SOURCE: Olin Corporation

Olin Corporation

April 26, 2010 19:11 ET

Olin Announces First Quarter Earnings

Winchester Posts Record First Quarter

CLAYTON, MO--(Marketwire - April 26, 2010) - Olin Corporation (NYSE: OLN) announced today that its first quarter 2010 net income was $14.1 million, or $0.18 per diluted share, which compares to $46.7 million, or $0.60 per diluted share in the first quarter of 2009. Sales in the first quarter of 2010 were $362.0 million, compared to $400.6 million in the first quarter of 2009.

Joseph D. Rupp, Chairman, President, and Chief Executive Officer, said, "Winchester achieved the highest level of first quarter earnings in its history, and the second best quarterly results ever, reflecting the continuation of the stronger than normal demand that began in the fourth quarter of 2008. In the first quarter of 2010, Winchester benefited from lower commodity costs and reduced bad debt related expenses compared to the first quarter of 2009, which more than offset lower sales volumes. First quarter 2010 Winchester volumes remained well above 2008 levels. Winchester's first quarter 2010 segment earnings were $19.5 million compared to $17.0 million in the first quarter of 2009.

"Chlor Alkali first quarter 2010 segment earnings of $10.6 million reflected a sequential improvement from the fourth quarter of 2009 earnings of $5.2 million. Both ECU netbacks and product volumes improved from the fourth quarter of 2009. First quarter 2010 Chlor Alkali segment earnings include approximately $1.4 million of costs directly associated with the first quarter force majeure event at the McIntosh, Alabama facility. The first quarter 2010 Chlor Alkali operating rate was 75%, which was higher than the fourth quarter 2009 level of 70%.

"First quarter 2010 earnings include $2.6 million of pretax recoveries from third parties of environmental costs incurred and expensed in prior periods, a $1.3 million pretax charge associated with an agreement to withdraw from a multi-employer defined benefit pension plan, and $3.8 million of favorable adjustments to income tax expense.

"Second quarter 2010 net income is forecast to be in the $0.15 to $0.20 per diluted share range. Second quarter 2010 Chlor Alkali segment earnings are expected to more than double compared to the first quarter of 2010 reflecting both improved pricing and improved demand. Segment earnings for Winchester are projected to decline from first quarter levels primarily due to higher commodity costs. Charges to income for environmental and remedial activities are forecast to increase to the $6 million to $8 million range in the second quarter of 2010. This second quarter 2010 forecast for environmental and remedial costs does not include any recovery of costs incurred and expensed in prior periods. The second quarter 2010 forecast includes approximately $2 million of favorable adjustments to income tax expense."

SEGMENT REPORTING

We define segment earnings as income (loss) before interest expense, interest income, other operating 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 first quarter of 2010 were $230.6 million compared to $267.7 million in the first quarter of 2009. First quarter 2010 chlorine and caustic soda volumes increased 20% compared to the first quarter 2009 levels. Volumes for potassium hydroxide more than tripled in the first quarter of 2010 primarily reflecting a raw material supply disruption that impacted first quarter 2009 volumes. Bleach volumes increased 12% during the first quarter of 2010 compared to the first quarter of 2009, while volumes for hydrochloric acid declined 23% compared to first quarter 2009 levels. ECU netbacks in the first quarter of 2010 decreased by 42% compared to the first quarter of 2009. Freight costs included in the ECU netbacks decreased 6% in the first quarter of 2010 compared to the first quarter of 2009, which reflects the benefits of increased pipeline shipments associated with the restart of the St. Gabriel, Louisiana facility. First quarter 2010 Chlor Alkali segment earnings were $10.6 million compared to $68.7 million in the first quarter of 2009, due to lower prices, which more than offset higher volumes and lower bad debt expenses.

WINCHESTER

Winchester first quarter 2010 sales were $131.4 million compared to $132.9 million in the first quarter of 2009. This decrease primarily reflects lower sales volumes. Commercial sales decreased during the quarter which more than offset increases in military, law enforcement and industrial sales. Winchester's first quarter 2010 segment earnings were $19.5 million compared to $17.0 million in the first quarter of 2009. The increase in segment earnings reflects the lower material and bad debt costs, which more than offset lower commercial volumes.

CORPORATE AND OTHER COSTS

Pension income included in the first quarter 2010 Corporate and Other segment was $4.7 million, compared to income of $4.8 million in the first quarter of 2009. First quarter 2010 pension income included a $1.3 million charge associated with an agreement to withdraw the Henderson, Nevada chlor alkali hourly workforce from a multi-employer defined benefit pension plan.

First quarter credits to income for environmental investigatory and remedial activities were $2.0 million in 2010, which includes the $2.6 million of pretax recoveries for costs incurred and expensed in prior periods. Without these recoveries, charges to income for environmental investigatory and remedial activities would have been $0.6 million in the first quarter of 2010 compared to $4.8 million in the first quarter of 2009. These charges relate primarily to remedial and investigatory activities associated with former waste sites and past operations.

