-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O6pvcVMCZCIeKUMK/Gw49B3fwlyQYIE/RJi3rOgRbVVh7/K2XY3g8osVZqRD36tj 1eFTnLismfezjtv6p+YKYw== 0000950130-95-002422.txt : 19951119 0000950130-95-002422.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950130-95-002422 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: CSX SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLIN CORP CENTRAL INDEX KEY: 0000074303 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 131872319 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01070 FILM NUMBER: 95591338 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-Q 1 FORM 10-Q FOR QUARTER ENDED 9/30/95 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 ------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO -- COMMISSION FILE NUMBER 1-1070 ------ OLIN CORPORATION ---------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) VIRGINIA 13-1872319 -------- ---------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 120 LONG RIDGE ROAD, STAMFORD, CT 06904 --------------------------------- ----- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (203) 356-2000 -------------- (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) (FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT) INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO ------------ ----------- AS OF OCTOBER 31, 1995 THERE WERE OUTSTANDING 24,624,451 SHARES OF THE REGISTRANT'S COMMON STOCK.
Part I - Financial Information Item 1. Financial Statements. OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Condensed Balance Sheets (In millions) September 30, December 31, 1995 1994 ---- ---- ASSETS - ------ Cash $ 5.6 $ 7.0 Accounts receivable, net 567.6 414.3 Inventories 407.3 386.2 Other current assets 73.8 72.4 -------- -------- Total current assets 1,054.3 879.9 Investments and advances 77.6 103.1 Property, plant and equipment (less accumulated depreciation of $1,726.4 and $1,624.4) 952.5 879.0 Goodwill 121.6 108.8 Other assets 77.1 58.8 -------- -------- Total assets $2,283.1 $2,029.6 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Short-term borrowings and current installments of long-term debt $ 212.2 $ 29.0 Accounts payable 264.5 332.2 Other current liabilities 311.8 257.0 -------- -------- Total current liabilities 788.5 618.2 Long-term senior debt 300.6 292.8 Long-term subordinated debt 125.0 125.0 Other liabilities 243.0 244.5 Shareholders' equity: Preferred stock, par value $1 per share: Authorized 10.0 shares. Series A Conversion Preferred Stock Issued 2.76 shares in 1994 - 2.8 ESOP Preferred Stock Issued 1.0 shares (1.1 in 1994) 80.4 85.6 Guaranteed ESOP obligations (26.0) (27.0) Common stock, par value $1 per share: Authorized 60.0 shares. Issued 24.6 shares (21.5 in 1994) 24.6 21.5 Additional paid-in capital 416.2 400.7 Cumulative translation adjustment (1.9) (3.1) Retained earnings 332.7 268.6 -------- -------- Total shareholders' equity 826.0 749.1 -------- -------- Total liabilities and shareholders' equity $2,283.1 $2,029.6 ======== ======== ___________________________________ The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Condensed Statements of Income (In millions, except per share amounts)
Three Months Nine Months Ended September 30, Ended September 30, ------------------ ------------------- 1995 1994 1995 1994 ---- ---- ---- ---- Sales $ 796.4 $ 666.9 $2,366.2 $1,979.9 Operating expenses: Cost of goods sold 643.9 543.6 1,889.6 1,598.3 Selling and administration 84.3 73.9 251.0 232.1 Research and development 12.1 8.7 26.5 26.0 ------- ------- -------- -------- Operating income 56.1 40.7 199.1 123.5 Interest expense 11.4 8.9 32.9 28.4 Interest and other income 3.5 4.2 9.2 7.4 ------- ------- -------- -------- Income before taxes 48.2 36.0 175.4 102.5 Income taxes 17.1 13.9 62.3 37.5 ------- ------- -------- -------- Net income 31.1 22.1 113.1 65.0 Preferred dividends 1.6 1.6 4.8 5.1 ------- ------- -------- -------- Net income available to common shareholders $ 29.5 $ 20.5 $ 108.3 $ 59.9 ======= ======= ======== ======== Per share of common stock: Primary $1.21 $0.86 $4.47 $2.64 Fully diluted $1.20 $0.85 $4.32 $2.57 Dividends $0.60 $0.55 $1.80 $1.65 ===== ===== ===== ===== Average common shares outstanding 24.5 21.4 24.4 20.3 ==== ==== ==== ==== ___________________________________ The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Condensed Statements of Cash Flows (In millions) Nine Months Ended September 30, ------------------ 1995 1994 ---- ---- Operating activities - -------------------- Net income $ 113.1 $ 65.0 Depreciation and amortization 105.0 105.8 Changes in: Receivables (129.4) (60.4) Inventories 12.7 8.1 Other current assets 1.1 (3.9) Current liabilities (41.6) (24.1) Noncurrent liabilities 7.8 10.6 Deferred taxes 7.5 8.3 Other operating activities (6.4) 6.4 ------- ------- Net operating activities 69.8 115.8 ------- ------- Investing activities - -------------------- Capital expenditures (132.7) (76.3) Proceeds from sale of business - 11.3 Businesses acquired in purchase transactions (65.0) (25.4) Other investments (1.3) (1.2) Other investing activities 0.6 11.3 ------- ------- Net investing activities (198.4) (80.3) ------- ------- Financing activities - -------------------- Long-term debt: Borrowings 50.0 - Repayments (8.0) (15.5) Short-term borrowings (repayments) 121.9 (78.5) Issuance of common stock - 97.7 Stock options exercised 10.3 3.7 Repayment from ESOP 1.0 10.0 Dividends paid (49.5) (45.5) Other financing activities 0.7 (2.7) ------- ------- Net financing activities 126.4 (30.8) ------- ------- Net (decrease) increase in cash (2.2) 4.7 Cash, beginning of period 7.8 3.3 ------- ------- Cash, end of period $ 5.6 $ 8.0 ======= ======= ___________________________________ The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements. OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONDENSED FINANCIAL STATEMENTS 1. The condensed financial statements included herein have been prepared by the company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and, in the opinion of the company, reflect all adjustments (consisting only of normal accruals) which are necessary to present fairly the results for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, the company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements, accounting policies and the notes thereto and management's discussion and analysis of financial condition and results of operations included in the company's Annual Report on Form 10-K for the year ended December 31, 1994. 2. Inventories are valued principally by the dollar value last-in, first-out (LIFO) method of inventory accounting. It is not practicable, therefore, to separate the inventory into its components (raw materials, work-in-process and finished products). Inventories under the LIFO method are based on annual determination of quantities and costs as of the year-end; therefore, the consolidated financial statements at September 30, 1995, reflect certain estimates relating to inventory quantities and costs at December 31, 1995. 3. An Employee Stock Ownership Plan (ESOP) was established in June 1989. The ESOP purchased from the company approximately 1.3 million shares ($100 million) of a newly-authorized 1.75 million share series of the company's ESOP preferred stock, financed by $60 million of notes guaranteed by the company(of which $26 million is outstanding at September 30, 1995), and $40 million of borrowings from the company. At September 30, 1995 there were approximately 1.0 million shares of ESOP preferred stock outstanding at a value of $84.00 per share. The quarterly fixed dividend rate is $1.4925 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. The ESOP preferred stock is included in shareholders' equity because the company intends to redeem the outstanding ESOP preferred stock solely with shares of the company's common stock, and has the ability to do so. 4. Primary earnings per share are computed by dividing net income less the ESOP preferred dividend requirement by the weighted average number of common shares outstanding, plus an equivalent number (one-for-one) of common shares, assuming the conversion of the Series A Stock in 1994. 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. Net income was reduced by an additional ESOP contribution (differential between the common and the ESOP preferred dividend rates under an assumed conversion) necessary to satisfy the debt service requirement. 5. In August 1995, the company completed its acquisition for approximately $65 million of Ciba-Geigy's 50% share of OCG Microelectronic Materials, a joint venture formed by Ciba and the company in 1990. The 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 July 1, 1995, the effective date of the acquisition. 6. In June 1995, the company sold $50 million of 7.11% notes due June 2005. The proceeds from this issue were used to reduce short-term debt incurred for working capital purposes. 7. On March 1, 1995, 2.76 million shares of the company's $1 par value Series A Conversion Preferred Stock were converted into shares of common stock on a one-for-one basis. The last dividend on these preferred shares was paid in March 1995. 8. Effective January 1, 1995, the company acquired the remaining 51% of Etoxyl, C.A., a Latin American joint venture. The purchase price is contingent upon the future earnings of this entity. The 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. 9. In 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, WV, a packaging facility in Livonia, MI and the SUN (R) brand trademark. The company was unsuccessful in overturning this ruling. On August 8, 1995 the company completed the sale of the Sun (R) brand trademark to AquaClear Industries, Inc. In October 1995, the company completed the sale of its dry sanitizer plant in South Charleston WV and a related tableting operation in Livonia, MI to Clearon Corp., a joint venture of Israel Chemicals Ltd. and its subsidiary, Dead Sea Bromine Group. These transactions did not have a material impact on the company's results of operations. Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations. ---------------------- Segment sales and net income for the 1995 third quarter and year-to-date period compared with corresponding prior year periods are set forth in the following table: Three Months Nine Months Ended September 30, Ended September 30, --------------------- --------------------- (In millions) 1995 1994 1995 1994 ---- ---- ---- ---- Sales: - -------------------------- Chemicals $392.3 $299.6 $1,141.0 $ 923.2 Metals 201.2 188.7 660.7 554.7 Defense and Ammunition 202.9 178.6 564.5 502.0 ------ ------ -------- -------- Total $796.4 $666.9 $2,366.2 $1,979.9 ====== ====== ======== ======== Net Income: Chemicals $ 28.1 $ 10.5 $ 86.5 $ 33.2 Metals 6.3 8.3 31.9 26.6 Defense and Ammunition 3.5 8.5 14.4 21.7 Corporate and Other (6.8) (5.2) (19.7) (16.5) ------ ------ -------- -------- Total $ 31.1 $ 22.1 $ 113.1 $ 65.0 ====== ====== ======== ======== Chemicals sales for the quarter increased 31%, while net income increased significantly from 1994 due to the improved performance of chlorine and caustic, urethanes and electronic materials. Higher caustic pricing was the main contributor to Chlor-Alkali's increased sales and profits. Higher prices for TDI(toluene diisocyanate) were the main factors in the improved financial results for urethanes. Pool chemicals sales increased over 1994 as worldwide demand exceeded capacity and prices in most foreign markets were higher. Pool's operating results were unfavorable due to higher raw materials costs and higher manufacturing costs. In the other chemical businesses such as biocides and hydrazine, additional sales volumes contributed to their improved performance. Sales and profits of the electronic materials business included the operating results of OCG Microelectronics Materials (OCG) and, also, benefited from the strong semiconductor industry demand. In August 1995, the company completed its acquisition of the remaining 50 percent share of OCG. On a year-to-date basis, segment sales increased 24%, while net income more than doubled from 1994's level. Demand for chlorine and caustic has been strong throughout 1995. Higher caustic prices and increased chlorine volumes have improved Chlor-Alkali's performance. Urethanes sales and profits have benefited from an increase in worldwide TDI demand along with increasing TDI prices, especially in the foreign markets. Higher raw materials and manufacturing costs more than offset the profit impact from higher sales and were the main factors in Pool chemicals profit decline. The electronic materials year-to-date performance has increased due to higher semiconductor industry demand along with the inclusion of OCG's operating results. Metals sales for the quarter increased 7%, while its net income was behind last year. Higher metal values was the main contributor to the sales increase. After a record 1995 first half performance, this segment experienced lower earnings in the third quarter. Declining demand for brass strip from the automotive and ammunition markets and the impact of lower shipments and higher costs associated with the planned maintenance shutdowns at its major operations led to decreased profits. On a year-to-date basis, higher metal values, improved pricing and a favorable product mix contributed to the sales increase and, also accounted primarily for the profit improvement over 1994. Defense and Ammunition sales for the quarter increased 14%, but net income decreased significantly. Winchester's higher military shipments were not sufficient to offset the decline in sporting ammunition business, which had experienced record levels brought about by unprecedented demand throughout 1994. This reduced sales level along with increased commodity costs (primarily copper) were the main contributors to the decline in Winchester's quarterly profits. Although Aerospace's sales increased over 1994 due primarily to strong demand for its solid propellant products, profits were behind due to higher costs associated with certain developmental programs. Ordnance's sales improved due to its combined effects munitions contract. Delivery delays and lower volumes on certain medium caliber ammunition programs and cost overruns on certain programs were the main contributors to Ordnance's lower profits. On a year-to-date basis, the reduction in the sporting ammunition business and higher commodity costs more than offset the impact of the improved military ammunition operating results and were the main detractors to Winchester's financial performance, compared to 1994. Aerospace's sales increased as additional