-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GfJh9/p3/IKU5h/KDNSAanxL4RtxCDwtKmcZgZBBxRglgMSY28R1DkpUUQFPByty fFDWk+yWMOE7PXgNGEzJdg== 0000074303-96-000016.txt : 19960816 0000074303-96-000016.hdr.sgml : 19960816 ACCESSION NUMBER: 0000074303-96-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: CSX SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLIN CORP CENTRAL INDEX KEY: 0000074303 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 131872319 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01070 FILM NUMBER: 96612310 BUSINESS ADDRESS: STREET 1: 501 MERRITT 7 STREET 2: P O BOX 4500 CITY: NORWALK STATE: CT ZIP: 06856 BUSINESS PHONE: 2033562000 FORMER COMPANY: FORMER CONFORMED NAME: OLIN MATHIESON CHEMICAL CORP DATE OF NAME CHANGE: 19691008 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 ------------- 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 incorporation or organization) Identification No.) 501 Merritt 7, Norwalk, CT 06851 -------------------------- ----- (Address of principal executive offices) (Zip Code) (203) 750-3000 -------------- (Registrant's telephone number, including area code) ----------------------------------------- (Former name, former address, and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- As of July 31, 1996 there were outstanding 24,958,183 shares of the registrant's common stock. Part I - Financial Information Item 1. Financial Statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Condensed Balance Sheets (In millions) June 30, December 31, 1996 1995 --------- ------------ ASSETS Cash $ 4.5 $ 7.5 Accounts receivable, net 596.7 554.9 Inventories 427.9 409.7 Other current assets 81.5 79.7 ------- ------- Total current assets 1,110.6 1,051.8 Investments and advances 84.2 79.8 Property, plant and equipment (less accumulated depreciation of $1,748.2 and $1,706.8) 915.2 955.7 Goodwill 117.8 120.6 Other assets 79.0 63.9 ------- ------- Total assets $2,306.8 $2,271.8 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Short-term borrowings and current installments of long-term debt $ 270.2 $ 122.1 Accounts payable 243.9 352.1 Other current liabilities 338.1 281.2 ------- ------- Total current liabilities 852.2 755.4 Long-term senior debt 277.1 286.2 Long-term subordinated debt - 125.0 Other liabilities 252.5 263.9 ------- ------- Total liabilities 1,381.8 1,430.5 ------- ------- Shareholders' equity: Preferred stock, par value $1 per share: Authorized 10.0 shares. ESOP Preferred Stock Issued 1.0 shares 73.9 77.3 Guaranteed ESOP obligations (10.0) (22.0) Common stock, par value $1 per share: Authorized 60.0 shares. Issued 24.9 shares (24.7 in 1995) 24.9 24.7 Additional paid-in capital 434.1 422.5 Cumulative translation adjustment (5.2) (4.3) Retained earnings 407.3 343.1 ------- ------- Total shareholders' equity 925.0 841.3 ------- ------- Total liabilities and shareholders' equity $2,306.8 $2,271.8 ======= ======= - -------------------- The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Condensed Statements of Income (In millions, except per share amounts)
Three Months Six Months Ended June 30, Ended June 30, -------------- -------------- 1996 1995 1996 1995 ---- ---- ---- ---- Sales $824.0 $803.7 $1,613.4 $1,569.8 Operating expenses: Cost of goods sold 632.9 632.7 1,241.7 1,245.7 Selling and administration 95.8 87.3 196.4 166.7 Research and development 11.3 7.1 22.4 14.4 ------ ------ ------- ------- Operating income 84.0 76.6 152.9 143.0 Interest expense 10.3 11.2 20.5 21.5 Interest and other income 6.5 2.3 17.6 5.7 ------ ------ ------- ------- Income before taxes 80.2 67.7 150.0 127.2 Income taxes 28.5 24.1 53.3 45.2 ------ ------ ------- ------- Net income 51.7 43.6 96.7 82.0 Preferred dividends 1.4 1.6 2.9 3.2 ------ ------ ------- ------- Net income available to common shareholders $ 50.3 $ 42.0 $ 93.8 $ 78.8 ==== ==== ==== ==== Per share of common stock: Primary $2.01 $1.74 $3.76 $3.26 Fully diluted $1.95 $1.66 $3.65 $3.12 Dividends $0.60 $0.60 $1.20 $1.20 ==== ==== ==== ==== Average common shares outstanding 24.9 24.3 24.9 24.3 ==== ==== ==== ==== - ---------------------- The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Condensed Statements of Cash Flows (In millions)
