FORM 10-Q

-----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, LIFcENKeXxn3erMYgo3vinoqxiFx25TajxxujrW6LHBJZnVNlwV9PCxAH0D3Y0tF xB1nJUvzyuutNa+k4NpV/A== 0000950130-02-007816.txt : 20021113 0000950130-02-007816.hdr.sgml : 20021113 20021113162139 ACCESSION NUMBER: 0000950130-02-007816 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLIN CORP CENTRAL INDEX KEY: 0000074303 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 131872319 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01070 FILM NUMBER: 02820307 BUSINESS ADDRESS: STREET 1: 501 MERRITT 7 STREET 2: P O BOX 4500 CITY: NORWALK STATE: CT ZIP: 06856 BUSINESS PHONE: 2037503000 MAIL ADDRESS: STREET 1: OLIN CORP STREET 2: 501 MERRITT 7 PO BOX 4500 CITY: NORWALK STATE: CT ZIP: 06851 FORMER COMPANY: FORMER CONFORMED NAME: OLIN MATHIESON CHEMICAL CORP DATE OF NAME CHANGE: 19691008 10-Q 1 d10q.htm FORM 10-Q FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

OR

o	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 incorporation or organization)		(I.R.S. Employer Identification No.)

501 Merritt 7, Norwalk, CT		06856

(Address of principal executive offices)		(Zip Code)

(203) 750-3000

(Registrant’s telephone number, including area code)



(Former name, address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

As of October 31, 2002, there were outstanding 57,330,111 shares of the registrant’s common stock.

Part I - Financial Information

Item 1. Financial Statements.

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Balance Sheets
(In millions, except per share data)

			Unaudited September 30, 2002			December 31, 2001

ASSETS
Cash and cash equivalents			$	93.9		$	164.8
Short-term investments				25.0			36.8
Accounts receivable, net				210.5			140.5
Inventories				255.5			223.2
Income taxes receivable				9.5			7.2
Other current assets				66.8			43.6

	Total current assets			661.2			616.1
Property, plant and equipment (less accumulated depreciation of $1,290.2 and $1,241.0)				550.5			477.1
Other assets				83.9			83.3
Goodwill				83.0			42.6

Total assets			$	1,378.6		$	1,219.1

LIABILITIES AND SHAREHOLDERS’ EQUITY
Short-term borrowings and current installments of long-term debt			$	1.5		$	101.5
Accounts payable				107.8			96.8
Income taxes payable				1.5			0.4
Accrued liabilities				163.5			136.5

	Total current liabilities			274.3			335.2
Long-term debt				328.4			329.2
Deferred income taxes				91.6			72.1
Other liabilities				214.5			211.6
Commitments and contingencies
Shareholders’ equity:
	Common stock, par value $1 per share:
		Authorized 120.0 shares Issued 57.2 shares (43.4 in 2001)		57.2			43.4
	Additional paid-in capital			435.9			204.3
	Accumulated other comprehensive loss			(17.4	)		(17.6	)
	Retained earnings (accumulated deficit)			(5.9	)		40.9

	Total shareholders’ equity			469.8			271.0

Total liabilities and shareholders’ equity			$	1,378.6		$	1,219.1


The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements.

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Income (Unaudited)
(In millions, except per share amounts)

		Three Months Ended September 30,						Nine Months Ended September 30,

		2002			2001			2002			2001

Sales		$	340.3		$	333.6		$	949.6		$	992.3
Operating Expenses:
	Cost of goods sold		307.9			302.9			862.7			879.9
	Selling and administration		26.2			29.2			83.5			86.9
	Research and development		1.2			1.2			3.5			4.0
	Restructuring charge		—			25.9			—			25.9
Loss of non-consolidated affiliates			0.5			2.3			8.3			4.6
Interest expense			5.8			4.9			20.4			12.8
Interest income			0.3			0.1			2.1			0.5
Other income			0.5			0.5			2.1			4.0

	Loss before taxes		(0.5	)		(32.2	)		(24.6	)		(17.3	)
Income tax provision (benefit)			0.5			(12.8	)		(5.3	)		(6.9	)

Net loss		$	(1.0	)	$	(19.4	)	$	(19.3	)	$	(10.4	)

Net loss per common share:
	Basic	$	(0.02	)	$	(0.45	)	$	(0.41	)	$	(0.24	)
	Diluted		(0.02	)		(0.45	)		(0.41	)		(0.24	)
Dividends per common share		$	0.20		$	0.20		$	0.60		$	0.60
Average common shares outstanding:
	Basic		49.7			43.4			47.0			43.6
	Diluted		49.7			43.4			47.0			43.6


The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements.

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Cash Flows (Unaudited)
(In millions)

					Nine Months Ended September 30,

					2002			2001

Operating activities
Net loss					$	(19.3	)	$	(10.4	)
Adjustments to reconcile net loss to net cash and cash equivalents provided by operating activities
			Loss of non-consolidated affiliates			8.3			4.6
			Depreciation and amortization			63.8			64.1
			Deferred income taxes			1.9			(3.0	)
			Qualified pension plan income			(5.9	)		(3.0	)
			Common stock issued under employee benefit plans			4.1			—
			Change in:
				Receivables		(44.3	)		(8.9	)
				Inventories		(17.7	)		33.6
				Other current assets		(17.9	)		(10.6	)
				Accounts payable and accrued liabilities		13.3			(59.4	)
				Income taxes payable		(3.8	)		(13.6	)
				Other assets		4.6			7.7
				Noncurrent liabilities		(14.6	)		(5.0	)
Other operating activities						(1.3	)		1.0

	Net operating activities					(28.8	)		(2.9	)

Investing activities
Capital expenditures						(15.2	)		(54.5	)
Proceeds from sale of short-term investments						11.8			—
Business acquired in purchase transaction						—			(48.3	)
Cash acquired through business acquisition, net						13.1			—
Investments and advances-affiliated companies at equity						(0.5	)		3.1
Disposition of property, plant and equipment						13.8			1.3
Other investing activities						0.2			(0.4	)

	Net investing activities					23.2			(98.8	)

Financing activities
Short-term debt borrowings						—			96.2
Long-term debt:
		Borrowings				34.7			—
		Repayments				(135.5	)		(7.3	)
Issuance of common stock						63.3			—
Purchases of Olin common stock						(2.5	)		(14.1	)
Stock options exercised						2.7			2.3
Dividends paid						(27.5	)		(26.1	)
Other financing activities						(0.5	)		(0.4	)

	Net financing activities					(65.3	)		50.6

	Net decrease in cash and cash equivalents					(70.9	)		(51.1	)
Cash and cash equivalents, beginning of period						164.8			56.6

Cash and cash equivalents, end of period					$	93.9		$	5.5



The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements.

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Tabular amounts in millions, except per share data)

1.	We have prepared the condensed financial statements included herein, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In our opinion, these financial statements reflect all adjustments (consisting only of normal accruals) which are necessary to present fairly the results for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, we believe that the disclosures are adequate to make the information presented not misleading. Certain reclassifications were made to prior year amounts to conform to the 2002 presentation. We recommend that you read these condensed financial statements in conjunction with the financial statements, accounting policies and the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K/A for the year ended December 31, 2001.

2.	Inventory consists of the following:

	September 30, 2002			December 31, 2001

Raw materials and supplies	$	122.0		$	119.4
Work in process		121.3			97.7
Finished goods		72.2			63.8

		315.5			280.9
LIFO reserve		(60.0	)		(57.7	)

Inventory, net	$	255.5		$	223.2

	Inventories are valued principally by the dollar value last-in, first-out (LIFO) method of inventory accounting; such valuations are not in excess of market. Cost for other inventories has been determined principally by the average cost and first-in, first-out (FIFO) methods. Elements of costs in inventories include raw materials, direct labor and manufacturing overhead. Inventories under the LIFO method are based on annual estimates of quantities and costs as of the year-end; therefore, the condensed financial statements at September 30, 2002, reflect certain estimates relating to inventory quantities and costs at December 31, 2002.