sales volumes (primarily solid propellant products) more than offset reductions in the in- flight entertainment orders. Profits, however, decreased due to a change in product mix and higher costs on certain developmental programs. Ordnance's sales increase is primarily attributable to the inclusion of the operating results of the 1994 medium caliber ammunition acquisition. Several factors, such as cost overruns, and delivery delays and lower volumes on certain medium caliber ammunition programs led to reduced 1995 profits. Changes in the strategic direction of defense spending, the timing of defense procurements and specific defense program appropriation decisions may adversely affect the performance of the Defense and Ammunition segment and the company in future years, including its income, liquidity, capital resources and financial condition. The precise impact of these decisions will depend on 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 US 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 the company, may not be indicative of future performance. In November 1995, the company announced that it is studying a spin off of its Ordnance and Aerospace divisions as a free-standing public company to its shareholders. Any final decision would require the approval of the Board of Directors among others. Selling and administration expenses as a percent of sales were 10.6% for both the quarter and nine-month period (11.1% and 11.7%, respectively in 1994). The decrease was attributable to the increased sales. For the quarter, selling and administration, and research and development expenses increased primarily due to the inclusion of the OCG's operating results. On a year-to-date basis, several factors contributed to the 1995 increase in selling and administration expenses. The company incurred higher legal costs, additional information processing expenses and higher costs related to incentive compensation programs, offset in part by cost reduction programs. The inclusion of the operating results of OCG and the 1994 medium caliber business(acquired in April 1994), also, contributed to this increase. Interest expense increased over 1994 levels due to higher average interest rates on higher average borrowings. Interest and other income for the 1995 nine-month period increased due to the favorable performance of nonconsolidated affiliates. Cash flow from operating activities amounted to $69.8 million and $115.8 million in 1995 and 1994, respectively. The decrease was primarily attributable to a higher receivables level and was partially offset by higher net income. The increase in receivables was due to higher level of business activity and the termination of a program under which an undivided interest in a designated pool of receivables was sold. Cash used for investing activities amounted to $198.4 million and $80.3 million in 1995 and 1994, respectively. Capital spending of $132.7 million in 1995 was ahead of 1994. Total year capital spending, including environmental capital spending of $15 million, is estimated to increase 34% from 1994, mainly to provide additional capacity and product quality for selected product lines. Historically, the company has funded its environmental capital spending through cash flow from operations and expects to do so in the future. In August 1995, the company completed its acquisition for approximately $65 million of Ciba- Geigy's 50% share of OCG, a joint venture formed by Ciba and the company in 1990. OCG is a supplier of photoresists, polyimides and ancillary products with R&D, manufacturing, customer support and distribution facilities in North America, Europe and Asia. In April 1994, the company purchased certain assets of the medium caliber ordnance business of Aerojet for approximately $25 million. In the 1994 third quarter, the company sold its conductive materials business including its manufacturing facility in Ontario, CA to Acheson Industries, which generated proceeds of $11.3 million. In 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, WV, a packaging facility in Livonia, MI and the SUN (R) brand trademark. The company was unsuccessful in overturning this ruling. On August 8, 1995 the company completed the sale of the Sun (R) brand trademark to AquaClear Industries, Inc. In October 1995, the company completed the sale of its dry sanitizer plant in South Charleston WV and a related tableting operation in Livonia, MI to Clearon Corp., a joint venture of Israel Chemicals Ltd. and its subsidiary, Dead Sea Bromine Group. These transactions did not have a material impact on the company's results of operations. On March 1, 1995, the outstanding Series A Conversion Preferred stock converted automatically into shares of common stock on a one-for-one basis. The last dividend on these preferred shares was paid in March 1995. Commencing with first quarter of 1995, the quarterly common stock dividend increased to $.60 per share. 