-----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, Kvh2zywb7j8nNUXOHF8KMbYo7r1c14w6+K7DyTpoCox6W8xoh8ptTH6TE3FrMIXe yCeyN0kqLoRAJPfCxuRmtw== 0000950130-98-001212.txt : 19980317 0000950130-98-001212.hdr.sgml : 19980317 ACCESSION NUMBER: 0000950130-98-001212 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980313 SROS: CSX SROS: NYSE SROS: PCX 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-K SEC ACT: SEC FILE NUMBER: 001-01070 FILM NUMBER: 98565160 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-K 1 FORM 10-K - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- ----------------------- 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
---------------- 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:
PART OF 10-K DOCUMENT INTO WHICH INCORPORATED -------- ----------------------- 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
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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 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
MAJOR RAW MATERIALS PRODUCT LINE OR & COMPONENTS FOR DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES - --------------- ------------------- ---------------- -------------------- ------------------- 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
- ------------------------------------------------------------------------------- * 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 CHEMICALS (CONT'D)
MAJOR RAW MATERIALS PRODUCT LINE OR & COMPONENTS FOR DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES --------------- ------------------- ------------------- -------------------- ------------------- 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 ---------------------------------------------------------------------------------------- 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
- -------------------------------------------------------------------------------- * 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 METALS AND AMMUNITION
MAJOR RAW MATERIALS PRODUCT LINE OR & COMPONENTS FOR DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES --------------- ------------------- ---------------- -------------------- ------------------- 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 ------------------------------------------------------------------------------------------ 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 ------------------------------------------------------------------------------------------ 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
- -------------------------------------------------------------------------------- * 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 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 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 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 ENVIRONMENTAL AND TOXIC SUBSTANCES CONTROLS
1997 1996 1995 ---- ---- ---- (IN MILLIONS) 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 === === ===
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 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 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 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
SERVED AS AN OLIN NAME AND AGE OFFICE OFFICER SINCE - ------------ ------ ------------- 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
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 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 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 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. 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.
- -------- * 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 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. 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.
- -------- * 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 (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.
(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 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.
SIGNATURE TITLE --------- ----- /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.
18
SIGNATURE TITLE --------- ----- /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
Date: March 10, 1998 19 LOGO PRINTED ON RECYCLED PAPER EX-3.B 2 BY-LAWS OF OLIN CORPORATION Exhibit 3(b) ================================================================================ BY-LAWS OF OLIN CORPORATION As Amended Effective January 1, 1998 ================================================================================ 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- 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- 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. -4- 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. -5- 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 -6- 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. -7- (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 -8- 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. -9- 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. -10- 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. -11- 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 -12- 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. -13- 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. -14- 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. -15- (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- EX-4.I 3 3RD AMENDMENT TO CREDIT AGREEMENT 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 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. 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 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 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 EX-4.J 4 4TH AMENDMENT TO CREDIT AGREEMENT 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 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: 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% 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)." 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 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 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 EX-10.D 5 OLIN CORP EMPLOYEE DEFERRAL PLAN 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; 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. 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. 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 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 ------------------ 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 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 8 Beneficiaries. A Participant may, at any time prior to death, elect to change the designation of a Beneficiary. 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 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. EX-10.J 6 SUPPLEMENTAL CONTRIBUTING EMPLOYEE OWNERSHIP PLAN 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. 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. 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 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; 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 EX-10.M 7 FORM OF EXECUTIVE AGREEMENT 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 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; 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; 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 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 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 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 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 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. 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 ________________________ EX-10.N 8 FORM OF SPECIAL SEVERANCE AGREEMENT 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; 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: 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 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 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. 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. EX-10.S 9 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS 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. 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. 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. 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 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 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. 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 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. 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 $155,000 EX-11 10 COMPUTATION OF PER SHARE EARNINGS Exhibit 11 OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Per Share Earnings (Unaudited) In 1997, the company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share," which specifies the methods for computing earnings per share. The calculation of earnings per share according to the provisions of this statement did not have an impact on the previously reported earnings per share amounts. Basic earnings per share are computed by dividing net income less the ESOP preferred stock dividend requirement (to the date of its redemption in 1996), and the redemption adjustment (excess of fair value over book value of ESOP shares redeemed), and in 1995 the Series A stock dividend requirement by the weighted average number of common shares outstanding. In Decemner 1996, the company redeemed the ESOP preferred stock with shares of common stock of equivalent value. On March 1, 1995, the Series A stock was converted on a one- for-one basis into common stock. Diluted earnings per share reflect the dilutive effect of stock options and assume the conversion of outstanding ESOP preferred stock, until its redemption in December 1996, into an equivalent number of common shares at the date of issuance. In addition, diluted earnings per share reflect an equivalent number of common shares for the Series A Stock until its conversion on March 1, 1995. Net Income was reduced by an additional ESOP contribution (differential between the common and the ESOP preferred dividend rates under an assumed conversion) necessary to satisfy the debt service requirement.
