Table of Contents

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 June 30, 2017
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 incorporation or organization)
(I.R.S. Employer Identification No.)
190 Carondelet Plaza, Suite 1530, Clayton, MO
63105
(Address of principal executive offices)
(Zip Code)

(314) 480-1400
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   x Accelerated filer   ¨ Non-accelerated filer   ¨ (Do not check if a smaller reporting company)

Smaller reporting company ¨ Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨ No x

As of June 30, 2017 , 166,258,140 shares of the registrant’s common stock were outstanding.

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Table of Contents




TABLE OF CONTENTS
 
 
 
Page
Item 1.
 
 
 
 
 
 
Item 2.
 
 
 
 
 
      Outlook
 
 
 
Item 3.
Item 4.
 
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 
 
 
 
 
 
 
 


2
Table of Contents

Part I — Financial Information

Item 1.  Financial Statements.

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Balance Sheets
(In millions, except per share data)
(Unaudited)

 
June 30, 2017
 
December 31, 2016
 
June 30, 2016
ASSETS
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
184.5

 
$
184.5

 
$
66.6

Receivables, net
782.2

 
675.0

 
790.5

Income taxes receivable
20.9

 
25.5

 
45.8

Inventories
666.2

 
630.4

 
636.2

Other current assets
37.2

 
30.8

 
23.8

Total current assets
1,691.0

 
1,546.2

 
1,562.9

Property, plant and equipment (less accumulated depreciation of $2,117.6, $1,891.6 and $1,681.2)
3,627.4

 
3,704.9

 
3,793.3

Deferred income taxes
125.2

 
119.5

 
107.0

Other assets
625.6

 
644.4

 
588.6

Intangible assets, net
605.6

 
629.6

 
671.2

Goodwill
2,119.5

 
2,118.0

 
2,186.3

Total assets
$
8,794.3

 
$
8,762.6

 
$
8,909.3

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Current installments of long-term debt
$
81.7

 
$
80.5

 
$
80.3

Accounts payable
656.1

 
570.8

 
536.4

Income taxes payable
7.1

 
7.5

 
8.2

Accrued liabilities
261.5

 
263.8

 
293.6

Total current liabilities
1,006.4

 
922.6

 
918.5

Long-term debt
3,518.9

 
3,537.1

 
3,615.5

Accrued pension liability
625.6

 
638.1

 
616.7

Deferred income taxes
1,037.6

 
1,032.5

 
1,079.3

Other liabilities
347.2

 
359.3

 
348.3

Total liabilities
6,535.7

 
6,489.6

 
6,578.3

Commitments and contingencies

 

 

Shareholders’ equity:
 
 
 
 
 
Common stock, par value $1 per share:  authorized, 240.0 shares;
   issued and outstanding, 166.3, 165.4 and 165.2 shares
166.3

 
165.4

 
165.2

Additional paid-in capital
2,262.7

 
2,243.8

 
2,240.3

Accumulated other comprehensive loss
(485.4
)
 
(510.0
)
 
(479.3
)
Retained earnings
315.0

 
373.8

 
404.8

Total shareholders’ equity
2,258.6

 
2,273.0

 
2,331.0

Total liabilities and shareholders’ equity
$
8,794.3

 
$
8,762.6

 
$
8,909.3


The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

3
Table of Contents

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Operations
(In millions, except per share data)
(Unaudited)

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Sales
$
1,526.5

 
$
1,364.0

 
$
3,093.6

 
$
2,712.2

Operating expenses:
 
 
 
 
 
 
 
Cost of goods sold
1,404.1

 
1,236.9

 
2,797.8

 
2,412.3

Selling and administration
80.0

 
79.3

 
168.2

 
167.4

Restructuring charges
8.5

 
8.2

 
16.7

 
101.0

Acquisition-related costs
4.4

 
16.3

 
11.4

 
26.5

Other operating income (expense)
0.3

 
(0.2
)
 
(0.1
)
 
10.7

Operating income
29.8

 
23.1

 
99.4

 
15.7

Earnings of non-consolidated affiliates
0.5

 
0.4

 
1.0

 
0.6

Interest expense
52.5

 
47.6

 
104.9

 
96.1

Interest income
0.4

 
0.5

 
0.6

 
0.8

Loss before taxes
(21.8
)
 
(23.6
)
 
(3.9
)
 
(79.0
)
Income tax benefit
(15.9
)
 
(22.6
)
 
(11.4
)
 
(40.1
)
Net (loss) income
$
(5.9
)
 
$
(1.0
)
 
$
7.5

 
$
(38.9
)
Net (loss) income per common share:
 
 
 
 
 
 
 
Basic
$
(0.04
)
 
$
(0.01
)
 
$
0.05

 
$
(0.24
)
Diluted
$
(0.04
)
 
$
(0.01
)
 
$
0.04

 
$
(0.24
)
Dividends per common share
$
0.20

 
$
0.20

 
$
0.40

 
$
0.40

Average common shares outstanding:
 
 
 
 
 
 
 
Basic
166.1

 
165.2

 
165.8

 
165.1

Diluted
166.1

 
165.2

 
168.0

 
165.1


The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

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Table of Contents

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Comprehensive Income (Loss)
(In millions)
(Unaudited)

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Net (loss) income
$
(5.9
)
 
$
(1.0
)
 
$
7.5

 
$
(38.9
)
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments, net
15.9

 
(10.8
)
 
21.9

 
4.7

Unrealized (losses) gains on derivative contracts, net
(3.7
)
 
(1.8
)
 
(5.7
)
 
1.2

Amortization of prior service costs and actuarial losses, net
4.5

 
3.5

 
8.4

 
7.3

Total other comprehensive income (loss), net of tax
16.7

 
(9.1
)
 
24.6

 
13.2

Comprehensive income (loss)
$
10.8

 
$
(10.1
)
 
$
32.1

 
$
(25.7
)

The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

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Table of Contents

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Shareholders’ Equity
(In millions, except per share data)
(Unaudited)

 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Shareholders’
Equity
 
Shares
Issued
 
Par
Value
Balance at January 1, 2016
165.1

 
$
165.1

 
$
2,236.4

 
$
(492.5
)
 
$
509.8

 
$
2,418.8

Net loss
—

 
—

 
—

 
—

 
(38.9
)
 
(38.9
)
Other comprehensive income
—

 
—

 
—

 
13.2

 
—

 
13.2

Dividends paid:
 
 
 
 
 
 
 
 
 
 
 
Common stock ($0.40 per share)
—

 
—

 
—

 
—

 
(66.1
)
 
(66.1
)
Common stock issued for:
 
 
 
 
 
 
 
 
 
 
 
Stock options exercised
—

 
—

 
0.2

 
—

 
—

 
0.2

Other transactions
0.1

 
0.1

 
0.7

 
—

 
—

 
0.8

Stock-based compensation
—

 
—

 
3.0

 
—

 
—

 
3.0

Balance at June 30, 2016
165.2

 
$
165.2

 
$
2,240.3

 
$
(479.3
)
 
$
404.8

 
$
2,331.0

Balance at January 1, 2017
165.4

 
$
165.4

 
$
2,243.8

 
$
(510.0
)
 
$
373.8

 
$
2,273.0

Net income
—

 
—

 
—

 
—

 
7.5

 
7.5

Other comprehensive income
—

 
—

 
—

 
24.6

 
—

 
24.6

Dividends paid:
 
 
 
 
 
 
 
 
 
 
 
Common stock ($0.40 per share)
—

 
—

 
—

 
—

 
(66.3
)
 
(66.3
)
Common stock issued for:
 
 
 
 
 
 
 
 
 
 
 
Stock options exercised
0.9

 
0.9

 
14.9

 
—

 
—

 
15.8

Other transactions
—

 
—

 
0.6

 
—

 
—

 
0.6

Stock-based compensation
—

 
—

 
3.4

 
—

 
—

 
3.4

Balance at June 30, 2017
166.3

 
$
166.3

 
$
2,262.7

 
$
(485.4
)
 
$
315.0

 
$
2,258.6


The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

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Table of Contents

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Cash Flows
(In millions)
(Unaudited)

 
Six Months Ended
June 30,
 
2017
 
2016
Operating Activities
 
 
 
Net income (loss)
$
7.5

 
$
(38.9
)
Adjustments to reconcile net income (loss) to net cash and cash equivalents provided by (used for) operating activities:
 
 
 
Earnings of non-consolidated affiliates
(1.0
)
 
(0.6
)
Losses on disposition of property, plant and equipment
0.3

 
0.5

Stock-based compensation
4.0

 
3.7

Depreciation and amortization
272.2

 
262.1

Deferred income taxes
(11.6
)
 
(33.2
)
Write-off of equipment and facility included in restructuring charges
—

 
76.6

Qualified pension plan contributions
(0.9
)
 
(0.7
)
Qualified pension plan income
(13.7
)
 
(18.7
)
Change in:
 
 
 
Receivables
(97.9
)
 
(37.4
)
Income taxes receivable/payable
3.3

 
(9.6
)
Inventories
(26.3
)
 
25.8

Other current assets
(10.3
)
 
15.0

Accounts payable and accrued liabilities
99.6

 
(57.0
)
Other assets
5.8

 
(1.1
)
Other noncurrent liabilities
(9.2
)
 
1.6

Other operating activities
5.6

 
(1.9
)
Net operating activities
227.4

 
186.2

Investing Activities
 
 
 
Capital expenditures
(150.9
)
 
(137.4
)
Business acquired in purchase transaction, net of cash acquired
—

 
(69.5
)
Payments under long-term supply contract
—

 
(85.0
)
Proceeds from disposition of property, plant and equipment
0.1

 
0.4

Proceeds from disposition of affiliated companies
—

 
4.4

Net investing activities
(150.8
)
 
(287.1
)
Financing Activities
 
 
 
Long-term debt:
 
 
 
Borrowings
1,875.0

 
—

Repayments
(1,890.1
)
 
(159.0
)
Stock options exercised
15.8

 
0.2

Dividends paid
(66.3
)
 
(66.1
)
Debt issuance costs
(11.2
)
 
—

Net financing activities
(76.8
)
 
(224.9
)
Effect of exchange rate changes on cash and cash equivalents
0.2

 
0.4

Net decrease in cash and cash equivalents
—

 
(325.4
)
Cash and cash equivalents, beginning of period
184.5

 
392.0

Cash and cash equivalents, end of period
$
184.5

 
$
66.6

Cash paid for interest and income taxes:
 
 
 
Interest, net
$
93.3

 
$
102.1

Income taxes, net of refunds
$
5.2

 
$
11.2

Non-cash investing activities:
 
 
 
Capital expenditures included in accounts payable and accrued liabilities
$
24.1

 
$
2.3


The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

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Table of Contents

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Financial Statements
(Unaudited)

DESCRIPTION OF BUSINESS

Olin Corporation (Olin) is a Virginia corporation, incorporated in 1892, having its principal executive offices in Clayton, MO.  We are a manufacturer concentrated in three business segments:  Chlor Alkali Products and Vinyls, Epoxy and Winchester.  The Chlor Alkali Products and Vinyls segment manufactures and sells chlorine and caustic soda, ethylene dichloride (EDC) and vinyl chloride monomer, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, trichloroethylene and vinylidene chloride, hydrochloric acid, hydrogen, bleach products and potassium hydroxide.  The Epoxy segment produces and sells a full range of epoxy materials, including allyl chloride, epichlorohydrin, liquid epoxy resins and downstream products such as converted epoxy resins and additives. The Winchester segment produces and sells sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.

We have prepared the condensed financial statements included herein, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). The preparation of the financial statements requires estimates and assumptions that affect amounts reported and disclosed in the financial statements and related notes. In our opinion, these financial statements 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, we believe that the disclosures are appropriate. We recommend that you read these condensed financial statements 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 our Annual Report on Form 10-K for the year ended December 31, 2016 . Certain reclassifications were made to prior year amounts to conform to the 2017 presentation.

ACQUISITION
On October 5, 2015 (the Closing Date), we completed the acquisition (the Acquisition) from The Dow Chemical Company (TDCC) of its U.S. Chlor Alkali and Vinyl, Global Chlorinated Organics and Global Epoxy businesses (collectively, the Acquired Business), whose operating results are included in the accompanying financial statements since the Closing Date.

We incurred costs related to the integration of the Acquired Business which consisted of advisory, legal, accounting and other professional fees of $4.4 million and $16.3 million for the three months ended June 30, 2017 and 2016 , respectively, and $11.4 million and $26.5 million for the six months ended June 30, 2017 and 2016 , respectively.

For the  three  months ended June 30, 2016 , payments of $69.5 million were made related to certain acquisition-related liabilities, including the final working capital adjustment.

RESTRUCTURING CHARGES

On March 21, 2016, we announced that we had made the decision to close a combined total of 433,000 tons of chlor alkali capacity across three separate locations. Associated with this action, we have permanently closed our Henderson, NV chlor alkali plant with 153,000 tons of capacity and have reconfigured the site to manufacture bleach and distribute caustic soda and hydrochloric acid. Also, the capacity of our Niagara Falls, NY chlor alkali plant has been reduced from 300,000 tons to 240,000 tons and the chlor alkali capacity at our Freeport, TX facility was reduced by 220,000 tons. This 220,000 ton reduction was entirely from diaphragm cell capacity. For the three months ended June 30, 2017 and 2016 , we recorded pretax restructuring charges of $7.4 million and $7.9 million , respectively, for employee severance and related benefit costs, employee relocation costs, facility exit costs and lease and other contract termination costs related to these actions. For the six months ended June 30, 2017 and 2016 , we recorded pretax restructuring charges of  $14.9 million and $100.1 million , respectively, for the write-off of equipment and facility costs, lease and other contract termination costs, employee severance and related benefit costs, employee relocation costs and facility exit costs related to these actions. We expect to incur additional restructuring charges through 2020 of approximately $25 million related to these capacity reductions. This estimate of additional restructuring charges does not include any additional charges related to a contract termination that is currently in dispute. The other party to the contract has filed a demand for arbitration alleging, among other things, that Olin breached the related agreement and claimed damages in excess of the amount Olin believes it is obligated for under the contract. Any additional

8

losses related to this contract dispute are not currently estimable because of unresolved questions of fact and law but, if resolved unfavorably to Olin, they could have a material effect on our financial results.

On December 12, 2014, we announced that we had made the decision to permanently close the portion of the Becancour, Canada chlor alkali facility that has been shut down since late June 2014. This action reduced the facility’s chlor alkali capacity by 185,000 tons. Subsequent to the shut down, the plant predominantly focuses on bleach and hydrochloric acid, which are value-added products, as well as caustic soda. For the three months ended  June 30, 2017  and  2016 , we recorded pretax restructuring charges of  $1.1 million  and  $0.1 million , respectively, for facility exit costs related to these actions. For the six months ended June 30, 2017 and 2016 , we recorded pretax restructuring charges of $1.8 million and $0.4 million , respectively, for lease and other contract termination costs and facility exit costs related to these actions. We expect to incur additional restructuring charges through 2018 of approximately $5 million related to the shut down of this portion of the facility.

On November 3, 2010, we announced that we made the decision to relocate the Winchester centerfire pistol and rifle ammunition manufacturing operations from East Alton, IL to Oxford, MS. Consistent with this decision in 2010, we initiated an estimated $110 million five-year project, which included approximately $80 million of capital spending. The capital spending was partially financed by $31 million of grants provided by the State of Mississippi and local governments. During 2016, the final rifle ammunition production equipment relocation was completed. For the three and six months ended June 30, 2016 , we recorded pretax restructuring charges of $0.2 million and $0.5 million , respectively, for employee relocation costs and facility exit costs related to these actions.

The following table summarizes the 2017 and 2016 activities by major component of these restructuring actions and the remaining balances of accrued restructuring costs as of June 30, 2017 and 2016 :
 
Employee severance and job related benefits
 
Lease and other contract termination costs
 
Employee relocation costs
 
Facility exit costs
 
Write-off of equipment and facility
 
Total
 
($ in millions)
Balance at January 1, 2016
$
4.6

 
$
2.1

 
$
—

 
$
—

 
$
—

 
$
6.7

Restructuring charges:
 
 
 
 
 
 
 
 
 
 
 
First quarter
3.9

 
9.2

 
0.2

 
2.9

 
76.6

 
92.8

Second quarter
0.2

 
—

 
0.8

 
7.2

 
—

 
8.2

Amounts utilized
(3.6
)
 
(1.3
)
 
(1.0
)
 
(7.9
)
 
(76.6
)
 
(90.4
)
Currency translation adjustments
—

 
0.1

 
—

 
—

 
—

 
0.1

Balance at June 30, 2016
$
5.1

 
$
10.1

 
$
—

 
$
2.2

 
$
—

 
$
17.4

Balance at January 1, 2017
$
3.4

 
$
7.5

 
$
—

 
$
1.8

 
$
—

 
$
12.7

Restructuring charges:
 
 
 
 
 
 
 
 
 
 
 
First quarter
—

 
5.7

 
0.2

 
2.3

 
—

 
8.2

Second quarter
—

 
5.8

 
0.1

 
2.6

 
—

 
8.5

Amounts utilized
(2.6
)
 
(2.6
)
 
(0.3
)
 
(6.6
)
 
—

 
(12.1
)
Balance at June 30, 2017
$
0.8

 
$
16.4

 
$
—

 
$
0.1

 
$
—

 
$
17.3



9

The following table summarizes the cumulative restructuring charges of these 2016, 2014 and 2010 restructuring actions by major component through June 30, 2017 :
 
 
Chlor Alkali Products and Vinyls
 
Winchester
 
Total
 
 
Becancour
 
Capacity Reductions
 
 
 
 
($ in millions)
Write-off of equipment and facility
 
$
3.5

 
$
76.6

 
$
—

 
$
80.1

Employee severance and job related benefits
 
2.7

 
5.1

 
13.1

 
20.9

Facility exit costs
 
3.1

 
17.8

 
2.3

 
23.2

Pension and other postretirement benefits curtailment
 
—

 
—

 
4.1

 
4.1

Employee relocation costs
 
—

 
1.7

 
6.0

 
7.7

Lease and other contract termination costs
 
5.3

 
25.0

 
—

 
30.3

Total cumulative restructuring charges
 
$
14.6

 
$
126.2

 
$
25.5

 
$
166.3


As of June 30, 2017 , we have incurred cash expenditures of $63.6 million and non-cash charges of $84.6 million related to these restructuring actions. The remaining balance of $17.3 million is expected to be paid out through 2020 .

ACCOUNTS RECEIVABLES

On December 20, 2016, we entered into a three year, $250.0 million Receivables Financing Agreement with PNC Bank, National Association, as administrative agent (Receivables Financing Agreement). Under the Receivables Financing Agreement, our eligible trade receivables are used for collateralized borrowings and continue to be serviced by us. As of June 30, 2017 , $326.1 million of our trade receivables were pledged as collateral and we had $210.0 million drawn under the agreement. As of June 30, 2017 , we had additional borrowing capacity of $32.3 million under the Receivables Financing Agreement. As of December 31, 2016 , $282.3 million of our trade receivables were pledged as collateral and $210.0 million was drawn under the agreement. For the year ended December 31, 2016 , the proceeds of the Receivables Financing Agreement were used to repay $210.0 million of the $800.0 million Sumitomo term loan facility (the Sumitomo Credit Facility). In addition, the Receivables Financing Agreement incorporates the leverage and coverage covenants that are contained in the senior revolving credit facilities.

On June 29, 2016, we entered into a trade accounts receivable factoring arrangement which was amended on September 1, 2016 and, on December 22, 2016, we entered into a separate trade accounts receivable factoring arrangement which was amended on March 24, 2017 (collectively the AR Facilities). Pursuant to the terms of the AR Facilities, certain of our subsidiaries may sell their accounts receivable up to a maximum of $256.5 million . We will continue to service such accounts.  These receivables qualify for sales treatment under Accounting Standards Codification (ASC) 860 “Transfers and Servicing” (ASC 860) and, accordingly, the proceeds are included in net cash provided by operating activities in the condensed statements of cash flows.  The gross amount of receivables sold for the three months ended June 30, 2017 and 2016 totaled $388.0 million and $26.8 million , respectively, and for the six months ended June 30, 2017 and 2016 totaled $777.6 million and $26.8 million , respectively.  The factoring discount paid under the AR Facilities is recorded as interest expense on the condensed statements of operations. The agreements are without recourse and therefore no recourse liability has been recorded as of June 30, 2017 .  As of June 30, 2017 , December 31, 2016 and June 30, 2016 , $148.4 million , $126.1 million and $26.8 million , respectively, of receivables qualifying for sales treatment were outstanding and will continue to be serviced by us.


10

ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLES

We evaluate the collectibility of accounts receivable based on a combination of factors. We estimate an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience. This estimate is periodically adjusted when we become aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in the overall aging of accounts receivable. While we have a large number of customers that operate in diverse businesses and are geographically dispersed, a general economic downturn in any of the industry segments in which we operate could result in higher than expected defaults, and, therefore, the need to revise estimates for the provision for doubtful accounts could occur.

Allowance for doubtful accounts receivable consisted of the following:
 
June 30,
 
2017
 
2016
 
($ in millions)
Balance at beginning of year
$
10.1

 
$
6.4

Provisions charged
2.1

 
2.2

Write-offs, net of recoveries
—

 
(0.8
)
Balance at end of period
$
12.2

 
$
7.8


Provisions charged to operations were  $0.7 million  and  $0.8 million  for the three months ended June 30, 2017 and 2016 , respectively.

INVENTORIES

Inventories consisted of the following:
 
June 30,
2017
 
December 31,
2016
 
June 30,
2016
 
($ in millions)
Supplies
$
59.7

 
$
58.1

 
$
60.9

Raw materials
74.9

 
72.6

 
82.1

Work in process
133.7

 
110.7

 
102.8

Finished goods
445.8

 
424.9

 
423.4

 
714.1

 
666.3

 
669.2

LIFO reserve
(47.9
)
 
(35.9
)
 
(33.0
)
Inventories, net
$
666.2

 
$
630.4

 
$
636.2


Inventories are valued at the lower of cost and net realizable value. For U.S. inventories, inventory costs are determined principally by the last-in, first-out (LIFO) method of inventory accounting while for international inventories, inventory costs are determined principally by the first-in, first-out (FIFO) method of inventory accounting. Cost for other inventories has been determined principally by the average-cost method (primarily operating supplies, spare parts and maintenance parts). Elements of costs in inventories included raw materials, direct labor and manufacturing overhead. Inventories under the LIFO method are based on annual estimates of quantities and costs as of year-end; therefore, the condensed financial statements at June 30, 2017 reflect certain estimates relating to inventory quantities and costs at December 31, 2017 . The replacement cost of our inventories would have been approximately $47.9 million , $35.9 million and $33.0 million higher than reported at June 30, 2017 , December 31, 2016 and June 30, 2016 , respectively.


11

OTHER ASSETS

Included in other assets were the following:
 
June 30, 2017
 
December 31, 2016
 
June 30, 2016
 
($ in millions)
Investments in non-consolidated affiliates
$
27.7

 
$
26.7

 
$
25.6

Deferred debt issuance costs
2.8

 
2.6

 
2.9

Tax-related receivables
16.0

 
17.5

 
18.2

Interest rate swaps
4.7

 
7.7

 
3.7

Supply contracts
554.1

 
566.7

 
518.8

Other
20.3

 
23.2

 
19.4

Other assets
$
625.6

 
$
644.4

 
$
588.6


In connection with the Acquisition, Olin and TDCC entered into arrangements for the long-term supply of ethylene by TDCC to Olin, pursuant to which, among other things, Olin made upfront payments of $433.5 million on the Closing Date in order to receive ethylene at producer economics and for certain reservation fees for the option to obtain additional future ethylene supply at producer economics. The fair value of the long-term supply contracts recorded as of the Closing Date was a long-term asset of $416.1 million which will be amortized over the life of the contracts as ethylene is received. During 2016, one of the options to reserve additional future ethylene supply at producer economics was exercised by us and, accordingly, additional payments will be made to TDCC of approximately $209.4 million in 2017, which will increase the value of the long-term asset. On February 27, 2017, we exercised the remaining option to reserve additional future ethylene supply and, in connection with the exercise, we also secured a long-term customer arrangement. Consequently, additional payments will be made to TDCC of between $425 million and $465 million on or about the fourth quarter of 2020, which will increase the value of the long-term asset.

During 2016, Olin entered into arrangements to increase our supply of low cost electricity.  In conjunction with these arrangements, Olin made payments of $175.7 million in 2016 , including $85.0 million for the six months ended June 30, 2016 .  The payments made under these arrangements will be amortized over the life of the contracts as electrical power is received.

Amortization expense of $6.3 million and $4.4 million for the three months ended June 30, 2017 and 2016 , respectively, and $12.6 million and $8.7 million for the six months ended June 30, 2017 and 2016 , respectively, was recognized within cost of goods sold related to these supply contracts and is reflected in depreciation and amortization on the condensed statements of cash flows. The long-term supply contracts are monitored for impairment each reporting period.

GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying value of goodwill were as follows:

 
Chlor Alkali Products and Vinyls
 
Epoxy
 
Total
 
($ in millions)
Balance at January 1, 2016
$
1,877.5

 
$
296.6

 
$
2,174.1

Acquisition activity
9.7

 
2.2

 
11.9

Foreign currency translation adjustment
0.2

 
0.1

 
0.3

Balance at June 30, 2016
$
1,887.4

 
$
298.9

 
$
2,186.3

Balance at January 1, 2017
$
1,831.3

 
$
286.7

 
2,118.0

Foreign currency translation adjustment
1.2

 
0.3

 
1.5

Balance at June 30, 2017
$
1,832.5

 
$
287.0

 
$
2,119.5



12

Intangible assets consisted of the following:

 
 
June 30, 2017
 
December 31, 2016
 
June 30, 2016
 
 
Gross Amount
Accumulated Amortization
Net
 
Gross Amount
Accumulated Amortization
Net
 
Gross Amount
Accumulated Amortization
Net
 
 
($ in millions)
Customers, customer contracts and relationships
 
$
675.0

 
$
(138.2
)
 
$
536.8

 
$
667.8

 
$
(112.9
)
 
$
554.9

 
$
672.3

 
$
(88.8
)
 
$
583.5

Trade name
 
7.0

 
(2.5
)
 
4.5

 
17.8

 
(12.7
)
 
5.1

 
17.9

 
(6.5
)
 
11.4

Acquired technology
 
85.3

 
(21.3
)
 
64.0

 
84.2

 
(15.0
)
 
69.2

 
84.9

 
(9.1
)
 
75.8

Other
 
2.3

 
(2.0
)
 
0.3

 
2.3

 
(1.9
)
 
0.4

 
2.3

 
(1.8
)
 
0.5

Total intangible assets
 
$
769.6

 
$
(164.0
)
 
$
605.6

 
$
772.1

 
$
(142.5
)
 
$
629.6

 
$
777.4

 
$
(106.2
)
 
$
671.2


Intangible assets with indefinite useful lives are reviewed annually in the fourth quarter and/or when circumstances or other events indicate the indefinite life is no longer supportable. In connection with the integration of the Acquired Business, in the first quarter of 2016, the K.A. Steel Chemicals Inc. trade name was changed from an indefinite life intangible asset to an intangible asset with a finite useful life of one year. Amortization expense of $2.8 million and $5.5 million was recognized within cost of goods sold for the three and six months ended June 30, 2016 , respectively, related to the change in useful life.

EARNINGS PER SHARE

Basic and diluted net (loss) income per share are computed by dividing net (loss) income by the weighted-average number of common shares outstanding. Diluted net (loss) income per share reflects the dilutive effect of stock-based compensation.
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Computation of (Loss) Income per Share
(In millions, except per share data)
Net (loss) income
$
(5.9
)
 
$
(1.0
)
 
$
7.5

 
$
(38.9
)
Basic shares
166.1

 
165.2

 
165.8

 
165.1

Basic net (loss) income per share
$
(0.04
)
 
$
(0.01
)
 
$
0.05

 
$
(0.24
)
Diluted shares:
 
 
 
 
 
 
 
Basic shares
166.1

 
165.2

 
165.8

 
165.1

Stock-based compensation
—

 
—

 
2.2

 
—

Diluted shares
166.1

 
165.2

 
168.0

 
165.1

Diluted net (loss) income per share
$
(0.04
)
 
$
(0.01
)
 
$
0.04

 
$
(0.24
)

The computation of dilutive shares from stock-based compensation does not include 6.9 million shares for both the three months ended June 30, 2017 and 2016 , and 1.6 million shares and 6.9 million shares for the six months ended June 30, 2017 and 2016 , respectively, as their effect would have been anti-dilutive.

ENVIRONMENTAL

We are party to various government and private environmental actions associated with past manufacturing facilities and former waste disposal sites. The condensed balance sheets included reserves for future environmental expenditures to investigate and remediate known sites amounting to $135.7 million , $137.3 million and $138.9 million at June 30, 2017 , December 31, 2016 and June 30, 2016 , respectively, of which $118.7 million , $120.3 million and $119.9 million , respectively, were classified as other noncurrent liabilities.


13

Environmental provisions charged to income, which are included in cost of goods sold, were $1.8 million and $2.4 million for the three months ended June 30, 2017 and 2016 , respectively, and  $4.4 million  and  $5.1 million  for the  six  months ended  June 30, 2017 and 2016 , respectively.

In connection with the Acquisition, TDCC retained liabilities relating to releases of hazardous materials and violations of environmental law to the extent arising prior to the Closing Date.

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, changes in regulatory authorities, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other potentially responsible parties (PRPs), our ability to obtain contributions from other parties and the lengthy time periods 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 to us, which could materially adversely affect our financial position or results of operations.

