends on the dividend payment date to his or her Stock
Account. The number of additional Stock Units (rounded to the nearest one-
thousandth of a share) credited to the Stock Account will be determined by
dividing (i) the product of (a) the dollar value of the cash dividend declared
in respect of a share of Common Stock multiplied by (b) the number of Stock
Units credited to the Participant's Stock Account as of the dividend record date
by (ii) the Fair Market Value of a share of Common Stock on the dividend payment
date.
The Cash Account of a Participant shall be credited on each Accounting Date
with interest for the quarter ending on such date, payable at the Rate of
Interest on such date.
A Participant who had an existing deferred account under the Prior Plans
shall automatically have such account transferred to a Compensation Account
under this Plan to be maintained and administered pursuant to the terms and
conditions of this Plan. A cash account of a Prior Plan shall be transferred to
the Cash Account maintained under the Plan for such Prior Plan and a stock
account for a Prior Plan shall be transferred to the Stock Account maintained
under this Plan for such Prior Plan.
Amounts credited to a Compensation Account shall remain a part of the
general funds of the Company and nothing contained in this Plan shall be deemed
to create a trust or fund of any kind or create any fiduciary relationship.
Nothing contained herein shall be deemed to give any Participant any ownership
or other proprietary, security or other rights in any funds, stock or assets
owned or possessed by the Company, whether or not earmarked for the Company's
own purposes as a reserve or fund to be utilized by the Company for the
discharge of its obligations hereunder. To the extent that any person acquires
a right to receive payments or distributions from the Company under this Plan,
such right shall be no greater than the right of any unsecured creditor of the
Company.
7. MANNER OF ELECTION
------------------
<PAGE>
6
(a) General. Any Employee selected by the Administrator to participate in
the Plan may elect to do so in any Fiscal Year by delivering to Corporate Human
Resources a written notice on a form prescribed by Corporate Human Resources
electing to defer payment of all or a portion (in 25% increments or other
increments so prescribed by the Committee) of his or her Compensation (an
"Election"), provided Section 16(b) Employees who elect to defer to a Stock
Account shall have the prior approval of the Committee. Such Election shall
specify whether the payout for the Compensation Account shall be in a lump sum
or in annual installments (not to exceed 20). Separate elections may be made
with respect to each type of Deferred Compensation; however, Compensation
Accounts for the same type of Deferred Compensation shall be paid out in
accordance with the same payout schedule. The Election must be filed on or
before December 31 in order to be effective for amounts earned in the
immediately succeeding Fiscal Year. An effective Election may not be revoked or
modified (except as otherwise stated herein) with respect to a Fiscal Year for
which such Election is effective.
(b) Changes in Election. A Participant will be allowed to change the
Election as provided herein. Any change with respect to the terms of a
Participant's Election for (i) amount or form of any future deferral hereunder
may be made at any time prior to such Compensation being earned and (ii) the
timing (which change may not accelerate a distribution date) or amount of
payments from any Compensation Account shall only be effective if made at least
six months prior to the payout and in the calendar year prior to the calendar
year payout is to occur.
8. MANNER OF PAYMENT
-----------------
(a) Form of Payment. In accordance with the Participant's Election,
amounts credited to a Participant's Compensation Account will be paid in a lump
sum or in the form of annual installments. Except as provided in Section 11, in
the case of distributions from the Stock Account (unless the Administrator, or
in the case of a Section 16(b) Employee, the Committee, decides it shall be in
the form of cash), distributions shall be in shares of Common Stock and in case
of distributions from any other Compensation Account, distributions shall be in
the form of cash (unless the Committee decides it shall be in the form of shares
of Common Stock), in each case to the Participant or, in the event of his or her
death, to the Beneficiary. If a Participant elects to receive payment in
installments, the payment period shall not exceed 20 years. Payment dates shall
be January 1 or July 1 pursuant to Participant's Election.
(b) Calculation for Payments in Cash. The amount of any cash distribution
to be made in installments with respect to a Compensation Account (other than
the Stock Account) will be determined by multiplying (i) the balance in such
Compensation Account on the payment date by (ii) a fraction, the numerator of
which is one and the denominator of which is the number of installments in which
distributions remain to be made (including the current distribution). If a
Stock Account is to be paid out in cash, the amount of any cash distribution to
be made in installments with respect to Stock Units will be determined by (i)
multiplying the number of Stock Units attributable to such installment
(determined as hereinafter provided) by (ii) the Fair Market Value of a share of
Common Stock on the fifth business day immediately prior to the date on which
such installment is to be paid. The number of Stock
<PAGE>
7
Units attributable to an installment shall be determined by multiplying (i) the
current number of Stock Units in the Stock Account by (ii) a fraction, the
numerator of which is one and the denominator of which is the number of
installments in which distributions remain to be made (including the current
distribution).
(c) Calculation for Payments in Stock. The amount of any stock
distribution to be made in installments with respect to the amount of a
Compensation Account invested in the Stock Account shall be determined by
multiplying (i) the current number of Stock Units by (ii) a fraction, the
numerator of which is one and the denominator of which is the number of
installments in which distributions remain to be made (including the current
distribution). If a Compensation Account (other than the Stock Account) is to
be paid out in shares of Common Stock, the amount of any stock distribution to
be made in installments with respect to such Compensation Account shall be
determined by dividing the amount of cash attributable to such installment
(determined as provided above) by the Fair Market Value of the Common Stock on
the fifth business day immediately prior to the date on which such installment
is to be paid.
(d) Fractional Shares; Required Withholding. Only whole numbers of shares
of Common Stock will be issued, with any fractional shares to be paid in cash.
To the extent required by law, taxes shall be withheld from payouts of the
Compensation Account, provided that if a fractional share results after
withholding, such fractional share shall be withheld as additional tax.
9. COMMENCEMENT OF PAYMENTS
------------------------
Payments of amounts deferred pursuant to a valid Election shall commence
(i) with respect to a lump sum, on January 1 or July 1 as indicated in a
Participant's Election and (ii) with respect to annual installments, on January
1 or July 1 of the first calendar year of deferred payment as selected by a
Participant in his or her Election. If a Participant dies prior to the first
deferred payment specified in an Election or prior to completion of all
installments, payments shall commence to the Participant's Beneficiary on the
first or next payment date so specified, unless the Administrator elects
otherwise to provide for a lump-sum distribution of the deceased Participant's
Compensation Accounts.
10. BENEFICIARY DESIGNATION
-----------------------
A Participant may designate one or more persons to whom payments are to be
made if the Participant dies before receiving payment of any or all amounts due
hereunder. A designation of Beneficiary will be effective only after the signed
Election is filed with Corporate Human Resources while the Participant is alive
and will cancel all designations of Beneficiary signed and filed earlier. If
Corporate Human Resources so permits, Beneficiaries may be designated for each
type of Compensation that is deferred. If the Participant fails to designate a
Beneficiary as provided above, the remaining unpaid amounts shall be paid in one
lump sum to the estate of such Participant. If all Beneficiaries of the
Participant die before the Participant or before complete payment of all amounts
due hereunder, the remaining unpaid amounts shall be paid in one lump sum to the
estate of the last to die of such
<PAGE>
8
Beneficiaries. A Participant may, at any time prior to death, elect to change
the designation of a Beneficiary.
<PAGE>
9
11. CHANGE IN CONTROL
-----------------
Notwithstanding any provision of this Plan to the contrary, in the event of
a Change in Control, each Participant in the Plan shall receive an automatic
lump-sum cash distribution of all amounts accrued in the Participant's
Compensation Account (including interest at the Rate of Interest from the date
of the Change in Control through the business day immediately preceding the date
of distribution) not later than 15 days after the date of the Change in Control.
For this purpose, the balance in the portion of a Participant's Compensation
Account invested in the Stock Account shall be determined by multiplying the
number of Stock Units by the higher of (a) the highest Fair Market Value on any
date within the period commencing 30 days prior to such Change in Control and
ending on the date of the Change in Control, or (b) if the Change in Control of
the Company occurs as a result of a tender or exchange offer or consummation of
a corporate transaction, then the highest price paid per share of Common Stock
pursuant thereto. Any consideration other than cash forming a part or all of
the consideration for Common Stock to be paid pursuant to the applicable
transaction shall be valued at the valuation price thereon determined by the
Board.
In addition, the Company shall reimburse a Participant for the legal fees
and expenses incurred if the Participant is required to seek to obtain or
enforce any right to distribution. In the event that it is determined that such
Participant is properly entitled to a cash distribution hereunder, such
Participant shall also be entitled to interest thereon payable in an amount
equivalent to the prime rate of interest as announced from time to time by
Citibank, N.A. from the date such distribution should have been made to and
including the date it is made.
Notwithstanding any provision of this Plan to the contrary, this Section 11
as applied to any Participant may not be amended or modified to the detriment of
a Participant after a Change in Control occurs without the written consent of
such Participant.
12. LOANS
-----
The Administrator may, upon rules and procedures established by it, permit
Participants to borrow from their Compensation Accounts up to 50% of the value
of the Participant's Stock Account and up to 100% of the Participant's other
Compensation Accounts with such accounts constituting security for repayment of
such borrowings and with such borrowings bearing interest at market rates as
determined by the Administrator. In addition to terms established by the
Administrator, borrowings shall be subject to the following terms and
conditions: (1) a borrowing may not exceed in principal amount outstanding at
any one time $50,000 and the minimum borrowed amount shall be $1,000, (2) a
Participant may not have more than one borrowing outstanding hereunder at any
one time, (3) a borrowing shall mature in not more than five years, (4) the
annual interest rate on the borrowing, which shall be fixed during its term
(except it may increase in the case of default), shall be 25 basis points over
the minimum rate required by the Internal Revenue Service to avoid imputation of
income and (5) principal and interest payments will amortize over the life of
the borrowing except Participants with borrowings maturing over two years or
more may instead elect to make annual principal installment payments of five
percent and pay the balance of principal at maturity. Notwithstanding any later
maturity date, all such borrowings
<PAGE>
10
by Participant become due and payable when the Participants employment with the
Company or any affiliate terminates.
13. INALIENABILITY OF BENEFITS
--------------------------
The interests of the Participants and their Beneficiaries under the Plan
may not in any way be voluntarily or involuntarily transferred, alienated or
assigned, nor subject to attachment, execution, garnishment or other such
equitable or legal process. A Participant or Beneficiary cannot waive the
provisions of this Section 13.
14. GOVERNING LAW
-------------
The provisions of this plan shall be interpreted and construed in
accordance with the laws of the Commonwealth of Virginia, except to the extent
preempted by Federal law.
15. AMENDMENTS
----------
The Committee may amend, alter or terminate this Plan at any time without
the prior approval of the Board; provided, however, that the Committee may not,
without approval by the Board increase the number of securities that may be
issued under the Plan (except as provided in Section 3(b)). No amendment or
modification may impair the rights of a Participant to receive amounts accrued
in the Participant's Compensation Account at the time of the effectiveness of
the amendment or modification.
16. EFFECTIVE DATE
--------------
The Plan will become effective as of November 1, 1997.
<PAGE>
Exhibit 10(j)
[COMPOSITE COPY]
OLIN SUPPLEMENTAL CONTRIBUTING EMPLOYEE OWNERSHIP PLAN
EFFECTIVE JANUARY 1, 1990
AS AMENDED BY FIRST AMENDMENT DATED AS OF MAY 6, 1994 AND
AS AMENDED BY SECOND AMENDMENT DATED AS OF JANUARY 30, 1998
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>
2
"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.
<PAGE>
3
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 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. 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.
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
<PAGE>
4
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.
17. Change in Control. Upon a Change in Control (as defined below), the Plan
-----------------
shall terminate and the Special Deferral Account balance of a SCEOP Participant
shall be paid in cash to such participant as promptly as practicable but in no
event later than 30 days following the Change in Control. For purposes of this
paragraph, "Change in Control" shall mean that any of the following events shall
have occurred:
(i) Olin ceases to be, directly or indirectly, owned by at least 1,000
shareholders;
(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) of the Act), other than Olin, a majority-owned
subsidiary of Olin or an employee benefit plan (or related trust) of Olin
or such subsidiary, become(s) the "beneficial owner" (as defined in Rule
13(d)(3) under the Act) of 20% or more of the then outstanding voting stock
of Olin;
<PAGE>
5
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Olin's Board of Directors (together with
any new Director whose election by Olin's Board of Directors or whose nomination
for election by the Olin's stockholders, was approved by a vote of at least two-
thirds of the Directors then still in office who either were Directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Directors then in office; or
(iv) Olin's Board of Directors determines that a tender offer for Olin's shares
indicates a serious intention by the offeror to acquire control of Olin.
For purposes of computing the payout under this Section 17, the cash value
of the Special Deferred Account shall be determined by multiplying the number of
Phantom Shares held in such account by the higher of (i) the highest Current
Market Value of the Common Stock (as defined in the CEO Plan) on any date within
the period commencing 30 days prior to such Change in Control and ending on the
date of the Change in Control, or (ii) if the Change in Control occurs as a
result of a tender or exchange offer or consummation of a corporate transaction,
then the highest price paid per share of Common Stock pursuant thereto.
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
<PAGE>
Exhibit 10(m)
FORM OF
-------
EXECUTIVE AGREEMENT
-------------------
Agreement between Olin Corporation, a Virginia corporation ("Olin"), and
_____________ (the "Executive"), dated as of ____________.
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 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
<PAGE>
2
(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 (A) the Executive's average
annual award actually paid under Olin's short-term annual incentive compensation
plans or programs ("ICP") (including zero if nothing was paid or deferred but
including any portion thereof the Executive has elected to defer) for the three
years immediately preceding the date of Termination (or if the Executive has not
participated in ICP for such three years, the average of any such awards for the
shorter period of years in which the Executive was a participant) and (B) 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.
(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;
<PAGE>
3
(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
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;
<PAGE>
4
(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 July 1, 1994 between Olin and the
Executive.
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
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
<PAGE>
5
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 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
<PAGE>
6
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.
(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
<PAGE>
7
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 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
<PAGE>
8
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.
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
<PAGE>
9
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.
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.
<PAGE>
10
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 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: ______________________________
Donald W. Griffin
Chairman of the Board, President and
Chief Executive Officer
________________________
<PAGE>
Exhibit 10(n)
Month date, 1998
- --------------------------
- --------------------------
- --------------------------
Dear :
--------------------
[This letter agreement supersedes and replaces in its entirety our letter
agreement of [date] with you relating to severance in the event of a Change in
Control of Olin Corporation.]*
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 Corporation ("Olin"), as defined below. In the event that
this agreement shall not have become operative by September 30, 2002, 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 (or
the plan's related trust) 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;
<PAGE>
2
(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
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 the Company or
(y) the combined company).
(b) "Cause" means your willful and continued failure to substantially
perform your duties; your willful engaging in gross misconduct
significantly and demonstrably financially injurious to Olin; or your
willful misconduct in the course of your employment which is a felony
or fraud. No act or failure to act on your part 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.
(c) "Olin" includes except for purposes of paragraph 2(a)(iv) above, a
successor of Olin Corporation (whether direct or indirect) by purchase,
merger, consolidation or otherwise.
(d) "Termination" means if:
(i) Within 18 months following a Change in Control, you are discharged
by Olin (or any of its subsidiaries) other than for Cause;
(ii) You terminate your employment within 24 months following a Change
in Control in the event that:
<PAGE>
3
(1) Olin requires you to relocate your then office to an area
which is not within reasonable commuting distance, on a daily
basis, from your then residence, except the requirement to
relocate your office to Olin's current corporate headquarters
located in Norwalk, Connecticut, is not a basis for
Termination if (a) in the transfer to Norwalk, Olin
reimburses you fully for all your relocation costs consistent
with its past practice in effect prior to a Change in Control
and (b) you are not age 55 or older with at least ten years
of creditable service under an Olin retirement plan at the
time of the required relocation;
(2) Olin reduces your base salary or fails to increase your base
salary on a basis consistent (as to frequency and amount)
with Olin's exempt salary system as in effect immediately
prior to the Change in Control;
(3) Olin fails to continue your 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 provided
such performance is a relevant criterion under such plan) and
the level of your 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 your amount of benefits and level
of participation shall be compared shall be the average
benefit awarded to you under the relevant plan during the
three years immediately preceding the date of Termination;
(4) Your duties, position or reporting responsibilities are
diminished.
