SOURCE: Olin Corporation

Olin Corporation

January 25, 2010 19:49 ET

Olin Announces 2009 Earnings

Winchester Completes Record Year

CLAYTON, MO--(Marketwire - January 25, 2010) - Olin Corporation (NYSE: OLN) announced today that its fourth quarter 2009 net income was $21.8 million, or $0.28 per diluted share, which compares to $47.2 million, or $0.61 per diluted share in the fourth quarter of 2008. Sales in the fourth quarter of 2009 were $350.9 million, compared to $434.2 million in the fourth quarter of 2008.

Joseph D. Rupp, Chairman, President, and Chief Executive Officer said, "Winchester achieved the highest level of fourth quarter segment earnings in its history, reflecting the continuation of the stronger than normal demand that began in the fourth quarter of 2008. Segment earnings more than doubled in the fourth quarter of 2009 compared to the fourth quarter of 2008 driven by better military sales, which increased 22% year-over-year, and improved costs. Winchester's record full year 2009 segment earnings of $68.6 million were more than double the prior full year segment earnings record.

"Chlor Alkali fourth quarter 2009 segment earnings of $5.2 million reflected seasonally weak demand. ECU netbacks improved approximately $50, or 13%, in the fourth quarter of 2009 compared to the third quarter of 2009, while chlorine and caustic soda volumes declined 8% in the fourth quarter of 2009 compared to the third quarter of 2009. The fourth quarter 2009 Chlor Alkali operating rate was 70%.

"Our fourth quarter 2009 earnings include $37.0 million of pretax recoveries of environmental costs incurred and expensed in prior periods and a $1.2 million pretax gain associated with the sale of a former manufacturing facility.

"Net income in 2009 was $135.7 million, or $1.73 per diluted share, compared to $157.7 million, or $2.07 per diluted share in 2008. Earnings in 2009 included pretax recoveries of environmental costs incurred and expensed in prior periods of $82.1 million, a $4.6 million pretax reduction in selling and administration expense associated with the favorable resolution of a capital tax matter in Canada, and $4.9 million of pretax gains associated with sales of real estate. Sales in 2009 were $1.53 billion compared to $1.76 billion in 2008.

"First quarter 2010 earnings are forecast to be in the $0.10 per diluted share range. First quarter 2010 Chlor Alkali segment earnings are expected to improve slightly compared to the fourth quarter of 2009 reflecting some anticipated improvement in demand. Earnings in the Winchester segment are expected to improve from fourth quarter levels due to seasonally stronger demand and are expected to be similar to first quarter 2009 levels."

SEGMENT REPORTING

We define segment earnings as income (loss) before interest expense, interest income, other income, and income taxes and include the results of non-consolidated affiliates in segment results consistent with management's monitoring of the operating segments.

CHLOR ALKALI PRODUCTS

Chlor Alkali product sales for the fourth quarter of 2009 were $224.9 million compared to $312.8 million in the fourth quarter of 2008. Fourth quarter 2009 chlorine and caustic soda volumes were similar to fourth quarter 2008 levels. Volumes for potassium hydroxide and bleach increased by 57% and 23%, respectively, during the fourth quarter of 2009 compared to the fourth quarter of 2008, while volumes for hydrochloric acid declined 27% compared to fourth quarter 2008 levels. ECU netbacks in the fourth quarter of 2009 declined by 43% compared to the fourth quarter of 2008. Freight costs included in the ECU netbacks increased 6% in the fourth quarter of 2009 compared to the fourth quarter of 2008. Fourth quarter 2009 Chlor Alkali segment income was $5.2 million compared to $86.5 million in the fourth quarter of 2008 due to lower prices.

WINCHESTER

Winchester fourth quarter 2009 sales were $126.0 million compared to $121.4 million in the fourth quarter of 2008. The increase primarily reflects higher sales volumes. Commercial and military sales increased during the quarter which more than offset declines in law enforcement and industrial sales. Winchester's fourth quarter 2009 segment income was $9.5 million compared to $3.3 million in the fourth quarter of 2008. The increase in segment income reflects the higher sales and lower material costs.

