Exhibit 99.1
Olin's Fourth Quarter Results Better Than Expected; Announces Decision
to Relocate Corporate Headquarters to Illinois; Declares $.20 Per Share
Quarterly Dividend
NORWALK, Conn.--(BUSINESS WIRE)--Jan. 29, 2004--Olin Corporation
(NYSE: OLN) today announced net income in the fourth quarter of 2003
of $0.4 million or $0.01 per diluted share, compared with a net loss
of $12.0 million or $0.21 per diluted share in the fourth quarter of
2002. The fourth quarter of 2003 includes a $1.8 million pretax
restructuring charge associated with the write-down of certain
offshore assets netted with a reduction of a previously established
reserve related to the company's Indianapolis restructuring. Excluding
this write-down, Olin would have earned $0.03 per diluted share. The
fourth quarter of 2002 included a $10.4 million provision for taxes in
connection with the surrender of life insurance policies purchased
under the Company Owned Life Insurance (COLI) program. Excluding the
$10.4 million tax charge, Olin's net loss would have been $0.03 per
share in the fourth quarter of 2002. Sales for the fourth quarter of
2003 were $385 million compared with $352 million in the fourth
quarter of 2002. A reconciliation for the adjusted numbers is outlined
in the attached profit summary.
For the full year 2003, Olin reported a net loss of $24.1 million
compared with a $31.3 million net loss in 2002. Excluding certain
charges in both 2003 and 2002 as outlined in the attached profit
summary table, Olin reported adjusted net income of $21.1 million or
$0.36 per diluted share in 2003 compared with a net loss of $20.9
million or $0.42 per diluted share in 2002.
Joseph D. Rupp, President and Chief Executive Officer, said, "Our
fourth quarter earnings of $0.01 per diluted share were better than
our previous expectation of a loss in the $0.05 per share range due to
better than expected performance from our Metals and Winchester
operations. The improvement in the rolled and shaped products portion
of our Metals Division is particularly significant after a protracted
period where there has been low industry-wide demand for brass
products. We now expect this strength to continue in the first quarter
of 2004."
In the first quarter of 2004, Olin expects to be at least
breakeven. For the first quarter of 2004, the Metals division is
expecting improved results over the first quarter of 2003 because of
higher volumes as a result of the improving economy. Winchester's
profits will be slightly below the first quarter last year. Chlor
Alkali profits are expected to be somewhat below the first quarter of
2003 with projected increased volumes partially offsetting lower
pricing. Non-cash pension expenses are expected to be about $5 million
pretax per quarter higher in 2004 compared with 2003.
Compared to the fourth quarter of 2003, the Metals division is
expecting improved results in the first quarter of 2004 because of
higher volumes as a result of the improving economy. Winchester's
profits will be improved over the fourth quarter of 2003 primarily
because of seasonal factors. Chlor Alkali profits are expected to be
somewhat higher than the fourth quarter as increased volumes are
expected to offset lower pricing.
Mr. Rupp added, "The company separately announced today a decision
to relocate its corporate offices to East Alton, Illinois, for
organizational, strategic and economic reasons. We expect to incur
one-time costs of approximately $12 million with annualized savings of
about $6 million. We will separately identify these costs when they
are recorded. None of these costs are included in the first quarter
2004 estimate. We expect the relocation to be completed by year-end."
NEW SEGMENT REPORTING STRUCTURE
In the fourth quarter of 2003, the company changed the reportable
segments to include a Corporate/Other segment. The change was made to
align the external segment reporting with how management evaluates and
allocates resources to the various businesses and provide more
transparent disclosure to investors. The segment operating results
under the old and new structures for 2001, 2002 and 2003 are provided
on the accompanying schedules. Segment operating income excludes the
restructuring charge for the shutdown of the Indianapolis Brass mill
and certain other actions.
The following commentary compares segment operating results for
the fourth quarter of 2003 to the fourth quarter of 2002 using the New
Segment Reporting Structure:
CHLOR ALKALI PRODUCTS
Chlor Alkali Products' sales for the fourth quarter of 2003 were
$93.9 million compared with $89.9 million in the fourth quarter of
2002. Chlor Alkali posted operating income of $11.4 million, compared
with $6.7 million in the fourth quarter of 2002. The improved
operating results were primarily due to higher ECU selling prices.
