|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Virginia
|
13-1872319
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
190
Carondelet Plaza, Suite 1530, Clayton, MO
|
63105-3443
|
(Address
of principal executive offices)
|
(Zip
Code)
|
March
31,
2009
|
December
31,
2008
|
March
31,
2008
|
||||||||||
ASSETS
|
||||||||||||
Current
Assets:
|
||||||||||||
Cash
and Cash Equivalents
|
$
|
168.6
|
$
|
246.5
|
$
|
249.9
|
||||||
Short-Term
Investments
|
―
|
—
|
26.1
|
|||||||||
Receivables,
Net
|
216.4
|
213.0
|
229.7
|
|||||||||
Inventories
|
166.5
|
131.4
|
130.2
|
|||||||||
Current
Deferred Income Taxes
|
62.8
|
68.5
|
64.2
|
|||||||||
Other
Current Assets
|
11.5
|
10.9
|
22.7
|
|||||||||
Total
Current Assets
|
625.8
|
670.3
|
722.8
|
|||||||||
Property,
Plant and Equipment (less Accumulated Depreciation of $970.6, $956.0 and
$929.4)
|
659.4
|
629.9
|
518.2
|
|||||||||
Prepaid
Pension Costs
|
―
|
—
|
147.8
|
|||||||||
Deferred
Income Taxes
|
23.5
|
46.8
|
―
|
|||||||||
Other
Assets
|
83.3
|
70.8
|
71.3
|
|||||||||
Goodwill
|
301.9
|
301.9
|
301.9
|
|||||||||
Total
Assets
|
$
|
1,693.9
|
$
|
1,719.7
|
$
|
1,762.0
|
||||||
LIABILITIES AND SHAREHOLDERS’
EQUITY
|
||||||||||||
Current
Liabilities:
|
||||||||||||
Accounts
Payable
|
$
|
124.2
|
$
|
145.6
|
$
|
167.9
|
||||||
Income
Taxes Payable
|
―
|
0.6
|
7.4
|
|||||||||
Accrued
Liabilities
|
202.6
|
253.6
|
222.5
|
|||||||||
Total
Current Liabilities
|
326.8
|
399.8
|
397.8
|
|||||||||
Long-Term
Debt
|
253.4
|
252.4
|
252.7
|
|||||||||
Accrued
Pension Liability
|
43.3
|
51.5
|
50.9
|
|||||||||
Deferred
Income Taxes
|
6.0
|
6.5
|
29.0
|
|||||||||
Other
Liabilities
|
304.3
|
304.5
|
332.7
|
|||||||||
Total
Liabilities
|
933.8
|
1,014.7
|
1,063.1
|
|||||||||
Commitments
and Contingencies
|
||||||||||||
Shareholders’
Equity:
|
||||||||||||
Common
Stock, Par Value $1 Per Share: Authorized, 120.0
Shares;
|
||||||||||||
Issued
and Outstanding 77.9, 77.3 and 74.7 Shares
|
77.9
|
77.3
|
74.7
|
|||||||||
Additional
Paid-In Capital
|
809.3
|
801.6
|
747.8
|
|||||||||
Accumulated
Other Comprehensive Loss
|
(253.8
|
)
|
(269.4
|
)
|
(144.4
|
)
|
||||||
Retained
Earnings
|
126.7
|
95.5
|
20.8
|
|||||||||
Total
Shareholders’ Equity
|
760.1
|
705.0
|
698.9
|
|||||||||
Total
Liabilities and Shareholders’ Equity
|
$
|
1,693.9
|
$
|
1,719.7
|
$
|
1,762.0
|
Three Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
Sales
|
$
|
400.6
|
$
|
399.1
|
||||
Operating
Expenses:
|
||||||||
Cost
of Goods Sold
|
306.2
|
314.0
|
||||||
Selling
and Administration
|
39.2
|
33.3
|
||||||
Other
Operating Income
|
5.5
|
0.6
|
||||||
Operating
Income
|
60.7
|
52.4
|
||||||
Earnings
of Non-consolidated Affiliates
|
14.8
|
8.1
|
||||||
Interest
Expense
|
1.6
|
4.5
|
||||||
Interest
Income
|
0.5
|
2.8
|
||||||
Other
Income
|
―
|
0.1
|
||||||
Income
before Taxes
|
74.4
|
58.9
|
||||||
Income
Tax Provision
|
27.7
|
21.6
|
||||||
Net
Income
|
$
|
46.7
|
$
|
37.3
|
||||
Net
Income per Common Share:
|
||||||||
Basic
|
$
|
0.60
|
$
|
0.50
|
||||
Diluted
|
$
|
0.60
|
$
|
0.50
|
||||
Dividends
per Common Share
|
$
|
0.20
|
$
|
0.20
|
||||
Average
Common Shares Outstanding:
|
||||||||
Basic
|
77.5
|
74.6
|
||||||
Diluted
|
77.6
|
75.0
|
Common
Stock
|
||||||||||||||||||||||||
Shares
Issued
|
Par
Value
|
