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|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Virginia
|
13-1872319
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
190 Carondelet Plaza, Suite 1530, Clayton, MO
|
63105-3443
|
(Address of principal executive offices)
|
(Zip Code)
|
March 31,
2010
|
December 31,
2009
|
March 31,
2009
|
||||||||||
ASSETS
|
||||||||||||
Current assets:
|
||||||||||||
Cash and cash equivalents
|
$
|
411.0
|
$
|
458.5
|
$
|
168.6
|
||||||
Receivables, net
|
197.1
|
183.3
|
216.4
|
|||||||||
Income tax receivable
|
19.3
|
19.4
|
2.7
|
|||||||||
Inventories
|
156.4
|
123.8
|
166.5
|
|||||||||
Current deferred income taxes
|
50.1
|
50.5
|
60.1
|
|||||||||
Other current assets
|
22.3
|
24.8
|
11.5
|
|||||||||
Total current assets
|
856.2
|
860.3
|
625.8
|
|||||||||
Property, plant and equipment (less accumulated depreciation of $1,017.5, $1,001.3 and $970.6)
|
688.5
|
695.4
|
659.4
|
|||||||||
Prepaid pension costs
|
14.5
|
5.0
|
―
|
|||||||||
Deferred income taxes
|
―
|
―
|
23.5
|
|||||||||
Other assets
|
71.8
|
71.0
|
83.3
|
|||||||||
Goodwill
|
300.3
|
300.3
|
301.9
|
|||||||||
Total assets
|
$
|
1,931.3
|
$
|
1,932.0
|
$
|
1,693.9
|
||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||||||
Current liabilities:
|
||||||||||||
Accounts payable
|
$
|
121.1
|
$
|
117.8
|
$
|
124.2
|
||||||
Accrued liabilities
|
192.4
|
193.1
|
202.6
|
|||||||||
Total current liabilities
|
313.5
|
310.9
|
326.8
|
|||||||||
Long-term debt
|
397.1
|
398.4
|
253.4
|
|||||||||
Accrued pension liability
|
55.7
|
56.6
|
43.3
|
|||||||||
Deferred income taxes
|
26.6
|
25.8
|
6.0
|
|||||||||
Other liabilities
|
316.4
|
318.0
|
304.3
|
|||||||||
Total liabilities
|
1,109.3
|
1,109.7
|
933.8
|
|||||||||
Commitments and contingencies
|
||||||||||||
Shareholders’ equity:
|
||||||||||||
Common stock, par value $1 per share: authorized, 120.0 shares;
|
||||||||||||
issued and outstanding 78.9, 78.7 and 77.9 shares
|
78.9
|
78.7
|
77.9
|
|||||||||
Additional paid-in capital
|
826.8
|
823.1
|
809.3
|
|||||||||
Accumulated other comprehensive loss
|
(250.7
|
)
|
(248.2
|
)
|
(253.8
|
)
|
||||||
Retained earnings
|
167.0
|
168.7
|
126.7
|
|||||||||
Total shareholders’ equity
|
822.0
|
822.3
|
760.1
|
|||||||||
Total liabilities and shareholders’ equity
|
$
|
1,931.3
|
$
|
1,932.0
|
$
|
1,693.9
|
Three Months Ended
March 31,
|
||||||||
2010
|
2009
|
|||||||
Sales
|
$
|
362.0
|
$
|
400.6
|
||||
Operating expenses:
|
||||||||
Cost of goods sold
|
312.5
|
306.2
|
||||||
Selling and administration
|
32.1
|
39.2
|
||||||
Other operating income
|
2.3
|
5.5
|
||||||
Operating income
|
19.7
|
60.7
|
||||||
Earnings of non-consolidated affiliates
|
2.2
|
14.8
|
||||||
Interest expense
|
6.9
|
1.6
|
||||||
Interest income
|
0.2
|
0.5
|
||||||
Income before taxes
|
15.2
|
74.4
|
||||||
Income tax provision
|
1.1
|
27.7
|
||||||
Net income
|
$
|
14.1
|
$
|
46.7
|
||||
Net income per common share:
|
||||||||
Basic
|
$
|
0.18
|
$
|
0.60
|
||||
Diluted
|
$
|
0.18
|
$
|
0.60
|
||||
Dividends per common share
|
$
|
0.20
|
$
|
0.20
|
||||
Average common shares outstanding:
|
||||||||
Basic
|
78.8
|
77.5
|
||||||
Diluted
|
79.4
|
77.6
|