Sales volumes were slightly lower.
METALS
Sales for the fourth quarter of 2003 were $226.4 million compared
to sales in the fourth quarter of 2002 of $197.9 million, an increase
of 14%. With most major market segments strengthening over 2002,
overall shipment volumes increased by 5% from the prior fourth
quarter. The remaining 9% increase in sales was due to higher copper
prices and a product mix containing a higher metal component.
Shipments to the automotive segment increased in 2003 by 7% as
automotive production has strengthened from the fourth quarter of
2002. Coinage and electronics shipments were up 44% and 14%,
respectively, from last year, however they are both still well below
historical averages. Shipments to the ammunition segment in 2003
increased from 2002 by 19% due to continued strong demand from the
military.
The Metals segment operating income of $3.6 million in the fourth
quarter of 2003 compares to an operating loss of $0.4 million in 2002.
The Metals segment improved operating results in the fourth quarter of
2003 are primarily due to the increased volumes and the cost savings
resulting from the closure of the Indianapolis facility in the first
quarter of 2003. Partially offsetting these improvements were
continued margin pressures, higher wages and fringe benefit costs, and
higher natural gas costs.
WINCHESTER
Sales for the fourth quarter of 2003 were $64.4 million compared
with $63.9 million in the fourth quarter of 2002. The increase in
sales was primarily driven by higher commercial demand. Operating
income in the fourth quarter of 2003 was $2.2 million, compared with
$0.6 million in 2002 primarily because of higher commercial sales
volumes, and favorable manufacturing costs.
CORPORATE AND OTHER COSTS
In 2002, total pension income was $3.0 million and in 2003 the
company recorded a pension expense of $5.0 million, resulting in an $8
million increase in total pension costs (see footnote (f) at the end
of the Segment Information schedule). The service cost and prior
service cost components of pension expense, which are included in the
corporate and operating segments, were equal in both years. As
previously noted, for the full year 2004, the company estimates that
its non-cash pension expense will increase in the $20 million pretax
range ($5 million per quarter) over 2003, and may continue to increase
by about $10 million per year over the next few years. These estimates
are based on historical plan experience and assumptions regarding the
future.
Under Statement of Financial Accounting Standards ("SFAS") No. 87,
the company recorded a $220 million after-tax charge ($360 million
pretax) to Shareholders' Equity as of December 31, 2002, reflecting an
accumulated benefit obligation in excess of the year-end market value
of assets of our pension plan. In 2003, the decline in interest rates
more than offset a significant rebound in the value of the plan's
assets, which necessitated the recording of a small, additional
after-tax charge of $19.5 million ($32 million pretax). This is a
non-cash charge and does not affect our ability to borrow under our
revolving credit agreement. Based on our assumptions and estimates, we
continue to believe that we may be required to make contributions to
the pension fund, but only minimal contributions will be required
until 2006.
In 2003, charges to income for environmental investigatory and
remedial activities were $19.6 million compared with $14.8 million in
2002. These charges relate primarily to remedial and investigatory
activities associated with former waste sites and past operations. In
2004, we currently estimate that these charges to income may be in the
$25 million range. Environmental costs for ongoing plant operations,
for example wastewater treatment, are included in the operating
segments and are not expected to change significantly in 2004.
Other corporate and unallocated costs increased from $29.6 million
in 2002 to $40.8 million in 2003. The increase relates primarily to an
insurance gain of $4.5 million recorded in 2002, consulting fees ($2
million), higher accruals for incentive compensation costs ($2
million), and accretion expense ($1 million) associated with our asset
retirement obligations recorded in accordance with Financial
Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations," which we adopted on January 1, 2003.
DIVIDEND
Olin Corporation's Board of Directors declared a quarterly
dividend of 20 cents on each share of Olin common stock. The dividend
is payable on March 10, 2004, to shareholders of record at the close
of business on February 10, 2004. This is the 309th consecutive
dividend to be paid by the company.
CONFERENCE CALL INFORMATION
Olin will hold a conference call with securities analysts at 10:00
a.m., Eastern time, January 30, 2004. Anyone desiring to listen to the
call may do so via the Internet by following the instructions posted
under the Conference Call icon on Olin's Internet website,
www.olin.com. Listeners should log on to the website at least 15
minutes before the call. A copy of this press release, together with
other financial and statistical information about the period ended
December 31, 2003, is available on the Olin website in the Investor
section under Recent Press Releases and Speeches. The text of the
prepared remarks from the conference call will be available after the
conclusion of the call in the same website location. The call also
will be audio archived on the Olin website for future replay. Archived
versions of the call will be available until February 15.