3.	Basic and diluted losses per share are computed by dividing net loss by the weighted average number of common shares outstanding.

	Three Months Ended September 30,						Nine Months Ended September 30,

Basic Loss Per Share	2002			2001			2002			2001

Net loss	$	(1.0	)	$	(19.4	)	$	(19.3	)	$	(10.4	)
Basic shares		49.7			43.4			47.0			43.6
Basic net loss per share	$	(0.02	)	$	(0.45	)	$	(0.41	)	$	(0.24	)

	Three Months Ended September 30,						Nine Months Ended September 30,

Diluted Loss Per Share	2002			2001			2002			2001

Net loss	$	(1.0	)	$	(19.4	)	$	(19.3	)	$	(10.4	)
Diluted shares		49.7			43.4			47.0			43.6
Diluted net loss per share	$	(0.02	)	$	(0.45	)	$	(0.41	)	$	(0.24	)

4.	We are party to various governmental and private environmental actions associated with waste disposal sites and manufacturing facilities. Environmental provisions charged to income amounted to $4 million in each of the three-month periods ended September 30, 2002 and 2001 and $11 million in each of the nine-month periods ended September 30, 2002 and 2001. Charges to income for investigatory and remedial efforts were material to operating results in 2001 and are expected to be material to operating results in 2002. The consolidated balance sheets include reserves for future environmental expenditures to investigate and remediate known sites amounting to $101 million at September 30, 2002 and $100 million at December 31, 2001, of which $79 million and $73 million was classified as other noncurrent liabilities, respectively. The September 30, 2002 environmental liabilities include $8 million associated with Chase Industries Inc. (“Chase”) which was acquired on September 27, 2002.

	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 our 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 to us, which could have a material adverse effect on our operating results and financial condition.

5.	The Board of Directors in April, 1998, authorized a share repurchase program of up to 5 million shares of our common stock. We have repurchased 4,845,924 shares under the April 1998 program. During the first nine months of 2002, we repurchased 144,157 shares of our common stock. At September 30, 2002 approximately 154,000 shares remain to be purchased.

	In March 2002, we issued and sold 3,302,914 shares of common stock at a public offering price of $17.50. Net proceeds from the sale were approximately $56 million and are available for general corporate purposes.

	In September 2002, we issued approximately 9.8 million shares at an average price of $18.11 per share for a total value of $178 million for the acquisition of Chase.

	During the first nine months of 2002 we issued approximately .2 million shares with a total value of $2.7 million representing stock options exercised. In addition, we issued approximately .6 million shares with a total value of $11.4 million in connection with our Contributing Employee Ownership Plan and our deferred compensation programs.

6.	In June 2002, we repaid the $100 million 8% notes from the proceeds from the sale of $200 million 9.125% notes in December 2001. In March 2002, we refinanced four variable rate tax-exempt debt issues, totaling $35 million.

7.	We define segment operating income (loss) as earnings (loss) before interest expense, interest income, other income, restructuring charge and unusual items, and income taxes and include the operating results of non-

consolidated affiliates. Segment operating results include an allocation of corporate operating expenses. Intersegment sales are not material.

		Three Months Ended September 30,						Nine Months Ended September 30,

		2002			2001			2002			2001

Sales:
	Chlor Alkali Products	$	83.3		$	93.8		$	230.9		$	304.1
	Metals		164.0			151.7			498.9			482.1
	Winchester		93.0			88.1			219.8			206.1

Total sales		$	340.3		$	333.6		$	949.6		$	992.3

Operating income (loss) before restructuring charge and unusual items:
	Chlor Alkali Products	$	(8.1	)	$	0.8		$	(38.4	)	$	17.2
	Metals		4.8			(4.0	)		16.0			(3.2	)
	Winchester		7.8			3.2			14.0			4.9

Total operating income (loss) before restructuring charge and unusual items:			4.5			—			(8.4	)		18.9
	Interest expense		5.8			4.9			20.4			12.8
	Interest income		0.3			0.1			2.1			0.5
	Other income		0.5			0.5			2.1			4.0
	Restructuring charge					25.9						25.9
	Unusual items (recorded in Cost of Goods Sold)		—			2.0			—			2.0

Loss before taxes		$	(0.5	)	$	(32.2	)	$	(24.6	)	$	(17.3	)

	In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” which became effective and was adopted by us on January 1, 2002. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of this statement. SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.” Accordingly, we ceased amortizing goodwill totaling $42 million as of January 1, 2002.

	We completed an initial impairment review of our goodwill balance during the second quarter of 2002 and determined an impairment charge was not required.

	If SFAS No. 142 had been in effect for the three and nine month periods ended September 30, 2001, net loss as reported of $19.4 million and $10.4 million would have decreased by $0.3 million and $0.7 million, respectively, representing the elimination of goodwill amortization. For the three and nine month periods ended September 30, 2001, reported basic net loss per share of $0.45 and $0.24 would have been $0.44 and $0.22, respectively, while reported diluted net loss per share of $0.45 and $0.24 would have been $0.44 and $0.22, respectively.

8.	In June 2001, we acquired the stock of Monarch Brass & Copper Corp. (“Monarch”) for approximately $48 million. Monarch was a privately held, specialty copper alloy manufacturer headquartered in Waterbury, CT with annual revenues of approximately $95 million in 2000. It produces and distributes an array of high performance copper alloys and other materials used for applications in electronics, telecommunications, automotive and building products. We financed the purchase through our credit lines. The purchase price exceeded the fair value of the identifiable net assets acquired by $19 million. The acquisition has been

	accounted for using the purchase method of accounting. The operating results of Monarch, which have been included in the accompanying financial statements since the date of acquisition, were not material.

9.	On September 27, 2002, we completed our merger with Chase by the issuance of approximately 9.8 million shares of our common stock for 100% of the outstanding stock of Chase. We believe the merger constitutes a tax-free exchange. As a result of the merger, Chase became our wholly-owned subsidiary. Our 2002 third quarter and year-to-date operating results do not include any sales and profits from Chase which was merged with Olin at the end of the third quarter. For segment reporting purposes, Chase will be included in our Metals segment.

	The aggregate purchase price was approximately $178 million, representing the issuance of approximately 9.8 million shares at a price of $18.11 per share (the average price per share of our stock a few days before and after the merger agreement was announced on May 8, 2002).

	The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed at the date of acquisition. We have obtained preliminary third party valuations of Chase’s fixed assets and certain intangible assets (trademark). Based on these valuations, $41 million was assigned to goodwill and $8 million was assigned to trademark, both of which are not subject to amortization. Because these valuations have not been finalized, the allocation of the purchase price is subject to refinements. Goodwill will not be deductible for tax purposes.

		September 30, 2002

Cash		$	13
Working capital			9
Property, plant and equipment			135
Goodwill			41
Intangible assets (trademark)			8
Other, net			(28	)

	Net assets acquired	$	178

The following unaudited pro forma condensed results of operations for the three and nine month periods ended September 30, 2002 and 2001, reflect the merger as if it had occurred on January 1, 2001, the beginning of the fiscal period presented.

		Three Months Ended September 30,					Nine Months Ended September 30,

		2002		2001			2002			2001

Sales		$	397	$	390		$	1,126		$	1,172
Income (loss) from continuing operations			1		(17	)		(13	)		(5	)
Income (loss) from continuing operations per common share:
	Basic	$	0.02	$	(0.32	)	$	(0.28	)	$	(0.09	)
	Diluted	$	0.02	$	(0.32	)	$	(0.28	)	$	(0.09	)

10.	In the 2002 year-to-date period, Cost of Goods Sold includes a non-recurring pretax gain of $4.5 million on an insurance settlement.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Recent Development
We announced on May 8, 2002 that we and Chase Industries Inc. (“Chase”) had entered into a merger agreement under which Chase would become our wholly-owned subsidiary. Chase, with 2001 sales of $232 million, is a leading manufacturer and supplier of brass rod in the U.S. and Canada. On September 27, 2002, we completed our merger with Chase by the issuance of approximately 9.8 million shares of our common stock. Holders of Chase common stock received 0.64 shares of our common stock for each share they owned. We believe the merger constitutes a tax-free exchange. Chase strengthens our financial position because we issued common stock for a profitable, debt-free company. Each of our metals businesses is a leader with strong premier reputations in their respective fields. We believe our combination created a company with the scale, scope and critical mass to compete more effectively, and created a stronger, less cyclical company.

