-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, kQhZzh0DP5rJ5j52l283T/sXToYheU/dn29+ARDJZZVLyFI8j2Z/i1EbPbseE3ax GWuLsSt8eKa+vGgZzEge1Q== 0000950130-95-000463.txt : 19950615 0000950130-95-000463.hdr.sgml : 19950615 ACCESSION NUMBER: 0000950130-95-000463 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950310 SROS: CSE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLIN CORP CENTRAL INDEX KEY: 0000074303 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 131872319 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-01070 FILM NUMBER: 95520098 BUSINESS ADDRESS: STREET 1: 120 LONG RIDGE RD CITY: STAMFORD STATE: CT ZIP: 06904-1355 BUSINESS PHONE: 2033562000 FORMER COMPANY: FORMER CONFORMED NAME: OLIN MATHIESON CHEMICAL CORP DATE OF NAME CHANGE: 19691008 10-K 1 FORM 10-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-K (Mark One) [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31,1994 OR [_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 1-1070 OLIN CORPORATION (Exact name of registrant as specified in its charter) Virginia 13-1872319 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 120 Long Ridge Road Stamford, 06904 (Zip Code) Connecticut (Address of principal executive offices) Registrant's telephone number, including area code: (203) 356-2000 ---------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- ----------------------- Common Stock New York Stock Exchange Chicago Stock Exchange Pacific Stock Exchange Common Stock Purchase Rights New York Stock Exchange Chicago Stock Exchange Pacific Stock Exchange
---------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE ---------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No . Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] ---------------- As of January 31, 1995, the aggregate market value of registrant's voting stock held by non-affiliates of registrant was approximately $1,137,958,000. The appraised value of the ESOP Preferred Shares as indicated in the most recent independent appraiser's quarterly report was used in determining the market value of such Shares. ---------------- As of January 31, 1995, 21,518,831 shares of the registrant's common stock were outstanding. ---------------- DOCUMENTS INCORPORATED BY REFERENCE PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED BY REFERENCE IN THIS FORM 10-K AS INDICATED HEREIN:
PART OF 10-K DOCUMENT INTO WHICH INCORPORATED -------- ----------------------- 1994 Annual Report to Shareholders of Olin Parts I, II, and IV Proxy Statement relating to Olin's 1995 Part III Annual Meeting of Shareholders
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS GENERAL Olin Corporation is a Virginia corporation, incorporated in 1892, having its principal executive offices in Stamford, Connecticut. It is a manufacturer concentrated in chemicals, metals, defense-related products and services, and ammunition. The chemicals segment is divided into three areas or divisions: Chemicals, Chlor-Alkali and Electronic Materials. Chemicals includes flexible urethanes, pool chemicals, biocides, acids, performance urethanes, and surfactants and fluids. Chlor-alkali includes chlor-alkali products, sodium hydrosulfite and high strength bleach products. Electronic Materials includes image-forming and related specialty chemicals and electronic interconnect materials and services. Products in the metals segment include copper and copper alloy sheet, strip, rod, wire, tube and fabricated parts and stainless steel strip. The defense and ammunition segment includes small, medium and large caliber military ammunition, sporting ammunition and advanced technology products and services for aerospace and defense customers. Information as to the sales and assets attributable to each of Olin's industry segments for each of the last ten fiscal years appears on page 19 of the 1994 Annual Report to Shareholders of Olin ("Shareholders Report") and in Exhibit 13 hereto. Such information with respect to the last three fiscal years is incorporated by reference in this Report.* Information as to operating income of Olin's industry segments for each of the last three fiscal years contained in the Note "Segment Information" of the Notes to Financial Statements on page 28 of the Shareholders Report and in Exhibit 13 hereto is incorporated herein by reference. The term "Olin" as used herein means Olin Corporation and its subsidiaries unless the context indicates otherwise. - -------- * Except for material contained in Exhibit 13, the Shareholders Report is not "filed" as part of this Report. 1 PRODUCTS AND SERVICES The following is a list of the principal and certain other products and services provided by Olin and its affiliates as of December 31, 1994 within each industry segment. Principal products on the basis of annual revenues are highlighted in bold face. CHEMICALS
MAJOR RAW MATERIALS PRODUCT LINE & COMPONENTS FOR OR DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES ------------ ---------------------------- ----------------------- ---------------------------- --------------------- Chlor-alkali Chlor-alkali CHLORINE/CAUSTIC SODA Pulp & paper Augusta, GA salt, electricity processing, chemical Charleston, TN manufacturing, water McIntosh, AL purification, Niagara Falls, NY (Niachlor) manufacture of vinyl chloride, bleach - ------------------------------------------------------------------------------------------------------------------------------------ Other Chlor-alkali Sodium Hydrosulfite Paper, textile & clay Augusta, GA caustic soda, Products bleaching Charleston, TN sulfuric acid, Salto, Brazil sulfur dioxide ------------------------------------------------------------------------------------------------------------------------ HyPure(TM) products Industrial & Charleston, TN chlorine, caustic institutional cleaners, soda textile bleaching - ------------------------------------------------------------------------------------------------------------------------------------ Chemicals Urethanes TOLUENE DIISOCYANATE Lake Charles, LA di-nitrotoluene, (TDI) Intermediate for Fukuoka, Japan (Kyodo chlorine, ammonia, flexible foam used in TDI Limited Company) natural gas ------------------------ furniture, -------------------------------------------------------- Flexible polyols bedding, carpet Brandenburg, KY propylene oxide, underlay, Punta Camacho, Venezuela ethylene oxide transportation, (Etoxyl, C.A.) packaging Ibaraki-ken, Japan (Asahi-Olin Ltd.) ---------------------------------------------------------------------------------------------------------------------- Urethane systems Packaging & insulation Ibaraki-ken, Japan polyols, methylene (Asahi-Olin Ltd.) diphenyl diisocyanate Salto, Brazil - ------------------------------------------------------------------------------------------------------------------------------------ Industrial CDB(R)** Chlorinated Sanitizers for S. Charleston, WV** chlorine, caustic Isocyanurates isocyanurates industrial & household Salto, Brazil soda, urea cleaners --------------------------------------------------------------------------------------------------------------- Virgin & regenerated Petroleum refining, Beaumont, TX sulfur, oxygen, sulfuric acid, nitric acid agricultural chemicals Lake Charles, LA ammonia Shreveport, LA - ------------------------------------------------------------------------------------------------------------------------------------ Pool Chemicals HTH(R), SOCK-IT(R), Residential & Charleston, TN chlorine, lime, PULSAR(R), SUPER SOCK-IT(R), commercial pool Igarassu, Brazil (Nordesclor caustic soda DURATION(R) & CCH(R) sanitizing, water S.A.) CALCIUM HYPOCHLORITE purification Kempton Park, S. Africa (Aquachlor (Proprietary) Ltd.) Brisbane, Australia --------------------------------------------------------------------------------------------------------------- PACE(R), SUN(R)** Residential & Anaheim, CA chlorine, caustic CHLORINATED commercial pool Livonia, MI** soda, urea ISOCYANURATES sanitizing, water S. Charleston, WV** purification Amboise, France - ------------------------------------------------------------------------------------------------------------------------------------ Performance Aliphatic isocyanates Coatings, elastomers, Lake Charles, LA chlorine, specialty Urethanes adhesives & sealants aliphatic amines --------------------------------------------------------------------------------------------------------------- Specialty polyols Elastomers, adhesives, Brandenburg, KY propylene oxide, coatings, sealants & Ibaraki-ken, Japan ethylene oxide rigid foam (Asahi-Olin Ltd.)
- -------------------------------------------------------------------------------- * If site is not operated by Olin or a majority-owned, direct or indirect subsidiary, name of joint venture, affiliate or operator is indicated. Sites manufacture, distribute or market one or more of the identified products or services. ** Subject to sale. See "Recent Developments." 2 CHEMICALS (CONT'D)
MAJOR RAW MATERIALS PRODUCT LINE PRODUCTS PLANTS & COMPONENTS FOR OR DIVISION & SERVICES MAJOR END-USES & FACILITIES* PRODUCTS/SERVICES ------------ ------------------------- ------------------------ -------------------------------- ------------------- Hydrazine Hydrazine solutions & Intermediate in blowing Lake Charles, LA chlorine, caustic hydrazine-based agents & agricultural McIntosh, AL soda, ammonia, propellants chemicals; boiler water dimethylamine, treatment, rocket & monomethylamine satellite propellants - ----------------------------------------------------------------------------------------------------------------------- Biocides Omadine(R) Antidandruff agents Rochester, NY pyridine, zinc IPBC Biocide, in shampoo, preservative Swords, Ireland salts, chlorine Triadine(R) Biocide, in metal working fluids, Zinc Omadine(R) coatings, Biocide & Sodium adhesives, plastics, an- Omadine(R) Biocide tifouling agent in marine paints ----------------------------------------------------------------------------------------------------------------- Custom chemicals Chemical intermediates Rochester, NY manufacturing - ----------------------------------------------------------------------------------------------------------------------- Organics Anionic & nonionic Household, industrial & Brandenburg, KY ethylene oxide, surfactants, glycols, institutional cleaners, Punta Camacho, propylene oxide glycol ethers, fluids basestocks for water Venezuela based metal- working/hydraulic fluids - ----------------------------------------------------------------------------------------------------------------------- Electronic Materials Electronic High purity acids & Used as process aids in Chandler, AZ various acids Chemicals solvents, dopants, semi-conductor Nazareth, PA & solvents, vapor deposition manufacturing Seward, IL ammonia-based chemicals, specialty etchants etchants ----------------------------------------------------------------------------------------------------------------- Photoresists & polyimides Used as semiconductor Brandenburg, KY diazo compounds, components and/or as East Providence, RI (OCG rubber polymers, process aids in Microelectronic novolak polymers, semiconductor Materials, Inc.) solvents, manufacturing Tempe, AZ (OCG photoinitiators, Microelectronic polyimide polymers Materials, Inc.) Zwijndrecht, Belgium (OCG Microelectronic Materials N.V.) Shizuoka, Japan (Fuji-Hunt Electronics Technology Co., Ltd.) Basle, Switzerland (OCG Microelectronic Materials AG) ----------------------------------------------------------------------------------------------------------------- Dry liquid toner systems Used in electrostatic Berea, OH resins, printers and offset Kallo, Belgium hydrocarbons platemaking systems
- -------------------------------------------------------------------------------- * If site is not operated by Olin or a majority-owned, direct or indirect subsidiary, name of joint venture, affiliate or operator is indicated. Sites manufacture, distribute or market one or more of the identified products or services. 3 CHEMICALS (CONT'D)
MAJOR RAW MATERIALS PRODUCT LINE PRODUCTS PLANTS & COMPONENTS FOR OR DIVISION & SERVICES MAJOR END-USES & FACILITIES* PRODUCTS/SERVICES ------------ ------------------------ ------------------------ ------------------------- --------------------- Interconnect High performance Integrated circuits & Manteca, CA specialty aluminum Materials integrated circuit multi-chip modules for alloys & specialty packaging materials computer, adhesives telecommunications, instrumentation & automotive products ------------------------------------------------------------------------------------------------------------------ High performance, All industry market New Bedford, MA all metals, metal high reliability, segments; computer, (Aegis, Inc.) alloys, metal hermetic metal communications, medical, matrix composites, packages for the industrial, special alloys and microelectronics instrumentation, glasses industry automotive, consumer, aerospace and military ----------------------------------------------------------------------------------------------------------------------- METALS Olin Brass COPPER & COPPER ALLOY Electronic connectors, Bryan, OH copper, zinc & SHEET & STRIP lead frames, electrical East Alton, IL other nonferrous (STANDARD & HIGH components, Indianapolis, IN metals PERFORMANCE) communications, Waterbury, CT automotive, builders' Iwata, Japan (Yamaha-Olin hardware, coinage Metal Corporation) ------------------------------------------------------------------------------------------------------------------ Network of metals Electronic connectors, Alliance, OH copper & copper alloy service centers electrical components, Caguas, PR sheet, strip, rod, communications, Carol Stream, IL tube & steel & automotive, builders' Allentown, PA aluminum strip hardware, household Warwick, RI products Watertown, CT Yorba Linda, CA ------------------------------------------------------------------------------------------------------------------ Beryllium copper strip High performance East Alton, IL beryllium copper electronic applications ------------------------------------------------------------------------------------------------------------------ POSIT-BOND(R) CLAD METAL Coinage strip & blanks East Alton, IL cupronickel, copper & aluminum ------------------------------------------------------------------------------------------------------------------ ROLLED COPPER FOIL, Printed circuit boards, Waterbury, CT copper, zinc COPPERBOND(R) FOIL, electrical & electronic, & other nonferrous STAINLESS STEEL STRIP automotive metals, stainless steel ------------------------------------------------------------------------------------------------------------------ COPPER ALLOY SEAMLESS Utility condensers, Cuba, MO copper, zinc & other & WELDED TUBE industrial heat Indianapolis, IN nonferrous metals exchangers, refrigeration & air conditioning, builders' hardware, automotive ------------------------------------------------------------------------------------------------------------------ Fabricated products Builders' hardware, East Alton, IL brass & stainless cartridge cases, shaped Coventry, U.K. steel strip charge cones, (Techniche Olin Limited) transportation, household & recreational products ------------------------------------------------------------------------------------------------------------------ Copper & copper alloy Fasteners, electrical Indianapolis, IN copper, zinc & other rod & wire connectors, nonferrous metals transportation, plumbing & builders' hardware
- -------------------------------------------------------------------------------- * If site is not operated by Olin or a majority-owned, direct or indirect subsidiary, name of joint venture, affiliate or operator is indicated. Sites manufacture, distribute or market one or more of the identified products or services. 4 DEFENSE AND AMMUNITION
MAJOR RAW MATERIALS PRODUCT LINE PRODUCTS PLANTS & COMPONENTS FOR OR DIVISION & SERVICES MAJOR END-USES & FACILITIES* PRODUCTS/SERVICES ------------ ------------------------ ------------------------ -------------------- --------------------------- Ordnance LARGE CALIBER MILITARY Used by tanks & Marion, IL various metals, AMMUNITION, PROJECTILES artillery Red Lion, PA propellants, & COMPONENTS St. Marks, FL sub-contracted St. Petersburg, FL components ------------------------------------------------------------------------------------------------------------ MEDIUM CALIBER MILITARY Used by ground Downey, CA Ball Powder(R) propellant, AMMUNITION & COMPONENTS vehicles, ships, Marion, IL explosives, various metals, helicopters & aircraft sub-contracted components ------------------------------------------------------------------------------------------------------------ BALL POWDER(R) Small caliber commercial St. Marks, FL nitrocellulose PROPELLANT, EXPLOSIVES ammunition, small, & research & development medium & large caliber for propulsion systems military ammunition ------------------------------------------------------------------------------------------------------------ Demilitarization of Contracts for disposal Marion, IL Government supplied medium & large caliber of U.S. Government St. Petersburg, FL ammunition & rocket ammunition & rocket surplus ammunition & motors motors rocket motors ------------------------------------------------------------------------------------------------------------ Government-owned Maintenance of U.S. Army Baraboo, WI sub-contracted & arsenal operations laid-away production government-supplied (GOCO) plant components ------------------------------------------------------------------------------------------------------------ Gas generators Specialty solid- Marion, IL various metals, solid propellant gas propellant ingredients generators for missiles & subcontracted & aircraft components - ------------------------------------------------------------------------------------------------------------------ Aerospace Pulsed power systems Pulsed high voltage gen- San Leandro, CA sub-contracted erators, nuclear radia- components, tion simulators, accel- including capacitors erators, high frequency modulators, military hardware survivability assessment, high power microwave systems, flash x-ray products ------------------------------------------------------------------------------------------------------------ Anti-armor systems Design, development & San Leandro, CA various metals, testing of advanced Tracy, CA sub-contracted antiarmor warhead sys- Lucerne, Switzerland components, explosive tems for various anti- ingredients tank missiles; volume production of missile- body metal parts; load, assembly & pack of vari- ous explosive devices ------------------------------------------------------------------------------------------------------------ Low-voltage power Design, development, Redmond, WA electronic piece conditioning & test & production of parts, printed controlling devices; aircraft, missile, wireboards, formed digital test equipment; spacecraft, shipboard & metal parts airborne electronic van-mounted power products equipment & control devices for military & commercial applications; design, development, test & production of microprocessor-based stores test equipment for military aircraft
- -------------------------------------------------------------------------------- * If site is not operated by Olin or a majority-owned, direct or indirect subsidiary, name of joint venture, affiliate or operator is indicated. Sites manufacture, distribute or market one or more of the identified products or services. 5 DEFENSE AND AMMUNITION (CONT'D)
MAJOR RAW MATERIALS PRODUCT LINE PRODUCTS PLANTS & COMPONENTS FOR OR DIVISION & SERVICES MAJOR END-USES & FACILITIES* PRODUCTS/SERVICES ------------ ------------------------ ------------------------ ------------------ ----------------------- Aerospace Hydrazine rocket Directional control Moses Lake, WA various metals, (continued) engines; advanced rockets & propulsion Redmond, WA sub-contracted propulsion systems & systems for satellite & components, components; inflation space vehicles, launch hydrazine liquid systems; specialty vehicles, tactical propellant, ammonium solid-propellant missiles & projectiles; nitrate-, sodium devices specialty solid- azide- and non-sodium propellant gas azide based solid generator-based devices propellant for munitions ingredients dispensing, fire suppression, flotation & other inflation systems - ------------------------------------------------------------------------------------------------------------- Winchester(R) WINCHESTER(R) SPORTING Hunters & recreational East Alton, IL brass, lead, steel, AMMUNITION (SHOT- shooters, law Geelong, Australia plastic, Ball Powder(R) SHELLS, SMALL CALIBER enforcement agencies propellant, CENTERFIRE & explosives RIMFIRE AMMUNITION) ------------------------------------------------------------------------------------------------------- Small caliber military Infantry and mounted East Alton, IL brass, lead, Ball ammunition weapons Powder(R) propellant, explosives ------------------------------------------------------------------------------------------------------- Government-owned Maintenance and Independence, MO brass, lead, Ball arsenal operation (GOCO) operation of U.S. Army Powder(R) propellant, small caliber military explosives, ammunition production government supplied plant components ------------------------------------------------------------------------------------------------------- Industrial products (8 Maintenance applications East Alton, IL brass, lead, gauge loads & powder- in power & concrete Geelong, Australia plastic, Ball actuated tool loads) industries, powder- Powder(R) propellant, actuated tools in explosives construction industry
- -------------------------------------------------------------------------------- * If site is not operated by Olin or a majority-owned, direct or indirect subsidiary, name of joint venture, affiliate or operator is indicated. Sites manufacture, distribute or market one or more of the identified products or services. 6 RECENT DEVELOPMENTS In April 1994, Olin acquired the medium caliber ammunition business of GenCorp's Aerojet--General Corporation's Ordnance Division. The acquisition expanded Olin's medium caliber ammunition family and positioned Olin with a complete line of improved 20MM, 25MM and 30MM ammunition as well as air dispensed munitions products. In May 1994, Olin issued approximately 2.2 million shares of its common stock in an underwritten public offering at $46 per share. The net proceeds of the offering were used to fund the aforementioned acquisition and to retire short term debt. In August 1994, Olin sold its conductive materials business to Acheson Industries, including Olin's manufacturing facility in Ontario, California. This business provided electrically conductive inks and coatings for membrane switches and circuitry used in the electronics industry. In December 1994, Olin sold its trichloroisocyanurate production facility in Lake Charles, Louisiana to BioLab Inc., a subsidiary of Great Lakes Chemical Corp. In February 1995, Olin signed an agreement to sell its isocyanurate plant at South Charleston, West Virginia and its Livonia, Michigan repackaging facility to subsidiaries of Israel Chemicals Ltd. Previously, Olin entered into an agreement to sell to Aqua Clear Industries, Inc. of Watervliet, New York, the Sun(R) brand of swimming pool chemicals. Olin is required by an order of the Federal Trade Commission (FTC) more fully discussed in Item 3(c) of this Form 10K, to divest itself of these assets. These sales are subject to the approval of the FTC, among other things. On March 1, 1995, the 2.76 million shares of Olin's Series A Conversion Preferred Stock (PERCS(R)) converted into shares of Olin's Common Stock on a one-for-one basis. INTERNATIONAL OPERATIONS Olin has sales offices and subsidiaries in various countries which support the worldwide export of products from the United States as well as overseas production facilities. In addition, Olin has manufacturing interests, both direct and through joint ventures, in several foreign countries. An Olin subsidiary in Ireland manufactures biocides for personal care and industrial applications; a Brazilian subsidiary manufactures urethane systems and Reductone(R) sodium hydrosulfite. An electronic materials subsidiary located in Belgium packages toners which are marketed throughout Europe. Hydrochim, S.A., a wholly-owned subsidiary, is a French isocyanurate repacking operation. Etoxyl, C.A., a Venezuelan subsidiary, manufactures urethane polyols and other specialty chemicals. OCG Microelectronic Materials, a group of companies owned by Ciba-Geigy Limited and Olin, markets photoresists, polyimides and other image forming chemicals throughout Europe. A joint venture of OCG Microelectronic Materials, Inc. and Fuji Photo Film Co., Ltd. manufactures photoresists in Japan and markets them throughout the Far East. Nordesclor S.A., a joint venture with S.A. Industrias Votorantim, a Brazilian company, manufactures calcium hypochlorite. Through a joint venture with Sentrachem Limited, Olin has an interest in a plant in South Africa for the production of HTH(R) pool chemicals. Olin has an interest in a plant in Japan for the production of urethane polyols and other specialty chemicals through a joint venture with Asahi Glass Company Ltd. Olin also has an interest in a plant in Venezuela for the production of ethylene oxide and ethylene glycol through a joint venture with Corimon, C.A., S.A.C.A., Petroquimica de Venezuela S.A. and the International Finance Corporation. A joint venture of Olin and Asahi Glass Company Ltd. has an interest in a TDI production plant in Japan with Mitsui Toatsu. 7 Yamaha-Olin Metal Corporation, a joint venture with Yamaha Corporation, manufactures high-performance copper alloys in Japan for sale to the electronics industry throughout the Far East. Techniche Olin Limited, a joint venture with a U.K. company, manufactures shaped charge cones in Coventry, England and markets them to prime contractors for inclusion in armor piercing munitions for certain West European countries. An Olin subsidiary loads and packs sporting and industrial ammunition in Australia. The geographic segment data contained in the Note "Segment Information" of the Notes to Financial Statements on page 28 of the Shareholders Report and Exhibit 13 hereto are incorporated by reference in this Report. CUSTOMERS AND DISTRIBUTION During 1994, no single nongovernmental customer accounted for more than 1.5% of Olin's total consolidated sales and U.S. government sales accounted for 14% of Olin's total consolidated sales. Products which Olin sells to industrial or commercial users or distributors for use in the production of other products constitute a major part of Olin's total sales. Some of its products, such as pool chemicals, sporting ammunition and brass, are sold to a large number of users or distributors, while others, such as certain industrial chemicals, are sold in substantial quantities to a relatively small number of industrial users. Most of Olin's products and services are marketed primarily through its sales force and sold directly to various industrial customers, the U.S. Government and its prime contractors, to wholesalers and other distributors. Chemicals. Principal customers of Olin's chemicals products include the pulp and paper industries, vinyl chloride manufacturers, household and industrial cleaner suppliers, municipal and industrial wastewater treatment companies, specialty chemical manufacturers, flexible and rigid foam suppliers, automotive companies, packaging suppliers, the refrigeration industry, manufacturers of adhesives, coatings, elastomers and sealants, suppliers of various consumer products including shampoos and swimming pool sanitizers, semiconductor manufacturers, non-impact computer printer manufacturers and defense contractors. Principal customers of Olin's interconnect materials business are suppliers to semiconductor manufacturers and major computer and telecommunications manufacturers. Metals. Principal customers of Olin's copper and copper alloy strip, sheet, rod, wire and seamless and welded tube include producers of electrical and electronic equipment, builders' hardware and appliances, the plumbing, automotive and air-conditioning industries and manufacturers of a variety of consumer goods. Olin manufactures cartridge brass for its ammunition business and for other ammunition makers. Olin also serves numerous high-technology markets through a thin-gauge reroll operation that produces stainless steels, high-temperature alloys and glass sealing alloys, in addition to copper and copper alloys. Posit-Bond(R) clad metal has made Olin a major supplier of metal to the U.S. Mint. Olin also sells various alloys to foreign governments for coinage purposes. The metal products business is also focused on the electronics market, providing high performance and high quality materials needed by the electronics industry and other advanced technology customers. These materials include Olin- developed proprietary alloys and Copperbond(TM) treated copper foil marketed to the printed circuit industry. Fabricated products are principally sold to ammunition manufacturers, the U.S. Armed Forces, building product suppliers, household product manufacturers and automotive manufacturers. 8 Defense and Ammunition. The principal customers of the Ordnance division are the U.S. Department of Defense and certain foreign governments. Principal customers of the Aerospace division are the U.S. Government, major defense contractors, aerospace companies, telecommunications companies and certain foreign governments. The principal users of the Winchester division's products are recreational shooters, hunters, law enforcement agencies, the power and concrete industries, the construction industry, the U.S. Armed Forces and certain foreign governments. GOVERNMENT SALES U.S. Government sales were approximately $379 million in 1994, $354 million in 1993 and $409 million in 1992. Approximately 91% of such 1994 sales were to the Department of Defense or agencies thereof. In addition, Olin operates certain Government owned plants, including the Lake City Army Ammunition Plant in Independence, Missouri, for which Olin receives fee income. Products and services sold to the Government, to Government contractors or friendly foreign governments include ammunition, propellant and specialty defense products and services. Olin also manufactures and blends hydrazine based fuels for the Government for use as a propellant for the Space Shuttle, satellites and expendable launch vehicles. The U.S. Mint purchases cupronickel for nickels and Posit-Bond(R) clad metal for other U.S. coins. Ammunition cups and strip are sold to Government contractors for ultimate delivery to the Government. Olin's Government business is performed under both cost reimbursement and fixed price contracts. Cost reimbursement contracts provide for the reimbursement of allowable costs plus the payment of a fixed fee, an incentive fee based upon actual performance as compared to contractual targets, or an award fee based upon unilateral evaluation by the Government. Olin's fixed price contracts are either firm fixed price contracts or incentive contracts under which Olin shares certain savings or overruns with the Government. Government contracts generally have provisions for audit by the Government, and cost reimbursement contracts have limitations on reimbursable costs. Contracts may be terminated at the Government's convenience upon payment of certain termination costs and, in some cases, profits. Because several of its divisions engage in government contracting activities and make sales to the U.S. Government, Olin is subject to extensive and complex U. S. government procurement laws and regulations. These laws and regulations provide for government audits and reviews of contract procurement, performance and administration. Failure to comply, even inadvertently, with these laws and regulations and with laws governing the export of munitions and other controlled products and commodities, could subject Olin or one or more of its businesses to civil and criminal penalties, and under certain circumstances, suspension and debarment from future government contracts for a specified period of time. Changes in the strategic direction of defense spending, the timing of defense procurements and specific defense program appropriation decisions may adversely affect the performance of the Defense and Ammunition segment and Olin in future years, including its income, liquidity, capital resources and financial condition. The precise impact of these decisions will depend upon the timing and size of changes and decisions, and Olin's ability to mitigate their impact with new business, business consolidations or cost reductions. Olin currently provides services to the U.S. Government in facilities management and ordnance demilitarization and continues to pursue other business areas. In view of continuing uncertainty regarding the strategy and priorities of the Department of Defense, the historical financial information of the Defense and Ammunition segment and, to a lesser extent, of Olin, may not be indicative of future performance. 9 COMPETITION Olin is in active competition with businesses producing the same or similar products, as well as, in some instances, with businesses producing different products designed for the same uses. With respect to certain product groups, such as ammunition and copper alloys, and with respect to certain individual products, such as pool chemicals, chlor-alkali and urethane products, Olin is one of the largest manufacturers or distributors in the United States. With respect to its many other products, Olin's share of total domestic sales varies greatly. EMPLOYEES As of December 31, 1994, Olin had approximately 12,800 employees (excluding approximately 1,300 employees at Government owned contractor operated facilities), approximately 12,300 of whom were working in the United States and approximately 500 of whom were working in foreign countries. A majority of the hourly paid employees are represented, for purposes of collective bargaining, by various labor unions. Some labor contracts extend for as long as four years, but during each year new agreements must be negotiated in a number of Olin's plants. One major labor contract was renewed in 1994. Five major collective bargaining agreements at its East Alton, Illinois facility will expire in 1995. While relations between Olin and its employees and their various representatives are generally considered satisfactory, there can be no assurance that new labor contracts can be concluded without work stoppages. No major work stoppages have occurred in the last three years. RESEARCH ACTIVITIES; PATENTS Olin's research activities are conducted both on a product group and corporate-wide basis at a number of facilities. Company sponsored research expenditures were approximately $35 million during 1994, $41 million during 1993 and $39 million during 1992. Customer sponsored research expenditures (primarily U.S. Government) were approximately $79 million in 1994, $88 million in 1993 and $84 million in 1992. Olin owns, or is licensed under, a number of patents, patent applications and trade secrets covering its products and processes. Olin believes that, in the aggregate, the rights under such patents and licenses are important to its operations, but does not consider any patent or license or group thereof related to a specific process or product to be of material importance when viewed from the standpoint of Olin's total business. RAW MATERIALS AND ENERGY Olin purchases the major portion of its raw material requirements. The principal basic raw materials required by Olin for its production of chemicals are various hydrocarbons, salt, lime, electricity, propylene oxide, ethylene oxide, natural gas, toluene, sulfur, ammonia and urea. Copper, zinc and various other nonferrous metals are required for the metals business. Lead, brass and propellant are the principal raw materials used in the ammunition business. Olin's principal basic raw materials are typically purchased pursuant to multiyear contracts. In addition, Olin uses many chemicals produced in its own operations as raw materials, intermediates or processing agents in the production of various other chemical products. In the manufacture of ammunition, Olin uses a substantial percentage of its own output of smokeless powder and cartridge brass. Additional information with respect to specific raw materials is set forth in the table above under the caption entitled "Products and Services." Electricity is the predominant energy source for Olin's manufacturing facilities. Most of Olin's facilities are served by utilities which generate electricity principally from coal and nuclear power. 10 ENVIRONMENTAL AND TOXIC SUBSTANCES CONTROLS The establishment and implementation of federal, state and local standards to regulate air, water and land quality has affected and will continue to affect substantially all of Olin's plants. Facilities and equipment to protect the environment do not inherently produce any significant increase in product capacity, efficiency or revenue, and their operation generally entails additional expense and energy consumption. Federal legislation providing for regulation of the manufacture, transportation, use and disposal of hazardous and toxic substances has imposed additional regulatory requirements on industry, particularly the chemicals industry. In addition, implementation of environmental laws, such as the Resource Conservation and Recovery Act and the Clean Air Act, has required and will continue to require new capital expenditures and will increase operating costs. Olin employs waste minimization and pollution prevention programs at its manufacturing sites. In order to help finance the cleanup of waste disposal sites, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 ("Superfund"), imposes a tax on the sale of various chemicals, including chlorine, caustic and certain other chemicals produced by Olin, and on the disposal of certain hazardous wastes. Olin is party to various governmental and private environmental actions associated with waste disposal sites and manufacturing facilities. Associated costs of investigatory and remedial activities are provided for in accordance with generally accepted accounting principles governing probability and the ability to reasonably estimate future costs. Environmental provisions charged to income amounted to $17 million in 1994, $85 million in 1993 and $17 million in 1992. The significant increase in 1993 resulted from expanded volumes of contaminants uncovered while remediating a particular site, at which excavation is now complete, combined with the availability of more definitive data from progressing investigatory activities concerning both the nature and extent of contamination and remediation alternatives at other sites. Charges to income for investigatory and remedial efforts were material to operating results in 1994, 1993 and 1992 and may be material to net income in future years. Cash outlays for environmental-related activities totalled $82 million in 1994 as compared with $93 million in 1993 and $103 million in 1992. During 1994, $45 million of these cash outlays were directed towards normal plant operations for the disposal of waste and the installation, operation and maintenance of pollution control equipment and facilities to ensure compliance with mandated and voluntarily imposed environmental quality standards. Comparable spending for 1993 and 1992 was $49 million and $62 million, respectively. Included in the costs for normal plant operations were environmental capital expenditures for pollution control equipment and pollution abatement facilities. Spending for environmental capital expenditures was $11 million in both 1994 and 1993 and $25 million in 1992. The 1992 environmental capital expenditures include construction costs for a waste water treatment facility at Olin's Lake Charles plant. Historically, Olin has funded its environmental capital expenditures through cash flow from operations and expects to do so in the future. Cash outlays for remedial and investigatory activities associated with former waste sites and past operations were $37 million in 1994, $44 million in 1993 and $41 million in 1992. These amounts were not charged to income but instead were charged to reserves established for such costs identified and expensed to income in prior years. Olin's estimated environmental liability at the end of 1994 was attributable to 78 sites, 33 of which were on the National Priority List ("NPL"). Twelve sites accounted for approximately 75% of such liability and, of the remaining sites, no one site accounted for more than three percent of such liability. Six of these twelve sites were in the investigatory stage of the remediation process. In this stage, remedial investigation and feasibility studies are conducted by either Olin, the United States Environmental Protection Agency ("EPA") or other potentially responsible parties ("PRP's") and a Record of Decision ("ROD") or its equivalent has not been issued. At another three of the twelve sites, a ROD or its equivalent has been issued by either the EPA or responsible state agency and Olin either 11 alone, or as a member of a PRP group, was engaged in performing the remedial measures required by that ROD. At the remaining three of the twelve sites, part of the site is subject to a ROD and another part is still in the investigative stage of remediation. All twelve sites were either former manufacturing facilities or waste sites containing contamination generated by those facilities. Total environmental-related cash outlays for 1995 are estimated to be $93 million, of which $53 million is expected to be spent on normal plant operations, including $15 million on capital projects, and $40 million on investigatory and remedial efforts. Annual environmental-related cash outlays for capital projects, site investigation and remediation, and normal plant operations are expected to range between $90-$105 million over the next several years. While Olin does not anticipate a material increase in the projected annual level of its environmental-related costs, there is always the possibility that such increases may occur in the future in view of the uncertainties associated with environmental exposures. Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other potentially responsible parties and Olin's ability to obtain contributions from other parties and the time periods (sometimes lengthy) over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably against Olin. See also Item 3, Legal Proceedings below, the Note "Environmental" of the Notes to Financial Statements contained in the Shareholders Report and Exhibit 13 hereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" incorporated in this Report for additional information regarding environmental matters affecting Olin. ITEM 2. PROPERTIES Olin has plants at 34 separate locations in 20 states and 4 plants in 4 foreign countries. Most plants are owned; a number of small plants and portions of one major plant are leased. Listed under Item 1 above in the table set forth under the caption "Products and Services" are the locations at or from which Olin's products and services are manufactured, distributed or marketed by segment. Olin leases warehouses, terminals and distribution offices and space for executive and branch sales offices and service departments throughout the country and overseas. ITEM 3. LEGAL PROCEEDINGS (a) In December 1979, an action was commenced in the U.S. District Court in New York by the United States against Occidental Chemical Corporation (then known as Hooker Chemical & Plastics Corporation) ("Oxychem"), certain related companies, Olin and the City of Niagara Falls, New York, alleging that chemical wastes are migrating in violation of environmental laws or regulations from a site in Niagara Falls where Oxychem and Olin own adjacent, inactive chemical waste landfills. The United States is seeking injunctive relief and an order requiring Oxychem and Olin, among other things, to secure the landfill site, install a leachate collection system and treat whatever leachate is collected, as well as an order requiring Oxychem and Olin to place $16.5 million in trust or provide a bond to ensure that the site will be secured. The United States is also seeking civil penalties for each day of alleged violation of the Clean Water Act which currently has a maximum daily penalty of $25,000. In November 1980, the State of New York filed a complaint as co-plaintiff in the same action based upon essentially the same factual allegations as in the suit brought by the United States. The State is seeking $100 million compensatory damages and $100 million punitive damages. The State is seeking $100 million compensatory damages and $100 million punitive damages. The State is also requesting 12 a court order to abate the alleged nuisance and penalties of $10,000 per day for alleged violations of each of four provisions of New York's Environmental Conservation Law. In 1983, the State filed a motion to amend its complaint to include a count under CERCLA (Comprehensive Environmental Response, Compensation and Liability Act of 1980) alleging damage to natural resources. In 1986, the Department of Justice filed a motion to amend its complaint to include a CERCLA and SARA (Superfund Amendments and Reauthorization Act of 1986) count. Oxychem and Olin have filed in opposition to the motions and the court has deferred a ruling on both motions. The U.S. Environmental Protection Agency ("EPA") notified Olin and Oxychem of an aggregate of $3,050,000 in agency oversight costs on the project. Under a stipulation entered into by all parties in 1984, Olin and Oxychem undertook a site remedial investigation which was completed in October 1988. Subsequently, the parties entered into a further stipulation under which Oxychem and Olin conducted a feasibility study of possible remedial measures. Olin does not expect these stipulations to have any further effect on the outcome of this matter. The remedial investigation and feasibility study was completed in July 1990. On September 24, 1990, EPA issued a Proposed Remedial Action Plan and on September 29, 1990 a Record of Decision ("ROD"). The EPA selected remedy was estimated to cost $30 million. On September 30, 1991, the EPA issued an administrative order directing Olin and Oxychem to implement the remedy identified in the September 29, 1990 Record of Decision. Olin and Oxychem have agreed to perform the remedy identified on such order. The cost of any remedy is expected to be shared by Olin and Oxychem in an agreed-upon proportion. Olin believes that any liability incurred by it in this matter will not be materially adverse to its financial condition. (b) In June 1987, the EPA issued a ROD recommending remedial actions and ecological studies with respect to mercury contamination at the site of Olin's former mercury cell chlor-alkali plant in Saltville, Virginia. In August 1987, EPA, under Section 122 of CERCLA, asked Olin to undertake the work called for in the ROD, and Olin agreed to do so. Olin's commitment was required to be incorporated into a Consent Decree to be filed with a federal district court. EPA's draft of the Consent Decree included a proposed $1.4 million Clean Water Act penalty for past unpermitted discharges from a muck pond at the site, as well as $570,000 in reimbursement of past EPA costs. In response to Olin's request, EPA has agreed to reduce the costs to $456,000 and to sever the penalty from the CERCLA action, making it the subject of separate negotiations after execution of the Consent Decree. In 1988, the proposed $1.4 million Clean Water Act penalty was severed from the Consent Decree entered into by Olin and filed with the U.S. District Court for the Western District of Virginia, and the EPA has taken no further action with respect to any proposed penalty. Pursuant to the Decree, in November, 1988 Olin submitted to EPA, Region III, a work plan for remedial action, including additional stormwater run-on control around Pond #5 and construction of a wastewater treatment plant for the outfall from Pond #5. Olin also submitted for EPA approval a work plan for further remedial investigation of the impact of mercury from the site on groundwater flowing into the North Fork Holston River and its sediment from the site to a point twenty-seven miles downstream at the Tennessee border. During 1989 work plans pursuant to the Consent Decree between EPA and Olin were approved by EPA. Final payment of past EPA costs of $228,000 plus interest was made on November 21, 1989, in accordance with the Consent Decree. On September 5, 1991, EPA advised Olin of potential liability for contaminated soils which were being removed in conjunction with construction of the Rte. 634 bridge in Saltville. Olin and EPA signed a Consent Order authorizing Olin to do the soil removal, which has been completed. Olin has completed the remedial investigation and feasibility study of the former plant site, including Ponds # 5 and 6. On January 18, 1995, EPA issued a Proposed Remedial Action Plan for a 30-day public comment period. The plan calls for a cap to be constructed over Pond #5, and the excavation of soil and sediment from the former chlorine plant site. Olin will be filing comments with EPA in support of less expensive but it believes equally effective alternatives for remediating the site. 13 On August 29, 1994, EPA notified Olin of the company's potential liability with respect to the "Graveyard Dump Site", located north of the former plant site. The site is relatively small, occupying about one half acre. EPA's investigation found about 20 capacitors and miscellaneous debris scattered around the site as well as evidence of PCB contamination in the soils. Negotiations with EPA ensued and Olin and EPA signed an Administrative Order by Consent, effective January 5, 1995, in which Olin agreed to perform certain response activities at the site, primarily the removal and disposal of PCB contaminated electrical equipment and soils. Planning for the work is underway and it is expected that the work will take place in the winter/spring of 1995. Olin believes that any liability incurred by it in this matter will not be materially adverse to its financial condition. (c) In December 1987, a Federal Trade Commission ("FTC") administrative law judge ruled that Olin must divest the chlorinated isocyanurates business acquired in 1985, which includes an isocyanurates manufacturing facility in South Charleston, West Virginia, a packaging facility in Livonia, Michigan and the Sun(R) brand trademark. The ruling stated that the acquisition was likely to lessen competition in markets for chlorinated isocyanurates and calcium hypochlorite dry swimming pool sanitizers. Olin appealed this decision to the FTC. In July 1990, the FTC announced that it had issued an order denying Olin's appeal and requiring Olin to divest itself of such business within one year of the order becoming final following appeal. Olin appealed the FTC decision to the U.S. Court of Appeals. The U.S. Court of Appeals upheld the FTC decision on February 26, 1993. Olin petitioned for review by the U.S. Supreme Court and such petition was denied. Olin unsuccessfully attempted to modify the FTC order by proposing to the FTC that Olin sell its trichloroisocyanurate production facility in Lake Charles, Louisiana to BioLab, Inc. (a sale which it ultimately consummated in 1994) instead of selling its South Charleston facilities. Olin is in the process of divesting the assets of this business to various entities in compliance with the FTC order. Olin believes that the divestment of this business will not be materially adverse to its financial condition or results of operations. (d) As part of the continuing environmental investigation by Federal, state and local governments of waste disposal sites, Olin has entered into a number of settlement agreements requiring it to contribute to the cost of the investigation and cleanup of a number of sites. This process of investigation and cleanup is expected to continue. (e) Olin and its subsidiaries are defendants in various other legal actions arising out of their normal business activities, none of which is considered by management to be material. 14 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of security holders during the three months ended December 31, 1994. Executive Officers of Olin Corporation as of March 1, 1995
SERVED AS AN OLIN NAME AND AGE OFFICE OFFICER SINCE - ------------ ------ ------------- John W. Johnstone, Jr. (62)..................... Chairman of the Board and Chief 1980 Executive Officer Donald W. Griffin (57).... President and Chief Operating Officer 1983 Joseph M. Gaffney (48).... Senior Vice President, Corporate 1981 Planning and Development James G. Hascall (56)..... Senior Vice President and President, 1985 Brass Group James A. Riggs (58)....... Senior Vice President and Chief 1986 Financial Officer Leon B. Anziano (52)...... Vice President and President, Chlor- 1993 Alkali Products Division Gerald W. Bersett (54).... Vice President and President, 1993 Winchester Division Robert A. Beyerl (52)..... Vice President and Controller 1994 Michael E. Campbell (47).. Vice President and President, Olin 1987 Electronic Materials Division Angelo A. Catani (62)..... Vice President and President, Ordnance 1993 Division Patrick J. Davey (51)..... Vice President and President, 1993 Chemicals Division George B. Erensen (51).... Vice President, Taxes and Risk 1990 Management Johnnie M. Jackson, Jr. (49)..................... Vice President, General Counsel and 1995 Secretary Peter C. Kosche (52)...... Vice President, Human Resources 1993 Janet M. Pierpont (47).... Vice President and Treasurer 1990 William M. Schmitt (53)... Vice President and President, Latin 1987 America and South Africa William W. Smith (60)..... Vice President and President, 1993 Aerospace Division
No family relationship exists between any of the above named executive officers or between any of them and any Director of Olin. Such officers were elected to serve as such, subject to the By-Laws, until their respective successors are chosen. Each of the above-named executive officers, except L. B. Anziano, G. W. Bersett, A. A. Catani, P. J. Davey, G. B. Erensen, P. C. Kosche, J. M. Pierpont, R. A. Beyerl and W. W. Smith, has served Olin as an executive officer for not less than the past five years. Leon B. Anziano was elected a Corporate Vice President on April 29, 1993. Prior to that time, since 1988, he has served Olin in the following management capacities: Group Vice President & General Manager, Industrial Chemicals; Group Vice President & General Manager, Urethanes; and President, Basic Chemicals Division. 15 Gerald W. Bersett was elected a Corporate Vice President on April 29, 1993. Prior to that time, since 1988, he has served Olin in the following management capacities: Division Vice President and General Manager, Winchester and President, Winchester Division. Robert A. Beyerl was elected a Corporate Vice President and Controller on April 26, 1994. Prior to that time, since 1989, he has served Olin in the following management capacities: Director of Internal Audit; the Financial Officer for the Defense Systems Group; and the Financial Officer for the Chemicals Group. Angelo A. Catani was elected a Corporate Vice President on April 29, 1993. Prior to that time, since 1988, he has served Olin in a management capacity as President, Ordnance Division. Patrick J. Davey was elected a Corporate Vice President on April 29, 1993. Prior to that time, since 1988, he has served Olin in the following management capacities: Group Vice President, Water Products & Services; and President, Performance Chemicals Division. George B. Erensen was elected a Corporate Vice President on April 26, 1990. Prior to that time, since 1988, he has served Olin in a management capacity as Staff Vice President, Taxes and Risk Management. Johnnie M. Jackson, Jr. was appointed a Corporate Vice President on February 23, 1995. Prior to that time, since 1989, he has served Olin in the following capacities: General Counsel--Corporate and Secretary, Associate General Counsel--Corporate Resources and Secretary and Deputy General Counsel. Peter C. Kosche was elected a Corporate Vice President on April 29, 1993. Prior to that time, since 1988, he has served Olin in the following management capacities: General Manager, Pool Chemicals; and Division Vice President, Materials Management. Janet M. Pierpont was elected a Corporate Vice President and Treasurer on April 26, 1990. Prior to that time, since 1988, she has served Olin in a management capacity as Assistant Treasurer. William W. Smith was elected a Corporate Vice President on April 29, 1993. Prior to that time, since 1988, he has served Olin in a management capacity as President, Aerospace Division. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS As of January 31, 1995, there were approximately 12,100 record holders of Olin Common Stock. Olin Common Stock is traded on the New York, Chicago and Pacific Stock Exchanges. Information concerning the high and low sales prices of Olin Common Stock and dividends paid on Olin Common Stock during each quarterly period in 1994, 1993, and 1992 appears on page 32 of the Shareholders Report and in Exhibit 13 hereto and is incorporated herein by reference. Among the provisions of Olin's agreements with its long-term lenders are restrictions relating to payment of dividends and acquisition of common stock. At December 31, 1994, retained earnings of approximately $224 million were not so restricted. ITEM 6. SELECTED FINANCIAL DATA The information relating to the last five fiscal years contained under the caption "Ten-Year Financial Summary" appearing on page 20 of the Shareholders Report and in Exhibit 13 hereto is incorporated by reference in this Report. 16 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing on pages 12 through 18 of the Shareholders Report (but excluding the balloon graphs appearing on such pages) and in Exhibit 13 hereto is incorporated by reference in this Report. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements of Olin Corporation and subsidiaries and the related notes thereto together with the report thereon of KPMG Peat Marwick LLP dated January 26, 1995, appearing on pages 21 through 30 of the Shareholders Report and in Exhibit 13 hereto are incorporated by reference in this Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The biographical information relating to Olin's Directors under the heading "Item 1--Election of Directors" in the Proxy Statement relating to Olin's 1995 Annual Meeting of Shareholders ("Proxy Statement") is incorporated by reference in this Report. See also the list of executive officers following Item 4 of this Report. The information regarding compliance with Section 16 of the Securities Exchange Act of 1934, as amended, contained in the last paragraph under the heading "Security Ownership of Directors and Officers" in the Proxy Statement is incorporated by reference in this Report. ITEM 11. EXECUTIVE COMPENSATION The information under the heading "Executive Compensation" in the Proxy Statement (but excluding the Report of the Compensation and Nominating Committee on Executive Compensation appearing on pages 11 through 14 of the Proxy Statement and the graphs appearing on page 18 of the Proxy Statement) is incorporated by reference in this Report. The information under the headings "Additional Information Regarding the Board of Directors--Compensation of Directors", and "Additional Information Regarding the Board of Directors-- Directors Retirement Plan" in the Proxy Statement is incorporated by reference in this Report. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information concerning holdings of Olin stock by certain beneficial owners contained under the heading "Certain Beneficial Owners" in the Proxy Statement and the information concerning beneficial ownership of Olin stock by Directors and officers of Olin under the heading "Security Ownership of Directors and Officers" in the Proxy Statement are incorporated by reference in this Report. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Not Applicable. 17 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. FINANCIAL STATEMENTS Consolidated financial statements of Olin Corporation and subsidiaries and the related notes thereto together with the report thereon of KPMG Peat Marwick LLP dated January 26, 1995, appearing on pages 21 through 30 of the Shareholders Report and in Exhibit 13 hereto are incorporated by reference in this Report. 2. FINANCIAL STATEMENT SCHEDULES Schedules not included herein are omitted because they are inapplicable or not required or because the required information is given in the consolidated financial statements and notes thereto. Separate financial statements of 50% or less owned subsidiaries accounted for by the equity method are not summarized herein and have been omitted because, in the aggregate, they would not constitute a significant subsidiary. 3. EXHIBITS Management contracts and compensatory plans and arrangements are listed as Exhibits 10(a) through 10(aa) below. 3(a) Olin's Restated Articles of Incorporation as amended effective January 15, 1992--Exhibit 3(a) to Olin's Form 10-K for 1991.* (b) By-Laws of Olin as amended effective February 23, 1995. 4(a) Articles of Amendment designating ESOP Preferred Shares, par value $1 per share--Exhibit 4 to Olin's Form 10-Q for the Quarter ended June 30, 1989.* (b) Rights Agreement dated as of February 27, 1986 between Olin and Manufacturers Hanover Trust Company, Rights Agent--Exhibit 1 to Olin's Form 8-A dated February 28, 1986, covering Common Stock Purchase Rights.* (c) Form of Senior Debt Indenture between Olin and Chemical Bank-- Exhibit 4(a) to Form 8-K dated June 15, 1992; Supplemental Indenture dated as of March 18, 1994 between Olin and Chemical Bank--Exhibit 4(c) to Registration Statement No. 33-52771; and Prospectus Supplement dated June 17, 1992 to Prospectus dated June 16, 1992, with respect to Olin's 8% Senior Notes Due 2002 filed under Registration Statement No. 33-4479.* (d) Form of Subordinated Debt Indenture between Olin and Bankers Trust Company--Exhibit 4(i) to Registration No. 33-4479; and Prospectus Supplement dated June 17, 1987 to Prospectus dated February 3, 1987, with respect to Olin's 9 1/2% Subordinated Notes Due 1997 filed under Registration Statement No. 33-4479.* (e) Credit Agreement, dated as of September 30, 1993, among Olin and the banks named therein--Exhibit 4 to Olin's Form 10-Q for the Quarter ended September 30, 1993.* (f) Letters, dated December 15, 1993, amending the Credit Agreement, dated as of September 30, 1993--Exhibit 4(f) to Olin's Form 10-K for 1993.*
- -------- * Previously filed as indicated and incorporated herein by reference. Exhibits incorporated by reference are located in SEC File No. 1-1070 unless otherwise indicated. 18 Olin is party to a number of other instruments defining the rights of holders of long-term debt. No such instrument authorizes an amount of securities in excess of 10% of the total assets of Olin and its subsidiaries on a consolidated basis. Olin agrees to furnish a copy of each instrument to the Commission upon request. 10(a) 1980 Stock Option Plan for Key Employees of Olin Corporation and Subsidiaries, as amended--Exhibit 10(a) to Olin's Form 10-K for 1991.* (b) 1988 Stock Option Plan for Key Employees of Olin Corporation and Subsidiaries as amended through February 23, 1995. (c) Olin Corporation Performance Unit Plan, as amended April 24, 1986--Exhibit 10(a) to Olin's Form 10-Q for Quarter ended March 31, 1986.* (d) Olin Corporate Incentive Compensation Plan--Exhibits 1(b) and 2(b) to Registration No. 2-64811.* (e) Olin Deferred Salary Plan, effective January 1, 1983--Exhibit 10(f) to Olin's Form 10-K for 1993.* (f) Form of Directors' deferral plan--Exhibit 10(g) to Olin's Form 10- K for 1993.* (g) Amendments to Olin Corporation Performance Unit Plan, Corporate Incentive Compensation Plan, Deferred Salary Plan and Directors' deferral plan, adopted September 29, 1988--Exhibit 10(j) to Olin's Form 10-K for 1988.* (h) Amendment to Olin Corporation Performance Unit Plan, adopted May 25, 1989--Exhibit 10(b) to Olin's Form 10-Q for Quarter ended June 30, 1989.* (i) Amendment to Olin Corporation Performance Unit Plan, adopted September 26, 1991--Exhibit 10(j) to Olin's Form 10-K for 1991.* (j) Amendment to Olin Corporation Performance Unit Plan, adopted December 16, 1993--Exhibit 10(k) to Olin's Form 10-K for 1993.* (k) Deferral elections with respect to certain acquisitions or "change of control events"--Exhibit 10(h) to Olin's Form 10-K for 1986.* (l) Olin Senior Executive Pension Plan with amendments. (m) Olin Supplementary Contributing Employee Ownership Plan, effective January 1, 1990 with amendments. (n) Form of arrangement to credit 100 shares of Olin Common Stock to certain Directors in each year from 1985 through 1994. (o) Olin Corporation Key Executive Life Insurance Program--Exhibit 10(b) to Olin's Form 10-Q for Quarter ended March 31, 1986.* (p) Form of Olin Corporation Endorsement Split Dollar Agreement (effective January 1, 1993)--Exhibit 10(s) to Olin's Form 10-K for 1992.* (q) Form of executive agreement between Olin and certain executive officers. (r) Form of special severance agreement provided to certain employees to become operative upon a "change in control event." (s) Retirement Plan for Non-Employee Directors of Olin Corporation, as amended through December 12, 1991--Exhibit 10(u) to Olin's Form 10-K for 1991.* (t) Change in Control elections regarding both the Directors' deferral plan and the arrangement to credit 100 shares of Olin Common Stock to certain Directors-- Exhibit 10(z) to Olin's Form 10-K for 1989.* (u) Olin 1991 Long Term Incentive Plan, as amended through February 23, 1995. (v) Description of 1991 Performance Unit Awards granted under the Olin 1991 Long Term Incentive Plan--Exhibit 10(w) to Olin's Form 10-K for 1991.*
- -------- * Previously filed as indicated and incorporated herein by reference. Exhibits incorporated by reference are located in SEC File No. 1-1070 unless otherwise indicated. 19 (w) Description of 1992 Performance Unit Awards granted under the Olin 1991 Long Term Incentive Plan--Exhibit 10(z) to Olin's Form 10-K for 1992.* (x) Description of Performance Share Awards granted under the Olin 1991 Long Term Incentive Plan--Exhibit 10 to Olin's Form 10-Q for the quarter ended June 30, 1993.* (y) Board Resolution adopted April 25, 1991 regarding payment of deferred amounts--Exhibit 10(y) to Olin's Form 10-K for 1991.* (z) Olin Corporation 1994 Stock Plan for Non-employee Directors-- Exhibit 10(a) to Olin's Form 10-Q for Quarter ended March 31, 1994.* (aa) Olin Senior Management Incentive Compensation Plan--Exhibit 10(b) to Olin's Form 10-Q for Quarter ended March 31, 1994.* 11. Computation of Per Share Earnings. 12 (a) Computation of Ratio of Earnings to Fixed Charges (unaudited). 12 (b) Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (unaudited). 13. Excerpts from the 1994 Annual Report to Shareholders. 21. List of Subsidiaries. 23. Consent of KPMG Peat Marwick LLP dated March 9, 1995. 27. Financial Data Schedule.
(b) REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended December 31, 1994. - -------- * Previously filed as indicated and incorporated herein by reference. Exhibits incorporated by reference are located in SEC File No. 1-1070 unless otherwise indicated. 20 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. Olin Corporation Date: February 23, 1995 /s/ John W. Johnstone, Jr. By................................... JOHN W. JOHNSTONE, JR. CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE --------- ----- /s/ John W. Johnstone, Jr. ..................................... JOHN W. JOHNSTONE, JR. Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer) /s/ Robert R. Frederick ..................................... ROBERT R. FREDERICK Director /s/ Donald W. Griffin ..................................... DONALD W. GRIFFIN Director /s/ William W. Higgins ..................................... WILLIAM W. HIGGINS Director /s/ Robert Holland, Jr. ..................................... ROBERT HOLLAND, JR. Director /s/ Suzanne D. Jaffe ..................................... SUZANNE D. JAFFE Director ..................................... JACK D. KUEHLER Director /s/ H. William Lichtenberger ..................................... H. WILLIAM LICHTENBERGER Director /s/ G. Jackson Ratcliffe, Jr. ..................................... G. JACKSON RATCLIFFE, JR. Director /s/ William L. Read ..................................... WILLIAM L. READ Director
S-1
SIGNATURE TITLE --------- ----- /s/ John P. Schaefer ..................................... JOHN P. SCHAEFER Director /s/ Irving Shain ..................................... IRVING SHAIN Director /s/ Robert A. Beyerl ..................................... ROBERT A. BEYERL Vice President and Controller (Chief Accounting Officer) /s/ James A. Riggs ..................................... JAMES A. RIGGS Senior Vice President and Chief Financial Officer (Principal Financial Officer)
Date: February 23, 1995 S-2 LOGO PRINTED ON RECYCLED PAPER Exhibit No. Description _______________ 3(a) Olin's Restated Articles of Incorporation as amended effective January 15, 1992-Exhibit 3(a) to Olin's Form 10-K for 1991.* 3(b) By-Laws of Olin as amended effective February 23, 1995. 4(a) Articles of Amendment designating ESOP Preferred Shares, par value $1 per share-Exhibit 4 to Olin's Form 10-Q for the Quarter ended June 30, 1989.* 4(b) Rights Agreement dated as of February 27, 1986 between Olin and Manufacturers Hanover Trust Company, Rights Agent-Exhibit 1 to Olin's Form 8-A dated February 28, 1986, covering Common Stock Purchase Rights.* 4(c) Form of Senior Debt Indenture between Olin and Chemical Bank-Exhibit 4(a) to Olin's Form 8-K dated June 15, 1992; Supplemental Indenture dated as of March 18, 1994 between Olin and Chemical Bank -- Exhibit 4(c) to Registration Statement No. 33-52771; and Prospectus Supplement dated June 17, 1992 to Prospectus dated June 16, 1992, with respect to Olin's 8% Senior Notes Due 2002 filed under Registration Statement No. 33-4479.* 4(d) Form of Subordinated Debt Indenture between Olin and Bankers Trust Company-Exhibit 4(i) to Registration No. 33-4479; and Prospectus Supplement dated June 17, 1987 to Prospectus dated February 3, 1987, with respect to Olin's 9 1/2% Subordinated Notes Due 1997-filed under Registration Statement No. 33-4479.* 4(e) Credit Agreement, dated as of September 30, 1993, among Olin and the banks named therein-Exhibit 4 to Olin's Form 10-Q for the Quarter ended September 30, 1993.* 4(f) Letters, dataed December 15, 1993, amending Credit Agreement, dated as of September 30, 1993-Exhibit 4(f) to Olin's Form 10-K for 1993.* 10(a) 1980 Stock Option Plan for Key Employees of Olin Corporation and Subsidiaries, as amended-Exhibit 10(a) to Olin's Form 10-K for 1991.* 10(b) 1988 Stock Option Plan for Key Employees of Olin Corporation and Subsidiaries as amended through February 23, 1995. 10(c) Olin Corporation Performance Unit Plan, as amended April 24, 1986- Exhibit 10(a) to Olin's Form 10-Q for Quarter ended March 31, 1986.* 10(d) Olin Corporation Incentive Compensation Plan-Exhibits 1(b) and 2(b) to Registration No. 2-64811.* 10(e) Olin Deferred Salary Plan, effective January 1, 1983-Exhibit 10(f) to Olin's Form 10-K for 1993.* 10(f) Form of Directors' deferral plan-Exhibit 10(g) to Olin's Form 10-k for 1993.* 10(g) Amendments to Olin Corporation Performance Unit Plan, Corporate Incentive Compensation Plan, Deferred Salary Plan and Directors' deferral plan, adopted September 29, 1988-Exhibit 10(j) to Olin's Form 10-K for 1988.* 10(h) Amendment to Olin Corporation Performance Unit Plan, adopted May 25, 1989-Exhibit 10(b) to Olin's Form 10-Q for Quarter ended June 30, 1989.* ____ *Previously filed as indicated and incorporated herein by reference. Exhibits incorporated by reference are located in SEC File No. 1-1070 unless otherwise indicated. Exhibit No. Description _______________ 10(i) Amendment to Olin Corporation Performance Unit Plan, adopted September 26, 1991-Exhibit 10(j) to Olin's Form 10-K for 1991.* 10(j) Amendment to Olin Corporation Performance Unit Plan, adopted December 16, 1993-Exhibit 10(k) to Olin's Form 10-K for 1993.* 10(k) Deferral elections with respect to certain acquisitions or "change of control events"-Exhibit 10(h) to Olin's Form 10-K for 1986.* 10(l) Olin Senior Executive Pension Plan with amendments. 10(m) Olin Supplementary Contributing Employee Ownership Plan, effective January 1, 1990 with amendments. 10(n) Form of arrangement to credit 100 shares of Olin Common Stock to certain Directors in each year from 1985 through 1994. 10(o) Olin Corporation Key Executive Life Insurance Program-Exhibit 10(b) to Olin's Form 10-Q for Quarter ended March 31, 1986.* 10(p) Form of Olin Corporation Endorsement Split Dollar Agreement (effective January 1, 1993)-Exhibit 10(s) to Olin's Form 10-K for 1992.* 10(q) Form of executive agreement between Olin and certain executive officers 10(r) Form of special severance agreement provided to certain employees to become operative upon "change in control event" 10(s) Retirement Plan for Non-Employee Directors of Olin Corporation, as amended through December 12, 1991-Exhibit 10(u) to Olin's Form 10-K for 1991.* 10(t) Change in Control elections regarding both the Directors' deferral plan and the arrangement to credit 100 shares of Olin Common Stock to certain Directors-Exhibit 10(z) to Olin's Form 10-K for 1989.* 10(u) Olin 1991 Long Term Incentive Plan, as amended through February 23, 1995. ____ *Previously filed as indicated and incorporated herein by reference. Exhibits incorporated by reference are located in SEC File No. 1-1070 unless otherwise indicated. Exhibit No. Description _______________ 10(v) Description of 1991 Performance Unit Awards granted under the Olin 1991 Long Term Incentive Plan-Exhibit 10(w) to Olin's Form 10-K for 1991.* 10(w) Description of 1992 Performance Unit Awards granted under the Olin 1991 Long Term Incentive Plan-Exhibit 10(z) to Olin's Form 10-K for 1992.* 10(x) Description of Performance Share Awards granted under the Olin 1991 Long Term Incentive Plan-Exhibit 10 to Olin's Form 10-Q for the Quarter ended June 30, 1993.* 10(y) Board Resolution adopted April 25, 1991 regarding payment of deferred amounts-Exhibit 10(y) to Olin's Form 10-K for 1991.* 10(z) Olin Corporation 1994 Stock Plan for Non-Employee Directors-Exhibit 10(a) to Olin's Form 10-Q for the Quarter ended March 31, 1994.* 10(aa) Olin Senior Management Incentive Compensation Plan-Exhibit 10(b) to Olin's Form 10-Q for the Quarter ended March 31, 1994.* 11 Computation of Per Share Earnings. 12(a) Computation of Ratio of Earnings to Fixed Charges (Unaudited). 12(b) Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited). 13 Excerpts from the 1994 Annual Report to Shareholders. 21 List of Subsidiaries. 23 Consent of KPMG Peat Marwick LLP, dated March 9, 1995. 27 Financial Data Schedule. ____ *Previously filed as indicated and incorporated herein by reference. Exhibits incorporated by reference are located in SEC File No. 1-1070 unless otherwise indicated. EX-3.(B) 2 BY-LAWS OF OLIN EXHIBIT 3(B) BY-LAWS OF OLIN CORPORATION -------------------------- ARTICLE I. MEETINGS OF SHAREHOLDERS. SECTION 1. PLACE OF MEETINGS. All meetings of the shareholders of ------------------ Olin Corporation (hereinafter called the "Corporation") shall be held at such place, either within or without the Commonwealth of Virginia, as may from time to time be fixed by the Board of Directors of the Corporation (hereinafter called the "Board"). SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders ---------------- of the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on the last Thursday in April in each year (or, if that day shall be a legal holiday, then on the next succeeding business day), or on such other day and/or in such other month as may be fixed by the Board, at such hour as may be specified in the notice thereof. SECTION 3. SPECIAL MEETINGS. A special meeting of the shareholders ----------------- for any purpose or purposes, unless otherwise provided by law or in the Articles of Incorporation of the Corporation as from time to time amended (hereinafter called the "Articles"), may be held at any time upon the call of the Board, the Chairman of the Board, the President or the holders of a majority of the shares of the issued and outstanding stock of the Corporation entitled to vote at the meeting. SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by law or ------------------- the Articles, not less than ten nor more than sixty days notice in writing of the place, day, hour and purpose or purposes of each meeting of the shareholders, whether annual or special, shall be given to each shareholder of record of the Corporation entitled to vote at such meeting, either by the delivery thereof to such shareholder personally or by the mailing thereof to such shareholder in a postage prepaid envelope addressed to such shareholder at his address as it appears on the stock transfer books of the Corporation; provided, however, that in the case of a special meeting of shareholders called by the shareholders, such notice shall be given at least fifty days before the date of the meeting. Notice of any meeting of shareholders shall not be required to be given to any shareholder who shall attend the meeting in person or by proxy, unless attendance is for the express purpose of objecting to the transaction of any business because the meeting was not lawfully called or convened, or who shall waive notice thereof in writing signed by the shareholder before, at or after such -meeting. Notice of any adjourned meeting need not be given, except when expressly required by law. SECTION 5. QUORUM. Shares representing a majority of the votes entitled to ------- be cast on a mattter by all classes or series which are entitled to vote thereon and be counted together collectively, represented in person or by proxy at any meeting of the shareholders, shall constitute a quorum for the transaction of business thereat with respect to such matter, unless otherwise provided by law or the Articles. In the absence of a quorum at any such meeting or any adjournment or adjournments thereof, shares representing a majority of the votes cast on the matter of adjournment, either in person or by proxy, may adjourn such meeting from time to time until a quorum is obtained. At any such adjourned meeting at which a quorum has been obtained, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 6. VOTING. Unless otherwise provided by law or the Articles, at ------- each meeting of the shareholders each shareholder entitled to vote at such meeting shall be entitled to one vote for each share of stock standing in his name on the books of the Corporation upon any date fixed as hereinafter provided, and may vote either in person or by proxy in writing. Unless demanded by a shareholder present in person or represented by proxy at any meeting of the shareholders and entitled to vote thereon or so directed by the chairman of the meeting, the vote on any matter need not be by ballot. On a vote by ballot, each ballot shall be signed by the shareholder voting or his proxy, and it shall show the number of shares voted. SECTION 7. JUDGES. One or more judges or inspectors of election for any ------- meeting of shareholders may be appointed by the chairman of such meeting, for the purpose of receiving and taking charge of proxies and ballots and deciding all questions as to the qualification of voters, the validity of proxies and ballots and the number of votes properly cast. SECTION 8. CONDUCT OF MEETING. The chairman of the meeting at each meeting ------------------- of shareholders shall have all the powers and authority vested in presiding officers by law or practice, without restriction, as well as the authority to conduct an orderly meeting and to impose reasonable limits on the amount of time taken up in remarks by any one shareholder. ARTICLE II. BOARD OF DIRECTORS. SECTION 1. NUMBER. CLASSIFICATION. TERM. ELECTION. The property, business --------------------------------------- and affairs of the Corporation shall be managed under the direction of the Board as from time to time constituted. The Board shall consist of thirteen directors, but the number of directors may be increased to any number, not more than eighteen directors, or decreased to any number, not less than three directors, by amendment of these By-laws, provided that any increase or decrease by more than thirty percent of the number of directors last elected by the shareholders may only be effected by the shareholders. No director need be a shareholder. The Board shall be divided into three classes, Class I, Class II and - 2 - Class III, as nearly equal in number as possible, with the members of each class to serve for the respective terms of office provided in the Articles, and until their respective successors shall have been duly elected or until death or resignation or until removal in the manner hereinafter provided. In case the number of directors shall be increased, the additional directors to fill the vacancies caused by such increase shall be elected in accordance with the provisions of Section 4 of Article VI of these By-laws. Any increase or decrease in the number of directors shall be so apportioned among the classes by the Board as to make all classes as nearly equal in number as possible. Subject to the rights of holders of any Preferred Stock outstanding, nominations for the election of directors may be made by the Board or a committee appointed by the Board or by any shareholder entitled to vote in the election of directors generally. However, any shareholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at a meeting only if it is a meeting of shareholders for the purposes of electing directors and written notice of such shareholder's intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Corporation not later than (i) with respect to an election to be held at an annual meeting of shareholders, 90 days in advance of such meeting and (ii) with respect to an election to be held at a special meeting of shareholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to shareholders. Each such notice shall set forth: (a) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the shareholder is a holder of record of shares of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (d) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission; and (e) the consent of each nominee to serve as a director of the Corporation if so elected. SECTION 2. COMPENSATION. Each director, in consideration of his serving as ------------- such, shall be entitled to receive from the Corporation such amount per annum or such fees for attendance at Board and Committee meetings, or both, in cash or other property, including securities of the Corporation, as the Board shall from time to time determine, together with reimbursements for the reasonable expenses incurred by him in connection with the performance of his duties. Nothing contained herein shall preclude any director from serving the Corporation, or any subsidiary or affiliated corporation, in any other capacity and receiving proper compensation therefor. If the Board adopts a resolution to that effect, any director may elect to defer all or any part of the annual and other fees hereinabove referred to for such period and on such terms and conditions as shall be permitted by such resolution. - 3 - SECTION 3. PLACE OF MEETINGS. The Board may hold its meetings at such ------------------ place or places within or without the Commonwealth of Virginia as it may from time to time by resolution determine or as shall be specified orfixed in the respective notices or waivers of notice thereof . SECTION 4. ORGANIZATION MEETING. After each annual election of directors, --------------------- as soon as conveniently may be, the newly constituted Board shall meet for the purposes of organization. At such organization meeting, the newly constituted Board shall elect officers of the Corporation and transact such other business as shall come before the meeting. Notice of organization meetings of the Board need not be given. Any organization meeting may be held at any other time or place which shall be specified in a notice given as hereinafter provided for special meetings of the Board, or in a waiver of notice thereof signed by all the directors. SECTION 5. REGULAR MEETINGS. Regular meetings of the Board may be held at ----------------- such time and place as may from time to time be specified in a resolution adopted by the Board then in effect; and, unless otherwise required by such resolution, or by law, notice of any such regular meeting need not be given. SECTION 6. SPECIAL MEETINGS. Special meetings of the Board shall be held ----------------- whenever called by the Chief Executive Officer, or by the Secretary at the request of any three directors. Notice of a special meeting shall be mailed to each director, addressed to him at his residence or usual place of business, not later than the second day before the day on which such meeting is to be held, or shall be sent addressed to him at such place by telegraph, cable or wireless, or be delivered personally or by telephone, not later than the day before the day on which such meeting is to be held. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board need be specified in the notice of such meeting, unless required by the Articles. SECTION 7. QUORUM. At each meeting of the Board the presence of a majority ------- of the number of directors fixed by these By-laws shall be necessary to constitute a quorum. The act of a majority of the directors present at a meeting at which a quorum shall be present shall be the act of the Board, except as may be otherwise provided by law or by these By-laws. Any meeting of the Board may be adjourned by a majority vote of the directors present at such meeting. Notice of any adjourned meeting need not be given. SECTION 8. WAIVERS OF NOTICE OF MEETINGS. Anything in these By-laws or in ------------------------------ any resolution adopted by the Board to the contrary notwithstanding, notice of any meeting of the Board need not be given to any director if such notice shall be waived in writing signed by such director before, at or after the meeting, or if such director shall be present at the meeting. Any meeting of the Board shall be a legal meeting without any notice having been given or regardless of the giving of any notice or the adoption of any resolution in reference thereto, if every member of the Board shall be present thereat. Except as otherwise provided by law or these By-laws, waivers of notice of any meeting of the Board need not contain any statement of the purpose of the meeting. - 4 - SECTION 9. TELEPHONE MEETINGS. Members of the Board or any committee may ------------------- participate in a meeting of the Board or such committee by means of a conference telephone or other means of communications whereby all directors participating may simultaneously hear each other during the meeting, and participation by such means shall constitute presence in person at such meeting. SECTION 10. ACTIONS WITHOUT MEETINGS. Any action that may be taken at a ------------------------- meeting of the Board or of a committee may be taken without a meeting if a consent in writing, setting forth the action, shall be signed, either before or after such action, by all of the directors or all of the members of the committee, as the case may be. Such consent shall have the same force and effect as a unanimous vote. ARTICLE III. * INDEMNIFICATION. AND LIMIT ON LIABILITY (a) Every person who is or was a director, officer or employee of the Corporation, or who, at the request of the Corporation, serves or has served in any such capacity with another corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise shall be indemnified by the Corporation against any and all liability and reasonable expense that may be incurred by him in connection with or resulting from any claim, action or proceeding (whether brought in the right of the Corporation or any such other corporation, entity, plan or otherwise), civil or criminal, in which he may become involved, as a party or otherwise, by reason of his being or having been a director, officer or employee of the Corporation, or such other corporation, entity or plan while serving at the request of the Corporation, whether or not he continues to be such at the time such liability or expense shall have been incurred, unless such person engaged in willful misconduct or a knowing violation of the criminal law. As used in this Article III: (i) the terms "liability" and "expense" shall include, but shall not be limited to, counsel fees and disbursements and amounts of judgments, fines or penalties against, and amounts paid in settlement by, a director, officer or employee; (ii) the terms "director", "officer" and "employee," unless the context otherwise requires, include the estate or personal representative of any such person; (iii) a person is considered to be serving an employee benefit plan as a director, officer or employee of the plan at the Corporation's request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or, in connection with the plan, to participants in or beneficiaries of the plan; (iv) the term "occurrence" means any act or * [Compilers Note: This Article III was adopted by the shareholders at the Annual Meeting of Shareholders, April 28, 1994.] - 5 - failure to act, actual or alleged, giving rise to a claim, action or proceeding; and (v) service as a trustee or as a member of a management or similar committee of a partnership or joint venture shall be considered service as a director, officer or employee of the trust, partnership or joint venture. The termination of any claim, action or proceeding, civil or criminal, by judgment, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that a director, officer or employee did not meet the standards of conduct set forth in this paragraph (a). The burden of proof shall be on the Corporation to establish, by a preponderance of the evidence, that the relevant standards of conduct set forth in this paragraph (a) have not been met. (b) Any indemnification under paragraph (a) of this Article shall be made unless (i) the Board, acting by a majority vote of those directors who were directors at the time of the occurrence giving rise to the claim, action or proceeding involved and who are not at the time parties to such claim, action or proceeding (provided there are at least five such directors), finds that the director, officer or employee has not met the relevant standards of conduct set forth in such paragraph (a), or (ii) if there are not at least five such directors, the Corporation's principal Virginia legal counsel, as last designated by the Board as such prior to the time of the occurrence giving rise to the claim, action or proceeding involved, or in the event for any reason such Virginia counsel is unwilling to so serve, then Virginia legal counsel mutually acceptable to the Corporation and the person seeking indemnification, deliver to the Corporation their written advice that, in their opinion, such standards have not been met. (c) Expenses incurred with respect to any claim, action or proceeding of the character described in paragraph (a) shall, except as otherwise set forth in this paragraph (c), be advanced by the Corporation prior to the final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amount if it is ultimately determined that he is not entitled to indemnification under this Article III. No security shall be required for such undertaking and such undertaking shall be accepted without reference to the recipient's financial ability to make repayment. Notwithstanding the foregoing, the Corporation may refrain from, or suspend, payment of expenses in advance if at any time before delivery of the final finding described in paragraph (b), the Board or Virginia legal counsel, as the case may be, acting in accordance with the procedures set forth in paragraph (b), find by a preponderance of the evidence then available that the officer, director or employee has not met the relevant standards of conduct set forth in paragraph (a) (d) No amendment or repeal of this Article III shall adversely affect or deny to any director, officer or employee the rights of indemnification provided in this Article III with respect to any liability or expense arising out of a claim, action or proceeding based in whole or substantial part on an occurrence the inception of which takes place before or while this Article III, as adopted by the shareholders of the Corporation at the 1986 Annual Meeting of the Corporation, is in effect. The provisions of this paragraph (d) shall apply to - 6 - any such claim, action or proceeding whenever commenced, including any such claim, action or proceeding commenced after any amendment or repeal to this Article III. (e) The rights of indemnification provided in this Article III shall be in addition to any rights to which any such director, officer or employee may otherwise be entitled by contraction or as a matter of law. (f) In any proceeding brought by or in the right of the Corporation or brought by or on behalf of shareholders of the Corporation, no director or officer of the Corporation shall be liable to the Corporation or its shareholders for monetary damages with respect to any transaction, occurrence or course of conduct, whether prior or subsequent to the effective date of this Article lll, except for liability resulting from such person's having engaged in willful misconduct or a knowing violation of the criminal law or any federal or state securities law. (g) An amendment to this Article iii shall be approved only by a majority of the votes entitled to be cast by each voting group entitled to vote thereon. ARTICLE IV. COMMITTEES. SECTION 1. EXECUTIVE AND FINANCE COMMITTEE. The Board may, by resolution -------------------------------- or resolutions adopted by a majority of the number of directors fixed by these By-laws, appoint two or more directors to constitute an Executive and Finance Committee, each member of which shall serve as such during the pleasure of the Board, and may designate for such Committee a Chairman, who shall continue as such during the pleasure of the Board. All completed action by the Executive and Finance Committee shall be reported to the Board at its meeting next succeeding such action or at its meeting held in the month following the taking of such action, and shall be subject to revision or alteration by the Board; provided, that no acts or rights of third parties shall be affected by any such revision or alteration. The Executive and Finance Committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the Board. At all meetings of the Executive and Finance Committee, a majority of the full number of members of such Committee shall constitute a quorum, and in every case the affirmative vote of a majority of members present at any meeting of the Executive and Finance Committee at which a quorum is present shall be necessary for the adoption of any resolution. During the intervals between the meetings of the Board, the Executive and Finance Committee shall possess and may exercise all the power and authority of the Board - 7 - (including, without limitation, all the power and authority of the Board in the management, control and direction of the financial affairs of the Corporation) except with respect to those matters reserved to the Board by Virginia law, in such manner as the Executive and Finance Committee shall deem best for the interests of the Corporation, in all cases in which specific directions shall not have been given by the Board. SECTION 2. OTHER COMMITTEES. To the extent permitted by law, the Board may ----------------- from time to time by resolution adopted by a majority of the number of directors fixed by these By-laws create such other committees of directors, officers, employees or other persons designated by it as the Board shall deem advisable and with such limited authority, functions and duties as the Board shall by resolution prescribe. The Board shall have the power to change the members of any such committee at any time, to fill vacancies, and to discharge any such committee, either with or without cause, at any time. ARTICLE V. OFFICERS. SECTION 1. NUMBER. TERM. ELECTION. The officers of the Corporation shall ----------------------- be a Chief Executive Officer, a Chairman of the Board, a President, one or more Vice Presidents, a Treasurer, a Controller and a Secretary. The Board may appoint such other officers and such assistant officers and agents with such powers and duties as the Board may find necessary or convenient to carry on the business of the Corporation. Such officers and assistant officers shall serve until their successors shall be chosen, or as otherwise provided in these By- laws. Any two or more offices may be held by the same person. SECTION 2. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall, ------------------------ subject to the control of the Board and the Executive and Finance Committee, have full authority and responsibility for directing the conduct of the business, affairs and operations of the Corporation. In addition to acting as Chief Executive Officer of the Corporation, he shall perform such other duties and exercise such other powers as may from time to time be prescribed by the Board and shall see that all orders and resolutions of the Board and the Executive and Finance Committee are carried into effect. In the event of the inability of the Chief Executive Officer to act, the Board will designate an officer of the Corporation to perform the duties of that office. SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside ---------------------- at all meetings of the Board and of the shareholders and, in the absence of the Chairman of the Executive and Finance Committee, at all meetings of the Executive and Finance Committee. He shall perform such other duties and exercise such other powers as may from time to time be prescribed by the Board or, if he shall not be the Chief Executive Officer, by the Chief Executive Officer. - 8 - SECTION 4. PRESIDENT. The President shall have such powers and perform ---------- such duties as may from time to time be prescribed by the Board or, if he shall not be the Chief Executive Officer, by the Chief Executive Officer. SECTION 5. VICE PRESIDENTS. Each Vice President shall have such powers and ---------------- perform such duties as may from time to time be prescribed by the Board, the Chief Executive Officer or any officer to whom the Chief Executive Officer may have delegated such authority. SECTION 6. TREASURER. The Treasurer shall have the general care and ---------- custody of the funds and securities of the Corporation. He shall perform such other duties and exercise such other powers as may from time to time be prescribed by the Board, the Chief Executive Officer or any officer to whom the Chief Executive Officer may have delegated such authority. If the Board shall so determine, he shall give a bond for the faithful performance of his duties, in such sum as the Board may determine to be proper, the expense of which shall be borne by the Corporation. To such extent as the Board shall deem proper, the duties of the Treasurer may be performed by one or more assistants, to be appointed by the Board. SECTION 7. CONTROLLER. The Controller shall be the accounting officer of ----------- the Corporation. He shall keep full and accurate accounts of all assets, liabilities, receipts and disbursements and other transactions of the Corporation and cause regular audits of the books and records of the Corporation to be made. He shall also perform such other duties and exercise such other powers as may from time to time be prescribed by the Board, the Chief Executive Officer or any officer to whom the Chief Executive Officer may have delegated such authority. If the Board shall so determine, he shall give a bond for the faithful performance of his duties, in such sum as the Board may determine to be proper, the expense of which shall be borne by the Corporation. To such extent as the Board shall deem proper, the duties of the Controller may be performed by one or more assistants, to be appointed by the Board. SECTION 8. SECRETARY. The Secretary shall keep the minutes of meetings of ---------- shareholders, of the Board, and, when requested, of Committees of the Board; and he shall attend to the giving and serving of notices of all meetings thereof. He shall keep or cause to be kept such stock and other books, showing the names of the shareholders of the Corporation, and all other particulars regarding them, as may be required by law. He shall also perform such other duties and exercise such other powers as may from time to time be prescribed by the Board, the Chief Executive Officer or any officer to whom the Chief Executive Officer may have delegated such authority. To such extent as the Board shall deem proper, the duties of the Secretary may be performed by one or more assistants, to be appointed by the Board. - 9 - ARTICLE VI. REMOVALS, RESIGNATIONS AND VACANCIES SECTION 1. REMOVAL OF DIRECTORS. Any director may be removed at any time --------------------- but only with cause, by the affirmative vote of the holders of record of a majority of the shares of the Corporation entitled to vote on the election of directors, given at a special meeting of the shareholders called expressly for the purpose. SECTION 2. REMOVAL OF OFFICERS. Any officer, assistant officer or agent of -------------------- the Corporation may be removed at any time, either with or without cause, by the Board in its absolute discretion. Any such removal shall be without prejudice to the recovery of damages for breach of the contract rights, if any, of the officer, assistant officer or agent removed. Election or appointment of an officer, assistant officer or agent shall not of itself create contract rights. SECTION 3. RESIGNATION. Any director, officer or assistant officer of the ------------ Corporation may resign as such at any time by giving written notice of his resignation to the Board, the Chief Executive Officer or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein or, if no time is specified therein, at the time of delivery thereof, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 4. VACANCIES. Any vacancy in the Board caused by death, ---------- resignation, disqualification, removal, an increase in the number of directors, or any other cause, may be filled (a) by the holders of shares of the Corporation entitled to vote on the election of directors, but only at an annual meeting of shareholders, or (b) by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board at any regular or special meeting thereof. Each director so elected by the Board shall hold office until the next annual election of directors, and each director so elected by the shareholders shall hold office for a term expiring at the annual meeting of shareholders at which the term of the class to which he has been elected expires, and, in each case, until his successor shall be elected, or until his death, or until he shall resign, or until he shall have been removed in the manner hereinabove provided. Any vacancy in the office of any officer or assistant officer caused by death, resignation, removal or any other cause, may be filled by the Board for the unexpired portion of the term. ARTICLE VII. CONTRACTS, LOANS, CHECKS, DRAFTS, DEPOSITS, ETC. SECTION 1. EXECUTION OF CONTRACTS. Except as otherwise provided by law or ----------------------- by these By-laws, the Board (i) may authorize any officer, employee or agent of the Corporation to execute and deliver any contract, agreement or other instrument in writing in the name and on behalf of the Corporation, and (ii) may authorize any officer, employee or agent of the Corporation so authorized by the Board to delegate such authority by - 10 - written instrument to other officers, employees or agents of the Corporation. Any such authorization by the Board may be general or specific and shall be subject to such limitations and restrictions as may be imposed by the Board. Any such delegation of authority by an officer, employee or agent may be general or specific, may authorize re-delegation, and shall be subject to such limitations and restrictions as may be imposed in the written instrument of delegation by the person making such delegation. SECTION 2. LOANS. No loans shall be contracted on behalf of the ------ Corporation and no negotiable paper shall be issued in its name unless authorized by the Board. When authorized by the Board, any officer, employee or agent of the Corporation may effect loans and advances at any time for the Corporation from any bank, trust company or other institution, or from any fir corporation or individual, and for such loans and advances may make, execute and deliver promissory notes, bonds or othe certificates or evidences of indebtedness of the Corporation and when so authorized may pledge, hypothecate or transfer securities or other property of the Corporation as security for any such loans or advances. Such authority may be general or confined to specific instances. SECTION 3. CHECKS. DRAFTS. ETC. All checks, drafts and other orders for -------------------- the payment of money out of the funds of the Corporation and all notes or other evidences of indebtedness of the Corporation shall be signed on behalf of the Corporation in such manner as shall from time to time be determined by the Board. SECTION 4. DEPOSITS. All funds of the Corporation not otherwise employed --------- shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as the Board may select or as may be selected by the Treasurer or any other officer, employee or agent of the Corporation to whom such power may from time to time be delegated by the Board. SECTION 5. VOTING OF SECURITIES. Unless otherwise provided by the Board, --------------------- the Chief Executive Officer may from time to time appoint an attorney or attorneys, or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name of the Corporation as such holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, all such written proxies or other instruments as such officer may deem necessary or proper in the premises. - 11 - ARTICLE VIII. CAPITAL STOCK. SECTION 1. CERTIFICATES. Every shareholder shall be entitled to a ------------- certificate, or certificates, in such form as shall be approved by the Board, signed by the Chairman of the Board, the President or a Vice President and the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer or any other officer authorized by these By-laws or a resolution of the Board, certifying the number of shares owned by him in the Corporation. Any such certificate may, but need not, bear the seal of the Corporation or a facsimile thereof. If any such certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation or an employee of the Corporation, the signatures of any of the officers above specified upon such certificate may be facsimiles. In case any such officer who shall have signed or whose facsimile signature shall have been placed upon such certificate shall have ceased to be such before such certificate is issued, it may be issued by the Corporation with the same effect as if such officer had not ceased to be such at the date of its issue. SECTION 2. TRANSFERS. Shares of stock of the Corporation shall be ---------- transferable on the stock books of the Corporation by the holder in person or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary or the transfer agent, but, except as hereinafter provided in the case of loss, destruction or mutilation of certificates, no transfer of stock shall be entered until the previous certificate, if any, given for the same shall have been surrendered and cancelled. Except as otherwise provided by law, no transfer of shares shall be valid as against the Corporation, its shareholders or creditors, for any purpose, until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred. The Board may also make such additional rules and regulations as it may deem expedient concerning the issue and transfer of certificates representing shares of the capital stock of the Corporation. SECTION 3. RECORD DATE. For the purpose of determining shareholders ------------ entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof unless the Board fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. SECTION 4. LOST. DESTROYED OR MUTILATED CERTIFICATES. In case of loss, ------------------------------------------ destruction or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, destruction or mutilation and upon the giving of a bond of - 12 - indemnity to the Corporation in such form and in such sum as the Board may direct; provided that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper so to do. SECTION 5. RESTRICTIONS ON TRANSFER. To the extent that the Rights ------------------------- Agreement dated as of February 27, 1986, between the Corporation and Manufacturers Hanover Trust Company may be deemed to impose restrictions on the transfer of securities of the Corporation, such restrictions are hereby authorized. ARTICLE IX. INSPECTION OF RECORDS. The Board from time to time shall determine whether, to what extent, at what times and places, and under what conditions and regulations the accounts and books and papers of the Corporation, or any of them, shall be open for the inspection of the shareholders, and no shareholder shall have any right to inspect any account or book or paper of the Corporation except as expressly conferred by statute or by these By-laws or authorized by the Board. ARTICLE X. AUDITOR. The Board shall annually appoint an independent accountant who shall carefully examine the books of the Corporation. One such examination shall be made immediately after the close of the fiscal year and be ready for presentation at the annual meeting of shareholders of the Corporation, and such other examinations shall be made as the Board may direct. ARTICLE XI. SEAL. The seal of the Corporation shall be circular in form and shall bear the name of the Corporation and the year "1892." - 13 - ARTICLE XII. FISCAL YEAR. The fiscal year of the Corporation shall end on the 3lst day of December in each year. ARTICLE XIII. AMENDMENTS. The By-laws of the Corporation may be altered, amended or repealed and new By-laws may be adopted by the Board (except as Section 1 of Article II may otherwise require), or by the holders of the outstanding shares of the Corporation entitled to vote generally at any annual or special meeting of the shareholders when notice thereof shall have been given in the notice of the meeting of shareholders. EMERGENCY BY-LAWS. SECTION 1. DEFINITIONS. As used in these Emergency By-laws, ------------ (a) the term "period of emergency" shall mean any period during which a quorum of the Board cannot readily be assembled because of some catastrophic event. (b) the term "incapacitated" shall mean that the individual to whom such term is applied shall not have been determined to be dead but shall be missing or unable to discharge the responsibilities of his office; and (c) the term "senior officer" shall mean the Chairman of the Board, the President, any corporate Vice President, the Treasurer, the Controller and the Secretary, and any other person who may have been so designated by the Board before the emergency. SECTION 2. APPLICABILITY. These Emergency By-laws, as from time to time -------------- amended, shall be operative only during any period of emergency. To the extent not inconsistent with these Emergency By-laws, all provisions of the regular By- laws of the Corporation shall remain in effect during any period of emergency. No officer, director or employee shall be liable for actions taken in good faith in accordance with these Emergency By-laws. SECTION 3. BOARD OF DIRECTORS. (a) A meeting of the Board may be called by ------------------- any director or senior officer of the Corporation. Notice of any meeting of the Board need be given only to such of the directors as it may be feasible to reach at the time and by such means as may be feasible at the time, including publication or radio, and at a time less - 14 - than twenty-four hours before the meeting if deemed necessary by the person giving notice. (b) At any meeting of the Board, three directors in attendance shall constitute a quorum. Any act of a majority of the directors present at a meeting at which a quorum shall be present shall be the act of the Board. If less than three directors should be present at a meeting of the Board, any senior officer of the Corporation in attendance at such meeting shall serve as a director for such meeting, selected in order of rank and within the same rank in order of seniority. (c) In addition to the Board's powers under the regular By-laws of the Corporation to fill vacancies on the Board, the Board may elect any individual as a director to replace any director who may be incapacitated and to serve until the latter ceases to be incapacitated or until the termination of the period of emergency, whichever first occurs. In considering officers of the Corporation for election to the Board, the rank and seniority of individual officers shall not be pertinent. (d) The Board, during as well as before any such emergency, may change the principal office or designate several alternative offices or authorize the officers to do so. SECTION 4. APPOINTMENT OF OFFICERS. In addition to the Board's powers ------------------------ under the regular By-laws of the Corporation with respect to the election of officers, the Board may elect any individual as an officer to replace any officer who may be incapacitated and to serve until the latter ceases to be incapacitated. SECTION 5. AMENDMENTS. These Emergency By-laws shall be subject to repeal ----------- or change by further action of the Board of Directors or by action of the shareholders, except that no such repeal or change shall modify the provisions of the second paragraph of Section 2 with regard to action or inaction prior to the time of such repeal or change. Any such amendment of these Emergency By-laws may make any further or different provision that may be practical and necessary for the circumstances of the emergency. - 15 - EX-10.(B) 3 1988 STOCK OPTION PLAN EXHIBIT 10(B) 1988 STOCK OPTION PLAN FOR KEY EMPLOYEES OF OLIN CORPORATION AND SUBSIDIARIES (AS AMENDED THROUGH FEBRUARY 23, 1995) 1. PURPOSE OF THE PLAN. The general purpose of the 1988 Stock Option Plan for Key Employees of Olin Corporation and Subsidiaries (the "Plan") is to aid in attracting, maintaining and developing a management capable of assuring the future success of Olin Corporation ("Olin") by providing to key employees of Olin and its subsidiaries additional incentive to enlarge their proprietary interest in Olin, to continue and increase their efforts on Olin's behalf and to remain in the employ of Olin or its subsidiaries. 2. SHARES SUBJECT TO THE PLAN. Options may be granted from time to time under the Plan in respect of an aggregate of not exceeding 1,100,000 shares of Common Stock of Olin (subject to the provisions in paragraph 15 hereof). If any option granted under the Plan shall expire or terminate for any reason other than its surrender pursuant to paragraph 7 (including, without limitation, by reason of its surrender or cancellation, in whole or in part, or the substitution therefor of a new option) without having been exercised in full, the unpurchased shares subject thereto shall (unless the Plan shall have been terminated) again be available for other options to be granted under the plan. 3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a Committee on Stock Options (the "Committee") appointed by the Board of Directors of Olin and consisting of not less than three of those members of the Board of Directors who are not eligible to participate in the Plan or who shall have advised the Board of Directors in writing that they irrevocably waive any rights under the Plan. The Committee shall have plenary authority in its discretion, but subject to the express provisions of the Plan, to determine the purchase price of the Common Stock covered by each option, the employees to whom, and the time or times at which, options shall be granted and the number of shares to be covered by each option; to interpret the Plan; to prescribe, amend and rescind rules and regulations relating to it; to determine the terms and provisions (and amendments thereof) of the respective option agreements (which need not be identical), including, if the Committee shall determine that a particular option is to conform to the requirements of any provision of the Internal Revenue Code as amended from time to time, such terms and provisions (and amendments) as shall be requisite in the judgment of the Committee to provide therefor or to conform to any change in any law or regulation applicable thereto; and to make all other determinations deemed necessary or advisable for the administration of the Plan. The Committee's determination on the foregoing matters shall be conclusive. The Committee shall select one of its members as its chairman and shall hold its meetings at such times and places as it shall deem advisable. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by not less than a majority of its members. A decision or determination reduced to writing and signed by a majority of the members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary, shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable. The Committee may designate the Secretary of Olin or other employees of Olin to assist the Committee in the administration of the Plan and may grant authority to such persons to execute option agreements or other documents on behalf of the Committee. 4. ELIGIBILITY; FACTORS TO BE CONSIDERED IN GRANTING OPTIONS. Options may be granted only to regular employees (including officers) of Olin and of its present and future subsidiary corporations ("subsidiaries"). A Director of Olin or of a subsidiary who is not also such an employee will not be eligible to receive an option. In determining the employees to whom options shall be granted and the number of shares to be covered by each option, the Committee may take into account the nature of the services rendered by the respective employees, their present and potential contributions to the success of Olin, and such other factors as the Committee in its discretion shall deem relevant. An employee who has been granted an option under the Plan or under any prior stock option plan of Olin may be granted an additional option or options if the Committee shall so determine. Nothing contained in the Plan shall be construed to limit the right of Olin to grant or assume options otherwise than under the Plan in connection with the acquisition by purchase, lease, merger, consolidation or otherwise of the business and assets of any corporation, firm or association, including options granted to employees thereof who become employees of Olin or a subsidiary, or for other proper corporate purposes. 5. OPTION PRICES. The purchase price of the Common Stock covered by each option shall be determined by the Committee but shall not be less than 100% of the fair market value of the Common Stock at the time of granting the option. Such fair market value shall be determined by the Committee and shall be taken at no less than the mean of the high and low sales prices of the Common Stock as reported on the consolidated transaction reporting system for New York Stock Exchange issues on such date or, if the Common Stock was not traded on such date, on the first preceding day on which the Common Stock was traded. 6. EXERCISE OF OPTIONS. The Committee shall have authority in its discretion to prescribe in any option agreement that the option will be exercisable in full at any time or from time to time during the term of the option, or to provide for the exercise thereof in such installments at such times during said term as the Committee may determine. An option may be exercised, at any time or from time to time during the term of the option, as to any or all full shares which have become purchasable under the provisions of the option but not as to less than 25 shares at any one time. The option price shall be paid in full in cash or its equivalent at the time the option is exercised; provided, however, that the Committee may elect to permit such option price to be paid in shares of Common Stock of Olin, or a combination of cash and shares of Common Stock of Olin, the fair market value of such Common Stock to be determined for such purpose in such manner as shall be selected by the Committee, but not at more than the mean of the high and low sales prices of the Common Stock as reported on the consolidated transaction reporting system for New York Stock Exchange issues on the date on which the optionee's written notice of exercise is received by Olin, or if the Common Stock was not traded on such day, on the first preceding day on which the Common Stock was traded. The term of each option shall be not more than ten years from the date of granting thereof, or such shorter period as is prescribed in paragraphs 11, 13 and 14 hereof. Except as provided in said paragraphs 11, 13 and 14 hereof, no option may be exercised at any time unless the holder thereof is then a regular employee of Olin or one of its subsidiaries. The holder of an option shall not have any of the rights of a stockholder with respect to the shares covered by his or her option until such shares shall be issued to him or her upon the due exercise of the option. In lieu of requiring an optionee to pay in cash such federal, state or local income taxes as may be applicable to exercise of an option ("withholding taxes"), the Committee may elect to permit withholding taxes to be paid by the optionee in shares of Common Stock of Olin or in a combination of cash and shares of Common Stock of Olin, the fair market value of such Common Stock to be determined for such purpose as provided in the next preceding paragraph with respect to the use of Common Stock of Olin in payment of the option price. Shares delivered in payment of an option price or for withholding taxes may be shares withheld by Olin upon exercise of an option or shares already owned by the optionee. 7. STOCK APPRECIATION RIGHTS. The Committee shall have authority in its discretion to grant a stock appreciation right ("SAR") to an optionee which shall relate to and have the same terms and conditions as a specific option granted to the optionee under the Plan (the "related option") together with such additional terms and conditions, if any, as the Committee in its discretion may prescribe. An SAR may be granted at the same time as the related option is granted or, except as otherwise provided herein, at any time thereafter prior to the last day on which the related option may be exercised. Each SAR shall be evidenced by written agreement in such form as the committee shall approve'. An SAR shall entitle the optionee, upon surrender of an exercisable related option or an exercisable portion thereof, to receive a payment, at the election of the Committee in cash, shares of Common Stock of Olin (and such other shares as may be deliverable as a result of an adjustment pursuant to paragraph 15 ("adjustment shares")) or a combination of cash and shares of Common Stock of olin (and adjustment shares) equivalent to the appreciated value of the shares that the optionee would have been entitled to purchase pursuant to the related option or portion thereof surrendered. Such appreciated value shall be the difference between the option price of such shares (as adjusted pursuant to paragraph 15) and the fair market value of such shares (as defined in paragraph 5) on the date on which the optionee's notice of exercise is received by Olin. If all or a portion of such payment is made in shares of Common Stock of Olin (or adjustment shares), the shares shall be valued for purposes of such payment at their fair market value, as defined in paragraph 5, on the date on which the optionee's written notice of exercise is received by Olin. No fractional shares shall be issued as a result of exercising an SAR. An SAR shall be exercisable only during the period when the related option is also exercisable. In no event shall an SAR or the related option held by an optionee who is subject to the limitations of Section 16(b) of the Securities Exchange Act be exercisable during the first six months following its date of grant, provided that this restriction shall not apply in the event of the death or disability of the optionee prior to the expiration of such six-month period. If an SAR is exercised, the related option shall cease to be exercisable to the extent of the number of shares with respect to which the SAR was exercised. Upon the exercise or termination of a related option, the SAR granted with respect thereto shall terminate to the extent of the number of shares as to which the related option was exercised or terminated. In lieu of requiring an optionee to pay cash and receive certificates for shares of Common Stock of Olin (and adjustment shares) upon the exercise of an option, if the option agreement so provides, initially or by amendment, the Committee may elect to require the optionee to surrender the option to Olin for cancellation as to all or any portion of the number of shares covered by the intended exercise and receive in exchange for such surrender a payment, at the election of the Committee, in cash, in shares of Common Stock of Olin (and adjustment shares), or a combination of cash and shares of Common Stock of Olin (and adjustment shares) equivalent to the appreciated value of the shares covered by the option surrendered for cancellation. Such appreciated value shall be the difference between the option price of such shares (as adjusted pursuant to paragraph 15) and the fair market value of such shares, as defined in paragraph 5, on the date on which the optionee's notice of exercise is received by Olin. If all or any part of such payment shall be in shares of Common Stock of Olin (or adjustment shares), the shares shall be valued for purposes of such payment at their fair market value, as defined in paragraph 5, on the date on which the optionee's notice of exercise is received by Olin. Upon delivery to Olin of a notice of exercise of option, the Committee may avail itself of its right to require the optionee to surrender the option to Olin for cancellation as to shares covered by such intended exercise. The Committee's right of election shall expire, if not exercised, at the close of business on the fifth business day following the delivery to Olin of such notice. Should the Committee not exercise such right of election, the delivery of the aforesaid notice of exercise shall constitute an exercise by the optionee of the option to the extent therein set forth, and payment for the shares covered by such exercise shall become due immediately. 8. CHANGE IN CONTROL. In the event of a change in Control of Olin, as defined below, each option then outstanding shall become immediately and fully exercisable, notwithstanding any provision therein for the exercise of such option in installments and unless an SAR shall already have been granted with respect to such option, the optionee shall be deemed to hold an SAR related to such option, exercisable in accordance with and subject to all of the terms and conditions of the first two paragraphs of paragraph 7, for the number of shares exercisable under such option after giving effect to such acceleration. Such SAR may, but need not be, evidenced by separate written agreement. For the purposes of this paragraph 8, a Change in Control shall mean that any of the following events shall have occurred: (i) the Corporation ceases to be publicly owned with at least 1,000 stockholders; (ii) a person, partnership, joint venture, corporation or other entity, or two or more of any of the foregoing acting as a group (or a "person" within the meaning of Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Act")), other than the Corporation, a majority-owned subsidiary of the Corporation or an employee benefit plan of the Corporation or such subsidiary, become(s) the "beneficial owner" (as defined in Rule 13(d)(3) under the Act) of 20% or more of the then outstanding voting stock of the Corporation; (iii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Corporation's Board of Directors (together with any new Director whose election by the Corporation's Board of Directors or whose nomination for election by the Corporation's stockholders, was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Directors then in office; or (iv) the Corporation's Board of Directors determines that a tender offer for the Corporation's shares indicates a serious intention by the offeror to acquire control of the Corporation. 9. EMPLOYEE'S AGREEMENT TO SERVE. Each employee receiving an option shall, as one of the terms of the option agreement, agree that he or she will, during employment, devote his or her entire time, energy and skill to the service of Olin or a subsidiary and the promotion of its interests, subject to vacations, sick leave and other absences in accordance with the regular policies of, or other reasons satisfactory to, Olin and its subsidiaries. Such employment shall (subject to the terms of any contract between Olin or any such subsidiary and such employee) be at the pleasure of Olin or such subsidiary, and shall be at such compensation as Olin or such subsidiary shall determine from time to time. Upon termination of such employee's employment either (a) for cause or (b) voluntarily on the part of the employee and without the written consent of Olin, any option or options held by him or her under the Plan, to the extent not theretofore exercised, shall forthwith terminate. Retirement pursuant to any retirement plan of Olin or of a subsidiary shall be deemed to be a termination of employment with Olin's consent. 10. NON-TRANSFERABILITY OF OPTIONS. No option granted prior to February 23, 1995, under the Plan shall be transferable otherwise than by will or the laws of descent and distribution, and an option may be exercised, during the lifetime of the holder thereof, only by him or her. For options granted on or after February 23, 1995, the following sentences shall apply: No option granted under the Plan on or after February 23, 1995 shall be transferable otherwise than by will or the laws of descent and distribution, except an option may be transferred by gift to any member of the optionee's immediate family or to a trust for the benefit of the one or more of such immediate family members if prior to its granting the Committee shall have adopted a resolution indicating that such option is transferable. During the lifetime of an optionee, and option shall be exercisable only by the optionee unless it has been transferred as permitted hereby, in which case it shall be exercisable only by such transferee. For the purpose of this Paragraph 10 on optionee's "immediate family" shall mean the optionee's spouse, children and grandchildren. 