COMPANY DESCRIPTION
Olin Corporation is a manufacturer concentrated in three business
segments: Metals, Chlor Alkali Products and Winchester. Metals
products include copper and copper alloy sheet, strip, foil, rod,
welded tube, fabricated parts, metal packages; and stainless steel and
aluminum strip. Chlor Alkali Products manufactures chlorine and
caustic soda, sodium hydrosulfite, hydrochloric acid and bleach
products. Winchester products include sporting ammunition, canister
powder, reloading components, small caliber military ammunition and
industrial cartridges.
FORWARD-LOOKING STATEMENTS
This communication includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements relate to analyses and other information that are based on
management's beliefs, certain assumptions made by management,
forecasts of future results, and current expectations, estimates and
projections about the markets and economy in which we and our various
segments operate. The statements contained in this communication that
are not statements of historical fact may include forward-looking
statements that involve a number of risks and uncertainties.
We have used the words "anticipate," "intend," "may," "expect,"
"believe," "should," "plan," "will," "estimate," and variations of
such words and similar expressions in this communication to identify
such forward-looking statements. These statements are not guarantees
of future performance and involve certain risks, uncertainties and
assumptions, which are difficult to predict and many of which are
beyond our control. Therefore, actual outcomes and results may differ
materially from those matters expressed or implied in such
forward-looking statements. We undertake no obligation to update
publicly any forward-looking statements, whether as a result of future
events, new information or otherwise. Relative to the dividend, the
payment of cash dividends is subject to the discretion of our Board of
Directors and will be determined in light of then-current conditions,
including our earnings, our operations, our financial conditions, our
capital requirements and other factors deemed relevant by our Board of
Directors. In the future, our Board of Directors may change our
dividend policy, including the frequency or amount of any dividend, in
light of then-existing conditions.
The risks, uncertainties and assumptions involved in our
forward-looking statements, many of which are discussed in more detail
in our filings with the SEC, including our Annual Report on Form 10-K
for the year ended December 31, 2002, 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 automotive,
electronics, coinage, telecommunications, ammunition, housing,
vinyls and pulp and paper;
-- extraordinary events, such as additional terrorist attacks or
war with one or more countries;
-- continued or additional 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;
-- 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;
-- an increase in our indebtedness or higher-than-expected
interest rates, affecting our ability to generate sufficient
cash flow for debt service;
-- unforeseen effects of competition, including the migration by
United States customers to low-cost foreign locations;
-- costs and other expenditures in excess of those projected for
environmental investigation and remediation or other legal
proceedings;
-- unexpected litigation outcomes or the impact of changes in
laws and regulations;
-- higher-than-expected raw material and utility or
transportation and/or logistics costs;
-- the occurrence of unexpected manufacturing interruptions and
outages, including those occurring as a result of production
hazards;
-- unexpected additional taxes and related interest as the result
of pending income tax audits; and
-- 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.
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.