Additional
Paid-In
Capital
|
Accumulated
Other
Comprehensive
Loss
|
Retained
Earnings
|
Total
Shareholders’
Equity
|
|||||||||||||||||||||
Common Stock
|
||||||||||||||||||||||||
Shares
Issued
|
Par
Value
|
|||||||||||||||||||||||
Balance at January 1, 2009
|
77.3
|
$
|
77.3
|
$
|
801.6
|
$
|
(269.4
|
)
|
$
|
95.5
|
$
|
705.0
|
||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||
Net income
|
―
|
―
|
―
|
―
|
46.7
|
46.7
|
||||||||||||||||||
Translation adjustment
|
―
|
―
|
―
|
(0.3
|
)
|
―
|
(0.3
|
)
|
||||||||||||||||
Net unrealized gain
|
―
|
―
|
―
|
13.9
|
―
|
13.9
|
||||||||||||||||||
Amortization of prior service costs and actuarial losses, net
|
―
|
―
|
―
|
2.0
|
―
|
2.0
|
||||||||||||||||||
Comprehensive income
|
62.3
|
|||||||||||||||||||||||
Dividends paid:
|
||||||||||||||||||||||||
Common stock ($0.20 per share)
|
―
|
―
|
―
|
―
|
(15.5
|
)
|
(15.5
|
)
|
||||||||||||||||
Common stock issued for:
|
||||||||||||||||||||||||
Employee benefit plans
|
0.6
|
0.6
|
6.6
|
―
|
―
|
7.2
|
||||||||||||||||||
Other transactions
|
―
|
―
|
0.3
|
―
|
―
|
0.3
|
||||||||||||||||||
Stock-based compensation
|
―
|
―
|
0.8
|
―
|
―
|
0.8
|
||||||||||||||||||
Balance at March 31, 2009
|
77.9
|
$
|
77.9
|
$
|
809.3
|
$
|
(253.8
|
)
|
$
|
126.7
|
$
|
760.1
|
||||||||||||
Balance at January 1, 2010
|
78.7
|
$
|
78.7
|
$
|
823.1
|
$
|
(248.2
|
)
|
$
|
168.7
|
$
|
822.3
|
||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||
Net income
|
―
|
―
|
―
|
―
|
14.1
|
14.1
|
||||||||||||||||||
Translation adjustment
|
―
|
―
|
―
|
(0.4
|
)
|
―
|
(0.4
|
)
|
||||||||||||||||
Net unrealized loss
|
―
|
―
|
―
|
(4.6
|
)
|
―
|
(4.6
|
)
|
||||||||||||||||
Amortization of prior service costs and actuarial losses, net
|
―
|
―
|
―
|
2.5
|
―
|
2.5
|
||||||||||||||||||
Comprehensive income
|
11.6
|
|||||||||||||||||||||||
Dividends paid:
|
||||||||||||||||||||||||
Common stock ($0.20 per share)
|
―
|
―
|
―
|
―
|
(15.8
|
)
|
(15.8
|
)
|
||||||||||||||||
Common stock issued for:
|
||||||||||||||||||||||||
Employee benefit plans
|
0.2
|
0.2
|
2.3
|
―
|
―
|
2.5
|
||||||||||||||||||
Other transactions
|
―
|
―
|
0.1
|
―
|
―
|
0.1
|
||||||||||||||||||
Stock-based compensation
|
―
|
―
|
1.3
|
―
|
―
|
1.3
|
||||||||||||||||||
Balance at March 31, 2010
|
78.9
|
$
|
78.9
|
$
|
826.8
|
$
|
(250.7
|
)
|
$
|
167.0
|
$
|
822.0
|
Three Months Ended
March 31,
|
||||||||
2010
|
2009
|
|||||||
Operating Activities
|
||||||||
Net income
|
$
|
14.1
|
$
|
46.7
|
||||
Adjustments to reconcile net income to net cash and cash equivalents provided by (used for) operating activities:
|
||||||||
Earnings of non-consolidated affiliates
|
(2.2
|
)
|
(14.8
|
)
|
||||
Other operating income – gains on disposition of property, plant and equipment
|
(2.0
|
)
|
(5.0
|
)
|
||||
Stock-based compensation
|
1.5
|
1.1
|
||||||
Depreciation and amortization
|
21.6
|
16.6
|
||||||
Deferred income taxes
|
2.5
|
21.2
|
||||||
Qualified pension plan contributions
|
(2.4
|
)
|
(1.0
|
)
|
||||
Qualified pension plan income
|
(6.0
|
)
|
(5.0
|
)
|
||||
Common stock issued under employee benefit plans
|
0.3
|
0.6
|
||||||
Change in:
|
||||||||
Receivables
|
(13.8
|
)
|
(3.4
|
)
|
||||
Income taxes receivable
|
