OLN-2015.3.31-10Q



	March 31, 2015			December 31, 2014			March 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	196.8		$	256.8		$	242.9
Receivables, net	303.8			263.1			331.0
Income taxes receivable	15.1			21.6			2.3
Inventories	216.1			210.1			187.6
Current deferred income taxes	54.0			54.2			49.6
Other current assets	17.4			10.3			15.3
Total current assets	803.2			816.1			828.7
Property, plant and equipment (less accumulated depreciation of $1,357.9, $1,330.7 and $1,287.3)	919.9			931.0			968.6
Prepaid pension costs	—			—			1.6
Restricted cash	—			—			3.6
Deferred income taxes	12.9			12.5			9.0
Other assets	198.2			191.4			205.2
Goodwill	747.1			747.1			747.1
Total assets	$	2,681.3		$	2,698.1		$	2,763.8
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt	$	16.4		$	16.4		$	12.6
Accounts payable	147.8			146.8			164.6
Income taxes payable	1.1			0.2			0.5
Accrued liabilities	205.1			214.3			198.2
Total current liabilities	370.4			377.7			375.9
Long-term debt	656.9			658.7			677.5
Accrued pension liability	167.2			182.0			102.0
Deferred income taxes	107.3			107.1			123.3
Other liabilities	361.3			359.3			377.5
Total liabilities	1,663.1			1,684.8			1,656.2
Commitments and contingencies
Shareholders’ equity:
Common stock, par value $1 per share: authorized, 120.0 shares; issued and outstanding 77.5, 77.4 and 79.0 shares	77.5			77.4			79.0
Additional paid-in capital	792.1			788.3			830.5
Accumulated other comprehensive loss	(439.7		)	(443.1		)	(363.5		)
Retained earnings	588.3			590.7			561.6
Total shareholders’ equity	1,018.2			1,013.3			1,107.6
Total liabilities and shareholders’ equity	$	2,681.3		$	2,698.1		$	2,763.8



	Three Months Ended March 31,
	2015		2014
Sales	$	518.0	$	577.4
Operating expenses:
Cost of goods sold	433.2		475.4
Selling and administration	47.0		43.5
Restructuring charges	1.2		1.0
Acquisition costs	10.4		0.2
Other operating expense	0.2		0.1
Operating income	26.0		57.2
Earnings of non-consolidated affiliates	0.4		0.4
Interest expense	7.1		9.7
Interest income	0.3		0.3
Income before taxes	19.6		48.2
Income tax provision	6.5		18.7
Net income	$	13.1	$	29.5
Net income per common share:
Basic	$	0.17	$	0.37
Diluted	$	0.17	$	0.37
Dividends per common share	$	0.20	$	0.20
Average common shares outstanding:
Basic	77.4		79.2
Diluted	78.5		80.5



	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total Shareholders’ Equity
	Shares Issued		Par Value			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total Shareholders’ Equity
Balance at January 1, 2014	79.4		$	79.4		$	838.8		$	(365.1	)	$	548.0		$	1,101.1
Net income	—		—			—			—			29.5			29.5
Other comprehensive income	—		—			—			1.6			—			1.6
Dividends paid:
Common stock ($0.20 per share)	—		—			—			—			(15.9		)	(15.9		)
Common stock repurchased and retired	(0.6	)	(0.6		)	(14.1		)	—			—			(14.7		)
Common stock issued for:
Stock options exercised	0.2		0.2			5.1			—			—			5.3
Other transactions	—		—			(1.0		)	—			—			(1.0		)
Stock-based compensation	—		—			1.7			—			—			1.7
Balance at March 31, 2014	79.0		$	79.0		$	830.5		$	(363.5	)	$	561.6		$	1,107.6
Balance at January 1, 2015	77.4		$	77.4		$	788.3		$	(443.1	)	$	590.7		$	1,013.3
Net income	—		—			—			—			13.1			13.1
Other comprehensive income	—		—			—			3.4			—			3.4
Dividends paid:
Common stock ($0.20 per share)	—		—			—			—			(15.5		)	(15.5		)
Common stock issued for:
Stock options exercised	0.1		0.1			2.7			—			—			2.8
Other transactions	—		—			(0.2		)	—			—			(0.2		)
Stock-based compensation	—		—			1.3			—			—			1.3
Balance at March 31, 2015	77.5		$	77.5		$	792.1		$	(439.7	)	$	588.3		$	1,018.2