Olin Corporation
Consolidated Statements of Income (a)
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Three Months Twelve Months
Ended Dec. 31, Ended Dec. 31,
(In millions, except per share
amounts) 2003 (b) 2002 2003 (b) 2002
- ----------------------------------------------------------------------
Sales $384.7 $351.7 $1,585.8 $1,301.3
Operating Expenses:
Cost of Goods Sold (c) 345.9 318.9 1,406.0 1,181.6
Selling and Administration 34.4 31.3 130.3 114.8
Research and Development 1.2 1.3 4.7 4.8
Restructuring Charge (d) 1.8 - 30.8 -
Earnings (Loss) of Non-consolidated
Affiliates 1.4 1.0 7.8 (7.3)
- ----------------------------------------------------------------------
Operating Income (Loss) 2.8 1.2 21.8 (7.2)
Interest Expense 4.8 5.2 20.2 25.6
Interest Income 0.5 0.5 1.3 2.6
Other Income 0.4 1.1 2.6 3.2
- ----------------------------------------------------------------------
Income (Loss) before Taxes and
Cumulative Effect of Accounting
Change (1.1) (2.4) 5.5 (27.0)
Income Tax Provision (Benefit) (e) (1.5) 9.6 4.2 4.3
- ----------------------------------------------------------------------
Income (Loss) before Cumulative
Effect of Accounting Change 0.4 (12.0) 1.3 (31.3)
Cumulative Effect of Accounting
Change, Net (f) - - (25.4) -
- ----------------------------------------------------------------------
Net Income (Loss) $0.4 $(12.0) $(24.1) $(31.3)
- ----------------------------------------------------------------------
Basic and Diluted Net Income (Loss) Per
Common Share:
Income (Loss) before Accounting
Change $0.01 $(0.21) $0.02 $(0.63)
Accounting Change, Net - - (0.44) -
- ----------------------------------------------------------------------
Net Income (Loss) $0.01 $(0.21) $(0.42) $(0.63)
- ----------------------------------------------------------------------
Dividends Per Common Share $0.20 $0.20 $0.80 $0.80
- ----------------------------------------------------------------------
Average Common Shares Outstanding -
Diluted 59.0 57.4 58.3 49.4
- ----------------------------------------------------------------------
(a) Unaudited
(b) Operating results for the periods beginning October 1, 2002
include the results of Chase Industries which was acquired on
September 27, 2002. Sales and income before taxes of Chase
Industries included in those periods since the date of the
acquisition were as follows:
2003 2002
-------------------- ----------
4th Qtr Total Year 4th Qtr
-------- ---------- ----------
Sales $56.6 $222.2 $52.1
Income before taxes 1.1 7.5 2.2
(c) Cost of Goods Sold for the 2002 year-to-date period included a
pretax gain of $4.5 on an insurance settlement.
(d) Reflects the restructuring charge for the shutdown of our
Indianapolis Brass mill and certain other actions.
(e) Income taxes for the 2002 fourth quarter and year included a
provision of $10.4 in connection with the surrender of life
insurance policies purchased by us under the Company Owned Life
Insurance program.
(f) Reflects the cumulative charge for the adoption of SFAS 143,
"Accounting for Asset Retirement Obligations", which we adopted on
January 1, 2003.
Olin Corporation
Consolidated Balance Sheets (a)
(In millions, except per share data)
- ----------------------------------------------------------------------
December 31, 2003 2002
- ----------------------------------------------------------------------
Assets:
Cash & Cash Equivalents $189.8 $110.5
Short-Term Investments - 25.0
Accounts Receivable, Net 184.8 168.1
Inventories, Net 242.4 255.0
Income Taxes Receivable 1.5 9.4
Other Current Assets 62.0 70.1
- ----------------------------------------------------------------------
Total Current Assets 680.5 638.1
Property, Plant and Equipment
(Less Accumulated Depreciation
of $1,313.4 and $1,308.4) 500.6 551.5
Prepaid Pension Costs 101.5 106.4
Other Assets 82.5 45.9
Goodwill 79.5 81.9
- ----------------------------------------------------------------------
Total Assets $1,444.6 $1,423.8
- ----------------------------------------------------------------------
Liabilities and Shareholders' Equity:
Current Debt $27.2 $1.6
Accounts Payable 128.9 109.8
Income Taxes Payable 12.6 0.3
Accrued Liabilities 141.9 145.5
- ----------------------------------------------------------------------