3. (a) In the event your Termination, Olin will pay you an amount ("Special
Severance") equal to the sum of:
(i) 12 months' salary at the higher of your base rate of salary in
effect at Olin (or any subsidiary thereof) immediately prior to the
Change in Control or on the date of Termination; plus
<PAGE>
4
(ii) an amount equal to the greater of (a) the average of your bonus
awards actually paid (including zero if nothing was paid or
deferred but including any portion thereof that you elected to
defer) under the annual cash incentive compensation plans for the
three calendar years immediately preceding the year in which
Termination occurs (or the average thereof of such shorter period
in which you participated in such plans if you participated for
less than three years), or (b) your standard annual cash incentive
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 on a basis no less favorable than in effect immediately
prior to the Change in Control.
(c) Payment of Special Severance will be made to you (i) over a twelve
month period in equal monthly installments commencing with the first
day of 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 equal to the sum of the monthly payments
referred to in clause (i) ("Annual Sum") less an amount equal to the
Annual Sum multiplied by the six-month U.S. Treasury bill rate in
effect on the date of Termination; provided, however, the amount of the
Special Severance paid hereunder shall be applied to reduce whatever
cash severance payments, if any, to which you are entitled under the
applicable severance policy of Olin or under any special severance
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, EVA Incentive Plan, Olin 1991 Long Term
Incentive Plan, any 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 following the date of Termination but
shall be entitled to payment for accrued and unused vacation for the
then current calendar year within 30 days of Termination.
(f) You shall not be entitled to an ICP award for the calendar year of
Termination if Termination occurs during the first calendar quarter.
If
<PAGE>
5
Termination occurs during or after the second calendar quarter, you
shall be entitled to prorated ICP award for the calendar year of
Termination which shall be determined by multiplying your then current
ICP standard by a fraction the numerator of which is the number of
weeks elapsed in the calendar year prior to the Termination and the
denominator of which is 52. You shall accrue no ICP award during the 12
months following the date of Termination. For purposes of this
paragraph, "ICP" shall mean the annual cash incentive plan or program
in effect at the time 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 a
third party 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 subsequent 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.
(b) Olin shall pay as they become due all reasonable legal fees and
expenses which you may incur to enforce this agreement unless you had
no reasonable basis for the claim.
<PAGE>
6
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
By:
----------------------------
Donald W. Griffin
Chairman of the Board, President
and Chief Executive Officer
Agreed:
- --------------------------
Signature
- --------------------------
Please Print Name
*To be used if employee has a previous Tier II Agreement which has not expired.
<PAGE>
Exhibit 10(s)
OLIN CORPORATION
1997 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
As Amended and Restated Effective October 2, 1997
1. PURPOSE. The purpose of the Olin Corporation 1997 Stock Plan for Non-
employee Directors is to promote the long-term growth and financial success of
Olin Corporation by attracting and retaining non-employee directors of
outstanding ability and by promoting a greater identity of interest between its
non-employee directors and its shareholders.
2. DEFINITIONS. The following capitalized terms utilized herein have the
following meanings:
"Annual Grant Participant" means a Non-employee Director who is
not eligible for any other pension benefits from the Company, including,
but not limited to, benefits from the Olin Employees Pension Plan, the
Olin Senior Executive Pension Plan or another pension plan of the
Company.
"Board" means the Board of Directors of the Company.
"Cash Account" means an account established under the Plan for a
Non-employee Director to which cash meeting fees and retainers have been
or are to be credited in the form of cash.
"Change in Control" means any of the following: (i) the Company
ceases to be, directly or indirectly, owned by at least 1,000
shareholders; (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 1934 Act, other
than the Company, a majority-owned subsidiary of the Company or an
employee benefit plan (or related trust) of the Company or such
subsidiary, become(s) the "beneficial owner" (as defined in Rule 13d-3
under the 1934 Act) of 20% or more of the then outstanding voting stock
of the Company; and (iii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board
(together with any new director whose election by the Board or whose
nomination for election by the Company'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.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" means the Compensation Committee (or its successor)
of the Board.
<PAGE>
2
"Common Stock" means the Company's Common Stock, $1.00 par value
per share.
"Company" means Olin Corporation, a Virginia corporation, and
any successor.
"Credit Date" means the first day of each calendar quarter,
beginning with January 1, 1998.
"Excess Retainer" means with respect to a Non-employee Director
the amount of the full annual cash retainer payable to such Non-employee
Director from time to time by the Company for service as a director in
excess of $25,000, if any; provided that in the event the annual cash
retainer is prorated to reflect that such Non-employee Director did not
serve as such for the full calendar year, the $25,000 shall be similarly
prorated.
"Fair Market Value" means, with respect to a date, on a per
share basis, the average of the high and the low price of a share of
Common Stock reported on the consolidated tape of the New York Stock
Exchange on such date or if the New York Stock Exchange is closed on
such date, the next succeeding date on which it is open.
"Interest Rate" means the rate of interest equal to the
Company's before-tax cost of borrowing as determined from time to time
by the Chief Financial Officer, the Treasurer or the Controller of the
Company (or in the event there is no such borrowing, the Federal Reserve
A1/P1 Composite rate for 90-day commercial paper plus 10 basis points,
as determined by any such officer) or such other rate as determined from
time to time by the Board or the Committee.
"1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"1994 Plan" means the 1994 Stock Plan for Non-employee Directors
as in effect on October 1, 1997.
"Non-employee Director" means a member of the Board who is not
an employee of the Company or any subsidiary thereof.
"One-time Grant Participant" means a Director with an accrued
benefit under the Retirement Plan, as shown on Exhibit 1 hereto;
provided such Director waives his or her rights with respect to the
Retirement Plan. (See Exhibit 1 for the present value of each such
Director's accrued benefit as of December 31, 1996.)
"Plan" means the Olin Corporation 1997 Stock Plan for Non-
employee Directors as amended from time to time.
<PAGE>
3
"Prior Plans" means the 1994 Plan and all of the Corporation's
other directors compensation plans, programs, or arrangements which
provided for a deferred cash or stock account.
"Retirement Date" means the date the Non-employee Director
ceases to be a member of the Board for any reason.
"Retirement Plan" means the Retirement Plan for Non-employee
Directors of Olin Corporation as in effect December 31, 1996.
"Stock Account" means an account established under the Plan for
a Non-employee Director to which shares of Common Stock have been or are
to be credited in the form of stock.
3. TERM. The Plan became effective January 1, 1997. Once effective, the
Plan shall operate and shall remain in effect until terminated by action of the
Board as provided in Section 9 hereof. The Plan was amended and restated
effective October 2, 1997.
4. ADMINISTRATION. Full power and authority to construe, interpret and
administer the Plan shall be vested in the Committee. Decisions of the Committee
shall be final, conclusive and binding upon all parties.
5. PARTICIPATION. All Non-employee Directors shall participate in the
Plan.
6. GRANTS AND DEFERRALS.
(a) Annual Stock Grant. Subject to the terms and conditions of
------------------
the Plan, each Non-employee Director shall be credited with 204 shares of Common
Stock on January 1 of each calendar year beginning in 1998 and each Annual Grant
Participant shall be credited with 500 shares of Common Stock on January 1 of
each calendar year beginning in 1997. To be entitled to such credit in any
calendar year, a Non-employee Director or an Annual Grant Participant, as the
case may be, must be serving as such on January 1 of such year; provided,
however, in the event a person becomes an Annual Grant Participant subsequent to
January 1 of a calendar year, such Annual Grant Participant, on the first day of
the calendar month following his or her becoming such, shall be credited with
that number of shares (rounded up to the next whole share in the event of a
fractional share) of Common Stock equal to one-twelfth of 500 times the number
of whole calendar months remaining in such calendar year following the date he
or she becomes an Annual Grant Participant. Actual receipt of shares shall be
deferred and each eligible Non-employee Director or Annual Grant Participant, as
the case may be, shall receive a credit to his or her Stock Account in the
amount of such shares and on the date of such credit. A Non-employee Director
may elect in accordance with Section 6(f) to defer to his or her Stock Account
receipt of all or any portion of such shares to a date or dates on or following
such Non-employee Director's or Annual Grant Participant's Retirement Date.
Except with respect to any shares the director has so elected to defer,
certificates representing such shares shall be delivered to the Non-employee
Director (or in the event of death, to his or her beneficiary designated
pursuant to Section 6(h)) as soon as practicable following the Retirement Date.
<PAGE>
4
(b) Annual Retainer Stock Grant. Subject to the terms and
---------------------------
conditions of the Plan, on each January 1 of each year beginning with 1998, each
Non-employee Director who is such on such date shall receive that number of
shares (rounded up to the next whole share) of Common Stock having an aggregate
Fair Market Value on such date of $25,000. In the event a person becomes in a
calendar year a Non-employee Director subsequent to January 1 and has not
received the annual stock retainer for such calendar year, such person, on the
first day of the calendar month following his or her becoming such, shall
receive that number of shares (rounded up to the next whole share in the event
of a fractional share) of Common Stock having an aggregate Fair Market Value on
such first day of an amount equal to $2,084 times the number of whole calendar
months remaining in such calendar year following the date he or she becomes a
Non-employee Director. The annual cash retainer payable to the Non-employee
Director shall be reduced by the aggregate Fair Market Value of the shares the
Non-employee Director receives or defers as the annual retainer stock grant
(excluding any rounding of fractional shares) on the date the Non-employee
Director becomes entitled to receive shares under this Section 6(b) for such
calendar year. A Non-employee Director may elect to defer receipt of all or any
portion of such shares in accordance with Section 6(f). Except with respect to
any shares the director has so elected to defer, certificates representing such
shares shall be delivered to such Non-employee Director as soon as practicable
following the date as of which the shares are awarded.
(c) One-time Stock Grant. Subject to the terms and conditions of
--------------------
the Plan, each One-time Grant Participant shall be credited as of January 15,
1997, with that number of shares (rounded up to the next whole share in the
event of a fractional share) of Common Stock equal to the present value of his
or her accrued benefit under the Retirement Plan, divided by the Fair Market
Value per share on January 15, 1997. Actual receipt of all shares credited under
this Section 6(c) shall be deferred and each One-time Grant Participant shall
receive a credit to his or her Stock Account in the amount of such credit on
January 15, 1997. A One-time Grant Participant may elect in accordance with
Section 6(f) to defer receipt of all or any portion of such shares to a date or
dates following such One-time Grant Participant's Retirement Date. Except with
respect to any shares so deferred, certificates representing such shares shall
be delivered to the One-time Grant Participant (or in the event of death, to his
or her beneficiary designated pursuant to Section 6(i)) as soon as practicable
following his or her Retirement Date.
(d) Election to Receive Meeting Fees and Excess Retainer in
-------------------------------------------------------
Stock in Lieu of Cash. Subject to the terms and conditions of the Plan, a Non-
- ---------------------
employee Director may elect to receive all or a portion of the director meeting
fees and all or a portion of the Excess Retainer payable in cash by the Company
for his or her service as a director for the calendar year in the form of shares
of Common Stock. Such election shall be made in accordance with Section 6(f).
The number of shares (rounded up to the next whole share in the event of a
fractional share) for a calendar year payable to a Non-employee Director who so
elects to receive all or a portion of the Excess Retainer in the form of shares
for such year shall be paid on January 1 (or in the case of proration, when the
annual stock retainer is to be paid or credited) equal to the amount of Excess
Retainer which has been elected to be paid in shares divided by the Fair Market
Value per share on January 1 of such calendar year (or in the case of a Non-
employee Director who becomes such after January 1, on the first day of the
<PAGE>
5
calendar month following the day such new Non-employee Director became such).
The number of shares (rounded up to the next whole share in the event of a
fractional share) for a calendar quarter payable to a Non-employee Director who
so elects to receive meeting fees in the form of shares shall be equal to the
aggregate Fair Market Value on the Credit Date following such quarter of the
director meeting fees which have been earned in such quarter and which are
elected to be paid in shares. Except with respect to any shares the director has
elected to defer, certificates representing such shares shall be delivered to
the Non-employee Director as soon as practicable following the date as of which
the Excess Retainer and/or meeting fees would have been paid in cash absent an
election hereunder.
(e) Deferrals of Meeting Fees and Excess Retainer. Subject to
---------------------------------------------
the terms and conditions of the Plan, a Non-employee Director may elect to defer
all or a portion of the shares payable under Section 6(d) and all or a portion
of the director meeting fees and Excess Retainer payable in cash by the Company
for his or her service as a director for the calendar year. The amount of the
Excess Retainer deferred in cash shall be credited on January 1 (or in the case
of proration, on the first day of the next calendar month following the day such
new Non-employee Director becomes such). Such election shall be made in
accordance with Section 6(f). A Non-employee Director who elects to so defer
shall have any deferred shares deferred in the form of shares of Common Stock
and any deferred cash fees and retainer deferred in the form of cash.
(f) Elections.
---------
(1) Deferrals. All elections under Sections 6(a), 6(b),
6(c), 6(d), 6(e), 6(f)(2) and 6(f)(3) shall (A) be made in writing and
delivered to the Secretary of the Company and (B) be irrevocable. All
Non-employee Director elections for payments in cash or stock or for
deferrals shall be made before January 1 of the year in which the shares
of Common Stock or director's fees and retainer are to be earned (or, in
the case of an individual who becomes a Non-employee Director during a
calendar year, prior to the date of his or her election as a director).
All One-time Grant Participant elections shall be made before December
31 of the year prior to the year in which the shares of Common Stock are
to be granted (or, in the case of an individual who becomes an Annual
Grant Participant during a calendar year, before the last day of the
calendar month of his or her becoming such). Deferral elections shall
also (A) specify the portions (in 25% increments) to be deferred and (B)
specify the future date or dates on which deferred amounts are to be
paid, or the future event or events upon the occurrence of which the
deferred amounts are to be paid, and the method of payment (lump sum or
annual installments (up to 10)). However, Non-employee Directors may
elect to defer all of his or her cash dividends on the Stock Account in
whole and not in part and all of his or her interest on the Cash Account
in whole but not in part. Installment payments from an Account shall be
equal to the Account balance (expressed in shares in the case of the
Stock Account, otherwise the cash value of the Account) at the time of
the installment payment times a fraction, the numerator of which is one
and the denominator of which is the number of installments not yet paid.
Fractional shares to be paid in any installment shall be rounded up to
the next whole share. In the event of an election under Section 6(d) for
director meeting fees or
<PAGE>
6
Excess Retainer to be paid in shares of Common Stock, the election shall
specify the portion (in 25% increments) to be so paid. Any change with
respect to the terms of a Non-employee Director's election for (A)
amount or form of any future deferral or the form of payment of any
director compensation hereunder may be made at any time prior to such
compensation being earned (and in the case of quarterly fees, prior to
the start of the quarter in which the fees are to be earned) and (B) the
timing (which timing may not accelerate a distribution date) or amount
of payments from any Account shall only be effective if made at least
six months prior to the payout and in the calendar year prior to the
calendar year payout is to occur.
(2) Stock Account. On the Credit Date (or in the case of
a proration, on the first day of the appropriate calendar month), a Non-
employee Director who has elected to defer shares under Sections 6(b) or
6(e) shall receive a credit to his or her Stock Account. The amount of
such credit shall be the number of shares so deferred (rounded to the
next whole share in the event of a fractional share). A Non-employee
Director may elect to defer the cash dividends paid on his or her Stock
Account in accordance with Section 6(f)(1).
(3) Cash Account. On the Credit Date or in the case of
the Excess Retainer, on the day on which the Non-employee Director is
entitled to receive such Excess Retainer, a Non-employee Director who
has elected to defer cash fees and/or the Excess Retainer under Section
6(e) in the form of cash shall receive a credit to his or her Cash
Account. The amount of the credit shall be the dollar amount of such
Director's meeting fees earned during the immediately preceding
quarterly period or the amount of the Excess Retainer to be paid for the
calendar year, as the case may be, and in each case, specified for
deferral in cash. A Non-employee Director may elect to defer interest
paid on his or her Cash Account in accordance with Section 6(f)(1).
(4) Dividends and Interest. Each time a cash dividend is
paid on the Common Stock, a Non-employee Director who has shares
credited to his or her Stock Account shall be paid on the dividend
payment date such cash dividend in an amount equal to the product of the
number of shares credited to the Non-employee Director's Stock Account
on the record date for such dividend times the dividend paid per share
unless the director has elected to defer such dividend to his or her
Stock Account as provided herein, in which case the Non-employee
Director shall receive a credit for such dividends on the dividend
payment date to his or her Stock Account. The amount of the dividend
credit shall be the number of shares (rounded to the nearest one-
thousandth of a share) determined by multiplying the dividend amount per
share by the number of shares credited to such director's Stock Account
as of the record date for the dividend and dividing the product by the
Fair Market Value per share on the dividend payment date. A Non-employee
Director who has a Cash Account shall be paid directly on each Credit
Date interest on such account's balance at the end of the preceding
quarter, payable at a rate equal to the Interest Rate in effect for such
preceding quarter unless such Non-employee Director has elected to defer
such interest to his or her Cash Account, in which case such interest
shall be credited to such Cash Account on the Credit Date.