Six Months Ended June 30, -------------- 1996 1995 ---- ---- Operating activities Net income $ 96.7 $ 82.0 Earnings of non-consolidated affiliates (4.9) (0.8) Depreciation and amortization 73.7 69.6 Deferred taxes (2.0) 8.9 Change in assets and liabilities net of sale of business: Receivables (44.7) (127.4) Inventories (20.9) (25.6) Other current assets (1.8) 3.5 Current liabilities other than borrowings (73.2) (44.9) Noncurrent liabilities 2.6 7.5 Other operating activities (11.5) (0.8) ------ ------ Net operating activities 14.0 (28.0) ------ ------ Investing activities Capital expenditures (41.1) (84.0) Disposition of property, plant and equipment 24.5 - Proceeds from sale of business 5.5 - Other investments (4.7) 2.1 Other investing activities (0.9) 3.9 ------ ------ Net investing activities (16.7) (78.0) ------ ------ Financing activities Long-term debt: Borrowings - 50.0 Repayments (18.2) (8.0) Short-term borrowings 32.1 91.7 Stock options exercised 6.3 0.7 Repayment from ESOP 12.0 1.0 Dividends paid (32.7) (33.3) Other financing activities 0.2 0.6 ------ ------ Net financing activities (0.3) 102.7 ------ ------ Net decrease in cash (3.0) (3.3) Cash, beginning of period 7.5 7.0 ------ ------ Cash, end of period $ 4.5 $ 3.7 ===== ===== - -------------------- The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONDENSED FINANCIAL STATEMENTS 1. The condensed financial statements included herein have been prepared by the company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and, in the opinion of the company, reflect all adjustments (consisting only of normal accruals) which are necessary to present fairly the results for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, the company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements, accounting policies and the notes thereto and management's discussion and analysis of financial condition and results of operations included in the company's Annual Report on Form 10-K for the year ended December 31, 1995. 2. Inventories are valued principally by the dollar value last-in, first-out (LIFO) method of inventory accounting. It is not practicable, therefore, to separate the inventory into its components (raw materials, work-in-process and finished products). Inventories under the LIFO method are based on annual determination of quantities and costs as of the year-end; therefore, the consolidated financial statements at June 30, 1996, reflect certain estimates relating to inventory quantities and costs at December 31, 1996. 3. An Employee Stock Ownership Plan (ESOP) was established in June 1989. The ESOP purchased from the company approximately 1.3 million shares ($100 million) of a newly authorized 1.75 million share series of the company's ESOP preferred stock, financed by $60 million of notes guaranteed by the company (of which $10 million is outstanding at June 30, 1996), and $40 million of borrowings from the company. In May 1996, the Board of Directors authorized the issuance from time to time of up to an additional 451,805 shares of ESOP Preferred Stock to satisfy employer matching contributions to the ESOP. At June 30, 1996, there were approximately 1.0 million shares of ESOP preferred stock outstanding at a value of $90.38 per share. The quarterly fixed dividend rate is $1.4925 per share. The ESOP preferred stock is convertible by the ESOP Trustee into the company's common stock on a one-for-one basis, subject to anti- dilutive adjustments, and may be redeemed at the option of the company, or at the option of the plan under certain circumstances (including upon payment of withdrawing plan participant accounts or if required to meet the plan's debt payments). The company reserves the right to satisfy the redemption in cash, marketable obligations or common stock. The ESOP preferred stock is included in shareholders' equity because the company intends to redeem the outstanding ESOP preferred stock solely with shares of the company's common stock, and has the ability to do so. 4. Primary earnings per share are computed by dividing net income less the ESOP preferred dividend requirement by the weighted average number of common shares outstanding. Fully diluted earnings per share reflect the dilutive effect of stock options and assume the conversion of outstanding ESOP preferred stock into an equivalent number of common shares at the date of issuance. Net income was reduced by an additional ESOP contribution (differential between the common and the ESOP preferred dividend rates under an assumed conversion) necessary to satisfy the debt service requirement. 