11. TERMINATION OF EMPLOYMENT. In the event the employment of an employee to whom an option has been granted under the Plan shall be terminated (otherwise than by reason of death), such option may, subject to the provisions of the next to last sentence of paragraph 9 and to the provisions of paragraph 12, be exercised (to the extent of the number of shares that the employee was entitled to purchase under such option at the termination of employment) at any time within three months after such termination (which three- month period may be extended by the Committee), but in no event shall such three-month period or any such extension permit the exercise of an option after the expiration date of the option specified in the option agreement therefor. Options granted under the Plan shall not be affected by any change of duties or position so long as the optionee continues to be an employee of Olin or of a subsidiary. Nothing in the Plan or in any option granted pursuant thereto shall confer on any employee any right to continue in the employ of Olin or any of its subsidiaries or affect in any way the right of Olin or any of its subsidiaries to terminate his or her employment at any time. 12. CONDITIONS TO ENJOYMENT OF OPTIONS. The following conditions shall apply to the grant and exercise of options: (i) The optionee shall not render services for any organization or engage, directly or indirectly, in any business which, in the judgment of the Committee or, if delegated to the Chief Executive Officer, in the judgment by such Officer, is or becomes competitive with Olin or any subsidiary, or which is or becomes otherwise prejudicial to or in conflict with the interests of Olin or any subsidiary. Such judgment shall be based on the optionee's positions and responsibilities while employed by Olin or any subsidiary, the optionee's post-employment responsibilities and position with the other organization or business, the extent of past, current and potential competition or conflict between Olin or a subsidiary and the other organization or business, the effect on customers, suppliers and competitors of the optionee's assuming the post-employment position, the guidelines established in the then current edition of Olin's Code of Business Conduct, and such other considerations as are deemed relevant given the applicable facts and circumstances. The optionee shall be free, however, to purchase as an investment or otherwise, stock or other securities of such organization or business so long as they are listed upon a recognized securities exchange or traded over the counter, and such investment does not represent a substantial investment to the optionee or a greater than 10% equity interest in the organization or business. (ii) The optionee shall not, without prior written authorization from Olin, disclose to anyone outside Olin, or use in other than Olin's business, any secret or confidential information, knowledge or data, relating to the business of Olin or a subsidiary in violation of his or her agreement with Olin or the subsidiary. (iii) The optionee, pursuant to his or her agreement with Olin or a subsidiary, shall disclose promptly and assign to Olin or the subsidiary all right, title, and interest in any invention or idea, patentable or not, made or conceived by the optionee during employment by Olin or the subsidiary, relating in any manner to the actual or anticipated business, research or development work of Olin or the subsidiary and shall do anything reasonably necessary to enable Olin or the subsidiary to secure a patent where appropriate in the United States and in foreign countries. Notwithstanding any other provision of the Plan, the Committee in its sole discretion, which may be delegated to the Chief Executive Officer of Olin, may cancel any option at any time prior to the exercise thereof, if the employment of the optionee shall be terminated, other than by reason of death, unless the conditions in this paragraph 12 are met. Failure to comply with the conditions of this paragraph 12 prior to, or during the six months after, any exercise shall constitute a rescission of the exercise. The difference between the fair market value (as defined in paragraph 5) on date of exercise of the shares exercised and the option price shall be returned to Olin by the optionee, in cash, within 10 days after notice of the rescission has been given to the optionee by Olin's Chief Executive Officer, chief legal officer or chief personnel officer. Such notice may be given at any time within two years of the date of exercise. Upon exercise of an option, the optionee shall certify on a form acceptable to the Committee that he or she is in compliance with the terms and conditions of the Plan. 13. DEATH OF AN EMPLOYEE. If an employee to whom an option has been granted under the Plan shall die while employed by Olin or a subsidiary or after the termination of such employment, such option may, subject to the provisions of the next to the last sentence of paragraph 9 and to the provisions of paragraph 12, be exercised by the legatee or legatees of the employee under his or her last will, or by his or her personal representatives or distributes, as follows: if an employee dies while so employed, at any time within one year after the employee's death (which one-year period may be extended by the Committee), to the extent of the remaining shares covered by such option, whether or not such shares had become purchasable by the employee at the date of his or her death; and if an employee dies after termination of employment and within the period an option remains exercisable, at any time within the longer of (i) the period that he or she could have exercised the option had he or she not died or (ii) one year after the date of death (which one-year period may be extended by the Committee), in either case, to the extent of the number of shares purchasable by such employee pursuant to the provisions of paragraph 11 at the date of his or her death. Notwithstanding the provisions of this paragraph 13, no option shall be exercisable after the expiration date specified in the option agreement therefor. 14. DISABILITY OF AN EMPLOYEE. If an employee to whom an option has been granted under the Plan shall become totally and permanently disabled, as that term is now defined in Section 105(d)(4) of the Internal Revenue Code, as such Section may be amended from time to time, and the employee's employment with Olin or a subsidiary is terminated as a result, such option may be exercised by such employee within one year after the date of termination of employment, provided that no option shall be exercisable after the expiration date specified in the option agreement therefor nor for more shares than that which could have been purchased thereunder on the date of termination of employment. 15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any change in the outstanding Common Stock of Olin by reason of stockdividends, stock splits, recapitalization, mergers, consolidations, combinations or exchanges of shares, split-ups, split-offs, spin-offs, liquidations or other similar changes in capitalization, or any distributions to common shareholders other than cash dividends, the numbers, class and prices of shares covered by outstanding options granted under the Plan and the aggregate number and class of shares available under the Plan, shall be appropriately adjusted by the Committee, whose determination shall be conclusive. Without limiting the foregoing, in the event of any split- up, split-off, spin-off or other distribution to shareholders of shares representing a part of Olin's business, properties and assets, the Committee may, with the consent of an optionee, modify an outstanding option or options so that such option or options shall thereafter relate to shares of Common Stock of Olin and shares of capital stock of the corporation owning the business, properties and assets so split-up, split-off, spun-off or otherwise distributed to shareholders of Olin in the same ratio in which holders of the Common Stock of Olin became entitled to receive shares of capital stock of the corporation owning the business, properties and assets so splitup, split-off, spun-off or otherwise distributed. 16. EFFECTIVENESS OF THE PLAN. The Plan became effective on April 28, 1988. 17. TIME OF GRANTING OF OPTIONS. The granting of an option pursuant to the Plan shall take place on the date established by the Committee. However, no option may be exercised if the employee to whom the option is granted shall fail to execute and deliver a copy of the option agreement to the Committee or Olin within 60 days after delivery of the option agreement to such employee. 18. CONSENT OF EMPLOYEE. Every employee who accepts an option under the Plan shall be bound by the terms and restrictions of the Plan and his or her acceptance of an option shall constitute an agreement between him or her and Olin and its subsidiaries and any successors in interest to any of them. 19. TERMINATION AND AMENDMENT. Unless the Plan theretofore has been terminated as hereinafter provided, it shall terminate on, and no option shall be granted thereunder after, April 30, 1998. The Board of Directors of Olin may at any time prior to that date terminate the Plan, or make such modification thereof as it shall deem advisable; provided, however, that the Board of Directors may not, without further approval by shareholders of Olin, (a) increase the maximum number of shares for which options may be granted under the Plan, (b) change the manner of determining the minimum option prices, other than to change the manner of determining the fair market value of the Common Stock as stated in paragraph 5 above to conform to any then applicable provisions of the Internal Revenue Code or regulations thereunder, or (c) increase the period during which options may be granted. No termination, modification or amendment of the Plan may, without the consent of the employee to whom any option shall theretofore have been granted, adversely affect the rights of such employee under such option. 20. INCENTIVE STOCK OPTION LIMITATION. The aggregate fair market value (determined at the time an option is granted) of Common Stock of Olin with respect to which incentive stock options (as defined in Section 422A of the Internal Revenue Code) are exercisable for the first time by an individual during any calendar year (under the Plan and any other stock option plan of the individual's employer corporation and its parent and subsidiary corporations) shall not exceed $100,000. EX-10.(L) 4 OLIN SENIOR EXEC PENSION Exhibit 10(l) OLIN SENIOR EXECUTIVE PENSION PLAN ---------------------------------- (As adopted by the Board of Directors on September 27, 1984) 1. Purposes -------- The purposes of the Olin Senior Executive Pension Plan ("Plan") are to enable Olin Corporation ("Olin") to attract and maintain a management group capable of assuring Olin's future success. 2. Definitions ----------- "Committee" means the Compensation and Stock Option Committee of Olin's Board of Directors. The Committee shall administer the Plan. "Participant" means an employee of Olin or a subsidiary ("Employing Company") whose job is rated at 2,000 Hay points (or equivalent) or over and who is selected by the Committee to participate in the Plan. As provided in paragraph 4, the Committee may remove any Participant from the Plan, whether or not he or she has begun to receive benefits hereunder. "Salaried Plan" means the Olin Salaried Pension Plan. The terms "Average Compensation", "Years of Benefit Service", "Retirement Allowance" and "Primary Social Security Benefit" are used as defined in the Salaried Plan. "Spouse Retirement Allowance" shall be an annual benefit equal to 50% of the Participant's Retirement Allowance (as defined below), except that if the spouse is more than four years younger than the Participant, the Spouse Retirement Allowance shall be reduced so that the present value of the spouses expected lifetime benefit is the same as it would have been if he or she was four years younger than the Participant and entitled to receive an annual benefit equal to 50% of the Participant's Retirement Allowance. The "Participant's Retirement Allowance shall be an annual retirement benefit equal to the lesser of (A x B) - (D + E) or (C) - (D + E + F) where A = Average Compensation (.03 x Years of Benefit Service with 2,000 or more Hay Points + .015 x Years of Benefit Service with less than 2,000 Hay Points) Exhibit 10(l) B = 100%, except that if the Participant begins receiving benefits prior to age 62, B shall be reduced by 1/3 of 1% for each month between the month in which benefits begin and the month of the Participant's 62nd birthday. C = .5 Average Compensation. D = Annual retirement allowance from all Olin pension plans, including, without limitation, the Salaried Plan, and the equivalent actuarial value of any other arrangement with Olin which the Committee , in its sole discretion, determines to be a form of pension supplement. E = 50% of the Participant's Primary Social Security Benefit. F = Annual retirement allowance from all pension plans of the Participant's previous employers. D and F shall be calculated assuming that the Participant selected a 50% joint and survivor annuity under such plans and began receiving benefits thereunder at the same time as under the Plan. 3. Payment of Benefits ------------------- (a) Except as set forth in the last sentence of this paragraph (a), or unless the Committee otherwise determines in its sole discretion, each Participant entitled to receive benefits under the Salaried Plan must elect to retire and begin to receive benefits hereunder at the same time as under the Salaried Plan. Subject to the provisions of paragraph 4, a Participant may retire or elect early retirement under the Plan in the same manner as provided in the Salaried plan without meeting the service requirements of the Salaried Plan. A Participant who leaves the employ of an Employing Company before age 55 may not elect to receive benefits under the Plan prior to age 65; benefits payable under the Plan to such Participant will assume that the Participant did not retire under the Salaried Plan until age 65, although he or she may retire under the Salaried Plan at such times as are permitted thereunder. (b) Subject to the provisions of paragraphs 3(c) and 4: (i) Upon the Participant's retirement under the Plan, the Participant's Retirement Allowance shall be paid in the manner and for the period that it would have been payable if it were a retirement allowance under the Salaried Plan. (ii) Upon the death of a Participant receiving benefits under the Plan, his or her spouse shall be paid the Spouse Retirement Allowance in the manner and for the period that it would have been payable if it were a joint and survivor allowance under the Salaried Plan. Exhibit 10(l) (iii) Upon the death of a Participant, if the Participant and his or her spouse meet the criteria set forth in the Salaried Plan for a pre- retirement spouse benefit (other than the 10 year creditable service requirement), the spouse shall be paid the Spouse Retirement Allowance in the manner and for the period that it would have been payable if it were a pre-retirement spouse benefit under the Salaried Plan. (iv) The total and permanent disability provisions of the Plan shall be the same as those of the Salaried Plan. (v) Unless otherwise determined by the Committee in its sole -- discretion, layoff rights under the Plan shall be the same as under the Salaried Plan. (c) Notwithstanding any other provision of the Plan, in the event of any ambiguity in Plan provisions, the Committee shall in its sole discretion interpret the provisions so as to conform with the intent as well as the terms of the Plan. 4. Removal from the Plan; Non-Payment of Benefits ---------------------------------------------- (a) Any Participant may be removed from the Plan by the Committee at any time for cause, as determined by the Committee in its sole discretion, whether or not the Participant has begun to receive payments under the plan, and whether or not the Participant's employment has been terminated. "Cause" shall include, without limitation, rendering services in any capacity to a competitor of Olin without the Committee's consent. Neither the Participant nor his or her spouse shall be entitled to receive any payments from the Plan from and after the date of the removal of the Participant nor have any cause of action as a result of such removal. The Participant or spouse shall not be required to return any payments made prior to removal of the Participant from the Plan. (b) No benefits shall be parable under the Plan if the Participant voluntarily terminates employment without the Committee's consent, whether or not under retirement provisions of the Salaried Plan or other Olin pension plan. (c) The Committee may notify a Participant that he or she is being suspended from the Plan as a result of job performance which the Committee in its sole discretion deems unsatisfactory. From and after the date of such notification and notwithstanding the Participant's actual Hay Points, he or she will not be deemed to have 2,000 or more Ray Points for purposes of calculating the Participant's Retirement Allowance. Any prior years of Service shall not be affected by such suspension. Exhibit 10(l) 5. Liability for Payment --------------------- Each Employing Company shall pay any benefits payable hereunder with respect to Participants formerly employed by it. (In the case of a participant who was employed by more than one Employing Company, the Committee shall allocate the cost of such benefits among such Employing Companies in such manner as it deems equitable.) The obligations of the Employing Companies hereunder shall not be funded in any manner. The rights of any person to receive benefits under the Plan are limited to those of a general creditor of the Employing Company liable for such benefits. 6. Employment Rights ----------------- Nothing in the Plan shall be construed as giving any Participant the right to be retained in the employ of any Employing Company. Each Employing Company expressly reserves the right to dismiss any Participant at any time without liability for the effect which such dismissal might have upon him or her hereunder. 7. Amendment and Termination ------------------------- The plan may be amended or terminated at any time or from time to time by Olin's Board of Directors without adversely affecting rights, if any, of Participants accrued prior to the date of such amendment or termination. 8. Assignability ------------- No right to payment or any other interest under the Plan shall be assignable or subject to attachment, execution or levy of any kind. 9. Governing Law ------------- The Plan and all actions taken hereunder shall be governed by and construed in accordance with the laws of the State of New York. Exhibit 10(l) TECHNICAL CORRECTION TO OLIN SENIOR EXECUTIVE PENSION PLAN ---------------------------------- The fourth paragraph of paragraph 2 of the Plan is corrected to read in its entirety as follows, effective September 27, 1984: The terms "Average Compensation", "Years of Benefit Service", "Retirement Allowance" and "Primary Social Security Benefit" are used as defined in the Salaried Plan, except that deferred payments of regular salary and deferred awards under Employing Company incentive compensation plans shall be included in the computation of "Average Compensation." Exhibit 10(l) RESOLVED that the Olin Senior Executive Pension Plan be, and it hereby is, amended by adding thereto the following provisions: "10. Lump Sum Payment. Notwithstanding any other provision of the Plan, ---------------- upon a Change in Control, each Participant covered by the Plan shall automatically be paid a lump sum amount in cash by Olin equal to the actuarial present value of the Participant's accrued benefits under the Plan, calculated as if his employment had terminated on the date of the Change in Control, discounted to present value at a discount rate of 120% of the then applicable Federal Rate determined under Section 1274(d) of the Internal Revenue Code, compounded semiannually, applied to each future payment from the time it ordinarily would have become payable to the date of the Change in Control. Such actuarial present value shall be determined by the actuary then providing actuarial services to the Olin Salaried Pension Plan. Such lump sum payment shall be made immediately upon a Change in Control regardless of the age of the individual at the time and shall be in lieu of any benefits under the Plan which might otherwise become due thereafter. Such lump sum payment shall not in and of itself terminate the Plan. "A `Change in Control' for purposes of the Plan shall be deemed to have occurred if (i) Olin shall cease to be a publicly owned corporation having its outstanding Common Stock listed on a national securities exchange or traded in the NASDAQ market system; (ii) a `person', or `group' (within the meaning of the Securities Exchange Act of 1934, as amended), other than an employee benefit plan of Olin, becomes the `beneficial owner' (as defined by regulation under such Act) of more than 20% of the combined voting power of the outstanding securities of Olin ordinarily entitled to vote in elections of Directors; or (iii) during any period of two consecutive years (not including any period prior to July 1, 1987), individuals who at the beginning of such period constitute the Board of Directors of Olin (together with any new Director whose election by the Board or whose nomination for election by Olin's stockholders was approved by a vote of at least two-thirds of the Directors of Olin 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; provided that the events referred to in clauses (i) and (ii) above shall not constitute a `Change in Control' if they are arranged for, or consummated with, the prior approval of the Board of Directors of Olin, and provided further that the event referred to in clause (iii) shall not constitute a `Change in Control' if it occurs after an event described in clause (i) or (ii) above which has been authorized by, or consummated with, the prior approval of the Board of Directors of Olin. "11. Arbitration. Any dispute or controversy arising under or in ------------- connection with the Plan subsequent to a Change in Control shall be settled exclusively by arbitration in New York City, New York in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Exhibit 10(l) RESOLVED that the Olin Senior Executive Pension Plan be, and it hereby is, amended by adding the following at the end of paragraph 2 thereof: " 'Spouse' means a Participant's spouse at the date of his or her death. Notwithstanding this or any other provision of the Plan, if a husband or wife of a Participant at the date of the Participants death was not such husband or wife at the date the Participant was selected by the Committee to participate in the Plan, no Spouse Retirement Allowance shall be payable unless the Participant shall have notified Olin's Pension Department in writing of his or her remarriage within 90 days thereof." Exhibit 10(l) RESOLVED that the Olin Senior Executive Pension Plan ("Senior Plan") be, and it hereby is, amended as follows: (a) By changing the fourth paragraph of paragraph 2 of the Senior Plan to read as follows: The terms `Average Compensation', `Years of Benefit Service', `Retirement Allowance' and `Primary Social Security Benefit' are used as defined in the Salaried Plan, except that (a) deferred amounts of regular salary and deferred awards otherwise due under Employing Company incentive compensation plans shall be included in the computation of `Average Compensation' and, in calculating `Average Compensation', an `Executive Severance'. payment to a Participant under an employment agreement with Olin shall be treated as if it was paid over the number of months of salary used to calculated such Executive Severance, notwithstanding that it is paid to the Participant in a lump sum, and (b) `Years of Benefit Service' shall include the number of months of salary used to calculate an `Executive Severance' payment to the Participant under an employment agreement with Olin, notwithstanding that such Executive Severance payment is made to the Participant in a lump sum." (b) By adding to the third sentence of Paragraph 5 of the Senior Plan the phrase "except under a so-called `Rabbi' or similar trust to be fully funded, or by annuities to be purchased, in the event of a Change in Control". (c) By changing paragraph 10 of the Senior Plan to read as follows: 10. Change in Control. Notwithstanding any other provision of the Plan: ------------------ (a) upon a Change in Control, each Participant covered by the Plan shall automatically be paid a lump sum amount in cash by Olin sufficient to purchase an annuity which, together with the monthly payment, if any, provided to the Participant under a `Rabbi' or other trust arrangement established by Olin to make payments hereunder in the event of a Change in Control and/or pursuant to any other annuity purchased by the Corporation for the Participant to make payments hereunder, shall provide the Participant with the same monthly after-tax benefit as he would have received under the Plan based on benefits accrued to the Participant hereunder to the date, of the Change in Control. Payment under this paragraph shall not in and of itself terminate the Plan, but such payment shall be taken into account in calculating benefits under the Plan which may otherwise become due the Participant thereafter." (b) removal for any reason of a Participant from the Plan after a Change in Control shall not affect any Years of Benefit Service accrued prior to such removal or the payment of benefits with respect thereto. Exhibit 10(l) A Change in Control for purposes of the Plan shall mean that any of the following events have occurred: "(i) the Corporation ceases to be publicly owned with at least 1,000 stockholders; (ii) a person, partnership, joint venture, corporation or other entity, or two or more of any of the foregoing acting as a group (or a `person' within the meaning of Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the `Act')), other than the Corporation, a majority-owned subsidiary of the Corporation or an employee benefit plan of the Corporation or such subsidiary, become(s) the `beneficial owner', (as defined in Rule 13d-3 under the Act) of 20% or more of the then outstanding voting stock of the Corporation; (iii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Corporation's Board of Directors (together with any new Director whose election by the Corporation's Board of Directors or whose nomination for election by the Corporation's stockholders, was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Directors then in office; or (iv) the Corporation's Board of Directors determines that a tender offer for the Corporation's shares indicates a serious intention by the offeror to acquire control of the Corporation." Exhibit 10(l) Amendment to Olin Senior Executive Pension Plan RESOLVED that effective May, 1990 the definition of "Salaried Plan" in the Senior Executive Pension Plan of the Corporation shall be amended to refer to the "Non Bargaining Employees Pension Plan of Olin Corporation (and any successor plan)." EX-10.(M) 5 SUPP CONTRIBUTING PLAN Exhibit 10(m) OLIN SUPPLEMENTAL CONTRIBUTING EMPLOYEE OWNERSHIP PLAN EFFECTIVE JANUARY 1, 1990 1. Establishment. Olin Corporation ("Olin") hereby establishes the Olin ------------- Supplemental Contributing Ownership Plan (the "Plan" or "SCEOP Plan"), effective January 1, 1990. 2. Purpose. The purpose of this Plan is to provide certain eligible ------- employees who are limited under Sections 401(a)(17) and 415(c)(1) of the Internal Revenue Code of 1986 and the regulations promulgated thereunder (the "Code") in making contributions to the Olin Corporation Contributing Employee Ownership Plan (as from time to time amended, the "CEO Plan") with certain supplemental benefits to make up for such Code-imposed limitations. 3. Definitions. Except as otherwise provided herein, the terms defined in ----------- the CEO Plan are used herein with the meanings ascribed to them in the CEO Plan. In addition, when used herein, the following definitions shall apply: "Dividend Equivalents" means with respect to a number of Phantom Shares, the dollar amount of regular or special dividends actually paid in cash from time to time on an equivalent number of shares of Common Stock. "CEOP Percentage" means with respect to a SCEOP Participant the annual percentage by which such participant reduces his received Compensation on either a before-tax or after-tax basis in calculating Contributions made to the CEO Plan; provided, however if such percentage exceeds 6%, the SCEOP Participant may elect for purposes of this Plan to reduce such percentage to 6% and if such election is made, for purposes of this Plan the CEOP Percentage shall be 6%. "Excess Company Matching Allocation" means with respect to a SCEOP Participant the percentage used in calculating the Company Matching Allocation (in excess of $25 per month) (as of the date hereof, 50%), as such percentage changes from time to time, multiplied by the annual Supplemental Plan Contribution for that participant; provided that if the participant's CEOP Percentage exceeds 6%, the Supplemental Plan Contribution will be calculated using 6% for the CEOP Percentage when calculating the Excess Company Matching Contribution. "Excess Performance Allocation" means with respect to a SCEOP Participant for a calendar year the percentage used in calculating the Performance Matching Allocation, if any, for such year multiplied by the Supplemental Plan Contribution of that participant for such year; provided that if such participant's CEOP Percentage exceeds 6%, the Supplemental Plan Contribution will be calculated using 6% for the CEOP Percentage when calculating the Excess Performance Allocation. "Maximum Eligible Compensation" means the maximum amount of Compensation under Section 401(a)(17) of the Code from which a Participant is permitted to make Contributions to the CEO Plan, as such maximum amount is adjusted from time to time under the Code. "Phantom Shares" means phantom shares of the Common Stock. "SCEOP Participant" with respect to a month in a Plan Year shall mean a Participant who has his or her contributions to the CEO Plan reduced as a result of the limitations set forth in the Sections 401(a)(17) or 415(c)(1) of the Code and who has filed an election to participate in the SCEOP with the Committee. "Special Deferral Account" for a SCEOP Participant shall mean the account established under the SCEOP for such participant. "Supplemental Plan Contribution" with respect to a SCEOP Participant shall mean the annual amount by which the SCEOP Participant has elected to reduce his base salary under this Plan, such amount being equal to the CEOP Percentage multiplied by the difference between (i) the Maximum Eligible Compensation and (ii) such participant's annual base salary. 4. Deferrals and Accounts. Each SCEOP Participant who so elects for a ---------------------- calendar year shall defer, and his or her Compensation shall be appropriately reduced on a pre-tax basis, the Supplemental Plan Contribution. An election to defer shall be made by December 1 prior to the calendar year for which Compensation would otherwise be earned. For each SCEOP Participant, a Special Deferral Account will be established. The account will contain sub-accounts for each type of contribution credited to the Special Deferral Account. For each Plan Year during which a person is a SCEOP Participant and making deferrals, the Participating Employer will credit to the Special Deferral Account of each SCEOP Participant the number of Phantom Shares equal to the sum of (1) the Supplemental Plan Contribution plus (2) the Excess Company Matching Allocation. The Company shall credit such amounts monthly on a prorata basis unless it elects otherwise for all SCEOP Participants. In addition, each year beginning with the 1990 calendar year, the Company will credit in the following calendar year to the Special Deferral Account in the form of Phantom Shares the Excess Performance Allocation, if any; such crediting shall occur at the time the Performance Matching Allocation is made. The Special Deferral Account will also be credited in the form of additional Phantom Shares with Dividend Equivalents from time to time when dividends are paid on the Common Stock. For purposes of calculating the number of Phantom Shares to be credited to the Special Deferral Account, the SCEOP shall use the Current Market Value for Common Stock as calculated under the CEO Plan. Phantom Shares will be credited in fractional amounts up to three decimal places. -2- An election to defer Compensation under this Plan must be made by the December 1 prior to the calendar year for which such Compensation would otherwise be earned. 5. Distribution. Distributions to SCEOP Participants of the Special ------------ Deferral Accounts shall be made only in the form of cash. The value of the amount of any distribution shall be based on the Current Market Value as of the Common Stock as calculated in accordance with the CEO Plan for distributions thereunder. Notwithstanding the foregoing, such value shall be determined at the close of business on the day for which the distribution is effective. 6. Plan Provisions. Except as otherwise expressly provided herein, all of --------------- the provisions of the CEO Plan contained in Articles VII, X, XII and Sections 15.04, 15.05, 15.07, 15.08, 15.10 and 15.11 shall apply to the SCEOP; provided any SCEOP Participant who is vested or becomes vested in the CEO Plan shall automatically be vested in the Special Deferred Account. 7. Benefits. Upon becoming a SCEOP Participant, such SCEOP Participant shall -------- elect to receive the value of his Special Deferred Account in the manner provided in Article X of the CEO Plan and shall elect a payment option described in Article X of the CEO Plan with respect to the payment of benefits payable under this SCEOP, except all payments made from the SCEOP shall be made in cash and only (1) upon a fixed date or dates at least six months after an election for payment is made or (2) incident to death, retirement, disability or termination of employment. A SCEOP Participant may change such election upon notice to the Company provided no such change shall be effective if the SCEOP Participant becomes eligible for a distribution from this Plan within six months of such change. 8. Liability for Payment. Each Participating Employer shall pay the --------------------- benefits provided hereunder with respect to SCEOP Participants who are employed or were formerly employed by it during their participation in the Plan. In the case of a SCEOP Participant who was employed by more than one Participating Employers, the Committee shall allocate the cost of such benefits among such Participating Employers in such manner as it deems equitable. The obligations of the Participating Employer hereunder shall not be funded in any manner. The rights of any person to receive benefits under this Plan are limited to those of a general creditor of the Participating Employer liable for such benefits hereunder. 9. Employment Rights. Nothing in the SCEOP shall be construed as giving any ----------------- employee the right to be retained in the employ of any Participating Employer. Each Participating Employer expressly reserves the right to dismiss any employee at any time without liability for the effect which such dismissal might have upon him or her hereunder. 10. Administration. The SCEOP shall be administered by the Committee in the -------------- same manner and with the same effect as the CEO Plan to the extent not inconsistent with the provisions hereof. -3- 11. Amendment and Termination. The SCEOP may be amended, or may be ------------------------- terminated, in whole or in part at any time and from time to time by the Board of Directors (or any committee authorized by such Board). Any Participating Employer may withdraw from participation in the SCEOP at any time. The foregoing provisions of this section notwithstanding, no amendment or termination of the CEO Plan or the SCEOP or withdrawal therefrom by a Participating Employer shall adversely affect the vested benefits payable hereunder on account of any person in respect of service rendered prior to the effective date of such amendment, termination or withdrawal. 12. Spendthrift. No SCEOP Participant or beneficiary thereof shall have the ----------- right to assign, transfer, encumber or otherwise subject to any lien any payment or any other interest under the SCEOP nor shall such payment or interest be subject to attachment, execution or levy of any kind. 13. Section 16. This Plan is not intended to give rise to any equity or ---------- derivative security under Section 16 of the Securities Exchange Act of 1934 and the regulations promulgated thereunder. This Plan shall be construed, interpreted and operated at all times in a manner as to exempt it from the application of such Section 16 notwithstanding any provision of this Plan. 14. Unfunded Plan. The Plan shall be unfunded. All payments to a SCEOP ------------- Participant under the Plan shall be made from the general assets of the Participating Employer of such participant. The rights of any SCEOP Participant to payment shall be those of any unsecured general creditor of such Participating Employer. 15. Service of Process and Plan Administrator. The Secretary of Olin shall ----------------------------------------- be the agent for service of legal process. Olin shall constitute the Plan Administrator. 16. Governing Law. The SCEOP and all actions taken hereunder shall be ------------- governed by and construed in accordance with the laws of the State of Connecticut. IN WITNESS WHEREOF, Olin Corporation has caused this Plan to be executed by its duly authorized officer as of January 1, 1990. OLIN CORPORATION By: /s/Michael E. Campbell ----------------------------- Vice President-Human Resources -4- Exhibit 10(m) FIRST AMENDMENT TO OLIN SUPPLEMENTAL CONTRIBUTING EMPLOYEE OWNERSHIP PLAN This First Amendment is made as of this 6th day of May 1994, by Colin Corporation ("Olin"). WITNESSETH WHEREAS, Olin has established the Olin Supplemental Contributing Ownership Plan (the "Plan"), effective January 1, 1990, providing certain eligible employees who are limited under certain sections of the Internal Revenue Code with certain supplemental benefits; WHEREAS, Olin intends to amend Section 7, entitled, "Benefits" of the Plan; NOW, THEREFORE, IT IS AGREED as follows: 1. Incorporation of Definitions Used in the Plan --------------------------------------------- Capitalized terms utilized in the Plan that are not defined in this Amendment are hereby incorporated by reference into this Amendment. 2. Amendment --------- The first sentence of Section 7 of the Plan is hereby amended to read in its entirety as follows: "Upon becoming a SCEOP Participant, such SCEOP Participant shall elect to receive the value of his Special Deferred Account from among the payment options described in Article X of the CEO Plan with respect to the payment of benefits payable under this SCEOP, except all payments made from the SCEOP shall be made in cash and only incident to death, retirement, disability or termination of employment." 3. Miscellaneous ------------- This amendment shall be effective as of the day written above. Except as amended by Section 2 above, the Plan remains in full force and effect. IN WITNESS WHEREOF, OLIN CORPORATION has caused this Amendment to be executed as of the date first above written. OLIN CORPORATION By: /s/ Peter C. Kosche --------------------- Vice President - Human Resources EX-10.(N) 6 ARRANGEMENT FOR COM SHRS Exhibit 10(n) ARRANGEMENT CREDITING 100 SHARES OF OLIN COMMON STOCK TO CERTAIN DIRECTORS -------------------- Effective January 1, 1985, each Olin Director entitled to fees for service as a Director was credited with 100 shares of Olin Common Stock, payment of which was deferred until after the Director retires from the Board. Such deferred shares will be credited with dividend equivalents, payment of which may also be deferred in the form of Common Stock if elected by the Director. EX-10.(Q) 7 EXECUTIVE AGREEMENT Exhibit 10(q) EXECUTIVE AGREEMENT ------------------- Agreement between Olin Corporation, a Virginia corporation ("Olin"), and __________ (the "Executive"), dated as of July 1, 1994. Olin and the Executive agree as follows: 1. Definitions As used in this Agreement: (a) "Cause" means the willful and continued failure of the Executive to substantially perform his duties; the willful engaging by the Executive in gross misconduct significantly and demonstrably injurious to Olin; or conduct by the Executive in the course of his employment which is a felony or fraud. No act or failure to act on the part of the Executive will be considered "willful" unless done or omitted not in good faith and without reasonable belief that the action or omission was in the interests of Olin or not opposed to the interests of Olin. (b) "Change in Control" means: (i) Olin ceases to be, directly or indirectly, owned by at least 1,000 stockholders ; (ii) A person, partnership, joint venture, corporation or other entity, or two or more of any of the foregoing acting as a "person" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Act"), other than Olin, a majority-owned subsidiary of Olin or an employee benefit plan of Olin or such subsidiary, become(s) the "beneficial owner" (as defined in Rule 13d-3 under such Act) of 20% or more of the then outstanding voting stock of Olin ; (iii) During any period of two consecutive years, individuals who at the beginning of such period constitute Olin's Board of Directors (together with any new Director whose election by Olin's Board of Directors or whose nomination for election by Olin's stockholders was approved by a vote of at least two-thirds of the Directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; or (iv) All or substantially all of the business of Olin is disposed of pursuant to a merger, consolidation or other transaction in which the Company is not the surviving corporation or Olin combines with another company and is the surviving corporation (unless the shareholders of Olin immediately following such merger, consolidation, combination, or other transaction beneficially own, directly or indirectly, more than 50% of the voting stock or other ownership interests of (x) the entity or entities, if any, that succeed to the business of the Company or (y) the combined company). (c) "Disability" means that the Executive has suffered an incapacity due to physical or mental illness which meets the criteria for disability established at the time under Olin's short-term disability plan. 2 (d) "Executive Severance" means: (i) twelve months of the Executive's then current monthly salary (without taking into account any reductions which may have occurred at or after the date of a Change in Control); plus (ii) an amount equal to the greater of the Executive's average annual award under Olin's management incentive compensation plan ("MICP") for the three years immediately preceding the date of Termination or the Executive's then current MICP standard annual award. (iii) The Executive will not be entitled to receive any other severance otherwise payable to the Executive under any other severance plan of Olin. (iv) If on the Termination date the Executive is eligible and is receiving payments under any then existing Olin disability plan, then the Executive agrees that all such payments may, and will be, suspended and offset for 12 months following the Termination date. If after such period the Executive remains eligible to receive disability payments, then such payments shall resume in the amounts and in accordance with the provisions of the applicable Olin disability plan. (e) "Potential Change in Control" means: (i) Olin has entered into an agreement the consummation of which would result in a Change in Control; (ii) any person (including Olin) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; (iii) Olin learns that any person (other than an employee benefit plan of Olin or a subsidiary of Olin) has become the beneficial owner directly or indirectly of securities of Olin representing 9.5% or more of the combined voting power of Olin's then outstanding securities ordinarily entitled to vote in elections of directors; or (iv) the Board of Directors of Olin adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control of Olin has occurred. (f) "Termination" means: (i) The Executive is discharged by Olin other than for Cause; (ii) The Executive terminates his or her employment in the event that: (1) Olin requires the Executive to relocate the Executive's then office to an area which is not within reasonable commuting distance, on a daily basis, from the Executive's then residence, except that a requirement to relocate the Executive's office to Olin's corporate headquarters is not a basis for Termination; (2) Olin reduces the Executive's base salary or fails to increase the Executive's base salary on a basis consistent (as to frequency and amount) with Olin's exempt salary system as then in effect or, in the event of a Change in Control, as in effect immediately prior to the Change in Control; (3) Olin fails to continue the Executive's participation in its benefit plans (including incentive compensation and stock options) on substantially the same basis, both in terms of the amount of the benefits provided (other than due to Olin's or a relevant operation's earnings performance) and the level of the Executive's participation relative to other participants as exists on the date hereof; provided that, with respect to annual 3 and long term incentive compensation plans, the basis with which the amount of benefits and level of participation of the Executive shall be compared shall be the average benefit awarded to the Executive under the relevant plan during the three years immediately preceding the date of Termination; (4) The Executive suffers a Disability which prevents the Executive from performing the Executive's duties with Olin for a period of at least 180 consecutive days; (5) Following a Change in Control, Olin fails to substantially maintain its benefit plans as in effect at the time of the Change in Control, unless reasonably equivalent arrangements (embodied in an on-going substitute or alternative plan) have been made with respect to such plans; or (6) The Executive's duties, position or reporting responsibilities are diminished. 