COMMITMENTS AND CONTINGENCIES

We, and our subsidiaries, are defendants in various legal actions (including proceedings based on alleged exposures to asbestos) incidental to our past and current business activities. As of June 30, 2017 , December 31, 2016 and June 30, 2016 , our condensed balance sheets included liabilities for these legal actions of $15.9 million , $13.6 million and $22.1 million , respectively. These liabilities do not include costs associated with legal representation. Based on our analysis, and considering the inherent uncertainties associated with litigation, we do not believe that it is reasonably possible that these legal actions will materially adversely affect our financial position, cash flows or results of operations. In connection with the Acquisition, TDCC retained liabilities related to litigation to the extent arising prior to the Closing Date. In addition to the aforementioned legal actions, we are party to a dispute relating to a contract termination. The other party to the contract has filed a demand for arbitration alleging, among other things, that Olin breached the related agreement and claimed damages in excess of the amount Olin believes it is obligated for under the contract. Any additional losses related to this contract dispute are not currently estimable because of unresolved questions of fact and law but, if resolved unfavorably to Olin, they could have a material effect on our financial results.

During the ordinary course of our business, contingencies arise resulting from an existing condition, situation or set of circumstances involving an uncertainty as to the realization of a possible gain contingency. In certain instances such as environmental projects, we are responsible for managing the cleanup and remediation of an environmental site. There exists the possibility of recovering a portion of these costs from other parties. We account for gain contingencies in accordance with the provisions of ASC 450 “Contingencies” (ASC 450) and, therefore, do not record gain contingencies and recognize income until it is earned and realizable.

For the six months ended June 30, 2016 , we recognized an insurance recovery of $11.0 million in other operating income (expense) for property damage and business interruption related to a 2008 chlor alkali facility incident.

SHAREHOLDERS’ EQUITY

On April 24, 2014, our board of directors authorized a share repurchase program for up to 8 million shares of common stock that terminated on April 24, 2017. For the six months ended June 30, 2017 and 2016 , no shares were purchased and retired. We purchased a total of 1.9 million shares under the April 2014 program, and the 6.1 million shares that remained authorized to be purchased have expired. Related to the Acquisition, for a period of two years subsequent to the Closing Date, we are subject to certain restrictions on our ability to conduct share repurchases.

We issued 0.9 million shares and less than 0.1 million shares representing stock options exercised for the six months ended June 30, 2017 and 2016 , respectively, with a total value of $15.8 million and $0.2 million , respectively.


14

The following table represents the activity included in accumulated other comprehensive loss:
 
Foreign
Currency
Translation
Adjustment
(net of taxes)
 
Unrealized
Gains (Losses)
on Derivative
Contracts
(net of taxes)
 
Pension and
Postretirement
Benefits
(net of taxes)
 
Accumulated
Other Comprehensive
Loss
 
($ in millions)
Balance at January 1, 2016
$
(12.1
)
 
$
(6.9
)
 
$
(473.5
)
 
$
(492.5
)
Unrealized gains (losses):
 
 
 
 
 
 
 
First quarter
24.0

 
1.1

 
—

 
25.1

Second quarter
(14.3
)
 
(4.6
)
 
—

 
(18.9
)
Reclassification adjustments into income:
 
 
 
 
 
 
 
First quarter
—

 
3.7

 
6.1

 
9.8

Second quarter
—

 
1.7

 
5.9

 
7.6

Tax (provision) benefit:
 
 
 
 
 
 
 
First quarter
(8.5
)
 
(1.8
)
 
(2.3
)
 
(12.6
)
Second quarter
3.5

 
1.1

 
(2.4
)
 
2.2

Net Change
4.7

 
1.2

 
7.3

 
13.2

Balance at June 30, 2016
$
(7.4
)
 
$
(5.7
)
 
$
(466.2
)
 
$
(479.3
)
Balance at January 1, 2017
$
(24.1
)
 
$
12.8

 
$
(498.7
)
 
$
(510.0
)
Unrealized gains (losses):
 
 
 
 
 
 
 
First quarter
8.3

 
(3.1
)
 
—

 
5.2

Second quarter
28.1

 
(3.7
)
 
—

 
24.4

Reclassification adjustments into income:
 
 
 
 
 
 
 
First quarter
—

 
(0.1
)
 
6.6

 
6.5

Second quarter
—

 
(2.3
)
 
6.8

 
4.5

Tax (provision) benefit:
 
 
 
 
 
 
 
First quarter
(2.3
)
 
1.2

 
(2.7
)
 
(3.8
)
Second quarter
(12.2
)
 
2.3

 
(2.3
)
 
(12.2
)
Net Change
21.9

 
(5.7
)
 
8.4

 
24.6

Balance at June 30, 2017
$
(2.2
)
 
$
7.1

 
$
(490.3
)
 
$
(485.4
)

Net (loss) income and cost of goods sold included reclassification adjustments for realized gains and losses on derivative contracts from accumulated other comprehensive loss.

Net (loss) income, cost of goods sold and selling and administrative expenses included the amortization of prior service costs and actuarial losses from accumulated other comprehensive loss. This amortization is recognized equally in cost of goods sold and selling and administrative expenses.


15

SEGMENT INFORMATION

We define segment results as income (loss) before interest expense, interest income, other operating income (expense), and income taxes, and include the operating results of non-consolidated affiliates. Consistent with the guidance in ASC 280 “Segment Reporting” (ASC 280), we have determined it is appropriate to include the operating results of non-consolidated affiliates in the relevant segment financial results. We have three operating segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. The three operating segments reflect the organization used by our management for purposes of allocating resources and assessing performance. Chlorine used in our Epoxy segment is transferred at cost from the Chlor Alkali Products and Vinyls segment. Sales and profits are recognized in the Chlor Alkali Products and Vinyls segment for all caustic soda generated and sold by Olin.

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Sales:
($ in millions)
Chlor Alkali Products and Vinyls
$
865.1

 
$
733.0

 
$
1,702.0

 
$
1,437.3

Epoxy
492.0

 
450.0

 
1,059.6

 
910.2

Winchester
169.4

 
181.0

 
332.0

 
364.7

Total sales
$
1,526.5

 
$
1,364.0

 
$
3,093.6

 
$
2,712.2

Income (loss) before taxes:
 
 
 
 
 
 
 
Chlor Alkali Products and Vinyls
$
52.8

 
$
30.7

 
$
140.3

 
$
98.8

Epoxy
(8.1
)
 
—

 
(9.3
)
 
8.2

Winchester
19.0

 
31.2

 
44.1

 
59.9

Corporate/other:
 
 
 
 
 
 
 
Pension income
10.7

 
12.6

 
21.0

 
24.8

Environmental expense
(1.8
)
 
(2.4
)
 
(4.4
)
 
(5.1
)
Other corporate and unallocated costs
(29.7
)
 
(23.9
)
 
(63.1
)
 
(53.5
)
Restructuring charges
(8.5
)
 
(8.2
)
 
(16.7
)
 
(101.0
)
Acquisition-related costs
(4.4
)
 
(16.3
)
 
(11.4
)
 
(26.5
)
Other operating income (expense)
0.3

 
(0.2
)
 
(0.1
)
 
10.7

Interest expense
(52.5
)
 
(47.6
)
 
(104.9
)
 
(96.1
)
Interest income
0.4

 
0.5

 
0.6

 
0.8

Loss before taxes
$
(21.8
)
 
$
(23.6
)
 
$
(3.9
)
 
$
(79.0
)


16

STOCK-BASED COMPENSATION

Stock-based compensation granted includes stock options, performance stock awards, restricted stock awards and deferred directors’ compensation. Stock-based compensation expense was as follows:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
 
($ in millions)
Stock-based compensation
$
4.2

 
$
1.6

 
$
11.5

 
$
6.0

Mark-to-market adjustments
(1.3
)
 
2.0

 
1.3

 
2.4

Total expense
$
2.9

 
$
3.6

 
$
12.8

 
$
8.4


The fair value of each stock option granted, which typically vests ratably over three years, but not less than one year, was estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted-average assumptions:
Grant date
2017
 
2016
Dividend yield
2.69
%
 
6.09
%
Risk-free interest rate
2.06
%
 
1.35
%
Expected volatility
34
%
 
32
%
Expected life (years)
6.0

 
6.0

Weighted-average grant fair value (per option)
$
7.78

 
$
1.90

Weighted-average exercise price
$
29.75

 
$
13.14

Shares granted
1,572,000

 
1,670,400


Dividend yield for 2017 and 2016 was based on a historical average. Risk-free interest rate was based on zero coupon U.S. Treasury securities rates for the expected life of the options. Expected volatility was based on our historical stock price movements, as we believe that historical experience is the best available indicator of the expected volatility. Expected life of the option grant was based on historical exercise and cancellation patterns, as we believe that historical experience is the best estimate of future exercise patterns.

DEBT

On March 9, 2017, we entered into a new five-year $1,975.0 million senior credit facility, which amended and restated the existing $1,850.0 million senior credit facility (the Senior Credit Facility). Pursuant to the agreement, the aggregate principal amount under the term loan facility was increased to $1,375.0 million (Term Loan Facility), and the aggregate commitments under the senior revolving credit facility were increased to $600.0 million (Senior Revolving Credit Facility and, together with the Term Loan Facility, the Amended Senior Credit Facility), from $500.0 million . In March 2017, we drew the entire $1,375.0 million term loan and used the proceeds to redeem the remaining balance of the existing Senior Credit Facility and a portion of the Sumitomo Credit Facility. The maturity date for the Amended Senior Credit Facility was extended from October 5, 2020 to March 9, 2022. The  $600.0 million  Senior Revolving Credit Facility includes a  $100.0 million  letter of credit subfacility. The Term Loan Facility includes amortization payable in equal quarterly installments at a rate of 5.0% per annum for the first two years, increasing to 7.5% per annum for the following year and to 10.0% per annum for the last two years.

Under the Amended Senior Credit Facility, we may select various floating rate borrowing options. The actual interest rate paid on borrowings under the Amended Senior Credit Facility is based on a pricing grid which is dependent upon the leverage ratio as calculated under the terms of the applicable facility for the prior fiscal quarter.  The facility includes various customary restrictive covenants, including restrictions related to the ratio of debt to earnings before interest expense, taxes, depreciation and amortization (leverage ratio) and the ratio of earnings before interest expense, taxes, depreciation and amortization to interest expense (coverage ratio).  Compliance with these covenants is determined quarterly based on the operating cash flows. We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of June 30, 2017 , and no event of default had occurred that would permit the lenders under our outstanding credit agreements to accelerate the debt if not cured. In the future, our ability to generate sufficient operating cash flows, among other factors, will determine the amounts available to be borrowed under these facilities. As of June 30, 2017 , as a result of our restrictive covenant related to the leverage ratio, the maximum additional borrowings available to us were $547.1 million .  This limitation would restrict our ability to borrow the maximum amounts available under the Senior Revolving Credit Facility and the Receivables Financing

17

Agreement.  As of June 30, 2017 , there were no other covenants or other restrictions that would have limited our ability to borrow.

On March 9, 2017, Olin issued $500.0 million aggregate principal amount of 5.125% senior notes due September 15, 2027 (2027 Notes), which were registered under the Securities Act of 1933, as amended. Interest on the 2027 Notes began accruing from March 9, 2017 and is paid semi-annually beginning on September 15, 2017. Proceeds from the 2027 Notes were used to redeem the remaining balance of the Sumitomo Credit Facility.

For the six months ended June 30, 2017 , we recognized interest expense of $2.7 million for the write-off of unamortized deferred debt issuance costs related to these actions. For the six months ended June 30, 2017 , we paid debt issuance costs of $11.2 million relating to the Amended Senior Credit Facility and the 2027 Notes.

CONTRIBUTING EMPLOYEE OWNERSHIP PLAN

The Contributing Employee Ownership Plan (CEOP) is a defined contribution plan available to essentially all domestic employees.  We provide a contribution to an individual retirement contribution account maintained with the CEOP equal to an amount of between 5% and 10% of the employee’s eligible compensation.  The defined contribution plan expense for the three months ended June 30, 2017 and 2016 was $6.0 million and $6.7 million , respectively, and for the six months ended June 30, 2017 and 2016 was $12.6 million and $13.3 million , respectively.

Company matching contributions are invested in the same investment allocation as the employee’s contribution.  Our matching contributions for eligible employees for the three months ended June 30, 2017 and 2016 were $2.5 million and $2.9 million , respectively, and for the six months ended June 30, 2017 and 2016 were $5.2 million and $5.6 million , respectively.

PENSION PLANS AND RETIREMENT BENEFITS

We sponsor domestic and foreign defined benefit pension plans for eligible employees and retirees. Most of our domestic employees participate in defined contribution plans.  However, a portion of our bargaining hourly employees continue to participate in our domestic qualified defined benefit pension plans under a flat-benefit formula. Our funding policy for the qualified defined benefit pension plans is consistent with the requirements of federal laws and regulations. Our foreign subsidiaries maintain pension and other benefit plans, which are consistent with statutory practices.

Our domestic qualified defined benefit pension plan provides that if, within three years following a change of control of Olin, any corporate action is taken or filing made in contemplation of, among other things, a plan termination or merger or other transfer of assets or liabilities of the plan, and such termination, merger, or transfer thereafter takes place, plan benefits would automatically be increased for affected participants (and retired participants) to absorb any plan surplus (subject to applicable collective bargaining requirements).


18

We also provide certain postretirement healthcare (medical) and life insurance benefits for eligible active and retired domestic employees. The healthcare plans are contributory with participants’ contributions adjusted annually based on medical rates of inflation and plan experience.

 
Pension Benefits
 
Other Postretirement
Benefits
 
Three Months Ended
June 30,
 
Three Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Components of Net Periodic Benefit (Income) Cost
($ in millions)
Service cost
$
4.1

 
$
2.7

 
$
0.3

 
$
0.4

Interest cost
21.5

 
21.8

 
0.4

 
0.4

Expected return on plans’ assets
(39.3
)
 
(39.1
)
 
—

 
—

Amortization of prior service cost
—

 
0.1

 
(0.7
)
 
—

Recognized actuarial loss
6.8

 
5.0

 
0.7

 
0.8

Net periodic benefit (income) cost
$
(6.9
)
 
$
(9.5
)
 
$
0.7

 
$
1.6

 
Pension Benefits

Other Postretirement
Benefits
 
Six Months Ended
June 30,

Six Months Ended
June 30,
 
2017

2016

2017

2016
Components of Net Periodic Benefit (Income) Cost
($ in millions)
Service cost
$
8.4


$
5.9


$
0.6


$
0.7

Interest cost
43.2


44.2


0.8


0.9

Expected return on plans’ assets
(78.4
)

(78.9
)

—


—

Amortization of prior service cost
—

 
0.1

 
(1.3
)
 
—

Recognized actuarial loss
13.4


10.3


1.3


1.6

Net periodic benefit (income) cost
$
(13.4
)

$
(18.4
)

$
1.4


$
3.2


We made cash contributions to our international qualified defined benefit pension plans of $0.9 million and $0.7 million for the six months ended June 30, 2017 and 2016 , respectively.


19

INCOME TAXES

The following table accounts for the difference between the actual tax provision and the amounts obtained by applying the statutory U.S. federal income tax rate of 35.0% to income before taxes.

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
Effective Tax Rate Reconciliation (Percent)
2017
 
2016
 
2017
 
2016
Statutory federal tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
Salt depletion
(9.6
)
 
40.1

 
(10.2
)
 
9.6

Stock-based compensation
3.9

 
—

 
61.0

 
—

Foreign rate differential
(3.2
)
 
14.0

 
(3.7
)
 
1.5

U.S. tax on foreign earnings
3.2

 
(13.7
)
 
3.7

 
(1.4
)
Dividends paid to CEOP
(0.4
)
 
3.4

 
(0.4
)
 
0.6

State income taxes, net
0.4

 
21.8

 
(0.3
)
 
5.6

Change in valuation allowance
—

 
(1.0
)
 
—

 
(0.3
)
Change in tax contingencies
45.7

 
(20.6
)
 
251.3

 
(5.1
)
Return to provision
(2.3
)
 
18.9

 
(42.6
)
 
5.7

Other, net
0.2

 
(2.1
)
 
(1.5
)
 
(0.4
)
Effective tax rate
72.9
 %
 
95.8
 %
 
292.3
 %
 
50.8
 %

Under ASC 740 “Income Taxes” (ASC 740), companies are required to apply their estimated annual tax rate on a year-to-date basis in each interim period. Under ASC 740, companies should not apply the estimated annual tax rate to interim financial results if the estimated annual tax rate is not reliably predictable. In this situation, the interim tax rate should be based on the actual year-to-date results. Based on the losses for the six months ended June 30, 2016 and the full year pretax projections as of June 30, 2016 , as well as the existence of large favorable permanent book-tax differences for 2016, a reliable projection of our annual effective tax rate as of June 30, 2016 was difficult to determine, producing significant variations in the customary relationship between income tax expense and pretax book income in interim periods, as a small change in forecasted pretax income could cause a significant change in the estimated annual effective tax rate. Consequently, the effective tax rates for the three and six months ended June 30, 2016 were determined based on year-to-date results rather than utilizing the method of calculating an estimated annual effective tax rate which was used up until the period ended March 31, 2016 and for the three and six months ended June 30, 2017 . The year-to-date actual discrete method was applied for the remainder of 2016.

The effective tax rates for both the three and six months ended June 30, 2017 included a benefit of $9.5 million related to an agreement reached with the Internal Revenue Service (IRS) for the years 2008, 2010 to 2012 tax examinations and a benefit of $0.9 million and $2.4 million , respectively, associated with stock-based compensation. The effective tax rate for the six months ended June 30, 2017 also included $1.0 million of tax expense associated with prior year tax positions.

The effective tax rates for both the the three and six months ended June 30, 2016 included a benefit of  $4.5 million associated with a return to provision adjustment for the finalization of our prior years’ U.S. federal and state income tax returns. The June 30, 2016 return to provision adjustment included  $14.2 million  of benefit primarily associated with a change in estimate related to the calculation of salt depletion and  $9.7 million  of expense associated with the correction of an immaterial error related to non-deductible acquisition costs. The effective tax rates for the three and six months ended June 30, 2016 also included an expense of  $4.9 million  and  $4.0 million , respectively, related to changes in uncertain tax positions for prior tax years.



20

As of June 30, 2017 , we had $34.3 million of gross unrecognized tax benefits, which would have a net $32.8 million impact on the effective tax rate, if recognized. As of June 30, 2016 , we had $37.5 million of gross unrecognized tax benefits, of which $35.8 million would have impacted the effective tax rate, if recognized. The amount of unrecognized tax benefits was as follows:
 
June 30,
 
2017
 
2016
 
($ in millions)
Balance at beginning of year
$
38.4

 
$
35.1

Increases for prior year tax positions
4.9

 
5.7

Decreases for prior year tax positions
(9.2
)
 
(1.8
)
Increases for current year tax positions
1.4

 
0.9

Settlement with taxing authorities
(1.0
)
 
(2.1
)
Reductions due to statute of limitations
(0.2
)
 
(0.3
)
Balance at end of period
$
34.3

 
$
37.5


In May 2017, we reached an agreement in principle with the IRS regarding their examination of our U.S. income tax returns for 2008, 2010 to 2012. The settlement resulted in a reduction of income tax expense of $9.5 million related primarily to favorable adjustments in uncertain tax positions for prior tax years.

As of June 30, 2017 , we believe it is reasonably possible that our total amount of unrecognized tax benefits will decrease by approximately $1.4 million over the next twelve months. The anticipated reduction primarily relates to settlements with taxing authorities and the expiration of federal, state and foreign statutes of limitation.

We operate globally and file income tax returns in numerous jurisdictions. Our tax returns are subject to examination by various federal, state and local tax authorities. None of our U.S. federal income tax returns are currently under examination by the IRS. In connection with the Acquisition, TDCC retained liabilities relating to taxes to the extent arising prior to the Closing Date. We believe we have adequately provided for all tax positions; however, amounts asserted by taxing authorities could be greater than our accrued position. For our primary tax jurisdictions, the tax years that remain subject to examination are as follows:

 
Tax Years
U.S. federal income tax
2013 - 2016
U.S. state income tax
2006 - 2016
Canadian federal income tax
2012 - 2016
Brazil
2014 - 2016
Germany
2015 - 2016
China
2014 - 2016
The Netherlands
2014 - 2016
South Korea
2014 - 2016

DERIVATIVE FINANCIAL INSTRUMENTS

We are exposed to market risk in the normal course of our business operations due to our purchases of certain commodities, our ongoing investing and financing activities and our operations that use foreign currencies. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. We have established policies and procedures governing our management of market risks and the use of financial instruments to manage exposure to such risks. ASC 815 “Derivatives and Hedging” (ASC 815) requires an entity to recognize all derivatives as either assets or liabilities in the condensed statement of financial position and measure those instruments at fair value. We use hedge accounting treatment for substantially all of our business transactions whose risks are covered using derivative instruments. In accordance with ASC 815, we designate derivative contracts as cash flow hedges of forecasted purchases of commodities and forecasted interest payments related to variable-rate borrowings and designate certain interest rate swaps as fair value hedges of fixed-rate borrowings. We do not enter into any derivative instruments for trading or speculative purposes.


21

Energy costs, including electricity and natural gas, and certain raw materials used in our production processes are subject to price volatility. Depending on market conditions, we may enter into futures contracts, forward contracts, commodity swaps and put and call option contracts in order to reduce the impact of commodity price fluctuations. The majority of our commodity derivatives expire within one year. Those commodity contracts that extend beyond one year correspond with raw material purchases for long-term fixed-price sales contracts.

Olin actively manages currency exposures that are associated with net monetary asset positions, currency purchases and sales commitments denominated in foreign currencies and foreign currency denominated assets and liabilities created in the normal course of business. We enter into forward sales and purchase contracts to manage currency risk to offset our net exposures, by currency, related to the foreign currency denominated monetary assets and liabilities of our operations. At June 30, 2017 , we had outstanding forward contracts to buy foreign currency with a notional value of $71.8 million and to sell foreign currency with a notional value of $90.4 million . All of the currency derivatives expire within one year and are for U.S. dollar (USD) equivalents. The counterparties to the forward contracts are large financial institutions; however, the risk of loss to us in the event of nonperformance by a counterparty could be significant to our financial position or results of operations. At December 31, 2016 , we had outstanding forward contracts to buy foreign currency with a notional value of $73.2 million and to sell foreign currency with a notional value of $100.8 million . At June 30, 2016 , we had outstanding forward contracts to buy foreign currency with a notional value of $86.5 million and to sell foreign currency with a notional value of $117.7 million .

Cash flow hedges

ASC 815 requires that all derivative instruments be recorded on the balance sheet at their fair value. For derivative instruments that are designated and qualify as a cash flow hedge, the change in fair value of the derivative is recognized as a component of other comprehensive income (loss) until the hedged item is recognized in earnings. Gains and losses on the derivatives representing hedge ineffectiveness are recognized currently in earnings.

We had the following notional amount of outstanding commodity contracts that were entered into to hedge forecasted purchases:
 
June 30, 2017
 
December 31, 2016
 
June 30, 2016
 
($ in millions)
Copper
$
42.8

 
$
35.8

 
$
38.7

Zinc
7.9

 
8.0

 
8.0

Lead
—

 
3.4

 
8.4

Natural gas
45.0

 
54.4

 
0.4


As of June 30, 2017 , the counterparties to these commodity contracts were Wells Fargo Bank, N.A. (Wells Fargo) ( $29.3 million ), Citibank ( $29.8 million ), Merrill Lynch Commodities, Inc. ( $27.4 million ) and JPMorgan Chase Bank, National Association ( $9.2 million ), all of which are major financial institutions.

We use cash flow hedges for certain raw material and energy costs such as copper, zinc, lead, electricity and natural gas to provide a measure of stability in managing our exposure to price fluctuations associated with forecasted purchases of raw materials and energy used in the company’s manufacturing process. At June 30, 2017 , we had open positions in futures contracts through 2022. If all open futures contracts had been settled on June 30, 2017 , we would have recognized a pretax gain of $1.9 million .

If commodity prices were to remain at June 30, 2017 levels, approximately $0.1 million of deferred losses would be reclassified into earnings during the next twelve months. The actual effect on earnings will be dependent on actual commodity prices when the forecasted transactions occur.


22

In April 2016, we entered into three tranches of forward starting interest rate swaps whereby we agreed to pay fixed rates to the counterparties who, in turn, pay us floating rates on $1,100.0 million , $900.0 million , and $400.0 million of our underlying floating-rate debt obligations. Each tranche’s term length is for twelve months beginning on December 31, 2016, December 31, 2017 and December 31, 2018, respectively. The counterparties to the agreements are SMBC Capital Markets, Inc., Wells Fargo, PNC Bank, National Association and Toronto-Dominion Bank. These counterparties are large financial institutions; however, the risk of loss to us in the event of nonperformance by a counterparty could be significant to our financial position or results of operations. We have designated the swaps as cash flow hedges of the risk of changes in interest payments associated with our variable-rate borrowings. Accordingly, the swap agreements have been recorded at their fair market value of $9.6 million and are included in other current assets and other assets on the accompanying condensed balance sheet as of June 30, 2017 , with the corresponding gain deferred as a component of other comprehensive loss. For both the three and six months ended June 30, 2017 , $0.5 million of income was recorded to interest expense on the accompanying condensed statement of operations related to these swap agreements. No gain or loss has been recorded in earnings as a result of ineffectiveness.

We use interest rate swaps as a means of minimizing cash flow fluctuations that may arise from volatility in interest rates of our variable-rate borrowings. These interest rate swaps are treated as cash flow hedges. At June 30, 2017 , we had open interest rate swaps designated as cash flow hedges with maximum terms through 2019. If all open interest rate swap contracts had been settled on June 30, 2017 , we would have recognized a pretax gain of $9.6 million .

If interest rates were to remain at June 30, 2017 levels, $3.1 million of deferred gains would be reclassified into earnings during the next twelve months. The actual effect on earnings will be dependent on actual interest rates when the forecasted transactions occur.

Fair value hedges

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. We include the gain or loss on the hedged items (fixed-rate borrowings) in the same line item, interest expense, as the offsetting loss or gain on the related interest rate swaps. As of June 30, 2017 , December 31, 2016 and June 30, 2016 , the total notional amounts of our interest rate swaps designated as fair value hedges were $500.0 million , $500.0 million and $250.0 million , respectively.

In April 2016, we entered into interest rate swaps on $250.0 million of our underlying fixed-rate debt obligations, whereby we agreed to pay variable rates to the counterparties who, in turn, pay us fixed rates.  The counterparties to these agreements are Toronto-Dominion Bank and SMBC Capital Markets, Inc., both of which are major financial institutions.

In October 2016, we entered into interest rate swaps on an additional $250.0 million of our underlying fixed-rate debt obligations, whereby we agreed to pay variable rates to the counterparties who, in turn, pay us fixed rates.  The counterparties to these agreements are PNC Bank, National Association and Wells Fargo, both of which are major financial institutions.

We have designated the April 2016 and October 2016 interest rate swap agreements as fair value hedges of the risk of changes in the value of fixed-rate debt due to changes in interest rates for a portion of our fixed-rate borrowings. Accordingly, the swap agreements have been recorded at their fair market value of $24.9 million and are included in other long-term liabilities on the accompanying condensed balance sheet as of June 30, 2017 , with a corresponding decrease in the carrying amount of the related debt. For the three months ended June 30, 2017 and 2016 , $0.7 million and $0.5 million , respectively, and for the six months ended June 30, 2017 and 2016 , $1.9 million and $0.5 million , respectively, of income was recorded to interest expense on the accompanying condensed statement of operations related to these swap agreements. No gain or loss has been recorded in earnings as a result of ineffectiveness.

In June 2012, we terminated $73.1 million of interest rate swaps with Wells Fargo that had been entered into on the SunBelt Notes in May 2011. The result was a gain of $2.2 million , which will be recognized through 2017. As of June 30, 2017 , $0.1 million of this gain was included in current installments of long-term debt.

We use interest rate swaps as a means of managing interest expense and floating interest rate exposure to optimal levels. These interest rate swaps are treated as fair value hedges. The accounting for gains and losses associated with changes in fair value of the derivative and the effect on the condensed financial statements will depend on the hedge designation and whether the hedge is effective in offsetting changes in fair value of cash flows of the asset or liability being hedged.


23

Financial statement impacts

We present our derivative assets and liabilities in our condensed balance sheets on a net basis whenever we have a legally enforceable master netting agreement with the counterparty to our derivative contracts. We use these agreements to manage and substantially reduce our potential counterparty credit risk.

The following table summarizes the location and fair value of the derivative instruments on our condensed balance sheets. The table disaggregates our net derivative assets and liabilities into gross components on a contract-by-contract basis before giving effect to master netting arrangements:

 
 
Asset Derivatives
 
Liability Derivatives
 
 
 
 
Fair Value
 
 
 
Fair Value
 
 
Balance Sheet Location
 
June 30, 2017
 
December 31, 2016
 
June 30, 2016
 
Balance Sheet Location
 
June 30, 2017
 
December 31, 2016
 
June 30, 2016
 
 
 
 
($ in millions)
 
 
 
($ in millions)
Derivatives Designated as Hedging Instruments
Interest rate contracts
 
Other current assets
 
$
5.0

 
$
1.9

 
$
—

 
Current installments of long-term debt
 
$
0.1

 
$
0.1

 
$
—

Interest rate contracts
 
Other assets
 
4.6

 
7.7

 
—

 
Long-term debt
 
—

 
—

 
0.3

Interest rate contracts
 
Other assets
 
—

 
—

 
3.7

 
Other liabilities
 
24.9

 
28.5

 
6.2

Commodity contracts – gains
 
Other current assets
 
4.9

 
13.2

 
—

 
Accrued liabilities
 
(0.1
)
 
—

 
(1.8
)
Commodity contracts – losses
 
Other current assets
 
(0.9
)
 
(1.7
)
 
—

 
Accrued liabilities
 
2.3

 
—

 
4.9

 
 
 
 
$
13.6

 
$
21.1

 
$
3.7

 
 
 
$
27.2

 
$
28.6

 
$
9.6

Derivatives Not Designated as Hedging Instruments
Foreign exchange contracts – gains
 
Other current assets
 
$
1.7

 
$
0.6

 
$
0.1

 
Accrued liabilities
 
$
—

 
$
(0.5
)
 
$
(0.7
)
Foreign exchange contracts – losses
 
Other current assets
 
(0.5
)
 
(0.5
)
 
—

 
Accrued liabilities
 
—

 
1.7

 
2.8

 
 
 
 
$
1.2

 
$
0.1

 
$
0.1

 
 
 
$
—

 
$
1.2

 
$
2.1

Total derivatives (1)
 
 
 
$
14.8

 
$
21.2

 
$
3.8

 
 
 
$
27.2

 
$
29.8

 
$
11.7


(1)
Does not include the impact of cash collateral received from or provided to counterparties.