The consolidated results of operations do not include any revenues or profits of Chase as it was acquired at the end of the quarter; however the balance sheet of Chase was consolidated as of September 30, 2002 as described more fully under Liquidity, Investment Activity and Other Financial Data.

Consolidated Results of Operations

		Three Months Ended September 30,						Nine Months Ended September 30,

($ in millions, except per share data)		2002			2001			2002			2001

Sales		$	340.3		$	333.6		$	949.6		$	992.3
Gross Margin			32.4			30.7			86.9			112.4
Selling and Administration			26.2			29.2			83.5			86.9
Interest Expense, net			5.5			4.8			18.3			12.3
Net Loss			(1.0	)		(19.4	)		(19.3	)		(10.4	)
Net Loss Per Common Share:
	Basic	$	(0.02	)	$	(0.45	)	$	(0.41	)	$	(0.24	)
	Diluted	$	(0.02	)	$	(0.45	)	$	(0.41	)	$	(0.24	)

Three Months Ended September 30, 2002 Compared to the Three Months Ended September 30, 2001
Sales increased 2% due to an increase in volumes (8%) offset in part by lower selling prices (5%) and metal sales (1%). The increase in sales volumes was across all segments. The price decreases were primarily related to lower Electrochemical Unit (“ECU”) prices in the Chlor Alkali Products segment.

Gross margin percentage approximated 9.5% in 2002 and 9.2% in 2001.

Selling and administration as a percentage of sales were 8% in 2002 and 9% in 2001. Selling and administration were $3 million lower than in 2001 primarily due to lower incentive

compensation costs and lower salary expense due to the early retirement incentive program and the voluntary separation program implemented in late 2001.

The decrease in operating losses from the non-consolidated affiliates was due primarily to the lower operating losses from the Sunbelt Chlor Alkali Partnership, which we own equally with our partner, PolyOne Corporation (“PolyOne”) and we refer to as the Sunbelt joint venture (2002 - $1 million loss; 2001 - $3 million loss), which benefited from higher ECU pricing.

Interest expense, net of interest income, increased from 2001 primarily due to higher interest rates on our debt portfolio.

In the third quarter of 2002, we recorded a tax provision of $0.5 million on a pretax loss of $0.5 million compared to an effective tax rate of 39.8% in 2001. The taxes recorded on the loss in 2002 were less than the statutory rate because we are accruing interest on taxes which may become payable in the future.

Nine Months Ended September 30, 2002 Compared to the Nine Months Ended September 30, 2001
Sales decreased 4% due to lower selling prices (7%) and metal sales (2%), offset in part by increased sales (3%) from Monarch Brass & Copper Corp. (“Monarch”) which we acquired in June 2001 and increased volumes (2%). The price decreases were primarily related to lower ECU prices in the Chlor Alkali Products segment. Sales volumes were higher in the Winchester and Metals businesses, in particular strip shipments to the ammunition, automotive and electronics segments.

Gross margin percentage decreased from 11% in 2001 to 9% in 2002 primarily due to lower ECU prices.

Selling and administration as a percentage of sales were 9% in 2002 and 2001. Selling and administration were $3.4 million lower than in 2001 primarily due to lower administration expenses, reduced salaries ($4 million) resulting from the early retirement incentive program and the voluntary separation program implemented in late 2001 and lower charitable contribution expense ($1 million) in 2002, partially offset by lower pension income ($3 million) in 2002.

The increase in operating losses from the non-consolidated affiliates was due primarily to the lower operating results from the Sunbelt joint venture (2002 - $9 million loss; 2001 - $5 million loss), which were adversely impacted by lower ECU pricing.

Interest expense, net of interest income, increased from 2001 due to higher average outstanding debt ($5 million) relating primarily to the $200 million that we borrowed in December 2001, partially offset by higher interest income ($2 million) in 2002. The additional interest expense in 2002 was due to higher interest rates on our debt ($3 million).

Other income decreased from 2001 primarily due to a non-recurring fee payment of $1.9 million that we received in 2001.

The effective tax rate decreased in 2002 to 21.5% from 39.9% in 2001. The tax benefit recorded on the loss in 2002 was less than the statutory rate because we are accruing interest on taxes which may become payable in the future.

Segment Operating Results
We define our segment operating results as earnings (loss) before interest expense, interest income, other income, restructuring charge and unusual items, and income taxes and include the operating results of non-consolidated affiliates. Segment operating results include an allocation of corporate operating expenses.

Chlor Alkali Products

	Three Months Ended September 30,					Nine Months Ended September 30,

($ in millions)	2002			2001		2002			2001

Sales	$	83.3		$	93.8	$	230.9		$	304.1
Operating Income (Loss)		(8.1	)		0.8		(38.4	)		17.2

Three Months Ended September 30, 2002 Compared to the Three Months Ended September 30, 2001
Sales decreased 11% from 2001 primarily due to lower selling prices (18%), offset in part by higher volumes (7%). Our ECU netbacks (gross selling price less freight, discount, etc.), excluding our Sunbelt joint venture, were approximately $240 in the third quarter of 2002 compared with approximately $310 in the third quarter of 2001, reflecting the impact of weak economic conditions on pricing and demand. Our ECU netbacks bottomed out in the second quarter of 2002 at approximately $200 and then increased to $240 in the third quarter and further improvement is expected in the fourth quarter. Operating rates at our manufacturing locations averaged 86% in the third quarter of 2002 compared to the industry average of approximately 88% (data from the Chlorine Institute) and 84% in the third quarter of 2001 compared to the industry average of 85%. Our operating results were lower in the third quarter of 2002 compared to 2001 primarily due to lower prices ($17 million) offset in part by higher volumes ($6 million) and lower losses from the Sunbelt joint venture (2002 - $1 million loss; 2001 - $3 million loss). The losses from the Sunbelt joint venture, which is a non-consolidated affiliate accounted for under the equity method of accounting, include interest expense of $2 million in 2002 and 2001 on the Sunbelt Notes. See “Liquidity and Other Financing Arrangements” for a description of the Sunbelt joint venture and the Sunbelt Notes.

Nine Months Ended September 30, 2002 Compared to the Nine Months Ended September 30, 2001
Sales decreased 24% from 2001 primarily due to lower selling prices (23%) and volumes (1%). The ECU netback averaged approximately $225 in the first nine months of 2002, compared to $325 in the first nine months of 2001. Poor economic conditions experienced during the first half of 2002 caused negative pressure on pricing, which resulted in one of the worst pricing cycles in the history of the business. Operating results were significantly lower in 2002 primarily

due to lower prices ($68 million) and higher losses from the Sunbelt joint venture, whose operating results (2002 - $9 million loss; 2001 - $5 million loss) were negatively impacted by significantly lower ECU pricing. The losses from the Sunbelt joint venture include interest expense of $5 million in 2002 and 2001 on the Sunbelt Notes. The negative impact on our operating results from pricing and volume was partially offset by reductions in manufacturing and selling and administration costs ($13 million). Profit improvement activities, lower steam cost and overall cost management contributed to these cost reductions. Also in the second quarter of 2002 we recorded a non-recurring pretax gain of $4.5 million on an insurance settlement.