Additional
Paid-In
Capital
|
Accumulated
Other
Comprehensive
Loss
|
Retained
Earnings
(Accumulated
Deficit)
|
Total
Shareholders’
Equity
|
|||||||||||||||||||
Balance
at January 1, 2008
|
74.5
|
$
|
74.5
|
$
|
742.0
|
$
|
(151.2
|
)
|
$
|
(1.6
|
)
|
$
|
663.7
|
|||||||||||
Comprehensive
Income:
|
||||||||||||||||||||||||
Net
Income
|
—
|
—
|
—
|
—
|
37.3
|
37.3
|
||||||||||||||||||
Translation
Adjustment
|
—
|
—
|
—
|
1.1
|
—
|
1.1
|
||||||||||||||||||
Net
Unrealized Gain
|
—
|
—
|
—
|
3.4
|
—
|
3.4
|
||||||||||||||||||
Amortization
of Prior Service Costs and Actuarial Losses, Net
|
—
|
—
|
—
|
2.3
|
—
|
2.3
|
||||||||||||||||||
Comprehensive
Income
|
44.1
|
|||||||||||||||||||||||
Dividends
Paid:
|
||||||||||||||||||||||||
Common
Stock ($0.20 per share)
|
—
|
—
|
—
|
—
|
(14.9
|
)
|
(14.9
|
)
|
||||||||||||||||
Common
Stock Issued for:
|
||||||||||||||||||||||||
Stock
Options Exercised
|
—
|
—
|
0.2
|
—
|
—
|
0.2
|
||||||||||||||||||
Employee
Benefit Plans
|
0.2
|
0.2
|
3.9
|
—
|
—
|
4.1
|
||||||||||||||||||
Other
Transactions
|
—
|
—
|
0.2
|
—
|
—
|
0.2
|
||||||||||||||||||
Stock-Based
Compensation
|
—
|
—
|
1.5
|
—
|
—
|
1.5
|
||||||||||||||||||
Balance
at March 31, 2008
|
74.7
|
$
|
74.7
|
$
|
747.8
|
$
|
(144.4
|
)
|
$
|
20.8
|
$
|
698.9
|
||||||||||||
Balance
at January 1, 2009
|
77.3
|
$
|
77.3
|
$
|
801.6
|
$
|
(269.4
|
)
|
$
|
95.5
|
$
|
705.0
|
||||||||||||
Comprehensive
Income:
|
||||||||||||||||||||||||
Net
Income
|
—
|
—
|
—
|
—
|
46.7
|
46.7
|
||||||||||||||||||
Translation
Adjustment
|
—
|
—
|
—
|
(0.3
|
)
|
—
|
(0.3
|
)
|
||||||||||||||||
Net
Unrealized Gain
|
—
|
—
|
—
|
13.9
|
—
|
13.9
|
||||||||||||||||||
Amortization
of Prior Service Costs and Actuarial Losses, Net
|
—
|
—
|
—
|
2.0
|
—
|
2.0
|
||||||||||||||||||
Comprehensive
Income
|
62.3
|
|||||||||||||||||||||||
Dividends
Paid:
|
||||||||||||||||||||||||
Common
Stock ($0.20 per share)
|
—
|
—
|
—
|
—
|
(15.5
|
)
|
(15.5
|
)
|
||||||||||||||||
Common
Stock Issued for:
|
||||||||||||||||||||||||
Employee
Benefit Plans
|
0.6
|
0.6
|
6.6
|
—
|
—
|
7.2
|
||||||||||||||||||
Other
Transactions
|
―
|
―
|
0.3
|
—
|
—
|
0.3
|
||||||||||||||||||
Stock-Based
Compensation
|
—
|
—
|
0.8
|
—
|
—
|
0.8
|
||||||||||||||||||
Balance
at March 31, 2009
|
77.9
|
$
|
77.9
|
$
|
809.3
|
$
|
(253.8
|
)
|
$
|
126.7
|
$
|
760.1
|
Three Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
Operating Activities
|
||||||||
Net
Income
|
$
|
46.7
|
$
|
37.3
|
||||
Adjustments
to Reconcile Net Income to Net Cash and Cash Equivalents Used for
Operating Activities:
|
||||||||
Earnings
of Non-consolidated Affiliates
|
(14.8
|
)
|
(8.1
|
)
|
||||
Other
Operating Income – Gains on Disposition of Property, Plant and
Equipment
|
(5.0
|
)
|
(0.2
|
)
|
||||
Stock-Based
Compensation
|
1.1
|
1.6
|
||||||
Depreciation
and Amortization
|
16.6
|
17.3
|
||||||
Deferred
Income Taxes
|
21.2
|
2.5
|
||||||
Qualified
Pension Plan Contribution
|
(1.0
|
)
|
—
|
|||||
Qualified
Pension Plan Income
|
(5.0
|
)
|
(4.0
|
)
|
||||
Common
Stock Issued under Employee Benefit Plans
|
0.6
|
1.2
|
||||||
Change
in:
|
||||||||
Receivables
|
(3.4
|
)
|
(27.7
|
)
|
||||
Inventories
|
(35.1
|
)
|
(23.5
|
)
|
||||
Other
Current Assets
|
(0.6
|
)
|
(8.0
|
)
|
||||
Accounts
Payable and Accrued Liabilities
|