0.1
|
(3.3
|
)
|
|||||
Inventories
|
(32.6
|
)
|
(35.1
|
)
|
||||
Other current assets
|
(4.4
|
)
|
(0.6
|
)
|
||||
Accounts payable and accrued liabilities
|
8.8
|
(46.3
|
)
|
|||||
Other assets
|
(0.1
|
)
|
―
|
|||||
Other noncurrent liabilities
|
0.4
|
0.8
|
||||||
Other operating activities
|
(0.2
|
)
|
0.2
|
|||||
Net operating activities
|
(14.4
|
)
|
(27.3
|
)
|
||||
Investing Activities
|
||||||||
Capital expenditures
|
(21.4
|
)
|
(49.8
|
)
|
||||
Proceeds from disposition of property, plant and equipment
|
2.5
|
5.5
|
||||||
(Advances to) distributions from affiliated companies, net
|
(0.2
|
)
|
1.4
|
|||||
Other investing activities
|
(0.4
|
)
|
(0.3
|
)
|
||||
Net investing activities
|
(19.5
|
)
|
(43.2
|
)
|
||||
Financing Activities
|
||||||||
Long-term debt borrowings
|
―
|
1.5
|
||||||
Issuance of common stock
|
2.2
|
6.6
|
||||||
Dividends paid
|
(15.8
|
)
|
(15.5
|
)
|
||||
Net financing activities
|
(13.6
|
)
|
(7.4
|
)
|
||||
Net decrease in cash and cash equivalents
|
(47.5
|
)
|
(77.9
|
)
|
||||
Cash and cash equivalents, beginning of period
|
458.5
|
246.5
|
||||||
Cash and cash equivalents, end of period
|
$
|
411.0
|
$
|
168.6
|
||||
Cash paid (received) for interest and income taxes:
|
||||||||
Interest
|
$
|
7.6
|
$
|
0.2
|
||||
Income taxes, net of refunds
|
$
|
(0.3
|
)
|
$
|
9.3
|
|||
Non-cash investing activities:
|
||||||||
Capital expenditures included in accounts payable and accrued liabilities
|
$
|
6.8
|
$
|
12.8
|
March 31,
|
||||||||
2010
|
2009
|
|||||||
($ in millions)
|
||||||||
Balance at beginning of year
|
$
|
3.3
|
$
|
5.0
|
||||
Provisions charged
|
0.1
|
4.7
|
||||||
Write-offs, net of recoveries
|
―
|
(2.7
|
)
|
|||||
Balance at end of period
|
$
|
3.4
|
$
|
7.0
|
March 31,
2010
|
December 31,
2009
|
March 31,
2009
|
||||||||||
($ in millions)
|
||||||||||||
Supplies
|
$
|
29.3
|
$
|
29.0
|
$
|
26.7
|
||||||
Raw materials
|
60.3
|
52.2
|
77.6
|
|||||||||
Work in process
|
27.6
|
23.0
|
27.8
|
|||||||||
Finished goods
|
97.5
|
77.8
|
117.4
|
|||||||||
214.7
|
182.0
|
249.5
|
||||||||||
LIFO reserve
|
(58.3
|
)
|
(58.2
|
)
|
(83.0
|
)
|
||||||
Inventories, net
|
$
|
156.4
|
$
|
123.8
|
$
|
166.5
|
Three Months Ended
March 31,
|
||||||||
2010
|
2009
|
|||||||
Computation of Basic Income per Share
|
($ and shares in millions,
except per share data)
|
|||||||
Net income
|
$
|
14.1
|
$
|
46.7
|
||||
Basic shares
|
78.8
|
77.5
|
||||||
Basic net income per share
|
$
|
0.18
|
$
|
0.60
|
||||
Computation of Diluted Income per Share
|
||||||||
Diluted shares:
|
||||||||
Basic shares
|
78.8
|
77.5
|
||||||
Stock-based compensation
|
0.6
|
0.1
|
||||||
Diluted shares
|
79.4
|
77.6
|
||||||
Diluted net income per share
|
$
|
0.18
|
$
|
0.60
|
Three Months Ended
March 31,
|
||||||||
2010
|
2009
|
|||||||
($ in millions)
|
||||||||
Charges to income
|
$
|
0.6
|
$
|
4.8
|
||||
Recoveries from third parties of costs incurred and expensed in prior periods
|
(2.6
|
)
|
―
|
|||||
Total environmental (income) expense
|
$
|
(2.0
|
)
|
$
|
4.8
|
Foreign Currency Translation Adjustment
|
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, 2009
|
$
|
(5.1
|
)
|
$
|
(25.0
|
)
|
$
|
(239.3
|
)
|
$
|
(269.4