5. In January 1996, the company sold its corporate headquarters. This transaction generated a gain of approximately $7 million, which was reported in Interest and Other Income. In March 1996, the company sold its Electrostatics business. This transaction did not have a material impact on the company's results of operations. 6. Effective January 1, 1996, the company adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." The adoption of this standard did not have a material impact on the company's financial position and its operating results. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS - --------------------- (in millions, except per share data)
CONSOLIDATED Three Months Six Months Ended June 30 Ended June 30 ------------- ------------- 1996 1995 1996 1995 ---- ---- ---- ---- Sales $824.0 $803.7 $1,613.4 $1,569.8 Gross Margin 191.1 171.0 371.7 324.1 Selling and Administration 95.8 87.3 196.4 166.7 Research and Development 11.3 7.1 22.4 14.4 Operating Income 84.0 76.6 152.9 143.0 Net Income 51.7 43.6 96.7 82.0 Net Income per Share Primary 2.01 1.74 3.76 3.26 Fully Diluted 1.95 1.66 3.65 3.12
Three Months Ended June 30, 1996 Compared to 1995 - ------------------------------------------------- Sales increased 3% as higher selling prices and the inclusion of sales of OCG, which was acquired in the third quarter of 1995, more than offset the impact of lower volumes in the Defense and Ammunition segment and lower metal values and volumes in the Metals segment. Gross margin percentage increased to 23% from 21%, as higher selling prices and an improved product mix more than offset increased manufacturing and distribution costs. Selling and administration expenses as a percentage of sales increased from 10.9% to 11.6%. The increase was primarily attributable to the inclusion of OCG's operating expenses, additional advertising and promotional efforts to increase dealer/consumer demand for sporting ammunition and higher costs related to incentive compensation programs. Research and development expenses increased as a result of inclusion of OCG's research and development expenses. Interest and other income increased primarily due to the favorable performance of the nonconsolidated affiliates and a gain on the sale of certain investment securities. Six Months Ended June 30, 1996 Compared to 1995 - ------------------------------------------------ Sales increased 3% as higher selling prices and the inclusion of sales of OCG more than offset the impact of lower volumes in the Defense and Ammunition segment and lower metal values and volumes in the Metals segment. Gross margin percentage increased to 23% from 21%, as higher selling prices and an improved product mix more than offset increased raw material and manufacturing costs. Selling and administration expenses as a percentage of sales increased from 10.6% to 12.2%. The increase was primarily attributable to the inclusion of OCG's operating expenses, charges to provide for claims and certain legal matters in the Defense and Ammunition segment, and additional advertising and promotional efforts directed towards sporting ammunition and pool products. Research and development expenses increased as a result of inclusion of OCG's research and development expenses. In the first quarter, the company completed the sale of its corporate headquarters. The gain of approximately $7 million, which was reported in Interest and Other Income, was offset by charges to provide for claims and certain legal matters, mentioned above.