(46.3
|
)
|
(9.8
|
)
|
||||
Income
Taxes Payable
|
(3.3
|
)
|
6.8
|
|||||
Other
Assets
|
―
|
0.7
|
||||||
Other
Noncurrent Liabilities
|
0.8
|
4.3
|
||||||
Other
Operating Activities
|
0.2
|
―
|
||||||
Net
Operating Activities
|
(27.3
|
)
|
(9.6
|
)
|
||||
Investing Activities
|
||||||||
Capital
Expenditures
|
(49.8
|
)
|
(23.1
|
)
|
||||
Proceeds
from Disposition of Property, Plant and Equipment
|
5.5
|
0.2
|
||||||
Distributions
from (Advances to) Affiliated Companies, Net
|
1.4
|
(3.1
|
)
|
|||||
Other
Investing Activities
|
(0.3
|
)
|
1.1
|
|||||
Net
Investing Activities
|
(43.2
|
)
|
(24.9
|
)
|
||||
Financing Activities
|
||||||||
Long-Term
Debt:
|
||||||||
Borrowings
|
1.5
|
—
|
||||||
Repayments
|
―
|
(9.8
|
)
|
|||||
Issuance
of Common Stock
|
6.6
|
2.9
|
||||||
Stock
Options Exercised
|
―
|
0.1
|
||||||
Excess
Tax Benefits from Stock Options Exercised
|
―
|
0.1
|
||||||
Dividends
Paid
|
(15.5
|
)
|
(14.9
|
)
|
||||
Net
Financing Activities
|
(7.4
|
)
|
(21.6
|
)
|
||||
Net
Decrease in Cash and Cash Equivalents
|
(77.9
|
)
|
(56.1
|
)
|
||||
Cash
and Cash Equivalents, Beginning of Period
|
246.5
|
306.0
|
||||||
Cash
and Cash Equivalents, End of Period
|
$
|
168.6
|
$
|
249.9
|
||||
Cash
Paid for Interest and Income Taxes:
|
||||||||
Interest
|
$
|
0.2
|
$
|
0.5
|
||||
Income
Taxes, Net of Refunds
|
$
|
9.3
|
$
|
8.7
|
||||
Non-Cash
Investing Activities:
|
||||||||
Capital
Expenditures included in Accounts Payable and Accrued
Liabilities
|
$
|
12.8
|
$
|
7.9
|
Three
Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
($
in millions)
|
||||||||
Balance
at beginning of year
|
$
|
5.0
|
$
|
3.0
|
||||
Provisions
charged (credited)
|
4.7
|
(0.2
|
)
|
|||||
Write-offs,
net of recoveries
|
(2.7
|
)
|
0.1
|
|||||
Balance
at end of period
|
$
|
7.0
|
$
|
2.9
|
March
31,
2009
|
December 31,
2008
|
March
31,
2008
|
||||||||||
($
in millions)
|
||||||||||||
Supplies
|
$
|
26.7
|
$
|
27.2
|
$
|
25.5
|
||||||
Raw
materials
|
77.6
|
56.4
|
42.4
|
|||||||||
Work
in process
|
27.8
|
26.6
|
27.4
|
|||||||||
Finished
goods
|
117.4
|
90.7
|
98.4
|
|||||||||
249.5
|
200.9
|
193.7
|
||||||||||
LIFO
reserve
|
(83.0
|
)
|
(69.5
|
)
|
(63.5
|
)
|
||||||
Inventories,
net
|
$
|
166.5
|
$
|
131.4
|
$
|
130.2
|
EARNINGS
PER SHARE
|
Three
Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
Computation of Basic Income per
Share
|
($
and shares in millions, except per share data)
|
|||||||
Net
income
|
$
|
46.7
|
$
|
37.3
|
||||
Basic
shares
|
77.5
|
74.6
|
||||||
Basic
net income per share
|
$
|
0.60
|
$
|
0.50
|
||||
Computation of Diluted Income per
Share
|
||||||||
Net
Income
|
$
|
46.7
|
$
|
37.3
|
||||
Diluted
shares:
|
||||||||
Basic
shares
|
77.5
|
74.6
|
||||||
Stock-based
compensation
|
0.1
|
0.4
|
||||||
Diluted
shares
|
77.6
|
75.0
|
||||||
Diluted
net income per share
|
$
|
0.60
|
$
|
0.50
|
ENVIRONMENTAL
|
SHAREHOLDERS’
EQUITY
|
Foreign
Currency Translation Adjustment
|
Unrealized
Gains (Losses) on Derivative Contracts
(net
of taxes)
|
Unrealized
Losses on Marketable Securities
(net
of taxes)
|
Amortization
of Prior Service Costs and Actuarial Losses (net of taxes)
|
Accumulated
Other Comprehensive Loss
|
||||||||||||||||
($
in millions)
|
||||||||||||||||||||
Balance
at January 1, 2008
|
$
|
(1.2
|
)
|
$
|
1.0
|