Metals

	Three Months Ended September 30,					Nine Months Ended September 30,

($ in millions)	2002		2001			2002		2001

Sales	$	164.0	$	151.7		$	498.9		482.1
Operating Income (Loss)		4.8		(4.0	)		16.0		(3.2	)

Three Months Ended September 30, 2002 Compared to the Three Months Ended September 30, 2001
Sales increased 8% due to higher strip volumes (11%), offset by lower metal sales (2%) and lower selling prices (1%). Strip shipments to the automotive segment were up 22% from last year. Strip shipments to the electronics segment were up 39% from last year, although still down significantly from historical levels. Coinage shipments were down 15% from last year, primarily because demand from the Federal Reserve System decreased.

Metals’ operating income increased substantially in 2002, due to reduced costs and increased volumes. The lower costs in 2002 include the benefit of the early retirement incentive program implemented in late 2001 and the consolidation of Monarch’s distribution business.

Nine Months Ended September 30, 2002 Compared to the Nine Months Ended September 30, 2001
Sales increased 3% due to the sales of Monarch (6%) for the full nine months and increased strip volumes (1%), offset by decreased metal sales (4%). Strip shipments to the automotive segment were up 26%, compared to last year. Shipments to the electronics segment were up 14% over last year but still down substantially from historical averages. Coinage shipments were down 39% from last year, primarily because demand from the Federal Reserve System decreased.

Metals’ operating income increased substantially in 2002, due to reduced manufacturing costs and the absence of the effect of the strike in 2001. Costs this year have been reduced by the early retirement incentive program, the consolidation of the Monarch distribution business and the idling of the Indianapolis facility early in the year. 2001 sales and profits for the nine-month period were adversely affected by a strike at the East Alton, IL facility which ended on January 21, 2001.

Winchester

	Three Months Ended September 30,				Nine Months Ended September 30,

($ in millions)	2002		2001		2002		2001

Sales	$	93.0	$	88.1	$	219.8	$	206.1
Operating Income		7.8		3.2		14.0		4.9

Three Months Ended September 30, 2002 Compared to the Three Months Ended September 30, 2001
Sales in 2002 were 6% higher than 2001 due to higher volumes (5%) and selling prices (1%). Domestic commercial sales accounted for the majority of the increase over the prior year. As a result of higher sales, lower raw material costs and lower costs resulting from the benefit of the early retirement incentive program implemented in late 2001, Winchester posted operating income of $7.8 million compared with $3.2 million in 2001.

Nine Months Ended September 30, 2002 Compared to the Nine Months Ended September 30, 2001
Sales in 2002 were 7% higher than 2001 primarily due to higher volumes (6%) and prices (1%). Higher volumes are attributable to an increase in domestic commercial ammunition demand. Winchester posted operating income of $14.0 million in 2002 compared with $4.9 million in 2001. The increase in sales accounted for most of the increase in operating income. The cost benefit realized in 2002 associated with the 2001 early retirement incentive program, lower raw material costs and the absence of the effect of the 2001 strike also contributed to the increase in operating income. Finally, in 2001, we benefited from non-recurring income from the settlement of a claim.

2002 Outlook
In the fourth quarter of 2002, we expect our performance will be somewhat lower than the third quarter of 2002 and project a loss in the $.05 per share range. Improvement in the Chlor Alkali segment is expected to be more than offset by lower operating results from the Metals segment and the normally low operating results caused by the seasonal effects on our Winchester business.

Better Chlor Alkali results are expected due to higher selling prices in the fourth quarter. We are expecting prices for both chlorine and caustic to increase from the third to the fourth quarter as our contracts reflect the price increases that have been announced in the marketplace since mid-year. We expect further price improvement in the first quarter of 2003 as our contracts reflect the price increases announced during the third and fourth quarters. In late October, a major chlor alkali producer announced a price increase of $70 per ton on caustic soda effective immediately or as contract terms permit. We understand that another major producer effected a similar price increase. On October 31, 2002, we also made a similar announcement.

During the month of October, Chlor Alkali operated at about 94% of capacity. We expect that our operating rates will be somewhat lower in November and December as chlorine demand slows due to normal seasonal factors associated with inventory management. We expect this to

result in a tight supply/demand situation for caustic soda both in the fourth quarter of 2002 and the first quarter of 2003.

We expect earnings for the Metals segment in the fourth quarter, which will include a modest profit from Chase, to decline from third quarter levels due to softening demand for our products. We forecast that overall demand for our strip and rod products will be decreasing somewhat after showing improvement earlier in the year.

For the fourth quarter, Winchester’s sales and operating results are expected to decrease seasonally from their peak third quarter levels as the hunting season winds down.

As we have previously disclosed, a significant decline has occurred in the equity markets this year. As a result of this, the market value of our pension plan portfolio is currently less than the accumulated benefit obligation. If, at December 31, 2002, the market value of the assets is less than the accumulated benefit obligation, under Statement of Financial Accounting Standards (“SFAS”) No. 87, we will be required at that time to reduce equity to reflect this difference. If the equity market does not improve by the end of the year, and interest rates (which also affect the calculation) do not change by the end of the year, we expect to take a charge against equity, which is a non-cash charge, in the $150 million range. Our estimate of this charge is unchanged since July 2002.

The potential non-cash charge to equity, regardless of the amount, would not affect our ability to borrow under our revolving credit agreement. Based on our assumptions and estimates we may be required to make contributions to the pension fund, but those contributions would not be required for several years. In addition, pension income may be modestly lower over the next few years.

Environmental Matters
In the nine-month periods ended September 30, 2002 and 2001, we spent approximately $18 million and $22 million, respectively, for environmental investigatory and remediation activities associated with former waste sites and past operations. Spending for investigatory and remedial efforts for the full year 2002 is estimated to be between $20 and $25 million. Cash outlays for remedial and investigatory activities associated with former waste sites and past operations were not charged to income but instead were charged to reserves established for such costs identified and expensed to income in prior periods. Associated costs of investigatory and remedial activities are provided for in accordance with generally accepted accounting principles governing probability and the ability to reasonably estimate future costs. Charges to income for investigatory and remedial activities were $11 million in each of the nine-month periods ended September 30, 2002 and 2001. Charges to income for investigatory and remedial efforts were material to operating results in 2001, are expected to be material to operating results in 2002 and may be material to operating results in future years.

Our consolidated balance sheets included liabilities for future expenditures to investigate and remediate known sites amounting to $101 million at September 30, 2002 and $100 million at December 31, 2001, of which $79 million and $73 million was classified as other noncurrent liabilities, respectively. The September 30, 2002 environmental liabilities include $8 million associated with the Chase operations. 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 circumstances have changed and/or remediation efforts and our estimate of related costs have changed. As a result of these reassessments, future charges to income may be made for additional liabilities.

Annual environmental-related cash outlays for site investigation and remediation, capital projects, and normal plant operations are expected to range between approximately $40 to $50 million over the next several years, $20 million to $25 million of which is expected to be charged against reserves recorded on our balance sheet. While we do not anticipate a material increase in the projected annual level of our 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 our 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 to us, which could have a material adverse effect on our operating results and financial condition.

Liquidity, Investment Activity and Other Financial Data

Cash Flow Data

	Nine Months Ended September 30,

Provided By (Used For) ($ in millions)	2002			2001

Net Operating Activities	$	(28.8	)	$	(2.9	)
Capital Expenditures		(15.2	)		(54.5	)
Net Investing Activities		23.2			(98.8	)
Purchases of Olin Common Stock		(2.5	)		(14.1	)
Net Financing Activities		(65.3	)		50.6

In the first nine months of 2002, income from operations exclusive of non-cash charges, proceeds from the refinancing of the tax-exempt debt and the issuance of common stock and cash equivalents on hand were used to finance our working capital requirements, capital and investment projects, dividends, the purchase of our common stock and long-term debt repayments (including tax-exempt debt).

Operating Activities
In the first nine months of 2002, the increase in cash used by operating activities was primarily attributable to lower operating results and a higher investment in working capital. The higher investment in working capital is attributable to the Metals segment where we are now selling more on a metal-price pass through basis rather than on a toll basis and therefore have to inventory more raw material.

