![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver51.jpg)
1
KeyBanc Basic Materials &
Packaging Conference
September 11, 2008
Packaging Conference
September 11, 2008
Exhibit 99.1
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver52.jpg)
2
Olin Representatives
John E. Fischer
Vice President & Chief Financial Officer
John L. McIntosh
Vice President & President, Chlor Alkali Products
Larry P. Kromidas
Assistant Treasurer & Director, Investor Relations
lpkromidas@olin.com
(618) 258 - 3206
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver53.jpg)
3
Investment Rationale
• Strong outlook based on:
– Historically high ECU prices
– Benefits from the Pioneer acquisition
– Increasing profitability from Winchester
• Strong balance sheet with no debt maturities until
2011
2011
• Substantial cash flow supports 81+ year continuous
common dividend with above average yield
common dividend with above average yield
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver54.jpg)
4
Olin Vision
To be a leading Basic Materials company delivering
attractive, sustainable shareholder returns
attractive, sustainable shareholder returns
• Being low cost, high quality producer, and #1 or
#2 supplier in the markets we serve
#2 supplier in the markets we serve
• Providing excellent customer service and
advanced technological solutions
advanced technological solutions
• Generating returns above the cost of capital over
the economic cycle
the economic cycle
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver55.jpg)
5
Total Return to Shareholders in Top Third of S&P Mid Cap 400
Return on Capital Employed Over Cost of Capital Through the Cycle
Olin Corporation Goal: Superior Shareholder Returns
Olin Corporate Strategy
1. Build on current leadership positions in Chlor-Alkali
and Ammunition
and Ammunition
• Improve operating efficiency and profitability
• Integrate downstream selectively
2. Allocate resources to the businesses that can create the
most value
most value
3. Manage financial resources to satisfy legacy liabilities
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver56.jpg)
6
Impact of Strategic Actions
“The New Olin”
“The New Olin”
• Improved profitability
• Improved product mix with increased value-added
bleach and greater geographic diversity
bleach and greater geographic diversity
• Stronger balance sheet with reduced working capital
investment and volatility
investment and volatility
• $30 million per year lower legacy costs
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver57.jpg)
7
Olin’s Chlor Alkali Strategy
• Be the preferred supplier to chlor alkali customers in
addition to being the low cost producer
addition to being the low cost producer
• Goal is to increase the value of the Chlor Alkali
Division to Olin through:
Division to Olin through:
– Optimizing capacity utilization
– Higher margin downstream products
– Cost reduction and financial discipline
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver58.jpg)
8
ECU = Electrochemical Unit; a unit of measure reflecting the chlor-alkali process outputs of
1 ton of chlorine, 1.13 tons of 100% caustic soda and 0.3 tons of hydrogen.
2
2
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver59.jpg)
9
Pioneer Acquisition
• Synergistic, bolt-on acquisition that enhances our
chlor-alkali franchise
chlor-alkali franchise
– Immediately accretive to earnings and cash flow that
remains highly accretive throughout the cycle
remains highly accretive throughout the cycle
– Improves profitability through synergies and capacity
optimization
optimization
– Provides platform for value-added growth
• #1 supplier of industrial bleach in North America
• St. Gabriel, LA conversion and expansion
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver510.jpg)
10
Synergies & Cost Reductions
• Approximately $10 million of synergies realized in Q2
• Original synergy forecast increased from $35 million
annual rate to more than $40 million; about 10% of
purchase price
annual rate to more than $40 million; about 10% of
purchase price
• Synergies of $8 to $10 million annually expected to be
realized from the Q2 Dalhousie, NB plant closing
realized from the Q2 Dalhousie, NB plant closing
• St. Gabriel, LA expansion/conversion expected to reduce
annual energy costs by approximately $25 million and
brine costs by approximately $5 million
annual energy costs by approximately $25 million and
brine costs by approximately $5 million
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver511.jpg)
11
Pioneer Acquisition moves Olin up to #3 Producer and…
Source: CMAI/Olin
Includes St. Gabriel conversion/expansion, Sunbelt joint venture and Dalhousie shutdown.
Presumes Shintech startup during 2008. Oxy includes OxyVinyls.