2. Previous Executive Agreement. This Agreement supersedes and replaces the Executive Agreement dated as of between Olin and the Executive, upon the expiration of such agreement on July 1, 1994. 3. Term/Executive's Duties. (a) This Agreement expires at the close of business on September 30, 1999, unless prior to that date there is a Change in Control, in which case this Agreement will expire on the later of the close of business on September 30, 1999 or three years following the date of the Change in Control. In the event of the Executive's death while employed by Olin, this Agreement shall terminate and be of no further force or effect on the date of his or her death. (b) During the period of the Executive's employment by Olin, the Executive shall devote his or her full time efforts during normal business hours to Olin's business and affairs, except during reasonable vacation periods and periods of illness or incapacity. Nothing in this Agreement will preclude the Executive from devoting reasonable periods required for service as a director or a member of any organization involving no conflict of interest with Olin's interest, provided that no additional position as director or member shall be accepted by the Executive during the period of his employment with Olin without its prior consent. (c) The Executive agrees that in the event of a Potential Change in Control of Olin occurring after the date hereof, the Executive will remain in the employ of Olin for a period of six months from the occurrence of such Potential Change in Control, during which period the Executive will have an office, title, duties an d responsibilities substantially consistent with those applicable immediately prior to the Potential Change in Control. 4. Executive Severance Payment (a) In the event of a Termination occurring before the expiration of this Agreement, Olin will pay the Executive a lump sum in an amount equal to the Executive Severance. The payment will be made within 30 days of the Termination. (b) In the event of a Termination after a Change in Control has occurred, in addition to the Executive Severance paid under Paragraph 4(a) above, Olin will pay a Change 4 in Control severance premium to the Executive in an amount equal to one* times the Executive Severance. The Change in Control severance premium, if it becomes due, will be made within 30 days of the Termination. (c) The amount due under paragraph 4(a) or 4(b) will be reduced to the extent that, if the amounts were paid in monthly installments, no installment would be paid after the Executive's sixty-fifth birthday. (d) The Executive will not be required to mitigate the amount of any payment provided for in paragraph 4(a) or 4(b) by seeking other employment or otherwise, nor shall any compensation received by the Executive from a third party reduce such payment. Except as may otherwise be expressly provided herein, nothing in this Agreement will be deemed to reduce or limit the rights which the Executive may have under any employee benefit plan, policy or arrangement of Olin. 5. Other Benefits (a) If the Executive becomes entitled to payment under paragraph 4(a), the Executive will receive 12 months service credit under all Olin pension plans for which the Executive was eligible at the time of the Termination (i.e., under Olin's qualified pension plans to the extent permitted under then applicable law, otherwise such credit will be reflected in a supplementary pension payment from Olin to be due at the times and in the manner payments are due the Executive under such qualified pension plans), and for 12 months from the date of the Termination the Executive will continue to enjoy coverage under all Olin medical, dental, and life insurance plans to the extent the Executive was enjoying such coverage immediately prior to the Termination. The Executive shall accrue no vacation during the 12 months following the date of Termination but shall be entitled to payment for accrued and unused vacation for the then current year. The Executive shall not be entitled to an MICP award for the calendar year of Termination if Termination occurs during the first calendar quarter. If Termination occurs during or after the second calendar quarter, the Executive shall be entitled to a prorated MICP award for the calendar year of Termination which shall be determined by multiplying his or her then current MICP standard by a fraction the numerator of which is the number of weeks in the calendar year prior to the Termination and the denominator of which is 52. The Executive shall accrue no MICP award during the 12 months following the date of Termination . (b) If the Executive receives payment under paragraph 4(b), the pension credit and insurance coverage provided for in paragraph 5(a) will be for an additional 12-month** period. (c) Notwithstanding the foregoing paragraphs (a) and (b), no such service credit or insurance coverage will be afforded by this Agreement with respect to any period after the Executive's sixty-fifth birthday. (d) In the event of a Termination, the Executive will be entitled at Olin's expense to outplacement counseling and associated services in accordance with Olin's customary practice at the time (or, if a Change in Control shall have occurred, in accordance *In the case of Chief Executive Officer and the President, "two". **In the case of the Chief Executive Officer and the President, "24-month". 5 with such practice immediately prior thereto) with respect to its senior executives who have been terminated other than for cause. It is understood that the counseling and services contemplated by this paragraph 5(d) are intended to facilitate the obtaining by the Executive of other employment following a Termination, and payments or benefits by Olin in lieu thereof will not be available to the Executive. (e) Notwithstanding the provisions of Section 10 of the Olin Senior Executive Pension Plan (the "Senior Plan"), if the Executive is in active employment with Olin at the date of a Change in Control but has not attained age 55 at such date, the Executive shall (if then a Participant in the Senior Plan) nevertheless automatically be paid the lump sum amount called for by such Section 10, except that such lump sum amount will be calculated first, by calculating the sum equal to the annual benefit which would otherwise be payable to the Executive at age 65 under all Olin pension plans assuming the Executive had terminated his or her employment with Olin on the date of the Change in Control, second, by multiplying such sum by the percentage then applicable in the calculation of benefits paid to employees retiring from active service with Olin at age 55 under the early retirement provisions of the Olin Salaried Pension Plan (72% as at July, 1994), third, by determining the then lump sum actuarial value of the product resulting from the second step, and fourth, by deducting from such lump sum actuarial value the then lump sum actuarial value of the Executive's accrued annual benefits under all other Olin pension plans. A lump sum payment under this paragraph (e) will be used to reduce any payments under the Senior Plan which may become due to the Executive thereafter. 6. Participation in Change in Control/Section 4999 of Internal Revenue Code (a) In the event that the Executive participates or agrees to participate by loan or equity investment (other than through ownership of less than 1% of publicly traded securities of another company) in a transaction ("acquisition") which would result in an event described in paragraph 1(b)(i) or (ii), the Executive must promptly disclose such participation or agreement to Olin. If the Executive so participates or agrees to participate, no payments due under this Agreement or by virtue of any Change in Control provisions contained in any compensation or benefit plan of Olin will be paid to the Executive until the acquiring group in which the Executive participates or agrees to participate has completed the acquisition. In the event the Executive so participates or agrees to participate and fails to disclose his participation or agreement, the Executive will not be entitled to any payments under this Agreement or by virtue of Change in Control provisions in any Olin compensation or benefit plan, notwithstanding any of the terms hereof or thereof. (b) Any payments made pursuant to this Agreement or by virtue of Change in Control provisions in any Olin compensation or benefit plan which are subject to tax under Section 4999 of the Internal Revenue Code or a successor provision ("4999") will be increased so that after paying the tax imposed by 4999 and the income tax on the amount of the increase provided by this paragraph (b), the Executive will have received a net payment equal to that which he would have received if 4999 did not apply. 7. Successors; Binding Agreement (a) Olin will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Olin, by agreement, in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that Olin would 6 be required to perform if no such succession had taken place. Failure of Olin to obtain such assumption and agreement prior to the effectiveness of any such succession will be a breach of this Agreement and entitle the Executive to compensation from Olin in the same amount and on the same terms as the Executive would be entitled to hereunder had a Termination occurred on the succession date. As used in this Agreement, "Olin" means Olin as defined in the preamble to this Agreement and any successor to its business or assets which executes and delivers the agreement provided for in this paragraph 7 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law or otherwise. (b) This Agreement shall be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 8. Notices. For the purpose of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: If to the Company: Olin Corporation 120 Long Ridge Road Stamford, CT 06904 Attention: Corporate Secretary or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 9. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Connecticut. 10. Miscellaneous. No provisions of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by the Executive and Olin. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. 11. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same Agreement. 12. Withholding of Taxes. Olin may withhold from any benefits payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling. 7 13. Non-assignability. This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder, except as provided in paragraph 7 above. Without limiting the foregoing, the Executive's right to receive payments hereunder shall not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, other than a transfer by his will or by the laws of descent or distribution, and, in the event of any attempted assignment or transfer by the Executive contrary to this Section, Olin shall have no liability to pay any amount so attempted to be assigned or transferred. 14. No Employment Right. This Agreement shall not be deemed to confer on the Executive a right to continued employment with Olin. 15. Disputes/Arbitration. (a) Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration at Olin's corporate headquarters in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that the Executive shall be entitled to seek specific performance of the Executive's right to be paid during the pendency of any dispute or controversy arising under or in connection with this Agreement. (b) Olin shall pay all reasonable legal fees and expenses which the Executive may incur to enforce this Agreement unless the Executive had no reasonable basis for his claim. Should Olin dispute the entitlement of the Executive to such fees and expenses, the burden of proof shall be on Olin to establish that the Executive had no reasonable basis for his claim. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the day and year first above set forth. OLIN CORPORATION By: ______________________ John W. Johnstone, Jr. Chairman of the Board and Chief Executive Officer _________________________ (Name of Executive) EX-10.(R) 8 SEVERANCE AGREEMENT Exhibit 10(r) (Date) (Name & Address) Dear ___________: The following supersedes and replaces in its entirety our letter agreement of ____________ with you relating to severance in the event of a Change in Control of Olin Corporation ("Olin"). 1. This agreement shall be binding immediately upon its execution and delivery, but it shall not be operative unless and until there has been a Change in Control of Olin, as defined below. In the event that this agreement shall not have become operative by September 30, 1999, it shall not thereafter become operative or be of any force or effect, notwithstanding the occurrence of a Change in Control, unless the Board of Directors of Olin shall have taken action expressly to reapprove this agreement. 2. For purposes of this agreement, the following definitions apply: (a) "Change in Control" means: (i) Olin ceases to be, directly or indirectly, owned by at least 1,000 stockholders; (ii) a person, partnership, joint venture, corporation or other entity, or two or more of any of the foregoing acting as a "person" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Act"), other than Olin, a majority-owned subsidiary of Olin or an employee benefit plan of Olin or such subsidiary, become(s) the "beneficial owner" (as defined in Rule 13d-3 under the Act) of 20% or more of the outstanding voting stock of Olin; (iii) during any period of two consecutive years, individuals who at the beginning of such period constitute Olin's Board of Directors (together with any new Director whose election by Olin's Board of Directors or whose nomination for election by Olin's stockholders, was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of such period or whose election or nomination for election was previously so approved, cease for 2 any reason to constitute a majority of the Directors then in office; or (iv) all or substantially all of the business of Olin is disposed of pursuant to a merger, consolidation or other transaction in which the Company is not the surviving corporation or Olin combines with another company and is the surviving corporation (unless the shareholders of Olin immediately following such merger, consolidation, combination, or other transaction beneficially own, directly or indirectly, more than 50% of the voting stock or other ownership interests of (x) the entity or entities, if any, that succeed to the business of the Company or (y) the combined company). (b) "Cause includes dishonesty, misconduct, insubordination or violation of, or extended deviation from, any reasonable Olin rule or policy. (c) "Olin" includes a successor of Olin Corporation (whether direct or indirect) by purchase, merger, consolidation or otherwise. (d) "Termination" means termination by Olin of your employment within 18 months following a Change in Control other than for Cause. Anything herein to the contrary notwithstanding, the following shall also be deemed a "Termination" for purposes of this agreement: (i) termination of your employment with Olin at your election within 24 months following a Change in Control, because Olin shall have changed your position within Olin to a position involving a diminution in your status, level of reporting, or compensation as in effect immediately prior to the Change in Control, or to a position which requires a relocation on your part and Olin shall not have offered to reimburse you fully for all of your relocation costs; (ii) termination of your employment with Olin at your election within 24 months following a Change in Control, if at the time you are at least 55 and have at least 10 years of creditable service under an Olin retirement plan and Olin shall have required you to relocate your principal office to a location outside of the general area in which it was located immediately prior to the Change in Control. 3. (a) In the event of your Termination, Olin will pay you an amount ("Special Severance") equal to the sum of: 3 (i) 12 months salary at the higher of your base rate of salary in effect at Olin immediately prior to the Change in Control or on the date of Termination; plus (ii) an amount equal to the greater of (a) the average of your bonus awards under Olin's incentive compensation plan for the three calendar years immediately preceding the year in which Termination occurs or (b) your standard award for the year in which Termination occurs. (b) During the 12-month period following your Termination, you and your dependents shall continue to be entitled to coverage under the medical and dental insurance plans of Olin, and you shall continue to be entitled to coverage under the life insurance plans (other than travel/accident) of Olin, in which you participated prior to Termination. (c) Payment of Special Severance will be made to you (i) over a twelve month period in equal monthly installments commencing with the month following the month in which your Termination occurs or (ii) at your election, within 30 days of the date of your Termination in a lump sum discounted to present value at a discount rate of 7-1/2% per annum applied to each future payment from the time it would have ordinarily become payable pursuant to clause (i) to the date of your Termination; provided, however, there shall be deducted from amounts payable to you under paragraph (a) all amounts in the nature of severance paid to you under the applicable severance policy of Olin or under any special arrangements which may have been entered into by you with Olin with respect to termination of your Olin employment. (d) Nothing in this Agreement shall be deemed to limit any provision of the Performance Unit Plan, a stock option plan or other employee benefit plan of Olin which may apply in the event of a Change in Control. (e) You shall accrue no vacation during the 12 months following the date of Termination but shall be entitled to payment for accrued and unused vacation for the then current year. (f) You shall not be entitled to an MICP award for the calendar year of Termination if Termination occurs during the first calendar quarter. If Termination occurs during or after the second calendar quarter, you shall be entitled to prorated MICP award for the calendar year of Termination which shall be determined by multiplying your then current MICP standard by a fraction the numerator of which is the 4 number of weeks in the calendar year prior to the Termination and the denominator of which is 52. You shall accrue no MICP award during the 12 months following the date of Termination. 4. The amount of payments provided for in this agreement shall not be reduced by the amount of compensation, if any, which you may receive from other employers following your Termination. 5. In the event that after a Change in Control your operating unit is to be sold and you are to be transferred to the purchaser of such operating unit, and your prospective new employer will not agree to assume this agreement in its entirety, then you shall be entitled to terminate your employment with Olin prior to the sale and receive from Olin the payments contemplated by paragraph 3 above, unless Olin shall have agreed to pay you the difference between the amount of such payments your prospective new employer is prepared to assume and the amount payable hereunder. 6. Anything in this agreement to the contrary notwithstanding: (a) In the event that you cease to be employed by Olin for any reason, whether at your election or that of Olin, prior to a Change in Control, this agreement shall not thereafter become operative or be of any force or effect notwithstanding the occurrence of a Change in Control. 7. No Employment Rights. This Agreement shall not be deemed to confer --------------------- upon you a right to continued employment with Olin. 8. Disputes/Arbitration. -------------------- (a) Any dispute or controversy arising under or in connection with this agreement shall be settled exclusively by arbitration at Olin's corporate headquarters in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid during the pendency of any dispute or controversy arising under or in connection with this agreement. 5 (b) Olin shall pay all reasonable legal fees and expenses which you may incur to enforce this agreement unless you had no reasonable basis for the claim. Should Olin dispute your entitlement to such fees and expenses, the burden of proof shall be on Olin to establish that you had no reasonable basis for the claim. Very truly yours, OLIN CORPORATION Donald W. Griffin President and Chief Operating Officer Agreed: _____________________ Signature _____________________ Please Print Name EX-10.(U) 9 1991 L/T INCENTIVE PLAN EXHIBIT 10(U) OLIN 1991 LONG TERM INCENTIVE PLAN (As Amended through February 23, 1995) Section 1. Purpose ------- The purposes of the Olin 1991 Long Term Incentive Plan (the "Plan") are to encourage selected salaried employees of Olin Corporation (together with any successor thereto, "Olin") and its Affiliates (as defined below) to acquire a proprietary interest in Olin's growth and performance, to generate an increased incentive to contribute to Olin's future success and to enhance the ability of Olin and its Affiliates to attract and retain qualified individuals. Section 2. Definitions ----------- As used in the Plan: (a) "Affiliate" means (i) any entity that, directly or through one or more intermediaries, is controlled by Olin and (ii) any entity in which Olin has a significant equity interest as determined by the Committee. (b) "Award" means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other Stock-Based Award granted under the Plan. (c) "Award Agreement" means any written agreement or other instrument or document evidencing an Award granted under the Plan. The terms of any plan or guideline adopted by the Board or the Committee and applicable to an Award shall be deemed incorporated in and a part of the related Award Agreement. (d) "Board" means the Board of Directors of Olin. (e) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (f) "Committee" means a committee of the Board designated by the Board to administer the Plan and composed of not less than three directors, each of whom is qualified to administer the Plan as contemplated by Rule 16b- 3. (g) "Dividend Equivalent" means any right granted under Section 6(f)(iv) of the Plan. (h) "Fair Market Value" means, with respect to any property (including, without limitation, Shares or other securities), the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. (i) "Incentive Stock Option" means an option to purchase Shares granted under Section 6(a) of the Plan that is intended to meet the -2- requirements of Section 422 of the Code or a successor provision thereto. (j) "Non-Qualified Stock Option" means an option to purchase Shares granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option. (k) "Option" means an Incentive Stock Option or a Non-Qualified Stock Option. (l) "Other Stock-Based Award" means any right granted under Section 6(e) of the Plan. (m) "Participant" means a Salaried Employee granted an Award under the Plan. (n) "Performance Award" means any right granted under Section 6(d) of the Plan. (o) "Person" means any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or government or political subdivision thereof. (p) The "1988 Plan" means the 1988 Stock Option Plan for Key Employees of Olin Corporation and Subsidiaries. (q) "Released Securities" means securities that were Restricted Securities with respect to which all applicable restrictions imposed under the terms of the relevant Award have expired, lapsed or been waived or satisfied. (r) "Restricted Securities" means Awards of Restricted Stock or other Awards under which outstanding Shares are held subject to certain restrictions. (s) "Restricted Stock" means any Share granted under Section 6(c) of the Plan. (t) "Restricted Stock Unit" means any right granted under Section 6(c) of the Plan that is denominated in Shares. (u) "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, or any successor rule. (v) "Salaried Employee" means any salaried employee of Olin or of an Affiliate. (w) "Shares" means the Common Stock of Olin and such other securities or property as may become the subject of Awards pursuant to an adjustment made under Section 4(b) of the Plan. (x) "Stock Appreciation Right" means any right granted under Section 6(b) of the Plan. -3- Section 3. Administration -------------- The Plan shall be administered by the Committee which shall have full power and authority to: (i) designate Participants; (ii) determine the Awards to be granted to Participants; (iii) determine the number of Shares (or securities convertible into Shares) to be covered by Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards, or other property, or canceled, substituted, forfeited or suspended, and the method or methods by which Awards may be settled, exercised, canceled, substituted, forfeited or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the Participant or of the Committee; (vii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (viii) establish, amend, suspend or waive such rules and guidelines and appoint such agents as it shall deem appropriate for the administration of the Plan; and (ix) make any other determination and take any other action that it deems necessary or desirable for such administration. All designations, determinations, interpretations and other decisions with respect to the Plan or any Award shall be within the sole discretion of the Committee and shall be final, conclusive and binding upon all Persons, including Olin, any Affiliate, any Participants, any holder or beneficiary of any Award, any shareholder and any employee of Olin or of any Affiliate. The Committee's powers include the adoption of modifications, amendments, procedures, subplans and the like as are necessary to comply with provisions of the laws of other countries in which Olin or an Affiliate may operate in order to assure the viability of Awards granted under the Plan and to enable Participants employed in such other countries to receive benefits under the Plan and such laws. Section 4. Shares Available for Awards --------------------------- (a) Shares Available. Subject to adjustment as provided in Section 4(b) of the ---------------- Plan: (i) The aggregate number of Shares available for granting Awards under the Plan shall be 500,000, provided that in the event the 1988 Plan shall terminate or be cancelled prior to April 30, 1998 (its stated expiration date), the number of Shares available for the grant of Awards under the Plan shall be increased by the sum (not to exceed 800,000) of (a) the number of shares which were available for the grant of options under the 1988 Plan immediately prior to the date of such termination or cancellation and (b) the aggregate number of shares which were subject to options under the 1988 Plan on such date and were not subsequently issued because such options terminated, expired or were forfeited without the delivery to optionees of Shares or other consideration. If an Award is denominated in or relates to a security of Olin convertible into its Common Stock, the number of shares of -4- Common Stock into which such security shall be convertible (calculated as of the date of grant of the Award, subject to adjustment as provided in Section 4(b) hereof or under the terms of such security) shall be deemed denominated in Shares and counted against the aggregate number of Shares available for the granting of Awards under the Plan. If, after the effective date of the Plan, Shares subject to an Award granted under the Plan (other than Restricted Securities) are forfeited, or the Award otherwise terminates without the delivery of Shares or of other consideration, then the Shares subject to such Award or the number of Shares otherwise counted against the aggregate number of Shares available under the Plan with respect to such Award, to the extent of such forfeiture or termination, shall again be available for granting Awards under the Plan." Any Award (other than a Dividend Equivalent) denominated in Shares shall be counted against the aggregate number of Shares available for granting Awards under the Plan even though the Award is ultimately paid in cash, provided that, notwithstanding the foregoing, an Award shall not be deemed denominated in Shares if the dollar amount of the Award is fixed at the time of grant by reference to the market value of Shares or otherwise. (ii) For purposes of this Section 4: (A) If an Award (other than a Dividend Equivalent) is denominated in Shares, the number of Shares covered by such Award, or to which such Award relates, shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan; and (B) Dividend Equivalents paid in Shares and Awards not denominated in Shares but paid in Shares shall be counted against the aggregate number of Shares available for granting Awards under the Plan in such amount and at such time as the Committee shall determine under procedures adopted by the Committee consistent with the purposes of the Plan; provided, however, that Awards that operate in tandem with, or that -------- ------- are substituted for, other Awards may be counted or not counted under procedures adopted by the Committee in order to avoid double counting. Any Shares that are delivered by Olin, and any Awards that are granted by, or become obligations of, Olin, through the assumption by Olin or an Affiliate of, or in substitution for, outstanding awards previously granted by an acquired company shall not, except in the case of Awards granted to Salaried Employees who are officers or directors of Olin for purposes of Section 16 of the Securities Exchange Act of 1934, as amended, be counted against the Shares available for granting Awards under the Plan. -5- (b) Adjustments. In the event that the Committee determines that any ----------- dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of Olin, issuance of warrants or other rights to purchase Shares or other securities of Olin, or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or property) which thereafter may be made the subject of Awards, (ii) the number and type of Shares (or other securities or property) subject to outstanding Awards, and (iii) the grant, purchase or exercise price with respect to any Award, or, if the Committee deems it appropriate, make provision for a cash payment to the holder of an outstanding Award; provided, however, that with respect to Awards of -------- ------- Incentive Stock Options, no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422 of the Code or any successor provision thereto. Notwithstanding the foregoing, a Participant to whom Dividend Equivalents or dividend units have been awarded shall not be entitled to receive a special or extraordinary dividend or distribution unless the Committee shall have expressly authorized such receipt. (c) Notwithstanding anything contained in this Plan to the contrary, grants to any one Participant of Awards which represent or are designated in Shares shall not exceed 60,000 Shares in any calendar year. Section 5. Eligibility ----------- Any Salaried Employee, including any officer or employee- director of Olin or an Affiliate, who is not a member of the Committee shall be eligible to be designated a Participant. Section 6. Awards ------ (a) Options. The Committee is authorized to grant Options to Participants ------- with the following terms and conditions and with such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine: (i) Exercise Price. The purchase price per Share purchasable -------------- under an Option shall be determined by the Committee; provided, -------- however, that such purchase price shall not be less than the Fair ------- Market Value of a Share on the date of grant of such Option. -6- (ii) Option Term. The term of each Option shall be fixed by ----------- the Committee, provided that in no event shall the term of an Option exceed a period of ten years from the date of its grant. (iii) Exercise. The Committee shall determine the time or -------- times at which an Option may be exercised in whole or in part (but in no event shall an Option be exercisable before the expiration of six months from the date of its grant, subject to Section 9 thereof, or after the expiration of ten years from the date of its grant), and the method or methods by which, and the form or forms (including, without limitation, cash, Shares, other Awards or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price) in which, payment of the exercise price with respect thereto may be made; provided that no Shares may be used by a Participant in payment of the exercise price of an Option unless such Shares have been held by the Participant for at least six months. (iv) Incentive Stock Options. The terms of any Incentive Stock Option ----------------------- granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code, or any successor provision thereto, and any regulations promulgated thereunder. Without limiting the preceding sentence, the aggregate Fair Market Value (determined at the time an option is granted) of Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under the Plan and any other plan of the Participant's employer corporation and its parent and subsidiary corporations providing for Options) shall not exceed such dollar limitation as shall be applicable to Incentive Stock Options under Section 422 of the Code or a successor provision. (b) Stock Appreciation Rights. The Committee is authorized to grant Stock ------------------------- Appreciation Rights to Participants which may but need not relate to a specific Option granted under Section 6(a). Subject to the terms of the Plan and any applicable Award Agreement, each Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, up to the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the exercise price of the right as specified by the Committee, which shall not be less than the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right. Subject to the terms of the Plan and any applicable Award Agreement, the exercise price, term, methods of exercise, methods of payment or settlement and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee, except that Stock Appreciation Rights related to Incentive Stock Options shall have the same terms and conditions as such Options, and in no event shall the term of a Stock Appreciation Right exceed a period of -7- ten years from the date of its grant. In the case of any Stock Appreciation Right related to an Option, the Stock Appreciation Right or applicable portion thereof shall terminate and no longer be exercisable upon the termination or exercise of the related Option, except that a Stock Appreciation Right granted with respect to less than the full number of Shares covered by a related Option shall not be reduced until the exercise or termination of the related Option exceeds the number of shares not covered by the Stock Appreciation Right and then only to the extent of the excess. Any Option related to a Stock Appreciation Right shall no longer be exercisable to the extent the related Stock Appreciation Right has been exercised. (c) Restricted Stock and Restricted Stock Units. ------------------------------------------- (i) Issuance. The Committee is authorized to grant Awards -------- of Restricted Stock and Restricted Stock Units to Participants. (ii) Restrictions. Shares of Restricted Stock and ------------ Restricted Stock Units shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate, provided that in order for a participant to vest in Awards of Restricted Stock or Restricted Stock Units, the participant must remain in the employ of Olin or an Affiliate for a period of not less than six months commencing on the date of grant of the Award, subject to Section 9 hereof and subject to relief for specified reasons as may be approved by the Committee. (iii) Registration. Any Restricted Stock granted under the ------------ Plan may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Shares of Restricted Stock granted under the Plan, such certificate shall be registered in the name of the Participant and when delivered to the Participant shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock. (iv) Forfeiture. Except as otherwise determined by the ---------- Committee, upon termination of employment for any reason during the applicable restriction period, all Shares of Restricted Stock and all Restricted Stock Units still subject ------------- to restriction shall be forfeited and reacquired by Olin; -------------------------------------------------------- provided, however, that the Committee may, in its sole -------- ------- discretion, waive in whole or in part any or all -8- remaining restrictions with respect to Shares of Restricted Stock or Restricted Stock Units. Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be delivered to the holder of Restricted Stock promptly after such Restricted Stock shall become Released Securities. (d) Performance Awards. The Committee is authorized to grant Performance ------------------ Awards to Participants. Subject to the terms of the Plan and any applicable Award Agreement, a Performance Award granted under the Plan (i) may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock), other securities, other Awards or other property and (ii) shall confer on the holder thereof rights valued as determined by the Committee and payable to, or exercisable by, the holder of the Performance Award, in whole or in part, upon the achievement of such performance goals during such performance periods as the Committee shall establish. Subject to the terms of the Plan and any applicable Award Agreement, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted, and the amount of any payment or transfer to be made pursuant to any Performance Award shall be determined by the Committee, provided that a performance period shall be at least six months, subject to Section 9 thereof. (e) Other Stock-Based Awards. The Committee is authorized to grant to ------------------------ Participants such other awards denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, phantom Shares, securities convertible into Shares and dividend units), as are deemed by the Committee to be consistent with the purposes of the Plan, provided that such grants shall comply with Rule 16b-3 to the extent applicable and applicable law. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions of such Awards. Shares or other securities delivered pursuant to a purchase, exchange or conversion right granted under this Section 6(e) shall be issued for such consideration, which may be paid by such method or methods and in such form or forms, including, without limitation, cash, Shares, other securities, other Awards, or other property, or any combination thereof, as the Committee shall determine, the value of which consideration, as established by the Committee, shall not be less than the Fair Market Value of such Shares or other securities as of the date such purchase, exchange or conversion right is granted. Other Stock-based Award Agreements shall contain provisions dealing with the disposition of such Award in the event of termination of the Participant's employment prior to exercise, realization or payment of the Award. -9- (f) General. ------- (i) No Cash Consideration for Awards. Participants shall -------------------------------- not be required to make any cash payment for the granting of an Award except for such minimum consideration as may be required by applicable law. (ii) Awards May Be Granted Separately or Together. Awards -------------------------------------------- may be granted either alone or in addition to, in tandem with, or in substitution for any other Award or any award or benefit granted under any other plan or arrangement of Olin or any Affiliate, or as payment for or to assure payment of an award or benefit granted under any such other such plan or arrangement, provided that the purchase or exercise price under an Award encompassing the right to purchase Shares shall not be reduced by the cancellation of such Award and the substitution of another Award. Awards so granted may be granted either at the same time as or at a different time from the grant of such other Awards or awards or benefits. (iii) Forms of Payment Under Awards. Subject to the terms of the ----------------------------- Plan and of any applicable Award Agreement, payments to be made by Olin or an Affiliate upon the grant, exercise, or payment of an Award may be made in such form or forms as the Committee shall determine, including, without limitation, cash, Shares, other securities, other Awards, or other property or any combination thereof, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. (iv) Dividend Equivalents or Interest. Subject to the terms of the -------------------------------- Plan and any applicable Award Agreement, a Participant, including the recipient of a deferred Award, shall, if so determined by the Committee, be entitled to receive, currently or on a deferred basis, interest or dividends or interest or dividend equivalents, with respect to the Shares covered by the Award. The Committee may provide that any such amounts shall be deemed to have been reinvested in additional Shares or otherwise reinvested. Notwithstanding the award of Dividend Equivalents or dividend units, a Participant shall not be entitled to receive a special or extraordinary dividend or distribution unless the Committee shall have expressly authorized such receipt. (v) Limits on Transfer of Awards. No Award (other than ---------------------------- Released Securities) or right thereunder shall be assignable or transferable by a Participant, other than (unless limited in the Award Agreement) by will or the laws of descent and distribution (or, in the case of an -10- Award of Restricted Securities, to Olin), except that an Option may be transferred by gift to any member of the holder's immediate family or to a trust for the benefit of one or more of such immediate family members, if permitted in the applicable Award Agreement; provided, however, that, if so -------- ------- determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries with respect to any Award to exercise the rights of the Participant, and to receive any property distributable, upon the death of the Participant. Each Award, and each right under any Award, shall be exercisable, during the Participant's lifetime, only by the Participant or, if permissible under applicable law by the Participant's guardian or legal representative unless it has been transferred to a member of the holder's immediate family or to a trust for the benefit of one or more of such immediate family members, in which case it shall be exercisable only by such transferee. For the purposes of this provision, a holder's "immediate family" shall mean the holder's spouse, children and grandchildren. No Award (other than Released Securities), and no right under any such Award, may be pledged, attached or otherwise encumbered other than in favor of Olin, and any purported pledge, attachment, or encumbrance thereof other than in favor of Olin shall be void and unenforceable against Olin or any Affiliate. (vi) Term of Awards. Except as otherwise expressly -------------- provided in the Plan, the term of each Award shall be for such period as may be determined by the Committee. (vii) Rule 16b-3 Six-Month Limitations. To the extent required in -------------------------------- order to satisfy the requirements for exemption under Rule 16b-3 only, any equity security offered pursuant to the Plan may not be sold for at least six months after acquisition (or such other period as may be required by Rule 16b-3), except in the case of death or disability, and any derivative security issued pursuant to the Plan shall not be exercisable for at least six months (or such other period as may be required by Rule 16b-3), except in case of death or disability. Terms used in the preceding sentence shall, for the purposes of such sentence only, have the meanings, if any, assigned or attributed to them under Rule 16b-3. (viii) No Rights to Awards. No Salaried Employee, Participant or ------------------- other Person shall have any claim to be granted an Award, and there is no obligation for uniformity of treatment of Salaried Employees, Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each recipient. The prospective recipient of any Award -11- under the Plan shall not, with respect to such Award, be deemed to have become a Participant, or to have any rights with respect to such Award, until and unless such recipient shall have executed an agreement or other instrument accepting the Award and delivered a fully executed copy thereof to the Company, and otherwise complied with the then applicable terms and conditions. (ix) Delegation. Notwithstanding any provision of the Plan ---------- to the contrary, the Committee may delegate to one or more officers or managers of Olin or any Affiliate, or a committee of such officers or managers, the authority, subject to such terms and limitations as the Committee shall determine, to grant Awards to, or to cancel, modify, waive rights or conditions with respect to, alter, discontinue, suspend, or terminate Awards held by, Salaried Employees who are not officers or directors of Olin for purposes of Section 16 of the Securities Exchange Act of 1934, as amended. (x) Withholding. Olin or any Affiliate may withhold from ----------- any Award granted or any payment due or transfer made under any Award or under the Plan the amount (in cash, Shares, other securities, other Awards, or other property) of withholding taxes due in respect of an Award, its exercise or any payment under such Award or under the Plan, and take such other action as may be necessary in the opinion of Olin or Affiliate to satisfy all obligations for the payment of such taxes. (xi) Other Compensation Arrangements. Nothing contained in ------------------------------- the Plan shall prevent Olin or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases. (xii) No Right to Employment. The grant of an Award shall ---------------------- not be construed as giving a Participant the right to be retained in the employ of Olin or any Affiliate. Nothing in the Plan or any Award Agreement shall limit the right of Olin or an Affiliate at any time to dismiss a Participant from employment, free from any liability or any claim under the Plan or the Award Agreement. (xiii) Governing Law. The validity, construction and effect of the ------------- Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Connecticut and applicable Federal law. (xiv) Severability. If any provision of the Plan or any Award is ------------ determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed -12- applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect. (xv) No Trust or Fund Created. Neither the Plan nor any ------------------------ Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between Olin or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from Olin or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of Olin or any Affiliate. (xvi) No Fractional Shares. No fractional Shares shall be -------------------- issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated. (xvii) Share Certificates. All certificates for Shares or ------------------ other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares or other securities are then listed, and any applicable Federal or state securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. (xviii) Conflict with Plan. In the event of any inconsistency or ------------------ conflict between the terms of the Plan and an Award Agreement, the terms of the Plan shall govern. (xix) Notwithstanding any provision in this Plan to the contrary, Awards granted under Sections 6(c), 6(d) or 6(e) after January 1, 1994 and designated by the Committee as being performance- based shall have as performance measures Return on Equity and Total Return to Shareholders. For purposes of the Plan, "Return on Equity" shall mean consolidated income of Olin after taxes and before the after-tax effect of any special charge or gain and any cumulative effect of any change in accounting, divided by average shareholders equity and "Total Return to -13- Shareholders" shall mean for the performance period total return to shareholders of $100 worth of Shares for such period assuming reinvestment of dividends on a quarterly basis. The Committee shall determine the performance goals for each such performance measure with respect to each such Award. Section 7. Amendment and Termination ------------------------- (a) Amendments to the Plan. The Board may amend, suspend, discontinue or ---------------------- terminate the Plan, including, without limitation, any amendment, suspension, discontinuation or termination that would impair the rights of any Participant, or any other holder or beneficiary of any Award theretofore granted, without the consent of any shareholder, Participant, ------------------------- other holder or beneficiary of an Award, or other Person; provided, ------------------------------------------------------------------ however, that, notwithstanding any other provision of the Plan or any Award ------- Agreement, without the approval of the shareholders of Olin, no such amendment, suspension, discontinuation or termination shall be made that would: (i) increase the total number of Shares available for Awards under the Plan, except as provided in Section 4 hereof; or (ii) permit any Award encompassing rights to purchase Shares to be granted with per Share purchase or exercise prices of less than the Fair Market Value of a Share on the date of grant thereof; and provided further that no amendment, suspension, discontinuation or -------- ------- termination (i) that would impair the rights of such Participant, holder or beneficiary shall be made with respect to Section 9 of the Plan after a Change in Control, as defined therein and (ii) may increase the amount of payment of any Award to any Participant. (b) Amendments to Awards. The Committee may waive any conditions or rights -------------------- with respect to, or amend, alter, suspend, discontinue, or terminate, any unexercised Award theretofore granted, prospectively or retroactively, without the consent of any relevant Participant or holder or beneficiary of an Award, provided that no amendment, alteration, suspension, -------- discontinuation or termination of an Award that would impair the rights of such Participant, holder or beneficiary shall be made after a Change in Control, as defined in Section 9; provided further that the Committee may not increase the payment of any Award granted any Participant. (c) Adjustments of Awards Upon Certain Acquisitions. In the event Olin or ----------------------------------------------- any Affiliate shall assume outstanding employee awards or the right or obligation to make future such awards in connection with the acquisition of another business or another company, the Committee may make such adjustments, not inconsistent with the terms of the Plan, in the terms of Awards as it shall deem appropriate. -14- (d) Adjustments of Awards Upon the Occurrence of Certain Unusual or --------------------------------------------------------------- Nonrecurring Events. The Committee may make adjustments in the terms and - ------------------- conditions of Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(b) hereof) affecting Olin, any Affiliate, or the financial statements of Olin or any Affiliate, or of changes in applicable laws,regulations, or accounting principles, whenever the Committee determines that statements of Olin or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits to be made available under the Plan. Section 8. Additional Conditions to Enjoyment of Awards. -------------------------------------------- (a) The Committee may cancel any unexpired, unpaid or deferred Awards if at any time the Participant is not in compliance with all applicable provisions of the Award Agreement, the Plan and the following conditions: (i) A Participant shall not render services for any organization or engage, directly or indirectly, in any business which, in the judgment of the Committee or, if delegated by the Committee to the Chief Executive Officer, in the judgment of such Officer, is or becomes competitive with Olin or any Affiliate, or which is or becomes otherwise prejudicial to or in conflict with the interests of Olin or any Affiliate. Such judgment shall be based on the Participant's positions and responsibilities while employed by Olin or an Affiliate, the Participant's post-employment responsibilities and position with the other organization or business, the extent of past, current and potential competition or conflict between Olin or an Affiliate and the other organization or business, the effect on customers, suppliers and competitors of the Participant's assuming the post-employment position, the guidelines established in the then current edition of Olin's Code of Business Conduct, and such other considerations as are deemed relevant given the applicable facts and circumstances. The Participant shall be free, however, to purchase as an investment or otherwise, stock or other securities of such organization or business so long as they are listed upon a recognized securities exchange or traded over the counter, and such investment does not represent a substantial investment to the Participant or a greater than 1% equity interest in the organization or business. (ii) Participant shall not, without prior written authorization from Olin, disclose to anyone outside Olin, or use in other than Olin's business, any secret or confidential information, knowledge or data, relating to the business of Olin or an Affiliate in violation of his or her agreement with Olin or the Affiliate. -15- (iii) A Participant, pursuant to his or her agreement with Olin or an Affiliate, shall disclose promptly and assign to Olin or the Affiliate all right, title and interest in any invention or idea, patentable or not, made or conceived by the Participant during employment by Olin or the Affiliate, relating in any manner to the actual or anticipated business, research or development work of Olin or the Affiliate and shall do anything reasonably necessary to enable Olin or the Affiliate to secure a patent where appropriate in the United States and in foreign countries. (b) Notwithstanding any other provision of the Plan, the Committee in its sole discretion may cancel any Award at any time prior to the exercise thereof, if the employment of the Participant shall be terminated, other than by reason of death, unless the conditions in this Section 8 are met. (c) Failure to comply with the conditions of this Section 8 prior to, or during the six months after, any exercise, payment or delivery pursuant to an Award shall cause the exercise, payment or delivery to be rescinded. Olin shall notify the Participant in writing of any such rescission within two years after such exercise payment or delivery and within 10 days after receiving such notice, the Participant shall pay to Olin the amount of any gain realized or payment received as a result of the exercise, payment or delivery rescinded. Such payment shall be made either in cash or by returning to Olin the number of Shares that the Participant received in connection with the rescinded exercise, payment or delivery. (d) Upon exercise, payment or delivery pursuant to an Award, the Committee may require the Participant to certify on a form acceptable to the Committee, that he or she is in compliance with the terms and conditions of the Plan. (e) Nothing herein shall be interpreted to limit the obligations of a Participant under his or her employee agreement or any other agreement with Olin. Section 9. Change in Control ----------------- (a) Except as the Board or the Committee may expressly provide otherwise prior to a Change in Control of Olin (as defined below) and subject to the provisions of Section 6(f)(vii) hereof, in the event of a Change in Control of Olin: (i) all Options and Stock Appreciation Rights then outstanding shall become immediately and fully exercisable, notwithstanding any provision therein for the exercise in installments; (ii) unless a Stock Appreciation Right shall have already been granted with respect to an outstanding Option, the -16- Participant holding such Option shall be deemed also to hold a Stock Appreciation Right related to such Option, exercisable in accordance with and subject to the terms and conditions of Section 6(b) for the number of Shares exercisable under such Option after giving effect to such acceleration, which Stock Appreciation Right may, but need not be, evidenced by separate written agreement; (iii) all restrictions and conditions of all Restricted Stock and Restricted Stock Units then outstanding shall be deemed satisfied as of the date of the Change in Control; and (iv) all Performance Awards shall become vested, deemed earned in full and promptly paid to the Participants, cash units in cash and phantom stock units in the Shares represented thereby or such other securities, property or cash as may be deliverable in respect of Shares as a result of a Change in Control, without regard to payment schedules and notwithstanding that the applicable performance cycle or retention cycle shall not have been completed. (b) A Change in Control of Olin shall have occurred in the event that: (i) Olin ceases to be publicly owned with at least 1,000 stockholders; (ii) a person, partnership, joint venture, corporation or other entity, or two or more of any of the foregoing acting as a group (or a "person" within the meaning of Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Act"), other than Olin, a majority-owned subsidiary of Olin or an employee benefit plan of Olin or such subsidiary, become(s) the "beneficial owner" (as defined in Rule 13d-3 under the Act) of 20% or more of the then outstanding voting stock of Olin; (iii) during any period of two consecutive years, individuals who at the beginning of such period constitute Olin's Board of Directors (together with any new Director whose election by Olin's Board of Directors or whose nomination for election by Olin's 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; or (iv) Olin's Board of Directors determines that a tender offer for Olin's shares indicates a serious intention by the offeror to acquire control of Olin. Section 10. Effective Date of the Plan -------------------------- -17- The Plan shall be effective as of the date of its approval by the shareholders of Olin. Section 11. Term of the Plan ---------------- No Award shall be granted under the Plan after April 30, 2001, but unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such date. EX-11 10 COMPUTATION OF EARNINGS EXHIBIT 11 OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS Primary earnings per share are computed by dividing net income less the ESOP preferred stock dividend requirement by the weighted average number of common shares outstanding plus an equivalent number (one-for-one) of common shares assuming the conversion of Series A stock (PERCS). Fully diluted earnings per share reflect the dilutive effect of stock options and assume the conversion of outstanding ESOP preferred stock into an equivalent number of common shares at the date of issuance. Net income was reduced by an additional ESOP contribution (differential between the common and ESOP preferred dividend rates under an assumed conversion) necessary to satisfy the debt service requirement.
(In thousands) Years Ended December 31, ----------------------------- 1994 1993 1992 ------ ------ ------ Weighted average number of common shares outstanding and common stock equivalents 23,303 21,840 21,598 Common shares issuable assuming the conversion of outstanding ESOP preferred stock at the date of issuance 1,440 1,623 1,597 Common shares issuable under outstanding stock options and additional remuneration agreements which have a dilutive effect on per share earnings 82 24 40 ------ ------ ------ Adjusted number of common shares outstanding 24,825 23,487 23,235 ====== ====== ====== (In millions) Net income (loss) $91 $(92) $9 Less ESOP preferred dividend (7) (7) (8) ------ ------ ------ Net income (loss) adjusted for primary earnings (loss) per share $84 $(99) $1 ====== ====== ====== Primary earnings (loss) per share (1) $3.65 $(4.52) $0.06 ====== ====== ====== Net income (loss) $91 $(92) $9 Less additional ESOP contribution (3) (2) (3) ------ ------ ------ Net income (loss) adjusted for fully diluted earnings (loss) per share $88 $(94) $6 ====== ====== ====== Fully diluted earnings (loss) per share (1)(2) $3.54 $(4.01) $0.26 ====== ====== ======
Notes: (1) Under the common stock equivalent method, primary loss per share would have been $5.70 and $.39 for 1993 and 1992. PERCS dividends in 1993 and 1992 were $10 million and $9 million, respectively, while average PERCS shares outstanding in 1993 and 1992 were 2.76 million and 2.55 million, respectively. (2) Fully diluted income or loss per share in 1993 and 1992 was anti-dilutive and therefore, was not reported on the Income Statement. EX-12.(A) 11 RATIO OF EARNINGS TO FIXED CHARGES Exhibit 12(a) OLIN CORPORATION Computation of Ratio of Earnings to Fixed Charges (Unaudited) (In millions)
Years Ended December 31, ------------------------------------------------------------------- 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- Earnings: Income (loss) before taxes $141 $(150) $88 $(25) $116 Add (deduct): Income taxes of 50% owned affiliates 4 3 1 3 (4) Equity in (earnings) loss of less than 50% owned affiliates 2 4 5 - (5) Dividends received from less than 50% owned affiliates - - - - 1 Interest capitalized, net of amortization 1 (1) (4) (1) (2) Fixed charges as described below 56 56 58 63 72 -------- -------- -------- ------- -------- Total $204 $(88) $148 $40 $178 ======== ======== ======== ======= ======== Fixed charges: Interest expense 38 41 45 50 57 Estimated interest factor in rent expense 18 15 13 13 15 ------- -------- ------- ------- ------- Total $56 $56 $58 $63 $72 ======= ======== ======= ======= ======= Ratio of earnings to fixed charges (a) 3.6 - 2.6 0.6 2.5 ======= ======== ======= ======= =======
_______________________________________________________________________________ (a) In the twelve months ended December 31, 1993 and December 31, 1991, earnings were inadequate to cover fixed charges by $144 million and $23 million, respectively. In 1993, the Company recorded an after-tax charge of $132 million for personnel reductions, business restructurings involving consolidations and re-alignments within divisions, costs at sites of discontinued businesses, future environmental liabilities, and other charges. In 1991, the Company recorded an after-tax charge of $80 million to cover losses on the disposition and write-down of certain businesses and costs of personnel reductions. EX-12.(B) 12 RATIO OF EARNINGS TO FIXED CHARGES & PREF STK Exhibit 12(b) OLIN CORPORATION Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited)
(In millions) Years Ended December 31, ------------------------------------------------- 1994 1993 1992 1991 1990 ------- -------- ------ ------ -------- Earnings: Income (loss) before taxes $141 $(150) $88 $(25) $116 Add (deduct): Income taxes of 50% owned affiliates 4 3 1 3 (4) Equity in (earnings) loss of less than 50% owned affiliates 2 4 5 - (5) Dividends received from less than 50% owned affiliates - - - - 1 Interest capitalized, net of amortization 1 (1) (4) (1) (2) Fixed charges as described below 56 56 58 63 72 -------- -------- -------- ------- -------- Total $204 $(88) $148 $40 $178 ======== ======== ======== ======= ======== Fixed charges and preferred stock dividends: Interest expense 38 41 45 50 57 Estimated interest factor in rent expense 18 15 13 13 15 Preferred stock dividend requirement 28 28 26 13 13 ------- ------- ------- ------- ------- Total $84 $84 $84 $76 $85 ======= ======= ======= ======= ======= Ratio of earnings to combined fixed charges and preferred stock dividends (a)(b) 2.4 - 1.8 0.5 2.1 ======= ======= ======= ======= ========
________________________________________________________________________________ (a) In the twelve months ended December 31, 1993 and December 31, 1991, earnings were inadequate to cover combined fixed charges and preferred stock dividends by $172 million and $36 million, respectively. In 1993, the Company recorded an after-tax charge of $132 million for personnel reductions, business restructurings involving consolidations and re-alignments within divisions, costs at sites of discontinued businesses, future environmental liabilities, and other charges. In 1991, the Company recorded an after-tax charge of $80 million to cover losses on the disposition and write-down of certain businesses and costs of personnel reductions. (b) The ratio of earnings to combined fixed charges and preferred stock dividends has been computed based upon income before taxes and fixed charges included in income (loss) after eliminating the amortization of capitalized interest and the undistributed (earnings) losses of less than 50%-owned affiliates. Fixed charges include interest and that portion of rental expense deemed to represent interest. EX-13 13 EXCERPTS FROM ANNUAL REP EXHIBIT 13 Olin Corporation is a Fortune 200 company whose businesses are concentrated in chemicals, materials and metals, defense, sporting ammunition and aerospace. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations 1994 Compared to 1993 The selective investments made over the past several years, strategic actions taken in 1993 and a stronger economy contributed to the company's improved financial performance over 1993. In 1994, all divisions exceeded 1993 profit levels with record earnings achieved in Metals, Winchester and Electronic Materials. Net income increased to $91 million, or $3.65 per share, from a net loss of $92 million, or $4.52 per share, which included a charge of $132 million. Sales in 1994 were a record $2.7 billion, up 10% from 1993, attributed primarily to strong customer demand for most major products. Chemicals Sales of $1,195 million for 1994 increased 7% over 1993, while segment net income was $42 million compared to 1993's net income of $12 million, excluding $106 million of the 1993 charge. Improved economic conditions favorably impacted many of the chemicals businesses. Improved pricing and lower manufacturing costs in chlor-alkali and higher volumes in pool products and urethanes contributed to the 1994 increase in net income from 1993. Chlor-alkali's sales were 11% ahead of last year due to strong demand and increased pricing. These factors along with lower manufacturing costs (raw materials and plant fixed costs) and the implementation of profit improvement programs resulting from reengineered processes, contributed to chlor-alkali's improved profit performance. In the urethanes business, strong domestic demand for polyols contributed to the 1994 sales increase. TDI volumes were comparable to 1993's levels. The specialty urethanes coating product line experienced higher sales volumes as this relatively new business continued to expand internationally. Operating results in 1994 improved as the higher volumes more than offset increases in raw material costs and the effect of the production outage at the Lake Charles, La. facility. Pool products sales increased over 1993's levels as higher volumes more than offset the impact of competitive pricing pressures. Domestic brand and bulk volumes as well as export shipments exceeded last year's levels. Reduction in administrative expenses were offset by additional expenditures for advertising and promotional efforts to support brand products. Operating results of specialty chemicals exceeded last year. Worldwide volumes increased as a result of higher foreign sales and the introduction of new products. The profit impact from these additional volumes was offset in part by higher operating costs relating to toxicology studies on new products and additional administrative personnel at foreign affiliates. Strong demand from the semiconductor industry for the company's high-purity electronic chemicals and its MQUAD microelectronic packaging system accounted ----- for the improvement in sales and profitability of the electronic chemicals business. Chemicals sales and net income are expected to increase from 1994's level due to higher volumes and improved pricing, offset in part by higher raw material costs. Chlor-alkali's performance is expected to improve due to continuing strong demand for caustic. Although additional volumes are estimated to increase specialty chemicals sales, new product introductions and market entry costs are expected to negate the profit impact from the additional volumes. In the electronic chemicals business, volume gains due to continuing demand from the semiconductor industry are expected to enhance 1995's performance. In the past, there have been legislative initiatives to study the dangers and benefits of chlorine and chlorinated compounds. It is impossible to predict what legislation or other initiatives, if any, may be adopted regarding chlorine and what effect, if any, such action may have on the company. Metals Sales in 1994 were a record $750 million, and improved 14% over 1993 on higher metal values and increased levels of commercial shipments, as all operations recorded higher volumes than the previous year. Net income increased to $39 million from $26 million in 1993, excluding $12 million of the 1993 charge. The record financial performance benefited from higher demand; additional investments in equipment to expand capacity, improve yields and reduce manufacturing costs; the implementation of profit improvement programs including a reduction in the salaried workforce; and the absence of operating losses from a joint venture disposed of in the fourth quarter of 1993. 12 With an improved economy in 1994, the demand for strip products from the automotive, housing and ammunition markets, was exceptionally strong. The industry has not seen demand for strip reach 1994 levels in the last ten years. The 1993 expansion of the East Alton, Ill. mill provided additional capacity to meet this demand. Shipments of other products, such as stainless steel and fineweld tube, also exceeded 1993's levels. In 1995, it is expected that the economy will remain strong throughout the year and that Metals will operate at near capacity production levels to support the demand for brass strip. Sales are expected to increase slightly as increased sales volumes in certain operations and higher metal values are expected to offset lower coinage requirements. There is still excess domestic capacity, which may lower industry operating rates and create a very competitive pricing environment. Segment net income is estimated to be comparable to last year. Defense and Ammunition Sales in 1994 were $713 million, 10% ahead of 1993 due to increased shipments of Winchester commercial ammunition and Ball Powder propellants and the inclusion ----------- of sales of the newly acquired medium caliber business. Net income in 1994 increased to $32 million from $24 million, excluding $14 million of the 1993 charge. The increased volumes, along with the profit contribution from the acquisition, additional royalty income and the savings from the reduction in the salaried workforce, contributed to the increase in segment net income. Winchester's domestic commercial ammunition sales were exceptionally strong throughout the year. Heavy consumer buying due in part to the fear of restrictive legislation and taxation accounted for Winchester's record sales level and offset decreases in military export ammunition sales. The related profit impact from higher sales more than offset lower fees associated with lower production volumes at the Lake City Army Ammunition Plant and accounted for the division's record profits in 1994. In the Ordnance Division, the integration of the newly acquired business was implemented successfully and expanded the company's medium caliber ammunition line of products. Ordnance's sales and profits improved over 1993 due to the acquisition and increased Ball Powder propellant shipments. Tank ----------- ammunition volumes in 1994 were comparable to the prior year. Aerospace Division sales were comparable to 1993's amount. Sales of new products were offset by delays/cancellations of certain government funded programs. Increased margins on certain rocket engine programs, new products and additional royalty income contributed to higher divisional profits in 1994. In 1995, sales for the Defense and Ammunition segment are expected to increase with net income comparable to 1994. Demand for Winchester's commercial ammunition is expected to remain strong, while its military ammunition shipments are expected to surpass 1994's level. Increases in commodity costs, especially copper, and lower fees related to reduced production volumes at Lake City are estimated to offset the profit impact from the sales increases. Higher shipments of large and medium caliber ammunition along with sales of new Aerospace products are expected to more than offset lower Ball Powder propellant volumes. ----------- U.S. government sales amounted to $379 million in 1994, $354 million in 1993 and $409 million in 1992. Approximately 91% of 1994 sales were to the Department of Defense (DoD) or agencies thereof. Changes in the strategic direction of defense spending, the timing of defense procurements and specific defense program appropriation decisions may adversely affect the performance of this segment and the company in future years, including its income, liquidity, capital resources and financial condition. The precise impact of these decisions will depend upon the timing and size of changes and decisions, and the company's ability to mitigate their impact with new business, business consolidations or cost reductions. The company currently provides services to the U.S. government in facilities management and ordnance demilitarization and continues to pursue other business areas. In view of the continuing uncertainty regarding the strategy and priorities of the DoD, the historical financial information of the Defense and Ammunition segment, and to a lesser extent, of the company, may not be indicative of future performance. Other Financial Data In 1993, the company recorded a pretax charge for a series of strategic actions consisting of personnel reductions, business restructurings including consolidations and realignments within divisions, provision for costs at sites of discontinued businesses, future environmental liabilities, and other charges. As of December 31, 1994, the planned personnel reductions had been approximately 80% completed. The remaining reductions are anticipated to occur in 1995 at an estimated cost of $18 million. Various actions within the business restructuring phase of the 1993 charge had been completed as of December 31, 1994. The remaining actions, primarily the restructuring of the electronic materials businesses, are expected to be finalized within the next two years at an estimated cost of $18 million. The savings resulting from the workforce reductions and business restructurings were approximately $20 million in 1994. The expected additional savings from the remaining actions are estimated to be $15 million on an annualized basis thereafter. Gross margin percentage was 19% for 1994, an increase of 1% from 1993, excluding the charge. The increase was driven by increased volumes and cost reduction programs (including an early retirement incentive program), but was offset in part by increased commodity costs (copper and lead) and higher raw materials costs. 13 Selling and administration expenses as a percentage of sales decreased to 11.4% in 1994 from 12.4% in 1993. The impact from cost reduction programs and other personnel reductions was offset by operating expenses relating to the acquisition and higher administrative expenses. Research and development expenditures decreased as efforts were concentrated on the company's core businesses and on new products and technologies related to such businesses. The decrease in 1994 average domestic short-term borrowings more than offset the impact of increasing short-term interest rates and contributed to the decrease in interest expense from 1993. The effective tax rate for 1994 was 35.5%, compared to 36.5% in 1993, excluding the effect of the charge. At December 31, 1994, the company had net deferred tax assets of $61 million, principally comprised of alternative minimum tax credits of $30 million and temporary differences between financial statement and tax bases of assets and liabilities. No valuation allowance has been provided because management believes that it is more likely than not that sufficient taxable income will be generated in the next two years to allow for the realization of these tax benefits. Taxable income required for such realization currently approximates $280 million. In December 1987, a Federal Trade Commission (FTC) judge ruled that the company must divest the chlorinated isocyanurates business acquired in 1985, which included an isocyanurates manufacturing facility in South Charleston, W. Va., a packaging facility in Livonia, Mich. and the SUN brand trademark. Over --- the years, the company has been unsuccessful in its efforts to appeal. The company unsuccessfully attempted to modify the FTC order by proposing to the FTC that the company sell its trichloroisocyanurate production facility in Lake Charles, La. to BioLab, Inc. (a sale which it ultimately consummated in 1994) instead of selling its South Charleston facility. The company entered into an agreement in principle, in 1994, to sell the SUN brand of isocyanurates. In --- February 1995, the company signed a letter of intent for the sale of its South Charleston and Livonia facilities to subsidiaries of Israel Chemicals Ltd. These transactions did not have a material impact on the company's results of operations in 1994 and are not expected to have a material adverse effect on the results of operations for 1995. 1993 Compared to 1992 The recession continued to influence some of the company's major product lines. The lingering effects of the recession, the inability to raise prices for certain chemical products, the declining levels of defense procurement and intense price competition in the metals industry had adversely impacted the company's financial performance. Also in 1993, a series of strategic actions were announced that resulted in a pretax charge to operations of $213 million ($132 million after tax) to cover costs for personnel reductions, business restructurings involving consolidations and realignments within divisions, costs at sites of discontinued businesses, future environmental liabilities, and other charges. As a result, the company reported a 1993 net loss of $92 million, equal to $4.52 per share. Net income in 1992 was $9 million or 6 cents per share and included an after-tax charge of $46 million for the adoption of two financial accounting standards involving retiree benefits and income taxes. Sales for 1993 were $2.4 billion, up slightly from 1992's level. Chemicals Chemicals 1993 sales were $1,117 million, up 12% from 1992. This increase was attributable in part to higher performance urethanes sales, particularly for the new specialty urethanes coatings, and sales of a previously non-consolidated affiliate in Europe. Segment net loss for 1993 was $94 million which included $106 million of the 1993 charge, compared to 1992's net income of $21 million. The decline in net income was due primarily to the poor performance from the chlor-alkali and flexible urethanes businesses. Despite a 3% increase in the 1993 chlorine industry operating rate to 97% of capacity, chlor-alkali financial performance was significantly behind 1992's level. Chlorine prices increased throughout 1993 driven by strong demand from plastic manufacturers. Conversely, demand for caustic was sluggish and adversely affected by over-supply conditions in the marketplace. The decline in caustic prices was greater than the increase in chlorine prices. These factors along with higher electricity costs (caused by severe weather conditions in the Southeast and a nuclear power plant shutdown) and operating problems at the Niachlor facility were the main contributors to the 1993 decline in chlor- alkali's financial performance. Sales of flexible urethanes increased over 1992's level. Higher domestic TDI volumes and prices more than offset lower international prices and contributed to the sales increase. Flexible polyols volumes and prices were slightly ahead of 1992's levels. Despite these sales gains, the flexible urethanes business lost money once again in 1993. Production problems early in the year, lower international prices and the unfavorable performance from the company's two Venezuelan joint ventures contributed to the additional losses. Sales of acids, sodium hydrosulfite and other industrial chemicals in 1993 were comparable to 1992 sales, while profits were slightly higher due primarily to the strong demand for sodium hydrosulfite by the textile and paper industries. 