Investing Activities
Capital spending of $15.2 million in the first nine months of 2002 was $39.3 million lower than in the corresponding period in 2001. The capital spending decrease was primarily due to the completion of the high performance alloys projects that were begun in 2000 and completed in 2001. For the total year, we plan to manage our capital spending at a level of approximately 50% of depreciation, or about $40 million, compared to 76% of depreciation or $65 million in 2001.

In January 2002, we received $11.0 million from the sale of the stock of Prudential Insurance Company. We were awarded these shares of stock in 2001 as a result of Prudential’s conversion from a mutual company to a stock company.

In June 2001, we acquired the stock of Monarch for approximately $48 million. Monarch was a privately held, specialty copper alloy manufacturer headquartered in Waterbury, CT with annual revenues of approximately $95 million in 2000. It produces and distributes an array of high performance copper alloys and other materials used for applications in electronics, telecommunications, automotive and building products. We financed the purchase price through our credit facilities. The purchase price exceeded the fair value of the identifiable net assets acquired by $19 million. The acquisition has been accounted for using the purchase method of accounting. The operating results of Monarch, which have been included in the accompanying financial statements since the date of acquisition, were not material.

On September 27, 2002, we acquired 100% of the stock of Chase by the issuance of approximately 9.8 million shares of our common stock. We believe the merger constitutes a tax-free exchange. The total consideration was approximately $178 million, which represented the fair value of Olin common stock issued. Chase, with 2001 sales of $232 million, is a leading manufacturer and supplier of brass rod in the U.S. and Canada. The purchase price exceeded the fair value of the identifiable net assets acquired by $41 million. The acquisition has been accounted for using the purchase method of accounting. Our third quarter operating results do not include the sales or profits from Chase which was merged with Olin at the end of the quarter.

Financing Activities
At September 30, 2002, we had $120 million available under our $140 million revolving credit agreement with a group of banks. We issued $20 million of letters of credit under a subfacility for that purpose to support certain long-term debt and self-insurance obligations. The credit facility will expire on January 3, 2005. Under the credit facility, we may select various floating rate borrowing options. It includes various customary restrictive covenants, including restrictions related to the ratio of debt to earnings before interest expense, taxes,

depreciation and amortization (“leverage ratio”) and the ratio of earnings before interest expense, taxes, depreciation and amortization to interest expense (“coverage ratio”). In the event that the leverage ratio equals or exceeds 3.75, we are required under this senior credit facility to grant a security interest in all of our U.S. inventory and accounts receivables. No assets of our subsidiaries will secure our obligation under our senior credit facility.

In December 2001, we sold $200 million of 9.125% Senior Notes with a maturity date of December 15, 2011. We used $100 million from the proceeds of the offering to repay the $100 million 8% notes in June 2002. In March 2002, we issued and sold 3,302,914 shares of common stock at a public offering price of $17.50. Net proceeds from this sale were approximately $56 million and provide liquidity and financial flexibility, and strengthen our financial position. The net proceeds are available for general corporate purposes.

In March 2002, we also refinanced $35 million of tax-exempt debt to create additional capacity under our revolving credit facility by eliminating the need for an equivalent amount of letters of credit. This action increased our potential liquidity by $35 million.

During the first nine months of 2002 and 2001, we used $2.5 million and $14.1 million to repurchase 144,157 and 694,870 shares of our common stock, respectively. Approximately 154,000 shares remain to be repurchased under our previously approved stock repurchase program.

The percent of total debt to total capitalization decreased to 41% at September 30, 2002, from 61% at year-end 2001 and was 55% at September 30, 2001. The decrease from year-end 2001 was due primarily to the repayment of the $100 million 8% notes and the increase in shareholder’s equity resulting from the issuance of approximately 3.3 million shares in March 2002, and approximately 9.8 million shares in September 2002 for the Chase acquisition.

In 2002, we paid quarterly dividends of $0.20 per share. In October 2002, our board of directors declared a quarterly dividend of $0.20 per share on our common stock, which is payable on December 10, 2002, to shareholders of record on November 11, 2002.

The payment of cash dividends is subject to the discretion of our board of directors and will be determined in light of then-current conditions, including our earnings, our operations, our financial condition, our capital requirements and other factors deemed relevant by our board of directors. In the future, our board of directors may change our dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions.

Liquidity and Other Financing Arrangements
Our principal sources of liquidity are from cash and cash equivalents, short-term investments, cash flow from operations and short-term borrowings under our revolving credit facility.

Cash flow from operations is subject to change as a result of the cyclical nature of our operating results, which have been affected recently by the economic downturn and resulting decline in demand from many of the industries served by us, such as coinage, electronics and the telecommunications sectors. In addition, cash flow from operations is affected by considerable

changes in ECU prices caused by the changes in the supply/demand balance of chlorine and caustic, resulting in the chlor alkali business having tremendous leverage on our earnings. A $10 per ECU price change equates to an approximate $11 million pretax profit change when we are operating at full capacity.

Our current debt structure has been used to fund our business operations, and commitments from banks under our revolving credit facility are a source of liquidity. As of September 30, 2002, we had long-term borrowings of $330 million of which $1 million was issued at variable rates. We have entered into interest rate swaps on approximately $140 million of our underlying debt obligations, whereby we agree to pay variable rates to a counterparty who, in turn, pays us fixed rates. Annual maturities of long-term debt at December 31, 2001, were $102 million in 2002; $2 million in 2003; $27 million in 2004; $63 million in 2005; $1 million in 2006 and $236 million thereafter. We used a portion of net proceeds from the offering of our $200 million 9.125% Senior Notes in December 2001 to repay the $100 million 8% notes in June 2002.

We use operating leases for certain purposes, such as railroad cars, distribution, warehousing and office space, data processing and office equipment. Leases covering these properties may contain escalation clauses based on increased costs of the lessor, primarily property taxes, maintenance and insurance, and have renewal or purchase options. Future minimum rent payments under operating leases having initial or remaining non-cancelable lease terms in excess of one year at December 31, 2001 are as follows: $21 million in 2002; $20 million in 2003; $18 million in 2004; $16 million in 2005; $15 million in 2006 and a total of $61 million thereafter. Assets under capital leases are not significant.

On December 31, 1997, we entered into a long-term, sulfur dioxide supply agreement with Alliance Specialty Chemicals, Inc. (“Alliance”), formerly known as RFC S02, Inc. Alliance has the obligation to deliver annually 36,000 tons of sulfur dioxide. Alliance owns the sulfur dioxide plant, which is located at our Charleston, TN facility and is operated by us. The price for the sulfur dioxide is fixed over the life of the contract, and under the terms of the contract, we are obligated to make a monthly payment of approximately $200 thousand regardless of the amount of sulfur dioxide purchased. Commitments related to this agreement are approximately $2 million per year for 2002 through 2006 and a total of $12 million thereafter.

Our credit facility is a source of liquidity. This credit facility is described above under the caption, “Financing Activities”. As of September 30, 2002, we did not have any outstanding borrowings under this credit facility. At September 30, 2002, we had outstanding letters of credit of $22 million, $20 million of which were issued under our credit facility. We have issued letters of credit primarily to support certain long-term debt and self-insurance obligations. As a result of the $20 million of outstanding letters of credit which were issued under the credit facility, the amount available under the credit facility at September 30, 2002 was $120 million.

The Sunbelt joint venture owns assets with productive capability to manufacture 275 thousand tons of caustic soda and 250 thousand tons of chlorine annually. We market all of the caustic soda production for the venture, while all of the chlorine production is required to be purchased by Oxy Vinyls (a joint venture between OxyChem and PolyOne) based on a formula tied to the

market price of chlorine. The construction of this plant and equipment was financed by the issuance of $195 million of Guaranteed Secured Senior Notes due 2017. The Sunbelt joint venture sold $97.5 million of Guaranteed Secured Senior Notes due 2017, Series O, and $97.5 million of Guaranteed Secured Senior Notes due 2017, Series G. We refer to these notes as the Sunbelt Notes. The Sunbelt Notes bear interest at a rate of 7.23% per annum payable semiannually in arrears on each June 22 and December 22.