Total Current Liabilities 310.6 257.2
Long-Term Debt 300.4 327.6
Accrued Pension Liability 469.2 445.3
Other Liabilities 188.0 162.4
- ----------------------------------------------------------------------
Total Liabilities 1,268.2 1,192.5
- ----------------------------------------------------------------------
Commitments and Contingencies
Shareholders' Equity:
Common Stock, Par Value $1 Per Share,
Authorized 120.0 Shares:
Issued and Outstanding 59.0 Shares
(57.6 in 2002) 59.0 57.6
Additional Paid-in Capital 464.2 441.9
Accumulated Other Comprehensive Loss (246.8) (238.8)
Accumulated Deficit (100.0) (29.4)
- ----------------------------------------------------------------------
Total Shareholders' Equity 176.4 231.3
- ----------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $1,444.6 $1,423.8
- ----------------------------------------------------------------------
(a) Unaudited
Olin Corporation
Consolidated Statements of Cash Flows (a)
(In millions)
- ----------------------------------------------------------------------
Twelve Months Ended December 31, 2003 2002
- ----------------------------------------------------------------------
Operating Activities:
Net Loss $(24.1) $(31.3)
(Earnings) Loss of Non-consolidated Affiliates (7.8) 7.3
Depreciation and Amortization 82.2 87.9
Deferred Income Taxes (18.2) 20.1
Non-Cash Portion of Restructuring Charge 24.6 -
Qualified Pension Plan Expense (Income) - (9.1)
Common Stock Issued Under Employee Benefit Plans 2.8 5.5
Changes in:
Receivables (16.7) (1.9)
Inventories 9.6 (17.2)
Other Current Assets (3.0) (16.3)
Accounts Payable and Accrued Liabilities 19.2 (8.7)
Income Taxes Payable 20.2 (1.8)
Other Assets 4.8 8.7
Noncurrent Liabilities 21.2 (11.3)
Other Operating Activities 3.9 (0.4)
- ----------------------------------------------------------------------
Net Operating Activities 118.7 31.5
- ----------------------------------------------------------------------
Investing Activities:
Capital Expenditures (54.5) (41.1)
Proceeds From Sale of Short-Term Investments 25.0 11.0
Cash Acquired Through Business Acquisition, net - 13.1
Investments and Advances - Affiliated Companies at
Equity 8.1 (10.5)
Disposition of Property, Plant and Equipment 5.4 14.8
Other Investing Activities 4.7 (0.6)
- ----------------------------------------------------------------------
Net Investing Activities (11.3) (13.3)
- ----------------------------------------------------------------------
Financing Activities:
Long-Term Debt:
Borrowings - 34.7
Repayments (1.6) (136.2)
Issuance of Common Stock 13.2 68.3
Purchases of Olin Common Stock - (2.5)
Stock Options Exercised 7.1 2.7
Dividends Paid (46.5) (39.0)
Other Financing Activities (0.3) (0.5)
- ----------------------------------------------------------------------
Net Financing Activities (28.1) (72.5)
- ----------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 79.3 (54.3)
Cash and Cash Equivalents, Beginning of Year 110.5 164.8
- ----------------------------------------------------------------------
Cash and Cash Equivalents, End of Period $189.8 $110.5
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(a) Unaudited
Olin Corporation
Segment Information (a)
(In millions)
- ----------------------------------------------------------------------
In the fourth quarter of 2003, the Company changed its reportable
segments to include a Corporate/Other segment. The change was made to
align the external segment reporting with how management currently
evaluates and allocates resources to the various businesses and
provide more transparent disclosure to investors. We have restated the
previously reported segment operating income/(loss) to conform with
the current segment reporting. The table below shows the operating
income/(loss) as reported under the old methodology and the new
reporting structure. The Corporate/Other segment includes those costs
which are not directly attributable to the business segments such as
environmental remediation costs for non-productive facilities, the
portion of the pension costs/income not attributable to service costs
and prior service costs, corporate overhead charges such as public
company costs, and other costs not directly attributable to the
ongoing business activities of the Company.