CHEMICALS Three Months Six Months Ended June 30 Ended June 30 ------------ ------------- 1996 1995 1996 1995 ---- ---- ---- ---- Sales $439.9 $397.8 $854.4 $748.7 Operating Income 66.9 54.0 128.8 85.9
Three Months Ended June 30, 1996 Compared to 1995 - ------------------------------------------------- Sales and operating income increased 11% and 24%, respectively. Higher pricing in several product lines was the most significant factor in the financial improvement. Urethanes and ethylene oxide/propylene oxide (EO/PO) derivative products were the major contributors to the segment's performance. Urethanes' improved performance was driven by higher pricing and increased volumes (principally in the international markets) for toluene diisocyanate (TDI). In EO/PO derivative products, lower raw material costs was the dominant factor in its improvement. Higher prices more than offset the impact of lower volumes due to the lack of product availability and contributed to pool products' increased profits. Microelectronic Materials sales and operating income increased substantially due to the inclusion of OCG's operating results and higher demand for electronic chemical products and services and more than offset higher manufacturing costs, delays in the start-up of the new semiconductor chemicals manufacturing plant in Mesa, AZ, which is expected to be fully operational in September, 1996, and development costs associated with a new semiconductor package. Six Months Ended June 30, 1996 Compared to 1995 - ----------------------------------------------- Sales and operating income increased 14% and 50%, respectively. Higher pricing in several product lines was the most significant factor in the financial improvement. Urethanes and EO/PO (ethylene oxide/propylene oxide) derivative products were the major contributors to the segment's performance. Urethanes' improved performance was driven by higher pricing and increased volumes (principally in the international markets) for TDI. This favorable price and volume impact was offset in part by higher raw material costs and other product-related costs. Higher sales volumes contributed to the improved performance of the specialty urethane coatings business. Lower raw material costs and higher volumes and prices contributed to EO/PO derivative products' favorable performance. Pool products' operating results were favorably impacted by higher prices and an improved product mix and more than offset the impact from lower volumes due to the lack of product availability. Based on strong projected worldwide demand for HTH[R] calcium hypochlorite, capacity additions are under way and are expected to increase capacity by 20% within the next 18 months. For the 1996 year, sales volumes of pool products are expected to be comparable to 1995 levels. Chlor-Alkali's sales were slightly behind last year due to lower volumes for chlorine and caustic. Although volumes declined slightly, demand for chlorine had been strong, while demand for caustic began to weaken in June. Lower utility costs and operating expenses were the major contributors to Chlor-Alkali's profit improvement. Microelectronic Materials sales and operating income increased substantially over the prior year. The inclusion of OCG's operating results and higher demand for electronic chemical products and services more than offset the higher manufacturing costs, delays in the start-up of the new Mesa, AZ facility and higher development costs. In addition, sales of MQUAD[R], the company's proprietary electronic package, surpassed 1995 levels.
METALS Three Months Six Months Ended June 30 Ended June 30 ------------- ------------- 1996 1995 1996 1995 ---- ---- ---- ---- Sales $204.6 $219.9 $430.3 $459.5 Operating Income 16.5 17.3 33.6 40.9
Three Months Ended June 30, 1996 Compared to 1995 - ------------------------------------------------- Sales and operating income decreased 7% and 5%, respectively. Sales declined due to lower metal values and lower demand for strip products. Operating income was adversely impacted by the weaker demand from customers who manufacture electronic and ammunition products and from electric utilities for heat exchanger tubing. Six Months Ended June 30, 1996 Compared to 1995 - ----------------------------------------------- Sales and operating income decreased 6% and 18%, respectively. Sales decreased due to lower metal values and lower demand for strip products. Shipments of strip were lower as the industry returns to more normal demand levels after two consecutive years of record domestic consumption. In addition to the reduced strip business, operating income was adversely impacted by the lower levels of utility business and weaker demand for ammunition products. Improvements were recorded by the Somers operation, which had strong CopperBond[R] flexible- circuit foil shipments. At the Indianapolis plant, work continued on the modernization of the seamless copper alloy tube facility. This project, scheduled for start-up at the end of the third quarter, is expected to increase capacity and improve product quality.