CORPORATE AND OTHER COSTS

Pension income included in the fourth quarter 2009 Corporate and Other segment was $5.5 million, compared to income of $1.5 million in the fourth quarter of 2008. Fourth quarter 2008 pension income included a $3.3 million curtailment charge associated with the transition of a portion of the Winchester hourly workforce from a defined benefit pension plan to a defined contribution pension plan.

Fourth quarter credits to income for environmental investigatory and remedial activities were $31.2 million in 2009, which includes the $37.0 million of pretax recoveries of costs incurred and expensed in prior periods. Without these recoveries, charges to income for environmental investigatory and remedial activities were $5.8 million in the fourth quarter of 2009 compared to $6.5 million in the fourth quarter of 2008. These charges relate primarily to remedial and investigatory activities associated with former waste sites and past operations.

Other corporate and unallocated costs in the fourth quarter of 2009 increased from the fourth quarter of 2008 due to a $1.0 million reduction in asset retirement obligations that was recorded in the fourth quarter of 2008. Stock based compensation costs increased in the fourth quarter of 2009 compared to the fourth quarter of 2008 due to higher mark-to-market adjustments. Legal and legal related settlement costs declined in the fourth quarter of 2009 compared to the fourth quarter of 2008.

CASH FLOW

Cash and cash equivalents increased from $376.6 million at September 30, 2009 to $458.5 million at December 31, 2009. The increase in cash reflects the majority of the proceeds from the third and fourth quarter recoveries of environmental costs incurred and expensed in prior periods and an $8.7 million decrease in working capital. Capital spending during the quarter was $15.6 million compared to depreciation of $21.2 million.

DIVIDEND

On January 22, 2010, Olin's Board of Directors declared a dividend of $0.20 on each share of Olin common stock. The dividend is payable on March 10, 2010 to shareholders of record at the close of business on February 10, 2010. This is the 333rd consecutive quarterly dividend to be paid by the Company.

CONFERENCE CALL INFORMATION

The Company's fourth quarter earnings conference call with securities analysts is scheduled for 10:00 A.M. Eastern Time, Tuesday, January 26. The call will feature remarks by Joseph D. Rupp, Olin's Chairman, President and Chief Executive Officer; John E. Fischer, Olin's Vice President and Chief Financial Officer; John L. McIntosh, Vice President and President Chlor Alkali Products Division; and Larry P. Kromidas, Olin's Assistant Treasurer and Director, Investor Relations. Anyone wishing to listen to the call may do so via the Internet by following the instructions posted under the Conference Call icon on Olin's website, www.olin.com. Listeners should log on to the website at least 5 minutes before the call. The call will also be audio archived on the Olin website for future replay. A text of the prepared remarks from the conference call will be available on the website in the Investor section.

COMPANY DESCRIPTION

Olin Corporation is a manufacturer concentrated in two business segments: Chlor Alkali Products and Winchester. Chlor Alkali Products manufactures chlorine and caustic soda, sodium hydrosulfite, hydrochloric acid, hydrogen, potassium hydroxide and bleach products. Winchester products include sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.

Click here for more information on Olin.

FORWARD-LOOKING STATEMENTS

This communication includes forward-looking statements. These statements relate to analyses and other information that are based on management's beliefs, certain assumptions made by management, forecasts of future results, and current expectations, estimates and projections about the markets and economy in which we and our various segments operate. The statements contained in this communication that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.

We have used the words "anticipate," "intend," "may," "expect," "believe," "should," "plan," "project," "estimate," "forecast," and variations of such words and similar expressions in this communication to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise. Relative to the dividend, the payment of cash dividends is subject to the discretion of our board of directors and will be determined in light of then-current conditions, including our earnings, our operations, our financial conditions, our capital requirements and other factors deemed relevant by our board of directors. In the future, our board of directors may change our dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions.