24

The following table summarizes the effects of derivative instruments on our condensed statements of income:

 
 
 
Amount of Gain (Loss)
 
Amount of Gain (Loss)
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
Location of Gain (Loss)
 
2017
 
2016
 
2017
 
2016
Derivatives – Cash Flow Hedges
 
($ in millions)
Recognized in other comprehensive income (loss) (effective portion):
 
 
 
 
 
 
 
 
Commodity contracts
———
 
$
(2.4
)
 
$
1.6

 
$
(7.4
)
 
$
2.7

Interest rate contracts
———
 
(1.3
)
 
(6.2
)
 
0.6

 
(6.2
)
 
 
 
$
(3.7
)
 
$
(4.6
)
 
$
(6.8
)
 
$
(3.5
)
Reclassified from accumulated other comprehensive loss into income (effective portion):
 
 
 
 
 
 
 
 
Interest rate contracts
Interest expense
 
$
0.5

 
$
—

 
$
0.5

 
$
—

Commodity contracts
Cost of goods sold
 
1.8

 
(1.7
)
 
1.9

 
(5.4
)
 
 
 
$
2.3

 
$
(1.7
)
 
$
2.4

 
$
(5.4
)
Derivatives – Fair Value Hedges
 
 
 
 
 
 
 
 
Interest rate contracts
Interest expense
 
$
0.8

 
$
1.2

 
$
2.0

 
$
1.9

Derivatives Not Designated as Hedging Instruments
 
 
 
 
 
 
 
 
Commodity contracts
Cost of goods sold
 
$
—

 
$
—

 
$
—

 
$
(0.4
)
Foreign exchange contracts
Selling and administration
 
5.0

 
(4.2
)
 
0.5

 
(7.3
)
 
 
 
$
5.0

 
$
(4.2
)
 
$
0.5

 
$
(7.7
)

The ineffective portion of changes in fair value resulted in zero charged or credited to earnings for the three and six months ended June 30, 2017 and 2016 .

Credit risk and collateral

By using derivative instruments, we are exposed to credit and market risk. If a counterparty fails to fulfill its performance obligations under a derivative contract, our credit risk will equal the fair value gain in a derivative. Generally, when the fair value of a derivative contract is positive, this indicates that the counterparty owes us, thus creating a repayment risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, assume no repayment risk. We minimize the credit (or repayment) risk in derivative instruments by entering into transactions with
high-quality counterparties. We monitor our positions and the credit ratings of our counterparties, and we do not anticipate nonperformance by the counterparties.

Based on the agreements with our various counterparties, cash collateral is required to be provided when the net fair value of the derivatives, with the counterparty, exceeds a specific threshold. If the threshold is exceeded, cash is either provided by the counterparty to us if the value of the derivatives is our asset, or cash is provided by us to the counterparty if the value of the derivatives is our liability. As of June 30, 2017 , December 31, 2016 and June 30, 2016 , this threshold was not exceeded. In all instances where we are party to a master netting agreement, we offset the receivable or payable recognized upon payment of cash collateral against the fair value amounts recognized for derivative instruments that have also been offset under such master netting agreements.


25

FAIR VALUE MEASUREMENTS

Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties or the amount that would be paid to transfer a liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.

Assets and liabilities recorded at fair value in the condensed balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, defined by ASC 820 “Fair Value Measurements and Disclosures” (ASC 820) are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, and are as follows:

Level 1 — Inputs were unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 — Inputs (other than quoted prices included in Level 1) were either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instruments’ anticipated life.

Level 3 — Inputs reflected management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration was given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

We are required to separately disclose assets and liabilities measured at fair value on a recurring basis, from those measured at fair value on a nonrecurring basis. Nonfinancial assets measured at fair value on a nonrecurring basis are intangible assets and goodwill, which are reviewed for impairment annually in the fourth quarter and/or when circumstances or other events indicate that impairment may have occurred.

26

Determining which hierarchical level an asset or liability falls within requires significant judgment. We evaluate our hierarchy disclosures each quarter. The following table summarizes the assets and liabilities measured at fair value in the condensed balance sheets:
 
Fair Value Measurements
Balance at June 30, 2017
Level 1
 
Level 2
 
Level 3
 
Total
Assets
($ in millions)
Interest rate swaps
$
—

 
$
9.6

 
$
—

 
$
9.6

Commodity contracts
—

 
4.0

 
—

 
4.0

Foreign exchange contracts
—

 
1.2

 
—

 
1.2

Liabilities
 
 
 
 
 
 
 
Interest rate swaps
$
—

 
$
25.0

 
$
—

 
$
25.0

Commodity contracts
—

 
2.2

 
—

 
2.2

Balance at December 31, 2016
 
 
 
 
 
 
 
Assets
 
Interest rate swaps
$
—

 
$
9.6

 
$
—

 
$
9.6

Commodity contracts
—

 
11.5

 
—

 
11.5

Foreign exchange contracts
—

 
0.1

 
—

 
0.1

Liabilities
 
 
 
 
 
 
 
Interest rate swaps
$
—

 
$
28.6

 
$
—

 
$
28.6

Foreign exchange contracts
—

 
1.2

 
—

 
1.2

Balance at June 30, 2016
 
 
 
 
 
 
 
Assets
 
Interest rate swaps
$
—

 
$
3.7

 
$
—

 
$
3.7

Foreign exchange contracts
—

 
0.1

 
—

 
0.1

Liabilities
 
 
 
 
 
 
 
Interest rate swaps
$
—

 
$
6.5

 
$
—

 
$
6.5

Commodity contracts
—

 
3.1

 
—

 
3.1

Foreign exchange contracts
—

 
2.1

 
—

 
2.1


For the six months ended June 30, 2017 , there were no transfers into or out of Level 1, Level 2 or Level 3.

Interest Rate Swaps

Interest rate swap financial instruments were valued using the “income approach” valuation technique. This method used valuation techniques to convert future amounts to a single present amount. The measurement was based on the value indicated by current market expectations about those future amounts. We use interest rate swaps as a means of managing interest expense and floating interest rate exposure to optimal levels.

Commodity Forward Contracts

Commodity contract financial instruments were valued primarily based on prices and other relevant information observable in market transactions involving identical or comparable assets or liabilities including both forward and spot prices for commodities. We use commodity derivative contracts for certain raw materials and energy costs such as copper, zinc, lead, electricity and natural gas to provide a measure of stability in managing our exposure to price fluctuations.

Foreign Currency Contracts

Foreign currency contract financial instruments were valued primarily based on relevant information observable in market transactions involving identical or comparable assets or liabilities including both forward and spot prices for currencies. We enter into forward sales and purchase contracts to manage currency risk resulting from purchase and sale commitments denominated in foreign currencies.

27


Financial Instruments

The carrying values of cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximated fair values due to the short-term maturities of these instruments. The fair value of our long-term debt was determined based on current market rates for debt of similar risk and maturities. The following table summarizes the fair value measurements of debt and the actual debt recorded on our condensed balance sheets:
 
Fair Value Measurements
 
Amount recorded
on balance sheets
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
($ in millions)
Balance at June 30, 2017
$
—

 
$
3,777.8

 
$
153.0

 
$
3,930.8

 
$
3,600.6

Balance at December 31, 2016
—

 
3,703.7

 
153.0

 
3,856.7

 
3,617.6

Balance at June 30, 2016
—

 
3,740.3

 
153.0

 
3,893.3

 
3,695.8


Nonrecurring Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis as required by ASC 820. There were no assets measured at fair value on a nonrecurring basis as of June 30, 2017 , December 31, 2016 and June 30, 2016 .

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

In October 2015, Blue Cube Spinco Inc. (the Issuer) issued $720.0 million aggregate principal amount of 9.75% senior notes due October 15, 2023 (2023 Notes) and $500.0 million aggregate principal amount of 10.00% senior notes due October 15, 2025 (2025 Notes and, together with the 2023 Notes, the Notes). During 2016, the Notes were registered under the Securities Act of 1933, as amended. The Issuer was formed on March 13, 2015 as a wholly owned subsidiary of TDCC and upon closing of the Acquisition became a 100% owned subsidiary of Olin (the Parent Guarantor). The Exchange Notes are fully and unconditionally guaranteed by the Parent Guarantor.

The following condensed consolidating financial information presents the condensed consolidating balance sheets as of June 30, 2017 , December 31, 2016 and June 30, 2016 , the related condensed consolidating statements of operations and comprehensive income for each of the three and six months ended June 30, 2017 and 2016 , and the related statements of cash flows for the six months ended June 30, 2017 and 2016 , of (a) the Parent Guarantor, (b) the Issuer, (c) the non-guarantor subsidiaries, (d) elimination entries necessary to consolidate the Parent Guarantor with the Issuer and the non-guarantor subsidiaries and (e) Olin on a consolidated basis. Investments in consolidated subsidiaries are presented under the equity method of accounting.

28

CONDENSED CONSOLIDATING BALANCE SHEETS
June 30, 2017
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Parent Guarantor
 
Issuer
 
Subsidiary
Non-Guarantor
 
Eliminations
 
Total
Assets
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
28.9

 
$
—

 
$
155.6

 
$
—

 
$
184.5

Receivables, net
101.7

 
—

 
680.5

 
—

 
782.2

Intercompany receivables
—

 
2.9

 
2,052.9

 
(2,055.8
)
 
—

Income taxes receivable
18.8

 
—

 
7.2

 
(5.1
)
 
20.9

Inventories
178.2

 
—

 
488.0

 
—

 
666.2

Other current assets
183.1

 
—

 
7.0

 
(152.9
)
 
37.2

Total current assets
510.7

 
2.9

 
3,391.2

 
(2,213.8
)
 
1,691.0

Property, plant and equipment, net
509.1

 
—

 
3,118.3

 
—

 
3,627.4

Investment in subsidiaries
6,082.7

 
3,774.0

 
—

 
(9,856.7
)
 
—

Deferred income taxes
151.8

 
—

 
97.8

 
(124.4
)
 
125.2

Other assets
46.9

 
—

 
578.7

 
—

 
625.6

Long-term receivables—affiliates
—

 
2,204.3

 
—

 
(2,204.3
)
 
—

Intangible assets, net
0.4

 
5.7

 
599.5

 
—

 
605.6

Goodwill
—

 
966.3

 
1,153.2

 
—

 
2,119.5

Total assets
$
7,301.6

 
$
6,953.2

 
$
8,938.7

 
$
(14,399.2
)
 
$
8,794.3

Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Current installments of long-term debt
$
0.8

 
$
68.8

 
$
12.1

 
$
—

 
$
81.7

Accounts payable
58.0

 
—

 
603.7

 
(5.6
)
 
656.1

Intercompany payables
2,055.8

 
—

 
—

 
(2,055.8
)
 
—

Income taxes payable
—

 
—

 
12.2

 
(5.1
)
 
7.1

Accrued liabilities
116.1

 
—

 
296.6

 
(151.2
)
 
261.5

Total current liabilities
2,230.7

 
68.8

 
924.6

 
(2,217.7
)
 
1,006.4

Long-term debt
822.3

 
2,487.4

 
209.2

 
—

 
3,518.9

Accrued pension liability
421.7

 
—

 
203.9

 
—

 
625.6

Deferred income taxes
—

 
237.9

 
924.1

 
(124.4
)
 
1,037.6

Long-term payables—affiliates
1,284.4

 
—

 
919.9

 
(2,204.3
)
 
—

Other liabilities
283.9

 
8.1

 
55.2

 
—

 
347.2

Total liabilities
5,043.0

 
2,802.2

 
3,236.9

 
(4,546.4
)
 
6,535.7

Commitments and contingencies
 
 
 
 
 
 
 
 
 
Shareholders' equity:
 
 
 
 
 
 
 
 
 
Common stock
166.3

 
—

 
14.6

 
(14.6
)
 
166.3

Additional paid-in capital
2,262.7

 
4,125.7

 
4,808.2

 
(8,933.9
)
 
2,262.7

Accumulated other comprehensive loss
(485.4
)
 
—

 
(8.6
)
 
8.6

 
(485.4
)
Retained earnings
315.0

 
25.3

 
887.6

 
(912.9
)
 
315.0

Total shareholders' equity
2,258.6

 
4,151.0

 
5,701.8

 
(9,852.8
)
 
2,258.6

Total liabilities and shareholders' equity
$
7,301.6

 
$
6,953.2

 
$
8,938.7

 
$
(14,399.2
)
 
$
8,794.3


29

CONDENSED CONSOLIDATING BALANCE SHEETS
December 31, 2016
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Parent Guarantor
 
Issuer
 
Subsidiary
Non-Guarantor
 
Eliminations
 
Total
Assets
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
25.2

 
$
—

 
$
159.3

 
$
—

 
$
184.5

Receivables, net
88.3

 
—

 
586.7

 
—

 
675.0

Intercompany receivables
—

 
—

 
1,912.3

 
(1,912.3
)
 
—

Income taxes receivable
19.0

 
—

 
7.3

 
(0.8
)
 
25.5

Inventories
167.7

 
—

 
462.7

 
—

 
630.4

Other current assets
164.7

 
3.4

 
1.2

 
(138.5
)
 
30.8

Total current assets
464.9

 
3.4

 
3,129.5

 
(2,051.6
)
 
1,546.2

Property, plant and equipment, net
510.1

 
—

 
3,194.8

 
—

 
3,704.9

Investment in subsidiaries
6,035.2

 
3,734.7

 
—

 
(9,769.9
)
 
—

Deferred income taxes
133.5

 
—

 
103.5

 
(117.5
)
 
119.5

Other assets
48.1

 
—

 
596.3

 
—

 
644.4

Long-term receivables—affiliates
—

 
2,194.2

 
—

 
(2,194.2
)
 
—

Intangible assets, net
0.4

 
5.7

 
623.5

 
—

 
629.6

Goodwill
—

 
966.3

 
1,151.7

 
—

 
2,118.0

Total assets
$
7,192.2

 
$
6,904.3

 
$
8,799.3

 
$
(14,133.2
)
 
$
8,762.6

Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Current installments of long-term debt
$
0.6

 
$
67.5

 
$
12.4

 
$
—

 
$
80.5

Accounts payable
45.3

 
—

 
527.4

 
(1.9
)
 
570.8

Intercompany payables
1,882.8

 
29.5

 
—

 
(1,912.3
)
 
—

Income taxes payable
—

 
—

 
8.3

 
(0.8
)
 
7.5

Accrued liabilities
124.9

 
—

 
277.5

 
(138.6
)
 
263.8

Total current liabilities
2,053.6

 
97.0

 
825.6

 
(2,053.6
)
 
922.6

Long-term debt
913.9

 
2,413.3

 
209.9

 
—

 
3,537.1

Accrued pension liability
453.7

 
—

 
184.4

 
—

 
638.1

Deferred income taxes
—

 
223.6

 
926.4

 
(117.5
)
 
1,032.5

Long-term payables—affiliates
1,209.1

 
—

 
985.1

 
(2,194.2
)
 
—

Other liabilities
288.9

 
6.6

 
63.8

 
—

 
359.3

Total liabilities
4,919.2

 
2,740.5

 
3,195.2

 
(4,365.3
)
 
6,489.6

Commitments and contingencies
 
 
 
 
 
 
 
 
 
Shareholders' equity:
 
 
 
 
 
 
 
 
 
Common stock
165.4

 
—

 
14.6

 
(14.6
)
 
165.4

Additional paid-in capital
2,243.8

 
4,125.7

 
4,808.2

 
(8,933.9
)
 
2,243.8

Accumulated other comprehensive loss
(510.0
)
 
—

 
(7.0
)
 
7.0

 
(510.0
)
Retained earnings
373.8

 
38.1

 
788.3

 
(826.4
)
 
373.8

Total shareholders' equity
2,273.0

 
4,163.8

 
5,604.1

 
(9,767.9
)
 
2,273.0

Total liabilities and shareholders' equity
$
7,192.2

 
$
6,904.3

 
$
8,799.3

 
$
(14,133.2
)
 
$
8,762.6



30

CONDENSED CONSOLIDATING BALANCE SHEETS
June 30, 2016
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Parent Guarantor
 
Issuer
 
Subsidiary
Non-Guarantor
 
Eliminations
 
Total
Assets
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
23.2

 
$
—

 
$
43.4

 
$
—

 
$
66.6

Receivables, net
98.2

 
—

 
692.3

 
—

 
790.5

Intercompany receivables
—

 
22.3

 
1,712.1

 
(1,734.4
)
 
—

Income taxes receivable
35.1

 
—

 
10.7

 
—

 
45.8

Inventories
175.2

 
—

 
461.0

 
—

 
636.2

Other current assets
146.1

 
—

 
5.4

 
(127.7
)
 
23.8

Total current assets
477.8

 
22.3

 
2,924.9

 
(1,862.1
)
 
1,562.9

Property, plant and equipment, net
494.7

 
—

 
3,298.6

 
—

 
3,793.3

Investment in subsidiaries
5,957.3

 
3,655.0

 
—

 
(9,612.3
)
 
—

Deferred income taxes
166.2

 
—

 
88.5

 
(147.7
)
 
107.0

Other assets
40.4

 
—

 
548.2

 
—

 
588.6

Long-term receivables—affiliates
—

 
2,262.4

 
—

 
(2,262.4
)
 
—

Intangible assets, net
0.5

 
5.7

 
665.0

 
—

 
671.2

Goodwill
—

 
994.2

 
1,192.1

 
—

 
2,186.3

Total assets
$
7,136.9

 
$
6,939.6

 
$
8,717.3

 
$
(13,884.5
)
 
$
8,909.3

Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Current installments of long-term debt
$
0.6

 
$
67.5

 
$
12.2

 
$
—

 
$
80.3

Accounts payable
59.8

 
—

 
476.6

 
—

 
536.4

Intercompany payables
1,734.4

 
—

 
—

 
(1,734.4
)
 
—

Income taxes payable
0.6

 
—

 
7.6

 
—

 
8.2

Accrued liabilities
133.4

 
—

 
287.9

 
(127.7
)
 
293.6

Total current liabilities
1,928.8

 
67.5

 
784.3

 
(1,862.1
)
 
918.5

Long-term debt
1,158.3

 
2,444.8

 
12.4

 
—

 
3,615.5

Accrued pension liability
164.1

 
—

 
452.6

 
—

 
616.7

Deferred income taxes
—

 
294.7

 
932.3

 
(147.7
)
 
1,079.3

Long-term payables—affiliates
1,277.3

 
—

 
985.1

 
(2,262.4
)
 
—

Other liabilities
277.4

 
—

 
70.9

 
—

 
348.3

Total liabilities
4,805.9

 
2,807.0

 
3,237.6

 
(4,272.2
)
 
6,578.3

Commitments and contingencies
 
 
 
 
 
 
 
 
 
Shareholders' equity:
 
 
 
 
 
 
 
 
 
Common stock
165.2

 
—

 
15.1

 
(15.1
)
 
165.2

Additional paid-in capital
2,240.3

 
4,125.7

 
4,756.4

 
(8,882.1
)
 
2,240.3

Accumulated other comprehensive loss
(479.3
)
 
—

 
(21.1
)
 
21.1

 
(479.3
)
Retained earnings
404.8

 
6.9

 
729.3

 
(736.2
)
 
404.8

Total shareholders' equity
2,331.0

 
4,132.6

 
5,479.7

 
(9,612.3
)
 
2,331.0

Total liabilities and shareholders' equity
$
7,136.9

 
$
6,939.6

 
$
8,717.3

 
$
(13,884.5
)
 
$
8,909.3



31

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Six Months Ended June 30, 2017
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Parent Guarantor
 
Issuer
 
Subsidiary
Non-Guarantor
 
Eliminations
 
Total
Sales
$
652.9

 
$
—

 
$
2,655.1

 
$
(214.4
)
 
$
3,093.6

Operating expenses:
 
 
 
 
 
 
 
 
 
Cost of goods sold
569.5

 
—

 
2,442.7

 
(214.4
)
 
2,797.8

Selling and administration
68.6

 
—

 
99.6

 
—

 
168.2

Restructuring charges
—

 
—

 
16.7

 
—

 
16.7

Acquisition-related costs
11.4

 
—

 
—

 
—

 
11.4

Other operating (expense) income
(4.5
)
 
—

 
4.4

 
—

 
(0.1
)
Operating (loss) income
(1.1
)
 
—

 
100.5

 
—

 
99.4

Earnings of non-consolidated affiliates
1.0

 
—

 
—

 
—

 
1.0

Equity income (loss) in subsidiaries
18.4

 
39.3

 
—

 
(57.7
)
 
—

Interest expense
21.4

 
82.8

 
4.0

 
(3.3
)
 
104.9

Interest income
3.0

 
—

 
0.9

 
(3.3
)
 
0.6

Income (loss) before taxes
(0.1
)
 
(43.5
)
 
97.4

 
(57.7
)
 
(3.9
)
Income tax (benefit) provision
(7.6
)
 
(30.7
)
 
26.9

 
—

 
(11.4
)
Net income (loss)
$
7.5

 
$
(12.8
)
 
$
70.5

 
$
(57.7
)
 
$
7.5



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Three Months Ended June 30, 2017
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Parent Guarantor
 
Issuer
 
Subsidiary
Non-Guarantor
 
Eliminations
 
Total
Sales
$
338.1

 
$
—

 
$
1,294.7

 
$
(106.3
)
 
$
1,526.5

Operating expenses:
 
 
 
 
 
 
 
 
 
Cost of goods sold
294.7

 
—

 
1,215.7

 
(106.3
)
 
1,404.1

Selling and administration
27.5

 
—

 
52.5

 
—

 
80.0

Restructuring charges
—

 
—

 
8.5

 
—

 
8.5

Acquisition-related costs
4.4

 
—

 
—

 
—

 
4.4

Other operating (expense) income
(4.0
)
 
—

 
4.3

 
—

 
0.3

Operating income
7.5

 
—

 
22.3

 
—

 
29.8

Earnings of non-consolidated affiliates
0.5

 
—

 
—

 
—

 
0.5

Equity (loss) income in subsidiaries
(7.8
)
 
4.2

 
—

 
3.6

 
—

Interest expense
9.4

 
41.9

 
3.1

 
(1.9
)
 
52.5

Interest income
2.3

 
—

 
—

 
(1.9
)
 
0.4

Income (loss) before taxes
(6.9
)
 
(37.7
)
 
19.2

 
3.6

 
(21.8
)
Income tax (benefit) provision
(1.0
)
 
(15.5
)
 
0.6

 
—

 
(15.9
)
Net (loss) income
$
(5.9
)
 
$
(22.2
)
 
$
18.6

 
$
3.6

 
$
(5.9
)


32

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Six Months Ended June 30, 2016
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Parent Guarantor
 
Issuer
 
Subsidiary
Non-Guarantor
 
Eliminations
 
Total
Sales
$
650.5

 
$
—

 
$
2,296.0

 
$
(234.3
)
 
$
2,712.2

Operating expenses:
 
 
 
 
 
 
 
 
 
Cost of goods sold
560.7

 
—

 
2,085.9

 
(234.3
)
 
2,412.3

Selling and administration
72.8

 
—

 
94.6

 
—

 
167.4

Restructuring charges
0.6

 
—

 
100.4

 
—

 
101.0

Acquisition-related costs
25.3

 
—

 
1.2

 
—

 
26.5

Other operating (expense) income
(1.1
)
 
—

 
11.8

 
—

 
10.7

Operating (loss) income
(10.0
)
 
—

 
25.7

 
—

 
15.7

Earnings of non-consolidated affiliates
0.6

 
—

 
—

 
—

 
0.6

Equity (loss) income in subsidiaries
(21.2
)
 
59.3

 
—

 
(38.1
)
 
—

Interest expense
21.0

 
76.0

 
1.9

 
(2.8
)
 
96.1

Interest income
1.5

 
—

 
2.1

 
(2.8
)
 
0.8

Income (loss) before taxes
(50.1
)
 
(16.7
)
 
25.9

 
(38.1
)
 
(79.0
)
Income tax benefit
(11.2
)
 
(28.2
)
 
(0.7
)
 
—

 
(40.1
)
Net (loss) income
$
(38.9
)
 
$
11.5

 
$
26.6

 
$
(38.1
)
 
$
(38.9
)


CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Three Months Ended June 30, 2016
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Parent Guarantor
 
Issuer
 
Subsidiary
Non-Guarantor
 
Eliminations
 
Total
Sales
$
329.8

 
$
—

 
$
1,154.7

 
$
(120.5
)
 
$
1,364.0

Operating expenses:
 
 
 
 
 
 
 
 
 
Cost of goods sold
285.4

 
—

 
1,072.0

 
(120.5
)
 
1,236.9

Selling and administration
36.0

 
—

 
43.3

 
—

 
79.3

Restructuring charges
0.3

 
—

 
7.9

 
—

 
8.2

Acquisition-related costs
15.1

 
—

 
1.2

 
—

 
16.3

Other operating (expense) income
(0.6
)
 
—

 
0.4

 
—

 
(0.2
)
Operating (loss) income
(7.6
)
 
—

 
30.7

 
—

 
23.1

Earnings of non-consolidated affiliates
0.4

 
—

 
—

 
—

 
0.4

Equity income (loss) in subsidiaries
7.6

 
15.7

 
—

 
(23.3
)
 
—

Interest expense
10.3

 
37.8

 
0.9

 
(1.4
)
 
47.6

Interest income
0.7

 
—

 
1.2

 
(1.4
)
 
0.5

Income (loss) before taxes
(9.2
)
 
(22.1
)
 
31.0

 
(23.3
)
 
(23.6
)
Income tax (benefit) provision
(8.2
)
 
(14.9
)
 
0.5

 
—

 
(22.6
)
Net (loss) income
$
(1.0
)
 
$
(7.2
)
 
$
30.5

 
$
(23.3
)
 
$
(1.0
)


33

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Six Months Ended June 30, 2017
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Parent Guarantor
 
Issuer
 
Subsidiary
Non-Guarantor
 
Eliminations
 
Total
Net income (loss)
$
7.5

 
$
(12.8
)
 
$
70.5

 
$
(57.7
)
 
$
7.5

Other comprehensive income, net of tax:
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments, net
—

 
—

 
21.9

 
—

 
21.9

Unrealized losses on derivative contracts, net
(5.7
)
 
—

 
—

 
—

 
(5.7
)
Amortization of prior service costs and actuarial losses, net
8.0

 
—

 
0.4

 
—

 
8.4

Total other comprehensive income, net of tax
2.3

 
—

 
22.3

 
—

 
24.6

Comprehensive income (loss)
$
9.8

 
$
(12.8
)
 
$
92.8

 
$
(57.7
)
 
$
32.1



CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three Months Ended June 30, 2017
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Parent Guarantor
 
Issuer
 
Subsidiary
Non-Guarantor
 
Eliminations
 
Total
Net (loss) income
$
(5.9
)
 
$
(22.2
)
 
$
18.6

 
$
3.6

 
$
(5.9
)
Other comprehensive income, net of tax:
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments, net
—

 
—

 
15.9

 
—

 
15.9

Unrealized losses on derivative contracts, net
(3.7
)
 
—

 
—

 
—

 
(3.7
)
Amortization of prior service costs and actuarial losses, net
4.3

 
—

 
0.2

 
—

 
4.5

Total other comprehensive income, net of tax
0.6

 
—

 
16.1

 
—

 
16.7

Comprehensive (loss) income
$
(5.3
)
 
$
(22.2
)
 
$
34.7

 
$
3.6

 
$
10.8




34

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Six Months Ended June 30, 2016
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Parent Guarantor
 
Issuer
 
Subsidiary
Non-Guarantor
 
Eliminations
 
Total
Net (loss) income
$
(38.9
)
 
$
11.5

 
$
26.6

 
$
(38.1
)
 
$
(38.9
)
Other comprehensive income, net of tax:
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments, net
—

 
—

 
4.7

 
—

 
4.7

Unrealized gains on derivative contracts, net
1.2

 
—

 
—

 
—

 
1.2

Amortization of prior service costs and actuarial losses, net
6.7

 
—

 
0.6

 
—

 
7.3

Total other comprehensive income, net of tax
7.9

 
—

 
5.3

 
—

 
13.2

Comprehensive (loss) income
$
(31.0
)
 
$
11.5

 
$
31.9

 
$
(38.1
)
 
$
(25.7
)


CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three Months Ended June 30, 2016
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Parent Guarantor
 
Issuer
 
Subsidiary
Non-Guarantor
 
Eliminations
 
Total
Net (loss) income
$
(1.0
)
 
$
(7.2
)
 
$
30.5

 
$
(23.3
)
 
$
(1.0
)
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments, net
—

 
—

 
(10.8
)
 
—

 
(10.8
)
Unrealized losses on derivative contracts, net
(1.8
)
 
—

 
—

 
—

 
(1.8
)
Amortization of prior service costs and actuarial losses, net
3.4

 
—

 
0.1

 
—

 
3.5

Total other comprehensive income (loss), net of tax
1.6

 
—

 
(10.7
)
 
—

 
(9.1
)
Comprehensive income (loss)
$
0.6

 
$
(7.2
)
 
$
19.8

 
$
(23.3
)
 
$
(10.1
)


35

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2017
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Parent Guarantor
 
Issuer
 
Subsidiary
Non-Guarantor
 
Eliminations
 
Total
Net operating activities
$
124.4

 
$
—

 
$
103.0

 
$
—

 
$
227.4

Investing Activities
 
 
 
 
 
 
 
 
 
Capital expenditures
(43.9
)
 
—

 
(107.0
)
 
—

 
(150.9
)
Proceeds from disposition of property, plant and equipment
—

 
—

 
0.1

 
—

 
0.1

Net investing activities
(43.9
)
 
—

 
(106.9
)
 
—

 
(150.8
)
Financing Activities
 
 
 
 
 
 
 
 
 
Long-term debt:
 
 
 
 
 
 
 
 
 
Borrowings
500.0

 
1,375.0

 
—

 
—

 
1,875.0

Repayments
(590.4
)
 
(1,299.7
)
 
—

 
—

 
(1,890.1
)
Stock options exercised
15.8

 
—

 
—

 
—

 
15.8

Dividends paid
(66.3
)
 
—

 
—

 
—

 
(66.3
)
Debt issuance costs
(8.3
)
 
(2.9
)
 
—

 
—

 
(11.2
)
Intercompany financing activities
72.4

 
(72.4
)
 
—

 
—

 
—

Net financing activities
(76.8
)
 
—

 
—

 
—

 
(76.8
)
Effect of exchange rate changes on cash and cash equivalents
—

 
—

 
0.2

 
—

 
0.2

Net increase (decrease) in cash and cash equivalents
3.7

 
—

 
(3.7
)
 
—

 
—

Cash and cash equivalents, beginning of period
25.2

 
—

 
159.3

 
—

 
184.5

Cash and cash equivalents, end of period
$
28.9

 
$
—

 
$
155.6

 
$
—

 
$
184.5



36

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2016
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Parent Guarantor
 
Issuer
 
Subsidiary
Non-Guarantor
 
Eliminations
 
Total
Net operating activities
$
305.4

 
$
—

 
$
(119.2
)
 
$
—

 
$
186.2

Investing Activities
 
 
 
 
 
 
 
 
 
Capital expenditures
(26.8
)
 
—

 
(110.6
)
 
—

 
(137.4
)
Business acquired in purchase transaction, net of cash acquired
(69.5
)
 
—

 
—

 
—

 
(69.5
)
Payments under long-term supply contract
—

 
—

 
(85.0
)
 
—

 
(85.0
)
Proceeds from disposition of property, plant and equipment
0.2

 
—

 
0.2

 
—

 
0.4

Proceeds from disposition of affiliated companies
4.4

 
—

 
—

 
—

 
4.4

Net investing activities
(91.7
)
 
—

 
(195.4
)
 
—

 
(287.1
)
Financing Activities
 
 
 
 
 
 
 
 
 
Long-term debt repayments
(125.2
)
 
(33.8
)
 
—

 
—

 
(159.0
)
Stock options exercised
0.2

 
—

 
—

 
—

 
0.2

Dividends paid
(66.1
)
 
—

 
—

 
—

 
(66.1
)
Intercompany financing activities
(118.8
)
 
33.8

 
85.0

 
—

 
—

Net financing activities
(309.9
)
 
—

 
85.0

 
—

 
(224.9
)
Effect of exchange rate changes on cash and cash equivalents
—

 
—

 
0.4

 
—

 
0.4

Net decrease in cash and cash equivalents
(96.2
)
 
—

 
(229.2
)
 
—

 
(325.4
)
Cash and cash equivalents, beginning of period
119.4

 
—

 
272.6

 
—

 
392.0

Cash and cash equivalents, end of period
$
23.2

 
$
—

 
$
43.4

 
$
—

 
$
66.6



37

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Business Background

We are a leading vertically-integrated global manufacturer and distributor of chemical products and a leading U.S. manufacturer of ammunition. Our operations are concentrated in three business segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. All of our business segments are capital intensive manufacturing businesses. Chlor Alkali Products and Vinyls operating rates are closely tied to the general economy. Each segment has a commodity element to it, and therefore, our ability to influence pricing is quite limited on the portion of the segment’s business that is strictly commodity.