$
|
―
|
$
|
(151.0
|
)
|
$
|
(151.2
|
)
|
|||||||
Unrealized
gains (losses)
|
1.1
|
5.9
|
(0.3
|
)
|
2.3
|
9.0
|
||||||||||||||
Gains
reclassified into income
|
―
|
(2.2
|
)
|
―
|
―
|
(2.2
|
)
|
|||||||||||||
Balance
at March 31, 2008
|
$
|
(0.1
|
)
|
$
|
4.7
|
$
|
(0.3
|
)
|
$
|
(148.7
|
)
|
$
|
(144.4
|
)
|
||||||
Balance
at January 1, 2009
|
$
|
(5.1
|
)
|
$
|
(25.0
|
)
|
$
|
―
|
$
|
(239.3
|
)
|
$
|
(269.4
|
)
|
||||||
Unrealized
gains (losses)
|
(0.3
|
)
|
4.7
|
―
|
2.0
|
6.4
|
||||||||||||||
Losses
reclassified into income
|
―
|
9.2
|
―
|
―
|
9.2
|
|||||||||||||||
Balance
at March 31, 2009
|
$
|
(5.4
|
)
|
$
|
(11.1
|
)
|
$
|
―
|
$
|
(237.3
|
)
|
$
|
(253.8
|
)
|
SEGMENT
INFORMATION
|
Three
Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
Sales:
|
($
in millions)
|
|||||||
Chlor
Alkali Products
|
$
|
267.7
|
$
|
288.3
|
||||
Winchester
|
132.9
|
110.8
|
||||||
Total
sales
|
$
|
400.6
|
$
|
399.1
|
||||
Income
before taxes:
|
||||||||
Chlor
Alkali Products
(1)
|
$
|
68.7
|
$
|
67.0
|
||||
Winchester
|
17.0
|
10.0
|
||||||
Corporate/Other:
|
||||||||
Pension
income
(2)
|
4.8
|
4.5
|
||||||
Environmental
provision
|
(4.8
|
)
|
(5.1
|
)
|
||||
Other
corporate and unallocated costs
|
(15.7
|
)
|
(16.5
|
)
|
||||
Other
operating income
(3)
|
5.5
|
0.6
|
||||||
Interest
expense
|
(1.6
|
)
|
(4.5
|
)
|
||||
Interest
income
|
0.5
|
2.8
|
||||||
Other
income
|
―
|
0.1
|
||||||
Income
before taxes
|
$
|
74.4
|
$
|
58.9
|
(1)
|
Earnings
of non-consolidated affiliates were included in the Chlor Alkali Products
segment results consistent with management’s monitoring of the operating
segments. The earnings from non-consolidated affiliates were $14.8 million
and $8.1 million for the three months ended March 31, 2009 and 2008,
respectively.
|
|
|
(2)
|
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.
|
(3)
|
Other
Operating Income for the three months ended March 31, 2009 included a $3.7
million gain on the sale of land and $1.3 million of gains on the disposal
of assets primarily associated with the ongoing St. Gabriel, LA facility
conversion and expansion project.
|
STOCK-BASED
COMPENSATION
|
Grant
date
|
2009
|
2008
|
||||||
Dividend
yield
|
4.26
|
%
|
4.34
|
%
|
||||
Risk-free
interest rate
|
2.32
|
%
|
3.21
|
%
|
||||
Expected
volatility
|
40
|
%
|
32
|
%
|
||||
Expected
life (years)
|
7.0
|
7.0
|
||||||
Grant
fair value (per option)
|
$
|
3.85
|
$
|
4.52
|
||||
Exercise
price
|
$
|
14.28
|
$
|
20.29
|
INVESTMENTS
– AFFILIATED COMPANIES
|
100%
Basis
|
March
31,
2009
|
December
31,
2008
|
March
31,
2008
|
|||||||||
Condensed
Balance Sheet Data:
|
($
in millions)
|
|||||||||||
Current
assets
|
$
|
50.3
|
$
|
22.4
|
$
|
46.2
|
||||||
Noncurrent
assets
|
105.2
|
107.7
|
111.7
|
|||||||||
Current
liabilities
|
21.5
|
19.7
|
27.2
|
|||||||||
Noncurrent
liabilities
|
97.5
|
97.5
|
109.7
|
Three
Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
Condensed
Income Statement Data:
|
($
in millions)
|
|||||||
Sales
|
$
|
52.5
|
$
|
42.2
|
||||
Gross
profit
|
30.5
|
19.9
|
||||||
Net
income
|
25.6
|
14.4
|
March
31, 2009
|
December
31, 2008
|
March
31, 2008
|
||||||||||
($
in millions)
|
||||||||||||
SunBelt
|
$
|
8.8
|
$
|
(3.7
|
)
|
$
|
0.9
|
|||||
Bay
Gas
|
11.0
|
10.7
|
6.2
|
|||||||||
Bleach
joint venture
|