The risks, uncertainties and assumptions involved in our forward-looking statements, many of which are discussed in more detail in our filings with the SEC, including without limitation the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2008, include, but are not limited to, the following:

--  sensitivity to economic, business and market conditions in the United
    States and overseas, including economic instability or a downturn in the
    sectors served by us, such as ammunition, housing, vinyls, and pulp and
    paper, and the migration by United States customers to low-cost foreign
    locations;
--  the cyclical nature of our operating results, particularly declines
    in average selling prices in the chlor alkali industry and the
    supply/demand balance for our products, including the impact of excess
    industry capacity or an imbalance in demand for our chlor alkali products;
--  economic and industry downturns that result in diminished product
    demand and excess manufacturing capacity in any of our segments and that,
    in many cases, result in lower selling prices and profits;
--  costs and other expenditures in excess of those projected for
    environmental investigation and remediation or other legal proceedings;
--  changes in legislation or government regulations or policies,
    including proposed legislation that would phase out the use of mercury in
    the manufacture of chlorine, caustic soda, and related products;
--  the effects of any declines in global equity markets on asset values
    and any declines in interest rates used to value the liabilities in our
    pension plan;
--  unexpected litigation outcomes;
--  new regulations or public policy changes regarding the transportation
    of hazardous chemicals and the security of chemical manufacturing
    facilities;
--  the occurrence of unexpected manufacturing interruptions and outages,
    including those occurring as a result of labor disruptions and production
    hazards;
--  higher-than-expected raw material and energy, transportation, and/or
    logistics costs;
--  an increase in our indebtedness or higher-than-expected interest
    rates, affecting our ability to generate sufficient cash flow for debt
    service;
--  continuing weak industry conditions could affect our ability to
    comply with the financial maintenance covenants in our senior revolving
    credit facility and our accounts receivable facility; and
--  adverse conditions in the credit and capital markets, limiting or
    preventing our ability to borrow or raise capital.
    

All of our forward-looking statements should be considered in light of these factors. In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of our forward-looking statements.

2010 - 04


Olin Corporation
Consolidated Statements of Income (a)


                                 Three Months Ended        Years Ended
(In millions, except per share      December 31,          December 31,
 amounts)                         2009       2008       2009       2008
                                ---------- ---------- ---------- ---------
Sales                           $    350.9 $    434.2 $  1,531.5 $ 1,764.5
Operating Expenses:
   Cost of Goods Sold                288.1      336.0    1,222.7   1,377.2
   Selling and Administration         28.8       32.8      135.3     137.3
Other Operating Income (b)             2.2        0.5        9.1       1.2
                                ---------- ---------- ---------- ---------
   Operating Income                   36.2       65.9      182.6     251.2
Earnings of Non-consolidated
 Affiliates                            4.8        8.3       37.7      39.4
Interest Expense (c)                   6.4        1.8       11.6      13.3
Interest Income                        0.2        1.0        1.1       6.2
Other Income (Expense) (d)               -        0.1        0.1     (26.0)
                                ---------- ---------- ---------- ---------
   Income before Taxes                34.8       73.5      209.9     257.5
Income Tax Provision                  13.0       26.3       74.2      99.8
                                ---------- ---------- ---------- ---------
Net Income                      $     21.8 $     47.2 $    135.7 $   157.7
                                ========== ========== ========== =========
Net Income Per Common Share:
   Basic                        $     0.28 $     0.61 $     1.74 $    2.08
   Diluted                      $     0.28 $     0.61 $     1.73 $    2.07
                                ========== ========== ========== =========
Dividends Per Common Share      $     0.20 $     0.20 $     0.80 $    0.80
                                ========== ========== ========== =========
Average Common Shares
 Outstanding - Basic                  78.6       77.1       78.1      75.8
                                ========== ========== ========== =========
Average Common Shares
 Outstanding - Diluted                78.9       77.4       78.3      76.1
                                ========== ========== ========== =========

