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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 8, 1999
OLIN CORPORATION
(Exact name of Registrant as specified in its charter)
VIRGINIA 1-1070 13-1872319
(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer Identification No.)
501 Merritt 7
P. O. Box 4500
Norwalk, Connecticut 06856-4500
(Address of principal executive offices) (Zip code)
(203) 750-3000
(Registrant's telephone number, including area code)
(N/A)
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On February 8, 1999, Olin Corporation ("Olin") distributed to its common
shareholders one share of Arch Chemicals, Inc. ("Arch Chemicals") Common Stock,
par value $1 per share, for each two shares of Olin Common Stock held of record
as of the close of business on February 1, 1999, (the "Distribution"). Olin
also transferred to Arch Chemicals all of the specialty chemicals businesses
formerly conducted by Olin. The Distribution was consummated pursuant to the
terms of a Distribution Agreement dated as of February 1, 1999 by and between
Olin and Arch Chemicals, a copy of which is filed as an exhibit hereto.
Item 7. Financial Statement and Exhibits.
(b) Pro Forma Financial Information
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Spin-off of Arch Chemicals
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As noted above, on February 8, 1999, Olin distributed its specialty
chemicals businesses to its shareholders as a separate public company, Arch
Chemicals. Holders of Olin Common Stock of record on February 1, 1999 received
one share of Arch Chemicals Common Stock for every two shares of Olin Common
Stock held.
Pro Forma
The following unaudited pro forma condensed consolidated information is
based on the historical consolidated financial statements of Olin adjusted to
give effect to the Distribution.
The unaudited pro forma condensed consolidated balance sheet as of
September 30, 1998 gives effect to the elimination of the specialty chemicals
businesses, as well as other adjustments, assuming the Distribution had taken
place on September 30, 1998.
The unaudited pro forma condensed consolidated income statements for the
year ended December 31, 1997 and the nine months ended September 30, 1998 give
effect to the elimination of the specialty chemicals businesses as well as other
adjustments, assuming the Distribution had taken place as of the beginning of
each of those periods.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable.
The following unaudited pro forma condensed consolidated financial
statements have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission. Management does not believe that this
pro forma presentation is indicative of the financial position and results which
would have occurred had the transactions occurred on the dates indicated in the
pro forma condensed consolidated financial statements because of the
hypothetical nature of the pro forma information and because Olin may have
operated its other remaining businesses differently during those periods.
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OLIN CORPORATION
Pro Forma Condensed Consolidated Income Statement
Nine Months Ended September 30, 1998
(Unaudited)
(in millions, except share data)
Pro forma
Historically Divestments Adjustment
-------------- -------------
Reported Arch (a) Pro forma
--------------- -------------- ------------- ----------------------
Sales $ 1,768 694 16 $ 1,090
Operating Expenses:
Cost of Goods Sold 1,374 493 16 897
Selling and Administration 225 128 - 97
Research and Development 20 13 - 7
Interest Expense 14 - - 14
Interest Income 3 - - 3
Other Income 10 3 - 7
Loss on Sales and Restructurings of 42 - - 42
Businesses ----------- --- ------------ -----------
Income Before Taxes 106 63 - 43
Income Tax Provision 35 22 - 13
----------- --- ------------ -----------
Net Income $ 71 41 - $ 30
=========== === ============ ===========
Net Income Per Common Share:
Basic $1.47 $0.62
Diluted $1.46 $0.62
Average Common Shares
Outstanding:
Basic 48,013,000 48,013,000
Diluted 48,285,000 48,285,000
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OLIN CORPORATION
Pro Forma Condensed Consolidated Income Statement
Year Ended December 31, 1997
(Unaudited)
(in millions, except share data)
Pro forma
Historically Divestments Adjustment
------------------ -------------------
Reported Arch (a) Pro forma
-------------------- ------------------ ------------------- ----------------
Sales $ 2,410 930 23 $ 1,503
Operating Expenses:
Cost of Goods Sold 1,866 676 22 1,212
Selling and Administration 285 154 - 131
Research and Development 29 21 - 8
Interest Expense 25 - - 25
Interest Income 11 - - 11
Other Income 18 7 - 11
----------- ----- ------------------ -----------
Income Before Taxes 234 86 1 149
Income Tax Provision 81 30 - 51
----------- ----- ------------------ -----------
Net Income $ 153 56 1 $ 98
=========== ===== ================== ===========
Net Income Per Common
Share:
Basic $3.02 $1.94
Diluted $3.00 $1.93
Average Common Shares
Outstanding:
Basic 50,519,000 50,519,000
Diluted 50,887,000 50,887,000
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Notes to Pro Forma Condensed Consolidated Income Statement
For the Nine Months Ended September 30, 1998 and Year Ended December 31, 1997
(Unaudited)
The preceding pro forma income statements present the consolidated income
of Olin for the nine months ended September 30, 1998 and the year ended December
31, 1997 after eliminating the specialty chemicals businesses and after giving
effect to the adjustment described below.