Chlorine Capacities
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver512.jpg)
12
…
Enhances Olin
’
s Operational and Geographical Platform
39
Pioneer Chlorine Plants
Pioneer Bleach Plants
Source: /Olin
Tacoma, WA
Tracy, CA
Santa Fe Springs, CA
Henderson, NV
St. Gabriel, LA
McIntosh, AL
Augusta, GA
Charleston, TN
Niagara Falls, NY
Becancour
, Quebec
Olin Chlorine & Bleach Plants
1,955
Total
108
Augusta, GA
152
Henderson, NV
160
McIntosh, AL (50%
Sunbelt)
246
St. Gabriel, LA
(2)
248
Charleston, TN
286
Niagara Falls, NY
340
Becancour
, Quebec
(1)
415
McIntosh, AL
1,955
Total
108
Augusta, GA
152
Henderson, NV
160
Sunbelt)
246
St. Gabriel, LA
(2)
248
Charleston, TN
286
Niagara Falls, NY
340
Becancour
, Quebec
(1)
415
Chlorine Capacity
(
-
000 Short Tons)
Location
(1)
Pioneer
’
s
Becancour
Plant has 275,000 short tons
diaphragm and 65,000 short tons membrane capacity
(2)
Pioneer
’
s St. Gabriel plant includes the announced
49,000 short tons capacity expansion and conversion to
membrane cell
Plant Locations
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver513.jpg)
13
• Industry pricing environment has improved through:
– Net capacity reductions of about 12% since 2000
– Higher natural gas prices have increased competitor
manufacturing costs by $25 to $30 an ECU for every
$1 increase in natural gas (the Olin system exposure to
natural gas is less than 25%)
manufacturing costs by $25 to $30 an ECU for every
$1 increase in natural gas (the Olin system exposure to
natural gas is less than 25%)
– Weaker U.S. dollar and higher transportation costs
have significantly reduced caustic imports
have significantly reduced caustic imports
– A $10 ECU change equals a $17 million change in
pretax income at full operating capacity, all other items
being unchanged, or $0.15/share at a 35% tax rate
pretax income at full operating capacity, all other items
being unchanged, or $0.15/share at a 35% tax rate
* ECU Netback = ECU price - freight +/- customer premiums/discounts
ECU Netback* Environment
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver514.jpg)
14
Olin ECU Netback Outlook
• 1st half caustic price announcements totaling $490-495
per ECU are supported by tight caustic supply, expected
to be realized in Q3, Q4 and into 2009
per ECU are supported by tight caustic supply, expected
to be realized in Q3, Q4 and into 2009
• 3rd quarter caustic price announcement of $130 is
expected to be realized in Q4 and Q1’09
expected to be realized in Q4 and Q1’09
• Higher ECU netbacks are driven by caustic pricing
offsetting lower chlorine prices and higher freight costs:
offsetting lower chlorine prices and higher freight costs:
2006 2007 2008 2008 Caustic Price
Netback Netback Netback Announcements
Q1 $590 $500 $580 $ 80
Q2 $560 $510 $590 $410 - - $415
Q3 $540 $540 $130
Q4 $520 $555
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver515.jpg)
15
Capacity Rationalization: 2000-2012
Source: Olin Data
Technology Key: DIA=Diaphragm, HG=Mercury, MB=Membrane, STB=Salt-to-Bleach.