	Three Months Ended March 31,
	2015			2014
Operating Activities
Net income	$	13.1		$	29.5
Adjustments to reconcile net income to net cash and cash equivalents provided by (used for) operating activities:
Earnings of non-consolidated affiliates	(0.4		)	(0.4		)
Losses on disposition of property, plant and equipment	0.3			0.2
Stock-based compensation	1.8			2.1
Depreciation and amortization	34.4			34.2
Deferred income taxes	(3.1		)	6.0
Qualified pension plan contributions	(0.2		)	(0.2		)
Qualified pension plan income	(6.8		)	(7.3		)
Change in:
Receivables	(40.7		)	(50.9		)
Income taxes receivable/payable	7.4			(1.6		)
Inventories	(6.0		)	(1.1		)
Other current assets	(7.1		)	(1.1		)
Accounts payable and accrued liabilities	(6.3		)	(13.2		)
Other assets	1.3			1.7
Other noncurrent liabilities	2.4			(4.8		)
Other operating activities	0.3			—
Net operating activities	(9.6		)	(6.9		)
Investing Activities
Capital expenditures	(23.3		)	(18.6		)
Proceeds from disposition of property, plant and equipment	0.6			0.7
Proceeds from disposition of affiliated companies	2.2			—
Restricted cash activity	—			0.6
Other investing activities	(1.4		)	0.7
Net investing activities	(21.9		)	(16.6		)
Financing Activities
Long-term debt repayments	(1.0		)	(0.1		)
Earn out payment – SunBelt	—			(14.8		)
Common stock repurchased and retired	—			(14.7		)
Stock options exercised	2.0			3.6
Excess tax benefits from stock-based compensation	0.3			0.5
Dividends paid	(15.5		)	(15.9		)
Deferred debt issuance costs	(14.3		)	—
Net financing activities	(28.5		)	(41.4		)
Net decrease in cash and cash equivalents	(60.0		)	(64.9		)
Cash and cash equivalents, beginning of period	256.8			307.8
Cash and cash equivalents, end of period	$	196.8		$	242.9
Cash paid for interest and income taxes:
Interest	$	6.6		$	12.7
Income taxes, net of refunds	$	1.6		$	13.8
Non-cash investing activities:
Capital expenditures included in accounts payable and accrued liabilities	$	2.4		$	6.3

Olin Corporation (Olin) is a Virginia corporation, incorporated in 1892. We are a manufacturer concentrated in three business segments: Chlor Alkali Products, Chemical Distribution and Winchester. Chlor Alkali Products, with eight U.S. manufacturing facilities and one Canadian manufacturing facility, produces chlorine and caustic soda, hydrochloric acid, hydrogen, bleach products and potassium hydroxide. Chemical Distribution, with twenty-four owned and leased terminal facilities, manufactures bleach products and distributes caustic soda, bleach products, potassium hydroxide and hydrochloric acid. Winchester, with its principal manufacturing facilities in East Alton, IL and Oxford, MS, produces and distributes sporting ammunition, law enforcement ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.

We have prepared the condensed financial statements included herein, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). The preparation of the consolidated financial statements requires estimates and assumptions that affect amounts reported and disclosed in the financial statements and related notes. In our opinion, these financial statements reflect all adjustments (consisting only of normal accruals), which are necessary to present fairly the results for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, we believe that the disclosures are appropriate. We recommend that you read these condensed financial statements in conjunction with the financial statements, accounting policies and the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2014. Certain reclassifications were made to prior year amounts to conform to the 2015 presentation.