|
)
|
||||
Unrealized gains (losses)
|
(0.3
|
)
|
4.7
|
―
|
4.4
|
|||||||||||
Reclassification adjustments into income
|
―
|
9.2
|
2.0
|
11.2
|
||||||||||||
Balance at March 31, 2009
|
$
|
(5.4
|
)
|
$
|
(11.1
|
)
|
$
|
(237.3
|
)
|
$
|
(253.8
|
)
|
||||
Balance at January 1, 2010
|
$
|
(0.5
|
)
|
$
|
11.6
|
$
|
(259.3
|
)
|
$
|
(248.2
|
)
|
|||||
Unrealized losses
|
(0.4
|
)
|
(1.0
|
)
|
―
|
(1.4
|
)
|
|||||||||
Reclassification adjustments into income
|
―
|
(3.6
|
)
|
2.5
|
(1.1
|
)
|
||||||||||
Balance at March 31, 2010
|
$
|
(0.9
|
)
|
$
|
7.0
|
$
|
(256.8
|
)
|
$
|
(250.7
|
)
|
Three Months Ended
March 31,
|
||||||||
2010
|
2009
|
|||||||
Sales:
|
($ in millions)
|
|||||||
Chlor Alkali Products
|
$
|
230.6
|
$
|
267.7
|
||||
Winchester
|
131.4
|
132.9
|
||||||
Total sales
|
$
|
362.0
|
$
|
400.6
|
||||
Income before taxes:
|
||||||||
Chlor Alkali Products
(1)
|
$
|
10.6
|
$
|
68.7
|
||||
Winchester
|
19.5
|
17.0
|
||||||
Corporate/other:
|
||||||||
Pension income
(2)
|
4.7
|
4.8
|
||||||
Environmental income (expense)
(3)
|
2.0
|
(4.8
|
)
|
|||||
Other corporate and unallocated costs
|
(17.2
|
)
|
(15.7
|
)
|
||||
Other operating income
(4)
|
2.3
|
5.5
|
||||||
Interest expense
(5)
|
(6.9
|
)
|
(1.6
|
)
|
||||
Interest income
|
0.2
|
0.5
|
||||||
Income before taxes
|
$
|
15.2
|
$
|
74.4
|
(1)
|
Earnings of non-consolidated affiliates were included in the Chlor Alkali Products segment results consistent with management’s monitoring of the operating segments. The earnings from non-consolidated affiliates were $2.2 million and $14.8 million for the three months ended March 31, 2010 and 2009, 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. Pension income for the three months ended March 31, 2010 included a charge of $1.3 million associated with an agreement to withdraw our Henderson, NV chlor alkali hourly workforce from a multi-employer defined benefit pension plan.
|
(3)
|
Environmental income (expense) for the three months ended March 31, 2010 included $2.6 million of recoveries from third parties for costs incurred and expensed in prior periods.
|
(4)
|
Other operating income for the three months ended March 31, 2010 and 2009 included $2.0 million and $1.3 million, respectively, of gains on the disposal of assets primarily associated with the St. Gabriel, LA conversion and expansion project. Other operating income for the three months ended March 31, 2009 also included a $3.7 million gain on the sale of land.
|
(5)
|
Interest expense was reduced by capitalized interest of $0.1 million and $2.5 million for the three months ended March 31, 2010 and 2009, respectively.
|
Three Months Ended
March 31,
|
||||||||
2010
|
2009
|
|||||||
($ in millions)
|
||||||||
Stock-based compensation
|
$
|
2.0
|
$
|
1.9
|
||||
Mark-to-market adjustments
|
0.8
|
(1.1
|
)
|
|||||
Total expense
|
$
|
2.8
|
$
|
0.8
|
Grant date
|
2010
|
2009
|
||||||
Dividend yield
|
4.32
|
%
|
4.26
|
%
|
||||
Risk-free interest rate
|
3.00
|
%
|
2.32
|
%
|
||||
Expected volatility
|
42
|
%
|
40
|
%
|
||||
Expected life (years)
|
7.0
|
7.0
|
||||||
Grant fair value (per option)
|
$
|
4.61
|
$
|
3.85
|
||||
Exercise price
|
$
|
15.68
|
$
|
14.28
|
||||