(a) Unaudited.
(b) Other operating income for the three months ended December 31, 2009
    included a $1.2 million gain on the disposition of a former
    manufacturing facility. Other operating income for the year ended
    December 31, 2009 included a $3.7 million gain on the sale of land,
    a $1.2 million gain on the disposition of a former manufacturing
    facility and $1.6 million of gains on the disposal of assets primarily
    associated with the St. Gabriel, LA conversion and expansion project.
(c) Interest expense was reduced by capitalized interest of $0.6 million
    and $2.7 million for the three months ended December 31, 2009 and 2008,
    respectively, and $9.7 million and $5.0 million for the years ended
    December 31, 2009 and 2008, respectively.
(d) Other income (expense) for the year ended December 31, 2008 included
    an impairment charge of the full value of a $26.6 million investment
    in corporate debt securities. No tax benefit is expected to be
    realized from this impairment charge.




Olin Corporation
Segment Information (a)
(In millions)

                                 Three Months Ended        Years Ended
                                    December 31,          December 31,
                                   2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Sales:
    Chlor Alkali Products       $   224.9  $   312.8  $   963.8  $ 1,275.4
    Winchester                      126.0      121.4      567.7      489.1
                                ---------  ---------  ---------  ---------
      Total Sales               $   350.9  $   434.2  $ 1,531.5  $ 1,764.5
                                ---------  ---------  ---------  ---------
Income before Taxes:
    Chlor Alkali Products (b)   $     5.2  $    86.5  $   125.4  $   328.3
    Winchester                        9.5        3.3       68.6       32.6
    Corporate/Other:
         Pension Income (c)           5.5        1.5       22.3       14.8
         Environmental Income
          (Expense) (d)              31.2       (6.5)      58.0      (27.7)
         Other Corporate and
          Unallocated Costs         (12.6)     (11.1)     (63.1)     (58.6)
    Other Operating Income (e)        2.2        0.5        9.1        1.2
    Interest Expense (f)             (6.4)      (1.8)     (11.6)     (13.3)
    Interest Income                   0.2        1.0        1.1        6.2
    Other Income (Expense) (g)          -        0.1        0.1      (26.0)
                                ---------  ---------  ---------  ---------
      Income before Taxes       $    34.8  $    73.5  $   209.9  $   257.5
                                =========  =========  =========  =========

(a) Unaudited.
(b) Earnings of non-consolidated affiliates are included in the Chlor
    Alkali Products segment results consistent with management's monitoring
    of the operating segments. The earnings from non-consolidated
    affiliates were $4.8 million and $8.3 million for the three months
    ended December 31, 2009 and 2008, respectively, and $37.7 million and
    $39.4 million for the years ended December 31, 2009 and 2008,
    respectively.
(c) The service cost and the amortization of prior service cost components
    of pension expense related to the employees of the operating segments
    are allocated to the operating segments based on their respective
    estimated census data. All other components of pension costs are
    included in Corporate/Other and include items such as the expected
    return on plan assets, interest cost and recognized actuarial gains
    and losses. Pension income for the three months ended December 31, 2008
    included a curtailment charge of $3.3 million associated with the
    transition of a portion of our Winchester hourly workforce from a
    defined benefit pension plan to a defined contribution pension plan.
    Pension income for the year ended December 31, 2008 included a
    curtailment charge of $4.1 million resulting from the transition of a
    portion of our Winchester hourly workforce and our McIntosh, AL chlor
    alkali hourly workforce from a defined benefit pension plan to a
    defined contribution pension plan.
(d) Environmental income (expense) for the three months and year ended
    December 31, 2009 included $37.0 million and $82.1 million,
    respectively, of recoveries from third parties for costs incurred
    and expensed in prior periods.
(e) Other operating income for the three months ended December 31, 2009
    included a $1.2 million gain on the disposition of a former
    manufacturing facility. Other operating income for the year ended
    December 31, 2009 included a $3.7 million gain on the sale of land,
    a $1.2 million gain on the disposition of a former manufacturing
    facility and $1.6 million of gains on the disposal of assets primarily
    associated with the St. Gabriel, LA conversion and expansion project.
(f) Interest expense was reduced by capitalized interest of $0.6 million
    and $2.7 million for the three months ended December 31, 2009 and
    2008, respectively, and $9.7 million and $5.0 million for the years
    ended December 31, 2009 and 2008, respectively.
(g) Other income (expense) for the year ended December 31, 2008 included
    an impairment charge of the full value of a $26.6 million investment
    in corporate debt securities. No tax benefit is expected to be
    realized from this impairment charge.