14 In the pool products business, 1993's financial performance was comparable to 1992. Improved weather conditions combined with sales of a previously non- consolidated European affiliate accounted for the revenue increase. Higher product exports and market share of bulk chemicals also contributed to mitigating the profit impact of lower pricing due to ongoing competitive pressures. The additional volumes and the improved operating results from a Brazilian joint venture offset the profit impact of lower prices, a less favorable product mix and higher administrative expenses. Specialty and organic chemicals sales were equal to 1992's level, while profits increased significantly from 1992. The company expanded its biocides products and markets in 1993, with shipments to the Far East and other international customers more than doubling. The combination of increased shipments and lower raw materials costs for propylene and ethylene oxide accounted for the improvement in sales and profitability of the specialty surfactants business. Sales of performance urethanes were well ahead of 1992 while associated operating losses declined significantly. Higher sales volumes and a lower raw material cost were the main contributors to the improved performance of the polyols business. In its first full year of operations in 1993, the new specialty urethanes coatings business built market share through competitive pricing. Metals Metals sales of $660 million declined 2% on lower metal values and reduced levels of utility and defense-related business. The Indianapolis operations, Mill Products and the Fabricating business and A. J. Oster Co. (Oster) each recorded higher volumes and improved product mix. Record commercial shipments of brass strip were achieved in 1993. In addition, the expansion of the East Alton mill was completed in mid-1993, contributing to improved quality and productivity. Metals net income was $14 million in 1993, compared to $29 million in 1992. The 1993 income is net of a $12 million charge for costs associated with the 1993 strategic action plan. The profit decline resulted from lower sales to the defense and utility industries and pricing pressures as a competitor brought additional capacity on line. In addition, losses from the German joint venture were significantly greater than the corresponding loss in 1992. In the 1993 fourth quarter, the company sold its interest in this venture to its partner for approximately book value. Offsetting these negative income factors to some degree were the strong profit performance from the Oster and Indianapolis operations due to higher shipments of brass strip. Defense and Ammunition Defense and Ammunition segment sales of $646 million were 8% behind 1992's level due primarily to lower shipments of certain tank and medium caliber ammunition and delays of awards/start-up of new Aerospace government programs. These reduced sales volumes along with higher costs incurred on certain government contracts in 1993 contributed to an 18% decline in segment net income, excluding $14 million of the 1993 charge applicable to this segment. Winchester's 1993 sales decreased 2% from 1992 resulting from the completion in 1992 of several foreign ammunition contracts and lower shipments of small caliber military and export ammunition partially offset by higher domestic sales. An improved product mix, higher domestic selling prices and favorable manufacturing cost performance more than offset the reduced export profit margins, resulting in a slight profit improvement in net income. The Ordnance Division experienced lower shipments of certain large and medium caliber ammunition due to shrinking defense procurements. Net income was further impacted by higher severance costs as the division continued to resize, reflecting the declining U.S. defense budgets. In 1993, the company entered into negotiations to purchase the medium caliber ordnance business of GenCorp Inc. The Aerospace Division financial results were mixed for 1993; sales declined 11% while net income increased 21%. Lower sales of certain solid propellant products and canceled/delayed Department of Defense contract awards contributed to the sales decline. The related profit impact from lower sales was more than offset by the absence of cost overruns on certain fixed-price contracts and the costs of closing the Wadsworth facility, both in 1992, along with lower operating expenses in 1993. Other Financial Data In December 1993, the company announced a series of strategic actions consisting of personnel reductions, business restructurings including consolidations and realignments within divisions, provisions for costs at sites of discontinued businesses, future environmental liabilities, and other charges. As a result of these actions, the company recorded a pretax charge to operations of $213 million ($132 million after tax) in the fourth quarter of 1993. Major components of this charge were the following: A. Personnel Reductions: The company expected to reduce its salaried workforce by over 10%, or 600 people, over the next two years along with minor reductions in the hourly workforce. An early retirement incentive program was put in effect for the Brass and Winchester divisions, which did not participate in a similar program offered in 1991. The pretax charge for these actions was $42 million. B. Business Restructurings: The charge provided for streamlining existing businesses by relocating and consolidating several facilities, primarily electronic materials businesses. Additionally, a portion of the charge related to lower estimated proceeds from asset disposals and higher costs associated with components of the 1991 streamlining program. The company recorded a pretax charge of $41 million for these business restructurings. C. Discontinued Businesses and Site Maintenance Costs: The pretax charge for discontinued businesses and site maintenance was $41 million to provide for property maintenance, security, and product liability expenses associated with several operations which are no longer ongoing businesses. Also, a previously decommissioned plant and warehouse will be disassembled, while associated buildings will be modified to make them suitable for future leasing. D. Future Environmental Liabilities: The pretax charge of $55 million recognized future environmental liabilities resulting from additional investigatory activities and more extensive remediation at sites. An additional pretax charge of $24 million related to remediation costs which the company funded and anticipated sharing with a third party, with whom the company is now in litigation. E. Other Charges: There were various other minor charges, including asset write-downs and long-term disability costs, which amounted to $10 million pretax. Selling and administration expenses as a percent of sales increased to 12.4% in 1993 from 11.7% in 1992. Increased administrative, selling and promotional efforts for new product introductions in the 15 Chemicals and the Defense and Ammunition segments, higher operating expenses of the electronic materials businesses and the European affiliate were the main contributors to the increase. Research and development expenditures, up slightly from 1992's level, were concentrated on the company's core businesses and the exploration of new products and technologies associated with these businesses. Interest expense in 1993 decreased slightly from 1992 due to lower short- term interest rates in effect during 1993. The average borrowing rate on domestic short-term debt decreased by 87 basis points from 1992's rate. The effective tax rate was 38.7% in 1993 and 37.5% in 1992, approximating the combined federal and state statutory rates in each year, respectively. At December 31, 1993, the company had net deferred tax assets of $63 million, principally comprised of alternative minimum tax credits of $40 million and temporary differences between financial statement and tax bases of assets and liabilities. No valuation allowance has been provided because management believes that it is more likely than not that sufficient taxable income will be generated in the next two to four years to allow for the realization of these tax benefits. Taxable income required for such realization approximated $350 million. Liquidity and Investment Activity Cash flow from operations supplemented by credit facilities, proceeds from the divestment of businesses and the issuance of common shares were used to finance the company's major funding needs, namely capital projects, dividends to shareholders and the acquisition. Cash flow from operating activities amounted to $199 million in 1994, $137 million in 1993 and $189 million in 1992. The 1994 change in cash flow from operating activities was primarily due to increased operating income. The increase in receivables and inventories to support a higher level of business activity was offset in part by higher current liabilities. Cash flow from operations was used for expenses incurred in executing the 1993 strategic action plan. The decrease in cash flow from operations in 1993 from 1992 was primarily attributable to lower operating income. The effect of lower operating income was partially offset by higher depreciation expense which resulted from increased capital spending levels in prior years. The reduction in current liabilities related to lower amounts due vendors, increased spending for environmental remediation and costs incurred in executing the 1991 streamlining program. Net cash used for investing activities was $127 million in 1994, $84 million in 1993 and $139 million in 1992. Capital spending in 1994 increased 13% from the prior year mainly to support the consolidation of some medium caliber ammunition operations, restore the trichloroisocyanurate production facility at South Charleston, W. Va. and provide additional capacity for selected product lines. Environmental capital spending in 1994 approximated last year's amount. Capital spending in 1993 decreased $41 million or 24% from 1992 due to lower environmental capital spending and the completion in 1992 of additional brass strip capacity, the new specialty urethanes plant and the sulfuric acid regeneration plant. Capital expenditures in 1995 are estimated to increase approximately 20% from 1994 to provide additional capacity and product quality for selected product lines. Three major projects account for the majority of this increase: the completion of a manufacturing, distribution and laboratory complex in Mesa, Ariz. for the electronic materials business; the integration and expansion of TDI capacity at Lake Charles, La. and the modernization of the tube mill at Indianapolis, Ind. Investment spending in 1993 and 1992 was primarily for a new ethylene oxide joint venture in Venezuela, which was completed in 1993. The company's investment in this venture totaled $21 million at December 31, 1994. Throughout 1994, this venture continued to experience liquidity difficulties due to high leverage. In Venezuela, general economic conditions have become unstable in light of government actions. The government imposed currency exchange controls in order to control capital flight and manage inflation. The company, along with its venture partners, is currently attempting to resolve these difficulties in order to protect its recorded investment. In 1994, the company purchased certain assets of the medium caliber ammunition business of GenCorp Inc.'s Aerojet Ordnance division for approximately $25 million. This acquisition provided the company with a complete line of improved medium caliber ammunition products as well as air dispensed munition products. During 1994, the company sold its conductive materials business including the manufacturing facility in Ontario, Cal. and its trichloroisocyanurate production facility in Lake Charles, La. These transactions generated proceeds of $41 million. During 1993 the company sold the facility and the assets of its contract integrated circuit assembly operation (completing the divestiture phase of its 1991 streamlining program) and its interest in the German joint venture to its partner. These divestments generated proceeds of $37 million. Throughout 1992, several small product lines were sold as part of the streamlining program. Proceeds from the sales amounted to $42 million including $6 million received from a prior year sale. At December 31, 1994, the company maintained committed credit facilities with banks of $303 million of which $278 million was available. The company believes that these credit facilities are adequate to satisfy its liquidity needs for the near future. In September 1993, the company entered into a new unsecured revolving credit agreement with a group of banks, which replaced a prior $200 million credit agreement. The new agreement provides a maximum borrowing of $250 million and unless extended, expires on October 15, 1997. The company may select various floating rate borrowing options. In May 1994, the company issued 2.2 million shares of common stock at a price of $46.00. The net proceeds of $98 million were used to reduce short-term floating-rate debt and finance the acquisition of the medium caliber ammunition business. In 1992, the company sold 2.76 million shares of its $1 par value Series A Conversion Preferred 16 Stock (Series A Stock) generating net proceeds of $111 million, which were used to reduce bank loans. On March 1, 1995, the outstanding Series A Stock will convert automatically into shares of common stock on a one-for-one basis. In addition, the company in 1992 sold $100 million of 8% Notes due 2002 and used the proceeds to reduce short-term debt (most of which was incurred for working capital purposes). The company has swapped interest payments on $50 million principal amount of these notes to a floating rate. In 1990, the company participated in a program in which it sold an undivided ownership interest in a designated pool of receivables, with limited recourse, in an amount not to exceed $70 million. Amounts sold were $25 million and $65 million at December 31, 1994 and 1993, respectively. In January 1995, the company ended its participation in this program. The establishment and implementation of federal, state and local standards to regulate air, water and land quality has affected and will continue to affect substantially all of the company's plants. Facilities and equipment to protect the environment do not inherently produce any significant increase in product capacity, efficiency or revenue, and their operation generally entails additional expense and energy consumption. Federal legislation providing for regulation of the manufacture, transportation, use and disposal of hazardous and toxic substances has imposed additional regulatory requirements on industry, particularly the chemicals industry. In addition, implementation of environmental laws, such as the Resource Conservation and Recovery Act and the Clean Air Act, has required and will continue to require new capital expenditures and will increase operating costs. The company employs waste minimization and pollution prevention programs at its manufacturing sites. In order to help finance the cleanup of waste disposal sites, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 ("Superfund"), imposes a tax on the sale of various chemicals, including chlorine, caustic and certain other chemicals produced by the company, and on the disposal of certain hazardous wastes. The company is party to various governmental and private environmental actions associated with waste disposal sites and manufacturing facilities. Associated costs of investigatory and remedial activities are provided for in accordance with generally accepted accounting principles governing probability and the ability to reasonably estimate future costs. Environmental provisions charged to income amounted to $17 million in 1994, $85 million in 1993, and $17 million in 1992. The significant increase in 1993 resulted from expanded volumes of contaminants uncovered while remediating a particular site, combined with the availability of more definitive data from progressing investigatory activities concerning both the nature and extent of contamination and remediation alternatives at other sites. Charges to income for investigatory and remedial efforts were material to operating results in 1994, 1993, and 1992 and may be material to net income in future years. Cash outlays for environmental-related activities totaled $82 million in 1994 as compared with $93 million in 1993 and $103 million in 1992. During 1994, $45 million of these cash outlays were directed towards normal plant operations for the disposal of waste and the installation, operation and maintenance of pollution control equipment and facilities to ensure compliance with mandated and voluntarily imposed environmental quality standards. Comparable spending for 1993 and 1992 was $49 million and $62 million, respectively. Included in the costs for normal plant operations were environmental capital expenditures for pollution control equipment and pollution abatement facilities. Spending for environmental capital was $11 million in both 1994 and 1993 and $25 million in 1992. The 1992 environmental capital expenditures include construction costs for a waste water treatment facility at the company's Lake Charles plant. Historically, the company has funded its environmental capital expenditures through cash flow from operations and expects to do so in the future. Cash outlays for remedial and investigatory activities associated with former waste sites and past operations were $37 million in 1994, $44 million in 1993 and $41 million in 1992. These amounts were not charged to income but instead were charged to reserves established for such costs identified and expensed to income in prior years. The company's estimated environmental liability at the end of 1994 was attributable to 78 sites, 33 of which were on the National Priority List (NPL). Twelve sites accounted for approximately 75% of such liability and, of the remaining sites, no one site accounted for more than three percent of such liability. Six of these twelve sites were in the investigatory stage of the remediation process. In this stage remedial investigation and feasibility studies are conducted by either the company, the United States Environmental Protection Agency (EPA) or other potentially responsible parties (PRPs) and a Record of Decision (ROD) or its equivalent has not been issued. At another three of the twelve sites, a ROD or its equivalent has been issued by either the EPA or responsible state agency and the company either alone, or as a member of a PRP group, was engaged in performing the remedial measures required by that ROD. At the remaining three of the twelve sites, part of the site is subject to a ROD and another part is still in the investigative stage of remediation. All twelve sites were either former manufacturing facilities or waste sites containing contamination generated by those facilities. Total environmental-related cash outlays for 1995 are estimated to be $93 million, of which $53 million is expected to be spent on normal plant operations, including $15 million on capital projects, and $40 million on investigatory and remedial efforts. The company's consolidated balance sheets included reserves for future environmental expenditures to investigate and remediate known sites amounting to $111 million at December 31, 1994 and $131 million at December 31, 1993, of which $71 million and $91 million were classified as other noncurrent liabilities, respectively. Included in the reserve at December 31, 1994 and 1993 were liabilities anticipated to be shared with a third party, with whom the company is currently in litigation. Those reserves did not take into account any discounting of future expenditures or any consideration of insurance recoveries or advances in technology. Those liabilities are reassessed periodically to determine if environmental circumstances have changed and/or remediation efforts and their costs can be better estimated. As a result of these reassessments, future charges to income may be made for additional liabilities. Annual environmental-related cash outlays for capital projects, site investigation and remediation, and normal plant operations are expected to range between $90-$105 million over the next several years. While the company does not anticipate a material increase in the projected annual level of its environmental-related costs, there is always the possibility that such increases may occur in the future in view of the uncertainties associated with environmental exposures. 17 Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other potentially responsible parties and the company's ability to obtain contributions from other parties and the time periods (sometimes lengthy) over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably against the company. At December 31, 1994, the company had estimated additional contingent environmental liabilities of $36 million which were determined in accordance with generally accepted accounting principles. The percent of total debt to total capitalization (excluding the reduction in equity for the Contributing Employee Ownership Plan (ESOP)) decreased to 36.5% at December 31, 1994, from 47.1% at year-end 1993 and was 42.0% at year- end 1992. Contributing to the decrease in 1994 was the issuance of the additional 2.2 million of common shares and the liquidation of all short-term borrowings as of December 31, 1994. The increase in 1993 was due to the reduction of shareholders' equity stemming from the charge taken in 1993. In 1989 the company established an ESOP. The ESOP trust borrowed $100 million ($40 million from the company) to purchase 1.3 million shares of the company's convertible preferred stock. The proceeds received by the company from the issuance of its preferred stock were used to acquire shares of its common stock. In 1992, the company received $15 million from the ESOP trust, which has repaid in full its original loan from the company. This loan to the ESOP was financed by the company through a long-term credit facility, which is classified on the December 31, 1994 balance sheet as long-term debt. Dividends per common share were $2.20 in 1994, 1993 and 1992. Total dividends paid on common stock amounted to $44 million in 1994, $42 million in 1993 and $41 million in 1992, while total ESOP preferred dividends, paid at an annual dividend rate of $5.97 per share, amounted to $7 million in 1994 and 1993 and $8 million in 1992. Dividends paid on Series A Stock were $10 million in 1994 and 1993, equal to $3.64 per share, and $9 million in 1992. Commencing with the first quarter of 1995, the quarterly common stock dividend has been increased to $.60 per share. The last dividend on the Series A Stock will be paid in March 1995. There are a variety of legal proceedings pending or threatened against the company. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be decided unfavorably against the company. Certain of these matters are discussed in Item 3, Legal Proceedings of the Form 10-K Annual Report and in other filings of the company with the Securities and Exchange Commission, which filings are available on request from the company. The company periodically evaluates risk retention and insurance levels for product liability, property damage and other potential areas of risk. Based on the cost and availability of insurance and the likelihood of a loss occurring, management decides the amount of insurance coverage to purchase from unaffiliated companies and the appropriate amount of risk to retain. The current levels of risk retention are believed to be appropriate and are consistent with those of other companies in the various industries in which the company operates. 18 Industry Segments
($ in millions) 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 - ----------------------------------------------------------------------------------------------------------------------------------- Chemicals Sales $1,195 $1,117 $ 996 $ 960 $1,269 $1,302 $1,386 $1,232 $1,127 $1,153 Net Income (Loss) 42 (94) 21 (38) 42 106 68 55 37 (153) Assets 1,037 1,024 1,067 982 945 977 1,034 1,028 920 867 Capital Expenditures 91 75 115 131 144 95 96 83 84 105 Depreciation 82 83 73 70 75 74 77 82 83 102 - ----------------------------------------------------------------------------------------------------------------------------------- Metals Sales 750 660 676 562 566 542 453 304 244 232 Net Income 39 14 29 17 35 19 25 20 15 12 Assets 446 430 445 436 337 326 321 225 204 184 Capital Expenditures 25 31 33 26 19 26 30 13 24 28 Depreciation 27 27 24 22 21 22 19 18 17 14 - ----------------------------------------------------------------------------------------------------------------------------------- Defense and Ammunition Sales 713 646 704 753 757 665 469 394 361 307 Net Income (Loss) 32 10 29 35 36 31 25 20 19 (21) Assets 521 441 465 552 544 535 516 373 365 331 Capital Expenditures 33 26 25 20 24 21 21 19 20 19 Depreciation 25 21 20 21 20 20 15 14 11 8 - ----------------------------------------------------------------------------------------------------------------------------------- Corporate and Other Sales -- -- -- -- -- -- -- -- -- 68 Net Income (Loss) (22) (22) (70) (27) (29) (32) (20) (17) 4 (3) Assets 26 35 53 42 40 66 69 59 56 216 Capital Expenditures -- -- -- -- -- -- -- -- -- 2 Depreciation -- -- -- -- -- -- -- -- -- 2 - ----------------------------------------------------------------------------------------------------------------------------------- Consolidated Sales 2,658 2,423 2,376 2,275 2,592 2,509 2,308 1,930 1,732 1,760 Net Income (Loss) 91 (92) 9 (13) 84 124 98 78 75 (165) Assets 2,030 1,930 2,030 2,012 1,866 1,904 1,940 1,685 1,545 1,598 Capital Expenditures 149 132 173 177 187 142 147 115 128 154 Depreciation 134 131 117 113 116 116 111 114 111 126 ===================================================================================================================================
(1) Intersegment sales, which are priced generally at prevailing prices and are excluded from above, are not significant. (2) Net income (loss) of each segment includes an allocation of Corporate expenses. (3) 1993 net loss includes a charge for the strategic action plan of $132 ($106 to Chemicals, $12 to Metals and $14 to Defense and Ammunition). 1992 net income includes a charge of $46 (allocated to Corporate and Other) for the cumulative effect of the accounting changes. 1991 net loss includes a charge for the streamlining program of $80 ($73 to Chemicals and $7 to Metals). 1985 net loss includes a charge of $230 ($174 to Chemicals, $1 to Metals, $35 to Defense and Ammunition and $20 to Corporate and Other). (4) Corporate and Other includes interest expense and Discontinued Operations (the company's Ecusta paper and film businesses, which were sold in 1985), and the cumulative effect of the accounting changes in 1992. (5) See Notes to Financial Statements for information relative to industry operating income and geographic segment data. 19 Ten-Year Financial Summary
($ in millions, except per share data) 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 - ------------------------------------------------------------------------------------------------------------------------------ Operations Sales $2,658 $2,423 $2,376 $2,275 $2,592 $2,509 $2,308 $1,930 $1,732 $1,760 Cost of Goods Sold 2,153 2,161 1,941 1,944 2,063 1,929 1,781 1,455 1,318 1,719 Restructuring Charge -- 42 -- 22 -- -- -- -- -- -- Selling and Administration 302 300 279 262 316 287 289 264 252 252 Research and Development 35 41 39 41 66 66 58 62 56 54 - ------------------------------------------------------------------------------------------------------------------------------ Operating Income (Loss) 168 (121) 117 6 147 227 180 149 106 (265) Interest Expense 37 38 39 46 53 56 43 32 32 35 Interest and Other Income 10 9 10 15 22 21 14 10 41 18 - ------------------------------------------------------------------------------------------------------------------------------ Income (Loss) Before Taxes 141 (150) 88 (25) 116 192 151 127 115 (282) Income Tax Provision (Benefit) 50 (58) 33 (12) 32 68 53 49 40 (92) - ------------------------------------------------------------------------------------------------------------------------------ Income (Loss) Before Cumulative Effect of Accounting Changes 91 (92) 55 (13) 84 124 98 78 75 (190) Accounting Changes/ Discontinued Operations/(1)/ -- -- (46) -- -- -- -- -- -- 25 - ------------------------------------------------------------------------------------------------------------------------------ Net Income (Loss) 91 (92) 9 (13) 84 124 98 78 75 (165) ============================================================================================================================== Financial Position Working Capital 262 136 179 85 212 205 184 276 210 304 Property, Plant and Equipment, Net 879 885 934 899 829 781 801 727 720 718 Total Assets 2,030 1,930 2,030 2,012 1,866 1,904 1,940 1,685 1,545 1,598 Capitalization: Short-Term Debt 29 121 101 178 104 155 211 50 52 47 Long-Term Debt 418 449 477 520 466 501 474 392 375 354 Shareholders' Equity 749 596 741 666 715 665 683 700 654 687 - ------------------------------------------------------------------------------------------------------------------------------ Total Capitalization 1,196 1,166 1,319 1,364 1,285 1,321 1,368 1,142 1,081 1,088 ============================================================================================================================== Per Share Data Net Income (Loss): Primary: Income (Loss) Before Cumulative Effect of Accounting Changes 3.65 (4.52) 2.17 (.92) 4.03 6.02 4.63 3.38 3.36 (8.28) Accounting Changes/ Discontinued Operations/(1)/ -- -- (2.11) -- -- -- -- -- -- 1.09 - ------------------------------------------------------------------------------------------------------------------------------ Net Income (Loss)/(2)/ 3.65 (4.52) .06 (.92) 4.03 6.02 4.63 3.38 3.36 (7.19) ============================================================================================================================== Net Income--Assuming Full Dilution/(3)/ 3.54 -- -- -- 3.88 5.85 4.59 3.32 3.13 -- ============================================================================================================================== Dividends: Common 2.20 2.20 2.20 2.20 2.15 1.95 1.70 1.60 1.525 1.50 ESOP Preferred 5.97 5.97 5.97 5.97 5.97 2.985 -- -- -- -- Series A Preferred (annual rate) 3.64 3.64 3.64 -- -- -- -- -- -- -- Shareholders' Equity/(4)/ 30.86 27.24 33.92 35.02 37.65 34.99 33.35 31.81 30.56 29.89 Market Price of Common Stock: High 60 1/8 50 1/2 54 3/4 54 60 5/8 68 1/4 60 56 1/4 53 1/4 38 Low 46 39 7/8 37 1/4 33 1/2 28 1/8 49 3/8 40 32 5/8 34 5/8 28 3/8 Year End 51 1/2 49 3/8 45 3/4 40 3/8 37 3/4 60 51 42 41 37 1/8 ============================================================================================================================== Other Capital Expenditures 149 132 173 177 187 142 147 115 128 154 Depreciation 134 131 117 113 116 116 111 114 111 126 Common Dividends Paid 44 42 41 41 41 39 36 37 34 35 Purchases of Common Stock -- -- -- 2 6 100 84 100 83 5 Current Ratio 1.4 1.2 1.3 1.1 1.4 1.4 1.3 1.7 1.5 1.8 Total Debt to Total Capitalization/(5)/ 36.5% 47.1% 42.0% 48.5% 41.5% 46.2% 50.1% 38.7% 39.5% 36.9% Effective Tax Rate 35.5% 38.7% 37.5% 48.0% 27.2% 35.4% 35.1% 38.6% 34.8% 32.6% Average Common Shares Outstanding 20.5 19.1 19.1 19.0 19.1 20.0 21.1 23.1 22.4 23.0 - ------------------------------------------------------------------------------------------------------------------------------ Shareholders 12,100 13,000 13,900 14,600 15,500 16,300 17,600 20,700 20,600 22,400 Employees/(6)/ 12,800 12,400 13,500 14,400 15,200 15,400 16,400 14,100 13,200 14,900 ==============================================================================================================================
(1) 1985 represents discontinued operations of the company's Ecusta paper and film businesses. (2) See Series A Preferred Stock footnote in the Notes to Financial Statements. (3) Fully diluted income or loss per share is not presented for 1993, 1992, 1991 and 1985 as amounts are anti-dilutive. (4) In 1994, 1993 and 1992, calculation is based on common shares and Series A Conversion Preferred Stock outstanding. (5) Excluding reduction to equity for the Employee Stock Ownership Plan from 1989 through 1994. (6) Employee data excludes employees who work at government-owned/contractor- operated facilities. 20 Consolidated Balance Sheets
December 31 ($ in millions, except share data) 1994 1993 - ----------------------------------------------------------------------------------------------- Assets Current Assets: Cash $ 7 $ 3 Receivables, Net: Trade 373 288 Other 41 57 Inventories, Net of LIFO Reserve of $178 ($145 in 1993) 386 329 Other Current Assets 73 63 - ----------------------------------------------------------------------------------------------- Total Current Assets 880 740 Investments and Advances--Affiliated Companies at Equity 103 121 Property, Plant and Equipment, Net 879 885 Goodwill 109 114 Other Assets 59 70 - ----------------------------------------------------------------------------------------------- Total Assets $2,030 $1,930 =============================================================================================== Liabilities and Shareholders' Equity Current Liabilities: Short-Term Borrowings $ -- $ 94 Current Installments of Long-Term Debt 29 27 Accounts Payable 332 232 Income Taxes Payable 4 2 Accrued Liabilities 253 249 - ----------------------------------------------------------------------------------------------- Total Current Liabilities 618 604 Long-Term Senior Debt 293 324 Long-Term Subordinated Debt 125 125 Other Liabilities 245 281 - ----------------------------------------------------------------------------------------------- Total Liabilities 1,281 1,334 - ----------------------------------------------------------------------------------------------- Shareholders' Equity: Preferred Stock, Par Value $1 Per Share: Authorized, 10,000,000 Shares Series A Conversion Preferred Stock Issued, 2,760,000 Shares 3 3 ESOP Preferred Stock Issued 1,110,418 Shares (1,194,569 in 1993) 86 92 ESOP Obligations (27) (44) Common Stock, Par Value $1 Per Share: Authorized, 60,000,000 Shares Issued 21,516,590 Shares (19,102,270 in 1993) 21 19 Additional Paid-In Capital 400 297 Cumulative Translation Adjustment (3) (9) Retained Earnings 269 238 - ----------------------------------------------------------------------------------------------- Total Shareholders' Equity 749 596 - ----------------------------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $2,030 $1,930 ===============================================================================================
The accompanying Notes to Financial Statements are an integral part of the financial statements. 21 Consolidated Statements of Income
Years ended December 31 ($ in millions, except per share data) 1994 1993 1992 - ----------------------------------------------------------------------------------------------------------------------- Sales $2,658 $2,423 $2,376 Operating Expenses: Cost of Goods Sold 2,153 2,161 1,941 Restructuring Charge -- 42 -- Selling and Administration 302 300 279 Research and Development 35 41 39 - ----------------------------------------------------------------------------------------------------------------------- Operating Income (Loss) 168 (121) 117 Interest Expense 37 38 39 Interest and Other Income 10 9 10 - ----------------------------------------------------------------------------------------------------------------------- Income (Loss) Before Taxes 141 (150) 88 Income Tax Provision (Benefit) 50 (58) 33 - ----------------------------------------------------------------------------------------------------------------------- Income (Loss) Before Cumulative Effect of Accounting Changes 91 (92) 55 Cumulative Effect of Accounting Changes -- -- (46) - ----------------------------------------------------------------------------------------------------------------------- Net Income (Loss) $ 91 $ (92) $ 9 ======================================================================================================================= Per Share of Common Stock Income (Loss) Before Cumulative Effect of Accounting Changes $ 3.65 $(4.52) $ 2.17 Cumulative Effect of Accounting Changes -- -- (2.11) - ----------------------------------------------------------------------------------------------------------------------- Net Income (Loss)/(1)/ $ 3.65 $(4.52) $ 0.06 ======================================================================================================================= Fully Diluted Income (Loss) Per Share/(2)/ $ 3.54 $ -- $ -- =======================================================================================================================
(1) See Series A Preferred Stock footnote in the Notes to Financial Statements. (2) Fully diluted income or loss per share in 1993 and 1992 was anti-dilutive. Consolidated Statements of Shareholders' Equity
Common Stock Additional Cumulative Preferred Stock Shares Par Paid-In Translation Retained Series A ESOP ESOP ($ in millions, except share data) Issued Value Capital Adjustment Earnings Par Value Par Value Obligations - ------------------------------------------------------------------------------------------------------------------------------------ Balance at January 1, 1992 19,013,307 $19 $185 $ 3 $435 $-- $99 $(75) Net Income -- -- -- -- 9 -- -- -- Dividends Paid: Common Stock ($2.20 per share) -- -- -- -- (41) -- -- -- ESOP Preferred Stock ($5.97 per share) -- -- -- -- (8) -- -- -- Series A Conversion Preferred Stock ($3.64 per share) -- -- -- -- (9) -- -- -- Issuance of Series A Conversion Preferred Stock (2,760,000 shares) -- -- 108 -- -- 3 -- -- Reduction in ESOP Obligations -- -- -- -- -- -- -- 15 Stock Options Exercised 45,305 -- 1 -- -- -- -- -- Translation Adjustment -- -- -- (4) -- -- -- -- Other Transactions 11,163 -- 2 -- 2 -- (3) -- - ------------------------------------------------------------------------------------------------------------------------------------ Balance at December 31, 1992 19,069,775 19 296 (1) 388 3 96 (60) Net Loss -- -- -- -- (92) -- -- -- Dividends Paid: Common Stock ($2.20 per share) -- -- -- -- (42) -- -- -- ESOP Preferred Stock ($5.97 per share) -- -- -- -- (7) -- -- -- Series A Conversion Preferred Stock ($3.64 per share) -- -- -- -- (10) -- -- -- Reduction in ESOP Obligations -- -- -- -- -- -- -- 16 Stock Options Exercised 19,418 -- 1 -- -- -- -- -- Translation Adjustment -- -- -- (3) -- -- -- -- Other Transactions 13,077 -- -- (5) 1 -- (4) -- - ------------------------------------------------------------------------------------------------------------------------------------ Balance at December 31, 1993 19,102,270 19 297 (9) 238 3 92 (44) Net Income -- -- -- -- 91 -- -- -- Dividends Paid: Common Stock ($2.20 per share) -- -- -- -- (44) -- -- -- ESOP Preferred Stock ($5.97 per share) -- -- -- -- (7) -- -- -- Series A Conversion Preferred Stock ($3.64 per share) -- -- -- -- (10) -- -- -- Issuance of Common Stock 2,213,750 2 96 -- -- -- -- -- Reduction in ESOP Obligations -- -- -- -- -- -- -- 17 Stock Options Exercised 87,102 -- 3 -- -- -- -- -- Translation Adjustment -- -- -- 6 -- -- -- -- Other Transactions 113,468 -- 4 -- 1 -- (6) -- - ------------------------------------------------------------------------------------------------------------------------------------ Balance at December 31, 1994 21,516,590 $21 $400 $(3) $269 $ 3 $86 $(27) ====================================================================================================================================
The accompanying Notes to Financial Statements are an integral part of the financial statements. 22 Consolidated Statements of Cash Flows
Years ended December 31 ($ in millions) 1994 1993 1992 - -------------------------------------------------------------------------------------------------------------------- Operating Activities - -------------------------------------------------------------------------------------------------------------------- Net Income (Loss) $ 91 $ (92) $ 9 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: Losses (Earnings) of Non-consolidated Affiliates (2) 1 5 Depreciation 134 131 117 Amortization of Intangibles 6 8 6 Deferred Taxes 2 (63) 10 Charge for 1993 Strategic Action Plan -- 213 -- Cumulative Effect of Accounting Changes -- -- 46 Change in Assets and Liabilities Net of Purchase and Sales of Businesses: Receivables (64) 13 56 Inventories (49) (10) (24) Other Current Assets (2) -- 8 Current Liabilities 63 (59) (60) Noncurrent Liabilities 2 (6) 1 Other Transactions 18 1 15 - -------------------------------------------------------------------------------------------------------------------- Net Operating Activities 199 137 189 - -------------------------------------------------------------------------------------------------------------------- Investing Activities - -------------------------------------------------------------------------------------------------------------------- Capital Expenditures (149) (132) (173) Disposition of Property, Plant and Equipment 8 19 2 Business Acquired in Purchase Transaction (25) -- -- Proceeds from Sales of Businesses 41 37 42 Other Investments (2) (8) (10) - -------------------------------------------------------------------------------------------------------------------- Net Investing Activities (127) (84) (139) - -------------------------------------------------------------------------------------------------------------------- Financing Activities - -------------------------------------------------------------------------------------------------------------------- Long-Term Debt: Borrowings -- -- 100 Repayments (29) (30) (130) Short-Term Borrowings (Repayments) (94) 22 (90) Issuance of Common Stock 98 -- -- Issuance of Series A Conversion Preferred Stock -- -- 111 Repayment from ESOP 17 16 15 Dividends Paid (61) (59) (58) Other Financing Activities 1 (3) (2) - -------------------------------------------------------------------------------------------------------------------- Net Financing Activities (68) (54) (54) - -------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Cash 4 (1) (4) - -------------------------------------------------------------------------------------------------------------------- Cash, Beginning of Year 3 4 8 - -------------------------------------------------------------------------------------------------------------------- Cash, End of Year $ 7 $ 3 $ 4 ==================================================================================================================== Cash Paid for Interest and Income Taxes: Interest $ 37 $ 39 $ 43 Income Taxes, Net of Refunds $ 39 $ 8 $ 15 ====================================================================================================================
The accompanying Notes to Financial Statements are an integral part of the financial statements. 23 Notes to Financial Statements ($ in millions, except share data) Accounting Policies Basis of Presentation The consolidated financial statements include the accounts of the company and all majority-owned subsidiaries. Investments in 20-50% owned affiliates are accounted for using the equity method of accounting under which investments are recorded at cost and consist of the company's share of undistributed earnings or losses of the affiliates. Long-Term Contracts Sales and cost of sales related to government contracts that extend beyond one year are primarily recognized under the percentage-of-completion method of accounting as costs are incurred. Profits expected to be realized on contracts are based on the company's estimates of costs at completion compared to total contract sales value. When the company believes the cost of completing a contract will exceed contract-related revenues, the full amount of the anticipated contract loss is recognized. Inventories Inventories are valued principally by the dollar value last-in, first-out (LIFO) method of inventory accounting. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized over the term of the lease or the estimated useful life of the improvement, whichever is less. Start-up costs are expensed as incurred. Income Taxes Deferred taxes are provided for differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred taxes have not been provided on the undistributed earnings of foreign subsidiaries, since the company intends to continue to reinvest these earnings. Foreign Currency Translation Foreign affiliates' balance sheet amounts are translated at the exchange rates in effect at year end, and income statement amounts are translated at the average rates of exchange prevailing during the year. Translation adjustments are recorded as a separate component of shareholders' equity. The company enters into forward sales and purchase contracts and currency options to manage currency risk resulting from purchase and sale commitments denominated in foreign currencies (principally Australian dollars, pound sterling, Canadian dollars and Japanese yen) and relating to particular anticipated but not yet committed sales expected to be denominated in those currencies. Some of the contracts involve the exchange of two foreign currencies, according to the local needs of foreign subsidiaries. All of the currency derivatives expire within one year. At December 31, 1994, the company had $9 million in options and contracts to buy (1993--$20 million) and $40 million in options and contracts to sell foreign currencies (1 993--$75 million). Net unrealized gains (or losses) were less than $1 million at December 31, 1994 and 1993. Foreign currency exchange losses, net of taxes, were $2 million in 1994, $4 million in 1993 and $3 million in 1992. Goodwill Goodwill, the excess of the purchase price of acquired businesses over fair value of the respective net assets, is amortized principally over 30 years on a straight-line basis. Financial Instruments The fair value of the company's financial instruments approximates carrying value. Fair values were estimated based on quoted market prices, where available, or on current rates offered to the company for debt with similar terms and maturities. Earnings Per Share Primary earnings per share are computed by dividing net income less the ESOP preferred stock dividend requirement by the weighted average number of common shares outstanding plus an equivalent number (one-for-one) of common shares, assuming the conversion of Series A Conversion Preferred Stock. Fully diluted earnings per share reflect the dilutive effect of stock options and assume the conversion of outstanding ESOP preferred stock into an equivalent number of common shares at the date of issuance. Net income was reduced by an additional ESOP contribution (differential between the common and the ESOP preferred dividend rates under an assumed conversion) necessary to satisfy the debt service requirement. Average Common Shares and Common Equivalents Outstanding
Assuming Full Years ended December 31 (In thousands) Primary Dilution - -------------------------------------------------------------------------- 1994 23,303 24,825 1993 21,840 23,487 1992 21,598 23,235 ==========================================================================
Trade Receivables In December 1990, the company entered into an agreement to sell an undivided fractional ownership interest in a designated pool of receivables, with limited recourse, in an amount not to exceed $70 million. At December 31, 1994 and 1993, $25 million and $65 million of accounts receivables had been sold under this agreement. The company's credit risk associated with the designated pool of receivables was assessed in conjunction with the overall evaluation of trade receivables. Reserves ascribed to these accounts are included in the allowance for doubtful items and are not a material portion thereof. Operating expenses include fees of $2 million in 1994, 1993 and 1992 related to the sale of receivables under this agreement. In January 1995, the company ended its participation in this program. At December 31, 1994 and 1993, trade receivables included unbilled receivables of $71 million, and $73 million respectively, related to certain government contracts which are accounted for on the percentage-of-completion method. Allowance for doubtful items was $12 million at December 31, 1994 and 1993. Provisions charged to operations were $2 million in 1994 and $3 million in 1993 and 1992. Bad debt write-offs, net of recoveries amounted to $2 million in 1994, $1 million in 1993, and $6 million in 1992. 24 Inventories If the first-in, first-out (FIFO) method of inventory accounting had been used, inventories would have been approximately $178 million and $145 million higher than reported at December 31, 1994 and 1993, respectively. It is not practicable to separate the inventory into its components because LIFO inventory values are determined principally by the use of the dollar value LIFO method.