Our Chlor Alkali Products and Vinyls segment is a commodity business where all supplier products are similar and price is the major supplier selection criterion. We have little or no ability to influence prices in the large, global commodity markets. Our Chlor Alkali Products and Vinyls segment produces some of the most widely used chemicals in the world that can be upgraded into a wide variety of downstream chemical products used in many end-markets. Cyclical price swings, driven by changes in supply/demand, can be abrupt and significant and, given capacity in our Chlor Alkali Products and Vinyls segment, can lead to very significant changes in our overall profitability.

The Epoxy segment consumes products manufactured by the Chlor Alkali Products and Vinyls segment. While competitive differentiation exists through downstream customization and product development opportunities, pricing is extremely competitive with a broad range of competitors across the globe.

Winchester also has a commodity element to its business, but a majority of Winchester ammunition is sold as a branded consumer product where there are opportunities to differentiate certain offerings through innovative new product development and enhanced product performance. While competitive pricing versus other branded ammunition products is important, it is not the only factor in product selection.

Executive Summary

2017 Overview

Chlor Alkali Products and Vinyls generated segment income of $52.8 million and $140.3 million for the three and six months ended June 30, 2017 , respectively. Chlor Alkali Products and Vinyls segment income was higher than the comparable prior year periods due to higher caustic soda and EDC product prices and lower operating costs, partially offset by higher maintenance costs, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with the turnarounds and outages. Electricity costs, primarily driven by higher natural gas prices, and ethylene costs were also higher than the comparable prior year periods. Chlor Alkali Products and Vinyls segment income included depreciation and amortization expense of $106.6 million and $103.4 million for the three months ended June 30, 2017 and 2016 , respectively, and $211.2 million and $205.3 million for the six months ended June 30, 2017 and 2016 , respectively.

For the final nine months of 2016, caustic soda price indices increased resulting in positive product price momentum into 2017. During the first two quarters of 2017, North America caustic soda price contract indices increased an additional $60 per ton. During May 2017, a caustic soda price increase of $70 per ton was announced. This price increase is in the process of being implemented and while the success of this price increase is not yet known, the majority of the benefit, if realized, would impact third and fourth quarters of 2017 results.

Epoxy reported a segment loss of $8.1 million and $9.3 million for the three and six months ended June 30, 2017 , respectively. Epoxy segment results are lower than the comparable prior year periods due to increased raw material costs, primarily associated with benzene and propylene, partially offset by increased product prices. Epoxy segment income included depreciation and amortization expense of $22.8 million and $23.0 million for the three months ended June 30, 2017 and 2016, respectively, and $45.2 million and $44.7 million for the six months ended June 30, 2017 and 2016 , respectively.

Winchester reported segment income of $19.0 million and $44.1 million for the three and six months ended June 30, 2017 , respectively. Winchester segment income declined from the comparable prior year periods primarily due to a lower level of commercial demand for shotshell, pistol and rifle ammunition and a less favorable product mix, partially offset by increased shipments to military customers. Winchester segment income included depreciation and amortization expense of $4.5 million for both the three months ended June 30, 2017 and 2016 , and $9.4 million and $9.1 million for the six months ended June 30, 2017 and 2016 , respectively.


38
Table of Contents

Financing

On March 9, 2017, we entered into a new five-year $1,975.0 million senior credit facility consisting of a $600.0 million senior revolving credit facility, which replaced our previous $500.0 million senior revolving credit facility, and a $1,375.0 million term loan facility. The proceeds of the term loan facility were used to redeem the remaining balance of the existing Senior Credit Facility and a portion of the Sumitomo Credit Facility. The Amended Senior Credit Facility will mature in March 2022.

On March 9, 2017, we issued $500.0 million aggregate principal amount of 5.125% senior notes due September 15, 2027. The proceeds of the 2027 Notes were used to redeem the remaining balance of the Sumitomo Credit Facility.

For the six months ended June 30, 2017 , we made long-term debt repayments of $1,890.1 million including $1,282.5 million related to the existing term loan facility, $590.0 million related to the Sumitomo Credit Facility and $17.2 million under the required quarterly installments of the $1,375.0 million term loan facility.
 
Consolidated Results of Operations
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
 
($ in millions, except per share data)
Sales
$
1,526.5

 
$
1,364.0

 
$
3,093.6

 
$
2,712.2

Cost of goods sold
1,404.1

 
1,236.9

 
2,797.8

 
2,412.3

Gross margin
122.4

 
127.1

 
295.8

 
299.9

Selling and administration
80.0

 
79.3

 
168.2

 
167.4

Restructuring charges
8.5

 
8.2

 
16.7

 
101.0

Acquisition-related costs
4.4

 
16.3

 
11.4

 
26.5

Other operating income (expense)
0.3

 
(0.2
)
 
(0.1
)
 
10.7

Operating income
29.8

 
23.1

 
99.4

 
15.7

Earnings of non-consolidated affiliates
0.5

 
0.4

 
1.0

 
0.6

Interest expense
52.5

 
47.6

 
104.9

 
96.1

Interest income
0.4

 
0.5

 
0.6

 
0.8

Loss before taxes
(21.8
)
 
(23.6
)
 
(3.9
)

(79.0
)
Income tax benefit
(15.9
)
 
(22.6
)
 
(11.4
)
 
(40.1
)
Net (loss) income
$
(5.9
)
 
$
(1.0
)
 
$
7.5

 
$
(38.9
)
Net (loss) income per common share:
 
 
 
 
 
 
 
Basic
$
(0.04
)
 
$
(0.01
)
 
$
0.05

 
$
(0.24
)
Diluted
$
(0.04
)
 
$
(0.01
)
 
$
0.04

 
$
(0.24
)


39
Table of Contents

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Sales for the three months ended June 30, 2017 were $1,526.5 million compared to $1,364.0 million in the same period last year, an increase of $162.5 million , or 12% . Chlor Alkali Products and Vinyls sales increased by $132.1 million primarily due to higher caustic soda and EDC product prices and increased volumes. Epoxy sales increased by $42.0 million primarily due to higher product prices. Winchester sales decreased by $11.6 million primarily due to decreased shipments to commercial customers, partially offset by increased shipments to military customers.

Gross margin decreased $4.7 million compared to the three months ended June 30, 2016 . Epoxy gross margin decreased $12.9 million primarily due to increased raw material costs, primarily associated with benzene and propylene, partially offset by higher product prices. Winchester gross margin decreased $12.4 million primarily due to lower level of commercial demand for shotshell, pistol and rifle ammunition and a less favorable product mix, partially offset by increased shipments to military customers. Chlor Alkali Products and Vinyls gross margin increased by $18.9 million primarily due to higher caustic soda and EDC product prices and lower operating costs, partially offset by higher maintenance costs, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with the turnarounds and outages. Electricity costs, primarily driven by higher natural gas prices, and ethylene costs were also higher than the comparable prior year period. Gross margin as a percentage of sales decreased to 8% in 2017 from 9% in 2016.

Selling and administration expenses for the three months ended June 30, 2017 were $80.0 million , an increase of $0.7 million from the same period last year. The increase was primarily due to an unfavorable foreign currency impact of $2.4 million and higher consulting and contract services of $1.7 million, partially offset by lower legal and legal-related settlement expenses of $1.3 million and lower stock-based compensation expense of $0.8 million, which includes mark-to-market adjustments. Selling and administration expenses as a percentage of sales were 5% in 2017 and 6% in 2016 .

Restructuring charges for the three months ended June 30, 2017 and 2016 of $8.5 million and $8.2 million , respectively, were primarily associated with the closure of 433,000 tons of chlor alkali capacity across three separate locations and permanently closing a portion of the Becancour, Canada chlor alkali facility. Restructuring charges for the three months ended June 30, 2016 were also associated with the relocation of our Winchester centerfire ammunition manufacturing operations from East Alton, IL to Oxford, MS, which was completed in 2016.

Acquisition-related costs of $4.4 million and $16.3 million for the three months ended June 30, 2017 and 2016 , respectively, were related to the integration of the Acquired Business, and consisted of advisory, legal, accounting and other professional fees.

Interest expense increased by $4.9 million for the three months ended June 30, 2017 , primarily due to higher interest rates, partially offset by a lower level of debt outstanding.

The effective tax rate for the three months ended June 30, 2017 included a benefit of $9.5 million related to an agreement reached with the Internal Revenue Service (IRS) for the years 2008, 2010 to 2012 tax examinations. The effective tax rate for the three months ended June 30, 2017 also included a benefit of $0.9 million associated with stock-based compensation. After giving consideration to these items, the effective tax rate for the three months ended June 30, 2017 of 25.2% was lower than the 35% U.S. federal statutory rate primarily due to favorable permanent tax deduction items, such as the salt depletion deduction and tax deductible dividends paid to the Contributing Employee Ownership Plan (CEOP). The effective tax rate for the three months ended June 30, 2016 included a benefit of $4.5 million associated with return to provision adjustments for the finalization of our prior years’ U.S. federal and state income tax returns. The June 30, 2016 return to provision adjustment included $14.2 million of benefit primarily associated with a change in estimate related to the calculation of salt depletion and $9.7 million of expense associated with the correction of an immaterial error related to non-deductible acquisition costs. The effective tax rate for the three months ended June 30, 2016 also included an expense of $4.9 million related to changes in uncertain tax positions for prior tax years. After giving consideration to these items, the effective tax rate for the three months ended June 30, 2016 of 97.5% was higher than the 35% U.S. federal statutory rate, primarily due to favorable permanent salt depletion deductions in combination with a pretax loss.


40
Table of Contents

Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

Sales for the six months ended June 30, 2017 were $3,093.6 million compared to $2,712.2 million in the same period last year, an increase of $381.4 million , or 14% . Chlor Alkali Products and Vinyls sales increased by $264.7 million primarily due to higher caustic soda and EDC product prices and increased volumes. Epoxy sales increased by $149.4 million primarily due to higher product prices and increased volumes. Winchester sales decreased by $32.7 million primarily due to decreased shipments to commercial customers, partially offset by increased shipments to military customers.

Gross margin decreased $4.1 million compared to the six months ended June 30, 2016 . Epoxy gross margin decreased $23.9 million primarily due to increased raw material costs, primarily associated with benzene and propylene, partially offset by higher product prices and increased volumes. Winchester gross margin decreased $18.1 million primarily due to lower volumes and a less favorable product mix, primarily due to lower level of commercial demand for shotshell, pistol and rifle ammunition, partially offset by increased shipments to military customers. Chlor Alkali Products and Vinyls gross margin increased by $35.8 million , primarily due to higher caustic soda and EDC product prices, increased volumes with a favorable product mix and lower operating costs. These increases were partially offset by higher maintenance costs, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with the turnarounds and outages. Electricity costs, primarily driven by higher natural gas prices, and ethylene costs were also higher than the comparable prior year period. Gross margin as a percentage of sales decreased to 10% in 2017 from 11% in 2016.

Selling and administration expenses for the six months ended June 30, 2017 were $168.2 million , an increase of $0.8 million from the same period last year. The increase was primarily due to an unfavorable foreign currency impact of $4.0 million and higher stock-based compensation expense of $4.5 million, which includes mark-to-market adjustments, partially offset by lower legal and legal-related settlement expenses of $6.0 million. Selling and administration expenses as a percentage of sales were 5% in 2017 and 6% in 2016 .

Restructuring charges for the six months ended June 30, 2017 and 2016 of $16.7 million and $101.0 million , respectively, were primarily associated with the closure of 433,000 tons of chlor alkali capacity across three separate locations and permanently closing a portion of the Becancour, Canada chlor alkali facility. For the six months ended June 30, 2016 , $76.6 million of these charges were non-cash asset impairment charges for equipment and facilities. Restructuring charges for the six months ended June 30, 2016 were also associated with the relocation of our Winchester centerfire ammunition manufacturing operations from East Alton, IL to Oxford, MS, which was completed in 2016.

Acquisition-related costs of $11.4 million and $26.5 million for the six months ended June 30, 2017 and 2016 , respectively, were related to the integration of the Acquired Business, and consisted of advisory, legal, accounting and other professional fees.

Other operating income (expense) for the six months ended June 30, 2016 included an $11.0 million insurance recovery for property damage and business interruption related to a 2008 chlor alkali facility incident.

Interest expense increased by $8.8 million for the six months ended June 30, 2017 , primarily due to higher interest rates and the write-off of unamortized deferred debt issuance costs of $2.7 million associated with the redemption of the Sumitomo Credit Facility and the Senior Credit Facility. These increases were partially offset by a lower level of debt outstanding.

The effective tax rate for the six months ended June 30, 2017 included a benefit of $9.5 million related to an agreement reached with the IRS for the years 2008, 2010 to 2012 tax examinations and a benefit of $2.4 million associated with stock-based compensation. The effective tax rate for the six months ended June 30, 2017 also included $1.0 million of tax expense associated with prior year tax positions. After giving consideration to these items, the effective tax rate for the six months ended June 30, 2017 of 12.8% was lower than the 35% U.S. federal statutory rate primarily due to favorable permanent tax deduction items, such as the salt depletion deduction and tax deductible dividends paid to the CEOP. The effective tax rate for the six months ended June 30, 2016 included a benefit of $4.5 million associated with return to provision adjustments for the finalization of our prior years’ U.S. federal and state income tax returns. The June 30, 2016 return to provision adjustment included $14.2 million of benefit primarily associated with a change in estimate related to the calculation of salt depletion and $9.7 million of expense associated with the correction of an immaterial error related to non-deductible acquisition costs. The effective tax rate for the six months ended June 30, 2016 also included an expense of $4.0 million related to changes in uncertain tax positions for prior tax years. After giving consideration to these items, the effective tax rate for the six months ended June 30, 2016 of 50.1% was higher than the 35% U.S. federal statutory rate, primarily due to favorable permanent salt depletion deductions in combination with a pretax loss.


41
Table of Contents

Segment Results

We define segment results as income (loss) before interest expense, interest income, other operating income (expense), and income taxes, and include the operating results of non-consolidated affiliates. Consistent with the guidance in ASC 280, “Segment Reporting” (ASC 280), we have determined it is appropriate to include the operating results of non-consolidated affiliates in the relevant segment financial results. We have three operating segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. The three operating segments reflect the organization used by our management for purposes of allocating resources and assessing performance. Chlorine used in our Epoxy segment is transferred at cost from the Chlor Alkali Products and Vinyls segment. Sales and profits are recognized in the Chlor Alkali Products and Vinyls segment for all caustic soda generated and sold by Olin.

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Sales:
($ in millions)
Chlor Alkali Products and Vinyls
$
865.1

 
$
733.0

 
$
1,702.0

 
$
1,437.3

Epoxy
492.0

 
450.0

 
1,059.6

 
910.2

Winchester
169.4

 
181.0

 
332.0

 
364.7

Total sales
$
1,526.5

 
$
1,364.0

 
$
3,093.6

 
$
2,712.2

Income (loss) before taxes:
 
 
 
 
 
 
 
Chlor Alkali Products and Vinyls (1)
$
52.8

 
$
30.7

 
$
140.3

 
$
98.8

Epoxy
(8.1
)
 
—

 
(9.3
)
 
8.2

Winchester
19.0

 
31.2

 
44.1

 
59.9

Corporate/other:

 

 
 
 
 
Pension income (2)
10.7

 
12.6

 
21.0

 
24.8

Environmental expense
(1.8
)
 
(2.4
)
 
(4.4
)
 
(5.1
)
Other corporate and unallocated costs
(29.7
)
 
(23.9
)
 
(63.1
)
 
(53.5
)
Restructuring charges (3)
(8.5
)
 
(8.2
)
 
(16.7
)
 
(101.0
)
Acquisition-related costs (4)
(4.4
)
 
(16.3
)
 
(11.4
)
 
(26.5
)
Other operating income (expense) (5)
0.3

 
(0.2
)
 
(0.1
)
 
10.7

Interest expense
(52.5
)
 
(47.6
)
 
(104.9
)
 
(96.1
)
Interest income
0.4

 
0.5

 
0.6

 
0.8

Loss before taxes
$
(21.8
)
 
$
(23.6
)
 
$
(3.9
)
 
$
(79.0
)

(1)
Earnings of non-consolidated affiliates are included in the Chlor Alkali Products and Vinyls segment results consistent with management’s monitoring of the operating segments. The earnings of non-consolidated affiliates were $0.5 million and $0.4 million for the three months ended June 30, 2017 and 2016 , respectively, and $1.0 million and $0.6 million for the six months ended June 30, 2017 and 2016 , 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)
Restructuring charges for the three months ended June 30, 2017 and 2016 of $8.5 million and $8.2 million , respectively, and for the six months ended June 30, 2017 and 2016 of $16.7 million and $101.0 million , respectively, were primarily associated with the closure of 433,000 tons of chlor alkali capacity across three separate locations and permanently closing a portion of the Becancour, Canada chlor alkali facility. For six months ended June 30, 2016 , $76.6 million of these charges were non-cash asset impairment charges for equipment and facilities. Restructuring charges for the three and six months ended June 30, 2016 were also associated with the relocation of our Winchester centerfire ammunition manufacturing operations from East Alton, IL to Oxford, MS which was completed in 2016.

(4)
Acquisition-related costs for the three and six months ended June 30, 2017 and 2016 were related to the integration of the Acquired Business, and consisted of advisory, legal, accounting and other professional fees.


42
Table of Contents

(5)
Other operating income (expense) for the six months ended June 30, 2016 included an $11.0 million insurance recovery for property damage and business interruption related to a 2008 chlor alkali facility incident.

Chlor Alkali Products and Vinyls

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Chlor Alkali Products and Vinyls sales for the three months ended June 30, 2017 were $865.1 million compared to $733.0 million for the same period in 2016 , an increase of $132.1 million , or 18% . The sales increase was primarily due to higher product prices ($103.8 million) and increased volumes ($28.3 million). The higher product prices were primarily related to caustic soda and EDC prices.

Chlor Alkali Products and Vinyls segment income was $52.8 million for the three months ended June 30, 2017 compared to $30.7 million for the same period in 2016 , an increase of $22.1 million , or 72% . Chlor Alkali Products and Vinyls segment income was higher due to higher product prices ($103.8 million) and lower operating costs ($11.1 million). These increases were partially offset by higher maintenance costs, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with the turnarounds and outages ($74.8 million). Electricity costs, primarily driven by higher natural gas prices, and ethylene costs were also higher compared to the prior year ($18.0 million). The higher product prices were primarily related to caustic soda and EDC prices. Chlor Alkali Products and Vinyls segment income included depreciation and amortization expense of $106.6 million and $103.4 million for the three months ended June 30, 2017 and 2016 , respectively.

Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

Chlor Alkali Products and Vinyls sales for the six months ended June 30, 2017 were $1,702.0 million compared to $1,437.3 million for the same period in 2016 , an increase of $264.7 million , or 18% . The sales increase was primarily due to increased product prices ($177.9 million) and increased volumes ($86.8 million). The higher product prices and increased volumes were primarily due to caustic soda and EDC.

Chlor Alkali Products and Vinyls segment income was $140.3 million for the six months ended June 30, 2017 compared to $98.8 million for the same period in 2016 , an increase of $41.5 million , or 42% . Chlor Alkali Products and Vinyls segment income was higher due to higher product prices ($177.9 million), lower operating costs ($15.0 million) and increased volumes with a favorable product mix ($5.8 million). These increases were partially offset by higher planned maintenance costs, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with the turnarounds and outages ($102.5 million). Electricity costs, primarily driven by higher natural gas prices, and ethylene costs were also higher compared to the prior year ($54.7 million). The higher product prices and increased volumes were primarily related to caustic soda and EDC. Chlor Alkali Products and Vinyls segment income included depreciation and amortization expense of $211.2 million and $205.3 million for the six months ended June 30, 2017 and 2016 , respectively.

Epoxy

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Epoxy sales for the three months ended June 30, 2017 were $492.0 million compared to $450.0 million for the same period in 2016 , an increase of $42.0 million , or 9% . The sales increase was primarily due to higher product prices ($42.0 million).

Epoxy segment loss was $8.1 million for the three months ended June 30, 2017 , compared to breakeven for the same period in 2016, a decrease in segment results of $8.1 million . Epoxy segment results were lower primarily due to increased raw material costs ($56.6 million), primarily associated with benzene and propylene. These decreases were partially offset by higher product prices ($42.0 million) and lower operating costs ($6.5 million). Epoxy segment income included depreciation and amortization expense of $22.8 million and $23.0 million for the three months ended June 30, 2017 and 2016 , respectively.


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Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

Epoxy sales for the six months ended June 30, 2017 were $1,059.6 million compared to $910.2 million for the same period in 2016 , an increase of $149.4 million , or 16% . The sales increase was primarily due to higher product prices ($82.1 million) and increased volumes and product mix ($67.3 million).

Epoxy segment loss was $9.3 million for the six months ended June 30, 2017 compared to segment income of $8.2 million for the same period in 2016 , a decrease in segment results of $17.5 million . Epoxy segment results were lower primarily due to increased raw material costs ($134.2 million), primarily associated with benzene and propylene. These decreases were partially offset by higher product prices ($82.1 million), increased volumes and product mix ($30.9 million) and lower operating costs ($3.7 million). Epoxy segment income included depreciation and amortization expense of $45.2 million and $44.7 million for the six months ended June 30, 2017 and 2016 , respectively.

Winchester

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Winchester sales were $169.4 million for the three months ended June 30, 2017 compared to $181.0 million for the same period in 2016 , a decrease of $11.6 million , or 6% . The sales decrease was primarily due to lower ammunition sales to commercial customers ($20.9 million), partially offset by increased shipments to military customers ($10.6 million). The decrease in commercial sales primarily reflects lower demand in shotshell, pistol and rifle ammunition.

Winchester reported segment income of $19.0 million for the three months ended June 30, 2017 compared to $31.2 million for the same period in 2016 , a decrease of $12.2 million , or 39% . The decrease was due to lower volumes and a less favorable product mix ($4.9 million), increased operating costs ($3.4 million), increased commodity and other material costs ($2.1 million) and lower product prices ($1.8 million). Winchester segment income included depreciation and amortization expense of $4.5 million for both the three months ended June 30, 2017 and 2016 .

Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

Winchester sales were $332.0 million for the six months ended June 30, 2017 compared to $364.7 million for the same period in 2016 , a decrease of $32.7 million , or 9% . The sales decrease was primarily due to lower ammunition sales to commercial customers ($49.7 million), partially offset by increased shipments to military customers ($17.0 million). The decrease in commercial sales primarily reflects lower demand in shotshell, pistol and rifle ammunition.

Winchester reported segment income of $44.1 million for the six months ended June 30, 2017 compared to $59.9 million for the same period in 2016 , a decrease of $15.8 million , or 26% . The decrease was due to lower volumes and a less favorable product mix ($12.5 million), increased commodity and other material costs ($2.0 million) and lower product prices ($2.5 million). These decreases were partially offset by lower operating costs ($1.2 million). Winchester segment income included depreciation and amortization expense of $9.4 million and $9.1 million for the six months ended June 30, 2017 and 2016 , respectively.

Corporate/Other

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

For the three months ended June 30, 2017 , pension income included in corporate/other was $10.7 million compared to $12.6 million for the three months ended June 30, 2016 . On a total company basis, defined benefit pension income for the three months ended June 30, 2017 , was $6.9 million compared to $9.5 million for the three months ended June 30, 2016 .

For the three months ended June 30, 2017 , charges to income for environmental investigatory and remedial activities were $1.8 million compared to $2.4 million for the three months ended June 30, 2016 . These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites.

For the three months ended June 30, 2017 , other corporate and unallocated costs were $29.7 million compared to $23.9 million for the three months ended June 30, 2016 , an increase of $5.8 million . The increase was primarily due to an unfavorable foreign currency impact of $2.4 million, increased consulting charges of $1.6 million and increased legal and legal-related settlement expenses of $1.4 million.

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Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

For the six months ended June 30, 2017 , pension income included in corporate/other was $21.0 million compared to $24.8 million for the six months ended June 30, 2016 . On a total company basis, defined benefit pension income for the six months ended June 30, 2017 , was $13.4 million compared to $18.4 million for the six months ended June 30, 2016 .

For the six months ended June 30, 2017 , charges to income for environmental investigatory and remedial activities were $4.4 million compared to $5.1 million for the six months ended June 30, 2016 . These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites.

For the six months ended June 30, 2017 , other corporate and unallocated costs were $63.1 million compared to $53.5 million for the six months ended June 30, 2016 , an increase of $9.6 million . The increase was primarily due to an unfavorable foreign currency impact of $4.0 million, higher stock-based compensation expense of $4.5 million, which includes mark-to-market adjustments, and increased consulting charges of $3.3 million. Partially offsetting these increases were decreased legal and legal-related settlement expenses of $2.5 million.

Outlook

Net income in 2017 is projected to be in the $0.70 to $1.15 per diluted share range, which includes pretax restructuring charges and pretax acquisition-related integration costs totaling approximately $50 million. Net loss in 2016 was $0.02 per diluted share, which included pretax acquisition-related integration costs of $48.8 million and pretax restructuring charges of $112.9 million.

The second half 2017 earnings are forecast to improve compared to first half 2017 levels. The second half 2017 earnings are expected to benefit from reduced maintenance turnaround activity compared to first half 2017 levels. The Chlor Alkali Products and Vinyls segment is forecast to benefit in the second half 2017 from stronger demand across all products, improved caustic soda and chlorine pricing and lower ethylene costs. The second half 2017 Epoxy segment income is expected to benefit from higher product prices and lower raw material costs associated with benzene and propylene than experienced in the first half 2017. In second half 2017, we expect Winchester will benefit from the seasonally strong third quarter commercial ammunition demand and an expected improvement in military sales.

Chlor Alkali Products and Vinyls 2017 segment income is expected to be higher compared to 2016 segment income of $224.9 million reflecting higher chlorine, caustic soda and EDC prices and additional cost synergy realization, partially offset by the impact of higher maintenance turnaround costs and higher electricity costs, driven by increased natural gas costs. We also expect the benefits of lower purchased ethylene prices beginning in the third quarter.