<PAGE>
7
(5) Payouts. Cash Accounts will be paid out in cash and
Stock Accounts shall be paid out in shares of Common Stock. Cash amounts
credited to a Cash Account and certificates representing shares credited
to a Stock Account shall be delivered to the Non-employee Director as
soon as practicable following the termination of the deferral and
consistent therewith.
(g) No Stock Rights. Except as expressly provided herein, the
---------------
deferral of shares of Common Stock into a Stock Account shall confer no rights
upon such Non-employee Director, as a shareholder of the Company or otherwise,
with respect to the shares held in such Stock Account, but shall confer only the
right to receive such shares credited as and when provided herein.
(h) Change in Control. Notwithstanding anything to the contrary
-----------------
in this Plan or any election, in the event a Change in Control occurs, amounts
and shares credited to Cash Accounts (including interest accrued to the date of
payout) and Stock Accounts shall be promptly distributed to Non-employee
Directors except the Stock Account shall be paid out in cash and not in the form
of shares of Common Stock. For this purpose, the cash value of the amount in the
Stock Account shall be determined by multiplying the number of shares held in
the Stock Account by the higher of (i) the highest Fair Market Value on any date
within the period commencing 30 days prior to such Change in Control and ending
on the date of the Change in Control, or (ii) if the Change in Control occurs as
a result of a tender or exchange offer or consummation of a corporate
transaction, then the highest price paid per share of Common Stock pursuant
thereto.
(i) Beneficiaries. A Non-employee Director may designate at any
-------------
time and from time to time a beneficiary for his or her Stock and Cash Accounts
in the event his or her Stock or Cash Account may be paid out following his or
her death. Such designation shall be in writing and must be received by the
Company prior to the death to be effective.
(j) Prior Plan Accounts. Upon the effective date of this
-------------------
amendment and restatement, a Participant or any former Non-employee Director who
had an existing account under any Prior Plan shall automatically have such
account transferred, in the case of an account denominated in cash, to the Cash
Account, and in the case of an account denominated in Olin Common Stock, to the
Stock Account, to be maintained and administered pursuant to the terms and
conditions of this Plan; provided that prior annual 100-or 204-share grant
deferrals shall be treated as deferrals of 204-share grants under this Plan, the
$25,000 annual share grant under the 1994 Plan shall be treated as deferrals
under Paragraph 6(b) hereof and deferrals of meeting fees under all Prior Plans
and of the Excess Retainer under the 1994 Plan shall be treated as deferrals
under Paragraph 6(d) hereof. Prior elections and beneficiary designations under
the 1994 Plan and this Plan shall govern this Plan unless changed subsequent to
the date of this amendment and restatement.
7. LIMITATIONS AND CONDITIONS.
(a) Total Number of Shares. The total number of shares of Common
----------------------
Stock that may be issued to Non-employee Directors under the Plan is 150,000.
Such total number of shares may consist, in whole or in part, of authorized but
unissued shares. The foregoing
<PAGE>
8
number may be increased or decreased by the events set forth in Section 8 below.
No fractional shares shall be issued hereunder. In the event a Non-employee
Director is entitled to a fractional share, such share amount shall be rounded
upward to the next whole share amount.
(b) No Additional Rights. Nothing contained herein shall be
--------------------
deemed to create a right in any Non-employee Director to remain a member of the
Board, to be nominated for reelection or to be reelected as such or, after
ceasing to be such a member, to receive any cash or shares of Common Stock under
the Plan which are not already credited to his or her accounts.
8. STOCK ADJUSTMENTS. In the event of any merger, consolidation, stock
or other non-cash dividend, extraordinary cash dividend, split-up, spin-off,
combination or exchange of shares or recapitalization or change in
capitalization, or any other similar corporate event, the Committee may make
such adjustments in (i) the aggregate number of shares of Common Stock that may
be issued under the Plan as set forth in Section 7(a) and the number of shares
that may be issued to a Non-employee Director with respect to any year as set
forth in Section 6(a) and the number of shares held in a Stock Account, (ii) the
class of shares that may be issued under the Plan and (iii) the amount and type
of payment that may be made in respect of unpaid dividends on shares of Common
Stock whose receipt has been deferred pursuant to Section 6(f), as the Committee
shall deem appropriate in the circumstances. The determination by the Committee
as to the terms of any of the foregoing adjustments shall be final, conclusive
and binding for all purposes of the Plan.
9. AMENDMENT AND TERMINATION. This Plan may be amended, suspended or
terminated by action of the Board. No termination of the Plan shall adversely
affect the rights of any Non-employee Director with respect to any amounts
otherwise payable or credited to his or her Cash Account or Stock Account.
10. NONASSIGNABILITY. No right to receive any payments under the Plan or
any amounts credited to a Non-employee Director's Cash or Stock Account shall be
assignable or transferable by such Non-employee Director other than by will or
the laws of descent and distribution or pursuant to a domestic relations order.
The designation of a beneficiary under Section 6(i) by a Non-employee Director
does not constitute a transfer.
11. UNSECURED OBLIGATION. Benefits payable under this Plan shall be an
unsecured obligation of the Company.
12. RULE 16b-3 COMPLIANCE. It is the intention of the Company that all
transactions under the Plan be exempt from liability imposed by Section 16(b) of
the 1934 Act. Therefore, if any transaction under the Plan is found not to be in
compliance with Rule 16b-3, the provision of the Plan governing such transaction
shall be deemed amended so that the transaction does so comply and is so exempt,
to the extent permitted by law and deemed advisable by the Committee, and in all
events the Plan shall be construed in favor of its meeting the requirements of
Rule 16b-3.
<PAGE>
9
Exhibit 1
Accrued Benefits Under the Retirement Plan for Non-Employee Directors of
------------------------------------------------------------------------
Olin Corporation
----------------
NON-EMPLOYEE DIRECTOR PRESENT VALUE OF ACCRUED BENEFIT
AS OF DECEMBER 31, 1996
Richard E. Cavanagh $74,000
William W. Higgins $144,000
Suzanne Denbo Jaffe $90,000
Jack D. Kuehler $181,000
H. William Lichtenberger $144,000
G. Jackson Ratcliffe $138,000
William L. Read $253,000
John P. Schaefer $155,000
<PAGE>
Exhibit 11
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Per Share Earnings (Unaudited)
In 1997, the company adopted Statement of Financial Accounting Standards No.
128, "Earnings per Share," which specifies the methods for computing earnings
per share. The calculation of earnings per share according to the provisions of
this statement did not have an impact on the previously reported earnings per
share amounts. Basic earnings per share are computed by dividing net income less
the ESOP preferred stock dividend requirement (to the date of its redemption in
1996), and the redemption adjustment (excess of fair value over book value of
ESOP shares redeemed), and in 1995 the Series A stock dividend requirement by
the weighted average number of common shares outstanding. In Decemner 1996, the
company redeemed the ESOP preferred stock with shares of common stock of
equivalent value. On March 1, 1995, the Series A stock was converted on a one-
for-one basis into common stock. Diluted earnings per share reflect the dilutive
effect of stock options and assume the conversion of outstanding ESOP preferred
stock, until its redemption in December 1996, into an equivalent number of
common shares at the date of issuance. In addition, diluted earnings per share
reflect an equivalent number of common shares for the Series A Stock until its
conversion on March 1, 1995. Net Income was reduced by an additional ESOP
contribution (differential between the common and the ESOP preferred dividend
rates under an assumed conversion) necessary to satisfy the debt service
requirement.
<TABLE>
<CAPTION>
Years Ended December 31
---------------------------------------------
1997 1996 1995
---------- ---------- ----------
Basic earnings per share ($ in millions except per share data)
<S> <C> <C> <C>
Basic earnings:
Continuing operations:
Income from continuing operations $ 153 $ 288 $ 134
Less preferred dividends:
ESOP net of tax benefit - (4) (6)
Series A - - (3)
Redemption adjustment - (8) -
------- ------- -------
$ 153 $ 276 $ 125
======= ======= =======
Discontinued operations:
Income (loss) from discontinued operations $ - $ (8) $ 6
Less redemption adjustment - (1) -
------- ------- -------
$ - $ (9) $ 6
======= ======= =======
Basic shares: (in thousands)
Weighted average shares outstanding 50,519 49,992 47,592
======= ======= =======
Basic earnings (loss) per share:
Continuing operations $ 3.02 $ 5,52 $ 2.63
Discontinued operations - (0.18) 0.12
------- ------- -------
$ 3.02 $ 5.34 $ 2.75
======= ======= =======
Diluted earnings per share
Diluted earnings:
Income from continuing operations $ 153 $ 288 $ 134
Less additional ESOP contribution - (4) (3)
------- ------- -------
$ 153 $ 284 $ 131
======= ======= =======
Income (loss) from discontinued operations $ - $ (8) $ 6
======= ======= =======
Diluted shares: (in thousands)
Basic shares 50,519 49,992 47,592
Assumed conversion of:
ESOP preferred stock - 1,950 2,262
Series A preferred stock - - 1,274
Stock options and remuneration agreements 368 369 164
------- ------- -------
50,887 52,311 51,292
======= ======= =======
Diluted earnings (loss) per share:
Continuing operations $ 3.00 $ 5.43 $ 2.56
Discontinued operations - (0.16) 0.11
------- ------- -------
$ 3.00 $ 5.27 $ 2.67
======= ======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 12
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(Unaudited)
(In millions) Years Ended December 31,
------------------------------------
1997 1996 1995 1994 1993
------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings:
Income (loss) from continuing operations before taxes $234 $446 $204 $119 $(154)
Add (deduct):
Income taxes of 50% owned affiliates 2 3 3 4 3
Equity in (earnings) loss of less than
50% owned affiliates (6) (2) (1) 3 5
Dividends received from less than
50% owned affiliates 2 2 1 - -
Interest capitalized, net of amortization - - 1 1 (1)
Fixed charges as described below 43 48 53 46 47
---- ---- ---- ---- -----
Total $275 $497 $261 $173 $(100)
==== ==== ==== ==== =====
Fixed charges:
Interest expense $ 26 $ 30 $ 36 $ 30 $ 33
Estimated interest factor in rent expense 17 18 17 16 14
---- ---- ---- ---- -----
Total $ 43 $ 48 $ 53 $ 46 $ 47
==== ==== ==== ==== =====
Ratio of earnings to fixed charges(a) 6.4 10.4 4.9 3.8 -
==== ==== ==== ==== =====
- -----------------------------------------------------------------------------------------------
(a) In the twelve months ended December 31, 1993, earnings were inadequate to cover fixed charges
by $147 million. In 1993, the Company recorded an after-tax charge of $124 million for personnel
reductions, business restructurings involving consolidations and re-alignments within divisions,
costs at sites of discontinued businesses, future environmental liabilities, and other charges.
</TABLE>
<PAGE>
EXHIBIT 13
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Consolidated
($ in millions, except per share data) 1997 1996(1) 1995(2)
================================================================================
<S> <C> <C> <C>
Sales $2,410 $2,638 $2,665
Gross Margin 544 617 550
Selling and Administration 285 319 293
Operating Income 230 259 223
Interest Expense 25 29 35
Interest Income 11 4 1
Other Income 18 24 15
Gain on Sale of Business -- 188 --
Income from Continuing Operations 153 288 134
Net Income 153 280 140
Per Common Share:
Basic
Income from Continuing Operations $ 3.02 $ 5.52 $ 2.63
Net Income $ 3.02 $ 5.34 $ 2.75
Diluted
Income from Continuing Operations $ 3.00 $ 5.43 $ 2.56
Net Income $ 3.00 $ 5.27 $ 2.67
================================================================================
</TABLE>
(1) Includes the operating results of the isocyanates business which was sold
in December 1996. Sales, gross margin, selling and administration and
operating income of the isocyanates business in 1996 was $296, $71, $16 and
$47, respectively.
(2) Includes the operating results of the isocyanates business which was sold
in December 1996. Sales, gross margin, selling and administration and
operating income of the isocyanates business in 1995 was $255, $36, $15 and
$14, respectively.
In December of 1996, the company sold its isocyanates business to ARCO
Chemical Company ("ARCO") for $565 million in cash. In connection with this
transaction the company recorded a pretax gain of $188 million. The following
comparison of operating results of 1997 to 1996 excludes the sales, gross
margin, selling and administration expenses, research and development expenses
and operating income of the isocyanates business in 1996.
1997 Compared to 1996
Sales and operating income increased 3% and 8%, respectively. The 3% increase in
sales was due to a 4% increase in volume and a 2% increase due to the inclusion
of the sales from the Niachlor acquisition offset by a 2% decrease in pricing
and a 1% decrease in metal values. The 8% increase in operating income was due
to the increase in sales and lower administrative expenses.
Gross margin percentage was 23% in 1997 and 1996 as lower fixed costs per
unit due to higher volumes offset the impact of lower selling prices.
Selling and administration expenses decreased in dollars as well as a
percentage of sales (12% in 1997, 13% in 1996). Selling and administration
expenses decreased in amount due to lower corporate administration expenses,
lower incentive compensation costs and the absence of expenses related to the
spin-off of Primex Technologies, Inc. ("Primex") incurred in 1996.
Research and development expenses were about equal.
Interest expense decreased due to the $125 million repayment of the 9.5%
subordinated notes at maturity in June of 1997.
The increase in interest income is due to higher average levels of cash,
cash equivalents and short-term investments during 1997 compared with 1996
primarily as a result of the net proceeds on the sale of the isocyanates
business in December 1996.
Other income in 1996 includes the gain on the sale of the company's
corporate headquarters ($7 million).
The effective tax rate decreased to 34.6% from 35.4%. Excluding the impact
of the gain on the sale of the isocyanates business, the effective tax rate in
1997 increased 1.7% due to reduced tax benefits associated with lower foreign
sales primarily due to the absence of the isocyanates business. At December 31,
1997, the company had net deferred tax assets of $99 million, primarily
comprised of 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 there will be
sufficient taxable income to allow for the realization of these tax benefits.
In February 1997, the company completed the purchase of the remaining 50%
of Niachlor (a former Chlor Alkali joint venture) 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 in connection with this
transaction. In November 1997, the company sold its surfactants, fluids,
non-urethane polypropylene glycol and polyethylene glycol businesses to BASF. In
October 1997, the company and Asahi Glass Company established separate ownership
of two former 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. These transactions did
not have a material effect on the company's results of operations.
1996 Compared to 1995
Sales decreased 1% while operating income increased 16%. The decrease in sales
was attributable to a 2% decrease in volume and a 3% decrease in metal values
offset by a 2% improvement in pricing and a 2% increase due to the inclusion of
OCG for a full year. Operating income was enhanced by lower raw material costs
and improved product mix. In 1996, record operating results were achieved by
both the Chlor Alkali and former Chemicals divisions, including the isocyanates
business which was sold in December 1996.
Gross margin percentage was 23%, an increase of 2% due to price increases
in several Chemical product lines, higher caustic volumes, lower raw materials
costs and an improved product mix.
Selling and administration expenses as a percentage of sales increased to
12% from 11%. Selling and administration expenses increased in amount due
primarily to the inclusion of OCG's operating expenses for a full year, expenses
related to the spin-off of Primex, higher costs related to incentive
compensation programs and higher sales promotion and advertising expenses for
Pool Products and Winchester sporting ammunition. This increase was offset in
part by the impact of cost reduction programs.
================================================================================
17
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
Research and development expenditures increased due to the inclusion of
OCG's research and development expenses for a full year in 1996.
Interest expense decreased due to lower average short-term borrowings and
lower average interest rates.
Other income increased due to the gain on the sale of the company's
corporate headquarters and the favorable performance of the nonconsolidated
affiliates.
The effective tax increased to 35.4% from 34.3%. The increase was mainly
attributable to the gain on the sale of the isocyanates business. At December
31, 1996, the company had net deferred tax assets of $135 million, primarily
comprised of temporary differences between financial statement and tax bases of
assets and liabilities.
In 1996, the company sold its isocyanates business to ARCO for $565 million
in cash. The sale included all assets at the company's Lake Charles, LA facility
used in the manufacture and sale of toluene diisocyanate, aliphatic isocyanates
and nitric acid. In connection with the transaction, the company recorded a
pretax gain of $188 million ($115 million after-tax gain).
On December 31, 1996, the company completed the spin-off of its Ordnance
and Aerospace businesses as Primex. Under the terms of the spin-off, the company
distributed to its holders of common stock of record at the close of business on
December 19, 1996 one Primex common share for every ten shares of Olin common
stock. The results of operations have been restated to reflect Primex as
discontinued operations for all periods presented.