Olin Corporation
Consolidated Balance Sheets (a)
(In millions, except per share data)

                                                           December 31,
                                                         2009       2008
                                                      ---------  ---------
Assets:
  Cash & Cash Equivalents                             $   458.5  $   246.5
  Accounts Receivable, Net                                183.3      213.0
  Inventories                                             123.8      131.4
  Current Deferred Income Taxes                            76.5       68.5
  Other Current Assets                                     24.8       10.9
                                                      ---------  ---------
    Total Current Assets                                  866.9      670.3
  Property, Plant and Equipment
    (Less Accumulated Depreciation of $1,001.3 and
     $956.0)                                              695.4      629.9
  Prepaid Pension Costs                                     4.4          -
  Deferred Income Taxes                                       -       48.4
  Other Assets                                             71.0       70.8
  Goodwill                                                300.3      300.3
                                                      ---------  ---------
Total Assets                                          $ 1,938.0  $ 1,719.7
                                                      =========  =========

Liabilities and Shareholders' Equity:
  Accounts Payable                                    $   117.8  $   145.6
  Income Taxes Payable                                        -        0.6
  Accrued Liabilities                                     193.1      253.6
                                                      ---------  ---------
    Total Current Liabilities                             310.9      399.8
  Long-Term Debt                                          398.4      252.4
  Accrued Pension Liability                                56.6       51.5
  Deferred Income Taxes                                    32.2        6.5
  Other Liabilities                                       318.0      304.5
                                                      ---------  ---------
      Total Liabilities                                 1,116.1    1,014.7
                                                      ---------  ---------
Commitments and Contingencies
Shareholders' Equity:
      Common Stock, Par Value $1 Per Share,
       Authorized 120.0 Shares: Issued and Outstanding
       78.7 Shares (77.3 in 2008)                          78.7       77.3
      Additional Paid-In Capital                          823.1      801.6
      Accumulated Other Comprehensive Loss               (248.6)    (269.4)
      Retained Earnings                                   168.7       95.5
                                                      ---------  ---------
      Total Shareholders' Equity                          821.9      705.0
                                                      ---------  ---------
Total Liabilities and Shareholders' Equity            $ 1,938.0  $ 1,719.7
                                                      =========  =========

(a) Unaudited.



Olin Corporation
Consolidated Statements of Cash Flows (a)
(In millions)