Epoxy 2017 segment income is expected to be equal to or slightly lower than 2016 segment income of $15.4 million as improved volumes and pricing year over year are expected to be more than offset by the higher raw material costs, associated with benzene and propylene, and increased turnaround and outage costs.

Winchester 2017 segment income is expected to be in the $95 million to $105 million range, compared to $120.9 million of segment income achieved during 2016. The forecast for Winchester is primarily driven by lower ammunition demand, due primarily to an overall reduction in both purchases and inventory reductions by our customers and higher commodity and material costs. We expect the decrease in commercial sales to be partially offset by an increase year over year in military sales. The Oxford, MS relocation project was completed during 2016. This relocation reduced Winchester's annual operating costs by approximately $40 million in 2016 and, in 2017, we expect the cost savings from the completed project to reach approximately $45 million.

Other Corporate and Unallocated costs in 2017 are expected to be higher than 2016 Other Corporate and Unallocated costs of $100.2 million driven by stock-based compensation, legal and litigation costs and the full year effect of the increased corporate infrastructure costs to support the integration of the Acquired Business.

During 2017, we are anticipating environmental expenses in the $15 million to $20 million range compared to $9.2 million in 2016. We do not expect to recover any environmental costs incurred and expensed in prior periods in 2017. In connection with the Acquisition, TDCC has retained liabilities relating to litigation, releases of hazardous materials and violations of environmental law to the extent arising prior to the Closing Date.


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We expect qualified defined benefit pension plan income in 2017 to be lower than the 2016 level by approximately $10 million. Based on our plan assumptions and estimates, we will not be required to make any cash contributions to our domestic qualified defined benefit pension plan in 2017. We do have several international qualified defined benefit pension plans to which we anticipate cash contributions of less than $5 million in 2017.

Approximately 30% of our debt is at variable rates, including the impact of our interest rate swaps. We are estimating our 2017 average interest rate on outstanding debt will be approximately 5%. During 2017, a total of approximately $65 million of debt will mature that is expected to be repaid using available cash.

In 2017, we currently expect our capital spending to be in the $300 million to $350 million range, which includes approximately $35 million of synergy-related capital, which we believe is necessary to realize the anticipated synergies. In 2017, we also expect to make payments of $209.4 million associated with long-term supply contracts. We expect 2017 depreciation and amortization expense to be in the $530 million to $540 million range.

The effective tax rate for 2017 includes a benefit of $9.5 million related to an agreement reached with the IRS regarding tax examination years 2008, and 2010 to 2012. After giving consideration to this item, we currently believe the 2017 effective tax rate will be in the 25% to 30% range.


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Environmental Matters

Environmental provisions charged to income, which are included in costs of goods sold, were $1.8 million and $2.4 million for the three months ended June 30, 2017 and 2016 , respectively, and $4.4 million and $5.1 million for the six months ended June 30, 2017 and 2016 , respectively.

Our liabilities for future environmental expenditures were as follows:
 
June 30,
 
2017
 
2016
 
($ in millions)
Balance at beginning of year
$
137.3

 
$
138.1

Charges to income
4.4

 
5.1

Remedial and investigatory spending
(6.1
)
 
(4.9
)
Currency translation adjustments
0.1

 
0.6

Balance at end of period
$
135.7

 
$
138.9


Environmental investigatory and remediation activities spending was associated with former waste disposal sites and past manufacturing operations. Spending in 2017 for investigatory and remedial efforts, the timing of which is subject to regulatory approvals and other uncertainties, is estimated to be approximately $17 million. Cash outlays for remedial and investigatory activities associated with former waste disposal sites and past manufacturing operations were not charged to income, but instead, were charged to reserves established for such costs identified and expensed to income in prior periods. 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. Our ability to estimate future costs depends on whether our investigatory and remedial activities are in preliminary or advanced stages. With respect to unasserted claims, we accrue liabilities for costs that, in our experience, we may incur to protect our interest against those unasserted claims. Our accrued liabilities for unasserted claims amounted to $0.8 million at June 30, 2017 . With respect to asserted claims, we accrue liabilities based on remedial investigation, feasibility study, remedial action and Operation, Maintenance and Monitoring (OM&M) expenses that, in our experience, we may incur in connection with the asserted claims. Required site OM&M expenses are estimated and accrued in their entirety for required periods not exceeding 30 years, which reasonably approximates the typical duration of long-term site OM&M. Charges to income for investigatory and remedial efforts could be material to operating results in 2017.

In connection with the Acquisition, TDCC retained liabilities relating to releases of hazardous materials and violations of environmental law to the extent arising prior to the Closing Date.

Our condensed balance sheets included liabilities for future environmental expenditures to investigate and remediate known sites amounting to $135.7 million at June 30, 2017 , $137.3 million at December 31, 2016 and $138.9 million at June 30, 2016 , of which $118.7 million , $120.3 million and $119.9 million , respectively, were classified as other noncurrent liabilities. These amounts do not take into account any discounting of future expenditures or any consideration of insurance recoveries or advances in technology. These liabilities are reassessed periodically to determine if environmental circumstances have changed and/or remediation efforts and our estimate of related costs have changed. As a result of these reassessments, future charges to income may be made for additional liabilities.

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, changes in regulatory authorities, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other PRPs, our ability to obtain contributions from other parties and the lengthy time periods 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 to us, which could materially adversely affect our financial position or results of operations.


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Legal Matters and Contingencies

We, and our subsidiaries, are defendants in various legal actions (including proceedings based on alleged exposures to asbestos) incidental to our past and current business activities. As of June 30, 2017 , December 31, 2016 and June 30, 2016 , our condensed balance sheets included liabilities for these legal actions of $15.9 million , $13.6 million and $22.1 million , respectively. These liabilities do not include costs associated with legal representation. Based on our analysis, and considering the inherent uncertainties associated with litigation, we do not believe that it is reasonably possible that these legal actions will materially adversely affect our financial position, cash flows or results of operations. In connection with the Acquisition, TDCC retained liabilities related to litigation to the extent arising prior to the Closing Date. In addition to the aforementioned legal actions, we are party to a dispute relating to a contract termination. The other party to the contract has filed a demand for arbitration alleging, among other things, that Olin breached the related agreement and claimed damages in excess of the amount Olin believes it is obligated for under the contract. Any additional losses related to this contract dispute are not currently estimable because of unresolved questions of fact and law but, if resolved unfavorably to Olin, they could have a material effect on our financial results.

During the ordinary course of our business, contingencies arise resulting from an existing condition, situation or set of circumstances involving an uncertainty as to the realization of a possible gain contingency. In certain instances such as environmental projects, we are responsible for managing the cleanup and remediation of an environmental site. There exists the possibility of recovering a portion of these costs from other parties. We account for gain contingencies in accordance with the provisions of ASC 450, and, therefore, do not record gain contingencies and recognize income until it is earned and realizable.

For the six months ended June 30, 2016 , we recognized an insurance recovery of $11.0 million in other operating income (expense) for property damage and business interruption related to a 2008 chlor alkali facility incident.


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Liquidity, Investment Activity and Other Financial Data

Cash Flow Data
 
Six Months Ended
June 30,
 
2017
 
2016
Provided By (Used For)
($ in millions)
Net operating activities
$
227.4

 
$
186.2

Capital expenditures
(150.9
)
 
(137.4
)
Business acquired in purchase transaction, net of cash acquired
—

 
(69.5
)
Payments under long-term supply contract
—

 
(85.0
)
Net investing activities
(150.8
)
 
(287.1
)
Long-term debt (repayments) borrowings, net
(15.1
)
 
(159.0
)
Stock options exercised
15.8

 
0.2

Debt issuance costs
(11.2
)
 
—

Net financing activities
(76.8
)
 
(224.9
)

Operating Activities

For the six months ended June 30, 2017 , cash provided by operating activities increased by $41.2 million from the six months ended June 30, 2016 , primarily due to a smaller increase in working capital. For the six months ended June 30, 2017 , working capital increased $31.6 million compared to an increase of $63.2 million for the six months ended June 30, 2016 . Receivables increased from December 31, 2016 by $97.9 million primarily as a result of higher sales in the second quarter of 2017 compared to the fourth quarter of 2016. Inventories increased from December 31, 2016 by $26.3 million and accounts payable and accrued liabilities increased from December 31, 2016 by $99.6 million . The increase in inventories and accounts payable and accrued liabilities was primarily due to an increase in raw material costs, primarily associated with benzene and propylene.

Investing Activities

Capital spending of $150.9 million for the six months ended June 30, 2017 was $13.5 million higher than the corresponding period in 2016 . Capital spending for the six months ended June 30, 2017 included approximately $20 million of synergy-related capital. For the total year 2017, we expect our capital spending to be in the $300 million to $350 million range, which includes approximately $35 million of capital which we believe is necessary to realize the anticipated synergies. In 2017, we also expect to make payments of $209.4 million associated with long-term supply contracts. Depreciation and amortization expense is forecast to be in the $530 million to $540 million range.

During the six months ended June 30, 2016 , payments of $69.5 million were made related to the Acquisition for certain acquisition-related liabilities including the final working capital adjustment.

During the six months ended June 30, 2016 , payments of $85.0 million were made related to arrangements for the long-term supply of low cost electricity.

During the six months ended June 30, 2016 , we received $4.4 million from the October 2013 sale of a bleach joint venture.

Financing Activities

On March 9, 2017, we entered into the Amended Senior Credit Facility. Pursuant to the agreement, the aggregate principal amount under the Term Loan Facility was increased to $1,375.0 million , and the aggregate commitments under the Senior Revolving Credit Facility were increased to $600.0 million , from $500.0 million . In March 2017, we drew the entire $1,375.0 million term loan and used the proceeds to redeem the remaining balance of the existing Senior Credit Facility and a portion of the Sumitomo Credit Facility. The maturity date for the Amended Senior Credit Facility was extended from
October 5, 2020 to March 9, 2022.


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On March 9, 2017, Olin issued $500.0 million aggregate principal amount of 5.125% senior notes due September 15, 2027, which were registered under the Securities Act of 1933, as amended. Interest on the 2027 Notes began accruing from March 9, 2017 and is paid semi-annually beginning on September 15, 2017. Proceeds from the 2027 Notes were used to redeem the remaining balance of the Sumitomo Credit Facility.

For the six months ended June 30, 2017 , we made long-term debt repayments of $1,890.1 million including $1,282.5 million related to the existing term loan facility, $590.0 million related to the Sumitomo Credit Facility and $17.2 million under the required quarterly installments of the $1,375.0 million term loan facility.

In March 2017, we paid debt issuance costs of $11.2 million relating to the Amended Senior Credit Facility and the 2027 Notes.

In June 2016, $125.0 million under the 2016 Notes became due and was repaid. For the six months ended June 30, 2016 , we repaid $33.8 million under the required quarterly installments of the $1,350.0 million term loan facility.

We issued 0.9 million and less than 0.1 million shares representing stock options exercised for the six months ended June 30, 2017 and 2016 , respectively, with a total value of $15.8 million and $0.2 million , respectively.

The percent of total debt to total capitalization was 61.5% and 61.4% as of June 30, 2017 and December 31, 2016 , respectively.

In the first two quarters of 2017 and 2016 , we paid a quarterly dividend of $0.20 per share. Dividends paid for the six months ended June 30, 2017 and 2016 , were $66.3 million and $66.1 million , respectively. On July 27, 2017, our board of directors declared a dividend of $0.20 per share on our common stock, payable on September 11, 2017 to shareholders of record on August 10, 2017.

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 condition, 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.

Liquidity and Other Financing Arrangements

Our principal sources of liquidity are from cash and cash equivalents, cash flow from operations and short-term borrowings under our senior revolving credit facility, AR Facilities and Receivables Financing Agreement. Additionally, we believe that we have access to the debt and equity markets.

In connection with the Acquisition, Olin and TDCC entered into arrangements for the long-term supply of ethylene by TDCC to Olin, pursuant to which, among other things, Olin made upfront payments of $433.5 million on the Closing Date in order to receive ethylene at producer economics and for certain reservation fees for the option to obtain additional future ethylene supply at producer economics. During 2016, one of the options to reserve additional future ethylene supply at producer economics was exercised by us and, accordingly, additional payments will be made to TDCC of $209.4 million in 2017. On February 27, 2017, we exercised the remaining option to reserve additional future ethylene supply and in connection with the exercise we also secured a long-term customer arrangement. Consequently, additional payments will be made to TDCC of between $425 million and $465 million on or about the fourth quarter of 2020.

The overall change in cash for the six months ended June 30, 2017 primarily reflects capital spending and increased working capital partially offset by our operating results. We believe, based on current and projected levels of cash flow from our operations, together with our cash and cash equivalents on hand and the availability to borrow under our Senior Revolving Credit Facility, we have sufficient liquidity to meet our short-term and long-term needs to make required payments of interest on our debt, make amortization payments under the Term Loan Facility, make required payments under long-term supply agreements, fund our operating needs, fund working capital and capital expenditure requirements and comply with the financial ratios in our debt agreements.

On March 9, 2017, we entered into the Amended Senior Credit Facility. Pursuant to the agreement, the aggregate principal amount under the Term Loan Facility was increased to $1,375.0 million , and the aggregate commitments under the Senior Revolving Credit Facility were increased to $600.0 million , from $500.0 million . In March 2017, we drew the entire $1,375.0 million term loan and used the proceeds to redeem the remaining balance of the existing Senior Credit Facility and a portion of the Sumitomo Credit Facility. The maturity date for the Amended Senior Credit Facility was extended from October

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5, 2020 to March 9, 2022. The  $600.0 million  Senior Revolving Credit Facility includes a  $100.0 million  letter of credit subfacility. The Term Loan Facility includes amortization payable in equal quarterly installments at a rate of 5.0% per annum for the first two years, increasing to 7.5% per annum for the following year and to 10.0% per annum for the last two years.

Under the Amended Senior Credit Facility, we may select various floating-rate borrowing options. The actual interest rate paid on borrowings under the Amended Senior Credit Facility is based on a pricing grid which is dependent upon the leverage ratio as calculated under the terms of the applicable facility for the prior fiscal quarter.  The facility includes various customary restrictive covenants, including restrictions related to the ratio of debt to earnings before interest expense, taxes, depreciation and amortization (leverage ratio) and the ratio of earnings before interest expense, taxes, depreciation and amortization to interest expense (coverage ratio).  Compliance with these covenants is determined quarterly based on the operating cash flows. We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of June 30, 2017 , and no event of default had occurred that would permit the lenders under our outstanding credit agreements to accelerate the debt if not cured. In the future, our ability to generate sufficient operating cash flows, among other factors, will determine the amounts available to be borrowed under these facilities. As of June 30, 2017 , as a result of our restrictive covenant related to the leverage ratio, the maximum additional borrowings available to us were $547.1 million .  This limitation would restrict our ability to borrow the maximum amounts available under the Senior Revolving Credit Facility and the Receivables Financing Agreement.  As of June 30, 2017 , there were no other covenants or other restrictions that would have limited our ability to borrow.

On March 9, 2017, Olin issued $500.0 million aggregate principal amount of 5.125% senior notes due September 15, 2027, which were registered under the Securities Act of 1933, as amended. Interest on the 2027 Notes began accruing from March 9, 2017 and is paid semi-annually beginning on September 15, 2017. Proceeds from the 2027 Notes were used to redeem the remaining balance of the Sumitomo Credit Facility.

On June 29, 2016, we entered into a trade accounts receivable factoring arrangement which was amended on September 1, 2016 and, on December 22, 2016, we entered into a separate trade accounts receivable factoring arrangement which was amended on March 24, 2017. Pursuant to the terms of the AR Facilities, certain of our subsidiaries may sell their accounts receivable up to a maximum of $256.5 million . We will continue to service such accounts. These receivables qualify for sales treatment under ASC 860 and, accordingly, the proceeds are included in net cash provided by operating activities in the condensed statements of cash flows. The gross amount of receivables sold for the three months ended June 30, 2017 and 2016 totaled $388.0 million and $26.8 million , respectively, and for the six months ended June 30, 2017 and 2016 totaled $777.6 million and $26.8 million , respectively.  The factoring discount paid under the AR Facilities is recorded as interest expense on the condensed statements of operations. The agreements are without recourse and therefore no recourse liability has been recorded as of June 30, 2017 .  As of June 30, 2017 , December 31, 2016 and June 30, 2016 , $148.4 million , $126.1 million and $26.8 million , respectively, of receivables qualifying for sales treatment were outstanding and will continue to be serviced by us.

On December 20, 2016, we entered into a three year, $250.0 million Receivables Financing Agreement. Under the Receivables Financing Agreement, our eligible trade receivables are used for collateralized borrowings and continue to be serviced by us. As of June 30, 2017 , $326.1 million of our trade receivables were pledged as collateral and we had $210.0 million drawn under the agreement. As of June 30, 2017 , we had additional borrowing capacity of $32.3 million under the Receivables Financing Agreement. As of December 31, 2016 , $282.3 million of our trade receivables were pledged as collateral. For the year ended December 31, 2016 , the proceeds of the Receivables Financing Agreement were used to repay $210.0 million of the Sumitomo Credit Facility. In addition, the Receivables Financing Agreement incorporates the leverage and coverage covenants that are contained in the Amended Senior Credit Facility.

Cash flow from operations is variable as a result of both the seasonal and the cyclical nature of our operating results, which have been affected by seasonal and economic cycles in many of the industries we serve, such as the vinyls, urethanes, bleach, ammunition and pulp and paper. The Acquired Business has significantly diversified our product and geographic base. Cash flow from operations is affected by changes in caustic soda, EDC and chlorine selling prices caused by the changes in the supply/demand balance of these products, resulting in the Chlor Alkali Products and Vinyls segment having significant leverage on our earnings and cash flow. For example, assuming all other costs remain constant, internal consumption remains approximately the same and we are operating at full capacity, a $10 selling price change per ton of caustic soda equates to an approximate $30 million annual change in our revenues and pretax profit, a $0.01 selling price change per pound of EDC equates to an approximate $20 million annual change in our revenues and pretax profit, and a $10 selling price change per ton of chlorine equates to an approximate $10 million annual change in our revenues and pretax profit.


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For the six months ended June 30, 2017 , cash provided by operating activities increased by $41.2 million from the six months ended June 30, 2016 , primarily due to a smaller increase in working capital. For the six months ended June 30, 2017 , working capital increased $31.6 million compared to an increase of $63.2 million for the six months ended June 30, 2016 . Receivables increased from December 31, 2016 by $97.9 million primarily as a result of higher sales in the second quarter of 2017 compared to the fourth quarter of 2016. Inventories increased from December 31, 2016 by $26.3 million and accounts payable and accrued liabilities increased from December 31, 2016 by $99.6 million . The increase in inventories and accounts payable and accrued liabilities was primarily due to an increase in raw material costs, primarily associated with benzene and propylene.

Capital spending of $150.9 million for the six months ended June 30, 2017 was $13.5 million higher than the corresponding period in 2016 . Capital spending for the six months ended June 30, 2017 included approximately $20 million of synergy-related capital. For the total year 2017, we expect our capital spending to be in the $300 million to $350 million range, which includes approximately $35 million of capital which we believe is necessary to realize the anticipated synergies. In 2017, we also expect to make payments of $209.4 million associated with long-term supply contracts. Depreciation and amortization expense is forecast to be in the $530 million to $540 million range.

On April 24, 2014, our board of directors authorized a share repurchase program for up to 8 million shares of common stock that terminated on April 24, 2017. For the six months ended June 30, 2017 , no shares were purchased and retired. We purchased a total of 1.9 million shares under the April 2014 program, and the 6.1 million shares that remained authorized to be purchased have expired. Related to the Acquisition, for a period of two years subsequent to the Closing Date, we are subject to certain restrictions on our ability to conduct share repurchases.

At June 30, 2017 , we had total letters of credit of $69.8 million outstanding, of which $16.6 million were issued under our $600.0 million Senior Revolving Credit Facility. The letters of credit were used to support certain long-term debt, certain workers compensation insurance policies, certain plant closure and post-closure obligations and certain Canadian pension funding requirements.

As of June 30, 2017 , we had long-term borrowings, including current installments and capital lease obligations, of $3,600.6 million , of which $1,723.7 million was issued at variable rates. Commitments from banks under our Senior Revolving Credit Facility, AR Facilities and Receivables Financing Agreement are an additional source of liquidity.

In April 2016, we entered into three tranches of forward starting interest rate swaps whereby we agreed to pay fixed rates to the counterparties who, in turn, pay us floating rates on $1,100.0 million , $900.0 million , and $400.0 million of our underlying floating-rate debt obligations. Each tranche’s term length is for twelve months beginning on December 31, 2016, December 31, 2017, and December 31, 2018, respectively. The counterparties to the agreements are SMBC Capital Markets, Inc., Wells Fargo, PNC Bank, National Association and Toronto-Dominion Bank. These counterparties are large financial institutions; however, the risk of loss to us in the event of nonperformance by a counterparty could be significant to our financial position or results of operations. We have designated the swaps as cash flow hedges of the risk of changes in interest payments associated with our variable-rate borrowings. Accordingly, the swap agreements have been recorded at their fair market value of $9.6 million and are included in other current assets and other assets on the accompanying condensed balance sheet as of June 30, 2017 , with the corresponding gain deferred as a component of other comprehensive loss. For both the three and six months ended June 30, 2017 , $0.5 million of income was recorded to interest expense on the accompanying condensed statement of operations related to these swap agreements. No gain or loss has been recorded in earnings as a result of ineffectiveness.

In April 2016, we entered into interest rate swaps on $250.0 million of our underlying fixed-rate debt obligations, whereby we agreed to pay variable rates to the counterparties who, in turn, pay us fixed rates.  The counterparties to these agreements are Toronto-Dominion Bank and SMBC Capital Markets, Inc., both of which are major financial institutions.

In October 2016, we entered into interest rate swaps on an additional $250.0 million of our underlying fixed-rate debt obligations, whereby we agreed to pay variable rates to the counterparties who, in turn, pay us fixed rates. The counterparties to these agreements are PNC Bank, National Association and Wells Fargo, both of which are major financial institutions.

We have designated the April 2016 and October 2016 interest rate swap agreements as fair value hedges of the risk of changes in the value of fixed-rate debt due to changes in interest rates for a portion of our fixed-rate borrowings. Accordingly, the swap agreements have been recorded at their fair market value of $24.9 million and are included in other long-term liabilities on the accompanying condensed balance sheet as of June 30, 2017 , with a corresponding decrease in the carrying amount of the related debt. For the three months ended June 30, 2017 and 2016 , $0.7 million and $0.5 million , respectively, and for the six months ended June 30, 2017 and 2016 , $1.9 million and $0.5 million , respectively, of income was recorded to

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interest expense on the accompanying condensed statement of operations related to these swap agreements. No gain or loss has been recorded in earnings as a result of ineffectiveness.

In June 2012, we terminated $73.1 million of interest rate swaps with Wells Fargo that had been entered into on the SunBelt Notes in May 2011. The result was a gain of $2.2 million, which will be recognized through 2017. As of June 30, 2017 , $0.1 million of this gain was included in current installments of long-term debt.

Off-Balance Sheet Arrangements

Non-cancelable operating leases and purchasing commitments are utilized in our normal course of business for our projected needs. In connection with the Acquisition, certain additional agreements have been entered into with TDCC, including long-term purchase agreements for raw materials. These agreements are maintained through long-term cost based contracts that provide us with a reliable supply of key raw materials. Key raw materials received from TDCC include ethylene, electricity, propylene and benzene.

New Accounting Standards

In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” which amends ASC 715 “Compensation—Retirement Benefits.” This update requires the presentation of the service cost component of net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. The update requires the presentation of the other components of the net period benefit cost separately from the line item that includes the service cost and outside of any subtotal of operating income. The standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The guidance in this update is applied on a retrospective basis with earlier application permitted. We are currently evaluating the effect of this update on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment” which amends ASC 350 “Intangibles—Goodwill and Other.” This update will simplify the measurement of goodwill impairment by eliminating Step 2 from the goodwill impairment test. This update will require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carry amount exceeds the reporting unit’s fair value. The update does not modify the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The guidance in this update is applied on a prospective basis with earlier application permitted. We are currently evaluating the effect of this update on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments” which amends ASC 230 “Statement of Cash Flows.” This update will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The update is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. We are currently evaluating the effect of this update on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09 “Improvements to Employee Share-Based Payment Accounting” which amends ASC 718 “Compensation—Stock Compensation.” This update will simplify the income tax consequences, accounting for forfeitures and classification on the statements of cash flows of share-based payment arrangements. This standard is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with earlier application permitted. We adopted ASU 2016-09 on January 1, 2017, which was applied prospectively; therefore, prior periods have not been retrospectively adjusted. The adoption of this update did not have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 “Leases,” which supersedes ASC 840 “Leases” and creates a new topic, ASC 842 “Leases.” This update requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. This update is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with earlier application permitted. This update will be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period

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presented in the financial statements. We are currently evaluating the effect of this update on our consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11 “Simplifying the Measurement of Inventory,” which amends ASC 330 “Inventory.” This update requires entities to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonable predictable costs of completion, disposal and transportation. This update simplifies the current guidance under which an entity must measure inventory at the lower of cost or market. This update does not impact inventory measured using LIFO. This update is effective for fiscal years beginning after December 15, 2016. We adopted ASU 2015-11 on January 1, 2017, which was applied prospectively; therefore, prior periods have not been retrospectively adjusted. The adoption of this update did not have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (ASU 2014-09), which amends ASC 605 “Revenue Recognition” and creates a new topic, ASC 606 “Revenue from Contracts with Customers” (ASC 606). Subsequent to the issuance of ASU 2014-09, ASC 606 was amended by various updates that amend and clarify the impact and implementation of the aforementioned standard. These updates provide guidance on how an entity should recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Upon initial application, the provisions of these updates are required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application. These updates also expand the disclosure requirements surrounding revenue recorded from contracts with customers. These updates are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We continue to evaluate the impact these updates will have on our consolidated financial statements. Based on the analysis conducted to date, we believe the most significant impact the updates will have will be on our accounting policies and disclosures on revenue recognition. Preliminarily, we do not expect that these updates will materially impact our consolidated financial statements and we have not yet determined the method of application we will use.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are exposed to market risk in the normal course of our business operations due to our purchases of certain commodities, our ongoing investing and financing activities and our operations that use foreign currencies. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. We have established policies and procedures governing our management of market risks and the use of financial instruments to manage exposure to such risks.

Energy costs, including electricity and natural gas, and certain raw materials used in our production processes are subject to price volatility. Depending on market conditions, we may enter into futures contracts, forward contracts, commodity swaps and put and call option contracts in order to reduce the impact of commodity price fluctuations. As of June 30, 2017 , we maintained open positions on commodity contracts with a notional value totaling $95.7 million ( $101.6 million at December 31, 2016 and $55.5 million at June 30, 2016 ). Assuming a hypothetical 10% increase in commodity prices which are currently hedged, as of June 30, 2017 , we would experience a $9.6 million ( $10.2 million at December 31, 2016 and $5.6 million at June 30, 2016 ) increase in our cost of inventory, which would be substantially offset by a corresponding increase in the value of related hedging instruments.

We transact business in various foreign currencies other than the USD which exposes us to movements in exchange rates which may impact revenue and expenses, assets and liabilities and cash flows. Our significant foreign currency exposure is denominated with European currencies, primarily the Euro, although exposures also exist in other currencies of Asia Pacific, Latin America, Middle East and Africa. For all derivative positions, we have evaluated the effects of a 10% shift in exchange rates between those currencies and the USD, holding all other assumptions constant. Unfavorable currency movements of 10% would negatively affect the fair values of the derivatives held to hedge currency exposures by $15.6 million. These unfavorable changes would generally have been offset by favorable changes in the values of the underlying exposures.

We are exposed to changes in interest rates primarily as a result of our investing and financing activities. Our current debt structure is used to fund business operations, and commitments from banks under our senior revolving credit facility, AR Facilities and Receivables Financing Agreement are a source of liquidity. As of June 30, 2017 , December 31, 2016 and June 30, 2016 , we had long-term borrowings, including current installments and capital lease obligations, of $3,600.6 million , $3,617.6 million and $3,695.8 million , respectively, of which $1,723.7 million , $2,238.4 million and $2,289.0 million at June 30, 2017 , December 31, 2016 and June 30, 2016 , respectively, were issued at variable rates.


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In April 2016, we entered into three tranches of forward starting interest rate swaps whereby we agreed to pay fixed rates to the counterparties who, in turn, pay us floating rates on $1,100.0 million , $900.0 million , and $400.0 million of our underlying floating-rate debt obligations. Each tranche’s term length is for twelve months beginning on December 31, 2016, December 31, 2017 and December 31, 2018, respectively. The counterparties to the agreements are SMBC Capital Markets, Inc., Wells Fargo, PNC Bank, National Association and Toronto-Dominion Bank. These counterparties are large financial institutions; however, the risk of loss to us in the event of nonperformance by a counterparty could be significant to our financial position or results of operations.

In April 2016, we entered into interest rate swaps on $250.0 million of our underlying fixed-rate debt obligations, whereby we agreed to pay variable rates to the counterparties who, in turn, pay us fixed rates.  The counterparties to these agreements are Toronto-Dominion Bank and SMBC Capital Markets, Inc., both of which are major financial institutions.

In October 2016, we also entered into interest rate swaps on an additional $250.0 million of our underlying fixed-rate debt obligations, whereby we agreed to pay variable rates to the counterparties who, in turn, pay us fixed rates.  The counterparties to these agreements are PNC Bank, National Association and Wells Fargo, both of which are major financial institutions.

In June 2012, we terminated $73.1 million of interest rate swaps with Wells Fargo that had been entered into on the SunBelt Notes in May 2011. The result was a gain of $2.2 million, which will be recognized through 2017. As of June 30, 2017 , $0.1 million of this gain was included in current installments of long-term debt.

Assuming no changes in the $1,723.7 million of variable-rate debt levels from June 30, 2017 , we estimate that a hypothetical change of 100-basis points in the LIBOR interest rates would impact annual interest expense by $17.2 million. A portion of this hypothetical change would be offset by our interest rate swaps.