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, some of which was incurred to finance the acquisition of the medium caliber ammunition business. At September 30, 1995, the percent of total debt to total capitalization (excluding the reduction in equity for the Contributing Employee Ownership Plan) was 42.8%, up from 36.5% at year-end 1994. The increase from year-end is attributable to higher short-term borrowings to fund the OCG acquisition and finance seasonal working capital requirements. Cash flow from operations and the use of credit facilities financed the company's seasonal working capital requirements, capital expenditures and dividends. At September 30, 1995, the company maintained committed credit facilities with banks of $290 million of which $146 million was available. The company believes that cash flow from operations, existing credit facilities and potential long-term borrowing capabilities are adequate to satisfy its liquidity needs for the near future. In the first nine months of 1995, the company spent approximately $16 million for investigatory and clean-up activities associated with former waste sites and past operations. Spending for environmental investigatory and remedial efforts for the full year 1995 is estimated to be $25 million. 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. Associated costs of investigatory and remedial activities are provided for in accordance with generally accepted accounting principles governing probability and the ability to reasonably estimate future costs. Charges to income for investigatory and remedial efforts were material to operating results in 1995 and 1994 and are expected to be material to net income in future years. 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. Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and the financial capability of other potentially responsible parties and the company's ability to obtain contributions from other parties and the time periods (sometimes lengthy) over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably against the company. The company's consolidated balance sheets include reserves for future environmental expenditures to investigate and remediate known sites amounting to $107 million and $111 million at September 30, 1995 and December 31, 1994, respectively, of which $67 million and $71 million was classified as other noncurrent liabilities, respectively. Included in the reserve at September 30, 1995 and 1994, 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. 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 1994 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. Part II - Other Information Item 1. Legal Proceedings. ----------------- (a) With respect to the Saltville environmental site described in Item 3(b) of --------- Olin's Annual Report on Form 10-K for the year ended December 31, 1994, the following are subsequent developments: Olin filed comments with the Environmental Protection Agency ("EPA") during the public comment period for the EPA's Proposed Remedial Action Plan issued on January 18, 1995 in support of alternatives to the proposed remediation plan for the site. EPA issued a Record of Decision on September 29, 1995 recognizing in substantial part Olin's comments. The Record of Decision calls for covering the former waste ponds, treatment of runoff from the ponds, and additional monitoring and investigation. The Record of Decision does not address remediation of the former chlorine plant site or the river, which are the subject of the additional investigation. On March 15, 1995, EPA notified Olin of liability for lead and asbestos present at the former steam-generating plant (power plant) at the site. On July 11, 1995, Olin and EPA entered into an Administrative Order on Consent in which Olin agreed to remove asbestos and lead, and demolish the power plant. The work is expected to be done during 1996 and 1997. (b) In May 1994, Olin discovered that an Ordnance Division employee may have modified inspection and testing software used on certain medium caliber ammunition production lines at its Marion, Illinois facility to permit inspections to be performed at tolerances which may not have been fully compliant with applicable contract specifications. Upon discovering the issue, Olin promptly notified U.S. Government contracting representatives, voluntarily disclosed the circumstances then known to the Department of Defense's Office of the Inspector General and expressed its intent to fully investigate the matter and take all necessary corrective actions. In September 1994, a federal grand jury in the United States District Court for the Southern District of Illinois issued two subpoenas to Olin requesting production of documents relating generally to certain medium caliber ammunition programs and specifically to the software modification described above. Subsequently, Olin has received additional subpoenas and several Marion employees have received subpoenas to testify before the grand jury. Olin has fully complied with the subpoenas and is committed to fully cooperating with Government officials to resolve the matter. Olin cannot predict the ultimate outcome of the investigation but believes that it will not be materially adverse to its results of operations or financial position. Item 6. Exhibits and Reports on Form 8-K. -------------------------------- (a) Exhibits -------- 11. Computation of Per Share Earnings (Unaudited). 