12.5
|
12.0
|
11.3
|
|||||||||
Investments
in equity affiliates
|
$
|
32.3
|
$
|
19.0
|
$
|
18.4
|
Three
Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
($
in millions)
|
||||||||
SunBelt
|
$
|
13.6
|
$
|
8.2
|
||||
Bay
Gas
|
0.4
|
0.2
|
||||||
Bleach
joint venture
|
0.8
|
(0.3
|
)
|
|||||
Equity
earnings of non-consolidated affiliates
|
$
|
14.8
|
$
|
8.1
|
PENSION
PLANS AND RETIREMENT BENEFITS
|
Pension
Benefits
|
Other Postretirement
Benefits
|
|||||||||||||||
Three Months Ended
March
31,
|
Three Months Ended
March
31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Components
of Net Periodic Benefit (Income) Cost
|
($
in millions)
|
($
in millions)
|
||||||||||||||
Service
cost
|
$
|
1.5
|
$
|
1.7
|
$
|
0.4
|
$
|
0.4
|
||||||||
Interest
cost
|
25.3
|
25.1
|
1.0
|
1.1
|
||||||||||||
Expected
return on plans’ assets
|
(33.2
|
)
|
(32.7
|
)
|
―
|
—
|
||||||||||
Amortization
of prior service cost
|
0.1
|
0.4
|
(0.1
|
)
|
—
|
|||||||||||
Recognized
actuarial loss
|
2.4
|
2.5
|
0.7
|
0.7
|
||||||||||||
Net
periodic benefit (income) cost
|
$
|
(3.9
|
)
|
$
|
(3.0
|
)
|
$
|
2.0
|
$
|
2.2
|
INCOME
TAXES
|
March
31, 2009
|
||||
($
in millions)
|
||||
Balance
at beginning of year
|
$
|
50.2
|
||
Decrease
for prior year tax positions
|
(0.1
|
)
|
||
Balance
at end of period
|
$
|
50.1
|
March
31, 2009
|
December
31, 2008
|
March
31, 2008
|
||||||||||
($
in millions)
|
||||||||||||
Copper
|
$
|
41.0
|
$
|
49.8
|
$
|
27.2
|
||||||
Zinc
|
3.5
|
5.4
|
4.6
|
|||||||||
Lead
|
17.4
|
26.8
|
38.1
|
|||||||||
Natural
gas
|
6.2
|
2.0
|
0.4
|
Asset
Derivatives
|
Liability
Derivatives
|
|||||||||||||||||||||||||
Fair
Value
|
Fair
Value
|
|||||||||||||||||||||||||
($
in millions)
|
($
in millions)
|
|||||||||||||||||||||||||
Balance
Sheet
Location
|
March
31, 2009
|
December
31, 2008
|
March
31, 2008
|
Balance
Sheet
Location
|
March
31, 2009
|
December
31, 2008
|
March
31, 2008
|
|||||||||||||||||||
Interest
rate contracts
|
Other
assets
|
$
|
2.7
|
$
|
11.3
|
$
|
10.0
|
Long-term
debt
|
$
|
10.8
|
$
|
11.3
|
$
|
10.0
|
||||||||||||
Commodity
contracts
|
Other
current assets
|
―
|
―
|
8.2
|
Accrued
liabilities
|
18.6
|
40.9
|
1.4
|
||||||||||||||||||
$
|
2.7
|
$
|
11.3
|
$
|
18.2
|
$
|
29.4
|
$
|
52.2
|
$
|
11.4
|
Asset
Derivatives
|
Liability
Derivatives
|
|||||||||||||||||||||||||
Fair
Value
|
Fair
Value
|
|||||||||||||||||||||||||
Balance
Sheet
Location
|
March
31, 2009
|
December
31, 2008
|
March
31, 2008
|
Balance
Sheet
Location
|
March
31, 2009
|
December
31, 2008
|
March
31, 2008
|
|||||||||||||||||||
($
in millions)
|
($
in millions)
|
|||||||||||||||||||||||||
Interest
rate contracts
|
Other
assets
|
$
|
8.5
|
$
|
―
|
$
|
―
|
Other
liabilities
|
$
|
0.3
|
$
|
―
|
$
|
―
|
||||||||||||
Commodity
contracts
|
Other
current assets
|
|
―
|
|
―
|
|
0.3
|
Accrued
liabilities
|
―
|
―
|
―
|
|||||||||||||||
Foreign
currency contracts
|
Other
current assets
|
―
|
―
|
―
|
Accrued
liabilities
|
―
|
―
|
0.2
|
||||||||||||||||||
$
|
8.5
|
$
|
―
|
$
|
0.3
|
$
|
0.3
|
$
|
―
|
$
|
0.2
|
|||||||||||||||
Total
Derivatives
(1)
|
$
|
11.2
|
$
|
11.3
|
$
|
18.5
|
$
|
29.7
|
$
|
52.2
|
$
|
11.6
|
Amount
of Gain (Loss)
|
|||||||||
Three
Months Ended March 31,
|
|||||||||
Location
of Gain (Loss)
|
2009
|
2008
|
|||||||
Derivatives