The adjustment made to these pro forma income statements assumes that the
Distribution occurred as of the beginning of each period.
It is management's opinion that these pro forma results are not necessarily
indicative of the results which would have occurred had the Distribution been
made at the beginning of each of those periods.
Historically Reported
The historically reported column represents the historical consolidated
income of Olin for the nine months ended September 30, 1998 and year ended
December 31, 1997, respectively.
Divestment
The divestments represent the historical results of the specialty chemicals
businesses for the nine months ended September 30, 1998 and the year ended
December 31, 1997, respectively.
Prior to the Distribution, Arch Chemicals succeeded to a $250 million
credit facility ("Credit Facility") established by Olin. Prior to the
Distribution, Olin borrowed $75 million under the Credit Facility, which
liability was assumed by Arch Chemicals. Olin intends to use the proceeds for
general corporate purposes, which may include share repurchases and future
acquisitions. An assessment of corporate overhead is included in selling and
administration expenses with the allocation based on either effort committed or
number of employees. Management believes that the allocation methods used to
allocate the costs and expenses are reasonable, however, such allocated amounts
may or may not necessarily be indicative of what selling and administration
expenses would have been if Arch Chemicals had operated independently of Olin.
Income taxes have been calculated based on Arch Chemicals' allocated share of
Olin's consolidated income tax provision and are calculated on a separate
company basis pursuant to the requirements of Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes".
This transaction was a tax free spin-off, and accordingly, no gain or loss
was recorded by Olin.
Pro Forma Adjustments
(a) This adjustment records the sales from Olin's Chlor-Alkali division to Arch
Chemicals which had been eliminated in the historical consolidated income
statements as they were considered inter-company sales. This adjustment
reflects the pro forma impact of the chloric supply agreement between Olin
and Arch Chemicals entered into at the time of the distribution. Proforma
adjustments exclude spin-off costs of $21 million pretax which were
recorded in the fourth quarter of 1998.
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OLIN CORPORATION
Pro Forma Condensed Consolidated Balance Sheet
September 30, 1998
(Unaudited)
(in millions)
Pro forma
Historically Divestments Adjustment
------------- ------------------
Reported Arch (a) Pro forma
--------------- ------------- ------------------ ------------
ASSETS
Current Assets:
Cash and Equivalents $ 81 (6) 75 $ 150
Short-term Investments 33 - - 33
Accounts Receivable, net 395 (161) - 234
Inventories 329 (121) - 208
Other Current Assets 39 (23) - 16
------ ---- ------------------ ------
Total Current Assets 877 (311) 75 641
Investments and Advances 28 (20) - 8
Property, Plant and Equipment, net 806 (305) - 501
Other Assets 105 (55) - 50
------ ---- ------------------ ------
Total Assets $1,816 (691) 75 $1,200
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LIABILITIES
Current Liabilities:
Short-Term Borrowings and Current
Installments of Long-Term Debt $ 1 - - $ 1
Accounts Payable 201 (102) - 99
Accrued Liabilities 266 (65) - 201
------ ---- ------------------ ------
Total Current Liabilities 468 (167) - 301
Long-Term Debt 236 (5) - 231
Other Liabilities 281 (45) - 236
------ ---- ------------------ ------
Total Liabilities 985 (217) - 768
------ ---- ------------------ ------
Commitments and Contingencies
Shareholders' Equity:
Common Stock 47 - - 47
Additional Paid-In Capital 277 - - 277
Cumulative Translation Adjustment (25) 14 - (11)
Retained Earnings 532 (488) 75 119
------ ---- ------------------ ------
Total Shareholders' Equity 831 (474) 75 432
------ ---- ------------------ ------
Total Liabilities and Shareholders' Equity $1,816 (691) 75 $1,200
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Notes to Pro Forma Condensed Balance Sheet, September 30, 1998 (Unaudited)
The preceding pro forma balance sheet presents the consolidated financial
position as of September 30, 1998 after eliminating the specialty chemicals
businesses and after giving effect to the adjustments described below.