CHEMICALS
<TABLE>
<CAPTION>
Results of Operations
($ in millions) 1997 1996 1995
================================================================================
<S> <C> <C> <C>
Sales
Businesses Retained $1,340 $1,290 $1,246
Business Sold -- 296 255
- --------------------------------------------------------------------------------
Total Sales $1,340 $1,586 $1,501
================================================================================
Operating Income
Businesses Retained $ 174 $ 160 $ 126
Business Sold -- 47 14
- --------------------------------------------------------------------------------
Total Operating Income $ 174 $ 207 $ 140
================================================================================
</TABLE>
1997 Compared to 1996 on a Businesses Retained Basis
Sales and operating income increased 4% and 9%, respectively. The increase in
sales was attributable to a 4% increase due to the inclusion of sales of
Niachlor and a 4% increase due to higher volumes offset by a 4% decrease due to
lower caustic pricing. Operating income increased due to higher volumes, lower
manufacturing and administrative costs and the impact of the Niachlor
acquisition.
Chlor Alkali sales were slightly higher due to increased demand for
chlorine and caustic and the inclusion of sales of Niachlor offset in part by
lower caustic prices. Lower caustic prices more than offset the profit impact
from the additional sales and was the main factor in lower Chlor Alkali
operating profits.
Pool Products' sales were slightly lower as lower volumes resulting from
lower export and brand sales, due to increased foreign competition and
unfavorable weather conditions, more than offset higher prices. Operating income
was higher due to the profit impact from the improved pricing and lower
operating expenses.
Performance Urethanes and Organics' sales and operating income were about
equal to last year. In November 1997, the company sold its surfactants, fluids,
non-urethane polypropylene glycol and polyethylene glycol businesses to BASF.
The company will continue to produce certain products for BASF under a
three-year supply agreement.
Higher volumes and margins accounted for Biocides' increased sales and
operating income. As a result of capacity expansions many products set annual
production and sales records due to growth in the market demand and market
share.
Microelectronic Materials' sales were higher due to stronger demand from
the semiconductor industry which is recovering from last year's downturn.
Operating income was about equal as higher volumes offset higher manufacturing
costs and an unfavorable product mix.
1996 Compared to 1995 on a Businesses Retained Basis
Sales and operating income increased 4% and 27%, respectively. The sales
increase was due to the inclusion of sales of OCG for a full year and higher
pricing which more than offset lower volumes. The sales improvement reflected
the record performance by the Chlor Alkali division which more than offset the
shortfall in Microelectronic Materials. Higher pricing in several product lines
was the most significant factor in the operating income improvement.
Higher caustic volumes and chlorine pricing, lower utility costs and
operating expenses contributed to Chlor Alkali's record performance.
Pool Products' sales decreased, while profits were significantly ahead of
last year. Increased pricing was more than offset by lower volumes due to
production capacity constraints and the sale of the chlorinated isocyanurates
business in late 1995. Increased pricing along with higher Pace volumes
contributed to increased profits.
Higher prices for glycols and polyols, lower raw materials costs and
reduced manufacturing and operating costs contributed to Performance Urethanes
and Organics' favorable performance.
Operating results of Biocides exceeded last year. Worldwide volumes
increased as a result of higher foreign sales and new product sales. The profit
impact from these additional volumes was offset in part by higher-priced
purchased materials due to limited production capacity and higher operating
costs for toxicology studies.
Microelectronic Materials' sales increased due to the inclusion of OCG's
sales for twelve months in 1996 compared to six months in 1995. The positive
impact of the inclusion of OCG in operating results was more than offset by the
negative impact of the downturn in the semiconductor industry, higher costs
associated with the delays in the startup of the new Mesa, AZ facility and
development costs for a new semiconductor package.
================================================================================
18
<PAGE>
1996 Compared to 1995 for the Business Sold
Operating results of the isocyanates business were at record levels even though
1996 included 11 months of operations. Higher volumes from increased product
offerings, strong international demand and higher prices were the main
contributors to this improvement.
METALS AND AMMUNITION
<TABLE>
<CAPTION>
Results of Operations
($ in millions) 1997 1996 1995
================================================================================
<S> <C> <C> <C>
Sales $1,070 $1,052 $1,164
Operating Income 56 52 83
================================================================================
</TABLE>
1997 Compared to 1996
Sales and operating income increased 2% and 8%, respectively. The increase in
sales was due to a 3% increase in volumes offset by a 1% decrease in metal
prices. Increased volumes for Brass products resulted in higher operating
income.
Increased demand for Brass strip products, particularly from the automotive
and electronics markets, along with record specialty products shipments led to
higher volumes. Brass' operating income improved as a result of these additional
volumes and the increased earnings at A.J. Oster Company (Oster), partially
offset by higher manufacturing costs at Indianapolis, IN.
Winchester's sales were behind last year, while operating income was about
equal. Reduced military ammunition shipments due to the absence of a U.S.
government contract along with lower commercial ammunition sales to distributors
were the main contributors to the sales decrease. The profit impact from the
lower volumes and increased advertising and selling expenses offset higher GOCO
management fees.
1996 Compared to 1995
Sales and operating income decreased 10% and 37%, respectively. Sales declined
due to lower metal values and lower demand for Brass products and a significant
decrease in commercial ammunition sales. Operating income declined due to the
lower volumes.
Reduced volumes to the electronics, ammunition and utilities industries
contributed to Brass' sales decline. Operating income decreased due to the lower
volumes and the start-up cost associated with the new tube mill at Indianapolis,
IN. The Oster operations achieved a record performance due to higher shipments.
Winchester's domestic commercial ammunition sales were significantly lower
in the first half of the year, but were equal to 1995 levels in the second half.
Military ammunition sales were well below the prior year level due to the
substantial completion in 1995 of several large contracts. The significant
decrease in operating results was primarily attributable to the profit impact
from the lower volumes which offset the impact of lower commodity costs.
1998 OUTLOOK
Consolidated
The company's 1998 sales and operating income are expected to be higher than
1997. Diluted earnings per share is expected in the $3.40 range, assuming an
increase in Chlor Alkali's Electrochemical Unit (ECU) pricing along with
anticipated higher operating income in Microelectronic Materials, Biocides,
Brass and Winchester.
Chemicals
Chemicals segment sales and operating income are expected to increase due
primarily to higher ECU pricing in Chlor Alkali, stronger demand from the
semiconductor industry and increased volumes in certain product lines. Chlor
Alkali plant operating rates are expected to be near capacity as demand for
chlorine and caustic is estimated to continue to be strong. Estimated lower
pricing in Pool Products along with higher raw materials costs and higher
manufacturing costs, including depreciation expense, are expected to decrease
its operating income. In Performance Urethanes and Organics, the 1997 divestment
of the surfactants and fluids business is expected to be the main reason for the
decrease in sales, while profits are expected to increase from the conversion of
certain businesses to tolling arrangements and lower raw material prices. As a
result of recent Biocides capacity additions, higher volumes from existing and
new products are expected to more than offset additional operating expenses for
new product introductions and market-entry costs in Biocides. As the
semiconductor industry continues to improve, increased volumes, a more favorable
product mix and lower manufacturing costs are expected to improve
Microelectronic Materials' performance. During 1998, the Microelectronic
Materials division expects to start up its ultra high-purity chemicals plant and
distribution center in Zwijndrecht, Belgium and its photoresist facility in
North Kingston, RI.
Metals and Ammunition
Sales for the Metals and Ammunition segment are expected to increase. Brass
sales are estimated to increase in 1998 as higher volumes offset lower average
metal values. Continued overcapacity in the metals industry is expected to
create a competitive pricing environment. Winchester's commercial ammunition
sales are expected to increase as product demand improves from 1997 levels.
Segment operating income is expected to increase due to higher Brass and
commercial ammunition volumes, cost reduction initiatives and lower commodity
costs.
Cautionary Statement under Federal Securities Laws
The information contained in the 1998 Outlook section (and subsections thereof),
the Environmental Matters section, the Liquidity, Investment Activity and Other
Financial Data section, and the Environmental and Commitments and Contingencies
notes to the Consolidated Financial Statements contains forward-looking
statements that are based on management's beliefs, certain assumptions made by
management and current expectations, estimates and projec-
================================================================================
19
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
tions 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. Future factors which could cause actual
results to differ materially from those discussed in these sections and notes
include but are not limited to: lack of moderate growth in the U.S. economy or
even a slight recession in 1998; competitive pricing pressures; the company's
ability to maintain chemical price increases; no increase in Chlor Alkali's ECU
prices; Chlor Alkali operating rates below capacity; higher-than-expected raw
material costs for certain chemical product lines; increased foreign competition
in the calcium hypochlorite markets; lack of growth in the semiconductor
industry; a downturn in many of the markets the company serves such as
electronics, automotive, ammunition and housing; the supply/demand balance for
the company's products, including the impact of excess industry capacity;
failure to achieve targeted cost reduction programs; unsuccessful entry into new
markets for electronic chemicals; capital expenditures, such as cost overruns,
in excess of those scheduled; environmental costs in excess of those projected;
and the occurrence of unexpected manufacturing interruptions/outages.
DISCONTINUED OPERATIONS
<TABLE>
<CAPTION>
Results of Operations
($ in millions) 1996 1995
================================================================================
<S> <C> <C>
Sales $471 $508
Operating Income 2 21
Net Income (Loss) (8) 6
================================================================================
</TABLE>
Sales declined 7%, principally attributable to lower shipments of combined
effects munitions, Ball Powder(R) propellant, and electromagnetic systems, which
more than offset higher tank ammunition sales to international customers. The
lower sales levels of combined effects munitions and electromagnetic systems
reflect the completion of major programs during 1996. Sales of commercial Ball
Powder propellant declined 17% as sporting ammunition customers drastically
reduced their purchases. In 1994 and 1995, heavy consumer buying patterns for
sporting ammunition were driven by a concern over the threat of restrictive
legislation and taxation, which increased the demand for Ball Powder propellant.
Net income was adversely impacted by the lower sales volumes and the
provision for the settlement of claims relating to a government investigation of
certain testing irregularities at the Marion, IL facility and a charge for a
Belgian contract dispute.
ENVIRONMENTAL MATTERS
<TABLE>
<CAPTION>
($ in millions) 1997 1996 1995
================================================================================
<S> <C> <C> <C>
Cash Outlays:
Remedial and Investigatory Spending $31 $30 $25
Capital Spending 5 6 8
Plant Operations 23 35 34
- --------------------------------------------------------------------------------
Total Cash Outlays $59 $71 $67
================================================================================
</TABLE>
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 manufacturing locations. 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.
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. Charges to income for
investigatory and remedial efforts were material to operating results in 1997,
1996, and 1995 and may be material to net income in future years. Such charges
to income were $19 million, $70 million and $24 million in 1997, 1996 and 1995,
respectively. In 1996, in connection with the sale of the isocyanates business
at the company's Lake Charles, LA facility, a $53 million provision was recorded
to provide for contractual liabilities related to future environmental spending
at the Lake Charles site.
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 years. Cash outlays for normal plant operations for the disposal
of waste and the operation and maintenance of pollution control equipment and
facilities to ensure compliance with mandated and voluntarily imposed
environmental quality standards were charged to income. Historically, the
company has funded its environmental capital expenditures through cash flow from
operations and expects to do so in the future.
The company's estimated environmental liability at the end of 1997 was
attributable to 46 sites, 18 of which were on the National Priority List (NPL).
Ten sites accounted for approximately 81% of such liability and, of the
remaining sites, no one site accounted for
================================================================================
20
<PAGE>
more than 2% of such liability. One of these ten sites was 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
seven of the ten 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 two of the ten sites, part of the site is subject to a ROD
and another part is still in the investigative stage of remediation. All ten
sites were either former manufacturing facilities or waste sites containing
contamination generated by those facilities.
The company's consolidated balance sheets included liabilities for future
environmental expenditures to investigate and remediate known sites amounting to
$136 million at December 31, 1997 and $148 million at December 31, 1996, of
which $106 million and $113 million were 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.
Total environmental-related cash outlays for 1998 are estimated to be $65
million, of which $30 million is expected to be spent on investigatory and
remedial efforts, $8 million on capital projects and $27 million on normal plant
operations.
Annual environmental-related cash outlays for site investigation and
remediation, capital projects, and normal plant operations are expected to range
between $65 - $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 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. At December 31,
1997, the company had estimated additional contingent environmental liabilities
of $41 million.
LIQUIDITY, INVESTMENT ACTIVITY AND OTHER FINANCIAL DATA
<TABLE>
<CAPTION>
Cash Flow Data
Provided By (Used For)($ in millions) 1997 1996 1995
================================================================================
<S> <C> <C> <C>
Net Cash and Cash Equivalents
Provided by Operating Activities
from Continuing Operations $ 53 $ 266 $ 210
Net Operating Activities 53 271 187
Capital Expenditures (140) (126) (182)
Net Investing Activities (65) 274 (199)
Purchases of Olin Common Stock (163) -- --
Net Financing Activities (346) (29) 13
================================================================================
</TABLE>
Cash flows from operations, cash and cash equivalents on hand were used to
finance the company's working capital requirements, long-term debt payments,
capital and investment projects, dividends, the purchases of the company's
common stock and taxes paid on the sale of the isocyanates business.
Operating Activities
In 1997, the decrease in cash flow from operating activities of continuing
operations was primarily attributable to lower operating income, an increased
investment in working capital and taxes paid on the sale of the isocyanates
business. Lower accounts payable and accrued liabilities levels, higher
receivable levels, and increased inventory levels in Chlor Alkali, Brass and
Microelectronic Materials were the main contributors to the increased investment
in working capital. The Niachlor acquisition, the discontinuation of an
ammunition prepayment program and an unusually low Brass accounts receivable
level at year-end 1996 contributed to the higher overall accounts receivable
balances at year-end 1997. During 1997, the company paid taxes of approximately
$110 million relating to the sale of its isocyanates business in December 1996.
In 1996, the increase in cash flow from operating activities of continuing
operations was primarily attributable to higher operating income and a reduced
investment in working capital compared to 1995.
Capital Expenditures
Capital expenditures of $140 million in 1997 increased 21% from the prior year
(excluding $10 million of capital spending of the isocyanates business) to
provide additional capacity for the Chemicals segment. In Microelectronic
Materials, there are two major projects: an ultra high-purity chemicals 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 photoresist products.
These two projects represent a total investment of approximately $50 million, of
which approximately $20 million was spent in 1997. The high-purity chemicals
plant in Belgium is expected to be completed in the Spring of 1998 while the
photoresist facility in Rhode Island is expected to start up in late 1998. In
Biocides, the company is investing in a $42 million expansion plan over the next
several years, including a new plant to be built in China to support increasing
================================================================================
21
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
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 in the year 2000. During 1997, approximately $5 million was spent in
Rochester, NY and Swords, Ireland related to the expanded capacity for key
intermediate materials. Capital spending in 1996 decreased 31% from the prior
year due to a planned reduction to control capital costs. Also contributing to
this lower level of spending was the completion of two significant projects in
1995.
Capital spending in 1998 is estimated to increase approximately 15-30% from
1997. This increase is due primarily to the two Microelectronic Materials
projects and spending for the Biocides expansion.
Investing Activities
In February 1997, the company completed its purchase of the remaining 50% of
Niachlor (a former Chlor Alkali joint venture) with a final payment of $2
million to DuPont. In December 1996, the company made an advance payment of $75
million to DuPont, which was included in Investment and Advances-Affiliated
Companies at Equity in the December 31, 1996 Balance Sheet. This acquisition was
accounted for as a purchase in 1997 and consists primarily of property, plant
and equipment. In November 1997, the company sold its surfactants, fluids,
non-urethane polypropylene glycol and polyethylene glycol businesses to BASF. In
October 1997, the company and Asahi Glass Company 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 Asahi-Olin joint
venture in polyols that was established in 1974. The combined net proceeds of
these divestments was $17 million. These transactions did not have a material
effect on the company's results of operations.
Investment spending in 1997 was primarily attributable to the Sunbelt
project, a joint venture formed by the Geon Company and the company in 1996 to
construct and operate a Chlor Alkali facility at the company's McIntosh, AL
site. The facility started operations in December 1997. Also in December, the
company was repaid $98 million of its original advances to the venture, as a
result of a long-term financing undertaken by this venture. The company has
guaranteed its share of the venture's long-term debt. In 1996, the company
invested approximately $27 million in this venture.