We have guaranteed Series O of the Sunbelt Notes, and PolyOne has guaranteed Series G of the Sunbelt Notes, in both cases pursuant to customary guaranty agreements. Our guarantee and PolyOne’s guarantee are separate, rather than joint. In other words, we are not required to make any payments under PolyOne’s guaranty of Sunbelt’s indebtedness. An insolvency or bankruptcy of PolyOne will not automatically trigger acceleration of the Sunbelt Notes or cause us to be required to make payments under our guarantee, even if PolyOne is required to make payments under its guarantee. However, if timely payments on the Sunbelt Notes are not made, whether as a result of a failure to pay on a guarantee or otherwise, the holders of the Sunbelt Notes may proceed against the assets of the Sunbelt joint venture for repayment.

Beginning on December 22, 2002 and each year through 2017, our Sunbelt joint venture is required to repay approximately $12 million of the Sunbelt Notes, of which approximately $6 million is attributable to Series O of the Sunbelt Notes. In the event our Sunbelt joint venture cannot make any of these payments, we would be required to fund our half of such payment. In certain other circumstances, we may also be required to repay the Sunbelt Notes prior to their maturity. We and PolyOne have agreed that, if we or PolyOne intend to transfer our respective interests in the Sunbelt joint venture and the transferring party is unable to obtain consent from holders of 80% of the aggregate principal amount of the indebtedness related to the guarantee being transferred after good faith negotiations, then we and PolyOne will be required to repay our respective portions of the Sunbelt Notes. In such event, any make whole or similar penalties or costs will be paid by the transferring party.

New Accounting Standards
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, “Business Combinations.” SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 141 also specifies certain criteria that must be met in order for intangible assets acquired in a purchase method business combination to be recognized and reported apart from goodwill. We adopted the provisions of SFAS No. 141 on July 1, 2001.

In June 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets,” which became effective and was adopted by us on January 1, 2002. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of this statement. SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.” Accordingly, we ceased amortizing goodwill totaling $42 million as of January 1, 2002.

We completed an initial impairment review of our goodwill balance during the second quarter of 2002 and determined an impairment charge was not required.

If SFAS No. 142 had been in effect for the three and nine month periods ended September 30, 2001, net loss as reported of $19.4 million and $10.4 million would have decreased by $0.3 million and $0.7 million respectively, representing the elimination of goodwill amortization. For the three and nine month periods ended September 30, 2001, reported basic net loss per share of $0.45 and $0.24 would have been $0.44 and $0.22, respectively, while reported diluted net loss per share of $0.45 and $0.24 would have been $0.44 and $0.22, respectively.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations”. SFAS No. 143 requires that the fair value of a liability for an asset retirement be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. This statement is effective for fiscal years beginning after June 15, 2002. At this time, it is not practical to reasonably estimate the impact of adopting this statement on our financial statements.

The FASB issued SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 addresses the financial accounting and reporting for the impairment or disposal of long-lived assets. This statement requires that one accounting model be used for long-lived assets to be disposed of by sale whether previously held and used or newly acquired. In addition, it broadened the presentation of discontinued operations to include more disposal transactions. This statement is effective for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years. At the time of adoption on January 1, 2002, this statement did not have a material impact on our financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk in the normal course of our business operations due to our operations that use different foreign currencies, our purchases of certain commodities and our ongoing investing and financing activities. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. We have established policies and procedures governing our management of market risks and the uses of financial instruments to manage exposure to such risks.

Certain raw materials and energy costs, namely copper, lead, zinc and natural gas, used primarily in our Metals and Winchester segments are subject to price volatility. Depending on market conditions, we may enter into futures contracts and put and call option contracts in order to reduce the impact of metal and natural gas price fluctuations. As of September 30, 2002, we maintained open positions on futures contracts totaling $37 million ($70 million at September 30, 2001). Assuming a hypothetical 10% increase in commodity prices which are currently hedged, we would experience a $3.7 million ($7.0 million at September 30, 2001) increase in our cost of related inventory purchased, which would be offset by a corresponding increase in the value of related hedging instruments.

We are exposed to changes in interest rates primarily as a result of our investing and financing activities. Investing activity is not material to our consolidated financial position, results of operations or cash flow. Our current debt structure has been used to fund our business operations, and commitments from banks under our revolving credit facility are a source of liquidity. As of September 30, 2002, we had long-term borrowings of $330 million ($231 million at September 30, 2001) of which $1 million ($36 million at September 30, 2001) was issued at variable rates. As a result of our recent fixed-rate financings, we entered into floating interest rate swaps in order to manage interest expense and floating interest rate exposure to optimal levels. We have entered into approximately $140 million of such swaps, whereby we agree to pay variable rates to a counterparty who, in turn, pays us fixed rates. In all cases the underlying index for the variable rates is six-month London InterBank Offered Rate (LIBOR). Accordingly, payments are settled every six months and the term of the swap is the same as the underlying debt instrument. In December 2001, we swapped interest payments on $50 million principal amount of our 9.125% Senior Notes to a floating rate (5.495% at September 30, 2002). In February and March 2002, we swapped interest payments on $30 million and $25 million principal amount, respectively, of our 9.125% Senior Notes to floating rates. Terms of these swaps set the floating rate at the end of each six-month reset period. Therefore, the interest rates for the current period will be set on December 16, 2002. We estimate that the rates will be between 4% and 5%. In March 2002, we refinanced four variable-rate tax-exempt debt issues totaling $35 million. The purpose of the refinancings was to eliminate the need for letter of credit support that used our liquidity. In order to manage interest expense and floating interest rate exposure to optimal levels, we swapped the fixed rate debt of the newly refinanced bonds back to variable rate debt through interest rate swaps. At September 30, 2002, interest rates on swaps of $8 million, $21 million and $6 million were 1.34%, 2.6% and 2.74%, respectively. These interest rate swaps reduced interest expense, resulting in a decrease in pretax loss of $3 million and less than $1 million for the nine months ended September 30, 2002 and 2001, respectively.

If the actual change in interest rates or commodities pricing is substantially different than expected, the net impact of interest rate risk or commodity risk on our cash flow may be materially different than that disclosed above.

We do not enter into any derivative financial instruments for speculative purposes.

Item 4. Controls and Procedures

(a) Evaluation of disclosure and procedures.

Our chief executive officer and chief financial officer have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) as of a date within 90 days before the filing of this quarterly report, (the “Evaluation Date”). Based on this review, they have concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to ensure that material information relating

to Olin Corporation and its consolidated subsidiaries would be disclosed on a timely basis in this report.

(b) Changes in internal controls.

We maintain a system of internal accounting controls that are designed to provide reasonable assurance that our books and records accurately reflect our transactions and that our established policies and procedures are followed. For the quarter ended September 30, 2002, there were no significant changes to our internal controls or in other factors that could significantly affect our internal controls.

Cautionary Statement Regarding Forward-Looking Statements
This quarterly report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to analyses and other information that are based on management’s beliefs, certain assumptions made by management, forecasts of future results, and current expectations, estimates and projections about the markets and economy in which we and our various segments operate. The statements contained in this quarterly report on Form 10-Q that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.

We have used the words “anticipate,” “intend,” “may,” “expect,” “believe,” “should,” “plan,” “will,” “estimate,” and variations of such words and similar expressions in this quarterly report to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward looking-statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.