Years Ended December 31 --------------------------------------------- 1997 1996 1995 ---------- ---------- ---------- Basic earnings per share ($ in millions except per share data) 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 ======= ======= =======
EX-12 11 COMPUTATION OF RATIO OF EARNINGS
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 ------------------------------------ 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 $124 million for personnel reductions, business restructurings involving consolidations and re-alignments within divisions, costs at sites of discontinued businesses, future environmental liabilities, and other charges.
EX-13 12 EXCERPTS FROM 1997 ANNUAL REPORT TO SHAREHOLDERS EXHIBIT 13 Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS
Consolidated ($ in millions, except per share data) 1997 1996(1) 1995(2) ================================================================================ 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 ================================================================================
(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 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 ($115 million after-tax gain). On December 31, 1996, the company completed the spin-off of its Ordnance and Aerospace businesses as Primex. Under the terms of the spin-off, the company distributed to its holders of common stock of record at the close of business on December 19, 1996 one Primex common share for every ten shares of Olin common stock. The results of operations have been restated to reflect Primex as discontinued operations for all periods presented. CHEMICALS
Results of Operations ($ in millions) 1997 1996 1995 ================================================================================ 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 ================================================================================
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 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
Results of Operations ($ in millions) 1997 1996 1995 ================================================================================ Sales $1,070 $1,052 $1,164 Operating Income 56 52 83 ================================================================================
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 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
Results of Operations ($ in millions) 1996 1995 ================================================================================ Sales $471 $508 Operating Income 2 21 Net Income (Loss) (8) 6 ================================================================================
Sales declined 7%, principally attributable to lower shipments of combined effects munitions, Ball Powder(R) propellant, and electromagnetic systems, which more than offset higher tank ammunition sales to international customers. The lower sales levels of combined effects munitions and electromagnetic systems reflect the completion of major programs during 1996. Sales of commercial Ball Powder propellant declined 17% as sporting ammunition customers drastically reduced their purchases. In 1994 and 1995, heavy consumer buying patterns for sporting ammunition were driven by a concern over the threat of restrictive legislation and taxation, which increased the demand for Ball Powder propellant. Net income was adversely impacted by the lower sales volumes and the provision for the settlement of claims relating to a government investigation of certain testing irregularities at the Marion, IL facility and a charge for a Belgian contract dispute. ENVIRONMENTAL MATTERS
($ in millions) 1997 1996 1995 ================================================================================ 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 ================================================================================
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 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 $41 million. LIQUIDITY, INVESTMENT ACTIVITY AND OTHER FINANCIAL DATA
Cash Flow Data Provided By (Used For)($ in millions) 1997 1996 1995 ================================================================================ 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 ================================================================================
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 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 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 Industry Segments
($ in millions) 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 ==================================================================================================================================== 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 ====================================================================================================================================
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 $11 to Metals and Ammunition). Corporate and Other includes principally Cash and Cash Equivalents, Short-Term Investments and for years prior to 1996, the net assets of discontinued operations. See Notes to Financial Statements for information relative to geographic segment data. ================================================================================ 24 Ten-Year Financial Summary
($ and shares in millions, except per share data) 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 ==================================================================================================================================== 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 ====================================================================================================================================
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 $87 of Short-Term Investments in 1997 and 1996, respectively. (2) Basic income or loss per share for 1994, 1993 and 1992 have been restated to conform with SFAS No. 128, "Earnings per Share." (3) In 1994, 1993 and 1992, calculation is based on common shares and Series A Conversion Preferred Stock outstanding. (4) Excluding reduction to equity for the Employee Stock Ownership Plan from 1989 through 1996. (5) Employee data excludes employees who work at government-owned/contractor-operated facilities. ================================================================================ 25 Consolidated Balance Sheets
December 31 ($ in millions, except share data) 1997 1996 ========================================================================================== 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 ==========================================================================================
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 Consolidated Statements of Income
Years ended December 31 ($ in millions, except per share data) 1997 1996 1995 ========================================================================================================= 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 =========================================================================================================
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 Consolidated Statements of Shareholders' Equity
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 ==================================================================================================================================== 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 $-- $-- $-- ====================================================================================================================================
The accompanying Notes to Financial Statements are an integral part of the financial statements and also contain information regarding the sale in 1996 of the company's isocyanates business. ================================================================================ 28 Consolidated Statements of Cash Flows
Years ended December 31 ($ in millions) 1997 1996 1995 ==================================================================================================================================== 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 ====================================================================================================================================
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 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 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 Computation of Earnings per Share
Basic earnings per share 1997 1996 1995 ================================================================================ 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 ================================================================================
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.