Other corporate and unallocated costs in the first quarter of 2010 increased $1.5 million compared to the first quarter of 2009. Stock based compensation costs increased in the first quarter of 2010 compared to the first quarter of 2009 due to higher mark-to-market adjustments.

INCOME TAX EXPENSE

First quarter 2010 income tax expense includes $3.8 million of adjustments from prior periods reflecting a $1.8 million reduction in expense related to the expiration of the statute of limitations in domestic jurisdictions, a $1.6 million reduction in expense related to the release of a valuation allowance associated with foreign tax credits generated by our Canadian operations, and a $0.4 million benefit related to prior years' tax returns.

DIVIDEND

On April 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 June 10, 2010 to shareholders of record at the close of business on May 10, 2010. This is the 334th consecutive dividend to be paid by the Company.

CONFERENCE CALL INFORMATION

The Company's first quarter earnings conference call with securities analysts is scheduled for 11:00 A.M. Eastern Time, Tuesday, April 27. 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 transcript of the conference call will be available on the website in the Investor section later in the day.

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.

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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, 2009, 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;
-- 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;
-- 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;
-- 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;
-- an increase in our indebtedness or higher-than-expected interest rates,
   affecting our ability to generate sufficient cash flow for debt service;
   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 - 09

Olin Corporation
Consolidated Statements of Income (a)

                                                      Three Months Ended
                                                           March 31,
(In millions, except per share amounts)                2010        2009
                                                    ----------- -----------
Sales                                               $     362.0 $     400.6
Operating Expenses:
   Cost of Goods Sold                                     312.5       306.2
   Selling and Administration                              32.1        39.2
Other Operating Income (b)                                  2.3         5.5
                                                    ----------- -----------
   Operating Income                                        19.7        60.7
Earnings of Non-consolidated Affiliates                     2.2        14.8
Interest Expense (c)                                        6.9         1.6
Interest Income                                             0.2         0.5
                                                    ----------- -----------
   Income before Taxes                                     15.2        74.4
Income Tax Provision                                        1.1        27.7
                                                    ----------- -----------
Net Income                                          $      14.1 $      46.7
                                                    ----------- -----------
Net Income Per Common Share:
   Basic                                            $      0.18 $      0.60
   Diluted                                          $      0.18 $      0.60
                                                    ----------- -----------
Dividends Per Common Share                          $      0.20 $      0.20
                                                    ----------- -----------
Average Common Shares Outstanding - Basic                  78.8        77.5
                                                    ----------- -----------
Average Common Shares Outstanding - Diluted                79.4        77.6
                                                    ----------- -----------

(a) Unaudited.
(b) Other operating income for the three months ended March 31, 2010 and
    2009 included $2.0 million and $1.3 million, respectively, of gains on
    the disposal of assets primarily associated with the St. Gabriel, LA
    conversion and expansion project.  Other operating income for the three
    months ended March 31, 2009 also included a $3.7 million gain on the
    sale of land.
(c) Interest expense was reduced by capitalized interest of $0.1 million
    and $2.5 million for the three months ended March 31, 2010 and 2009,
    respectively.





Olin Corporation
Segment Information (a)

(In millions)                                         Three Months Ended
                                                          March 31,
                                                       2010        2009
                                                    ----------  ----------
Sales:
   Chlor Alkali Products                            $    230.6  $    267.7
   Winchester                                            131.4       132.9
                                                    ----------  ----------
      Total Sales                                   $    362.0  $    400.6
                                                    ----------  ----------
Income before Taxes:
   Chlor Alkali Products (b)                        $     10.6  $     68.7
   Winchester                                             19.5        17.0
   Corporate/Other:
      Pension Income (c)                                   4.7         4.8
      Environmental Income (Expense) (d)                   2.0        (4.8)
      Other Corporate and Unallocated Costs              (17.2)      (15.7)
   Other Operating Income (e)                              2.3         5.5
   Interest Expense (f)                                   (6.9)       (1.6)
   Interest Income                                         0.2         0.5
                                                    ----------  ----------
      Income before Taxes                           $     15.2  $     74.4
                                                    ----------  ----------
(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 $2.2 million and $14.8 million for the three months
    ended March 31, 2010 and 2009, 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 March 31, 2010
    included a charge of $1.3 million associated with an agreement to
    withdraw our Henderson, NV chlor alkali hourly workforce from a
    multi-employer defined benefit pension plan.
(d) Environmental income (expense) for the three months ended March 31,
    2010 included $2.6 million of recoveries from third parties for costs
    incurred and expensed in prior periods.
(e) Other operating income for the three months ended March 31, 2010 and
    2009 included $2.0 million and $1.3 million, respectively, of gains on
    the disposal of assets primarily associated with the St. Gabriel, LA
    conversion and expansion project.  Other operating income for the
    three months ended March 31, 2009 also included a $3.7 million gain on
    the sale of land.
(f) Interest expense was reduced by capitalized interest of $0.1 million
    and $2.5 million for the three months ended March 31, 2010 and 2009,
    respectively.