In December 1996, the company sold its isocyanates business for $565
million in cash. The sale included all assets at the company's Lake Charles, LA
facility used in the manufacture and sale of toluene diisocyanate, aliphatic
isocyanates and nitric acid. Also in 1996, the company sold its electrostatics
business, which generated proceeds of $6 million. Proceeds of $23 million in
1996 from the disposition of property, plant and equipment consisted primarily
of the sale of the corporate headquarters.
In 1995, the company completed its acquisition for approximately $65
million of Ciba-Geigy's 50% share of OCG, a joint venture formed by Ciba-Geigy
and the company in 1990. Also, the company acquired the remaining 51% of Etoxyl,
C.A., a Latin American joint venture. During 1995, the company sold its Sun(R)
brand trademark and its dry sanitizer plant in South Charleston, WV and a
related tableting operation in Livonia, MI. These divestments generated proceeds
of $49 million.
Financing Activities
At December 31, 1997, the company maintained committed credit facilities with
banks of $257 million, all of which were available. The company believes that
these credit facilities are adequate to satisfy its liquidity needs for the near
future. In June 1997, the company repaid $125 million of 9.5% subordinated
notes. In June 1995, the company sold $50 million of 7.11% notes due June 2005.
The proceeds from this issue were used to reduce short-term debt incurred for
working capital purposes. Included in the $257 million committed credit facility
is an unsecured revolving credit agreement with a group of banks which provides
a maximum borrowing of $250 million. During 1997, the company amended the
revolving credit agreement, extending the expiration date to October 2002. The
company may select various floating rate borrowing options.
In 1996, the board of directors authorized the company to purchase up to 5
million shares or approximately 10% of the then outstanding shares of common
stock. In 1997, the company used $163 million to purchase approximately 3.8
million shares of its common stock. It is expected that this program will be
completed during the second quarter of 1998.
Prior to being spun-off from the company, Primex assumed a $160 million
credit facility established by the company, under which the company had borrowed
$125 million. The company used these funds to reduce its own borrowings in 1997.
The percent of total debt to total capitalization [excluding the reduction
in equity for the Contributing Employee Ownership Plan (ESOP)] decreased to 24%
at December 31, 1997 from 30% at year-end 1996 and was 38% at year-end 1995.
Contributing to the decrease in 1997 was the repayment of the 9.5% subordinated
notes.
================================================================================
22
<PAGE>
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 ESOP trust 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 and was repaid in July 1996. In
December 1996, the board of directors approved the redemption of all outstanding
ESOP preferred stock with common stock of equivalent value. Approximately 1.87
million shares of common stock at a per share value of $40.19 were issued in
exchange for approximately .9 million shares of ESOP preferred stock at a per
share value of $85.75. The annual fixed dividend rate was $5.97 per share and
during 1996 dividends were paid in the first three quarters.
Dividends per common share were $1.20 in 1997, 1996 and 1995. Total
dividends paid on common stock amounted to $61 million in 1997, $60 million in
1996 and $57 million in 1995, while total ESOP preferred dividends amounted to
$4 million in 1996 and $6 million in 1995. Dividends paid on Series A Stock were
$3 million in 1995.
On March 1, 1995, 2.76 million shares of the company's $1 par value Series
A Conversion Preferred Stock were converted into shares of common stock on a
one-for-one basis. The last dividend on these preferred shares was paid in March
1995. During 1992, the company swapped interest payments on $50 million
principal amount of its 8% notes due 2002, to a floating rate (6.0625% at
December 31, 1997). In the Spring of 1995, the company offset this transaction
by swapping interest payments to a fixed rate of 6.485%.
New Accounting Standards
In 1997, the company adopted 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 calculation
of earnings per share according to the provisions of this statement did not have
an impact on the previously reported earnings per share amounts.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which establishes new disclosures for reporting comprehensive income
and 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 will
include the required disclosures under SFAS No. 130 in the March 31, 1998 Form
10Q. The company is still assessing the disclosure requirements of SFAS No. 131
which is effective for the years beginning after December 15, 1997.
Year 2000 Computer Systems
The company is in the process of upgrading its information technology systems
and implementing SAP. As a result, it is reviewing all internal processes and
hardware and software issues. In addition, it is analyzing the issues relating
to the Year 2000 and is also discussing with its vendors and customers the
possibility of any interface difficulties which may affect the company. With
respect to the Year 2000 issue, no significant concerns have been identified to
date. While management expects the costs associated with information technology
systems will increase over the next few years and will be higher than those in
previous years, the additional costs are not expected to be material.
Risk Management
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.
================================================================================
23
<PAGE>
Industry Segments
<TABLE>
<CAPTION>
($ in millions) 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Chemicals
Sales $ 1,340 $ 1,586 $ 1,501 $ 1,195 $ 1,117 $ 996 $ 960 $ 1,269 $ 1,302 $ 1,386
Operating Income (Loss) 174 207 140 52 (166) 25 (74) 43 142 98
Assets 1,066 1,058 1,223 1,037 1,024 1,067 982 945 977 1,034
Capital Expenditures 87 78 126 91 75 115 131 144 95 96
Depreciation 80 86 81 82 83 73 70 75 74 77
====================================================================================================================================
Metals and Ammunition
Sales 1,070 1,052 1,164 1,073 951 972 869 854 809 681
Operating Income 56 52 83 86 36 68 46 65 54 67
Assets 659 648 639 601 564 587 597 506 491 484
Capital Expenditures 35 45 52 40 44 44 34 28 33 38
Depreciation 38 38 37 35 34 30 29 28 29 26
====================================================================================================================================
Corporate and Other
Assets 221 633 320 282 251 293 325 320 336 340
Capital Expenditures 18 3 4 -- -- -- -- -- -- --
====================================================================================================================================
Consolidated
Sales 2,410 2,638 2,665 2,268 2,068 1,968 1,829 2,123 2,111 2,067
Operating Income (Loss) 230 259 223 138 (130) 93 (28) 108 196 165
Assets 1,946 2,339 2,182 1,920 1,839 1,947 1,904 1,771 1,804 1,858
Capital Expenditures 140 126 182 131 119 159 165 172 128 134
Depreciation 118 124 118 117 117 103 99 103 103 103
====================================================================================================================================
</TABLE>
In December 1996, the company sold its isocyanates business for $565 in cash.
1996 and prior include the operating results of the isocyanates business.
Intersegment sales, which are priced generally at prevailing prices and are
excluded from above, are not significant.
Operating income (loss) of each segment includes an allocation of corporate
expenses.
1993 operating loss includes a charge for the strategic action plan of $200
($171 to Chemicals and $29 to Metals and Ammunition). 1991 operating loss
includes a charge for the streamlining program of $129 ($118 to Chemicals and
$11 to Metals and Ammunition).
Corporate and Other includes principally Cash and Cash Equivalents, Short-Term
Investments and for years prior to 1996, the net assets of discontinued
operations.
See Notes to Financial Statements for information relative to geographic segment
data.
================================================================================
24
<PAGE>
Ten-Year Financial Summary
<TABLE>
<CAPTION>
($ and shares in millions,
except per share data) 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operations
Sales $ 2,410 $ 2,638 $ 2,665 $ 2,268 $ 2,068 $ 1,968 $ 1,829 $ 2,123 $ 2,111 $ 2,067
Cost of Goods Sold 1,866 2,021 2,115 1,844 1,862 1,612 1,587 1,690 1,613 1,596
Restructuring Charge -- -- -- -- 38 -- 22 -- -- --
Selling and Administration 285 319 293 256 262 230 213 267 244 254
Research and Development 29 39 34 30 36 33 35 58 58 52
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Income (Loss) 230 259 223 138 (130) 93 (28) 108 196 165
Interest Expense 25 29 35 28 30 31 37 42 44 33
Interest and Other Income 29 216 16 9 6 8 15 22 21 14
- ------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Continuing
Operations Before Taxes 234 446 204 119 (154) 70 (50) 88 173 146
Income Tax Provision (Benefit) 81 158 70 40 (61) 25 (25) 23 60 51
- ------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Continuing
Operations Before Cumulative
Effect of Accounting Changes 153 288 134 79 (93) 45 (25) 65 113 95
Accounting Changes -- -- -- -- -- (40) -- -- -- --
Discontinued Operations -- (8) 6 12 1 4 12 19 11 3
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) 153 280 140 91 (92) 9 (13) 84 124 98
====================================================================================================================================
Financial Position
Working Capital 424(1) 528(1) 153 164 60 78 (49) 83 90 84
Property, Plant and
Equipment, Net 795 657 841 765 787 826 791 721 674 696
Total Assets 1,946 2,339 2,182 1,920 1,839 1,947 1,904 1,771 1,804 1,858
Capitalization:
Short-Term Debt 9(1) 139(1) 122 29 121 101 178 104 155 211
Long-Term Debt 268(1) 276(1) 411 418 449 477 520 466 501 474
Shareholders' Equity 879 946 841 749 596 741 666 715 665 683
- ------------------------------------------------------------------------------------------------------------------------------------
Total Capitalization 1,156 1,361 1,374 1,196 1,166 1,319 1,364 1,285 1,321 1,368
====================================================================================================================================
Per Share Data
Net Income (Loss):
Basic:
Continuing Operations 3.02 5.52 2.63 1.54 (2.88) .73 (.78) 1.51 2.72 2.25
Accounting Changes -- -- -- -- -- (1.04) -- -- -- --
Discontinued Operations -- (.18) .12 .29 .03 .11 .32 .51 .29 .07
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss)(2) 3.02 5.34 2.75 1.83 (2.85) (0.20) (.46) 2.02 3.01 2.32
- ------------------------------------------------------------------------------------------------------------------------------------
Diluted:
Continuing Operations 3.00 5.43 2.56 1.53 (2.88) .73 (.78) 1.46 2.65 2.23
Accounting Changes -- -- -- -- -- (1.04) -- -- -- --
Discontinued Operations -- (.16) .11 .24 .03 .11 .32 .48 .28 .07
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) 3.00 5.27 2.67 1.77 (2.85) (.20) (.46) 1.94 2.93 2.30
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Dividends:
Common 1.20 1.20 1.20 1.10 1.10 1.10 1.10 1.08 .98 .85
ESOP Preferred (annual rate) -- 5.97 5.97 5.97 5.97 5.97 5.97 5.97 5.97 --
Series A Preferred
(annual rate) -- -- 3.64 3.64 3.64 3.64 -- -- -- --
Shareholders' Equity(3) 17.98 18.13 17.03 15.43 13.62 16.96 17.51 18.83 17.50 16.68
Market Price of Common Stock:
High 51 3/8 48 38 5/8 30 1/8 25 1/4 27 3/8 27 30 3/8 34 1/8 30
Low 35 3/8 34 7/8 24 1/4 23 20 18 5/8 16 3/4 14 1/8 24 3/4 20
Year End 46 7/8 37 5/8 37 1/8 25 3/4 24 3/4 22 7/8 20 1/4 18 7/8 30 25 1/2
====================================================================================================================================
Other
Capital Expenditures 140 126 182 131 119 159 165 172 128 134
Depreciation 118 124 118 117 117 103 99 103 103 103
Common Dividends Paid 61 60 57 44 42 41 41 41 39 36
Purchases of Common Stock 163 -- -- -- -- -- 2 6 100 84
Current Ratio 1.8 1.7 1.2 1.3 1.1 1.2 1.0 1.2 1.2 1.2
Total Debt to Total
Capitalization(4) 24.0% 30.4% 38.2% 36.5% 47.1% 42.0% 48.5% 41.5% 46.2% 50.1%
Effective Tax Rate 34.6% 35.4% 34.3% 33.6% 39.6% 35.7% 50.0% 26.1% 34.7% 34.9%
Average Common Shares
Outstanding 50.5 50.0 47.6 41.0 38.2 38.2 38.0 38.2 40.0 42.2
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholders 10,600 11,300 12,000 12,100 13,000 13,900 14,600 15,500 16,300 17,600
Employees(5) 9,800 9,400 10,400 10,300 10,100 10,800 11,400 12,100 13,200 14,400
====================================================================================================================================
</TABLE>
In December 1996, the company sold its isocyanates business for $565 in
cash. 1996 and prior include the operating results of the isocyanates
business. See Management's Discussion and Analysis of Financial Condition
and Results of Operations on p. 17.
(1) Working Capital includes $166 and $524 of Cash and Cash Equivalents and $28
and $87 of Short-Term Investments in 1997 and 1996, respectively.
(2) Basic income or loss per share for 1994, 1993 and 1992 have been restated
to conform with SFAS No. 128, "Earnings per Share."
(3) In 1994, 1993 and 1992, calculation is based on common shares and Series A
Conversion Preferred Stock outstanding.
(4) Excluding reduction to equity for the Employee Stock Ownership Plan from
1989 through 1996.
(5) Employee data excludes employees who work at
government-owned/contractor-operated facilities.
================================================================================
25
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31 ($ in millions, except share data) 1997 1996
==========================================================================================
<S> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents $ 166 $ 524
Short-Term Investments 28 87
Receivables, Net:
Trade 308 259
Other 42 62
Inventories, Net of LIFO Reserve of $137 ($154 in 1996) 347 315
Other Current Assets 45 89
- ------------------------------------------------------------------------------------------
Total Current Assets 936 1,336
Investments and Advances--Affiliated Companies at Equity 31 174
Property, Plant and Equipment, Net 795 657
Other Assets 184 172
- ------------------------------------------------------------------------------------------
Total Assets $ 1,946 $ 2,339
==========================================================================================
Liabilities and Shareholders' Equity
Current Liabilities:
Current Installments of Long-Term Debt $ 9 $ 139
Accounts Payable 256 268
Income Taxes Payable 5 127
Accrued Liabilities 242 274
- ------------------------------------------------------------------------------------------
Total Current Liabilities 512 808
Long-Term Debt 268 276
Other Liabilities 287 309
- ------------------------------------------------------------------------------------------
Total Liabilities 1,067 1,393
- ------------------------------------------------------------------------------------------
Commitments and Contingencies
Shareholders' Equity:
Common Stock, Par Value $1 Per Share:
Authorized, 120,000,000 Shares
Issued and Outstanding 48,840,234 Shares (52,202,759 in 1996) 49 52
Additional Paid-In Capital 348 494
ESOP Obligations -- (5)
Cumulative Translation Adjustment (24) (9)
Retained Earnings 506 414
- ------------------------------------------------------------------------------------------
Total Shareholders' Equity 879 946
- ------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 1,946 $ 2,339
==========================================================================================
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements and also contain information regarding the sale in 1996 of
the company's isocyanates business.
================================================================================
26
<PAGE>
Consolidated Statements of Income
<TABLE>
<CAPTION>
Years ended December 31 ($ in millions, except per share data) 1997 1996 1995
=========================================================================================================
<S> <C> <C> <C>
Sales $ 2,410 $ 2,638 $ 2,665
Operating Expenses:
Cost of Goods Sold 1,866 2,021 2,115
Selling and Administration 285 319 293
Research and Development 29 39 34
- ---------------------------------------------------------------------------------------------------------
Operating Income 230 259 223
Interest Expense 25 29 35
Interest Income 11 4 1
Other Income 18 24 15
Gain on Sale of Business -- 188 --
- ---------------------------------------------------------------------------------------------------------
Income from Continuing Operations Before Taxes 234 446 204
Income Taxes 81 158 70
- ---------------------------------------------------------------------------------------------------------
Income from Continuing Operations 153 288 134
Income (Loss) from Discontinued Operations, Net of Taxes -- (8) 6
- ---------------------------------------------------------------------------------------------------------
Net Income 153 280 140
Preferred Dividends -- 4 9
- ---------------------------------------------------------------------------------------------------------
Net Income Available to Common Shareholders $ 153 $ 276 $ 131
=========================================================================================================
Net Income (Loss) Per Common Share:
Basic:
Continuing Operations $ 3.02 $ 5.52 $ 2.63
Discontinued Operations -- (0.18) .12
- ---------------------------------------------------------------------------------------------------------
Net Income $ 3.02 $ 5.34 $ 2.75
=========================================================================================================
Diluted:
Continuing Operations $ 3.00 $ 5.43 $ 2.56
Discontinued Operations -- (0.16) .11
- ---------------------------------------------------------------------------------------------------------
Net Income $ 3.00 $ 5.27 $ 2.67
=========================================================================================================
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements and also contain information regarding the sale in 1996 of
the company's isocyanates business.