On March 27, 2015, Olin and The Dow Chemical Company (TDCC) announced that Olin had agreed to acquire certain chlor alkali and downstream derivatives businesses from TDCC using a Reverse Morris Trust structure. Olin and TDCC and certain affiliates have entered into an Agreement and Plan of Merger (the Merger Agreement) dated March 26, 2015 among Olin, TDCC, Blue Cube Acquisition Corporation, a wholly-owned subsidiary of Olin (Merger Sub) and Blue Cube Spinco Inc. (Spinco), pursuant to which, subject to the terms and conditions of the Merger Agreement and a Separation Agreement dated March 26, 2015 between TDCC and Spinco (the Separation Agreement), (1) TDCC will transfer its U.S. chlor alkali and vinyl, global chlorinated organics and global epoxy businesses (collectively, the Business) to Spinco, (2) TDCC will distribute Spinco’s stock to TDCC’s shareholders, at TDCC’s option, by way of a spin-off, a split-off or a combination thereof (the Distribution) and (3) Merger Sub will merge with and into Spinco, with Spinco as the surviving corporation (the Merger).

Upon consummation of the transactions contemplated by the Merger Agreement and the Separation Agreement, the shares of Spinco common stock then outstanding will automatically be converted into approximately 80.6 million shares of Olin’s common stock and will represent approximately 50.5% of the outstanding shares of Olin’s common stock. Olin’s existing shareholders will continue to hold the remaining approximately 49.5% of the outstanding shares of Olin’s common stock. In the event that certain joint venture interests owned by an unrelated third party participant in a TDCC chlor alkali joint venture (DMCA JV) are transferred to Spinco in the transaction, approximately 6.9 million shares of additional Olin common stock would be issued in the Merger to TDCC shareholders receiving the Distribution.

Prior to the Distribution, TDCC will receive from Spinco distributions of cash and debt instruments of Spinco with an aggregate value of approximately $2.0 billion (collectively, the Cash and Debt Distribution). TDCC expects to deliver the Spinco debt instruments received in the Cash and Debt Distribution in exchange for outstanding debt obligations to be identified by TDCC prior to the consummation of the Distribution (the Exchange). As the cash portion of the Cash and Debt Distribution, TDCC will receive from Spinco a total of $875 million immediately prior to the Distribution. The amount of the Cash and Debt Distribution is subject to adjustment based on Spinco’s working capital at the time of Distribution. If TDCC determines that the Exchange is not reasonably likely to be consummated at the time of the Distribution, TDCC may elect to receive the Spinco debt instruments in any event, or alternatively, may elect to receive cash for the full amount of the Cash and Debt Distribution; however TDCC has no obligation to waive the consummation of the Exchange as a condition to the closing of the Merger.

On March 26, 2015, we and certain financial institutions executed commitment letters pursuant to which the financial institutions have agreed to provide financing to Spinco to finance the amount of the Cash and Debt Distribution and to provide financing to Olin to refinance certain of our existing debt (the Bridge Financing), in each case on the terms and conditions set forth in the commitment letters. For the three months ended March 31, 2015, we paid deferred debt issuance costs of $14.3 million associated with the Bridge Financing.

During 2015, we expect to incur one-time costs in connection with the Merger and related transactions, including approximately$40 million to $45 million of advisory, legal, accounting and other professional fees, approximately $50 million of costs associated with the change in control mandatory acceleration of expenses under deferred compensation plans as a result of the transaction and approximately $25 million to $30 million financing-related fees. For the three months ended March 31, 2015 acquisition costs included $10.4 million associated with advisory, legal, accounting and other professional fees and interest expense included $0.4 million for financing fees.

The consummation of the Merger is subject to the satisfaction or waiver of various customary closing conditions, including, among others, (1) the consummation of the separation of the Business from the other businesses of TDCC (the Separation) and the Distribution in accordance with the Separation Agreement, (2) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of regulatory approvals in certain other jurisdictions, (3) the effectiveness of registration statements to be filed with the SEC, (4) the approval by Olin’s shareholders of the issuance of Olin common stock in the Merger (the Share Issuance) and the amendment of Olin’s Amended and Restated Articles of Incorporation to increase the number of authorized shares of Olin common stock (the Charter Amendment), (5) the receipt by TDCC of a favorable IRS private letter ruling with respect to certain aspects of the Separation and the Distribution and an opinion from its counsel with respect to certain federal income tax matters related to the Separation, Distribution and Exchange, (6) the receipt by TDCC, on the one hand, and Olin, on the other hand, of an opinion from their respective counsel to the effect that the Merger will be treated as a “reorganization” for U.S. federal income tax purposes, (7) the consummation of the Exchange (unless TDCC elects to receive cash for the full amount of the Cash and Debt Distribution as described above), (8) material compliance by each party with its covenants and (9) subject to certain materiality qualifiers, the absence of breaches of representations and warranties.