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


                                        March 31,  December 31,  March 31,
                                           2010        2009        2009
                                        ----------  ----------  ----------
Assets:
   Cash & Cash Equivalents              $    411.0  $    458.5  $    168.6
   Accounts Receivable, Net                  197.1       183.3       216.4
   Income Taxes Receivable                    19.3        19.4         2.7
   Inventories                               156.4       123.8       166.5
   Current Deferred Income Taxes              50.1        50.5        60.1
   Other Current Assets                       22.3        24.8        11.5
                                        ----------  ----------  ----------
      Total Current Assets                   856.2       860.3       625.8
   Property, Plant and Equipment
    (Less Accumulated Depreciation of
    $1,017.5, $1,001.3 and $970.6)           688.5       695.4       659.4
   Prepaid Pension Costs                      14.5         5.0           -
   Deferred Income Taxes                         -           -        23.5
   Other Assets                               71.8        71.0        83.3
   Goodwill                                  300.3       300.3       301.9
                                        ----------  ----------  ----------
Total Assets                            $  1,931.3  $  1,932.0  $  1,693.9
                                        ----------  ----------  ----------

Liabilities and Shareholders' Equity:
   Accounts Payable                     $    121.1  $    117.8  $    124.2
   Accrued Liabilities                       192.4       193.1       202.6
                                        ----------  ----------  ----------
      Total Current Liabilities              313.5       310.9       326.8
   Long-Term Debt                            397.1       398.4       253.4
   Accrued Pension Liability                  55.7        56.6        43.3
   Deferred Income Taxes                      26.6        25.8         6.0
   Other Liabilities                         316.4       318.0       304.3
                                        ----------  ----------  ----------
      Total Liabilities                    1,109.3     1,109.7       933.8
                                        ----------  ----------  ----------
Commitments and Contingencies
Shareholders' Equity:
      Common Stock, Par Value $1 Per
       Share, Authorized 120.0 Shares:
       Issued and Outstanding 78.9
       Shares (78.7 and 77.9 in 2009)         78.9        78.7        77.9
      Additional Paid-In Capital             826.8       823.1       809.3
      Accumulated Other Comprehensive
       Loss                                 (250.7)     (248.2)     (253.8)
      Retained Earnings                      167.0       168.7       126.7
                                        ----------  ----------  ----------
      Total Shareholders' Equity             822.0       822.3       760.1
                                        ----------  ----------  ----------
Total Liabilities and Shareholders'
 Equity                                 $  1,931.3  $  1,932.0  $  1,693.9
                                        ----------  ----------  ----------

(a) Unaudited.




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


Three Months Ended March 31,                           2010        2009
                                                    ----------  ----------
Operating Activities:
Net Income                                          $     14.1  $     46.7
Earnings of Non-consolidated Affiliates                   (2.2)      (14.8)
Gains on Disposition of Property, Plant and
 Equipment                                                (2.0)       (5.0)
Stock-Based Compensation                                   1.5         1.1
Depreciation and Amortization                             21.6        16.6
Deferred Income Taxes                                      2.5        21.2
Qualified Pension Plan Contributions                      (2.4)       (1.0)
Qualified Pension Plan Income                             (6.0)       (5.0)
Common Stock Issued Under Employee Benefit Plans           0.3         0.6
Changes in:
   Receivables                                           (13.8)       (3.4)
   Income Taxes Receivable                                 0.1        (3.3)
   Inventories                                           (32.6)      (35.1)
   Other Current Assets                                   (4.4)       (0.6)
   Accounts Payable and Accrued Liabilities                8.8       (46.3)
   Other Assets                                           (0.1)          -
   Other Noncurrent Liabilities                            0.4         0.8
Other Operating Activities                                (0.2)        0.2
                                                    ----------  ----------
   Net Operating Activities                              (14.4)      (27.3)
                                                    ----------  ----------
Investing Activities:
Capital Expenditures                                     (21.4)      (49.8)
Proceeds from Disposition of Property, Plant and
 Equipment                                                 2.5         5.5
(Advances to) Distributions from Affiliated
 Companies, Net                                           (0.2)        1.4
Other Investing Activities                                (0.4)       (0.3)
                                                    ----------  ----------
   Net Investing Activities                              (19.5)      (43.2)
                                                    ----------  ----------
Financing Activities:
Long Term Debt Borrowings                                    -         1.5
Issuance of Common Stock                                   2.2         6.6
Dividends Paid                                           (15.8)      (15.5)
                                                    ----------  ----------
   Net Financing Activities                              (13.6)       (7.4)
                                                    ----------  ----------
Net Decrease in Cash and Cash Equivalents                (47.5)      (77.9)
Cash and Cash Equivalents, Beginning of Year             458.5       246.5
                                                    ----------  ----------
Cash and Cash Equivalents, End of Period            $    411.0  $    168.6
                                                    ==========  ==========

(a) Unaudited.

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