- ----------------------------------------------------------------------
2003
-----------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
- ----------------------------------------------------------------------
Sales:
Chlor-Alkali $97.3 $107.4 $100.9 $93.9 $399.5
Metals (b) 222.2 218.3 216.3 226.4 883.2
Winchester 70.7 70.7 97.3 64.4 303.1
- ----------------------------------------------------------------------
Total Sales $390.2 $396.4 $414.5 $384.7 $1,585.8
- ----------------------------------------------------------------------
Operating Income(Loss)
before Restructuring Charge
Under the Old Segment
Reporting Structure (c):
Chlor-Alkali $9.0 $14.2 $13.2 $6.1 $42.5
Metals (b) 0.3 1.1 (5.1) (1.3) (5.0)
Winchester 5.0 3.1 7.2 (0.2) 15.1
- ----------------------------------------------------------------------
Total Operating
Income before
Restructuring Charge $14.3 $18.4 $15.3 $4.6 $52.6
- ----------------------------------------------------------------------
Operating Income(Loss)
before Restructuring Charge
Under the New Segment
Reporting Structure (c):
Chlor-Alkali $13.5 $19.0 $18.9 $11.4 $62.8
Metals (b) 3.4 4.8 (1.2) 3.6 10.6
Winchester 5.9 4.4 9.1 2.2 21.6
Corporate/Other:
Pension (f) 4.5 4.5 4.5 4.5 18.0
Environmental
Provision (3.7) (3.7) (5.7) (6.5) (19.6)
Other Corporate and
Unallocated Costs (9.3) (10.6) (10.3) (10.6) (40.8)
- ----------------------------------------------------------------------
Total Operating
Income before
Restructuring Charge $14.3 $18.4 $15.3 $4.6 $52.6
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
2002
-----------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
- ----------------------------------------------------------------------
Sales:
Chlor-Alkali $72.4 $75.2 $83.3 $89.9 $320.8
Metals 160.4 174.5 164.0 197.9 696.8
Winchester 62.2 64.6 93.0 63.9 283.7
- ----------------------------------------------------------------------
Total Sales $295.0 $314.3 $340.3 $351.7 $1,301.3
- ----------------------------------------------------------------------
Operating Income(Loss) Under
the Old Segment Reporting
Structure:
Chlor-Alkali $(15.1) $(15.2) $(8.1) $2.8 $(35.6)
Metals 2.3 8.9 4.8 (1.7) 14.3
Winchester 3.4 2.8 7.8 0.1 14.1
- ----------------------------------------------------------------------
Total Operating
Income(Loss) $(9.4) $(3.5) $4.5 $1.2 $(7.2)
- ----------------------------------------------------------------------
Operating Income(Loss) Under
the New Segment Reporting
Structure:
Chlor-Alkali $(11.0) $(15.0) $(4.8) $6.7 $(24.1)
Metals 4.6 10.5 4.4 (0.4) 19.1
Winchester 4.3 3.1 8.2 0.6 16.2
Corporate/Other:
Pension (f) 6.5 6.5 6.5 6.5 26.0
Environmental
Provision (3.7) (3.7) (3.7) (3.7) (14.8)
Other Corporate and
Unallocated Costs
(d) (10.1) (4.9) (6.1) (8.5) (29.6)
- ----------------------------------------------------------------------
Total Operating
Income(Loss) $(9.4) $(3.5) $4.5 $1.2 $(7.2)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
2001
-----------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
- ----------------------------------------------------------------------
Sales:
Chlor-Alkali $105.1 $105.2 $93.8 $79.5 $383.6
Metals 173.5 156.9 151.7 135.5 617.6
Winchester 55.6 62.4 88.1 63.3 269.4
- ----------------------------------------------------------------------
Total Sales $334.2 $324.5 $333.6 $278.3 $1,270.6
- ----------------------------------------------------------------------
Operating Income(Loss)
before Restructuring Charge
and Unusual Items Under
the Old Segment Reporting
Structure(e):
Chlor-Alkali $4.3 $12.1 $0.8 $(8.9) $8.3
Metals 0.6 0.2 (4.0) 10.9 7.7
Winchester (0.7) 2.4 3.2 1.8 6.7
- ----------------------------------------------------------------------
Total Operating
Income before
Restructuring Charge
and Unusual Items $4.2 $14.7 $- $3.8 $22.7
- ----------------------------------------------------------------------
Operating Income(Loss)
before Restructuring Charge
and Unusual Items Under
the New Segment Reporting
Structure (e):
Chlor-Alkali $8.2 $15.3 $3.8 $(6.4) $20.9
Metals 2.1 0.1 (4.9) 11.0 8.3
Winchester (0.1) 2.4 3.0 1.9 7.2
Corporate/Other:
Pension (f) 8.5 8.5 8.5 8.5 34.0
Environmental
Provision (3.7) (3.7) (3.7) (2.9) (14.0)
Other Corporate and
Unallocated Costs (10.8) (7.9) (6.7) (8.3) (33.7)
- ----------------------------------------------------------------------
Total Operating
Income before
Restructuring Charge
and Unusual Items $4.2 $14.7 $- $3.8 $22.7
- ----------------------------------------------------------------------
(a) Unaudited
(b) Operating results for the periods beginning October 1, 2002
included the results of Chase Industries which was acquired on
September 27, 2002. Sales and income before taxes of Chase
Industries included in those periods since the date of the
acquisition were as follows:
2003 2002
----------------------------------- ------
1st 2nd 3rd 4th Total 4th
Qtr Qtr Qtr Qtr Year Qtr
------ ------ ------ ------ ------- ------
Sales $58.2 $52.9 $54.5 $56.6 $222.2 $52.1
Income before taxes 3.0 1.8 1.6 1.1 7.5 2.2
(c) Segment operating income for the year 2003 excluded the $30.8
pretax restructuring charge for the shutdown of the Indianapolis
Brass mill and certain other actions.