– Cash Flow Hedges
|
($
in millions)
|
||||||||
Recognized
in Other Comprehensive Loss (Effective Portion)
|
———
|
$
|
7.7
|
$
|
9.7
|
||||
Reclassified
from Accumulated Other Comprehensive Loss into Income (Effective
Portion)
|
Cost
of Goods Sold
|
$
|
(15.1
|
)
|
$
|
3.6
|
|||
Recognized
in Income (Ineffective Portion)
|
Cost
of Goods Sold
|
(0.4
|
)
|
(0.2
|
)
|
||||
$
|
(15.5
|
)
|
$
|
3.4
|
|||||
Derivatives
– Fair Value Hedges
|
|||||||||
Interest
rate contracts
|
Interest
Expense
|
$
|
0.9
|
$
|
0.3
|
||||
$
|
0.9
|
$
|
0.3
|
||||||
Derivatives
Not Designated as Hedging Instruments
|
|||||||||
Interest
rate contracts
|
Interest
Expense
|
$
|
0.1
|
$
|
―
|
||||
Foreign
currency contracts
|
Selling
and Administration
|
―
|
(0.6
|
)
|
|||||
$
|
0.1
|
$
|
(0.6
|
)
|
Fair
Value Measurements
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
($
in millions)
|
|||||||||||||||
Interest
rate swaps
|
$ | — | $ | 11.2 | $ | — | $ | 11.2 | ||||||||
Liabilities
|
||||||||||||||||
Interest
rate swaps
|
$ | — | $ | 11.1 | $ | — | $ | 11.1 | ||||||||
Commodity
forward contracts
|
6.6 | 12.0 | — | 18.6 |
Three
Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
($
in millions, except per share data)
|
||||||||
Sales
|
$
|
400.6
|
$
|
399.1
|
||||
Cost
of Goods Sold
|
306.2
|
314.0
|
||||||
Gross
Margin
|
94.4
|
85.1
|
||||||
Selling
and Administration
|
39.2
|
33.3
|
||||||
Other
Operating Income
|
5.5
|
0.6
|
||||||
Operating
Income
|
60.7
|
52.4
|
||||||
Earnings
of Non-consolidated Affiliates
|
14.8
|
8.1
|
||||||
Interest
Expense
|
1.6
|
4.5
|
||||||
Interest
Income
|
0.5
|
2.8
|
||||||
Other
Income
|
―
|
0.1
|
||||||
Income
before Taxes
|
74.4
|
58.9
|
||||||
Income
Tax Provision
|
27.7
|
21.6
|
||||||
Net
Income
|
$
|
46.7
|
$
|
37.3
|
||||
Net
Income per Common Share:
|
||||||||
Basic
|
$
|
0.60
|
$
|
0.50
|
||||
Diluted
|
$
|
0.60
|
$
|
0.50
|
Three
Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
Sales:
|
($
in millions)
|
|||||||
Chlor
Alkali Products
|
$
|
267.7
|
$
|
288.3
|
||||
Winchester
|
132.9
|
110.8
|
||||||
Total
sales
|
$
|
400.6
|
$
|
399.1
|
||||
Income
before taxes:
|
||||||||
Chlor
Alkali Products
(1)
|
$
|
68.7
|
$
|
67.0
|
||||
Winchester
|
17.0
|
10.0
|
||||||
Corporate/Other:
|
||||||||
Pension
income
(2)
|
4.8
|
4.5
|
||||||
Environmental
provision
|
(4.8
|
)
|
(5.1
|
)
|
||||
Other
corporate and unallocated costs
|
(15.7
|
)
|
(16.5
|
)
|
||||
Other
operating income
(3)
|
5.5
|
0.6
|
||||||
Interest
expense
|
(1.6
|
)
|
(4.5
|
)
|
||||
Interest
income
|
0.5
|
2.8
|
||||||
Other
income
|
―
|
0.1
|
||||||
Income
before taxes
|
$
|
74.4
|
$
|
58.9
|
(1)
|
Earnings
of non-consolidated affiliates were included in the Chlor Alkali Products
segment results consistent with management’s monitoring of the operating
segments. The earnings from non-consolidated affiliates were $14.8 million
and $8.1 million for the three months ended March 31, 2009 and 2008,
respectively.
|
(2)
|
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.
|
(3)
|
Other
operating income for the three months ended March 31, 2009 included a $3.7
million gain on the sale of land and $1.3 million of gains on the disposal
of assets primarily associated with the ongoing St. Gabriel, LA facility
conversion and expansion project.