Chlor Alkali Capacity Reductions
Chlor Alkali Capacity Expansions
Company | Location | Tech | ECU |
COMPLETED | |||
Dow | Ft. Saskatchewan | DIA | 526,000 |
Dow | Plaquemine, LA | DIA | 375,000 |
Formosa Plastics | Baton Rouge, LA | DIA | 201,000 |
La Roche | Gramercy, LA | DIA | 198,000 |
Oxy Vinyls LP | Deer Park, TX | DIA/HG | 395,000 |
Georgia Pacific | (3 locations) | DIA/HG | 24,000 |
Pioneer | Tacoma, WA | DIA/MB | 214,000 |
Atofina | Portland, OR | DIA/MB | 187,000 |
St. Anne Chem | Nackawic, NB | MB | 10,000 |
PPG | Lake Charles, LA | HG | 280,000 |
Oxy (KOH) | Taft, LA | HG | 210,000 |
OXY | Delaware City, DE | HG | 145,000 |
Olin (KOH) | Charleston, TN | HG | 110,000 |
Holtra Chem | Orrington, ME | HG | 80,000 |
Holtra Chem | Acme, NC | HG | 66,000 |
Mexichem | Santa Clara, Mex | HG | 40,000 |
Cedar Chem | Vicksburg, MS | HG | 40,000 |
Olin | Dalhousie, NB | HG | 36,000 |
ANNOUNCED | |||
Dow | Freeport, TX | DIA | 2,675,000 |
Olin | St. Gabriel, LA | HG | 197,000 |
Canexus | North Vancouver, BC | DIA | 145,000 |
ERCO | Port Edwards, WI | HG | 80,000 |
Reductions | 6,234,000 |
Reductions (6,234,000)
Expansions 5,121,000
Net Reduction (1,113,000)
Company | Location | Tech | ECU | |
COMPLETED | ||||
Dow | Freeport, TX | MB | 500,000 | |
PPG | Lake Charles, LA | MB | 280,000 | |
Oxy | Geismer, LA | MB | 210,000 | |
Equachlor | Longview, WA | MB | 88,000 | |
Westlake | Calvert City, KY | MB | 80,000 | |
SunBelt | McIntosh, AL | MB | 70,000 | |
Mexichem | Santa Clara, Mex | MB | 45,000 | |
Oxy | Various Sites | MB | 22,000 | |
AV Nackawic | Nackawic, NB | MB | 10,000 | |
Kuehne | Delaware City, DE | STB | 40,000 | |
Trinity | Hamlet, NC | STB | 40,000 | |
Odyssey | Tampa, FL | STB | 30,000 | |
BleachTech | Seville, OH | STB | 20,000 | |
ANNOUNCED | ||||
Dow1 | Freeport, TX | MB | 2,225,000 | |
Shintech | Plaquemine, LA | MB | 330,000 | |
Shintech | Plaquemine, LA | MB | 240,000 | |
Westlake | Geismar, LA | MB | 250,000 | |
Olin | St. Gabriel | MB | 246,000 | |
Canexus | North Vancouver, BC | MB | 180,000 | |
ERCO | Port Edwards, WI | MB | 80,000 | |
Allied Universal | Fort Pierce, FL | STB | 40,000 | |
BleachTech | St. Petersburg, VA | STB | 40,000 | |
K2 Pure | Los Angeles, CA | STB | 55,000 | |
Expansions | 5,121,000 |
Annual caustic demand growth: 0.8% or 110,000 Tons/Year
1 Dow’s supply agreement renewal with Shintech is expected to eliminate Shintech’s plans for a Chocolate Bayou plant.
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver516.jpg)
16
Why Industrial Bleach
• Olin is the leading bleach producer with a current
capacity of 250 million gallons, or 160,000 equivalent
ECUs, in a 1 billion gallon market
capacity of 250 million gallons, or 160,000 equivalent
ECUs, in a 1 billion gallon market
• Bleach commands a $100 to $200 price premium over
ECU selling prices
ECU selling prices
• Utilizes both chlorine and caustic soda
• Regional nature of bleach business benefits Olin’s
geographic diversity
geographic diversity
• Platform for future growth in fastest growing segment
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver517.jpg)
17
Products
End Uses
Winchester ® sporting ammunition -- shot- shell, small caliber centerfire & rimfire ammunition | Hunters & recreational shooters, law enforcement agencies |
Small caliber military ammunition | Infantry and mounted weapons |
Industrial products -- 8 gauge loads & powder- actuated tool loads | Maintenance applications in power & concrete industries, powder-actuated tools in construction industry |
Winchester Products
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver518.jpg)
18
Winchester’s Strategy
• Leverage existing strengths
– Seek new opportunities to leverage the
legendary Winchester® brand name
legendary Winchester® brand name
– Investments that maintain Winchester as the
retail brand of choice, and lower costs
retail brand of choice, and lower costs
• Focus on product line growth
– Continue to develop new product offerings
• Provide returns in excess of Cost of Capital
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver519.jpg)
19
Winchester
• Twelve price increases announced since beginning of
2004 to offset higher metal prices
2004 to offset higher metal prices
• Other U.S. manufacturers, including Remington and
ATK, have implemented similar price increases
ATK, have implemented similar price increases
• Continued expansion of military and law enforcement
business now accounts for 25 - 30% of total revenue:
business now accounts for 25 - 30% of total revenue:
– Military awards of approximately $100 million in 2007
– FBI awards of $54 million each in 2007 and 2008