Shares granted
|
803,750
|
866,250
|
100% Basis
|
March 31,
2010
|
December 31,
2009
|
March 31,
2009
|
|||||||||
Condensed balance sheet data:
|
($ in millions)
|
|||||||||||
Current assets
|
$
|
23.0
|
$
|
16.1
|
$
|
50.3
|
||||||
Noncurrent assets
|
90.4
|
94.1
|
105.2
|
|||||||||
Current liabilities
|
23.0
|
21.4
|
21.5
|
|||||||||
Noncurrent liabilities
|
85.3
|
85.3
|
97.5
|
Three Months Ended
March 31,
|
||||||||
2010
|
2009
|
|||||||
Condensed income statement data:
|
($ in millions)
|
|||||||
Sales
|
$
|
27.6
|
$
|
52.5
|
||||
Gross profit
|
6.2
|
30.5
|
||||||
Net income
|
1.6
|
25.6
|
March 31,
2010
|
December 31,
2009
|
March 31,
2009
|
||||||||||
($ in millions)
|
||||||||||||
SunBelt
|
$
|
(1.9
|
)
|
$
|
(4.1
|
)
|
$
|
8.8
|
||||
Bay Gas
|
12.9
|
12.6
|
11.0
|
|||||||||
Bleach joint venture
|
11.0
|
11.1
|
12.5
|
|||||||||
Investments in equity affiliates
|
$
|
22.0
|
$
|
19.6
|
$
|
32.3
|
Three Months Ended
March 31,
|
||||||||
2010
|
2009
|
|||||||
($ in millions)
|
||||||||
SunBelt
|
$
|
1.6
|
$
|
13.6
|
||||
Bay Gas
|
0.4
|
0.4
|
||||||
Bleach joint venture
|
0.2
|
0.8
|
||||||
Equity earnings of non-consolidated affiliates
|
$
|
2.2
|
$
|
14.8
|
Pension Benefits
|
Other Postretirement
Benefits
|
|||||||||||||||
Three Months Ended
March 31,
|
Three Months Ended
March 31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Components of Net Periodic Benefit (Income) Cost
|
($ in millions)
|
|||||||||||||||
Service cost
|
$
|
1.6
|
$
|
1.7
|
$
|
0.4
|
$
|
0.4
|
||||||||
Interest cost
|
24.8
|
25.9
|
1.0
|
1.1
|
||||||||||||
Expected return on plans’ assets
|
(34.7
|
)
|
(33.9
|
)
|
―
|
―
|
||||||||||
Amortization of prior service cost
|
0.2
|
0.2
|
(0.1
|
)
|
―
|
|||||||||||
Recognized actuarial loss
|
3.3
|
2.4
|
0.7
|
0.6
|
||||||||||||
Net periodic benefit (income) cost
|
$
|
(4.8
|
)
|
$
|
(3.7
|
)
|
$
|
2.0
|
$
|
2.1
|
Three Months Ended
March 31,
|
||||||||
Effective Tax Rate Reconciliation (Percent)
|
2010
|
2009
|
||||||
Statutory federal tax rate
|
35.0
|
35.0
|
||||||
Foreign rate differential
|
(0.5
|
)
|
(0.1
|
)
|
||||
Domestic manufacturing/export tax incentive
|
―
|
(0.8
|
)
|
|||||
Dividends paid to CEOP
|
(3.2
|
)
|
(0.4
|
)
|
||||
State income taxes, net
|
(0.9
|
)
|
3.1
|
|||||
Reductions due to statute of limitations
|
(12.1
|
)
|
―
|
|||||
Change in valuation allowance
|
(10.4
|
)
|
―
|
|||||
Return to provision
|
(2.4
|
)
|
―
|
|||||
Other, net
|
1.7
|
0.4
|
||||||
Effective tax rate
|
7.2
|
37.2
|
March 31,
|
||||||||
2010
|
2009
|
|||||||
($ in millions)
|
||||||||
Balance at beginning of year
|
$
|
50.8
|
$
|
50.2
|
||||
Increases for prior year tax positions
|
0.1
|
―
|
||||||
Decrease for prior year tax positions
|
(0.3
|
)
|
(0.1
|
)
|
||||
Increases for current year tax positions
|
0.1
|
―
|
||||||
Reductions due to statute of limitations
|
(1.8
|
)
|
―
|
|||||
Balance at end of period
|
$
|
48.9
|
$
|
50.1
|
March 31,
2010
|
December 31,
2009
|
March 31,
2009
|
||||||||||
($ in millions)
|
||||||||||||
Copper
|
$
|
32.7
|
$
|
34.1
|
$
|
41.0
|
||||||
Zinc
|
3.8
|
3.2
|
3.5
|
|||||||||
Lead
|
25.4
|
17.0
|
17.4
|
|||||||||
Natural gas
|
8.3
|
7.1
|
6.2
|
Asset Derivatives
|
Liability Derivatives