12(a). Computation of Ratio of Earnings to Fixed Charges (Unaudited). 12(b). Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited). 27. Financial Data Schedule. (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed during the quarter ended September 30, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OLIN CORPORATION (Registrant) By: R. A. Beyerl ------------ R. A. Beyerl Vice President and Controller (Chief Accounting Officer) By: J. M. Jackson, Jr. ------------------ J. M. Jackson, Jr. Vice President and General Counsel Date: November 14, 1995 EXHIBIT INDEX Exhibit No. Description - ------- ----------- 11. Computation of Per Share Earnings (Unaudited). 12(a). Computation of Ratio of Earnings to Fixed Charges (Unaudited). 12(b). Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited). 27. Financial Data Schedule. EX-11 2 COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Per Share Earnings (Unaudited) (In millions) Nine Months Ended September 30, ------------------- Primary earnings per share - -------------------------- 1995 1994 ---- ---- Primary earnings: Net income $113.1 $ 65.0 Less ESOP preferred dividend, net of tax benefit (4.3) (4.2) ------ ------ Net income $108.8 $ 60.8 ====== ====== Primary shares: Weighted average shares outstanding 24.4 20.3 Weighted average common share equivalents assuming the conversion of Series A Conversion Preferred Stock at the date of issuance - 2.7 ------ ------ Primary shares 24.4 23.0 ====== ====== Primary net income per common share $ 4.47 $ 2.64 ====== ====== Fully diluted earnings per share - -------------------------------- Fully diluted earnings: Net income $113.1 $ 65.0 Less additional ESOP contribution (2.3) (2.3) ------ ------ Net income $110.8 $ 62.7 ====== ====== Fully diluted shares: Weighted average number of common shares outstanding and common stock equivalents 24.4 23.0 Dilutive effect of ESOP preferred stock 1.3 1.4 ------ ------ Fully diluted shares 25.7 24.4 ====== ====== Fully diluted net income per common share $ 4.32 $ 2.57 ====== ====== EX-12.(A) 3 COMPUTATION OF RATIO OF EARNINGS OF FIXED CHARGES Exhibit 12(a) OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (Unaudited) (In millions) Nine Months Ended September 30, ------------------- 1995 1994 ---- ---- Earnings: Income before taxes $175.4 $102.5 Add (deduct): Income taxes of 50% owned affiliates 2.7 3.0 Equity in losses of less than 50% owned affiliates 2.0 3.4 Dividends received from less than 50% owned affiliates 0.7 0.4 Interest capitalized, net of amortization (0.1) 0.3 Fixed charges as described below 47.8 41.9 ------ ------ Total $228.5 $151.5 ====== ====== Fixed Charges: Interest expense $ 34.5 $ 29.3 Estimated interest factor in rent expense 13.3 12.6 ------ ------ Total $ 47.8 $ 41.9 ====== ====== Ratio of earnings to fixed charges 4.8 3.6 === === EX-12.(B) 4 COMPUTATION OF RATIO OF EARNINGS- COMBINED Exhibit 12(b) OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited) (In millions) Nine Months Ended September 30, ------------------- 1995 1994 ---- ---- Earnings: Income before taxes $175.4 $102.5 Add (deduct): Income taxes of 50% owned affiliates 2.7 3.0 Equity in losses of less than 50% owned affiliates 2.0 3.4 Dividends received from less than 50% owned affiliates 0.7 0.4 Interest capitalized, net of amortization (0.1) 0.3 Fixed charges as described below 47.8 41.9 ------ ------ Total $228.5 $151.5 ====== ====== Fixed Charges: Interest expense $ 34.5 $ 29.3 Estimated interest factor in rent expense 13.3 12.6 Preferred stock dividend requirement 12.0 20.0 ------ ------ Total $ 59.8 $ 61.9 ====== ====== Ratio of earnings to combined fixed charges and preferred stock dividends 3.8 2.4 === === EX-27 5 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Financial Statements contained in Item 1 of Form 10-Q for the period ended September 30, 1995 and is qualified in its entirety by reference to such financial statements. Figures are rounded to the nearest 100,000 (except EPS). OTHER DEC-31-1994 JAN-01-1995 SEP-30-1995 5,600 0 567,600 0 407,300 1,054,300 2,678,900 (1,726,400) 2,283,100 788,500 425,600 24,600 0 80,400 721,000 2,283,100 2,366,200 2,366,200 1,889,600 1,889,600 0 0 32,900 175,400 62,300 113,100 0 0 0 113,100 4.47 4.32
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