================================================================================
27
<PAGE>
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
Common Stock Preferred Stock
------------------- Additional Cumulative -------------------
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, 1995 43,033,180 $43 $378 $(3) $269 $3 $86 $(27)
Net Income -- -- -- -- 140 -- -- --
Dividends Paid:
Common Stock ($1.20 per share) -- -- -- -- (57) -- -- --
ESOP Preferred Stock
($5.97 per share) -- -- -- -- (6) -- -- --
Series A Conversion Preferred Stock
($3.64 per share) -- -- -- -- (3) -- -- --
Conversion of Series A Conversion
Preferred Stock 5,520,000 5 (2) -- -- (3) -- --
Reduction in ESOP Obligations -- -- -- -- -- -- -- 5
Stock Options Exercised 612,936 1 12 -- -- -- -- --
Translation Adjustment -- -- -- (1) -- -- -- --
Other Transactions 252,294 -- 10 -- -- -- (9) --
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 49,418,410 49 398 (4) 343 -- 77 (22)
Net Income -- -- -- -- 280 -- -- --
Dividends Paid:
Common Stock ($1.20 per share) -- -- -- -- (60) -- -- --
ESOP Preferred Stock
($5.97 per share) -- -- -- -- (4) -- -- --
Issuance of ESOP Preferred Stock -- -- -- -- -- -- 9 --
Redemption of ESOP Preferred Stock 2,343,401 2 84 -- -- -- (86) --
Spin-off of Primex Technologies, Inc. -- -- -- -- (145) -- -- --
Reduction in ESOP Obligations -- -- -- -- -- -- -- 17
Stock Options Exercised 347,232 1 10 -- -- -- -- --
Translation Adjustment -- -- -- (5) -- -- -- --
Other Transactions 93,716 -- 2 -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 52,202,759 52 494 (9) 414 -- -- (5)
Net Income -- -- -- -- 153 -- -- --
Dividends Paid
Common Stock ($1.20 per share) -- -- -- -- (61) -- -- --
Reduction in ESOP Obligations -- -- -- -- -- -- -- 5
Stock Options Exercised 413,258 -- 13 -- -- -- -- --
Stock Repurchased (3,827,100) (3) (160) -- -- -- -- --
Translation Adjustment -- -- -- (12) -- -- -- --
Other Transactions 51,317 -- 1 (3) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 48,840,234 $49 $348 $(24) $506 $-- $-- $--
====================================================================================================================================
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements and also contain information regarding the sale in 1996 of
the company's isocyanates business.
================================================================================
28
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Years ended December 31 ($ in millions) 1997 1996 1995
====================================================================================================================================
<S> <C> <C> <C>
Operating Activities
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations $ 153 $ 288 $ 134
Adjustments to Reconcile Income from Continuing Operations to Net Cash
and Cash Equivalents Provided by Operating Activities:
Earnings of Non-consolidated Affiliates (7) (9) (6)
Depreciation 118 124 118
Amortization of Intangibles 6 6 4
Deferred Taxes 36 (74) 4
Gain on Disposition of Business -- (188) --
Change in Assets and Liabilities Net of Purchases and Sales of Businesses:
Receivables (29) 20 (56)
Inventories (26) (9) (13)
Other Current Assets (5) 6 (6)
Accounts Payable and Accrued Liabilities (55) (2) 44
Income Taxes Payable (122) 122 2
Noncurrent Liabilities (19) (25) (2)
Other Operating Activities 3 7 (13)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Cash and Cash Equivalents Provided by Operating Activities from Continuing
Operations 53 266 210
Discontinued Operations:
Net Income (Loss) -- (8) 6
Change in Net Assets -- 13 (29)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Operating Activities 53 271 187
- ------------------------------------------------------------------------------------------------------------------------------------
Investing Activities
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Expenditures (140) (126) (182)
Disposition of Property, Plant and Equipment -- 23 --
Business Acquired in Purchase Transactions (2) -- (65)
Proceeds From Sales of Businesses 17 571 49
Purchases of Short-Term Investments (126) (87) --
Proceeds From Sale of Short-Term Investments 185 -- --
Investments and Advances - Affiliated Companies at Equity (84) (102) 1
Repayment of Joint Venture Advances 98 -- --
Other Investing Activities (13) (5) (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investing Activities (65) 274 (199)
- ------------------------------------------------------------------------------------------------------------------------------------
Financing Activities
- ------------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt:
Borrowings -- -- 50
Repayments (138) (62) (25)
Short-Term Borrowings (Repayments) -- (56) 34
Borrowings under Line of Credit Assumed by Primex Technologies, Inc. -- 125 --
Purchases of Olin Common Stock (163) -- --
Repayment from ESOP 5 17 5
Stock Options Exercised 13 11 13
Dividends Paid (61) (64) (66)
Other Financing Activities (2) -- 2
- ------------------------------------------------------------------------------------------------------------------------------------
Net Financing Activities (346) (29) 13
- ------------------------------------------------------------------------------------------------------------------------------------
Net (Decrease) Increase in Cash and Cash Equivalents (358) 516 1
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, Beginning of Year 524 8 7
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Year $ 166 $ 524 $ 8
====================================================================================================================================
Cash Paid for Interest and Income Taxes:
Interest $ 27 $ 40 $ 44
Income Taxes, Net of Refunds $ 166 $ 104 $ 67
====================================================================================================================================
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements and also contain information regarding the sale in 1996 of
the company's isocyanates business.
================================================================================
29
<PAGE>
Notes to Financial Statements
($ in millions, except share data)
ACCOUNTING POLICIES
The preparation of the consolidated financial statements requires estimates and
assumptions that affect amounts reported and disclosed in the financial
statements and related notes. Actual results could differ from those estimates.
Certain reclassifications were made to prior year amounts to conform with the
1997 presentation.
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 on the equity method. Accordingly, the company's share of earnings
or losses of these affiliates is included in consolidated net income.
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.
Cash and Cash Equivalents
All highly liquid investments with a maturity of three months or less at the
date of purchase are considered to be cash equivalents.
Short-Term Investments
Marketable securities are accounted for in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Accordingly, the company has
classified its marketable securities as available-for-sale which are reported at
fair market value with unrealized gains and losses included in Shareholders'
Equity net of applicable taxes. The fair value of marketable securities is
determined by quoted market prices. Unrealized gains and losses in 1997 and 1996
were insignificant. Realized gains and losses on sales of investments, as
determined on specific identification method and declines in value of securities
judged to be other-than-temporary are included in Other Income in the
Consolidated Statement of Income. Interest and dividends on all securities are
included in Interest Income and Other Income, respectively.
All investments which have original maturities between three and twelve
months are considered short-term investments and consist of debt securities such
as commercial paper, time deposits, certificates of deposit, bankers
acceptances, repurchase agreements, and marketable direct obligations of the
United States Treasury.
Inventories
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 materials, direct labor
and manufacturing overhead.
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.
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. The company periodically reviews the value of its goodwill
to determine if any impairment has occurred. The company assesses the potential
impairment of recorded goodwill by the undiscounted value of expected future
operating cash flows in relation to its net capital investment. An impairment
would be recorded based on the estimated fair value.
Environmental Liabilities and Expenditures
Accruals for environmental matters are recorded when it is probable that a
liability has been incurred and the amount of the liability can be reasonably
estimated, based upon current law and existing technologies. These amounts,
which are not discounted and exclusive of claims against third parties, are
adjusted periodically as assessment and remediation efforts progress or
additional technical or legal information becomes available. Environmental
remediation costs are charged to expense. Environmental costs are capitalized if
the costs increase the value of the property and/or mitigate or prevent
contamination from future operations.
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.
Derivative Financial Instruments
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, Irish punt and Japanese yen) and relating to particular
anticipated but not yet committed purchases and sales expected to be denominated
in those currencies. All of the currency derivatives expire within one year and
are for United States dollar equivalents. At December 31, 1997, the company had
forward contracts to sell foreign currencies with face values of $5 (1996-$32)
and forward contracts to buy foreign currencies with face values of $7
(1996-$23). At December 31, 1996, the company had option contracts to sell
foreign currencies with face values of $12 and to buy foreign currencies with
face values of $15. The counterparties to the options and contracts are major
financial institutions. The risk of loss to the company in the event of
nonperformance by a counterparty is not significant.
================================================================================
30
<PAGE>
In accordance with SFAS No. 52, "Foreign Currency Translation," a
transaction is classified as a hedge when the foreign currency 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 hedge, it is considered to be speculative. 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 or matures 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. Premiums paid for currency options and gains
or losses on forward sales and purchase contracts were not material to operating
results.
Foreign currency exchange gains (losses), net of taxes, were $1 in 1997,
$(4) in 1996, and $(1) in 1995.
Depending on market conditions, the company may enter into futures
contracts and put and call option contracts in order to reduce the impact of
metal price fluctuations, principally in copper, lead and zinc. In accordance
with SFAS No. 80, "Accounting for Futures Contracts," futures contracts are
classified as a hedge when the item to be hedged exposes the company to price
risk and the futures contract reduces that risk exposure. Future contracts that
relate to transactions that are expected to occur are accounted for as a hedge
when the significant characteristics and expected terms of the anticipated
transaction are identified and it is probable that the anticipated transaction
will occur. If a transaction does not meet the criteria to qualify as a hedge,
it is considered to be speculative. Any gains or losses associated with futures
contracts which are classified as speculative are recognized in the current
period. If a futures contract that has been accounted for as a hedge is closed
or matures before the date of the anticipated transaction, the accumulated
change in value of the contract is carried forward and included in the
measurement of the related transaction. Option contracts are accounted for in
the same manner that futures contracts are accounted for. At December 31, 1997,
the company has open positions in futures contracts totalling $37 (1996 - $20).
Gains on futures contracts, net of taxes, were $1 in 1997 and 1996 and $3 in
1995.
Financial Instruments
Fair values are estimated based on quoted market prices, where available, or on
current rates offered to the company for debt with similar terms and maturities.
At December 31, 1997, the estimated fair value of debt was $282 (1996 - $421).
The fair value of the company's other financial instruments approximates
carrying value.
Stock-Based Compensation
The company accounts for stock-based compensation under SFAS No. 123,
"Accounting for Stock-Based Compensation." As allowed under SFAS No. 123, the
company has chosen to continue to account for stock-based compensation cost in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees." Under this option, compensation cost is recorded
when the fair market value of the company's stock at the date of grant for fixed
options exceeds the exercise price of the stock option. The company's policy is
to grant stock options at a value equal to its common stock's fair market value
on the date of the grant. Compensation cost for restricted stock awards is
accrued over the life of the award based on the quoted market price of the
company's stock at the date of the award.
Earnings Per Share
In 1997, the company adopted SFAS No. 128, "Earnings per Share," which specifies
the methods for computing earnings per share. The calculation of earnings per
share according to the provisions of this statement did not have an impact on
the previously reported earnings per share amounts.
Basic earnings per share are computed by dividing net income less the ESOP
preferred stock 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), and in 1995 the Series A stock dividend requirement by the
weighted average number of common shares outstanding. In December 1996, the
company redeemed the ESOP preferred stock with shares of common stock of
equivalent value. On March 1, 1995, the Series A stock was converted on a
one-for-one basis into common stock.
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. In addition, diluted earnings per share reflect an equivalent number
of common shares for the Series A Stock until its conversion on March 1, 1995.
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.
================================================================================
31
<PAGE>
Computation of Earnings per Share
<TABLE>
<CAPTION>
Basic earnings per share 1997 1996 1995
================================================================================
<S> <C> <C> <C>
Income from continuing operations $ 153 $ 288 $ 134
Less preferred dividends:
ESOP net of tax benefit -- (4) (6)
Series A -- -- (3)
Redemption adjustment -- (8) --
- --------------------------------------------------------------------------------
$ 153 $ 276 $ 125
- --------------------------------------------------------------------------------
Basic shares (in thousands) 50,519 49,992 47,592
- --------------------------------------------------------------------------------
Basic earnings per share-continuing
operations $ 3.02 $ 5.52 $ 2.63
================================================================================
Diluted earnings per share
- --------------------------------------------------------------------------------
Income from continuing operations $ 153 $ 288 $ 134
Less: additional ESOP contribution -- (4) (3)
- --------------------------------------------------------------------------------
$ 153 $ 284 $ 131
- --------------------------------------------------------------------------------
Diluted Shares (in thousands):
Basic shares 50,519 49,992 47,592
Assumed conversion of:
ESOP preferred stock -- 1,950 2,262
Series A preferred stock -- -- 1,274
Stock options and remuneration
agreements 368 369 164
- --------------------------------------------------------------------------------
50,887 52,311 51,292
- --------------------------------------------------------------------------------
Diluted earnings per share-continuing
operations $ 3.00 $ 5.43 $ 2.56
================================================================================
</TABLE>
In 1996, the board of directors authorized the company to purchase up to 5
million shares, or approximately 10%, of the outstanding common stock of the
company under a share repurchase program which began in January of 1997. During
1997, the company repurchased 3,827,100 shares. It is expected that this program
will be completed by the second quarter of 1998.
<TABLE>
<CAPTION>
MARKETABLE SECURITIES
1997 1996
================================================================================
<S> <C> <C>
Tax exempt $28 $ 6
Certificates of deposit -- 40
Commercial paper -- 19
Government and government agencies -- 20
Other -- 2
- --------------------------------------------------------------------------------
Total $28 $87
================================================================================
</TABLE>
TRADE RECEIVABLES
Allowance for doubtful items was $10 and $11 at December 31, 1997 and 1996,
respectively. Provisions charged to operations were $2 in 1997, $1 in 1996 and
$3 in 1995. Bad debt write-offs, net of recoveries amounted to $3 in 1997 and
1996 and $2 in 1995.
<TABLE>
<CAPTION>
INVENTORIES
1997 1996
================================================================================
<S> <C> <C>
Raw materials and supplies $ 158 $ 153
Work in process 129 144
Finished goods 197 172
- --------------------------------------------------------------------------------
484 469
LIFO reserves (137) (154)
- --------------------------------------------------------------------------------
Inventory, net $ 347 $ 315
================================================================================
</TABLE>
Inventories valued using the LIFO method comprised 72% and 71% of the total
inventories at December 31, 1997 and 1996, respectively.
<TABLE>
<CAPTION>
PROPERTY, PLANT AND EQUIPMENT
Useful Lives 1997 1996
================================================================================
<S> <C> <C> <C>
Land and improvements to land 10 - 20 Years $ 80 $ 79
Buildings and building equipment 10 - 25 Years 285 257
Machinery and equipment 3 - 12 Years 1,829 1,532
Leasehold improvements 8 8
Construction in progress 121 134
- --------------------------------------------------------------------------------
Property, plant and equipment 2,323 2,010
Less accumulated depreciation 1,528 1,353
================================================================================
Property, plant and equipment, net $ 795 $ 657
================================================================================
</TABLE>
Leased assets capitalized and included above are not significant.
Maintenance and repairs charged to operations amounted to $130, $149, and $158
in 1997, 1996 and 1995, respectively.
SHORT-TERM BORROWINGS
At December 31, 1997 and 1996, the company maintained committed credit
facilities with banks of $257 and $256, respectively, all of which was available
in both years.
Included in the $257 committed credit facility is an unsecured revolving
credit agreement with a group of banks, which provides a maximum borrowing of
$250, and expires in October 2002. The company may select various floating rate
borrowing options.
================================================================================
32
<PAGE>
<TABLE>
<CAPTION>
LONG-TERM DEBT
1997 1996
================================================================================
<S> <C> <C>
Notes payable:
7.11%, due 2005 $ 50 $ 50
7.75%, due 2005 11 11
7.97%, due 1998-2002 38 44
8%, due 2002 100 100
Industrial development and environmental
improvement obligations:
Payable at interest rates of 2% to 6% which vary
with short-term tax exempt rates, due 2004-2017 35 35
Payable at interest rates of 6% to 7%, due 1998-2008 36 38
Guarantee of ESOP debt varying with LIBOR, due 1997 -- 5
Notes floating with LIBOR, due 1999-2009 5 5
Mortgage, capitalized leases and other indebtedness 2 2
- --------------------------------------------------------------------------------
Total senior debt 277 290
Subordinated notes 9.5%, due 1997 -- 125
- --------------------------------------------------------------------------------
277 415
Amounts due within one year 9 139
================================================================================
Total long-term debt $268 $276
================================================================================
</TABLE>
Among the provisions of certain agreements are restrictions relating to
payment of dividends and acquisition of the company's capital stock. At December
31, 1997, retained earnings of approximately $220 were not so restricted under
the provisions.
The ESOP's purchase of preferred stock in 1989 was financed by $60 of notes
(guaranteed by the company) and $40 of borrowings from the company. The loan
from the company to the ESOP was financed through a long-term credit facility
which was repaid in July 1996.
In June 1995, the company sold $50 of 7.11% notes with a maturity date of
June 2005. The proceeds from this issue were used to reduce short-term debt
incurred for working capital purposes. There remains $248 unissued under the
medium-term note program registered in May 1994.