(d) Other Corporate and Unallocated Costs in the second quarter of
2002 included a pretax gain of $4.5 on an insurance settlement.
(e) Segment operating income for the year 2001 excluded a
Restructuring Charge of $39.0 pretax and Unusual Items of $3.1
pretax for a total of $42.1 pretax, primarily for costs associated
with a salaried workforce reduction through an early retirement
incentive program, a voluntary retirement program and the
consolidation of certain Metals facilities in order to optimize
distribution operations.
(f) An analysis of pension income (expense) is summarized in the table
below. The service cost and the amortization of prior service
costs are allocated to the operating segments based on their
respective census data. Other components of pension costs includes
items such as the expected return on plan assets, interest cost
and recognized actuarial gains and losses.
2003 2002 2001
------- ------- -------
Service cost and prior service cost ($23.0) ($23.0) ($20.0)
Other components of pension costs 18.0 26.0 34.0
------- ------- -------
Subtotal pension income (expense) (5.0) 3.0 14.0
Curtailment charge - ERIP - - (17.0)
------- ------- -------
Total pension income (expense) ($5.0) $3.0 ($3.0)
======= ======= =======
Olin Corporation
- ----------------------------------------------------------------------
Quarterly Trend Data (a)
(In millions)
- ----------------------------------------------------------------------
2003
-----------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
- ----------------------------------------------------------------------
Sales $390.2 $396.4 $414.5 $384.7 $1,585.8
Operating Income before
Restructuring Charge (b) 14.3 18.4 15.3 4.6 52.6
Depreciation and Amortization 22.8 21.3 18.6 19.5 82.2
Capital Expenditures 8.6 12.5 13.9 19.5 54.5
Dividends Paid 11.5 11.6 11.7 11.7 46.5
- ----------------------------------------------------------------------
Total Debt to Total
Capitalization 63.5% 62.9% 62.9% 65.0% 65.0%
- ----------------------------------------------------------------------
Basic and Diluted Net Income
(Loss) Per Common Share:
Income (Loss) before
Accounting Change ($0.23) $0.15 $0.10 $0.01 $0.02
Net Income (Loss) (c) ($0.67) $0.15 $0.10 $0.01 ($0.42)
- ----------------------------------------------------------------------
Dividends $0.20 $0.20 $0.20 $0.20 $0.80
- ----------------------------------------------------------------------
Average Common Shares
Outstanding - Diluted 57.8 58.4 58.7 59.0 58.3
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
2002 (d)
-----------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
- ----------------------------------------------------------------------
Sales $295.0 $314.3 $340.3 $351.7 $1,301.3
Operating Income(Loss) (9.4) (3.5) 4.5 1.2 (7.2)
Depreciation and Amortization 21.3 21.3 21.2 24.1 87.9
Capital Expenditures 3.4 3.8 8.0 25.9 41.1
Dividends Paid 8.7 9.4 9.4 11.5 39.0
- ----------------------------------------------------------------------
Total Debt to Total
Capitalization 57.9% 52.4% 41.3% 58.7% 58.7%
- ----------------------------------------------------------------------
Per Common Share:
Basic ($0.26) ($0.15) ($0.02) ($0.21) ($0.63)
Basic and Diluted ($0.26) ($0.15) ($0.02) ($0.21) ($0.63)
- ----------------------------------------------------------------------
Dividends $0.20 $0.20 $0.20 $0.20 $0.80
- ----------------------------------------------------------------------
Average Common Shares
Outstanding - Diluted 44.3 46.9 49.7 57.4 49.4
- ----------------------------------------------------------------------
(a) Unaudited
(b) Segment operating income excluded the 2003 restructuring charge of
$30.8 pretax.
(c) Included the cumulative charge in the first quarter of 2003 for
the adoption of SFAS 143 "Accounting for Asset Retirement
Obligations", which we adopted on January 1, 2003.