– 3rd and 4th deliveries of Second Source contract secured
totaling approximately $60 million
totaling approximately $60 million
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver520.jpg)
20
Financial Highlights
• Strong Balance Sheet
– Gross Debt / EBITDA is less than 1x
– Ample liquidity with multi-year lines of credit
totaling $350 million and cash of $207 million
totaling $350 million and cash of $207 million
– Pension plan now over-funded
• Strong Profit Outlook
– ECU price trend is favorable due to strength of caustic
soda
soda
– Winchester performance continues to improve
– Significant reduction in legacy costs
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver521.jpg)
21
• Strong outlook based on:
– Historically high ECU prices
– Benefits from the Pioneer acquisition
– Increasing profitability from Winchester
• Strong balance sheet with no debt maturities until
2011
2011
• Substantial cash flow supports 81+ year continuous
common dividend with above average yield
common dividend with above average yield
Investment Rationale
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver522.jpg)
22
Forward-Looking Statements
This presentation contains estimates of future
performance, which are forward-looking
statements and actual results could differ
materially from those anticipated in the forward-
looking statements. Some of the factors that
could cause actual results to differ are described
in the business and outlook sections of Olin’s
Form 10-K for the year ended December 31, 2007
and in Olin’s Second Quarter 2008 Earnings
Release. These reports are filed with the U.S.
Securities and Exchange Commission.
performance, which are forward-looking
statements and actual results could differ
materially from those anticipated in the forward-
looking statements. Some of the factors that
could cause actual results to differ are described
in the business and outlook sections of Olin’s
Form 10-K for the year ended December 31, 2007
and in Olin’s Second Quarter 2008 Earnings
Release. These reports are filed with the U.S.
Securities and Exchange Commission.
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver523.jpg)
23
1892 founded in East Alton, IL providing
blasting powder to Midwestern coal mines
blasting powder to Midwestern coal mines
1898 formed Westerner Cartridge Co to
manufacture small arms ammunition
manufacture small arms ammunition
1931 acquires Winchester Repeating Arms
1940s & 1950s acquires cellophane, paper,
lumber & powder-actuated tools businesses
lumber & powder-actuated tools businesses
1892 founded in Saltville, VA to produce
soda ash.
soda ash.
1896 builds first chlor-alkali plant in US
1909 introduces first commercial
production of liquefied chlorine
production of liquefied chlorine
1940s & 1950s builds plants in Lake
Charles, LA & McIntosh, AL, buys Squibb
Charles, LA & McIntosh, AL, buys Squibb
1954 Merger creates the Olin Mathieson Chemical Corporation
1950s & 1960 entered into phosphates, aluminum, urethanes, TDI, skis,
camping equipment, homebuilding and expanded paper and forestry businesses
camping equipment, homebuilding and expanded paper and forestry businesses
1970s to 2000 consolidation back to core businesses, spin-offs included forest
products (Olinkraft), military ordinance (Primex) and specialty chemicals
(Arch) and sold aluminum, TDI, urethanes and Squibb businesses
products (Olinkraft), military ordinance (Primex) and specialty chemicals
(Arch) and sold aluminum, TDI, urethanes and Squibb businesses
2007 acquired Pioneer and sold the Metals business, resulting in a company
similar in businesses to that which existed in the late 1890s
similar in businesses to that which existed in the late 1890s
Olin Industries Mathieson Chemical Corp.
Appendix
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver524.jpg)
24
(1) Olin production capacity includes Sunbelt & other joint ventures. Source: CMAI - May, 2008
North American ECU Capacity
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver525.jpg)
25
Source: CMAI, 2008
“Organics” includes: MDI, TDI, polycarbonates, monosodium glutamate, and more.
“Inorganics” includes: titanium dioxide (TiO2), sodium silicates, sodium cyanide, and more.
North American Chlorine
Demand by End Use
Demand by End Use
![](https://capedge.com/proxy/8-K/0000074303-08-000059/keybancslides091108ver526.jpg)
26
Source: CMAI, 2008
“Organics” includes: MDI, TDI, polycarbonates, monosodium glutamate, and more.
“Inorganics” includes: titanium dioxide (TiO2), sodium silicates, sodium cyanide, and more.
North American Caustic Soda
Demand by End Use
Demand by End Use