|
||||||||||||||||||||||||||
Fair Value
|
Fair Value
|
||||||||||||||||||||||||||
Derivatives Designated as Hedging Instruments
|
Balance
Sheet
Location
|
March 31,
2010
|
December 31,
2009
|
March 31,
2009
|
Balance
Sheet
Location
|
March 31,
2010
|
December 31,
2009
|
March 31,
2009
|
|||||||||||||||||||
($ in millions)
|
($ in millions)
|
||||||||||||||||||||||||||
Interest rate contracts
|
Other assets
|
$
|
0.8
|
$
|
1.4
|
$
|
2.7
|
Long-term debt
|
$
|
5.6
|
$
|
6.9
|
$
|
10.8
|
|||||||||||||
Commodity contracts – gains
|
Other current assets
|
12.0
|
17.7
|
―
|
Accrued liabilities
|
―
|
―
|
(0.9
|
)
|
||||||||||||||||||
Commodity contracts – losses
|
Other current assets
|
(1.4
|
)
|
(0.2
|
)
|
―
|
Accrued liabilities
|
0.8
|
―
|
19.5
|
|||||||||||||||||
$
|
11.4
|
$
|
18.9
|
$
|
2.7
|
$
|
6.4
|
$
|
6.9
|
$
|
29.4
|
Derivatives Not Designated as Hedging Instruments
|
|||||||||||||||||||||||||||
Interest rate contracts
|
Other assets
|
$
|
5.7
|
$
|
6.0
|
$
|
8.5
|
Other liabilities
|
$
|
1.3
|
$
|
0.9
|
$
|
0.3
|
|||||||||||||
Commodity contracts – losses
|
Other current assets
|
―
|
―
|
―
|
Accrued liabilities
|
0.7
|
―
|
―
|
|||||||||||||||||||
Foreign currency contracts
|
Other current assets
|
―
|
―
|
―
|
Accrued liabilities
|
0.1
|
0.1
|
―
|
|||||||||||||||||||
$
|
5.7
|
$
|
6.0
|
$
|
8.5
|
$
|
2.1
|
$
|
1.0
|
$
|
0.3
|
||||||||||||||||
Total derivatives
(1)
|
$
|
17.1
|
$
|
24.9
|
$
|
11.2
|
$
|
8.5
|
$
|
7.9
|
$
|
29.7
|
Amount of Gain (Loss)
|
|||||||||
Three Months Ended
March 31,
|
|||||||||
Location of Gain (Loss)
|
2010
|
2009
|
|||||||
Derivatives – Cash Flow Hedges
|
($ in millions)
|
||||||||
Recognized in other comprehensive loss (effective portion)
|
——— | $ | (1.6 | ) | $ | 7.7 | |||
Reclassified from accumulated other comprehensive loss into income (effective portion)
|
Cost of goods sold
|
$ | 5.8 | $ | (15.1 | ) | |||
Recognized in income (ineffective portion)
|
Cost of goods sold
|
(0.3 | ) | (0.4 | ) | ||||
$ | 5.5 | $ | (15.5 | ) | |||||
Derivatives – Fair Value Hedges
|
|||||||||
Interest rate contracts
|
Interest expense
|
$ | 1.1 | $ | 0.9 | ||||
$ | 1.1 | $ | 0.9 | ||||||
Derivatives Not Designated as Hedging Instruments
|
|||||||||
Interest rate contracts
|
Interest expense
|
$ | 0.1 | $ | 0.1 | ||||
Commodity contracts
|
Cost of goods sold
|
(0.7 | ) |
―
|
|||||
Foreign currency contracts
|
Selling and administration
|
―
|
―
|
||||||
$ | (0.6 | ) | $ | 0.1 |
Fair Value Measurements
|
|||||||||||||||||
Balance at March 31, 2010
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
($ in millions)
|
||||||||||||||||
Interest rate swaps
|
$
|
―
|
$
|
6.5
|
$
|
―
|
$
|
6.5
|
|||||||||
Commodity forward contracts
|
4.4
|
6.2
|
―
|
10.6
|
|||||||||||||
Liabilities
|
|||||||||||||||||
Interest rate swaps
|
$
|
―
|
$
|
6.9
|
$
|
―
|
$
|
6.9
|
|||||||||
Commodity forward contracts
|
―
|
1.5
|
―
|
1.5
|
|||||||||||||
Foreign currency contracts
|
0.1
|
―
|
―
|
0.1
|
Balance at December 31, 2009
|
|||||||||||||||||
Assets
|
|||||||||||||||||
Interest rate swaps
|
$
|
―
|
$
|
7.4
|
$
|
―
|
$
|
7.4
|
|||||||||
Commodity forward contracts
|
5.7
|
11.8
|
―
|
17.5
|
|||||||||||||
Liabilities
|
|||||||||||||||||