(d) Operating results for the periods beginning October 1, 2002
included the results of Chase Industries which was acquired on
September 27, 2002. Sales and income before taxes of Chase
Industries included in those periods since the date of the
acquisition were as follows:
2003 2002
----------------------------------- ------
1st 2nd 3rd 4th Total 4th
Qtr Qtr Qtr Qtr Year Qtr
------ ------ ------ ------ ------- ------
Sales $58.2 $52.9 $54.5 $56.6 $222.2 $52.1
Income before taxes 3.0 1.8 1.6 1.1 7.5 2.2
Olin Corporation
Profit Summary (a)
(In millions, except EPS)
- ----------------------------------
The following table summarizes the significant unusual items impacting
the reported operating results. Management monitors earnings per share
excluding unusual items such as restructuring charges, unusual
charges/credits and accounting changes. Management believes that these
items are unique and are not part of the ongoing business results.
Management believes that providing this information to investors will
better enable them to understand our historical and future trends by
excluding these items from our results. The table below reconciles
operating income/(loss), pretax income/(loss), net income/(loss) and
diluted earnings per share on a generally accepted accounting
principles basis, as reflected in our Consolidated Statements of
Income, to diluted earnings per share as adjusted for each of the
unusual items.
On September 2002 we completed our acquisition of Chase Industries.
The acquisition was accounted for using the purchase method of
accounting. Accordingly, the operating results of Chase have been
included in the accompanying financial statements since the date of
acquisition. We believe that a meaningful analysis of our financial
performance requires that we exclude the Chase operating results when
comparing results in 2003 to results in 2002 that do not include
Chase. In order to assist investors in analyzing comparable results,
we have included sales and income before taxes of Chase in footnote b
in the segment information table for each period since the date of the
acquisition.
-------------------------------------------------
Fourth Quarter - 2003
-------------------------------------------------
Operating Pretax Net Diluted
Income/(Loss) Income/(Loss) Income/(Loss) EPS
------------- ------------- ------------- -------
As Reported $2.8 ($1.1) $0.4 $0.01
Restructuring Charge
(b) 1.8 1.8 1.1 0.02
-------------------------------------------------
As Adjusted $4.6 $0.7 $1.5 $0.03
=================================================
Average Diluted Shares 59.0
=======
-------------------------------------------------
Fourth Quarter - 2002
-------------------------------------------------
Operating Pretax Net Diluted
Income/(Loss) Income (Loss) Income/(Loss) EPS
------------- ------------- ------------- -------
As Reported $1.2 ($2.4) ($12.0) ($0.21)
COLI Tax Charge (c) 10.4
-------------------------------------------------
As Adjusted $1.2 ($2.4) ($1.6) ($0.03)
=================================================
Average Diluted Shares 57.4
=======
-------------------------------------------------
Full Year - 2003
-------------------------------------------------
Operating Pretax Net Diluted
Income/(Loss) Income/(Loss) Income/(Loss) EPS
-------------------------------------------------
As Reported $21.8 $5.5 ($24.1) ($0.42)
Accounting Change (d) - - 25.4 0.44
Restructuring Charge
(b) 30.8 30.8 19.8 0.34
-------------------------------------------------
As Adjusted $52.6 $36.3 $21.1 $0.36
=================================================
Average Diluted Shares 58.3
=======
-------------------------------------------------
Full Year - 2002
-------------------------------------------------
Operating Pretax Net Diluted
Income/(Loss) Income (Loss) Income/(Loss) EPS
-------------------------------------------------
As Reported ($7.2) ($27.0) ($31.3) ($0.63)
COLI Tax Charge
(c) - - 10.4
-------------------------------------------------
As Adjusted ($7.2) ($27.0) ($20.9) ($0.42)
=================================================
Average Diluted Shares 49.4
=======
(a) Unaudited
(b) Reflects the restructuring charge for the shutdown of our
Indianapolis Brass mill and certain other actions.
(c) Income taxes for the 2002 fourth quarter and year included a
provision in connection with the surrender of life insurance
policies purchased by us under the Company Owned Life Insurance
program.
(d) Reflects the cumulative charge for the adoption of SFAS 143,
"Accounting for Asset Retirement Obligations", which we adopted on
January 1, 2003.
CONTACT: Olin Corporation
Investor Contact:
Richard E. Koch, 203-750-3254
or
Press Contact:
Thomas J. Fitzgerald, 203-750-3831