                                                             Years Ended
                                                             December 31,
                                                            2009     2008
                                                          -------  -------
Operating Activities:
Net Income                                                $ 135.7  $ 157.7
Earnings of Non-consolidated Affiliates                     (37.7)   (39.4)
(Gains) Losses on Disposition of Property, Plant and
 Equipment                                                   (6.5)     0.7
Stock-Based Compensation                                      5.8      6.3
Depreciation and Amortization                                71.7     69.6
Deferred Income Taxes                                        72.3     11.0
Qualified Pension Plan Contributions                         (4.5)       -
Qualified Pension Plan Income                               (21.8)   (11.6)
Impairment of Investment in Corporate Debt Securities           -     26.6
Common Stock Issued Under Employee Benefit Plans              2.1      2.7
Changes in:
       Receivables                                           29.7     (9.5)
       Inventories                                            7.6    (25.0)
       Other Current Assets                                   3.6      3.8
       Accounts Payable and Accrued Liabilities             (43.5)   (66.1)
       Income Taxes Payable                                 (20.0)    (1.0)
       Other Assets                                          (2.1)     3.8
       Other Noncurrent Liabilities                          10.2    (14.5)
Other Operating Activities                                   (2.4)     0.5
                                                          -------  -------
       Net Operating Activities                             200.2    115.6
                                                          -------  -------
Investing Activities:
Capital Expenditures                                       (137.9)  (180.3)
Proceeds from Disposition of Property, Plant and
 Equipment                                                    8.5      0.6
Distributions from Affiliated Companies, Net                 37.1     27.6
Other Investing Activities                                    4.6     (3.9)
                                                          -------  -------
       Net Investing Activities                             (87.7)  (156.0)
                                                          -------  -------
Financing Activities:
Long-Term Debt:
  Borrowings                                                150.3        -
  Repayments                                                    -    (11.3)
Issuance of Common Stock                                     14.8     15.4
Stock Options Exercised                                       0.2     31.9
Excess Tax Benefits from Stock Options Exercised                -      5.5
Dividends Paid                                              (62.5)   (60.6)
Deferred Debt Issuance Costs                                 (3.3)       -
                                                          -------  -------
       Net Financing Activities                              99.5    (19.1)
                                                          -------  -------
Net Increase (Decrease) in Cash and Cash Equivalents        212.0    (59.5)
Cash and Cash Equivalents, Beginning of Year                246.5    306.0
                                                          -------  -------
Cash and Cash Equivalents, End of Period                  $ 458.5  $ 246.5
                                                          =======  =======

(a) Unaudited.



Olin Corporation
Quarterly Trend Data (a)
(In millions, except per share amounts)

                                             2009
                     -----------------------------------------------------
                       First      Second     Third      Fourth     Total
                      Quarter    Quarter    Quarter    Quarter     Year
                     ---------  ---------  ---------  ---------  ---------
Sales                $   400.6  $   383.0  $   397.0  $   350.9  $ 1,531.5
Income before Taxes       74.4       44.8       55.9       34.8      209.9
Depreciation and
 Amortization             16.6       16.8       17.1       21.2       71.7
Capital Expenditures      49.8       37.8       34.7       15.6      137.9
Dividends Paid            15.5       15.6       15.6       15.8       62.5
                     ---------  ---------  ---------  ---------  ---------
Total Debt to Total
 Capitalization           25.0%      24.1%      32.5%      32.6%      32.6%
                     ---------  ---------  ---------  ---------  ---------
Diluted Income Per
 Common Share        $    0.60  $    0.36  $    0.50  $    0.28  $    1.73
                     =========  =========  =========  =========  =========
Dividends            $    0.20  $    0.20  $    0.20  $    0.20  $    0.80
                     ---------  ---------  ---------  ---------  ---------
Average Common
 Shares Outstanding
 - Diluted                77.6       78.1       78.6       78.9       78.3
                     =========  =========  =========  =========  =========


                                             2008
                     -----------------------------------------------------
                       First      Second     Third      Fourth     Total
                      Quarter    Quarter    Quarter    Quarter     Year
                     ---------  ---------  ---------  ---------  ---------
Sales                $   399.1  $   428.3  $   502.9  $   434.2  $ 1,764.5
Income before Taxes       58.9       54.8       70.3       73.5      257.5
Depreciation and
 Amortization             17.3       17.6       17.3       17.4       69.6
Capital Expenditures      23.1       39.3       61.0       56.9      180.3
Dividends Paid            14.9       15.0       15.2       15.5       60.6
                     ---------  ---------  ---------  ---------  ---------
Total Debt to Total
 Capitalization           26.6%      25.6%      24.2%      26.4%      26.4%
                     ---------  ---------  ---------  ---------  ---------
Diluted Income Per
 Common Share        $    0.50  $    0.47  $    0.49  $    0.61  $    2.07
                     =========  =========  =========  =========  =========
Dividends            $    0.20  $    0.20  $    0.20  $    0.20  $    0.80
                     ---------  ---------  ---------  ---------  ---------
Average Common
 Shares Outstanding
 - Diluted                75.0       75.4       76.7       77.4       76.1
                     =========  =========  =========  =========  =========

(a) Unaudited.


Contact Information