Interest rate swaps
|
$
|
―
|
$
|
7.8
|
$
|
―
|
$
|
7.8
|
|||||||||
Foreign currency contracts
|
0.1
|
―
|
―
|
0.1
|
Balance at March 31, 2009
|
|||||||||||||||||
Assets
|
|||||||||||||||||
Interest rate swaps
|
$
|
―
|
$
|
11.2
|
$
|
―
|
$
|
11.2
|
|||||||||
Liabilities
|
|||||||||||||||||
Interest rate swaps
|
$
|
―
|
$
|
11.1
|
$
|
―
|
$
|
11.1
|
|||||||||
Commodity forward contracts
|
6.6
|
12.0
|
―
|
18.6
|
Three Months Ended
March 31,
|
||||||||
2010
|
2009
|
|||||||
($ in millions, except per share data)
|
||||||||
Sales
|
$
|
362.0
|
$
|
400.6
|
||||
Cost of goods sold
|
312.5
|
306.2
|
||||||
Gross margin
|
49.5
|
94.4
|
||||||
Selling and administration
|
32.1
|
39.2
|
||||||
Other operating income
|
2.3
|
5.5
|
||||||
Operating income
|
19.7
|
60.7
|
||||||
Earnings of non-consolidated affiliates
|
2.2
|
14.8
|
||||||
Interest expense
|
6.9
|
1.6
|
||||||
Interest income
|
0.2
|
0.5
|
||||||
Income before taxes
|
15.2
|
74.4
|
||||||
Income tax provision
|
1.1
|
27.7
|
||||||
Net income
|
$
|
14.1
|
$
|
46.7
|
||||
Net income per common share:
|
||||||||
Basic
|
$
|
0.18
|
$
|
0.60
|
||||
Diluted
|
$
|
0.18
|
$
|
0.60
|
Three Months Ended
March 31,
|
||||||||
2010
|
2009
|
|||||||
Sales:
|
($ in millions)
|
|||||||
Chlor Alkali Products
|
$
|
230.6
|
$
|
267.7
|
||||
Winchester
|
131.4
|
132.9
|
||||||
Total sales
|
$
|
362.0
|
$
|
400.6
|
||||
Income before taxes:
|
||||||||
Chlor Alkali Products
(1)
|
$
|
10.6
|
$
|
68.7
|
||||
Winchester
|
19.5
|
17.0
|
||||||
Corporate/other:
|
||||||||
Pension income
(2)
|
4.7
|
4.8
|
||||||
Environmental income (expense)
(3)
|
2.0
|
(4.8
|
)
|
|||||
Other corporate and unallocated costs
|
(17.2
|
)
|
(15.7
|
)
|
||||
Other operating income
(4)
|
2.3
|
5.5
|
||||||
Interest expense
(5)
|
(6.9
|
)
|
(1.6
|
)
|
||||
Interest income
|
0.2
|
0.5
|
||||||
Income before taxes
|
$
|
15.2
|
$
|
74.4
|
(1)
|
Earnings of non-consolidated affiliates were included in the Chlor Alkali Products segment results consistent with management’s monitoring of the operating segments. The earnings from non-consolidated affiliates were $2.2 million and $14.8 million for the three months ended March 31, 2010 and 2009, 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. Pension income for the three months ended March 31, 2010 included a charge of $1.3 million associated with an agreement to withdraw our Henderson, NV chlor alkali hourly workforce from a multi-employer defined benefit pension plan.
|
(3)
|
Environmental income (expense) for the three months ended March 31, 2010 included $2.6 million of recoveries from third parties for costs incurred and expensed in prior periods.
|
(4)
|
Other operating income for the three months ended March 31, 2010 and 2009 included $2.0 million and $1.3 million, respectively, of gains on the disposal of assets primarily associated with the St. Gabriel, LA conversion and expansion project. Other operating income for the three months ended March 31, 2009 also included a $3.7 million gain on the sale of land.
|
(5)
|
Interest expense was reduced by capitalized interest of $0.1 million and $2.5 million for the three months ended March 31, 2010 and 2009, respectively.