DEFENSE AND AMMUNITION Three Months Six Months Ended June 30 Ended June 30 ------------- ------------- 1996 1995 1996 1995 ---- ---- ---- ---- Sales $179.5 $186.0 $328.7 $361.6 Operating Income (Loss) 0.6 5.3 (9.5) 16.2
Three Months Ended June 30, 1996 Compared to 1995 - ------------------------------------------------- Sales declined 3%, primarily attributable to the reduced level of sporting ammunition business. The decrease in operating income during the quarter resulted from the sales decline, an unfavorable product mix and higher manufacturing costs associated with production problems for certain medium caliber ammunition programs. Winchester's financial performance was significantly behind due to lower demand for domestic sporting ammunition. In Ordnance, higher tank ammunition sales more than offset lower Ball Powder[R] propellant sales. Operating income decreased due to unfavorable product mix and costs associated with production problems on two medium caliber ammunition programs. Six Months Ended June 30, 1996 Compared to 1995 - ----------------------------------------------- Sales declined 9%, principally attributable to lower sales of domestic sporting ammunition and medium caliber ammunition, reduced Ball Powder[R] shipments and the completion in 1995 of two Aerospace programs. In addition, approximately $7 million of charges were provided for claims and certain legal matters. Winchester's financial performance was significantly behind 1995 levels due to lower demand for domestic sporting ammunition along with higher raw material costs. Distributor order flow continued to be slow due to the resistance to an industry-wide price increase and reduced incentives for an early-buy program. For the 1996 year, Winchester's commercial ammunition sales and profits are expected to be below 1995 levels. In Ordnance, operating income was below last year due to lower Ball Powder[R] propellant sales and reduced medium caliber ammunition shipments, resulting from production problems and lower procurement levels. For the 1996 year, Ordnance's operating profits are expected to be comparable to 1995 due to an unfavorable change in its product mix and higher than anticipated operating expenses. Aerospace's sales decreased from last year as a result of the completion of two major production programs, while the improvement in operating income was primarily due to lower costs on certain development programs. Changes in the strategic direction of defense spending, the timing of defense procurements and specific defense program appropriation decisions may adversely affect the performance of the Defense and Ammunition segment and the company in future years, including its income, liquidity, capital resources and financial condition. The precise impact of these decisions will depend upon the timing and size of changes and decisions, and the company's ability to mitigate their impact with new business, business consolidations or cost reductions. In view of the continuing uncertainty regarding the size, content and priorities of the annual Department of Defense budget, the historical financial information of the Defense and Ammunition segment, and to a lesser extent, of the company, may not be indicative of future performance. ENVIRONMENTAL - ------------- In the first six months of 1996, the company spent approximately $12 million for investigatory and clean-up activities associated with former waste sites and past operations. Spending for environmental investigatory and remedial efforts for the full year 1996 is estimated to be $40 million. Cash outlays for remedial and investigatory activities associated with former waste sites and past operations were not charged to income but instead were charged to reserves established for such costs identified and expensed to income in prior periods; $8 million was charged to income to date in 1996. 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 1995 and may be material to operating results in 1996 and future years. The company's consolidated balance sheets included liabilities for future environmental expenditures to investigate and remediate known sites amounting to $107 million and $111 million at June 30, 1996 and December 31, 1995, of which $67 million and $76 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. Annual environmental-related cash outlays for site investigation and remediation, capital projects and normal plant operations are expected to range between $85-$100 million over the next several years. While the company does not anticipate a material increase in the projected annual level of its environmental-related costs, there is always the possibility that such increases may occur in the future in view of the uncertainties associated with environmental exposures. Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and the financial capability of other potentially responsible parties and the company's ability to obtain contributions from other parties and the time periods (sometimes lengthy) over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably against the company. LITIGATION - ---------- There is a variety of legal proceedings pending or threatened against the company. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be decided unfavorably against the company. Certain of these matters are discussed in Item 3, Legal Proceedings of the 1995 Form 10-K Annual Report and in other filings of the company with the Securities and Exchange Commission, which filings are available on request from the company. LIQUIDITY, INVESTMENT ACTIVITY and OTHER FINANCIAL DATA - -------------------------------------------------------
Cash Flow Data Six Months Provided by(used for)(in millions) Ended June 30, -------------- 1996 1995 ---- ---- Net Operating Activities $ 14.0 $(28.0) Capital Expenditures (41.1) (84.0) Net Investing Activities (16.7) (78.0) Net Financing Activities (0.3) 102.7
Cash flow from operations, proceeds from the sales of assets and the use of credit facilities financed the company's seasonal working capital requirements, capital expenditures and dividends. At June 30, 1996, the company maintained committed credit facilities with banks of $308 million of which $219 million was available. The company believes that these credit facilities are adequate to satisfy its liquidity needs for the near future. Cash flow from operations improved due to higher operating income and improved working capital management. Capital spending of $41.1 million in 1996 was 51% lower than 1995. Funds were spent in 1995 to provide additional capacity and improve product quality for selected product lines, and on a chemical plant maintenance turnaround. Total year capital spending, including environmental capital spending of $17 million, is estimated to decrease 10-20% from 1995 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. Historically, the company has funded its environmental capital spending through cash flow from operations and expects to do so in the future. Proceeds from the sale of assets including the corporate headquarters and the divestment of the Electrostatics business approximated $30 million. At June 30, 1996, the percent of total debt to total capitalization (excluding the reduction in equity for the Contributing Employee Ownership Plan) was 36.9%, down from 38.2% at year-end 1995 and 41.5% at June 30, 1995. 1996 OUTLOOK - ------------ Cautionary Statement under Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995: All statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations section that do not reflect historical information are forward-looking statements. These statements involve risks and uncertainties that could significantly affect expected results. Factors that could cause actual results to differ materially from those discussed in the "1996 Outlook" sections of Item 7 of Olin's 1995 Form 10-K and herein include but are not limited to: competitive pricing pressures, including Olin's ability to maintain chemical and Winchester price increases; higher-than-expected raw material and commodity costs; the supply/demand balance for the company's products, including the impact of excess industry capacity; any recession in the U.S. economy; failure to complete capital projects as scheduled; changes in scheduled maintenance at certain chemical plants; higher-than-expected legal expenses and cost overruns; and failure to achieve targeted cost reduction programs. Previously the company announced that it is studying the spin-off to its shareholders of its Ordnance and Aerospace businesses as a free-standing company. PART II - OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Company held its Annual Meeting of Shareholders on April 25, 1996. Of the 25,842,283 shares of Common Stock and ESOP Preferred Stock entitled to vote at such meeting, 22,287,543 shares were present for purposes of a quorum. At the meeting, shareholders elected to the Board of Directors William J. Alley, Donald W. Griffin, H. William Lichtenberger and G. Jackson Ratcliffe, Jr. as Class II Directors with terms expiring in 1999. Votes cast for and votes withheld in the election of Directors were as follows: Votes For Votes Withheld --------- -------------- William J. Alley 21,819,877 467,666 Donald W. Griffin 21,973,849 313,694 H. William Lichtenberger 21,958,218 329,325 G. Jackson Ratcliffe, Jr. 21,956,185 331,358 There were no abstentions or broker non-votes. The shareholders also voted on and approved the 1996 Stock Option Plan for Key Employees of Olin Corporation and Subsidiaries. Voting for the resolution approving the plan were 17,261,261 shares, 3,271,441 