Our interest rate swaps reduced interest expense by $1.3 million and $1.2 million for the three months ended June 30, 2017 and 2016 , respectively, and by $2.5 million and $1.9 million for the six months ended June 30, 2017 and 2016 , respectively.

If the actual changes in commodities, foreign currency, or interest pricing is substantially different than expected, the net impact of commodity risk, foreign currency risk, or interest rate risk on our cash flow may be materially different than that disclosed above.

We do not enter into any derivative financial instruments for speculative purposes.

Item 4. Controls and Procedures.

Our chief executive officer and our chief financial officer evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2017 . Based on that evaluation, our chief executive officer and chief financial officer have concluded that, as of such date, our disclosure controls and procedures were effective to ensure that information Olin is required to disclose in the reports that it files or submits with the SEC under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and to ensure that information we are required to disclose in such reports is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2017 , that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Cautionary Statement Regarding Forward-Looking Statements

This quarterly report on Form 10-Q 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. These statements may include statements regarding the acquisition of the Acquired Business from TDCC, the expected benefits and synergies of the transaction, and future opportunities for the combined company following the transaction. The statements contained in this quarterly report on Form 10-Q 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,” “optimistic,” and variations of such words and similar expressions in this quarterly report 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, 2016 , 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, vinyls, urethanes, 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;

•
higher-than-expected raw material and energy, transportation and/or logistics costs;

•
our substantial amount of indebtedness and significant debt service obligations;

•
weak industry conditions could affect our ability to comply with the financial maintenance covenants in our senior credit facilities and certain tax-exempt bonds;

•
our reliance on a limited number of suppliers for specified feedstock and services and our reliance on third-party transportation;

•
failure to control costs or to achieve targeted cost reductions;

•
the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions and production hazards;

•
new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities;

•
changes in legislation or government regulations or policies;

•
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;



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•
complications resulting from our multiple enterprise resource planning systems;

•
the failure or an interruption of our information technology systems;

•
unexpected litigation outcomes;

•
costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings;

•
the integration of the Acquired Business may not be successful in realizing the benefits of the anticipated synergies;

•
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;

•
fluctuations in foreign currency exchange rates;

•
adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital;

•
failure to attract, retain and motivate key employees;

•
our assumptions included in long range plans not realized causing a non-cash impairment charge of long-lived assets;

•
the effects of restrictions imposed on our business following the transaction with TDCC in order to avoid significant tax-related liabilities; and

•
differences between the historical financial information of Olin and the Acquired Business and our future operating performance.

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.



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Part II — Other Information

Item 1. Legal Proceedings.

Not Applicable.

Item 1A. Risk Factors.

Not Applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a)
Not Applicable.

(b)
Not Applicable.

(c)
Issuer Purchases of Equity Securities

Period
 
Total Number of
Shares (or Units)
Purchased (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
 
April 1-30, 2017
 
—

 
—
 
—

 
 
 
May 1-31, 2017
 
—

 
—
 
—

 
 
 
June 1-30, 2017
 
—

 
—
 
—

 
 
 
Total
 
 

 
 
 
 
 
—

(1)  

(1)
On April 24, 2014, we announced a share repurchase program approved by the board of directors for the purchase of up to 8 million shares of common stock that terminated on April 24, 2017. Through June 30, 2017 , 1,937,343 shares had been repurchased, and 6,062,657 shares that remained available for purchase under this program have expired. Related to the Acquisition, for a period of two years subsequent to the Closing Date, we will continue to be subject to certain restrictions on our ability to conduct share repurchases.

Item 3. Defaults Upon Senior Securities.

Not Applicable.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

Not Applicable.



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Item 6. Exhibits.
 
 
3.1

Bylaws of Olin Corporation as amended effective April 27, 2017*
 
 
10.1

Form of executive agreement between Olin Corporation and Mr. Blanchard dated April 26, 2017
 
 
10.2

Form of executive change in control agreement between Olin Corporation and Mr. Blanchard dated April 26, 2017
 
 
11

Computation of Per Share Earnings (included in the Note—“Earnings Per Share” to Notes to Consolidated Financial Statements in Item 1)
 
 
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
 
 
101.INS

XBRL Instance Document
 
 
101.SCH

XBRL Taxonomy Extension Schema Document
 
 
101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document
 
 
101.DEF

XBRL Taxonomy Extension Definition Linkbase Document
 
 
101.LAB

XBRL Taxonomy Extension Label Linkbase Document
 
 
101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document
 
 
*

Previously filed as indicated and incorporated by reference.



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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:
/s/ Todd A. Slater
 
Vice President and Chief Financial Officer
(Authorized Officer)

Date: August 1, 2017

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EXHIBIT INDEX

Exhibit No.

Description
 
 
3.1

 
 
10.1

 
 
10.2

 
 
11

 
 
12

 
 
31.1

 
 
31.2

 
 
32

 
 
101.INS

 
 
101.SCH

XBRL Taxonomy Extension Schema Document
 
 
101.CAL

 
 
101.DEF

 
 
101.LAB

 
 
101.PRE

 
 
*

Previously filed as indicated and incorporated by reference.


61


Exhibit 10.1



EXECUTIVE AGREEMENT, dated as of [ l ] (the “ Effective Date ”), between OLIN CORPORATION, a Virginia corporation (“ Olin ”), and [ l ] (“ Executive ”).
WHEREAS Executive is a key member of Olin’s management; and
WHEREAS Olin believes that it is appropriate to provide Executive with certain specified severance compensation and benefits in the event of termination of employment under certain circumstances as set forth in more detail below.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
SECTION 1. Definitions. As used in this Agreement:
(a) “ Board ” means the Board of Directors of Olin.
(b) “ Cause ” means (i) the willful and continued failure of Executive to substantially perform Executive’s duties (other than any such failure resulting from Executive’s incapacity due to physical or mental illness or injury); (ii) the willful engaging by Executive in gross misconduct significantly and demonstrably financially injurious to Olin; (iii) a willful breach by Executive of Olin’s Code of Business Conduct; or (iv) willful misconduct by Executive in the course of Executive’s employment which is a felony or fraud. No act or failure to act on the part of Executive will be considered “willful” unless done or omitted not in good faith and without reasonable belief that the action or omission was in the interests of Olin or not opposed to the interests of Olin and unless the act or failure to act has not been cured by Executive within 14 days after written notice to Executive specifying the nature of such violations. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause without reasonable written notice to Executive setting forth the reasons for Olin’s intention to terminate for Cause.
(c) “ Executive Severance ” means:
(i)
twelve months of Executive’s then current monthly salary; plus
(ii)
an amount equal to the greater of (A) Executive’s average annual award actually paid in cash (or, in the event that the award in respect of the calendar year immediately prior to the year in which the date of Termination occurs has not yet been paid, the amount of such award that would have been payable in cash in the year in which the date of Termination occurs had Executive not incurred a Termination) under Olin’s short-term annual incentive compensation plans or programs (“ICP”) (including zero if nothing was paid or deferred but including any portion thereof Executive has elected to defer and, for the avoidance of doubt, excluding any portion of an annual award that Executive does not have a right to receive currently in cash) in respect of the three calendar years immediately preceding the calendar year in which the date of Termination occurs (or if Executive has not participated in ICP for such three completed calendar years, the average of any such awards in respect of the shorter period of years in which Executive was a participant) and (B) Executive’s then current ICP standard in respect of the year in which the date of Termination occurs (the “ Current ICP Standard ”), provided that if (x) Executive was reasonably expected by Olin to be a “covered employee” (within the meaning of Section 162(m) of the Code) for the taxable year of Olin in which the date of Termination occurs, (y) the ICP standard that

1


Executive would have been eligible to receive for such year was originally intended by Olin to satisfy the performance-based exception under Section 162(m) of the Code (without regard to any entitlement to payment upon termination of employment) and (z) as of the date of Termination, Executive had been employed by Olin for a period of time sufficient to have an ICP standard for the fiscal year preceding the fiscal year in which the date of Termination occurs (the conditions in the foregoing clauses (x), (y) and (z) are hereinafter referred to collectively as the “ 162(m) Conditions ”), the reference above to Executive’s Current ICP Standard shall be replaced by a reference to the product of (1) Executive’s annual base salary as of the date of Termination and (2) a fraction, the numerator of which is Executive’s ICP standard for the fiscal year immediately preceding the fiscal year in which the date of Termination occurs and the denominator of which is Executive’s annual base salary for such year (such product, the “ Adjusted Prior Year ICP Standard ”).
(d) “ Termination ” means the termination of Executive’s employment by Olin other than for Cause and other than due to Executive’s death or disability. For purposes solely of clarification, it is understood that (x) if, in connection with the spinoff of an Olin business or Olin’s assets as a separate public company to Olin’s shareholders, Executive accepts employment with, and becomes employed at, the spunoff company or its affiliate, the termination of Executive’s employment with Olin shall not be considered a “Termination” for purposes of this Agreement and (y) except as provided in Section 4(d), in connection with the sale of an Olin business or assets to a third party or the transfer or sale of an Olin business or Olin’s assets to a joint venture to be owned directly or indirectly by Olin with one or more third parties, if Executive accepts employment with, and becomes employed by, such buyer or its affiliate or such joint venture or its affiliate in connection with such transaction, such cessation of employment with Olin shall not be considered a “Termination” for purposes of this Agreement.
SECTION 2. Entire Agreement; Prior Agreements. This Agreement (together with the Executive Change in Control Agreement, dated as of the date hereof, between Executive and Olin (the “CIC Agreement”)) sets forth the entire understanding between Executive and Olin with respect to the subject matter hereof and thereof. All oral or written agreements or representations, express or implied, with respect to the subject matter of this Agreement are set forth in this Agreement and the CIC Agreement. All prior agreements, understandings and obligations (whether written, oral, express or implied) between Executive and Olin with respect to the subject matter hereof are terminated as of the date hereof and are superseded by this Agreement and the CIC Agreement. Notwithstanding the foregoing, the provisions of Section 7 shall not supersede any other agreements, understandings or obligations between Executive and Olin with respect to the subject matter thereof, which shall remain in full force and effect in accordance with their terms.
SECTION 3. Term; Executive’s Duties. (a) This Agreement expires at the close of business on January 26, 2019, provided that the expiration of this Agreement shall not affect any of Executive’s rights resulting from a Termination occurring prior to such expiration. In the event of Executive’s death while employed by Olin, this Agreement shall terminate and be of no further force or effect on the date of Executive’s death. Executive’s death will not affect any of Executive’s rights resulting from a Termination prior to death.
(b)    During the period of Executive’s employment by Olin, Executive shall devote Executive’s full time efforts during normal business hours to Olin’s business and affairs, except during vacation periods in accordance with Olin’s vacation policy and periods of illness or incapacity. Nothing in this Agreement will preclude Executive from devoting reasonable periods required for service as a director or a member of any organization involving no conflict of interest with Olin’s interest, provided that no additional position as director or member shall be accepted by Executive during the period of Executive’s employment with Olin without its prior consent.

2


SECTION 4. Executive Severance Payment. (a) Subject to Section 4(b), in the event of a Termination occurring before the expiration of this Agreement, Olin will pay Executive, in equal installments in accordance with Olin’s normal payroll practices, over the 12-month period that begins on the 55th day after the date of Termination, an aggregate amount equal to the Executive Severance, provided that no amounts shall be payable to Executive unless, on or prior to the 54th day following the date of Termination, (i) Executive shall have executed the Release described in Section 6 and (ii) such Release shall have become effective and irrevocable.
(b)    Notwithstanding Section 4(a), if Executive would otherwise have been required by Olin policy to retire at the applicable age specified in Olin’s mandatory retirement policy for specified job positions, as in effect on the date of Termination (the “Mandatory Retirement Age”), then if the date upon which Executive would have attained the Mandatory Retirement Age falls during the 12-month period immediately following the date of Termination, the aggregate amount payable pursuant to Section 4(a) shall be reduced to the amount equal to the product of (i) the Executive Severance, multiplied by (ii) a fraction, the numerator of which is the number of days from the date of Termination through and including the date upon which Executive would have attained the Mandatory Retirement Age and the denominator of which is 365, and such reduced amount shall be payable (subject to the Release requirement set forth in Sections 4(a) and (6) in equal installments in accordance with Olin’s normal payroll practices over the period that begins on the 55th day after the date of Termination and ends on the 55th day after the date upon which Executive would have attained the Mandatory Retirement Age.
(c)    If on the date of Termination, Executive is eligible and is receiving payments under any then existing disability plan of Olin or its subsidiaries and affiliates, then Executive agrees that all payments under such disability plan may, and will be, suspended and offset (subject to applicable law) during the 12-month period specified in Section 4(a) (or, if applicable, such shorter as specified in Section 4(b)). If, after such period, Executive remains eligible to receive disability payments, then such payments shall resume in the amounts and in accordance with the provisions of the applicable disability plan of Olin or its subsidiaries and affiliates.
(d)    In the event Executive, in connection with the sale of an Olin business or assets to a third party or the transfer of an Olin business or Olin assets to a joint venture which would be owned directly or indirectly by Olin with one or more third parties, ceases to be employed by Olin and with Olin’s consent becomes employed by the buyer or its affiliate or the joint venture or its affiliate (a “New Employer”), Executive shall be entitled to the benefits provided under Section 4(a) (determined as if Executive incurred a Termination upon such cessation of employment with Olin) (subject to Sections 4(b), 4(c) and 17) and the first sentence of Section 5(a) (subject to Section 5(b)), and Section 5(c), if Executive has a Termination with the New Employer (with the New Employer being substituted for Olin in Section 1(d)) within 12 months of becoming employed by such New Employer. Subject to Section 18(b), any cash compensation amounts paid under this Section 4(d) shall be reduced by any severance, job transition or employment termination payments such Executive receives in cash from the New Employer in connection with the Termination.
SECTION 5. Other Benefits. (a) If Executive becomes entitled to payment under Section 4(a) or 4(b), as applicable, then (i) Executive will be treated as if Executive remained employed for service purposes for 12 months following the date of Termination. Executive will receive 12 months of retirement contributions to all Olin qualified and non-qualified defined contribution plans for which Executive was eligible at the time of the Termination. Such contributions shall be based on the amount of the Executive Severance. Such service credits or contributions shall be applied to Olin’s qualified pension plans to the extent permitted under then applicable law, otherwise such credit shall be applied to Olin’s non-qualified defined benefit or defined contribution plan, as appropriate. Payments under such non-qualified plans shall be due at the times and in the manner payments are due Executive under Olin’s non-qualified defined benefit and defined contribution pension plans, it being understood that Executive shall be permitted to receive payments from Olin’s plans (assuming Executive otherwise qualifies to receive such payments, is permitted to do so under the applicable plan terms and elects to do so), during the period that Executive is receiving payments pursuant to Section 4(a)), and that Executive’s defined benefit pension benefit will be determined based on

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Executive’s actual age at the time Executive’s pension benefit commences; and (ii) for 12 months from the date of the Termination, Executive (and Executive’s covered dependents) will continue to enjoy coverage on the same basis as a similarly situated active employee under all Olin medical, dental and life insurance plans to the extent Executive was enjoying such coverage immediately prior to the Termination. Executive’s entitlement to insurance continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 would commence at the end of the period during which insurance coverage is provided under this Agreement without offset for coverage provided hereunder. Executive shall accrue no vacation during the 12 months following the date of Termination but shall be entitled to payment for accrued and unused vacation for the calendar year in which the Termination occurs. If Executive receives the Executive Severance (including the amount referred to in Section 1(c)(ii)), Executive shall not be entitled to an ICP award for the calendar year of Termination if Termination occurs during the first calendar quarter. Even if Executive receives the Executive Severance (including the amount referred to in Section 1(c)(ii)), if Termination occurs during or after the second calendar quarter, Executive shall be entitled to a prorated ICP award for the calendar year of Termination which shall be determined by multiplying the average actual payout (as a percentage of the ICP standard) for all participants in the ICP in the same measurement organizational unit by a fraction, the numerator of which is the number of weeks in the calendar year prior to the Termination and the denominator of which is 52, which shall be payable at substantially the same time as ICP payments for the year in which Termination occurs are made to then current active employees, provided that such payment shall be made to Executive no earlier than January 1 and no later than December 31 of the calendar year following the year in which the date of Termination occurs. Notwithstanding the foregoing, in the event that the 162(m) Conditions exist, the formula for calculating the prorated ICP award for the calendar year of Termination set forth in the immediately preceding sentence shall be replaced by a reference to Executive’s Adjusted Prior Year ICP Standard, which shall be subject to the same terms and conditions regarding proration and timing of payment as set forth in the immediately preceding sentence. Executive shall accrue no ICP award following the date of Termination.
(b)    Notwithstanding the foregoing Section 5(a), no such service credit or insurance coverage will be afforded by this Agreement with respect to any period after the date upon which Executive would have attained the Mandatory Retirement Age.
(c)    In the event of a Termination, Executive will be entitled at Olin’s expense to outplacement counseling and associated services in accordance with Olin’s customary practice at the time with respect to its senior executives who have been terminated other than for Cause. It is understood that the counseling and services contemplated by this Section 5(c) are intended to facilitate the obtaining by Executive of other employment following a Termination, and payments or benefits by Olin in lieu thereof will not be available to Executive. The outplacement services will be provided for a period of 12 months beginning within five days after the Release described in Section 6 becomes effective and irrevocable.
SECTION 6. Release. Executive shall not be entitled to receive any of the payments or benefits set forth in Sections 4 and 5 unless Executive executes a Release (substantially in the form of Exhibit A hereto) in favor of Olin and others set forth in Exhibit A relating to all claims or liabilities of any kind relating to Executive’s employment with Olin or an affiliate and the termination of such employment, and, on or prior to the 54th day following the date of Termination, such Release becomes effective and irrevocable in accordance with the terms thereof.
SECTION 7. Restrictive Covenants. (a) As an inducement to Olin to provide the payments and benefits to Executive hereunder, Executive acknowledges and agrees that, except as otherwise provided in Section 7(g), in the event of Executive’s termination of employment for any reason, Executive agrees to comply with the restrictions set forth in Section 7(b) for a one-year period from the date of Termination (or, if earlier, until Executive would have attained the Mandatory Retirement Age) (the “Non-Compete Term”), provided that if Executive’s employment is not terminated by reason of a Termination (and Executive therefore is not entitled to receive the payments and benefits set forth in Sections 4 and 5 hereof), then Executive need not comply with the restrictions set forth in Section 7(b).

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(b)    Executive acknowledges and agrees that, except as otherwise provided in Section 7(g), so long as Olin complies with its obligations to provide the payments required under Sections 4 and 5, Executive shall not during the Non-Compete Term, directly or indirectly: (i) render services for any corporation, partnership, sole proprietorship or any other person or entity or engage in any business which, in the judgment of Olin, is or becomes competitive with Olin or any affiliate, or which is or becomes otherwise prejudicial to or in conflict with the interests of Olin or any affiliate (such judgment to be based on Executive’s positions and responsibilities while employed by Olin or an affiliate, Executive’s post-employment responsibilities and position with such corporation, partnership, sole proprietorship, person, entity or business, the extent of past, current and potential competition or conflict between Olin or an affiliate and such other corporation, partnership, sole proprietorship, person, entity or business, the effect on customers, suppliers and competitors of Executive’s assuming such post-employment position, the guidelines established in the then-current edition of Olin’s Standards of Ethical Business Practices, and such other considerations as are deemed relevant given the applicable facts and circumstances), provided that Executive shall be free to purchase as an investment or otherwise, stock or other securities of such corporation, partnership, sole proprietorship, person, entity or business so long as they are listed upon a recognized securities exchange or traded over the counter and such investment does not represent a substantial investment to Executive or a greater than 1% equity interest in such corporation, partnership, sole proprietorship, person, entity or business or (ii) for Executive or for any other person, corporation, partnership, sole proprietorship, entity or business: (A) employ or attempt to employ or enter into any contractual arrangement with any employee or former employee of Olin, unless such employee or former employee has not been employed by Olin for a period in excess of six months; (B) call on or solicit any of the actual or targeted prospective clients of Olin on behalf of any corporation, partnership, sole proprietorship, person, entity or business in connection with any business competitive with the business of Olin; or (C) make known the names and addresses of such clients or any information relating in any manner to Olin’s trade or business relationships with such customers.
(c)    Executive acknowledges and agrees (whether or not Executive is subject to the restrictions set forth in Section 7(b)) not to disclose, either while in Olin’s employ or at any time thereafter, to any person not employed by Olin, or not engaged to render services to Olin, any confidential information obtained by Executive while in the employ of Olin, including, without limitation, trade secrets, know-how, improvements, discoveries, designs, customer and supplier lists, business plans and strategies, forecasts, budgets, cost information, formulae, processes, manufacturing equipment, compositions, computer programs, data bases and tapes and films relating to the business of Olin and its subsidiaries and affiliates (including majority-owned companies of such subsidiaries and affiliates); provided, however, that this provision shall not preclude Executive from disclosing information (i) known generally to the public (other than pursuant to Executive’s act or omission) or (ii) to the extent required by law or court order. Executive also agrees that upon leaving Olin’s employ Executive will not take with Executive, without the prior written consent of an officer authorized to act in the matter by the Board, any drawing, blueprint, specification or other document of Olin, its subsidiaries or affiliates, which is of a confidential nature relating to Olin, its subsidiaries or affiliates, including, without limitation, relating to its or their methods of distribution, or any description of any formulae or secret processes. Notwithstanding the foregoing, nothing in this Agreement shall prevent Executive from exercising any legally protected whistleblower rights (including under Rule 21F under the Securities Exchange Act of 1934, as amended). Furthermore, Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (x) in confidence to a federal, state or local governmental official, either directly or indirectly, or to an attorney, in each case, solely for the purpose of reporting or investigating a suspected violation of law or (y) in a complaint or other document filed in a lawsuit or proceeding, if such filings are made under seal.
(d)    Executive acknowledges and agrees that (i) the restrictive covenants contained in this Section 7 are reasonably necessary to protect the legitimate business interests of Olin, and are not overbroad, overlong, or unfair and are not the result of overreaching, duress or coercion of any kind, (ii) Executive’s full, uninhibited and faithful observance of each of the covenants contained in this Section 7 will not cause Executive any undue hardship, financial or otherwise, and that enforcement of each of the covenants contained herein will not impair Executive’s ability to obtain employment commensurate with Executive’s abilities and on terms fully acceptable to Executive or otherwise to obtain income required for the comfortable support of

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Executive and Executive’s family and the satisfaction of the needs of Executive’s creditors and (iii) the restrictions contained in this Section 7 are intended to be, and shall be, for the benefit of and shall be enforceable by, Olin’s successors and permitted assigns.
(e)    Executive acknowledges and agrees that any violation of the provisions of Section 7 would cause Olin irreparable damage and that if Executive breaches or threatens to breach such provisions, Olin shall be entitled, in addition to any other rights and remedies Olin may have at law or in equity, to obtain specific performance of such covenants through injunction or other equitable relief from a court of competent jurisdiction, without proof of actual damages and without being required to post bond.
(f)    In the event that any arbitrator or court of competent jurisdiction shall finally hold that any provision of this Agreement (whether in whole or in part) is void or constitutes an unreasonable restriction against Executive, such provision shall not be rendered void but shall be deemed to be modified to the minimum extent necessary to make such provision enforceable for the longest duration and the greatest scope as such arbitrator or court may determine constitutes a reasonable restriction under the circumstances.
(g)    Notwithstanding anything to the contrary in this Agreement, the provisions of Sections 7(a) and 7(b) shall not apply to Executive, if Executive becomes entitled to receive severance payments and benefits pursuant to the CIC Agreement.
SECTION 8. Successors; Binding Agreement. (a) Olin will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Olin, by agreement, in form and substance satisfactory to Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that Olin would be required to perform if no such succession had taken place. Failure of Olin to obtain such assumption and agreement prior to the effectiveness of any such succession will be a breach of this Agreement and entitle Executive to compensation from Olin in the same amount and on the same terms as Executive would be entitled to hereunder had a Termination occurred on the succession date. As used in this Agreement, “Olin” means Olin as defined in the preamble to this Agreement and any successor to its business or assets which executes and delivers the agreement provided for in this Section 8 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law or otherwise.
(b)    This Agreement shall be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
SECTION 9. Notices. For the purpose of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Executive :
[ l ]

If to Olin :
Olin Corporation
190 Carondelet Plaza
Suite 1530
Clayton, MO 63105-3443
Attention: Corporate Secretary
or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

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SECTION 10. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Virginia (without giving effect to its principles of conflicts of law).
SECTION 11. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same Agreement.
SECTION 12. Mitigation. Executive will not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall any compensation received by Executive from a third party reduce such payment except as explicitly provided in this Agreement. Except as may otherwise be expressly provided herein, nothing in this Agreement will be deemed to reduce or limit the rights which Executive may have under any employee benefit plan, policy or arrangement of Olin and its subsidiaries and affiliates. Except as expressly provided in this Agreement and subject to Section 18(b), payments made pursuant to this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense or other claim which Olin and its subsidiaries and affiliates may have against Executive.
SECTION 13. Withholding of Taxes. Olin may withhold from any benefits payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling.
SECTION 14. Non-assignability. This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder, except as provided in Section 8 above. Without limiting the foregoing, Executive’s right to receive payments hereunder shall not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, other than a transfer by will or by the laws of descent or distribution, and, in the event of any attempted assignment or transfer by Executive contrary to this Section 14, Olin shall have no liability to pay any amount so attempted to be assigned or transferred.
SECTION 15. No Employment Right. This Agreement shall not be deemed to confer on Executive a right to continued employment with Olin.
SECTION 16. Disputes/Arbitration. (a) Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration at Olin’s corporate headquarters in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of Executive’s right to be paid during the pendency of any dispute or controversy arising under or in connection with this Agreement.
(b)    Olin shall pay all reasonable legal fees and expenses, as they become due, which Executive may incur prior to the third anniversary of the expiration of this Agreement to enforce this Agreement through arbitration or otherwise unless the arbitrator determines that Executive had no reasonable basis for Executive’s claim. Should Olin dispute the entitlement of Executive to such fees and expenses, the burden of proof shall be on Olin to establish that Executive had no reasonable basis for Executive’s claim. All reimbursable expenses shall be reimbursed to Executive as promptly as practicable and in any event not later than the last day of the calendar year after the calendar year in which the expenses are incurred, and the amount of expenses eligible for reimbursement during any calendar year will not affect the amount of expenses eligible for reimbursement in any other calendar year.
(c)    If any payment which is due to Executive pursuant to this Agreement has not been paid within ten (10) days of the date on which such payment was due, Executive shall be entitled to receive interest thereon from the due date until paid at an annual rate of interest equal to the Prime Rate reported in the Wall Street Journal, Northeast Edition, on the last business day of the month preceding the due date, compounded annually.

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SECTION 17. Miscellaneous. (a) Except as specifically provided in Section 18(d), no provisions of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by Executive and Olin. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.
(b)    The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect to the fullest extent permitted by law.
(c)    Executive may not cumulate the benefits provided under this Agreement with any severance or similar benefits (“Other Severance Benefits”) that Executive may be entitled to by agreement with Olin (including, without limitation, pursuant to the CIC Agreement or an employment, severance or termination agreement, plan, arrangement or policy) or under applicable law in connection with the termination of Executive’s employment. Subject to Section 18(b), to the extent that Executive receives any Other Severance Benefits, then the payments and benefits payable hereunder to such participant shall be reduced by a like amount. To the extent Olin is required to provide payments or benefits to any Executive under the Worker Adjustment and Retraining Notification Act (or any state, local or foreign law relating to severance or dismissal benefits), the benefits payable hereunder shall be first applied to satisfy such obligation.
SECTION 18. Section 409A. (a) It is intended that the provisions of this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations thereunder as in effect from time to time (collectively, hereinafter, “Section 409A”), and all provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.
(b)    Neither Executive nor any of Executive’s creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A) payable under this Agreement or under any other plan, policy, arrangement or agreement of or with Olin or any of its affiliates (this Agreement and such other plans, policies, arrangements and agreements, the “Olin Plans”) to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to Executive or for Executive’s benefit under any Olin Plan may not be reduced by, or offset against, any amount owing by Executive to Olin or any of its affiliates.
(c)    If, at the time of Executive’s separation from service (within the meaning of Section 409A), (i) Executive shall be a specified employee (within the meaning of Section 409A and using the identification methodology selected by Olin from time to time) and (ii) Olin shall make a good faith determination that an amount payable under an Olin Plan constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then Olin (or its affiliate, as applicable) shall not pay such amount on the otherwise scheduled payment date but shall instead accumulate such amount and pay it, without interest, on the first business day after such six-month period.
(d)    Notwithstanding any provision of this Agreement or any Olin Plan to the contrary, in light of the uncertainty with respect to the proper application of Section 409A, Olin reserves the right to make amendments to this Agreement and any Olin Plan as Olin deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A. In any case, except as specifically provided in any Olin Plan, Executive is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on Executive or for Executive’s account in connection with any Olin Plan (including any taxes and penalties under Section 409A), and neither Olin nor any affiliate shall have any obligation to indemnify or otherwise hold Executive harmless from any or all of such taxes or penalties.

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(e)    For purposes of Section 409A, each installment of Executive Severance will be deemed to be a separate payment as permitted under Treasury Regulation Section 1.409A-2(b)(2)(iii).
( remainder of this page intentionally left blank )



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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the day and year first above set forth.