The adjustments made to this pro forma balance sheet assume that the
Distribution occurred as of September 30, 1998.
Historically Reported
The historically reported column represents the historical balance sheet of
Olin as of September 30, 1998.
Divestment
The divestments represent the historical balance sheet positions of the
specialty chemicals businesses and the amounts related to the Distribution as of
September 30, 1998.
Prior to the Distribution Arch Chemicals succeeded to a $250 million Credit
Facility established by Olin. Prior to the Distribution, Olin borrowed $75
million under the Credit Facility, which liability was assumed by Arch
Chemicals. Olin intends to use the proceeds for general corporate purposes,
which may include share repurchases and future acquisitions.
Pro Forma Adjustments
(a) This adjustment records the $75 million borrowed by Olin under the
Credit Facility prior to the Distribution, which liability was assumed by Arch
Chemicals.
(c) Exhibits. The following documents are filed as Exhibits to this Form 8-K:
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Exhibit No. Document
- ---------- --------
2.1 Distribution Agreement between Olin Corporation and Arch
Chemicals, Inc., dated as of February 1, 1999.
10.1 364-Day Credit Agreement dated as of January 27, 1999, among
Arch Chemicals, Inc., Olin Corporation, the Lenders party
thereto, Bank of America, National Trust and Savings
Association, as Syndication Agent, Wachovia Bank, N.A., as
Documentation Agent, The Chase Manhattan Bank, as Administrative
Agent and Chase Securities, Inc., as Arranger.
10.2 Five-year Credit Agreement dated as of January 27, 1999, among
Arch Chemicals, Inc., Olin Corporation, the Lenders party
thereto, Bank of America, National Trust and Savings
Association, as Syndication Agent, Wachovia Bank, N.A., as
Documentation Agent, The Chase Manhattan Bank, as Administrative
Agent and Chase Securities, Inc., as Arranger.
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SIGNATURE
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
By: /s/ Johnnie M. Jackson, Jr.
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Johnnie M. Jackson, Jr.
Vice President, General
Counsel and Secretary
Date: February 23, 1999
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EXHIBIT INDEX
2.1 Distribution Agreement between Olin Corporation and Arch
Chemicals, Inc., dated as of February 1, 1999.
10.1 364-Day Credit Agreement dated as of January 27, 1999, among Arch
Chemicals, Inc., Olin Corporation, the Lenders party thereto,
Bank of America, National Trust and Savings Association, as
Syndication Agent, Wachovia Bank, N.A., as Documentation Agent,
The Chase Manhattan Bank, as Administrative Agent and Chase
Securities, Inc., as Arranger.
10.2 Five-year Credit Agreement dated as of January 27, 1999, among
Arch Chemicals, Inc., Olin Corporation, the Lenders party
thereto, Bank of America, National Trust and Savings Association,
as Syndication Agent, Wachovia Bank, N.A., as Documentation
Agent, The Chase Manhattan Bank, as Administrative Agent and
Chase Securities, Inc., as Arranger.
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