The risks, uncertainties and assumptions that are involved in our forward-looking statements include but are not limited to:

	•	sensitivity to economic, business and market conditions in the United States and overseas, including economic instability or a downturn in the sectors served by us, such as automotive, electronics, coinage, telecommunications, ammunition, housing, vinyls and pulp and paper;

	•	extraordinary events, such as the attacks on the World Trade Center and the Pentagon that occurred on September 11, 2001 or war with one or more countries, including a possible conflict with Iraq which was the subject of a Congressional Resolution in the Fall of 2002;

	•	economic and industry downturns that result in diminished product demand and excess manufacturing capacity in any of our segments and that, in many cases, result in lower selling prices and profits;

	•	the cyclical nature of our operating results, particularly declines in average selling prices in the chlor alkali industry and the supply/demand balance for our products, including the impact of excess industry capacity or an imbalance in demand for our chlor alkali products;

	•	an increase in our indebtedness or higher-than-expected interest rates, affecting our ability to generate sufficient cash flow for debt service;

	•	unforeseen effects of competition;

	•	environmental costs and other expenditures in excess of those projected;

	•	higher-than-expected raw material and utility or transportation and/or logistics costs;

	•	the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of production hazards;

	•	unexpected additional taxes and related interest as the result of pending income tax audits; and

	•	the effects of a continued depressed stock market on the asset values and declining long-term interest rates on the liabilities in our pension plan.

	All of our forward-looking statements should be considered in light of these factors.

Part II - Other Information

Item 1.	Legal Proceedings.

		Not Applicable.

Item 2.	Changes in Securities and Use of Proceeds.

		Not Applicable.

Item 3.	Defaults Upon Senior Securities.

		Not Applicable.

Item 4.	Submission of Matters to a Vote of Security Holders.

The Company held its Special Meeting of Shareholders on September 25, 2002. At the meeting, shareholders approved the issuance of 0.6400 shares of Olin common stock for each share of Chase Industries Inc.’s common stock outstanding, in connection with the merger of Chase Industries Inc. and a wholly-owned subsidiary of Olin Corporation pursuant to the Agreement and Plan of Merger dated May 7, 2002, among Olin Corporation, Plumber Acquisition Corp. and Chase Industries Inc. Voting for the resolution approving the issuance of Olin common stock to stockholders of Chase in the merger of Chase and a subsidiary of Olin were 35,692,940 shares. Voting against were 782,094 shares. Abstaining were 472,969 shares. There were no broker nonvotes.

Item 5.	Other Information.

		Not Applicable.

Item 6.	Exhibits and Reports on Form 8-K.

	(a)	Exhibits

		10(h)	Form of Extension Letter dated September 26, 2002 relating to Executive Agreement.

		10(j)	1997 Stock Plan for Non-Employee Directors as amended effective July 25, 2002.

		12.	Computation of Ratio of Earnings to Fixed Charges (Unaudited).

		99.1	Certification Statement of Chief Executive Officer

	99.2	Certification Statement of Chief Financial Officer

(b)	Reports on Form 8-K

	Form 8-K filed August 14, 2002 furnishing the Statements Under Oath of Olin’s Chief Executive Officer and Chief Financial Officer which were filed with the Securities and Exchange Commission on August 13, 2002, pursuant to the SEC’s Order No. 4-460.

	Form 8-K filed September 27, 2002 announcing closing of Chase Industries Inc. merger and filing the related pro forma financial information.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	OLIN CORPORATION
	(Registrant)


By:		/s/ A. W. RUGGIERO

		Executive Vice President and Chief Financial Officer (Authorized Officer)

Date: November 13, 2002

CERTIFICATIONS

I, Joseph D. Rupp, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Olin Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 13, 2002	/s/ JOSEPH D. RUPP

	Joseph D. Rupp President and Chief Executive Officer

I, Anthony W. Ruggiero, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Olin Corporation;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

Date: November 13, 2002	/s/ ANTHONY W. RUGGIERO

	Anthony W. Ruggiero Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.		Description

10(h)		Form of Extension Letter dated September 26, 2002 relating to Executive Agreement.

10(j)		1997 Stock Plan for Non-Employee Directors as amended effective July 25, 2002.

12.		Computation of Ratio of Earnings to Fixed Charges (Unaudited).

99.1		Certification Statement of Chief Executive Officer

99.2		Certification Statement of Chief Financial Officer

EX-10.(H) 3 dex10h.htm FORM OF EXTENSION . LETTER. DATED 09/26/2002 FORM OF EXTENSION . LETTER. DATED 09/26/2002

Exhibit 10(h)

September 26, 2002

Name of Executive
Address of Executive

Re: Extension of Executive Agreement

Dear ________:

As you know, the Executive Agreement, dated as of [December 10, 1998]¹, between Olin Corporation and you (the “Executive Agreement”) is scheduled to expire on September 30, 2002. This letter will confirm that paragraph 3(a) of the Executive Agreement is hereby amended by substituting the phrase “December 31, 2002” for the phrase “September 30, 2002” each time it appears therein.

Except as specifically provided above, the terms and conditions of the Executive Agreement will continue to apply and remain in full force and effect. This letter agreement and any disputes arising under or related thereto shall be governed and construed in accordance with the laws of the Commonwealth of Virginia, without reference to its conflicts of law principles.

		Very truly yours,

		OLIN CORPORATION



		Name:
		Title:

Agreed and Accepted:



Name of Executive

¹ Enter applicable date, if different for some executives

EX-10.(J) 4 dex10j.htm 1997 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS 1997 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS

Exhibit 10(j)

OLIN CORPORATION
1997 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS

(As Amended Effective July 25, 2002)

Amendment adopted on July 25, 2002 is underlined.

1. Purpose. The purpose of the Olin Corporation 1997 Stock Plan for Non-employee Directors the (“Plan”) 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. The Plan is amended and restated to reflect the distribution to Olin’s shareholders of all of the outstanding shares of common stock of Arch Chemicals, Inc., effective as of the date of such distribution.

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.

	“Arch” means Arch Chemicals, Inc., a Virginia corporation and any successor.

	“Arch Common Stock” means shares of common stock of Arch, par value $1.00 per share.

	“Arch Director” means a non-employee director of the board of directors of Arch.

	“Arch Stock Account” means the Stock Account to which phantom shares of Arch Common Stock are credited.

	“Arch Directors’ Plan” means the Arch Chemicals, Inc. 1999 Stock Plan for Non-employee Directors.

	“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 of the Company or such subsidiary (or such plan’s related trust), 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.

	“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 second Thursday after the regularly scheduled board meeting in each calendar quarter (January, April, July and October) beginning April 2001.

	“Distribution” means the distribution of all outstanding shares of Arch Common Stock to the shareholders of the Company.

	“Distribution Date” means the dividend payment date fixed by the Board for the Distribution.

	“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, with respect to phantom shares of Common Stock or Arch Common Stock, the average of the high and the low price of a share of Common Stock or Arch

	Common Stock, as the case may be, as 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.

	“l934 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.

	“Olin Stock Account” means the Stock Account to which phantom shares of Common Stock are credited from time to time.

	“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 this Olin Corporation 1997 Stock Plan for Non-employee Directors as amended from time to time.

	“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; provided that a Non-employee Director will not be considered to have incurred a Retirement Date if he ceases to be a Non-employee Director to become an Arch Director.

	“Retirement Plan” means the Retirement Plan for Non-employee Directors of Olin Corporation as in effect on December 31, 1996.

	“Stock Account” means an account established under the Plan for a Non-employee Director to which shares of Common Stock and Arch Common Stock

have been or are to be credited in the form of phantom stock, which shall include the Olin Stock Account and the Arch Stock Account.

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, and again effective as of the Distribution Date.