OLIN CORPORATION
 
 
By:
 
Name:
 
Title:
 

EXECUTIVE
 
 
By:
 
Name:
 















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EXHIBIT A
RELEASE AGREEMENT
In consideration of the promises, payments and benefits provided for in the Executive Agreement, dated as of [ l ] (the “Executive Agreement”), between Olin Corporation (“Olin”) and [ l ] (“Executive”), Executive hereby agrees to the terms of this Release Agreement. Capitalized terms used and not defined in this Release Agreement (the “Agreement”) shall have the meanings assigned thereto in the Executive Agreement.
1.
Employment Separation . Effective ___________, Executive’s employment with Olin and its subsidiaries and affiliates (collectively, the “Company”) [will be] [was] terminated. On that date, all Company-paid benefits will cease except as otherwise set forth in the Executive Agreement. Executive will receive Executive’s final paycheck and any accrued, unused vacation, less all applicable withholdings and deductions (subject to Section 18(b) of the Executive Agreement), including but not limited to any overpayments made to Executive by the Company in any form (provided that the Company shall give Executive reasonable advance notice prior to making any deductions for any such overpayments).
2.
Executive Agreement Benefits . In consideration of the release set forth in Paragraph 4 of this Agreement, Executive shall be entitled to receive the Executive Severance and other benefits to which Executive is otherwise entitled pursuant to the terms and conditions of the Executive Agreement (the “Severance Benefits”). Executive acknowledges and agrees that, pursuant to the terms of the Executive Agreement, Executive is not entitled to receive the Severance Benefits unless this Agreement becomes effective and irrevocable in accordance with its terms and conditions.
3.
Non-Admission . It is specifically understood and agreed that this Agreement does not constitute and is not to be construed as an admission of any wrongdoing of any kind whatsoever on the part of Executive or any Releasee, as defined in Paragraph 4, and shall not be offered or used for that purpose.
4.
Waiver and Release .
a.
In exchange for the consideration described in Paragraph 2, Executive for Executive, Executive’s heirs, executors, administrators, trustees, legal representatives, successors and assigns (hereinafter collectively referred to as the “Releasor”), hereby irrevocably and unconditionally waives, releases, and forever discharges Olin and its past, present and future affiliates and related entities, parent and subsidiary corporations, divisions, shareholders, employee benefit plans and/or pension plans or funds, predecessors, successors and assigns, and its and their past, present or future officers, directors, trustees, fiduciaries, administrators, employees, agents, representatives, shareholders, predecessors, successors and assigns (hereinafter collectively referred to as the “Releasees”) from any and all claims, charges, demands, sums of money, actions, rights, promises, agreements, causes of action, obligations and liabilities of any kind or nature whatsoever, at law or in equity, whether known or unknown, existing or contingent, suspected or unsuspected, apparent or concealed (hereinafter collectively referred to as “claims”) which the Releasor now or in the future may have or claim to have against the Releasees based upon or arising out of any facts, acts, conduct, omissions, transactions, occurrences, contracts, claims, events, causes, matters or things of any conceivable kind or character existing or occurring or claimed to exist or to have occurred at any time on

11


or before the date Executive signs this Agreement, including, but not limited to any and all claims relating to or arising out of Executive’s employment, compensation and benefits with the Company, or the termination thereof, any and all defamation, personal injury and tort claims, wrongful termination claims, discrimination, harassment and retaliation claims, whistle-blower claims, fraud claims, contract claims, benefits claims, claims under any federal, state or municipal wage payment, whistle-blower, discrimination or fair employment practices law, statute or regulation, including, without limitation, Title VII of the Civil Rights Act of 1964, as amended, Section 1981 of the Civil Rights Act of 1870, as amended, the Americans with Disabilities Act, as amended, the Age Discrimination in Employment Act (“ADEA”), the Older Workers Benefit Protection Act (“OWBPA”), the Employee Retirement Income Security Act, the Worker Adjustment and Retraining Notification Act, the federal Family and Medical Leave Act, the Missouri Human Rights Act, the common law of the State of Missouri, including but not limited to any claim for wrongful discharge in violation of public policy and all other federal, state or local statutes, which are or may be based upon any facts, acts, conduct, representation, omissions, claims, events, causes, matters or things of any conceivable kind or character existing or occurring at any time on or before the Effective Date (as defined in Paragraph 8 of this Agreement), and claims for costs, expenses and attorneys’ fees with respect thereto.
b.
Notwithstanding the foregoing, Executive is not waiving or releasing any rights Executive may have to challenge the knowing and voluntary nature of the release of ADEA claims pursuant to the OWBPA and Executive is not prohibited from making or asserting (i) any claim or right under state workers’ compensation or unemployment laws, or (ii) any claim or right which by law cannot be waived, including Executive’s rights to file a charge with an administrative agency or to participate in an agency investigation, including but not limited to the right to file a charge or participate in an investigation or proceeding conducted by the Equal Employment Opportunity Commission (“ EEOC ”).
c.
Executive further agrees and covenants that should any person, organization or other entity file, including, but not limited to, the EEOC, a charge, claim or sue or cause or permit to file any civil action, suit or legal proceeding involving any matter occurring at any time prior to Executive’s execution of this Agreement, Executive will not seek or accept any personal relief from such civil action, suit or proceeding.
5.
Non-Disclosure; Confidentiality . Executive agrees that Executive will keep confidential and not disclose, nor use for Executive’s benefit or the benefit of any other person or entity, any information received from the Company that is confidential or proprietary or that constitutes trade secrets of the Company. Notwithstanding the foregoing, nothing in this Agreement shall prevent Executive from exercising any legally protected whistleblower rights (including under Rule 21F under the Securities Exchange Act of 1934, as amended).
6.
Non-Disparagement . Executive shall not, whether written or orally, criticize, denigrate or disparage the Company or any of the other Releasees.
7.
Return of Property and Documents . Executive represents and warrants that Executive has returned, or will immediately return, to the Company all Company property (including, without limitation, any and all Company identification cards, card key passes, corporate credit cards, corporate phone cards, computers and peripherals, cellphones, files, memoranda, reports, keys and software).

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8.
Review of Agreement; Revocation . Executive shall have the right to consider this Agreement for a period of [twenty-one (21)] 1 days following Executive’s receipt of the Agreement, although Executive may choose to sign the Agreement prior to the expiration of such [twenty-one (21)] day period. The Company advises Executive to consult with an attorney prior to signing this Agreement, and Employee agrees that the Company shall not be responsible for any attorneys’ fees incurred by Executive. Executive shall have the right to revoke this Agreement for a period of seven (7) days following its execution by giving written notice of such revocation to: Vice President, Human Resources, c/o Olin Corporation, 190 Carondelet Plaza, Suite 1530, Clayton, MO 63105, by hand or certified mail, return receipt requested, so that such notice is received within the seven (7) day revocation period. This Agreement shall not become effective until the eighth (8th) day following its execution by Executive (the “Effective Date”).
9.
Severability . If, at any time after the Effective Date, any provision of this Agreement shall be held by any court of competent jurisdiction to be illegal, void, or unenforceable, such provision shall be of no force and effect. The illegality or unenforceability of such provision, however, shall have no effect upon, and shall not impair the enforceability of, any other provision of this Agreement.
10.
Choice of Law . The terms of this Agreement and all rights and obligations of the parties thereto including its enforcement shall be interpreted and governed by the laws of the Commonwealth of Virginia.
11.
Modification of Agreement . No provisions of this Agreement may be modified, altered, waived or discharged unless such modification, alteration, waiver or discharge is agreed to in writing and signed by the parties hereto.
12.
Entire Agreement; Non-Compete . This Agreement and the Executive Agreement sets forth the entire agreement between the parties hereto, and any and all prior and contemporaneous agreements, discussions or understandings between the parties pertaining to the subject matter hereof have been and are merged into and superseded by this Agreement, provided, however, that this Agreement does not supersede or affect the parties’ agreements relating to trade secrets, confidential information, copyrights, non-competition, no-solicitation and the like (including, without limitation, the provisions of Section 7 of the Executive Agreement, notwithstanding anything to the contrary contained therein), which shall remain in full force and effect in accordance with their terms.
13.
Executive’s Rights; Acknowledgments . Nothing in this Agreement shall prohibit or restrict Executive from: (i) making any disclosure of information required by law; (ii) providing information to, or testifying or otherwise assisting in any investigation or proceeding brought by, any federal regulatory or law enforcement agency or legislative body, any self-regulatory organization or Olin’s designated legal compliance officer; (iii) filing, testifying, participating in or otherwise assisting in a proceeding relating to an alleged violation of any federal, state or municipal law relating to fraud or any rule or regulation of the Securities and Exchange Commission or any self-regulatory organization; or (iv) challenging the knowing and voluntary

_______________________________
1 This period should be 45 days in the event of a group termination for purposes of ADEA.

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nature of the release of ADEA claims pursuant to the OWBPA. Executive acknowledges and agrees that:
a.
Severance Benefits exceed anything of value to which Executive would otherwise be entitled from the Company if Executive were not a party to this Agreement;
b.
Executive has had the opportunity to review and consider for [twenty-one (21)] days, the terms and provisions of this Agreement, although Executive is not prevented from executing this Agreement prior to the expiration of said [twenty-one (21)] day period, and Executive has been given the opportunity to revoke this Agreement for a period of seven (7) days following its execution;
c.
Executive has been advised by the Company to consult with an attorney of Executive’s choosing prior to executing this Agreement;
d.
[Executive has been informed in writing as to any class, unit or group of individuals eligible for the Severance Benefits, the job titles and ages of all individuals eligible for the Severance Benefits, and the ages and job titles of all individuals not eligible for the Severance Benefits. (This information is set forth in Attachments A and B.) For additional information, contact [NAME] at [ADDRESS] or by phone at [PHONE].] 2
e.
Executive has carefully read this Agreement in its entirety and fully understands the significance of all of the terms and provisions; and
f.
Executive is signing this Agreement voluntarily and of Executive’s own free will and assents to all the terms and conditions contained herein.
{ remainder of this page intentionally left blank }










_______________________________
2 Only include in the event of a group termination for purposes of ADEA.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the dates set forth below.

OLIN CORPORATION
 
 
By:
 
Name:
 
 
 



Date:
 



BY SIGNING BELOW, EXECUTIVE AFFIRMS THAT EXECUTIVE HAS READ THIS DOCUMENT, AND IS SATISFIED WITH THE INFORMATION THAT HAS BEEN PROVIDED TO EXECUTIVE, AND EXECUTIVE AGREES TO BE LEGALLY BOUND BY THE TERMS OF THIS AGREEMENT.

[EXECUTIVE]
 
 
By:
 
Date:
 
 
 




Sworn to me this
 
day of
 
.
 
 
 
 
Notary Public
 



15


Exhibit 10.2


EXECUTIVE CHANGE IN CONTROL AGREEMENT, dated as of [ l ] (the “ Effective Date ”), between OLIN CORPORATION, a Virginia corporation (“ Olin ”), and [ l ] (“ Executive ”).
WHEREAS Executive is a key member of Olin’s management;
WHEREAS Olin believes that it is in its best interests, as well as those of its stockholders, to assure the continuity of Executive for a fixed period of time in the event of an actual or threatened change in control of Olin and whether or not such change in control is determined by the Board (as defined in Section 1(a) of this Agreement) to be in the best interest of its stockholders;
WHEREAS Olin believes it is in its best interests, as well as those of its stockholders, to enter into this Agreement; and
WHEREAS this Agreement is not intended to alter materially the compensation, benefits or terms of employment that Executive could reasonably expect in the absence of a change in control of Olin, but is intended to encourage and reward Executive’s compliance with the wishes of the Board, whatever they may be, in the event that a change in control occurs or is threatened.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
SECTION 1. Definitions. As used in this Agreement:
(a) “ Board ” means the Board of Directors of Olin or, if applicable following a Change in Control described in Section 1(c)(iii) of this Agreement, the board of directors (or similar governing body in the case of an entity other than a corporation) of the Parent Entity (as defined in Section 1(c)(iii) of this Agreement) or, if there is no Parent Entity, the Surviving Entity (as defined in Section 1(c)(iii) of this Agreement).
(b) “ Cause ” means (i) the willful and continued failure of Executive to substantially perform Executive’s duties (other than any such failure resulting from Executive’s incapacity due to physical or mental illness or injury or any such actual or anticipated failure after the issuance of a notice of Termination by Executive in respect of any event described in Section 1(e)(ii) of this Agreement); (ii) the willful engaging by Executive in gross misconduct significantly and demonstrably financially injurious to Olin; (iii) a willful breach by Executive of Olin’s Code of Business Conduct; or (iv) willful misconduct by Executive in the course of Executive’s employment which is a felony or fraud. No act or failure to act on the part of Executive will be considered “willful” unless done or omitted not in good faith and without reasonable belief that the action or omission was in the interests of Olin or not opposed to the interests of Olin and unless the act or failure to act has not been cured by Executive within 14 days after written notice to Executive specifying the nature of such violations. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause without (A) reasonable written notice to Executive setting forth the reasons for Olin’s intention to terminate for Cause, (B) an opportunity for Executive, together with Executive’s counsel, to be heard before the Board and (C) delivery to Executive of a notice of termination from the Board finding that, in the good faith opinion of 75% of the entire

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membership of the Board, Executive was guilty of conduct described above and specifying the particulars thereof in detail.
(c) “ Change in Control ” means the occurrence of any one of the following events on or after the Effective Date:
(i) individuals who, on the Effective Date, constitute the Board (the “ Incumbent Directors ”) cease for any reason to constitute at least a majority of the Board; provided that any person becoming a director subsequent to the Effective Date, whose election or nomination for election was approved by a vote of at least two-thirds of the directors who were, as of the date of such approval, Incumbent Directors, shall be an Incumbent Director; provided , however , that no individual initially appointed, elected or nominated as a director of Olin pursuant to an actual or threatened election contest with respect to directors or pursuant to any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;
(ii) any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Olin representing 20% or more of the combined voting power of Olin’s then outstanding securities eligible to vote for the election of the Board (the “ Olin Voting Securities ”); provided , however , that the event described in this Section 1(c)(ii) shall not be deemed to be a Change in Control if such event results from any of the following: (A) the acquisition of Olin Voting Securities by Olin or any of its subsidiaries, (B) the acquisition of Olin Voting Securities directly from Olin; (C) the acquisition of Olin Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by Olin or any of its subsidiaries, (D) the acquisition of Olin Voting Securities by any underwriter temporarily holding securities pursuant to an offering of such securities, (E) the acquisition of Olin Voting Securities pursuant to a Non-Qualifying Transaction (as defined in Section 1(c)(iii) of this Agreement) or (F) the acquisition of Olin Voting Securities by Executive or any group of persons including Executive (or any entity controlled by Executive or any group of persons including Executive);
(iii) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (A) Olin or (B) any of its subsidiaries pursuant to which, in the case of this clause (B), Olin Voting Securities are issued or issuable (any event described in the immediately preceding clause (A) or (B), a “ Reorganization ”) or the sale or other disposition of all or substantially all of the assets of Olin to an entity that is not an affiliate of Olin (a “ Sale ”), unless immediately following such Reorganization or Sale: (1) more than 50% of the total voting power (in respect of the election of directors, or similar officials in the case of an entity other than a corporation) of (x) Olin (or, if Olin ceases to exist, the entity resulting from such Reorganization), or, in the case of a Sale, the entity which has acquired all or substantially all of the assets of Olin (in either case, the “ Surviving Entity ”), or (y) if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of more than 50% of the total voting power (in respect of the election of directors, or similar officials in the case of an entity other than a corporation) of the Surviving Entity (the “ Parent Entity ”), is represented by Olin Voting Securities that were outstanding immediately prior to such Reorganization or Sale (or, if applicable, is represented by shares into which or for which such Olin Voting Securities were converted or exchanged pursuant to such Reorganization or Sale) with ownership of such Olin Voting Securities (or, if applicable, shares into which or for which such Olin Voting Securities

2


were converted or exchanged pursuant to such Reorganization or Sale) continuing in substantially the same proportions as the ownership of Olin Voting Securities immediately prior to consummation of such Reorganization or Sale (excluding any outstanding voting securities of the Surviving Entity or Parent Entity that are held immediately following the consummation of such Reorganization or Sale as a result of ownership prior to such consummation of voting securities of any corporation or other entity involved in or forming part of such Reorganization or Sale other than Olin or any of its wholly owned subsidiaries), (2) no person (other than any employee benefit plan (or related trust) sponsored or maintained by Olin, the Surviving Entity or the Parent Entity), is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power (in respect of the election of directors, or similar officials in the case of an entity other than a corporation) of the outstanding voting securities of the Parent Entity (or, if there is no Parent Entity, the Surviving Entity) and (3) at least a majority of the members of the Board following the consummation of the Reorganization or Sale were, at the time of the approval by the Board of the execution of the initial agreement providing for such Reorganization or Sale (or, in the absence of any such agreement, at the time of approval by the Board of such Reorganization or Sale), Incumbent Directors (any Reorganization or Sale which satisfies all of the criteria specified in (1), (2) and (3) above being deemed to be a “ Non-Qualifying Transaction ”); provided , however , that if, in connection with a Reorganization or Sale that would otherwise be considered a Change in Control pursuant to this Section 1(c)(iii), (I) the immediately preceding clause (3) is satisfied, (II) at least seventy-five percent (75%) of the individuals who were executive officers (within the meaning of Rule 3b-7 under the Exchange Act) of Olin immediately prior to consummation of such Reorganization or Sale become executive officers of the Parent Entity (or, if there is no Parent Entity, the Surviving Entity) immediately following such Reorganization or Sale, and (III) the Incumbent Directors at the time of approval by the Board of such Reorganization or Sale determine in good faith that such individuals are expected to remain executive officers for a significant period of time following such Reorganization or Sale, then such directors shall be permitted to determine by at least a two-thirds vote that such Reorganization or Sale shall not constitute a Change in Control for purposes of this Section 1(c)(iii); or
(iv) the stockholders of Olin approve a plan of complete liquidation or dissolution of Olin.
Notwithstanding the foregoing, if any person becomes the beneficial owner, directly or indirectly, of 20% or more of the combined voting power of Olin Voting Securities solely as a result of the acquisition of Olin Voting Securities by Olin which reduces the number of Olin Voting Securities outstanding, such increased amount shall be deemed not to result in a Change in Control; provided , however , that if such person subsequently becomes the beneficial owner, directly or indirectly, of additional Olin Voting Securities that increases the percentage of outstanding Olin Voting Securities beneficially owned by such person, a Change in Control of Olin shall then be deemed to occur.
(d) “ Change in Control Severance ” means two times the sum of:
(i) twelve months of Executive’s then current monthly salary (without taking into account any reductions which may have occurred at or after the date of a Change in Control); plus
(ii) an amount equal to the greater of (A) Executive’s average annual award actually paid in cash (or, in the event that the award in respect of the calendar year immediately prior to the year in which the date of Termination occurs has not yet been

3


paid, the amount of such award that would have been payable in cash in the year in which the date of Termination occurs had Executive not incurred a Termination) under Olin’s short-term annual incentive compensation plans or programs (“ ICP ”) (including zero if nothing was paid or deferred but including any portion thereof Executive has elected to defer and, for the avoidance of doubt, excluding any portion of an annual award that Executive does not have a right to receive currently in cash) in respect of the three calendar years immediately preceding the calendar year in which the date of Termination occurs (or if Executive has not participated in ICP for such three completed calendar years, the average of any such awards in respect of the shorter period of years in which Executive was a participant) and (B) Executive’s then current ICP standard annual award in respect of the year in which the date of Termination occurs.
(e) “ Termination ” means:
(i) Executive is discharged by Olin, upon or following a Change in Control, other than for Cause and other than due to Executive’s death or disability (which will be deemed to occur if Executive becomes eligible to commence immediate receipt of disability benefits under the terms of Olin’s long-term disability plan); or
(ii) Executive terminates Executive’s employment in the event that upon or following a Change in Control:
(A) (1) Olin requires Executive to relocate Executive’s principal place of employment by more than fifty (50) miles from the location in effect immediately prior to the Change in Control and such relocation increases the commuting distance, on a daily basis, between Executive’s residence at the time of relocation and principal place of employment or (2) Olin requires Executive to travel on business to a substantially greater extent than, and inconsistent with, Executive’s travel requirements prior to the Change in Control (taking into account the number and/or duration (both with respect to airtime and overall time away from home) of such travel trips following the Change in Control as compared to a comparable period prior to the Change in Control);
(B) Olin reduces Executive’s base salary or fails to increase Executive’s base salary on a basis consistent (as to frequency and amount) with Olin’s salary system for executive officers as in effect immediately prior to the Change in Control;
(C) Olin fails to continue Executive’s participation in Olin’s incentive compensation plans (including, without limitation, short-term and long-term cash and stock incentive compensation) on substantially the same basis, both in terms of (1) the amount of the benefits provided (other than due to Olin’s or a relevant operation’s or business unit’s financial or stock price performance; provided that such performance is a relevant criterion under such plan) and (2) the level of Executive’s participation relative to other participants as exists immediately prior to the Change in Control; provided that with respect to annual and long-term incentive compensation plans, the basis with which the amount of benefits and level of participation of Executive shall be compared shall be the average benefit opportunity awarded to Executive under the relevant plan during the three completed fiscal years immediately preceding the year in which the date

4


of Termination occurs (or if Executive has not been employed by Olin for such three fiscal years, the average benefit awarded to Executive under the relevant plan during the shorter period of fiscal years during which Executive was employed by Olin);
(D) Olin fails to substantially maintain its health, welfare and retirement benefit plans as in effect immediately prior to the Change in Control, unless arrangements (embodied in an on-going substitute or alternative plan) are then in effect to provide benefits that are substantially similar to those in effect immediately prior to the Change in Control; or
(E) (1) Executive is assigned any duties inconsistent in any adverse respect with Executive’s position (including status, offices, titles and reporting lines), authority, duties or responsibilities immediately prior to the Change in Control or (2) Olin takes any action that results in a diminution in such position (including status, offices, titles and reporting lines), authority, duties or responsibilities or in a substantial reduction in any of the resources available to carry out any of Executive’s authorities, duties or responsibilities from those resources available immediately prior to the Change in Control.
Notwithstanding anything to the contrary contained herein, Executive will not be entitled to terminate employment and receive the payments and benefits set forth in Sections 4 and 5 of this Agreement as the result of the occurrence of any event specified in the foregoing clause (ii) (each such event, a “ Good Reason Event ”) unless, within 90 days following the occurrence of such event, Executive provides written notice to Olin of the occurrence of such event, which notice sets forth the exact nature of the event and the conduct required to cure such event. Olin will have 30 days from the receipt of such notice within which to cure; provided that such 30-day period to cure shall terminate in the event that Olin informs Executive that it does not intend to cure such event (such period, whether 30 days or less, the “ Cure Period ”). If, during the Cure Period, such event is remedied, then Executive will not be permitted to terminate employment and receive the payments and benefits set forth in Sections 4 and 5 of this Agreement as a result of such Good Reason Event. If, at the end of the Cure Period, the Good Reason Event has not been remedied, Executive will be entitled to terminate employment as a result of such Good Reason Event during the 45-day period that follows the end of the Cure Period. If Executive terminates employment during such 45-day period, so long as Executive delivered the written notice to Olin of the occurrence of the Good Reason Event at any time prior to the expiration of this Agreement, for purposes of the payments, benefits and other entitlements set forth in Sections 4 and 5 of this Agreement, the termination of Executive’s employment pursuant thereto shall be deemed to be a Termination before the expiration of this Agreement. If Executive does not terminate employment during such 45-day period, Executive will not be permitted to terminate employment and receive the payments and benefits set forth in Sections 4 and 5 of this Agreement as a result of such Good Reason Event.
If (x) Executive’s employment is terminated prior to a Change in Control for reasons that would have constituted a Termination if they had occurred upon or following a Change in Control, (y) Executive reasonably demonstrates that such termination of employment (or event described in clause (ii) above) occurred at the request of a third party who had indicated an intention or taken steps reasonably calculated to effect a Change in Control and (z) a Change in Control involving such third party (or a party competing with such third party to effectuate a Change in Control) does occur within two years following the date of Executive’s termination of employment, then for purposes of this Agreement, the date immediately preceding the date of such termination of employment (or event described in clause (ii) above) shall be treated as the date of the Change in Control, except that for purposes of determining Executive’s

5


entitlement to payments and benefits described in Sections 4 and 5 of this Agreement and the timing of such payments and benefits, the date of the actual Change in Control shall be treated as the Executive’s date of termination of employment. In the event that Executive’s employment terminates under the circumstances described in clauses (x), (y) and (z) of the preceding sentence (any such termination, an “ Anticipatory Termination ”), such termination will be considered a Termination for purposes of this Agreement, and Executive will be entitled to receive the payments and benefits described in Sections 4 and 5 of this Agreement; provided that any such payments and benefits due under Sections 4 and 5 of this Agreement shall be reduced by the payments and benefits Executive has already received pursuant to any applicable employment, severance or termination agreement, plan, arrangement or policy (collectively, the “ Other Arrangements ”) in respect of Executive’s termination of employment with Olin, and the remainder of the payments and benefits payable pursuant to the Other Arrangements shall be forfeited. For purposes of implementing the terms of Section 5(f) of this Agreement in the event of an Anticipatory Termination, all outstanding and unvested stock options, restricted stock and other equity-based awards (including, without limitation, performance shares) that Executive holds on the date of the Anticipatory Termination shall be deemed to remain outstanding until the date of the Change in Control (but in the case of any stock options, not beyond the date that such stock options would have expired if Executive had remained continuously employed from the date of the Anticipatory Termination until the date of the Change in Control) and become immediately vested and exercisable as of the date of the Change in Control.
SECTION 2. Entire Agreement; Prior Agreements. This Agreement (together with any Other Arrangements) sets forth the entire understanding between Executive and Olin with respect to the subject matter hereof and thereof. All oral or written agreements or representations, express or implied, with respect to the subject matter of this Agreement are set forth in this Agreement and any Other Arrangements. All prior agreements, understandings and obligations (whether written, oral, express or implied) between Executive and Olin with respect to the subject matter hereof are terminated as of the date hereof and are superseded by this Agreement. Notwithstanding the foregoing, the provisions of Section 8 of this Agreement shall not supersede any other agreements, understandings or obligations between Executive and Olin with respect to the subject matter thereof, which shall remain in full force and effect in accordance with their terms and, for the avoidance of doubt, Executive hereby acknowledges and agrees that the restrictive covenants under Section 8 of this Agreement shall operate independently of, and shall be in addition to, any similar restrictive covenants to which Executive may be subject pursuant to any other agreement or understanding between Olin and Executive.
SECTION 3. Term; Executive’s Duties. (a) This Agreement expires at the close of business on January 26, 2019; provided , however , that if a Change in Control has occurred prior to the date on which this Agreement expires, this Agreement shall not expire prior to three years following the date of the Change in Control; provided , further , that the expiration of this Agreement will not affect any of Executive’s rights resulting from a Termination prior to such expiration. In the event of Executive’s death while employed by Olin, this Agreement shall terminate and be of no further force or effect on the date of Executive’s death. Executive’s death will not affect any of Executive’s rights resulting from a Termination prior to death.
(b)    During the period of Executive’s employment by Olin, Executive shall devote Executive’s full time efforts during normal business hours to Olin’s business and affairs, except during vacation periods in accordance with Olin’s vacation policy and periods of illness or incapacity. Nothing in this Agreement will preclude Executive from devoting reasonable periods required for service as a director or a member of any organization involving no conflict of interest with Olin’s interest; provided that no additional position as a director or member shall be accepted by Executive during the period of Executive’s employment with Olin without its prior consent.