During 1992, the company swapped interest payments on $50 principal amount
of its 8% notes due 2002 to a floating rate (6.0625% at December 31, 1997). In
June 1995, the company offset this transaction by swapping interest payments to
a fixed rate of 6.485%. Counterparties to 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 in Interest Expense.
Annual maturities of long-term debt for the next five years are $9 in 1998,
$8 in 1999, 2000 and 2001 and $114 in 2002.
Interest expense incurred on short-term borrowings and long-term debt
totaled $26 in 1997, $31 in 1996 and $36 in 1995; of which $1 was capitalized in
1997, $2 in 1996 and $1 in 1995.
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.
<TABLE>
<CAPTION>
Components of Net Pension Expense
1997 1996 1995
================================================================================
<S> <C> <C> <C>
Service cost (benefits earned
during the period) $ 27 $ 28 $ 23
Interest cost on the projected
benefit obligation 83 78 73
Actual return on assets (189) (127) (260)
Actual return deferred
for later recognition 91 35 174
Net amortization of unrecognized
transition asset, prior service cost
and deferred gains and losses (3) 1 (2)
- --------------------------------------------------------------------------------
Net pension expense $ 9 $ 15 $ 8
================================================================================
</TABLE>
<TABLE>
<CAPTION>
Principal Assumptions
1997 1996 1995
================================================================================
<S> <C> <C> <C>
Weighted average discount rate 7.25% 8.0% 7.5%
Weighted average rate of
compensation increase 4.5% 4.5% 4.5%
Long-term rate of return on assets 9.5% 9.5% 9.5%
================================================================================
</TABLE>
<TABLE>
<CAPTION>
Funded Status of the Plans
1997 1996
================================================================================
<S> <C> <C>
Accumulated benefit obligation including
vested benefits of $1,113 and $1,015 $ 1,165 $ 1,017
- --------------------------------------------------------------------------------
Plan assets at fair value, primarily equity
and fixed-income securities $ 1,297 $ 1,174
Projected benefit obligation for
service rendered to date (1,236) (1,078)
- --------------------------------------------------------------------------------
Assets over projected benefit obligation 61 96
Unrecognized net transition asset (21) (28)
Unrecognized gain (108) (138)
Unrecognized prior service cost 36 36
- --------------------------------------------------------------------------------
Net pension liability $ (32) $ (34)
================================================================================
</TABLE>
The company's common stock represents approximately 2% and 3% of the plan
assets at December 31, 1997 and 1996, respectively.
The company's foreign subsidiaries maintain pension and other benefit plans
which are consistent with statutory practices and are not significant.
The 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.
================================================================================
33
<PAGE>
In addition to the net pension expense above, during 1996 the company
recorded a $6 curtailment loss in connection with the sale of the isocyanates
business and the spin-off of the Ordnance and Aerospace divisions as Primex
Technologies, Inc. ("Primex").
The company provides certain postretirement health care and life insurance
benefits for eligible active and retired domestic employees.
<TABLE>
<CAPTION>
Components of Postretirement Expense
1997 1996 1995
================================================================================
<S> <C> <C> <C>
Service cost-benefits earned during year $ 2 $ 3 $ 3
Interest cost on accumulated
postretirement benefit obligation 5 5 4
Net amortization of unrecognized prior
service cost and deferred gains and losses -- (1) (1)
- --------------------------------------------------------------------------------
Net postretirement expense $ 7 $ 7 $ 6
================================================================================
</TABLE>
<TABLE>
<CAPTION>
Unfunded Liability for Postretirement Benefits
1997 1996
================================================================================
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 45 $ 32
Fully eligible active plan participants 13 15
Other active participants 20 20
- --------------------------------------------------------------------------------
Cumulative accumulated postretirement
benefit obligation 78 67
Unrecognized loss (12) (5)
Unrecognized prior service cost 5 6
- --------------------------------------------------------------------------------
Net postretirement benefit liability $ 71 $ 68
================================================================================
</TABLE>
The accumulated postretirement benefit obligation was determined using the
projected unit credit method and an assumed discount rate of 7.25% in 1997, 8%
in 1996 and 7.5% in 1995. The assumed health care cost trend rate used for
pre-65 retirees was 9.7% in 1997, 11% in 1996 and 12.5% in 1995, declining
one-half percent per annum to 5.5%. For post-65 retirees, the company provides a
fixed dollar benefit which is not subject to escalation.
A one percent increase each year in the health care cost trend rate used
would have resulted in a $1 increase in the aggregate service and interest
components of expense for the year 1997, and a $6 increase in the accumulated
postretirement benefit obligation at December 31, 1997.
During 1996, in connection with the spin-off of Primex, the company
transferred $8 of net postretirement benefit liability to Primex.
INCOME TAXES
<TABLE>
<CAPTION>
Components of Pretax Income from Continuing Operations
1997 1996 1995
================================================================================
<S> <C> <C> <C>
Domestic $ 209 $ 409 $ 172
Foreign 25 37 32
- --------------------------------------------------------------------------------
Pretax income $ 234 $ 446 $ 204
================================================================================
</TABLE>
<TABLE>
<CAPTION>
Components of Income Tax Expense (Benefit)
1997 1996 1995
================================================================================
<S> <C> <C> <C>
Currently payable:
Federal $ 33 $ 185 $ 43
State 3 36 13
Foreign 9 11 10
- --------------------------------------------------------------------------------
45 232 66
Deferred 36 (74) 4
- --------------------------------------------------------------------------------
Income tax expense $ 81 $ 158 $ 70
================================================================================
</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% to the income from continuing operations before taxes.
<TABLE>
<CAPTION>
Effective Tax Rate Reconciliation
(Percent) 1997 1996 1995
================================================================================
<S> <C> <C> <C>
Statutory federal tax rate 35.0 35.0 35.0
Foreign income tax (1.9) (1.0) (.8)
State income taxes, net 3.6 3.3 3.7
Equity in net income of affiliates (.8) (.4) (.6)
Other, net (1.3) (1.5) (3.0)
- --------------------------------------------------------------------------------
Effective tax rate 34.6 35.4 34.3
================================================================================
</TABLE>
<TABLE>
<CAPTION>
Components of Deferred Tax Assets and Liabilities
1997 1996
================================================================================
<S> <C> <C>
Deferred tax assets
Postretirement benefits $ 39 $ 40
Environmental reserves 51 57
Non-deductible reserves 58 81
Other miscellaneous items 19 17
- --------------------------------------------------------------------------------
Total deferred tax assets $167 $195
================================================================================
Deferred tax liabilities
Property, plant and equipment $ 53 $ 54
Other miscellaneous items 15 6
- --------------------------------------------------------------------------------
Total deferred tax liabilities $ 68 $ 60
================================================================================
</TABLE>
Included in Other Current Assets at December 31, 1997 and 1996 are $26 and
$76, respectively, of net current deferred tax assets. Taxable income is
expected to be sufficient to recover the net benefit therefore, no valuation
allowance was established.
At December 31, 1997, the company's share of the cumulative undistributed
earnings of foreign subsidiaries was approximately $78. No provision has been
made for U.S. or additional foreign taxes on the undistributed earnings of
foreign subsidiaries since the company intends to continue to reinvest these
earnings. Foreign tax credits would be available to substantially reduce or
eliminate any amount of additional U.S. tax that might be payable on these
foreign earnings in the event of distributions or sale.
================================================================================
34
<PAGE>
CONTRIBUTING EMPLOYEE OWNERSHIP PLAN
The Contributing Employee Ownership Plan (CEOP) 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) of a newly authorized 1.75 million share series of the
company's ESOP preferred stock, financed by $60 of notes guaranteed by the
company and a $40 loan from the company. This loan has been repaid in total to
the company as of December 31, 1992. In December 1996, the board of directors
approved the redemption of all outstanding shares of ESOP preferred stock with
common stock of equivalent value. Upon redemption of the ESOP preferred stock,
the company is matching employee contributions with common stock. The annual
fixed preferred dividend rate was $5.97 per share and during 1996, dividends
were paid in the first three quarters. Expenses related to the plan are based on
ESOP preferred and common stock allocated to participants. These costs amounted
to $12 in 1997, $11 in 1996 and $12 in 1995. Interest incurred by the plan
totaled $1 in 1996 and 1995, which was funded by ESOP preferred dividends.
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. All
options granted since December 31, 1995 vest over three years. Stock option
transactions are as follows:
<TABLE>
<CAPTION>
Weighted
Average
Option Price Option Price
Shares Per Share Per Share
================================================================================
<S> <C> <C> <C>
Outstanding at
January 1, 1995 1,911,208 $15.41 - $32.50 $24.87
Granted 272,508 27.82 - 32.41 27.99
Exercised (612,936) 15.41 - 31.80 21.82
Canceled (16,512) 15.41 - 27.82 25.05
- --------------------------------------------------------------------------------
Outstanding at
December 31, 1995 1,554,268 21.18 - 32.50 25.59
Granted 1,441,641 39.17 - 40.46 39.18
Exercised (347,232) 21.63 - 27.82 25.07
Canceled (250,958) 23.87 - 39.17 37.61
- --------------------------------------------------------------------------------
Outstanding at
December 31, 1996 2,397,719 21.18 - 40.46 32.06
Granted 599,200 38.63 - 47.13 38.77
Exercised (413,258) 21.18 - 39.17 28.70
Canceled (137,198) 38.63 - 39.17 39.00
================================================================================
Outstanding at
December 31, 1997 2,446,463 $21.18 - $47.13 $33.91
================================================================================
</TABLE>
Of the outstanding options at December 31, 1997, options covering 1,250,358
shares are currently exercisable at a weighted average exercise price of $29.12.
At December 31, 1997, common shares reserved for issuance under these plans
were 4,899,575 and under additional remuneration agreements were estimated to be
119,000.
The company accounts for stock-based compensation under SFAS No. 123,
"Accounting for Stock-Based Compensation." As allowed by SFAS No. 123, the
company has not recognized compensation cost for stock-based compensation
arrangements. Pro forma net income and earnings per share were calculated based
on the following assumptions as if the company had recorded compensation expense
for the stock options granted since 1995. The fair value of each option granted
during 1997, 1996 and 1995 was estimated on the date of grant, using the
Black-Scholes option pricing model with the following weighted-average
assumptions used: dividend yield of 2.8% in 1997, 4.0% in 1996 and 4.2% in 1995,
risk-free interest rate of 5.5% in 1997 and 6.5% in 1996 and 1995, expected
volatility of 21% in 1997, 22% in 1996 and 20% in 1995 and an expected life of 7
years. The following table shows the difference between reported and pro forma
net income and earnings per share as if the company had recorded compensation
expense for the stock options granted.
<TABLE>
<CAPTION>
1997 1996 1995
================================================================================
<S> <C> <C> <C> <C>
Net Income As reported $153 $280 $140
Pro forma 149 277 139
Per Share Data:
Basic As reported 3.02 5.34 2.75
Pro forma 2.96 5.29 2.74
Diluted As reported 3.00 5.27 2.67
Pro forma 2.95 5.23 2.66
================================================================================
</TABLE>
COMMON STOCK
In connection with the spin-off of Primex in 1996, its employees were allowed to
transfer their account balances from the company's CEOP into Primex's savings
and retirement plan. The company issued .3 million shares of common stock at a
value of $40.50 in exchange for .2 million shares of ESOP preferred stock at a
per share value of $85.63 at the time of the transfer.
In December 1996, the company's board of directors approved the redemption
of all outstanding shares of ESOP preferred stock with common stock of
equivalent value. Approximately 1.87 million shares of common stock at a value
of $40.19 were issued in exchange for approximately .9 million shares of ESOP
preferred stock at a per share value of $85.75.
SHAREHOLDER RIGHTS PLAN
Effective February 1996, the board of directors adopted a new Shareholder Rights
Plan to replace the prior plan which had been adopted in 1986. Like the former
plan, the new plan is designed to prevent an acquiror from gaining control of
the company without offering a fair price to all shareholders. Each right
entitles a shareholder (other than the acquiror) to buy one-five hundredth share
of Series A Participating Cumulative Preferred Stock at an exercise price of one
hundred twenty dollars. The rights are exercisable only if a person acquires
more than 15% of the company's common stock or if the board of directors so
determines following the commencement of
================================================================================
35
<PAGE>
a tender or exchange offer to acquire more than 15% of the company's common
stock. If any person acquires more than 15% of the company's common stock and in
the event of a subsequent merger or combination, each right will entitle the
holder (other than the acquiror) to purchase stock or other property of the
acquiror having a value of twice the exercise price. The company can redeem the
rights at $.005 per right for a certain period of time. The rights will expire
on February 27, 2006, unless earlier redeemed by the company.
SEGMENT INFORMATION
Information relative to the various industries in which the company operates
appears on page 24 and is incorporated herein by reference.
<TABLE>
<CAPTION>
Geographic Segment Data
1997 1996 1995
================================================================================
<S> <C> <C> <C>
Sales
United States $ 2,156 $ 2,251 $ 2,357
Foreign 254 387 308
Transfers between areas
United States 78 158 102
Foreign 2 12 16
Eliminations (80) (170) (118)
- --------------------------------------------------------------------------------
Total sales $ 2,410 $ 2,638 $ 2,665
================================================================================
Operating income
United States $ 212 $ 231 $ 198
Foreign 18 28 25
- --------------------------------------------------------------------------------
Operating income $ 230 $ 259 $ 223
================================================================================
Assets
United States $ 1,606 $ 1,492 $ 1,699
Foreign 201 230 198
Investments 14 38 43
Corporate assets and eliminations 125 579 242
- --------------------------------------------------------------------------------
Total consolidated assets $ 1,946 $ 2,339 $ 2,182
================================================================================
</TABLE>
Transfers between geographic areas are priced generally at prevailing
market prices. Export sales from the United States to unaffiliated customers
were $170, $212, and $213 in 1997, 1996, and 1995, respectively.
ACQUISITIONS
In February 1997, the company completed its purchase of the remaining 50% of
Niachlor with a final payment of $2 to E.I. du Pont de Nemours and Company
(DuPont). In December 1996, the company made an advance payment of $75 to
DuPont, which was included in Investment and Advances-Affiliated Companies at
Equity in the December 31, 1996 Balance Sheet. In 1995, the company acquired the
remaining 50% of OCG Microelectronic Materials, a joint venture formed by
Ciba-Geigy and the company in 1990, for approximately $65. In addition, the
company acquired the remaining 51% of Etoxyl, C.A., a Latin American joint
venture. These acquisitions were accounted for as purchases and accordingly,
their results of operations, which were not material, are included in the
consolidated financial statements from the dates of acquisition.
Supplemental cash flow information on businesses acquired is as follows:
<TABLE>
<CAPTION>
1997 1995
================================================================================
<S> <C> <C>
Working capital $ (5) $ 39
Property, plant and equipment 112 45
Other assets -- 14
Goodwill -- 17
Other liabilities (5) --
Debt -- (27)
Investments and advances - affiliated companies (25) (23)
- --------------------------------------------------------------------------------
Purchase price $ 77 $ 65
================================================================================
</TABLE>
DISPOSITIONS
In November 1997, the company sold its surfactants, fluids, non-urethane
polypropylene glycol and polyethylene glycol businesses to BASF. The company
will continue to produce certain products for BASF under a three-year supply
agreement. In October 1997, the company and Asahi Glass Company 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. The combined
net proceeds of these transactions was $17 and did not have a material effect on
the company's results of operations.
In December of 1996, the company sold its isocyanates business for $565 in
cash. The sale included all assets at the company's Lake Charles, LA facility
used in the manufacture and sale of toluene diisocyanate, aliphatic isocyanates
and nitric acid. In connection with the transaction, the company recorded a
pretax gain of $188 ($115 after-tax gain). The company's results of operations
for 1996 and 1995 included sales of $296 and $255 and operating income of $47
and $14, respectively, from the isocyanates business.
Supplemental cash flow information on businesses disposed is as follows:
<TABLE>
<CAPTION>
1996
================================================================================
<S> <C>
Proceeds $ 571
Working capital (123)
Property, plant and equipment (177)
Other assets (5)
Other liabilities (78)
- --------------------------------------------------------------------------------
Gain on disposition of businesses $ 188
================================================================================
</TABLE>
During 1995, the company sold its dry sanitizer plant in South Charleston,
WV, a related tableting operation in Livonia, MI, and Sun brand of isocyanurates
completing the final steps to comply with the Federal Trade Commission order to
divest chlorinated isocyanurate pool chemical assets that were acquired in 1985.