|
March
31,
|
||||||||
2009
|
2008
|
|||||||
Reserve
for Environmental Liabilities:
|
($
in millions)
|
|||||||
Balance
at Beginning of Year
|
$
|
158.9
|
$
|
155.6
|
||||
Charges
to Income
|
4.8
|
5.1
|
||||||
Remedial
and Investigatory Spending
|
(3.3
|
)
|
(5.9
|
)
|
||||
Currency
Translation Adjustments
|
(0.3
|
)
|
(0.4
|
)
|
||||
Balance
at End of Period
|
$
|
160.1
|
$
|
154.4
|
Three Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
Used
For
|
($
in millions)
|
|||||||
Net
operating activities
|
$
|
(27.3
|
)
|
$
|
(9.6
|
)
|
||
Capital
expenditures
|
(49.8
|
)
|
(23.1
|
)
|
||||
Net
investing activities
|
(43.2
|
)
|
(24.9
|
)
|
||||
Net
financing activities
|
(7.4
|
)
|
(21.6
|
)
|
Underlying
Debt Instrument
|
Swap
Amount
|
Date of Swap
|
March
31, 2009
|
||||||
($ in millions)
|
|||||||||
Olin Pays
Floating Rate
:
|
|||||||||
9.125%,
due 2011
|
$ | 50.0 |
December
2001
|
5.79%
|
|||||
9.125%,
due 2011
|
$ | 25.0 |
March
2002
|
4.0-5.0%
(a)
|
|||||
Industrial
development and environmental improvement obligations at fixed interest
rates of 6.625% to 6.75%, due 2016-2017
|
$ | 21.1 |
March
2002
|
4.09%
|
|||||
5.5 |
March
2002
|
4.23%
|
|||||||
Olin Receives
Floating Rate
:
|
|||||||||
9.125%,
due 2011
|
$ | 75.0 |
January
2009
|
9.22%
|
|
•
|
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;
|
|
•
|
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;
and
|
|
•
|
adverse
conditions in the credit and capital markets, limiting or preventing our
ability to borrow or raise capital.
|
Period
|
Total Number of
Shares (or Units)
Pu
r
chased
(1)
|
Average Price
Paid per Share
(or
Unit)
|
Total Number of
Shares (or Units)
Purchased as
Part of
Publicly
Announced
Plans
or Programs
|
Maximum
Number of
Shares
(or Units) that
May Yet Be
Purchased
Under the Plans or
Programs
|
|||||||||
January
1-31, 2009
|
—
|
N/A
|
—
|
||||||||||
February
1-28, 2009
|
—
|
N/A
|
—
|
||||||||||
March
1-31, 2009
|
—
|
N/A
|
—
|
||||||||||
Total
|
154,076
|
(1)
|
(1)
|
On
April 30, 1998, the issuer announced a share repurchase program
approved by the board of directors for the purchase of up to
5 million shares of common stock. Through March 31, 2009, 4,845,924
shares had been repurchased, and 154,076 shares remain available for
purchase under that program, which has no termination
date.
|
10.1
|
Amendment
to Olin Supplemental Contributing Employee Ownership Plan effective
February 19, 2009
|
10.2
|
Summary
of Stock Option Continuation Policy as of April 2009
|
12
|
Computation
of Ratio of Earnings to Fixed Charges (Unaudited)
|
31.1
|
Section
302 Certification Statement of Chief Executive Officer
|
31.2
|
Section
302 Certification Statement of Chief Financial Officer
|
32
|
Section
906 Certification Statement of Chief Executive Officer and Chief Financial
Officer
|
OLIN
CORPORATION
|
||
(Registrant)
|
||
By:
|
/s/ John E.
Fischer
|
|
Vice President and Chief Financial Officer
(Authorized
Officer)
|
Exhibit
No.
|
Description
|
10.1
|
Amendment
to Olin Supplemental Contributing Employee Ownership Plan effective
February 19, 2009
|
10.2
|
Summary
of Stock Option Continuation Policy as of April 2009
|
12
|
Computation
of Ratio of Earnings to Fixed Charges (Unaudited)
|
31.1
|
Section
302 Certification Statement of Chief Executive Officer
|
31.2
|
Section
302 Certification Statement of Chief Financial Officer
|
32
|
Section
906 Certification Statement of Chief Executive Officer and Chief Financial
Officer
|
1.
|
Section
3.4 is amended by inserting “Subject to Section 3.7,” at the beginning of
the first sentence and second
sentence.
|
2.
|
Section
3.7 shall be added to the Plan as
follows:
|
3.
|
Section
8.9 is amended by inserting “(including the Clawback Policy incorporated
by reference under Section 3.7)” after the first
“Plan”.
|
Plan
Provisions
|
|||||||
Options
|
Performance
Shares
|
Olin’s
General
Extension
Policy
|
|||||
1991
LTIP/2000 LTIP/
2003
LTIP/2006 LTIP/2009 LTIP
/1996
Option Plan
|
1991
LTIP / 2000 LTIP/
2003
LTIP / 2006 LTIP / 2009 LTIP
|
1991
LTIP/ 2000 LTIP /
2003
LTIP / 2006 LTIP/
2009
LTIP /
1996
Option Plan
|
|||||
Termination
by Olin
-
Without cause
-
With cause
-
In sale or shut-down of business or spin-off
|
3
mos. (1)
Immediate
expiration
3
mos. (1)
|
(6)
(7)
(6)
|
|
1 yr.