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, on the second Thursday following the regularly scheduled January Board meeting each year, beginning with 2002, each Non-employee Director shall be credited with a number of shares of Common Stock with an aggregate Fair Market Value on such date equal to $24,000, rounded to the nearest 100 shares. To be entitled to such credit in any calendar year, a Non-employee Director must be serving as such on January 1 of such year; provided, however, that in the event a person becomes a Non-employee Director subsequent to January 1 of a calendar year, such Non-employee Director, on the Credit Date next 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 the number of shares issued to each other Non-employee Director on the second Thursday following the regularly scheduled January Board meeting of such year, multiplied by the number of whole calendar months remaining in such calendar year following the date he or she becomes a Non-employee Director. Actual receipt of shares shall be deferred and each eligible Non-employee Director shall receive a credit to his or her Olin 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 Olin Stock Account receipt of all or any portion of such shares to a date or dates on or following such Non-employee Director’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(i)) as soon as practicable following the date as of which such shares are awarded.

(b) Annual Retainer Stock Grant. Subject to the terms and conditions of the Plan, on the second Thursday following the regularly scheduled January board meeting of each year, beginning with 2002, each Non-employee Director who is such on January 1 of that year shall receive that number of shares (rounded up to the next whole share) of Common Stock having an aggregate Fair Market Value on the second Thursday

following the regularly scheduled January board meeting 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 Credit Date next 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 Credit Date 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 such Fair Market Value is calculated. 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 (or in the event of death, to his or her beneficiary designated pursuant to Section 6(i)) 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 Olin 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). 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 the second Thursday following the regularly scheduled January board meeting (or in the case of proration, when the annual stock retainer is to be paid or credited) a number of shares (rounded up to the next whole share in the event of a fractional share) 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 the second Thursday following the regularly scheduled January board meeting of such calendar year (or in the case of a Non-employee Director who becomes

such after January 1, on the Credit Date next 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 next following the meeting for which such director meeting fees have been earned 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) Deferral 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 the second Thursday following the regularly scheduled January Board meeting (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 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) Olin 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 Olin 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)(4).

	(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)(4).

	(4) Dividends and Interest. Each time a cash dividend is paid on Common Stock or Arch Common Stock, a Non-employee Director who has shares of such stock 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 Olin Stock Account or Arch Stock Account, as the case may be, on the record date for such dividend times the dividend paid per applicable share unless the director has elected to defer such dividend to his or her applicable Stock Account as provided herein. If the Non-employee Director has elected to defer such dividend, he or she shall receive a credit for such dividends on the dividend payment date to his or her Olin Stock Account or Arch Stock Account, as the case may be. 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 applicable Stock Account as of the record date for the dividend and dividing the product by the Fair Market Value per share of Common Stock or Arch Common Stock, as the case may be, 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.

	(5) Payouts. Cash Accounts and the Arch Stock Account will be paid out in cash and Olin Stock Accounts shall be paid out in shares of Common Stock unless the Non-employee Director elects at the time the payment is due to take the Olin Stock Account in cash. Cash amounts and certificates representing shares credited to the Olin 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 or Arch Common Stock into a Stock Account shall confer no rights upon such Non-employee Director, as a shareholder of the Company or of Arch 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 Olin 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 Olin Stock Account or Arch Stock Account by the higher of (i) the highest Fair Market Value of Common Stock or Arch Common Stock, as appropriate, 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 or Arch Common Stock, as appropriate, 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. As of October 2, 1997, 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 Olin 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 October 2, 1997.

(k) Adjustment for Distribution. Immediately prior to the Distribution, the terms of the phantom shares of Common Stock held in the Olin Stock Account of each Non-employee Director who will become an Arch Director shall be amended to provide that such shares shall be paid out in cash based on the Fair Market Value of such shares at the time of distribution to the Arch Director. As of the Distribution Date, the Arch Stock Account of each Non-employee Director on such date shall be credited with the number of shares of Arch Common Stock that the Non-employee Director would have received in the Distribution Date had the Non-employee Director owned directly the number of shares of Common Stock held in his or her Olin Stock Account. As of the Distribution Date, the Cash Account and Stock Account of each Arch Director (after giving effect to the adjustment described in this Section 6(k)) shall be transferred to the Arch Directors’ Plan provided that the Arch Director provides the Company with a release, acceptable to the Committee, waiving all rights to benefits under this Plan.

With respect to a Non-employee Director who does not become an Arch Director, shares credited to his or her Arch Stock Account shall be treated as follows: (i) to the extent such shares represent a dividend on shares of Common Stock credited pursuant to paragraph 6(a) of the Plan (or shares arising from dividend equivalents thereon), such shares shall be deemed credited pursuant to paragraph 6(a) of the Plan, (ii) to the extent such shares represent a dividend on shares of Common Stock credited pursuant to paragraph 6(b) of the Plan (or shares arising from dividend equivalents thereon), such shares shall be deemed credited pursuant to paragraph 6(b) of the Plan, and (iii) to the extent such shares represent a dividend on shares of Common Stock credited under paragraph 6(c) of the Plan (or shares arising from dividend equivalents thereon), such shares shall be deemed credited pursuant to paragraph 6(c) of the Plan.

(l) Stock Account Transfers. A Non-employee Director may elect from time to time to transfer all or a portion (in 25% increments) of his or her Arch Stock Account to his or her Olin Stock Account. The amount of phantom shares of Common Stock to be credited to a Non-employee Director’s Olin Stock Account shall be equal to the number of shares of Common Stock that could be purchased if the number of

phantom shares of Arch Common Stock in his or her Arch Stock Account being transferred were sold and the proceeds reinvested in Common Stock based on the Fair Market Value of each. Except as provided in Section 6(f)(4) with respect to dividends or in Section 8, no additional contributions or additions may be made to a Non-employee Director’s Arch Stock Account after the Distribution Date.

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 250,000. Such total number of shares may consist, in whole or in part, of authorized but unissued shares. The foregoing 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 of Olin Common Stock or Arch Common Stock, as the case may be, 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 Arch Common Stock or 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 an exemption from such Section 16(b), 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 an exemption.

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-12 5 dex12.htm COMPUTATION OF RATIO OF EARNINGS (UNAUDITED) COMPUTATION OF RATIO OF EARNINGS (UNAUDITED)

Exhibit 12

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

Computation of Ratio of Earnings to Fixed Charges (Unaudited)
(In millions)

			Nine Months Ended September 30,

			2002			2001

Earnings:
Loss before taxes			$	(24.6	)	$	(17.3	)
Add (deduct):
	Dividends received from non-consolidated affiliates			—			0.4
	Amortization of capitalized interest			0.2			0.2
	Capitalized interest			—			(0.7	)
	Fixed charges as described below			28.3			22.1

		Total	$	3.9			4.7

Fixed Charges:
	Interest expensed and capitalized		$	20.4		$	13.5
	Estimated interest factor in rent expense			7.9			8.6

		Total	$	28.3		$	22.1

Ratio of earnings to fixed charges (1)				—			—

(1)	Income (loss) before taxes was insufficient to cover fixed charges by approximately $24.4 million and $17.4 million for the nine months ended September 30, 2002 and September 30, 2001, respectively.

EX-99.1 6 dex991.htm CERTIFICATION STATEMENT OF CHIEF EXECUTIVE OFFICER CERTIFICATION STATEMENT OF CHIEF EXECUTIVE OFFICER

Exhibit 99.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Olin Corporation (the "Company") on Form 10-Q for the period ended September 30, 2002 as filed with the Securities and Exchange Commission (the "Report"), I, Joseph D. Rupp, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ JOSEPH D. RUPP

Signature Joseph D. Rupp President and Chief Executive Officer

Dated: November 13, 2002

EX-99.2 7 dex992.htm CERTIFICATION STATEMENT OF CHIEF FINANCIAL OFFICER CERTIFICATION STATEMENT OF CHIEF FINANCIAL OFFICER

Exhibit 99.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Olin Corporation (the "Company") on Form 10-Q for the period ended September 30, 2002 as filed with the Securities and Exchange Commission (the "Report"), I, Anthony W. Ruggiero, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ ANTHONY W. RUGGIERO

Signature Anthony W. Ruggiero Executive Vice President and Chief Financial Officer

Dated: November 13, 2002

-----END PRIVACY-ENHANCED MESSAGE-----