shares were voted against and 351,735 shares abstained from voting. There were 1,403,106 broker non-votes. The shareholders also ratified the appointment of KPMG Peat Marwick as independent auditors for 1996. Voting for the resolution ratifying the appointment were 22,092,550 shares, 101,265 shares were voted against and 93,728 shares abstained from voting. There were no broker non-votes. The shareholders also voted on and defeated a shareholder proposal recommending that all future nonemployee directors not be granted pension benefits and current nonemployee directors voluntarily relinquish their pension benefits. Voting for this resolution were 7,940,877 shares, 12,334,806 shares were voted against and 608,755 shares abstained from There were 1,403,105 broker non-votes. Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS 11. Computation of Per Share Earnings (Unaudited). 12(a). Computation of Ratio of Earnings to Fixed Charges (Unaudited). 12(b). Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited). 27. Financial Data Schedule. (b) REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended June 30, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OLIN CORPORATION (Registrant) By: A.W. Ruggiero ----------------- A.W. Ruggiero Senior Vice President and Chief Financial Officer (Authorized Officer) Date: August 13, 1996 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION 11. Computation of Per Share Earnings (Unaudited). 12(a). Computation of Ratio of Earnings to Fixed Charges (Unaudited). 12(b). Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited). 27. Financial Data Schedule. EX-11 2 COMPUTATION OF PER SHARE EARNINGS Exhibit 11 OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Per Share Earnings (Unaudited) (In millions)
Six Months Ended June 30, -------------- 1996 1995 ---- ---- Primary earnings per share - -------------------------- Primary earnings: Net income $96.7 $82.0 Less ESOP preferred dividend, net of tax benefit and other (3.3) (2.8) ------ ------ Net income $93.4 $79.2 ===== ===== Primary shares: Weighted average shares outstanding 24.9 24.3 ===== ===== Primary net income per common share $3.76 $3.26 ===== ===== Fully diluted earnings per share - -------------------------------- Fully diluted earnings: Net income $96.7 $82.0 Less additional ESOP contribution (1.7) (1.2) ------ ------ Net income $95.0 $80.8 ===== ===== Fully diluted shares: Weighted average number of common shares outstanding and common stock equivalents 24.9 24.3 Dilutive effect of: ESOP preferred stock 0.9 1.6 Stock options 0.2 - ------ ------ Fully diluted shares 26.0 25.9 ===== ===== Fully diluted net income per common share $3.65 $3.12 ===== =====
EX-12.(A) 3 EXH. 12(A) COMP'N OF EARNINGS/FIXED CHARGES Exhibit 12(a) OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (Unaudited) (In millions)
Six Months Ended June 30, -------------- 1996 1995 ---- ---- Earnings: Income before taxes $150.0 $127.2 Add (deduct): Income taxes of 50% owned affiliates 1.8 2.4 Equity in (earnings) losses of less than 50% owned affiliates (1.3) 1.8 Interest capitalized, net of amortization 0.1 (0.2) Fixed charges as described below 30.9 31.7 ------ ------ Total $181.5 $162.9 ====== ====== Fixed Charges: Interest expense $ 20.8 $ 22.9 Estimated interest factor in rent expense 10.1 8.8 ------ ------ Total $ 30.9 $ 31.7 ====== ====== Ratio of earnings to fixed charges 5.9 5.1 === ===
EX-12.(B) 4 EXH. 12(B) COMP'N EARNINGS/FIXED CHRGS & PREF DIVS Exhibit 12(b) OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited) (In millions)
Six Months Ended June 30, -------------- 1996 1995 ---- ---- Earnings: Income before taxes $150.0 $127.2 Add (deduct): Income taxes of 50% owned affiliates 1.8 2.4 Equity in (earnings) losses of less than 50% owned affiliates (1.3) 1.8 Interest capitalized, net of amortization 0.1 (0.2) Fixed charges: Interest expense 20.8 22.9 Estimated interest factor in rent expense 10.1 8.8 ------ ------ Total $181.5 $162.9 ====== ====== Fixed Charges: Interest expense $20.8 $22.9 Estimated interest factor in rent expense 10.1 8.8 Preferred stock dividend requirement 4.8 9.4 ------ ------ Total $ 35.7 $ 41.1 ====== ====== Ratio of earnings to combined fixed charges and preferred stock dividends 5.1 4.0 === ===
EX-27 5 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Financial Statements contained in Item 1 of Form 10-Q for the period ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. Figures are rounded to the nearest 100,000 (except EPS). 1,000 6-MOS DEC-31-1995 JUN-30-1996 4,500 0 596,700 0 427,900 1,110,600 2,663,400 (1,748,200) 2,306,800 852,200 277,100 0 73,900 24,900 826,200 2,306,800 1,613,400 1,613,400 1,241,700 1,241,700 0 0 20,500 150,000 53,300 96,700 0 0 0 96,700 3.76 3.65
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