N/A
2 yrs.
|
|||
Quitting
-
Without consent
-
With consent
|
Immediate
expiration
3
mos. (1)
|
(7)
(6)
|
|
N/A
1 yr.
|
|||
Death
-
While Olin Employee(2)
-
While not an Olin Employee
|
1
yr. (1)
(3)
|
(8)
(7)
|
|
Term of
option
N/A
|
|||
Retires
under Pension Plan (55 or over)
|
3
mos.(1)
|
(8)
|
|
Term
of option
|
|||
Disability
|
1
yr.
|
(8)
|
|
N/A
|
|||
Transfer
to JV
-
Transfer to JV with Consent
-
JV Termination without cause or with JV consent
-
JV Termination with cause or without JV consent
|
3
mos. (1)
(4)
Immediate
expiration
|
(6)
(6)
(7)
|
|
Term of
option
(5)
N/A
|
|||
Transfer
to Sold Business (SB)
-
Transfer to SB with consent
-
SB Termination without cause or with SB consent
-
SB Termination with cause or without SB consent
|
3
mos. (1)
(4)
Immediate
expiration
|
(6)
(6)
(7)
|
|
2 yrs.
(5)
N/A
|
(1)
|
Under
the 2006 LTIP and 2009 LTIP, vested options automatically extend to term
upon retirement, unless the Committee determines otherwise. Under the
terms of the other plans, Olin may extend this period until the expiration
of the option, as specified in the option
agreement.
|
(2)
|
All
unvested options vest automatically upon death of an employee and then all
options may be exercised by the option holder’s executor, administrator,
personal representative or permitted
transferee.
|
(3)
|
Only
options held by a former employee that were exercisable at the time of
death may be exercised for the longer of the period the optionee could
have exercised option had optionee not died or 1 year (which may be
extended but not beyond the term of the option
agreement).
|
(4)
|
Although
not addressed in the respective plan documents, after an employee leaves
Olin to go to a joint venture or a sold business, Olin generally considers
the employee’s termination to be a termination with consent. If the joint
venture or the sold business terminates the employee without cause or the
employee quits without consent, see note
5.
|
(5)
|
The
employee may exercise any exercisable options until the earlier of 2 years
after transfer to the joint venture/sold business or 1 year after
termination from the joint venture/sold business.
|
(6)
|
If
performance award has not vested, Olin will determine the portion, if any,
of the performance share award which will be forfeited and the form of
payment the employee will receive. If the performance shares have vested,
but have not been issued or paid, the employee is entitled to them and the
performance share award will be paid as specified in the performance share
program.
|
(7)
|
If
the performance shares have vested, but have not been issued or paid, the
employee is entitled to them and the performance share award will be paid
as specified in the performance share program. If they have not vested,
then they expire immediately.
|
(8)
|
If
performance share award has not vested, employee will be entitled to a pro
rata performance share award payable in cash. If the performance shares
have vested, but have not been issued or paid, the employee is entitled to
them and the performance share award will be paid as specified in the
performance share program. (Refer to Performance Share Program for
additional details.)
|
N.B.
|
Options
may never extend beyond the original term of the options under an
employee’s option agreement. Except as noted above in Note (2), all
extensions apply only to
exercisable
options; all
unexercisable options expire.
|
Three
Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
Earnings:
|
($
in millions)
|
|||||||
Income
before taxes
|
$
|
74.4
|
$
|
58.9
|
||||
Add
(deduct):
|
||||||||
Equity
in income of non-consolidated affiliates
|
(14.8
|
)
|
(8.1
|
)
|
||||
Dividends
received from non-consolidated affiliates
|
0.4
|
―
|
||||||
Capitalized
interest
|
(2.5
|
)
|
(0.4
|
)
|
||||
Fixed
charges as described below
|
7.2
|
8.0
|
||||||
Total
|
$
|
64.7
|
$
|
58.4
|
||||
Fixed
Charges:
|
||||||||
Interest
expensed and capitalized
|
$
|
4.1
|
$
|
4.9
|
||||
Estimated
interest factor in rent expense
(1)
|
3.1
|
3.1
|
||||||
Total
|
$
|
7.2
|
$
|
8.0
|
||||
Ratio
of earnings to fixed charges
|
9.0
|
7.3
|
Date:
April 28, 2009
|
/s/
Joseph D. Rupp
|
Joseph
D. Rupp
|
|
Chairman,
President and Chief Executive
Officer
|
Date:
April 28, 2009
|
/s/ John E.
Fischer
|
John
E. Fischer
|
|
Vice
President and Chief Financial
Officer
|
/s/ Joseph D.
Rupp
|
Joseph
D. Rupp
|
Chairman,
President and Chief Executive Officer
|
Dated:
April 28, 2009
|
/s/ John E.
Fischer
|
John
E. Fischer
|
Vice
President and Chief Financial Officer
|
Dated:
April 28,
2009
|