Property, Plant and Equipment 1994 1993 - ---------------------------------------------------------------------- Land and improvements to land $ 126 $ 127 Buildings and building equipment 293 296 Machinery and equipment 1,910 1,951 Leasehold improvements 27 22 Construction in progress 147 113 - ---------------------------------------------------------------------- Property, plant and equipment 2,503 2,509 Less accumulated depreciation 1,624 1,624 - ---------------------------------------------------------------------- Property, plant and equipment, net $ 879 $ 885 ======================================================================
Leased assets capitalized and included above are not significant. Maintenance and repairs charged to operations amounted to $153 million in 1994, $159 million in 1993 and $152 million in 1992. Short-Term Borrowings There were no outstanding short-term borrowings at December 31, 1994. Short-term borrowings at December 31, 1993 consisted of domestic bank loans of $53 million at an interest rate of 3.4%, foreign bank loans of $11 million at interest rates ranging from 4% to 12% and domestic commercial paper of $30 million at an interest rate of 3.4%. At December 31, 1994, the company maintained committed credit facilities with banks of $303 million of which $278 million was available, while comparable 1993 amounts were $367 million and $208 million, respectively. Long-Term Debt
Due 1994 1993 - ---------------------------------------------------------------------- Note agreements 96-02 7.97% notes $ 50 $ 56 12/96 8.125% notes 6 12 6/02 8% notes 100 100 Industrial development and environ- mental improvement obligations 04-17 payable at interest rates of 2% to 4% which vary with short-term tax exempt rates 35 35 96-08 payable at interest rates of 6% to 7% 39 39 6/96 7.144% note payable 40 40 96-09 Guarantee of ESOP debt varying with LIBOR 11 29 9/05 7.75% note (10% in 1993) 11 11 96-02 Mortgage, capitalized leases and other indebtedness 1 2 - ---------------------------------------------------------------------- Total long-term senior debt 293 324 6/97 9.5% subordinated notes 125 125 - ---------------------------------------------------------------------- Total long-term debt $418 $449 ======================================================================
Among the provisions of the note agreements are restrictions relating to payment of dividends and acquisition of the company's capital stock. At December 31, 1994, retained earnings of approximately $224 million were not so restricted under the provisions. The ESOP's purchase of preferred stock in 1989 was financed by $60 million of notes (guaranteed by the company) and $40 million of borrowings from the company. The loan from the company to the ESOP was financed through a long-term credit facility. At December 31, 1994, $16 million of the Guarantee of ESOP debt has been included in current installments of long-term debt. In September 1993, the company entered into an unsecured revolving credit agreement with a group of banks, which provides a maximum borrowing of $250 million and unless extended, expires on October 15, 1997. The company may select various floating rate borrowing options. In June 1992, the company sold $100 million of 8% notes due 2002. The proceeds from this issue were used to reduce outstanding short-term debt. The company then swapped interest payments on $50 million principal amount of the notes to a floating rate (6.94% at December 31, 1994). Annual maturities of long-term debt for the next five years are $13 million in 1995, $53 million in 1996, $132 million in 1997, $7 million in 1998 and $8 million in 1999 (excluding the expiring guarantees of ESOP debt). Series A Preferred Stock In January 1992, the company sold 2.76 million shares of its $1 par value Series A Conversion Preferred Stock (Series A Stock) generating net proceeds of $111 million. Dividends on the Series A Stock are cumulative at an annual rate of $3.64 per share. On the mandatory conversion date (March 1, 1995) each outstanding Series A Stock will convert automatically into one share of the company's common stock (subject to adjustment in certain events) and the right to receive an amount of cash equal to all accrued and unpaid dividends thereon. The company has included these shares in the computation of earnings per share under the common stock outstanding method (one-for-one). Beginning in 1995, the common stock equivalent method is required for new issues of such shares. Under this method, loss per share would have been $5.70 and $.39 for 1993 and 1992, respectively. Cost of Sales-Related Transactions Included in cost of sales for 1993 is a pretax charge of $171 million associated with the strategic action plan formulated during the fourth quarter. The plan included costs of business restructurings involving the relocation and consolidation of facilities along with lower estimated proceeds from asset disposals and higher costs associated with components of the 1991 streamlining program ($41 million); dismantling, product liability and ongoing custodial costs related to discontinued businesses ($41 million); future environmental liabilities ($55 million); and other charges including asset write-downs and long-term disability liabilities ($34 million). Various actions within the business restructuring phase of the 1993 charge had been completed as of December 31, 1994. The remaining actions, primarily the restructuring of the electronic material businesses are expected to be finalized within the next two years at an estimated cost of $18 million. 25 Restructuring Charge The 1993 strategic action plan included a restructuring charge of $42 million in 1993 for workforce reductions which were accomplished largely through an early retirement incentive initiative. As of December 31, 1994, the planned workforce reductions had been approximately 80% completed. The remaining reductions are anticipated to occur in 1995 at an estimated cost of $18 million. Interest Expense Interest incurred totaled $37 million in 1994, $40 million in 1993, and $43 million in 1992, of which less than $1 million was capitalized in 1994, $2 million in 1993, and $4 million in 1992. Pension Plans and Retirement Benefits Essentially all of the company's domestic pension plans are non-contributory final-average-pay or flat-benefit plans and all domestic employees are covered. The company's funding policy is consistent with the requirements of federal laws and regulations. In 1993, the company offered to certain qualified employees an option to receive enriched pension benefits under the early retirement incentive program in connection with the restructuring charge. Components of Net Pension Expense
1994 1993 1992 - ----------------------------------------------------------------------- Service cost (benefits earned during the period) $ 25 $ 19 $ 17 Interest cost on the projected benefit obligation 68 71 65 Enriched pension benefit -- 7 -- Actual loss (return) on assets 6 (132) (62) Actual (loss) return deferred for later recognition (89) 53 (12) Net amortization of unrecognized transition asset, prior service cost and deferred gains and losses (1) (2) (6) - ----------------------------------------------------------------------- Net pension expense $ 9 $ 16 $ 2 =======================================================================
Principal Assumptions
1994 1993 1992 - ----------------------------------------------------------------------- Weighted average discount rate 8.5% 7.5% 8.5% Weighted average rate of compensation increase 4.5% 4.5% 5.5% Long-term rate of return on assets 9.5% 9.5% 9.5%
Funded Status of the Plans
1994 1993 - ---------------------------------------------------------- Accumulated benefit obligation including vested benefits of $845 and $935 $ 847 $ 938 - ---------------------------------------------------------- Plan assets at fair value, primarily equity and fixed-income securities $ 916 $ 984 Projected benefit obligation for service rendered to date (898) (1,002) - ---------------------------------------------------------- Assets over (under) projected benefit obligation 18 (18) Unrecognized net transition asset (41) (48) Unrecognized loss (gain) (25) 18 Unrecognized prior service cost 29 32 - ---------------------------------------------------------- Net pension liability $ (19) $ (16) ==========================================================
The company's common stock represents approximately 3% of the plan assets at December 31, 1994 and 1993. The company's foreign subsidiaries maintain pension and other benefit plans which are consistent with statutory practices and are not significant. The Nonbargaining Employees Pension Plan of Olin Corporation provides that if, within three years following a change of control of the company, any corporate action is taken or filing made in contemplation of, among other things, a plan termination or merger or other transfer of assets or liabilities of the plan, and such termination, merger or transfer thereafter takes place, plan benefits would automatically be increased for affected participants (and retired participants) to absorb any plan surplus. The company provides certain postretirement health care and life insurance benefits for eligible active and retired domestic employees. Effective January 1, 1992, the company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" and recognized the full amount of its estimated accumulated postretirement benefit obligation, representing the present value of the estimated future benefits payable to current retirees and the earned portion of estimated benefits payable to active employees after retirement. The pretax charge to 1992 earnings was $80 million with a net income effect of $50 million or $2.30 per share. The net income and per share amounts have been included in the statement of income as the cumulative effect of an accounting change. Components of Postretirement Expense
1994 1993 1992 - ------------------------------------------------------------------------------- Service cost-benefits earned during year $ 3 $ 2 $ 2 Interest cost on accumulated postretirement benefit obligation 5 6 7 Net amortization of unrecognized prior service cost and deferred gains and losses (1) -- -- Enriched postretirement benefit -- 3 -- - ------------------------------------------------------------------------------ Net postretirement expense $ 7 $11 $ 9 ==============================================================================
26 Unfunded Liability for Postretirement Benefits
1994 1993 - --------------------------------------------------------------------- Accumulated postretirement benefit obligation: Retirees $39 $41 Fully eligible active plan participants 13 11 Other active participants 21 25 - --------------------------------------------------------------------- Cumulative accumulated postretirement benefit obligation 73 77 Unrecognized loss (6) (8) Unrecognized prior service cost 10 11 - --------------------------------------------------------------------- Net postretirement benefit liability $77 $80 =====================================================================
The accumulated postretirement benefit obligation was determined using the projected unit credit method and an assumed discount rate of 8.5% in 1994, 7.5% in 1993 and 8.75% in 1992. The assumed health care cost trend rate used for pre- 65 retirees was 13% in 1994 and 13.5% in 1993, declining one-half percent per annum to 6%. For post-65 retirees, the company provides a fixed dollar benefit which is not subject to escalation. In 1993 the company modified certain attributes of the postemployment medical plan including eligibility requirements, retiree contributions and a limit (effective year 2000) on pre-65 retiree medical coverage. A one percent increase each year in the health care cost trend rate used would have resulted in a less than $1 million increase in the aggregate service and interest components of expense for the year 1994, and a $4 million increase in the accumulated postretirement benefit obligation at December 31, 1994. Income Taxes The company adopted Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" as of January 1, 1992. The cumulative effect on prior years of this change in accounting principle increased 1992 net income by $4 million or $.19 per share and is reported separately in the consolidated statement of income. Components of Pretax Income (Loss)
1994 1993 1992 - ---------------------------------------------------------------- Domestic $127 $(158) $89 Foreign 14 8 (1) - ---------------------------------------------------------------- $141 $(150) $88 ================================================================
Components of Income Tax Expense (Benefit)
1994 1993 1992 - ---------------------------------------------------------------- Currently payable: Federal $33 $ (1) $18 State 8 3 4 Foreign 7 3 1 - ---------------------------------------------------------------- 48 5 23 Deferred 2 (63) 10 - ---------------------------------------------------------------- $50 $(58) $33 ================================================================
The following table accounts for the difference between the actual tax provision and the amounts obtained by applying the statutory U.S. federal income tax of 35% in 1994 and 1993 and 34% in 1992 to the income (loss) before taxes. Effective Tax Rate Reconciliation
(Percent) 1994 1993 1992 - ---------------------------------------------------------------------- Statutory federal tax rate 35.0 (35.0) 34.0 Foreign income tax .2 2.5 (.9) State income taxes, net 3.1 (3.4) 3.8 Goodwill 1.2 1.2 2.0 Equity in net income of affiliates (.7) (.5) (.3) Other, net (3.3) (3.5) (1.1) - ---------------------------------------------------------------------- Effective tax rate 35.5 (38.7) 37.5 ======================================================================
The cumulative amount of undistributed earnings of foreign subsidiaries, if remitted, would result in a minimal amount of tax because of available foreign tax credits. Components of Deferred Tax Assets and Liabilities
1994 1993 - ---------------------------------------------------------------------- Deferred tax assets Postretirement benefits $ 37 $ 37 Non-deductible reserves 109 144 Tax credit carryforwards 30 44 Other miscellaneous items 19 16 - ---------------------------------------------------------------------- Total deferred tax assets $195 $241 ====================================================================== Deferred tax liabilities Property, plant and equipment $117 $133 Other miscellaneous items 17 45 - ---------------------------------------------------------------------- Total deferred tax liabilities $134 $178 ======================================================================
Included in Other Current Assets at December 31, 1994 and 1993, respectively, are $54 million and $46 million of net current deferred assets. Taxable income is expected to be sufficient to recover the net benefit within the carryforward period and, therefore, no valuation allowance was established. As of December 31, 1994, the company had approximately $30 million of Alternative Minimum Tax Credits available to offset future federal income taxes on an indefinite carryforward basis. Contributing Employee Ownership Plan The Contributing Employee Ownership Plan is a defined contribution plan available to essentially all domestic employees which provides a match of employee contributions. The plan purchased from the company approximately 1.3 million shares ($100 million) of a newly authorized 1.75 million share series of the company's ESOP preferred stock, financed by $60 million of notes guaranteed by the company and a $40 million loan from the company. This loan has been repaid in total to the company as of December 31, 1992. At December 31, 1994 there were 1.1 million shares of ESOP preferred stock outstanding at a value of $72.75 per share. The annual fixed dividend rate is $5.97 per share. The ESOP preferred stock is convertible by the holder into the company's common stock on a one-for-one basis, subject to anti-dilutive adjustments and may be redeemed at the option of the company, or at the option of the plan under certain circumstances (including upon payment of withdrawing plan participant accounts or if required to meet the plan's debt payments). The company reserves the right to satisfy the redemption in cash, marketable obligations or common stock. Expenses related to the plan are based on ESOP preferred and common stock allocated 27 to participants. These costs amounted to $10 million in 1994, 1993 and 1992. Interest incurred by the plan totaled $1 million in 1994, $2 million in 1993, and $3 million in 1992, which was funded by ESOP preferred dividends. The ESOP preferred stock is included in shareholders' equity because the company intends to redeem the outstanding ESOP preferred stock solely with shares of the company's common stock, and has the ability to do so. Stock Options Under the stock option plans, options may be granted to purchase shares of the company's common stock at not less than fair market value at the date of grant, and are exercisable for a period not exceeding ten years from that date. Stock option transactions are as follows:
Option Price Shares Per Share - ----------------------------------------------------------------------------- Outstanding at January 1, 1992 735,022 $13.24-$65.00 Granted 148,125 53.00-63.60 Exercised (45,305) 13.24-49.32 Canceled (29,806) 30.82-53.50 - ----------------------------------------------------------------------------- Outstanding at December 31, 1992 808,036 22.14-65.00 Granted 147,030 43.25 Exercised (19,418) 28.19-44.38 Canceled (14,159) 43.25-53.50 - ----------------------------------------------------------------------------- Outstanding at December 31, 1993 921,489 22.14-65.00 Granted 134,074 52.00 Exercised (87,102) 22.14-53.50 Canceled (12,857) 43.25-53.50 - ----------------------------------------------------------------------------- Outstanding at December 31, 1994 955,604 $30.82-$65.00 =============================================================================
Of the outstanding options at December 31, 1994, options covering 822,642 shares are currently exercisable. At December 31, 1994, common shares reserved for issuance under these plans were 1,726,222 and under additional remuneration agreements were estimated to be 44,000. Shareholder Rights Plan In 1986, the Board of Directors adopted a Shareholder Rights Plan expiring in 1996, which is designed to prevent an acquirer from gaining control of the company without offering a fair price to all shareholders. Each right entitles the shareholder to buy one-half share of common stock of the company at an exercise price of $50. The rights are exercisable only if a person acquires 20% or more of the company's common stock or commences a tender or exchange offer for 30% or more of such stock. The company can redeem the rights at $.05 per right for a certain time period. If any person acquires 30% or more of the common stock and in the event of certain mergers or combinations, each right will entitle the holder to purchase stock or other property having a value of twice the exercise price. Segment Information Information relative to the various industries in which the company operates appears on page 19 and is incorporated herein by reference. Segment Operating Income (Loss)
1994 1993 1992 - -------------------------------------------------------------------- Chemicals $ 58 $(165) $ 26 Metals 64 29 47 Defense and Ammunition 46 15 44 - -------------------------------------------------------------------- Total operating income (loss) $168 $(121) $117 ====================================================================
Geographic Segment Data
1994 1993 1992 - -------------------------------------------------------------------- Sales United States $2,451 $2,242 $2,222 Foreign 207 181 154 Transfers between areas United States 100 83 79 Foreign 16 16 12 Eliminations (116) (99) (91) - -------------------------------------------------------------------- Total sales $2,658 $2,423 $2,376 ==================================================================== Operating income (loss) United States $ 150 $ (128) $ 110 Foreign 13 6 3 Eliminations 5 1 4 - -------------------------------------------------------------------- Operating income (loss) $ 168 $ (121) $ 117 ==================================================================== Assets United States $1,904 $1,782 $1,831 Foreign 107 137 183 Investments 34 40 47 Corporate assets and eliminations (15) (29) (31) - -------------------------------------------------------------------- Total consolidated assets $2,030 $1,930 $2,030 ====================================================================
Sales to the U.S. government were $379 million, $354 million and $409 million in 1994, 1993 and 1992, respectively. The Defense and Ammunition segment accounted for approximately 83% of the government sales in 1994, 1993 and 1992. Transfers between geographic areas are priced generally at prevailing market prices. Export sales from the United States to unaffiliated customers were $168 million, $162 million and $172 million in 1994, 1993 and 1992, respectively. Acquisition In 1994, the company acquired certain assets of the medium caliber ammunition business of GenCorp's Aerojet Ordnance Division for approximately $25 million. The fair value of assets acquired included working capital of $11 million and property, plant and equipment of $14 million. This acquisition was accounted for as a purchase and accordingly, its results of operations, which were not material, are included in the consolidated financial statements from the date of acquisition. 28 Dispositions In December 1987, a Federal Trade Commission (FTC) judge ruled that the company must divest the chlorinated isocyanurates business acquired in 1985, which included an isocyanurates manufacturing facility in South Charleston, W. Va., a packaging facility in Livonia, Mich. and the SUN brand trademark. --- Over the years, the company has been unsuccessful in its efforts to appeal. The company unsuccessfully attempted to modify the FTC order by proposing to the FTC that the company sell its trichloroisocyanurate production facility in Lake Charles, La. to BioLab, Inc. (a sale which it ultimately consummated in 1994) instead of selling its South Charleston facility. The company entered into an agreement in principle, in 1994, to sell the SUN brand of --- isocyanurates. In February 1995, the company signed a letter of intent for the sale of its South Charleston and Livonia facilities to subsidiaries of Israel Chemicals Ltd. These transactions did not have a material impact on the company's results of operations in 1994 and are not expected to have a material adverse effect on the results of operations for 1995. In addition, during 1994, the company sold its conductive materials business including its manufacturing facility. During 1993, the company sold the facility and the assets of its contract integrated circuit assembly operation and its interest in the German joint venture to its partner. Throughout 1992, several small product lines were sold as part of the 1991 streamlining program. Supplemental cash flow information on businesses sold is as follows:
1994 1993 1992 - ---------------------------------------------------------------------- Fair value of assets sold $41 $37 $42 Liabilities assumed by the purchaser -- -- 6 Note paid by the purchaser -- -- (6) - ---------------------------------------------------------------------- Net proceeds from sales of businesses $41 $37 $42 ======================================================================
Environmental The company is party to various governmental and private environmental actions associated with waste disposal sites and manufacturing facilities. Associated costs of investigatory and remedial activities are provided for in accordance with generally accepted accounting principles governing probability and the ability to reasonably estimate future costs. Environmental provisions charged to income amounted to $17 million in 1994, $85 million in 1993, and $17 million in 1992. The significant increase in 1993 resulted from expanded volumes of contaminants uncovered while remediating a particular site combined with the availability of more definitive data from progressing investigatory activities concerning both the nature and extent of contamination and remediation alternatives at other sites. The consolidated balance sheets include reserves for future environmental expenditures to investigate and remediate known sites amounting to $111 million at December 31, 1994 and $131 million at December 31, 1993, of which $71 million and $91 million are classified as other noncurrent liabilities, respectively. Included in the reserve at December 31, 1994 and 1993 are liabilities anticipated to be shared with a third party, with whom the company is currently in litigation. Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other potentially responsible parties and the company's ability to obtain contributions from other parties and the time periods (sometimes lengthy) over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably against the company. At December 31, 1994, the company had estimated additional contingent environmental liabilities of $36 million which were determined in accordance with generally accepted accounting principles. Commitments and Contingencies The company leases certain properties, such as manufacturing, warehousing and office space, data processing and office equipment and railroad cars. Leases covering these properties generally contain escalation clauses based on increased costs of the lessor, primarily property taxes, maintenance and insurance and have renewal or purchase options. Total rent expense charged to operations amounted to $52 million in 1994, $45 million in 1993 and $37 million in 1992, (sublease income is not significant). Future minimum rent payments under operating leases having initial or remaining noncancelable lease terms in excess of one year at December 31, 1994 are as follows (in millions): 1995--$28; 1996--$24; 1997--$20; 1998--$15; 1999--$11; thereafter--$48. There are a variety of legal proceedings, contractual obligations and environmental issues, arising out of its businesses, pending or threatened against the company. Certain information regarding these matters can be found in the Environmental note to the consolidated financial statements; and Item 3, Legal Proceedings and Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in the 1994 Form 10-K, which is available on request from the company. 29 Independent Auditors' Report To the Board of Directors and Shareholders of Olin Corporation: We have audited the accompanying consolidated balance sheets of Olin Corporation and subsidiaries as of December 31, 1994 and 1993 and the related consolidated statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1994. These consolidated financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements, referred to above, present fairly, in all material respects, the financial position of Olin Corporation and subsidiaries as of December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1994 in conformity with generally accepted accounting principles. As discussed in the notes to financial statements, the company changed its methods of accounting for postretirement benefits other than pensions and income taxes in 1992. /s/ KPMG Peat Marwick LLP Stamford, Connecticut January 26, 1995 Management Report on Financial Statements The company has prepared the accompanying consolidated financial statements and related information for the years ended December 31, 1994, 1993, and 1992. Management is responsible for the integrity of the financial statements, which were prepared in conformity with generally accepted accounting principles. In our opinion, they contain no material misstatements attributable to fraud or error. The financial information contained elsewhere in this annual report is consistent with the financial statements. The company maintains internal accounting control systems designed to provide reliable information and reasonable assurance that assets are safeguarded from loss or unauthorized use, that fraudulent reporting would be prevented or detected and that all transactions are properly authorized. A well- qualified internal audit department evaluates internal accounting control systems and monitors compliance with the company's internal control policies and procedures. Management believes that, as of December 31, 1994, the company's system of internal controls is adequate to accomplish the objectives discussed herein. Management also recognizes its responsibility for fostering a strong ethical climate so that the company's affairs are conducted according to the highest standards of personal and corporate conduct. This responsibility is communicated to all employees in the company's code of business conduct, which is publicized throughout the company. The code of conduct addresses, among other things, the necessity of ensuring open communication within the company; potential conflicts of interest; compliance with all domestic and foreign laws, including those relating to financial disclosure; and the confidentiality of proprietary information. The company maintains a systematic program to assess compliance with these policies. Our independent auditors are engaged to audit and to render an opinion on the fairness in all material respects of our consolidated financial statements presented in conformity with generally accepted accounting principles. In performing their audit in accordance with generally accepted auditing standards, they evaluate the effectiveness of our internal accounting control systems, review selected transactions and carry out other auditing procedures to the extent they consider necessary in expressing their opinion on our financial statements. The Audit Committee of the Board of Directors, composed solely of outside directors, meets periodically with the independent auditors, management and the company's internal auditors to review the work of each and to evaluate matters pertinent to internal accounting controls and financial reporting, and the nature, extent and results of auditing activities. The Audit Committee annually recommends to the Board of Directors the appointment of independent auditors. The independent auditors and the company's internal audit department have access to the Audit Committee without management's presence. /s/ John W. Johnstone, Jr. /s/ James A. Riggs John W. Johnstone, Jr. James A. Riggs Chairman and Senior Vice President and Chief Executive Officer Chief Financial Officer 30 Directors Board of Directors William J. Alley Chairman of the Executive Committee and Member of the Board of Directors, American Brands, Inc. Robert R. Frederick Former President and Chief Executive Officer, RCA Corporation Donald W. Griffin President and Chief Operating Officer William W. Higgins Former Senior Vice President, The Chase Manhattan Bank, N.A. Robert Holland, Jr. President and Chief Executive Officer, Ben & Jerry's Homemade, Inc., and Chairman, ROKHER-J, Inc. Suzanne Denbo Jaffe Managing Director, Hamilton & Company John W. Johnstone, Jr. Chairman and Chief Executive Officer Jack D. Kuehler Former Vice Chairman, International Business Machines Corporation H. William Lichtenberger Chairman and Chief Executive Officer, Praxair, Inc. G. Jackson Ratcliffe, Jr. Chairman, President and Chief Executive Officer, Hubbell Incorporated William L. Read Vice Admiral, U.S. Navy (Ret.) John P. Schaefer Chairman, Research Corporation Technologies and President, Research Corporation Irving Shain Former Vice President and Chief Scientist Committees of the Board Audit Committee William W. Higgins, Chairman H. William Lichtenberger William L. Read John P. Schaefer Irving Shain Compensation and Nominating Committee G. Jackson Ratcliffe, Jr., Chairman Robert R. Frederick Robert Holland, Jr. Jack D. Kuehler Executive and Finance Committee Robert R. Frederick, Chairman Donald W. Griffin William W. Higgins Robert Holland, Jr. John W. Johnstone, Jr. Jack D. Kuehler G. Jackson Ratcliffe, Jr. Corporate Responsibility Committee John P. Schaefer, Chairman Robert Holland, Jr. H. William Lichtenberger William L. Read Irving Shain Management Corporate Management John W. Johnstone, Jr. Chairman and Chief Executive Officer Donald W. Griffin President and Chief Operating Officer Joseph M. Gaffney Senior Vice President, Planning and Development James G. Hascall Senior Vice President James A. Riggs Senior Vice President and Chief Financial Officer Robert A. Beyerl Vice President and Controller George B. Erensen Vice President, Taxes and Risk Management Johnnie M. Jackson, Jr. Vice President, General Counsel and Secretary Peter C. Kosche Vice President, Human Resources Janet M. Pierpont Vice President and Treasurer Linda E. Gaza Vice President, Public Affairs Charles W. Newton, III Vice President, Environment and Regulatory Affairs Operations Management Leon B. Anziano President, Chlor-Alkali Products, and Corporate Vice President Gerald W. Bersett President, Winchester, and Corporate Vice President Michael E. Campbell President, Electronic Materials, and Corporate Vice President Angelo A. Catani President, Ordnance, and Corporate Vice President Patrick J. Davey President, Chemicals, and Corporate Vice President James G. Hascall President, Brass, and Corporate Senior Vice President William M. Schmitt President, Latin America and South Africa, and Corporate Vice President William W. Smith President, Aerospace, and Corporate Vice President Marc A. Kolpin President, Physics International 31 Corporate Data Transfer Agent and Registrar Chemical Bank 450 W. 33rd Street New York, N.Y. 10001 Telephone: (800) 306-8594 Stock Exchange Listings Common Stock New York Stock Exchange Pacific Stock Exchange Chicago Stock Exchange Ticker Symbol: OLN Trustee for Subordinated Notes Bankers Trust Company Four Albany Street New York, N.Y. 10015 Telephone: (212) 250-6112 Trustee for 8% Notes Chemical Bank 450 W. 33rd Street New York, N.Y. 10001 Telephone: (800) 648-8380 Commercial Paper Dealers J.P. Morgan Securities, Inc. 60 Wall Street New York, N.Y. 10260-0060 Telephone: (212) 648-0100 Goldman Sachs Money Markets, L.P. 85 Broad Street New York, N.Y. 10004 Telephone: (212) 902-8279 Dividend Reinvestment Service Olin makes a Dividend Reinvestment Service available to its shareholders. For information, write to: Chemical Bank JAF Building P.O. Box 3069 New York, N.Y. 10116-3069 Trademarks Underlined words identifying products in this report are trade- marks or servicemarks of Olin Corporation or its subsidiaries or affiliates. Annual Meeting The annual meeting of the share- holders will be held on Thursday, April 27, 1995, at 10:30 a.m., local time, at the headquarters of the corporation, 120 Long Ridge Road, Stamford, Connecticut. Toll Free Shareholder Information Telephone: (800) 656-OLIN Quarterly earnings releases and other corporate news releases are available. Earnings are released during the third week of April, July, October, and the fourth week of January. Form 10-K Available A copy of Olin's Form 10-K, con- taining additional information of possible interest to shareholders and filed with the Securities and Exchange Commission in March each year, will be sent without charge to any shareholder who requests it. Write to: Richard E. Koch Director, Investor Relations Olin Corporation P.O. Box 1355 Stamford, CT 06904-1355 Telephone: (203) 356-3254 Quarterly Data (unaudited)
First Second Third Fourth 1994 Quarter Quarter Quarter Quarter Year - -------------------------------------------------------------------------------------------------- Sales $605 $708 $667 $678 $2,658 Cost of goods sold 488 567 543 555 2,153 Net income 15 28 22 26 91 Net income per share: Primary .62 1.16 .86 1.01 3.65 Assuming full dilution .62 1.10 .85 .97 3.54 Common dividends .55 .55 .55 .55 2.20 Market price of common stock* High 51 5/8 54 1/4 59 7/8 60 1/8 60 1/8 Low 47 1/2 46 1/4 53 3/4 50 1/4 46 1/4 1993 - -------------------------------------------------------------------------------------------------- Sales $592 $626 $607 $598 $2,423 Cost of goods sold 484 507 508 662 2,161 Net income (loss) 12 14 5 (123) (92) Net income (loss) per share: Primary .45 .57 .15 (5.69) (4.52) Assuming full dilution .45 .57 -- -- -- Common dividends .55 .55 .55 .55 2.20 Market price of common stock* High 46 1/4 46 1/4 45 1/4 50 1/2 50 1/2 Low 40 3/8 42 3/8 39 7/8 41 3/4 39 7/8 1992 - -------------------------------------------------------------------------------------------------- Sales $614 $633 $577 $552 $2,376 Cost of goods sold 490 516 482 453 1,941 Income before accounting changes 24 21 6 4 55 Accounting changes (46) -- -- -- (46) Net income (loss) (22) 21 6 4 9 Net income (loss) per share: Primary: Income before accounting changes 1.04 .88 .18 .07 2.17 Accounting changes (2.11) -- -- -- (2.11) Net income (loss) (1.07) .88 .18 .07 .06 Assuming full dilution -- .86 -- -- -- Common dividends .55 .55 .55 .55 2.20 Market price of common stock* High 54 1/4 54 3/4 47 3/4 46 1/4 54 3/4 Low 39 3/8 43 3/4 39 1/2 37 1/4 37 1/4 ==================================================================================================
*New York Stock Exchange composite transactions. 1993 fourth-quarter loss includes a $132 million charge for personnel reductions, business restructurings involving consolidations and realignments within divisions, costs at sites of discontinued businesses, future environmental liabilities, and other charges. 1992 first-quarter loss includes a $46 million charge for cumulative effect of Accounting Changes for the adoption of SFAS No. 106 and No. 109. 32 EX-21 14 LIST OF SUBSIDIARIES EXHIBIT 21 SUBSIDIARIES OF OLIN CORPORATION -------------------------------- (as of December 31, 1994)
JURISDICTION PERCENTAGE OF DIRECT/ ------------ --------------------- WHERE INDIRECT OWNERSHIP BY ----------- ------------------------ SUBSIDIARY ORGANIZED OLIN OF VOTING SECURITIES - ----------- ----------- ------------------------- A.J. Oster Caribe, Inc. Delaware 100% A.J. Oster Company Rhode Island 100% A.J. Oster Foils, Inc. Delaware 100% A.J. Oster West, Inc. Rhode Island 100% Bridgeport Brass Corporation/1/ Indiana 100% Bryan Metals, Inc./2/ Ohio 100% General Defense Corporation/3/ Pennsylvania 100% Hi-Pure Chemicals, Inc. Pennsylvania 100% Hydrochim, S.A. France 100% N.V. Olin Hunt Specialty Products Belgium 100% N.V. Olin Hunt Trading Belgium 100% Olin Aerospace Company Washington 100% Olin Australia Limited Australia 100% Olin Brasil Ltda. Brazil 100% Olin Canada Inc. Canada 100% Olin Chemicals B.V. Netherlands 100% Olin Corporation N.Z. Limited New Zealand 100% Olin Engineered Systems, Inc. Delaware 100% Olin Export Trading Corporation Virgin Islands 100% Olin Financial Services, Inc. Delaware 100% Olin GmbH Germany 100% Olin Hunt Specialty Products, Inc. Delaware 100% Olin Hunt Sub. I Corp. Delaware 100% Olin Industrial (Hong Kong) Limited Hong Kong 100% Olin Japan, Inc. Japan 100% Olin Pte. Ltd. Singapore 100% Olin S.A. France 100% Olin (U.K.) Limited United Kingdom 100% Physics International Company California 100% Superior Pool Products, Inc. Delaware 100% U.S. Ordnance Company/4/ Delaware 100%
There are omitted from the foregoing list the names of certain subsidiaries which, if considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary. _______ 1. d/b/a "Olin Brass, Indianapolis" and "Olin Brass, Indianapolis Facility" in States of California, Illinois, Indiana, New Jersey, North Carolina, Ohio, Pennsylvania, Rhode Island and Texas 2. d/b/a "Bryan Metals of Ohio" in New Jersey. 3. d/b/a "Olin Ordnance" in States of Florida and Pennsylvania. 4. d/b/a "Olin Ordnance" in Los Angeles County, California. EX-23 15 CONSENT OF PEAT MARWICK Exhibit 23 CONSENT OF INDEPENDENT AUDITORS The Board of Directors Olin Corporation: We consent to incorporation by reference in Registration Statements No. 33-4479 and No. 33-52771 on Form S-3 and Nos. 33-28593, 33-40346, 33-55187 and 33-52681 on Form S-8 of Olin Corporation of our report dated January 26, 1995, relating to the consolidated balance sheets of Olin Corporation and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1994, which report is incorporated by reference in the December 31, 1994 annual report on Form 10-K of Olin Corporation. Our report refers to a change in accounting for postretirement benefits other than pensions and income taxes in 1992. KPMG PEAT MARWICK LLP Stamford, Connecticut March 9, 1995 EX-27 16 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Financial Statements contained in Item 8 of Form 10-K for the period ended December 31, 1994 and is qualified in its entirety by reference to such financial statements. 1,000,000 12-MOS DEC-31-1994 DEC-31-1994 7 0 385 (12) 386 880 2,503 (1,624) 2,030 618 418 21 0 89 639 2,030 2,658 2,658 2,153 2,153 0 2 37 141 50 91 0 0 0 91 3.65 3.54
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