These transactions did not have a material impact on the company's results of
operations.
================================================================================
36
<PAGE>
DISCONTINUED OPERATIONS
On December 31, 1996, the company completed the spin-off of its Ordnance and
Aerospace businesses as Primex Technologies, Inc. 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 spin-off distribution reduced shareholders' equity by
$145 which represents the book value of the net assets of Primex as of December
31, 1996.
The historical operating results of these businesses are shown net of tax
as discontinued operations in the consolidated statements of income.
The historical results for the discontinued operations include an
allocation of the company's interest expense based on an assumed debt level
providing a debt to capital ratio similar to that of the company as well as a
level of debt that Primex could maintain on an independent basis in the future.
The allocated debt of $125 represents the amount borrowed by the company under a
credit facility established by the company and assumed by Primex prior to the
distribution on December 31, 1996. The cash received by the company under this
credit facility was used to liquidate its existing debt.
The company and Primex have entered into a tax sharing agreement
effectively providing that the company will be responsible for the tax liability
of Primex for the years that Primex was included in the company's consolidated
income tax returns. Income taxes have been allocated to Primex based on its
pretax income and calculated on a separate company basis pursuant to the
requirements of SFAS No. 109, "Accounting for Income Taxes." Income taxes
allocated to Primex were $2 and $7 in 1996 and 1995, respectively.
In addition, the company and Primex have entered into several other
agreements which cover such matters as technology transfers, transition
services, covenants not to compete and powder and component supplies.
Condensed historical combined balance sheet and income statement data of
the discontinued operations are summarized below:
<TABLE>
<CAPTION>
1996
- --------------------------------------------------------------------------------
<S> <C>
Combined Balance Sheets
Total assets $374
Total liabilities 229
Equity 145
================================================================================
</TABLE>
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Combined Statements of Income
Sales $ 471 $ 508
Operating income 2 21
Net income (loss) (8) 6
================================================================================
</TABLE>
ENVIRONMENTAL
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 $19 in 1997, $70 in 1996 and $24 in
1995. In 1996, in connection with the sale of the isocyanates business a $53
provision was recorded to provide for contractual liabilities related to future
environmental spending at the Lake Charles, LA site. Charges to income for
investigatory and remedial efforts were material to operating results in 1997,
1996 and 1995. The consolidated balance sheets include reserves for future
environmental expenditures to investigate and remediate known sites amounting to
$136 at December 31, 1997 and $148 at December 31, 1996, of which $106 and $113
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. At December 31, 1997, the company had estimated additional
contingent environmental liabilities of $41.
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 $51 in 1997, $55 in 1996 and $51 in 1995, (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, 1997 are as follows: $27 in 1998; $22 in 1999; $18 in 2000; $12 in
2001; $10 in 2002; and $32 thereafter.
There are a variety of non-environmental legal proceedings pending or
threatened against the company. Those matters that are probable have been
accrued for in the accompanying financial statements. Any contingent amounts in
excess of amounts accrued are not expected to have a material adverse effect on
results of operations, financial position or liquidity of the company.
================================================================================
37
<PAGE>
Other Financial Data
<TABLE>
<CAPTION>
QUARTERLY DATA (UNAUDITED)
First Second Third Fourth
1997 Quarter Quarter Quarter Quarter Year
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
Sales $ 591 $ 633 $ 608 $ 578 $2,410
Cost of goods sold 450 492 470 454 1,866
Net income 42 39 38 34 153
Earnings per common share:
Basic .81 .75 .76 .70 3.02
Diluted .80 .75 .75 .70 3.00
Common dividends per share .30 .30 .30 .30 1.20
Market price of common stock(2)
High 43 1/4 43 48 7/8 51 3/8 51 3/8
Low 35 3/8 36 38 1/4 40 3/4 35 3/8
==============================================================================================================================
<CAPTION>
1996
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
Sales $ 693 $ 702 $ 652 $ 591 $2,638
Cost of goods sold 529 529 501 462 2,021
Income from continuing operations 51 51 41 145 288
Net income 45 52 38 145 280
Per common share:
Basic
Income from continuing operations .99 .99 .78 2.76 5.52
Net income .87 1.01 .72 2.74 5.34
Diluted
Income from continuing operations .96 .96 .75 2.76 5.43
Net income .85 .98 .70 2.74 5.27
Proforma net income(1) .70 .90 .50 .50 2.60
Common dividends per share .30 .30 .30 .30 1.20
Market price of common stock(2)
High 44 3/8 48 45 1/4 45 1/8 48
Low 34 7/8 42 3/8 36 1/2 37 1/8 34 7/8
==============================================================================================================================
</TABLE>
(1) Proforma net income per share for 1996 represents income from continuing
operations adjusted to exclude the net effect of the operations ($.47 per
share) of the isocyanates business and Primex and the gain ($2.20 per
share) on the sale of the isocyanates business. Proforma net income per
share excludes the impact of interest income that would have been earned on
the proceeds from the sale.
(2) New York Stock Exchange composite transactions.
38
<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, 1997 and 1996 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, 1997. 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, 1997 and 1996, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1997 in conformity with generally accepted accounting
principles.
/s/ KPMG PEAT MARWICK LLP
Stamford, Connecticut
January 29, 1998
Management Report on Financial Statements
Management is responsible for the preparation and integrity of the accompanying
consolidated financial statements. These financial statements have been prepared
in conformity with generally accepted accounting principles and, where
necessary, involve amounts based on management's best judgments and estimates.
Management also prepared the other information in this annual report and is
responsible for its accuracy and consistency with the financial statements.
The company's system of internal controls is designed to provide reasonable
assurance as to the integrity and reliability of the financial statements, the
protection of assets from unauthorized use or disposition, and the prevention
and detection of fraudulent financial reporting. This system, which is reviewed
regularly, consists of written policies and procedures, an organizational
structure providing delegation of authority and segregation of responsibility
and is monitored by an internal audit department. The company's independent
auditors also review and test the internal control system along with tests of
accounting procedures and records to the extent that they consider necessary in
order to issue their opinion on the financial statements. Management believes
that the system of internal accounting controls meets the objectives noted
above.
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 a variety of ways, including personal training
sessions.
The Ethics Program is based upon a document called "The Standards of
Ethical Business Practices." The standards address, 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 standards and has established confidential ways, including a
telephone help-line, for employees to ask questions and share concerns.
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
accounting, auditing, internal controls and financial reporting matters. The
Audit Committee annually recommends to the Board of Directors the appointment of
independent auditors, subject to shareholder approval. The independent auditors
and the company's internal audit department have independent and free access to
the Audit Committee.
/s/ DONALD W. GRIFFIN /s/ ANTHONY W. RUGGIERO
Donald W. Griffin Anthony W. Ruggiero
Chairman, Senior Vice President and
President and Chief Financial Officer
Chief Executive Officer
================================================================================
39
<PAGE>
Today, Olin businesses are leading producers and marketers of high performance
chemicals, metals, microelectronic materials and sporting ammunition.
Investor Information
Transfer Agent and Registrar Commercial Paper Dealers
ChaseMellon J.P. Morgan Securities, Inc.
Shareholder Services, L.L.C. 60 Wall Street
85 Challenger Road New York, NY 10260-0060
Ridgefield Park, NJ 07660 Telephone: (212) 648-0100
Telephone: (800) 306-8594
Goldman Sachs
Money Markets, L.P.
Stock Exchange Listings 85 Broad Street
New York, NY 10004
Common Stock Telephone: (212) 902-8279
Ticker Symbol: OLN
New York Stock Exchange
Pacific Stock Exchange Dividend Reinvestment Service
Chicago Stock Exchange
Olin makes a Dividend Reinvestment
Service available to its
Trustees for 8% Notes shareholders. For more
and 7.11% Notes information, write to:
ChaseMellon
The Chase Manhattan Bank Shareholder Services, L.L.C.
450 W. 33rd Street P.O. Box 3336
New York, NY 10001 South Hackensack, NJ 07606
Telephone: (800) 648-8380
Trademarks
[LOGO] : a registered trademark of Olin Corporation. Italicized words
identifying products in this report are trademarks or servicemarks of Olin
Corporation or its subsidiaries or affiliates except: EVA, a registered
trademark of Stern Stewart & Company; Ball Powder propellant, a registered
trademark of Primex Technologies, Inc.; and Sun, a registered trademark of Aqua
Clear Industries.
Free Shareholder Information
Telephone: (800) 656-OLIN Quarterly earnings releases and other corporate news
releases are available. Earnings are generally released during the third week of
April, July, October, and the fourth week of January. This same information is
also available on the internet at: http://www.shareholder.com/olin/
http://www.olin.com
Form 10K Available
A copy of Olin's Form 10K, containing 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
Vice President,
Investor Relations
Olin Corporation
501 Merritt 7
P.O. Box 4500
Norwalk, CT 06856-4500
Telephone: (203) 750-3254
Annual Meeting
The annual meeting of the shareholders will be held on Thursday, April 30, 1998,
at 11:15 a.m. at Olin's offices at 501 Merritt 7, Norwalk, CT.
================================================================================
40
<PAGE>
Board of Directors
Richard E. Cavanagh (1)(3)
President and Chief Executive Officer
The Conference Board, Inc.
Donald W. Griffin (4)
Chairman, President
and Chief Executive Officer
Olin Corporation
William W. Higgins (1)(4)
Retired, former Senior
Vice President
The Chase Manhattan
Bank, N.A.
Robert Holland, Jr. (2)(3)
Chief Executive Officer
Workplace Integrators
Suzanne Denbo Jaffe (1)(4)
Managing Director
Hamilton & Company
John W. Johnstone, Jr. (4)
Retired, former Chairman
Olin Corporation
Jack D. Kuehler (2)(4)
Retired, former Vice Chairman
International Business
Machines Corporation
Randall W. Larrimore (2)(3)
President and Chief
Executive Officer
United Stationers Inc.
H. William Lichtenberger (1)(2)
Chairman and
Chief Executive Officer
Praxair, Inc.
G. Jackson Ratcliffe, Jr. (2)(4)
Chairman, President and
Chief Executive Officer
Hubbell, Inc.
Richard M. Rompala (1)(4)
Chairman, President and
Chief Executive Officer
The Valspar Corporation
John P. Schaefer (1)(3)
President
Research Corporation
Committees of the Board
(1) Audit Committee
William W. Higgins,
Chairman
(2) Compensation Committee
G. Jackson Ratcliffe, Jr.,
Chairman
(3) Directors and Corporate
Governance Committee
John P. Schaefer,
Chairman
(4) Finance Committee
John W. Johnstone, Jr.,
Chairman
Corporate Management
Donald W. Griffin
Chairman, President and
Chief Executive Officer
Michael E. Campbell
Executive Vice President
Peter C. Kosche
Senior Vice President,
Corporate Affairs
Anthony W. Ruggiero
Senior Vice President and
Chief Financial Officer
George B. Erensen
Vice President and
General Tax Counsel
Johnnie M. Jackson, Jr.
Vice President,
General Counsel and Secretary
Sarah Y. Kienzle
Vice President,
Planning and Development
Louis S. Massimo
Vice President and Controller
Janet M. Pierpont
Vice President and Treasurer
Operations Management
Leon B. Anziano
President, Chlor Alkali Products,
and Corporate Vice President
Thomas M. Gura
President, Winchester, and
Corporate Vice President
Joseph D. Rupp
President, Brass, and
Corporate Vice President
Steven T. Warshaw
President, Olin Microelectronic
Materials, and Corporate
Vice President
- --------------------------------
Robert K. Gebing
Vice President,
Business Ethics and Integrity
Richard E. Koch
Vice President,
Investor Relations
William B. McDaniel
Vice President, Public Affairs
Alfred C. Schmidt, Jr.
Vice President,
Information Technology
================================================================================
41
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF OLIN CORPORATION/1/
(as of December 31, 1997)
JURISDICTION PERCENTAGE OF DIRECT/
WHERE INDIRECT OWNERSHIP BY
SUBSIDIARY ORGANIZED OLIN OF VOTING
- ---------- --------- SECURITIES
----------
Aegis, Inc. Massachusetts 100%
A.J. Oster Caribe, Inc. Delaware 100%
A.J. Oster Foils, Inc. Delaware 100%
A.J. Oster West, Inc. Rhode Island 100%
Bridgeport Brass Corporation/2/ Indiana 100%
Bryan Metals, Inc./3/ Ohio 100%
Doe Run Gas Transmission Company Kentucky 100%
Etoxyl, C.A. Venezuela 100%
Hydromen Espana, S.L. Spain 100%
Hydrochim, S.A. France 100%
Nutmeg Insurance Limited Bermuda 100%
N.V. Olin Hunt Specialty Products Belgium 100%
N.V. Olin Hunt Trading Belgium 100%
Olin-Asahi Interconnect Technologies Delaware 100%
Olin Australia Limited Australia 100%
Olin Benefits Management, Inc./4/ California 80%
Olin Brasil Ltda. Brazil 100%
Olin Brass and Winchester, Inc. Rhode Island 100%
Olin Canada Inc. Canada 100%
Olin Chemicals B.V. Netherlands 100%
Olin Corporation N.Z. Limited New Zealand 100%
Olin Electronic Chemicals, Inc. Pennsylvania 100%
Olin Engineered Systems, Inc. Delaware 100%
Olin Environmental Management, Inc./4/ Delaware 80%
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 Industrial (Hong Kong) Limited Hong Kong 100%
Olin Japan, Inc. Japan 100%
Olin Kimya, A.S. Turkey 75%
Olin Mexico, S.A. de C.V. Mexico 100%
____________________
/1/There are omitted from the following list the names of certain subsidiaries
which, if considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary.
/2/d/b/a "Olin Brass, Indianapolis" and "Olin Brass, Indianapolis Facility" in
CA, IL, IN, NJ, NC, OH, PA , RI and TX.
/3/d/b/a/ "Bryan Metals of Ohio" in NJ.
/4/Class A shares, all of which are held directly and indirectly by Olin
Corporation, have the right to elect 4 directors. Class B shares, none of
which are held directly or indirectly by Olin Corporation, have the right to
elect 1 director.
EX21.
<PAGE>
JURISDICTION PERCENTAGE OF DIRECT/
WHERE INDIRECT OWNERSHIP BY
SUBSIDIARY ORGANIZED OLIN OF VOTING
- ---------- --------- SECURITIES
----------
Olin Microelectronic Chemicals, Inc. Delaware 100%
Olin Microelectronic Materials AG Switzerland 100%
Olin Microelectronic Materials GmbH Germany 100%
Olin Microelectronic Materials Limited United Kingdom 100%
Olin Microelectronic Materials N.V. Belgium 100%
Olin Microelectronic Materials S.A. France 100%
Olin Pte. Ltd. Singapore 100%
Olin Quimica S.A. Delaware 100%
Olin S.A. France 100%
Olin S.r.l. Italy 100%
Olin Sunbelt, Inc. Delaware 100%
Olin (U.K.) Limited United Kingdom 100%
Superior Pool Products, Inc. Delaware 100%
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Olin Corporation:
We consent to the incorporation by reference in Registration Statements No.
33-4479 and No. 33-52771 on Form S-3 and Nos. 33-28593, 33-00159, 33-40346,
33-41202, 333-05097, 333-17629, 333-18619, 333-39305 and 333-39303 on Form S-8
of Olin Corporation of our report dated January 29, 1998, relating to the
consolidated balance sheets of Olin Corporation and subsidiaries as of December
31, 1997 and 1996, 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, 1997, which report is incorporated by reference in the
December 31, 1997 annual report on Form 10-K of Olin Corporation.
KPMG Peat Marwick LLP
Stamford, Connecticut
March 10, 1998
<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, 1997 and is qualified in its entirety by reference to such
financial statements. Figures are rounded to the nearest 1,000,000 (except
EPS).
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 166
<SECURITIES> 28
<RECEIVABLES> 318
<ALLOWANCES> (10)
<INVENTORY> 347
<CURRENT-ASSETS> 936
<PP&E> 2,323
<DEPRECIATION> (1,528)
<TOTAL-ASSETS> 1,946
<CURRENT-LIABILITIES> 512
<BONDS> 268
0
0
<COMMON> 49
<OTHER-SE> 830
<TOTAL-LIABILITY-AND-EQUITY> 1,946
<SALES> 2,410
<TOTAL-REVENUES> 2,410
<CGS> 1,866
<TOTAL-COSTS> 1,866
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2
<INTEREST-EXPENSE> 25
<INCOME-PRETAX> 234
<INCOME-TAX> 81
<INCOME-CONTINUING> 153
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 153
<EPS-PRIMARY> 3.02
<EPS-DILUTED> 3.00
</TABLE>