MARKETABLE SECURITIES 1997 1996 ================================================================================ Tax exempt $28 $ 6 Certificates of deposit -- 40 Commercial paper -- 19 Government and government agencies -- 20 Other -- 2 - -------------------------------------------------------------------------------- Total $28 $87 ================================================================================
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.
INVENTORIES 1997 1996 ================================================================================ 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 ================================================================================
Inventories valued using the LIFO method comprised 72% and 71% of the total inventories at December 31, 1997 and 1996, respectively.
PROPERTY, PLANT AND EQUIPMENT Useful Lives 1997 1996 ================================================================================ 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 ================================================================================
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
LONG-TERM DEBT 1997 1996 ================================================================================ 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 ================================================================================
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.
Components of Net Pension Expense 1997 1996 1995 ================================================================================ 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 ================================================================================
Principal Assumptions 1997 1996 1995 ================================================================================ 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% ================================================================================
Funded Status of the Plans 1997 1996 ================================================================================ 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) ================================================================================
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 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.
Components of Postretirement Expense 1997 1996 1995 ================================================================================ 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 ================================================================================
Unfunded Liability for Postretirement Benefits 1997 1996 ================================================================================ 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 ================================================================================
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
Components of Pretax Income from Continuing Operations 1997 1996 1995 ================================================================================ Domestic $ 209 $ 409 $ 172 Foreign 25 37 32 - -------------------------------------------------------------------------------- Pretax income $ 234 $ 446 $ 204 ================================================================================
Components of Income Tax Expense (Benefit) 1997 1996 1995 ================================================================================ 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 ================================================================================
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.
Effective Tax Rate Reconciliation (Percent) 1997 1996 1995 ================================================================================ 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 ================================================================================
Components of Deferred Tax Assets and Liabilities 1997 1996 ================================================================================ 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 ================================================================================
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 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:
Weighted Average Option Price Option Price Shares Per Share Per Share ================================================================================ 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 ================================================================================
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.
1997 1996 1995 ================================================================================ 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 ================================================================================
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 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.
Geographic Segment Data 1997 1996 1995 ================================================================================ 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 ================================================================================
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:
1997 1995 ================================================================================ 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 ================================================================================
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:
1996 ================================================================================ Proceeds $ 571 Working capital (123) Property, plant and equipment (177) Other assets (5) Other liabilities (78) - -------------------------------------------------------------------------------- Gain on disposition of businesses $ 188 ================================================================================
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 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:
1996 - -------------------------------------------------------------------------------- Combined Balance Sheets Total assets $374 Total liabilities 229 Equity 145 ================================================================================
1996 1995 - -------------------------------------------------------------------------------- Combined Statements of Income Sales $ 471 $ 508 Operating income 2 21 Net income (loss) (8) 6 ================================================================================
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 Other Financial Data
QUARTERLY DATA (UNAUDITED) First Second Third Fourth 1997 Quarter Quarter Quarter Quarter Year ============================================================================================================================== 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 ============================================================================================================================== 1996 ============================================================================================================================== Sales $ 693 $ 702 $ 652 $ 591 $2,638 Cost of goods sold 529 529 501 462 2,021 Income from continuing operations 51 51 41 145 288 Net income 45 52 38 145 280 Per common share: Basic Income from continuing operations .99 .99 .78 2.76 5.52 Net income .87 1.01 .72 2.74 5.34 Diluted Income from continuing operations .96 .96 .75 2.76 5.43 Net income .85 .98 .70 2.74 5.27 Proforma net income(1) .70 .90 .50 .50 2.60 Common dividends per share .30 .30 .30 .30 1.20 Market price of common stock(2) High 44 3/8 48 45 1/4 45 1/8 48 Low 34 7/8 42 3/8 36 1/2 37 1/8 34 7/8 ==============================================================================================================================
(1) Proforma net income per share for 1996 represents income from continuing operations adjusted to exclude the net effect of the operations ($.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 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 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 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 EX-21 13 LIST OF SUBSIDIARIES 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. 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% EX-23 14 CONSENT OF KPMG PEAT MARWICK LLP DATED 03/10/98 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 EX-27 15 FINANCIAL DATA SCHEDULE
5 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). 12-MOS DEC-31-1997 DEC-31-1997 166 28 318 (10) 347 936 2,323 (1,528) 1,946 512 268 0 0 49 830 1,946 2,410 2,410 1,866 1,866 0 2 25 234 81 153 0 0 0 153 3.02 3.00
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