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SECTION 4. Change in Control Severance Payment. (a) Subject to Section 4(b) of this Agreement and the remainder of this Section 4(a), in the event of a Termination occurring before the expiration of this Agreement, Olin will pay Executive a lump sum in an amount equal to the Change in Control Severance. The payment of the Change in Control Severance will be made on the 60th day after the date of Termination; provided that no such amount shall be payable to Executive unless, on or prior to the 59th day following the date of Termination the Release Requirement (as defined in Section 7 of this Agreement) has been satisfied; provided further , that, any portion of the Change in Control Severance that constitutes deferred compensation within the meaning of Section 409A (as defined in Section 19 of this Agreement) will be paid at the earliest date that is permitted in accordance with the schedule that is applicable to the cash severance provided for in any agreement between Executive and Olin, as would be applicable in the event of a Termination on the date hereof.
(b)    Notwithstanding Section 4(a) of this Agreement, if Executive would otherwise have been required by Olin policy to retire at the applicable age specified in Olin’s mandatory retirement policy for specified job positions, as in effect on the date of Termination (the “ Mandatory Retirement Age ”), then if the date upon which Executive would have attained the Mandatory Retirement Age falls during the 24-month period following the date of Termination, the amount payable pursuant to Section 4(a) of this Agreement shall be reduced to the amount equal to the product of (i) the Change in Control Severance, multiplied by (ii) a fraction, the numerator of which is the number of days from the date of Termination through and including the date upon which Executive would have attained the Mandatory Retirement Age and the denominator of which is 730.
(c)    If on the date of Termination, Executive is eligible and is receiving payments under any then existing disability plan of Olin or its subsidiaries and affiliates, then Executive agrees that all payments under such disability plan may, and will be, suspended and offset (subject to applicable law) for 24 months (or, if earlier, until Executive would have attained the Mandatory Retirement Age) following the date of Termination. If, after such period, Executive remains eligible to receive disability payments, then such payments shall resume in the amounts and in accordance with the provisions of the applicable disability plan of Olin or its subsidiaries and affiliates.
SECTION 5. Other Benefits. (a) If Executive becomes entitled to payment under Section 4(a) or 4(b) of this Agreement, as applicable, then Executive will receive 24 months of retirement contributions to all Olin qualified and non-qualified defined contribution plans for which Executive was eligible at the time of Termination, it being understood that Executive shall be permitted to receive payments from Olin’s plans (assuming Executive otherwise qualifies to receive such payments, is permitted to do so under the applicable plan terms and elects to do so), during the period that Executive is receiving payments pursuant to Section 4(a) of this Agreement). Such contributions shall be based on the amount of the Change in Control Severance. Such contributions shall, subject to Executive’s satisfaction of the Release Requirement, be paid in a lump sum on the 60th day after the date of Termination; provided that any portion of such payment that constitutes deferred compensation within the meaning of Section 409A will be paid at the earliest date that is permitted in accordance with the schedule that is applicable to any cash severance provided for in any agreement between Executive and Olin, as would be applicable in the event of a Termination on the date hereof. For 24 months from the date of Termination, Executive (and Executive’s covered dependents) will continue to enjoy coverage on the same basis as a similarly situated active employee under all Olin medical, dental and life insurance plans to the extent Executive was enjoying such coverage immediately prior to Termination. Executive’s entitlement to insurance continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 would commence at the end of the period during which insurance coverage is provided under this Agreement without offset for coverage provided hereunder. Executive shall accrue no vacation during the 24 months following the date of Termination but shall be entitled to payment for accrued and unused

7


vacation for the calendar year in which Termination occurs. If Executive receives the Change in Control Severance (including the amount referred to in Section 1(d)(ii) of this Agreement), Executive shall not be entitled to an ICP award for the calendar year of Termination if Termination occurs during the first calendar quarter. Even if Executive receives the Change in Control Severance (including the amount referred to in Section 1(d)(ii) of this Agreement), if Termination occurs during or after the second calendar quarter, Executive shall be entitled to a prorated ICP award for the calendar year of Termination which shall be determined by multiplying Executive’s then current ICP standard annual award by a fraction, the numerator of which is the number of weeks in the calendar year prior to Termination and the denominator of which is 52. Executive shall accrue no ICP award following the date of Termination. The accrued vacation pay and, subject to satisfaction of the Release Requirement, ICP award, if any, shall be paid in a lump sum on or prior to the 60th day after the date of Termination.
(b)    Notwithstanding the foregoing Section 5(a) of this Agreement, no such insurance coverage or retirement contributions will be afforded by this Agreement with respect to any period after the date upon which Executive would have attained the Mandatory Retirement Age.
(c)    In the event of a Termination, Executive will be entitled at Olin’s expense to outplacement counseling and associated services in accordance with Olin’s customary practice at the time or, if more favorable to Executive, in accordance with such practice immediately prior to the Change in Control, with respect to its senior executives who have been terminated other than for Cause. It is understood that the counseling and services contemplated by this Section 5(c) are intended to facilitate the obtaining by Executive of other employment following a Termination, and payments or benefits by Olin in lieu thereof will not be available to Executive. The outplacement services will be provided for a period of 12 months beginning within 10 days following the date that the Release Requirement is satisfied.
(d)    If Executive becomes entitled to the payment under Section 4(a) of this Agreement, then at the end of the period for insurance coverage provided in accordance with Section 5(a) of this Agreement, if Executive at such time has satisfied the eligibility requirements to participate in Olin’s post-retirement medical and dental plan, Executive shall be entitled to continue in Olin’s medical and dental coverage (including dependent coverage) on the same basis as a similarly situated active employee until Executive reaches age 65; provided that if Executive obtains other employment which offers medical or dental coverage to Executive and Executive’s dependents, Executive shall enroll in such medical or dental coverage, as the case may be, and the corresponding coverage provided to Executive hereunder shall be secondary coverage to the coverage provided by Executive’s new employer so long as such employer provides Executive with such coverage.
(e)    If there is a Change in Control, Olin shall not reduce or diminish the insurance coverage or benefits which are provided to Executive under Section 5(a) or 5(d) of this Agreement during the period Executive is entitled to such coverage; provided that Executive makes the premium payments required by active employees generally for such coverage, if any, under the terms and conditions of coverage applicable to Executive.
(f)    Notwithstanding any provision to the contrary in any long-term incentive plan maintained by Olin or any applicable award agreement thereunder (collectively, the “ Equity Award Documents ”) and except as otherwise provided in this Section 5(f), all outstanding stock options, restricted stock and other equity awards held by Executive (other than any performance share awards), regardless of whether granted before, at or after the Change in Control, shall not automatically become fully vested and immediately exercisable, as the case may be, upon the occurrence of a “change in control” (as such term, or any similar term, is used in any applicable Equity Award Document) and, instead, each such award shall continue to vest in accordance with its terms following a Change in

8


Control; provided that subject to Executive’s satisfaction of the Release Requirement, such awards shall become fully vested (without pro-ration) and immediately exercisable, as the case may be, as of a Termination. Notwithstanding the foregoing sentence, unless provision is made in connection with a Change in Control for (i) assumption of such awards or (ii) substitution of such awards for new awards covering stock of a successor corporation or its “parent corporation” (as defined in Section 424(e) of the Code) or “subsidiary corporation” (as defined in Section 424(f) of the Code) with appropriate adjustments as to the number and kinds of shares and exercise prices (if applicable) that preserve the material terms and conditions of such awards as in effect immediately prior to the Change in Control (including, without limitation, with respect to the vesting schedules, the intrinsic value of the awards as of the Change in Control and transferability of the shares underlying such awards), all such awards shall become fully vested and immediately exercisable, as the case may be, as of immediately prior to the Change in Control. Notwithstanding anything in this Section 5(f) to the contrary and for the avoidance of doubt, in the event that payment of any amount that would otherwise be paid pursuant to the immediately preceding sentence would result in a violation of Section 409A, then Executive’s rights to payment of such amount will become vested pursuant to such sentence and the amount of such payment shall be determined as of the Change in Control, but such amount shall not be paid to Executive until the earliest time permitted under Section 409A. Notwithstanding anything in this Agreement to the contrary, any performance share awards held by Executive on the date of the Change in Control shall become vested in accordance with the terms of the applicable Equity Award Documents; provided that notwithstanding the terms of any applicable Equity Award Document, the term “change in control” (or any similar term used in any applicable Equity Award Documents) shall have the meaning set forth in Section 1(c) of this Agreement.
SECTION 6. Participation in Change in Control; Section 4999 of Internal Revenue Code. (a) In the event that Executive participates or agrees to participate by loan or equity investment (other than through ownership of less than 1% of publicly traded securities of another company) in a transaction (referred to in this Section 6(a) as an “acquisition”) which would result in an event described in Section 1(c)(i) or (ii) of this Agreement, Executive must promptly disclose such participation or agreement to Olin, and such transaction will not be considered a Change in Control with respect to Executive for purposes of this Agreement.
(b)    Notwithstanding anything in this Agreement to the contrary, in the event that any payments or benefits that could be paid, provided or delivered under this Agreement would, when combined with all other payments or benefits that could be paid, provided or delivered to Executive by Olin, any successor or any of their respective affiliates, are considered “parachute payments” (as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “ Code ”) and the applicable Treasury regulations thereunder) (such payments and benefits, the “ Parachute Payments ”), then the aggregate amount of Parachute Payments to which Executive will be entitled shall equal the amount which produces the greatest after-tax benefit to Executive after taking into account any excise tax payable by Executive under Section 4999 of the Code (the “ Excise Tax ”). For the avoidance of doubt, this provision will reduce the amount of Parachute Payments otherwise payable to Executive, only if doing so would place Executive in a better net after-tax economic position as compared with not doing so (taking into account the Excise Tax payable in respect of such Parachute Payments). In such event, Olin shall reduce or eliminate the Parachute Payments by first reducing or eliminating the portion of the Parachute Payments that are payable in cash and then by reducing or eliminating the non-cash portion of the Parachute Payments, in each case, in reverse order beginning with payments or benefits which are to be paid the furthest in the future; provided , however , that for purposes of the foregoing sequence, any amounts that are payable with respect to equity-based or equity-related awards (whether payable in cash or in kind) shall be deemed to be a non-cash portion of the Parachute Payments. All determinations to be made hereunder shall be made, at Olin’s expense, by a nationally recognized certified public accounting

9


firm (the “ Accounting Firm ”) selected by Olin. To the extent that, based on the Accounting Firm’s determination, the Parachute Payments are required to be reduced or eliminated, Olin shall provide Executive with prior written notice of any such reduction or elimination and shall, upon a written request made by Executive within five days of receiving such notification, provide Executive and Executive’s tax advisors with the opportunity to review the calculations prepared by the Accounting Firm and discuss such calculations with Olin.
SECTION 7. Release. Executive shall not be entitled to receive (or continue in the case of health and other welfare benefits) any of the payments or benefits set forth in Sections 4 and 5 of this Agreement unless Executive executes a release of claims (in the form of Exhibit A hereto, subject to any modifications required to comply with applicable laws) in favor of Olin and others set forth in Exhibit A relating to all claims or liabilities of any kind relating to Executive’s employment with Olin or an affiliate and the termination of such employment and, on or prior to the 59th day following the date of Termination, Executive has not revoked such Release and the revocation period thereunder has expired in accordance with its terms (the “ Release Requirement ”).
SECTION 8. Restrictive Covenants. (a) As an inducement to Olin to provide the payments and benefits to Executive hereunder, Executive acknowledges and agrees that, notwithstanding any provision to the contrary in any Other Arrangements, in the event of Executive’s Termination, Executive agrees to comply with the restrictions set forth in Sections 8(b) and (c) of this Agreement for a one-year period from the date of Termination (or, if earlier, until Executive would have attained the Mandatory Retirement Age) (the “ Restriction Period ”); provided that if Executive’s employment is not terminated by reason of a Termination (and Executive therefore is not entitled to receive the payments and benefits set forth in Sections 4 and 5 of this Agreement), then Executive need not comply with the restrictions set forth in Sections 8(b) and (c) of this Agreement.
(b)    Executive acknowledges and agrees that so long as Olin complies with its obligations to provide the payments required under this Agreement, notwithstanding any provision to the contrary in any Other Arrangements, Executive shall not during the Restriction Period, directly or indirectly, for Executive or for any other person, corporation, partnership, sole proprietorship, entity or business: (i) employ or attempt to employ or enter into any contractual arrangement with any employee or former employee of Olin, unless such employee or former employee has not been employed by Olin for a period in excess of six months or (ii) make known the names and addresses of customers of Olin or any information relating in any manner to Olin’s trade or business relationships with such customers. Notwithstanding anything in this Agreement to the contrary and for the avoidance of doubt, references in this Section 8(b) to “Olin” shall be deemed to refer to Olin and its subsidiaries and affiliates prior to a Change in Control.
(c)    During the Restriction Period, Executive shall not make any statement that intentionally disparages Olin or its business, services or products unless, in each case, in the context of a legal process (including without limitation, litigation between Olin and Executive), required governmental testimony or filings, any administrative or arbitral proceedings (including, without limitation, arbitration between Olin and Executive) or as otherwise required by law. Notwithstanding the foregoing and subject to Section 8(d) of this Agreement, in no event shall Executive be prohibited from making truthful statements in response to questions from a prospective future employer.
(d)    Executive acknowledges and agrees (whether or not Executive is subject to the restrictions set forth in Sections 8(b) and (c) of this Agreement) not to disclose, either while in Olin’s employ or at any time thereafter, to any person not employed by Olin, or not engaged to render services to Olin, any confidential information obtained by Executive while in the employ of Olin, including, without

10


limitation, trade secrets, know-how, improvements, discoveries, designs, customer and supplier lists, business plans and strategies, forecasts, budgets, cost information, formulae, processes, manufacturing equipment, compositions, computer programs, data bases and tapes and films relating to the business of Olin and its subsidiaries and affiliates (including majority-owned companies of such subsidiaries and affiliates); provided, however, that this provision shall not preclude Executive from disclosing information (i) known generally to the public (other than pursuant to Executive’s act or omission) or (ii) to the extent required by law or court order. Executive also agrees that upon leaving Olin’s employ Executive will not take with Executive, without the prior written consent of an officer authorized to act in the matter by the Board, any drawing, blueprint, specification or other document of Olin, its subsidiaries or affiliates, which is of a confidential nature relating to Olin, its subsidiaries or affiliates, including, without limitation, relating to its or their methods of distribution, or any description of any formulae or secret processes. Notwithstanding the foregoing, nothing in this Agreement shall prevent Executive from exercising any legally protected whistleblower rights (including under Rule 21F under the Securities Exchange Act of 1934, as amended). Furthermore, Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (x) in confidence to a federal, state or local governmental official, either directly or indirectly, or to an attorney, in each case, solely for the purpose of reporting or investigating a suspected violation of law or (y) in a complaint or other document filed in a lawsuit or proceeding, if such filings are made under seal.
(e)    Executive acknowledges and agrees that (i) the restrictive covenants contained in this Section 8 are reasonably necessary to protect the legitimate business interests of Olin, and are not overbroad, overlong, or unfair and are not the result of overreaching, duress or coercion of any kind, (ii) Executive’s full, uninhibited and faithful observance of each of the covenants contained in this Section 8 will not cause Executive any undue hardship, financial or otherwise, and that enforcement of each of the covenants contained herein will not impair Executive’s ability to obtain employment commensurate with Executive’s abilities and on terms fully acceptable to Executive or otherwise to obtain income required for the comfortable support of Executive and Executive’s family and the satisfaction of the needs of Executive’s creditors and (iii) the restrictions contained in this Section 8 are intended to be, and shall be, for the benefit of and shall be enforceable by, Olin’s successors and permitted assigns.
(f)    Executive acknowledges and agrees that any violation of the provisions of this Section 8 would cause Olin irreparable damage and that if Executive breaches or threatens to breach such provisions, Olin shall be entitled, in addition to any other rights and remedies Olin may have at law or in equity, to obtain specific performance of such covenants through injunction or other equitable relief from a court of competent jurisdiction, without proof of actual damages and without being required to post bond.
(g)    In the event that any arbitrator or court of competent jurisdiction shall finally hold that any provision of this Agreement (whether in whole or in part) is void or constitutes an unreasonable restriction against Executive, such provision shall not be rendered void but shall be deemed to be modified to the minimum extent necessary to make such provision enforceable for the longest duration and the greatest scope as such arbitrator or court may determine constitutes a reasonable restriction under the circumstances.
SECTION 9. Successors; Binding Agreement. (a) Olin will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Olin, by agreement, in form and substance satisfactory to Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that Olin would be required to perform if no such succession had taken place. Failure of Olin to obtain such assumption and agreement prior to the effectiveness of any such succession will be a breach of this Agreement and

11


entitle Executive to compensation from Olin in the same amount and on the same terms as Executive would be entitled to hereunder had a Termination occurred on the succession date. Except as otherwise set forth in Section 8(b) of this Agreement, as used in this Agreement, “Olin” means Olin as defined in the preamble to this Agreement and any successor to its business or assets which executes and delivers the agreement provided for in this Section 9 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law or otherwise.
(b)    This Agreement shall be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
SECTION 10. Notices. For the purpose of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Executive :
[ l ]

If to Olin :
Olin Corporation
190 Carondelet Plaza
Suite 1530
Clayton, MO 63105-3443
Attention: Corporate Secretary
or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
SECTION 11. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Virginia (without giving effect to its principles of conflicts of law).
SECTION 12. Counterparts. This Agreement may be executed in one or more counterparts (including via facsimile and portable document format (PDF)), each of which shall be deemed to be an original but all of which together will constitute one and the same Agreement.
SECTION 13. No Mitigation. Executive will not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall any compensation received by Executive from a third party reduce such payment except as explicitly provided in this Agreement. Except as may otherwise be expressly provided herein, nothing in this Agreement will be deemed to reduce or limit the rights which Executive may have under any employee benefit plan, policy or arrangement of Olin and its subsidiaries and affiliates. Except as expressly provided in this Agreement and subject to Section 19(b) of this Agreement, payments made pursuant to this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense or other claim which Olin and its subsidiaries and affiliates may have against Executive.
SECTION 14. Withholding of Taxes. Olin may withhold from any benefits payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling.

12


SECTION 15. Non-assignability. This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder, except as provided in Section 9 of this Agreement. Without limiting the foregoing, Executive’s right to receive payments hereunder shall not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, other than a transfer by will or by the laws of descent or distribution, and, in the event of any attempted assignment or transfer by Executive contrary to this Section 15, Olin shall have no liability to pay any amount so attempted to be assigned or transferred.
SECTION 16. No Employment Right. This Agreement shall not be deemed to confer on Executive a right to continued employment with Olin.
SECTION 17. Disputes/Arbitration. (a) Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration at Olin’s corporate headquarters in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of Executive’s right to be paid during the pendency of any dispute or controversy arising under or in connection with this Agreement.
(b)    Olin shall pay all reasonable legal fees and expenses, as they become due, which Executive may incur prior to the third anniversary of the expiration of this Agreement in connection with this Agreement through arbitration or otherwise unless the arbitrator determines that Executive had no reasonable basis for Executive’s claim or was acting in bad faith; provided that legal fees and expenses payable hereunder shall include legal fees and expenses incurred by Executive, whether prior to or after the expiration of this Agreement, in defending against an alleged breach of the restrictive covenants set forth in Section 8 of this Agreement, unless Olin is able to establish that Executive was acting in bad faith and that such restrictive covenants were in fact breached. Should Olin dispute the entitlement of Executive to such fees and expenses, the burden of proof shall be on Olin to establish that Executive had no reasonable basis for Executive’s claim or was acting in bad faith.
(c)    If any payment which is due to Executive hereunder has not been paid within ten (10) days of the date on which such payment was due, Executive shall be entitled to receive interest thereon from the due date until paid at an annual rate of interest equal to the Prime Rate reported in the Wall Street Journal, Northeast Edition, on the last business day of the month preceding the due date, compounded annually.
SECTION 18. Miscellaneous. (a) Except as specifically provided in Section 19(f) of this Agreement, no provisions of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by Executive and Olin. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.
(b)    The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect to the fullest extent permitted by law.
(c)    Executive may not cumulate the benefits provided under this Agreement with any severance or similar benefits (“ Other Severance Benefits ”) that Executive may be entitled to by agreement with Olin (including, without limitation, pursuant to any Other Arrangements) or under applicable law in connection with the termination of Executive’s employment. Subject to Section 19(b) of this Agreement, to the extent that Executive receives any Other Severance Benefits, then the payments

13


and benefits payable hereunder to Executive shall be reduced by a like amount. To the extent Olin is required to provide payments or benefits to Executive under the Worker Adjustment and Retraining Notification Act (or any state, local or foreign law relating to severance or dismissal benefits), the benefits payable hereunder shall be first applied to satisfy such obligation.
SECTION 19. Section 409A; 105(h). (a) It is intended that the provisions of this Agreement comply with Section 409A of the Code and the regulations thereunder as in effect from time to time (collectively, “ Section 409A ”), and all provisions of this Agreement shall be construed and interpreted either to (i) exempt any compensation from the application of Section 409A or (ii) comply with the requirements for avoiding taxes and penalties under Section 409A.
(b)    Neither Executive nor any of Executive’s creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A) payable under this Agreement or under any other plan, policy, arrangement or agreement of or with Olin or any of its affiliates (this Agreement and such other plans, policies, arrangements and agreements, the “ Olin Plans ”) to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to Executive or for Executive’s benefit under any Olin Plan may not be reduced by, or offset against, any amount owing by Executive to Olin or any of its affiliates.
(c)    If, at the time of Executive’s separation from service (within the meaning of Section 409A), (i) Executive shall be a specified employee (within the meaning of Section 409A and using the identification methodology selected by Olin from time to time) and (ii) Olin shall make a good faith determination that an amount payable under an Olin Plan constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then Olin (or its affiliate, as applicable) shall not pay such amount on the otherwise scheduled payment date but shall instead accumulate such amount and pay it, without interest, on the first business day after such six-month period.
(d)    To the extent required by Section 409A, any payment or benefit that would be considered deferred compensation subject to, and not exempt from, Section 409A, payable or provided upon a termination of Executive’s employment shall only be paid or provided to Executive upon his separation from service (within the meaning of Section 409A).
(e)    Except as specifically permitted by Section 409A, the amounts of any benefits and reimbursements provided to the Executive under this Agreement during any tax year of Executive (“ Executive Tax Year ”) shall not affect the amounts of any benefits and reimbursements to be provided to Executive under this Agreement in any other Executive Tax Year, and the right to such benefits and reimbursements cannot be liquidated or exchanged for any other benefit and shall be provided in accordance with Treas. Reg. Section 1.409A-3(i)(1)(iv) or any successor thereto. Furthermore, any reimbursement payments for any non-tax expenses provided to Executive under this Agreement shall be made to Executive as soon as practicable following the date that the applicable expense is incurred, but in no event later than the last day of the Executive Tax Year following the Executive Tax Year in which the applicable expense is incurred, and any reimbursement payments for any taxes provided to Executive under this Agreement shall be made to Executive no later than the last day of the Executive Tax Year following the Executive Tax Year in which the related taxes are remitted.
(f)    Notwithstanding any provision of this Agreement or any other Olin Plan to the contrary, in light of the uncertainty with respect to the proper application of Section 409A, Olin reserves

14


the right to make amendments to this Agreement and any other Olin Plan as Olin deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A. In any case, Executive is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on Executive or for Executive’s account in connection with any Olin Plan (including any taxes and penalties under Section 409A), and neither Olin nor any affiliate shall have any obligation to indemnify or otherwise hold Executive harmless from any or all of such taxes or penalties.
(g)    For purposes of Section 409A, each installment of any payments made under this Agreement will be deemed to be a separate payment as permitted under Treas. Reg. Section 1.409A-2 (b)(2)(iii).
(h)    Notwithstanding any provision of this Agreement to the contrary, to the extent necessary to satisfy Section 105(h) of the Code, Olin will be permitted to alter the manner in which health or other welfare benefits are provided to Executive following the date of Termination; provided that the after-tax cost to Executive of such benefits shall not be greater than the costs applicable to similarly situated executives of Olin who have not terminated employment.
[ remainder of this page intentionally left blank ]



15


IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the day and year first above set forth.

OLIN CORPORATION
                                             


EXECUTIVE
                                                     
                                






16


Exhibit A
RELEASE
Pursuant to the terms of the Executive Change in Control Agreement (the “ Agreement ”) entered into on [ l ], among [ l ] (“ Executive ”) and Olin Corporation (“ Olin ”) and in exchange for the payments and benefits provided under the Agreement, Executive, for himself, his family, his attorneys, agents, descendants, heirs, legatees, executors, personal administrators, guardians, personal representatives, hereby releases and discharges Olin and its past, present and future shareholders, subsidiaries, affiliates, agents, directors, officers, employees, representatives, principals, attorneys, insurers, predecessors, successors, assigns and all persons acting by, through, under or in concert with Olin and its subsidiaries or affiliates (collectively referred to as the “ Released Parties ”), from any and all non-statutory claims, obligations, debts, liabilities, demands, actions, causes of action, suits, accounts, covenants, contracts, agreements and damages whatsoever of every name and nature, known and unknown, which Executive ever had, or now has, against the Released Parties to the date of this Release, both in law and equity, arising out of or in any way related to Executive’s employment with Olin and its subsidiaries and affiliates or the termination of that employment, including any claims that Executive is entitled to any compensation or benefits from any Released Party. The claims Executive releases include, but are not limited to, claims that the Released Parties:
(a) discriminated against Executive on the basis of race, color, sex (including claims of sexual harassment), national origin, ancestry, disability, religion, sexual orientation, marital status, parental status, veteran status, source of income, entitlement to benefits, union activities, age or any other claim or right Executive may have under the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, or any other status protected by local, state or Federal laws, constitutions, regulations, ordinances or executive orders;
(b) failed to give proper notice of this employment termination under the Worker Adjustment and Retraining Notification Act, or any similar state or local statute or ordinance;
(c) violated any other Federal, state or local employment statute, such as the Employee Retirement Income Security Act of 1974, as amended, which, among other things, protects employee benefits; the Fair Labor Standards Act, which regulates wage and hour matters; the Family and Medical Leave Act, which requires employers to provide leaves of absence under certain circumstances; Title VII of the Civil Rights Act of 1964; the Americans With Disabilities Act; the Rehabilitation Act; the Occupational Safety and Health Act; and any other Federal, state or local laws relating to employment;
(d) violated the Released Parties’ personnel policies, handbooks, any covenant of good faith and fair dealing, or any contract of employment between Executive and any of the Released Parties;
(e) violated public policy or common law, including claims for personal injury, invasion of privacy, retaliatory discharge, negligent hiring, retention or supervision, defamation, intentional or negligent infliction of emotional distress and/or mental anguish, intentional interference with contract, negligence, detrimental reliance, loss of consortium to Executive or any member of Executive’s family and/or promissory estoppel; or
(f) are in any way obligated for any reason to pay damages, expenses, litigation costs (including attorneys’ fees), bonuses, commissions, disability benefits, compensatory damages, punitive damages and/or interest.

17


Notwithstanding the forgoing, Executive is not prohibited from making or asserting (i) any claim or right under state workers’ compensation or unemployment laws, (ii) Executive’s rights as an insured under any director’s and officer’s liability insurance policy now or previously in force or (iii) any claim or right which by law cannot be waived, including Executive’s rights to file a charge with an administrative agency or to participate in an agency investigation, including but not limited to the right to file a charge with, or participate in an investigation or proceeding conducted by, the Equal Employment Opportunity Commission (“ EEOC ”). Executive waives, however, the right to recover money if any Federal, state or local government agency, including but not limited to the EEOC, pursues a claim on Executive’s behalf or on behalf of a class to which Executive may belong that arises out of or relates to Executive’s employment or severance from employment. In addition, this Release does not constitute a waiver or release of any of Executive’s rights to payments or benefits pursuant to the Agreement or any accrued benefit under any employee benefit plan, program or arrangement of the Released Parties. Notwithstanding the foregoing, nothing in this Release shall prevent Executive from exercising any legally protected whistleblower rights (including under Rule 21F under the Securities Exchange Act of 1934, as amended).
For the purpose of giving a full and complete release, Executive understands and agrees that this Release includes all claims that Executive may now have but does not know or suspect to exist in Executive’s favor against the Released Parties, and that this Release extinguishes those claims. Notwithstanding the foregoing, the waiver and release provisions set forth in this Release are not an attempt to cause Executive to waive or release rights or claims that may arise after the date this Release is executed.
Acknowledgments .
Executive affirms that Executive has fully reviewed the terms of this Release, affirms that Executive understands its terms, and states that Executive is entering into this Release knowingly, voluntarily and in full settlement of all claims which existed in the past or which currently exist, that arise out of Executive’s employment with Olin or Executive’s termination of employment.
Executive acknowledges that Executive has had at least 21 days to consider this Release thoroughly, and has been specifically advised to consult with an attorney, if Executive wishes, before signing below.
If Executive signs and returns this Release before the end of the 21-day period, Executive certifies that Executive’s acceptance of a shortened time period is knowing and voluntary, and that Olin did not improperly encourage Executive to sign through fraud, misrepresentation, a threat to withdraw or alter the offer before the 21-day period expires, or by providing different terms to other employees who sign the release before such time period expires.
Executive understands that Executive may revoke this Release within seven days after Executive signs it. Executive’s revocation must be in writing and submitted within such seven-day period.
If Executive does not revoke this Release within the seven-day period, it becomes effective and irrevocable on the eighth day after execution. Executive further understands that if Executive revokes this Release, Executive will not be eligible to receive the payments and benefits covered in Sections 4 and 5 of the Agreement.
Executive acknowledges that the waiver and release provisions set forth in this Release are in exchange for good and valuable consideration that is in addition to anything of value to which

18


Executive was already entitled. Olin has advised Executive that it is in Executive’s best interest to consult with an attorney prior to executing this Release.

Date:
 
 
 
 
By:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 






19


Exhibit 12

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(Unaudited)

 
 
Six Months Ended
June 30,
 
 
2017
 
2016
Earnings:
 
($ in millions)
Loss before taxes (1)
 
$
(3.9
)
 
$
(79.0
)
Add (deduct):
 
 
 
 
Earnings of non-consolidated affiliates
 
(1.0
)
 
(0.6
)
Amortization of capitalized interest
 
1.0

 
2.6

Capitalized interest
 
(1.6
)
 
(1.6
)
Fixed charges as described below
 
126.5

 
115.5

Total
 
$
121.0

 
$
36.9

 
 
 
 
 
Fixed charges:
 
 
 
 
Interest expensed and capitalized
 
$
106.5

 
$
97.7

Estimated interest factor in rent expense (2)
 
20.0

 
17.8

Total
 
$
126.5

 
$
115.5

 
 
 
 
 
Ratio of earnings to fixed charges (3)
 
1.0

 
0.3


(1)
For the six months ended June 30, 2016 , loss before taxes included $76.6 million of non-cash asset impairment restructuring charges associated with permanently closing the Henderson, NV chlor alkali plant and reconfiguring the facility to manufacture bleach and distribute caustic soda and hydrochloric acid.

(2)
Amounts represent those portions of rent expense that are reasonable approximations of interest costs.

(3)
The ratio coverage during the six months ended June 30, 2016 was less than 1:1. We would have needed to generate additional earnings of $78.6 million to achieve a coverage of 1:1 during the six months ended June 30, 2016 .




Exhibit 31.1
 
CERTIFICATIONS
 
I, John E. Fischer, certify that:
 
1. I have reviewed this quarterly report on Form 10-Q of Olin Corporation;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
Date: 
August 1, 2017
/s/ John E. Fischer
 
 
John E. Fischer
 
 
Chairman, President and Chief Executive Officer



Exhibit 31.2
 
CERTIFICATIONS
 
I, Todd A. Slater, certify that:
 
1. I have reviewed this quarterly report on Form 10-Q of Olin Corporation;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
Date: 
August 1, 2017
/s/ Todd A. Slater
 
 
Todd A. Slater
 
 
Vice President and Chief Financial Officer



Exhibit 32



CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Olin Corporation (the “Company”) on Form 10-Q for the period ended  June 30, 2017 as filed with the Securities and Exchange Commission (the “Report”), I, John E. Fischer, Chairman, President and Chief Executive Officer and I, Todd A. Slater, Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to our knowledge: (1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its Staff upon request.


 
 
/s/ John E. Fischer
 
John E. Fischer
 
Chairman, President and Chief Executive Officer
 
Dated:
August 1, 2017
 
 
/s/ Todd A. Slater
 
Todd A. Slater
 
Vice President and Chief Financial Officer
 
Dated: 
August 1, 2017