|
Three Months Ended
March 31,
|
||||||||
2010
|
2009
|
|||||||
($ in millions)
|
||||||||
Charges to income
|
$
|
0.6
|
$
|
4.8
|
||||
Recoveries from third parties of costs incurred and expensed in prior periods
|
(2.6
|
)
|
―
|
|||||
Total environmental (income) expense
|
$
|
(2.0
|
)
|
$
|
4.8
|
March 31,
|
||||||||
2010
|
2009
|
|||||||
($ in millions)
|
||||||||
Balance at beginning of year
|
$
|
166.1
|
$
|
158.9
|
||||
Charges to income
|
0.6
|
4.8
|
||||||
Remedial and investigatory spending
|
(2.9
|
)
|
(3.3
|
)
|
||||
Currency translation adjustments
|
0.4
|
(0.3
|
)
|
|||||
Balance at end of period
|
$
|
164.2
|
$
|
160.1
|
Three Months Ended
March 31,
|
||||||||
2010
|
2009
|
|||||||
Used For
|
($ in millions)
|
|||||||
Net operating activities
|
$
|
(14.4
|
)
|
$
|
(27.3
|
)
|
||
Capital expenditures
|
(21.4
|
)
|
(49.8
|
)
|
||||
Net investing activities
|
(19.5
|
)
|
(43.2
|
)
|
||||
Net financing activities
|
(13.6
|
)
|
(7.4
|
)
|
Underlying Debt Instrument
|
Swap
Amount
|
Date of Swap
|
March 31, 2010
|
||||||
($ in millions)
|
|||||||||
Olin Pays
Floating Rate:
|
|||||||||
9.125%, due 2011
|
$
|
50.0
|
December 2001
|
3.92%
|
|||||
9.125%, due 2011
|
$
|
25.0
|
March 2002
|
3-4%
|
(a)
|
||||
6.75%, due 2016
|
$
|
65.0
|
March 2010
|
3.5-4.5%
|
(a)
|
||||
6.75%, due 2016
|
$
|
60.0
|
March 2010
|
3.5-4.5%
|
(a)
|
||||
Industrial development and environmental improvement obligations at fixed interest rates of 6.625% to 6.75%, due 2016-2017
|
$
|
21.1
|
March 2002
|
0.89%
|
|||||
5.5
|
March 2002
|
1.03%
|
|||||||
Olin Receives Floating Rate:
|
|||||||||
9.125%, due 2011
|
$
|
75.0
|
January 2009
|
7.35%
|
|
•
|
sensitivity to economic, business and market conditions in the United States and overseas, including economic instability or a downturn in the sectors served by us, such as ammunition, housing, vinyls and pulp and paper, and the migration by United States customers to low-cost foreign locations;
|
|
•
|
the cyclical nature of our operating results, particularly declines in average selling prices in the chlor alkali industry and the supply/demand balance for our products, including the impact of excess industry capacity or an imbalance in demand for our chlor alkali products;
|
|
•
|
economic and industry downturns that result in diminished product demand and excess manufacturing capacity in any of our segments and that, in many cases, result in lower selling prices and profits;
|
|
•
|
costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings;
|
|
•
|
changes in legislation or government regulations or policies, including proposed legislation that would phase out the use of mercury in the manufacture of chlorine, caustic soda, and related products;
|
|
•
|
unexpected litigation outcomes;
|
|
•
|
new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities;
|
|
•
|
the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions and production hazards;
|
|
•
|
higher-than-expected raw material and energy, transportation, and/or logistics costs;
|
|
•
|
continuing weak industry conditions could affect our ability to comply with the financial maintenance covenants in our senior revolving credit facility and our accounts receivable facility;
|
|
•
|
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;
|
|
•
|
an increase in our indebtedness or higher-than-expected interest rates, affecting our ability to generate sufficient cash flow for debt service; and
|
|
•
|
adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital.
|
Period
|
Total Number of
Shares (or Units)
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
|
|||||||||
January 1-31, 2010
|
—
|
N/A
|
—
|
||||||||||
February 1-28, 2010
|
—
|
N/A
|
—
|
||||||||||
March 1-31, 2010
|
—
|
N/A
|
—
|
||||||||||
Total
|
154,076
|
(1)
|
(1)
|
On April 30, 1998, the issuer announced a share repurchase program approved by the board of directors for the purchase of up to 5 million shares of common stock. Through March 31, 2010, 4,845,924 shares had been repurchased, and 154,076 shares remain available for purchase under that program, which has no termination date.
|
10.1
|
Amended and Restated 1997 Stock Plan for Non-employee Directors as amended and restated effective April 22, 2010 – Appendix A to Olin’s Proxy Statement dated March 10, 2010.*
|
10.2
|
Amended and Restated Olin Senior Management Incentive Compensation Plan as amended and restated effective April 22, 2010 – Appendix B to Olin’s Proxy Statement dated March 10, 2010.*
|
12
|
Computation of Ratio of Earnings to Fixed Charges (Unaudited)
|
31.1
|
Section 302 Certification Statement of Chief Executive Officer
|
31.2
|
Section 302 Certification Statement of Chief Financial Officer
|
32
|
Section 906 Certification Statement of Chief Executive Officer and Chief Financial Officer
|
OLIN CORPORATION
|
||
(Registrant)
|
||
By:
|
/s/ John E. Fischer
|
|
Vice President and Chief Financial Officer
(Authorized Officer)
|
Exhibit No.
|
Description
|
10.1
|
Amended and Restated 1997 Stock Plan for Non-employee Directors as amended and restated effective April 22, 2010 – Appendix A to Olin’s Proxy Statement dated March 10, 2010.*
|
10.2
|
Amended and Restated Olin Senior Management Incentive Compensation Plan as amended and restated effective April 22, 2010 – Appendix B to Olin’s Proxy Statement dated March 10, 2010.*
|
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
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
---|
DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
---|
No information found
No Customers Found
Price
Yield
Owner | Position | Direct Shares | Indirect Shares |
---|