In connection with the transactions contemplated by the Merger Agreement and the Separation Agreement, certain additional agreements have been or will by entered into, including, among others, an Employee Matters Agreement, a Tax Matters Agreement and site, transitional and other services agreements, supply and purchase agreements, real estate agreements, technology licenses and intellectual property agreements. In addition, Olin and TDCC have agreed in connection with the transactions to enter into arrangements for the long-term supply of ethylene by TDCC to Olin at co-producer economics, pursuant to which, among other things, Olin will make an upfront payment of just over $300 million upon the closing of the Merger. Olin will also have the option of obtaining additional future ethylene supply by paying an additional reservation fee at closing.

On December 12, 2014, we announced that we had made the decision to permanently close the portion of the Becancour, Canada chlor alkali facility that had been shut down since late June 2014. This action reduces the facility’s chlor alkali capacity by 185,000 tons. Subsequent to the shutdown, the plant will predominantly focus on bleach and hydrochloric acid, which are value-added products, as well as caustic soda. In the fourth quarter of 2014, we recorded pretax restructuring charges of $10.0 million for the write-off of equipment and facility costs, employee severance and related benefit costs, lease and other contract termination costs and a non-cash pension curtailment charge related to these actions. For the three months ended March 31, 2015, we recorded pretax restructuring charges of $1.2 million for the write-off of equipment and facility costs, lease and other contract termination costs, facility exit costs and a non-cash pension curtailment charge related to these actions. We expect to incur additional restructuring charges through 2016 of approximately $4 million related to the shut down of this portion of the facility.

On December 9, 2010, our board of directors approved a plan to eliminate our use of mercury in the manufacture of chlor alkali products. Under the plan, the 260,000 tons of mercury cell capacity at our Charleston, TN facility was converted to 200,000 tons of membrane capacity capable of producing both potassium hydroxide and caustic soda. The board of directors also approved plans to reconfigure our Augusta, GA facility to manufacture bleach and distribute caustic soda, while discontinuing chlor alkali manufacturing at this site. The completion of these projects eliminated our chlor alkali production using mercury cell technology. For the three months ended March 31, 2014, we recorded pretax restructuring charges of $0.6 million for employee severance and related benefit costs and facility exit costs related to these actions.

On November 3, 2010, we announced that we made the decision to relocate the Winchester centerfire pistol and rifle ammunition manufacturing operations from East Alton, IL to Oxford, MS. This relocation, when completed, is forecast to reduce Winchester’s annual operating costs by approximately $35 million to $40 million. Consistent with this decision we initiated an estimated $110 million five-year project, which includes approximately $80 million of capital spending. The capital spending was partially financed by $31 million of grants provided by the State of Mississippi and local governments. We currently expect to complete this relocation by the end of 2016. For the three months ended March 31, 2015 and 2014, we recorded pretax restructuring charges of less than $0.1 million and $0.4 million, respectively, for employee severance and related benefit costs, employee relocation costs and facility exit costs related to these actions. We expect to incur additional restructuring charges through 2016 of approximately $2 million related to the transfer of these operations.



		Employee severance and job related benefits			Lease and other contract termination costs			Employee relocation costs			Facility exit costs			Write-off of equipment and facility			Total
		($ in millions)
Balance at January 1, 2014		$	10.2		$	—		$	—		$	—		$	—		$	10.2
	2014 restructuring charges	0.2			—			0.1			0.7			—			1.0
	Amounts utilized	(0.6		)	—			(0.1		)	(0.7		)	—			(1.4		)
Balance at March 31, 2014		$	9.8		$	—		$	—		$	—		$	—		$	9.8
Balance at January 1, 2015		$	11.2		$	4.5		$	—		$	—		$	—		$	15.7
	2015 restructuring charges	—			0.7			0.1			0.2			0.2			1.2
	Amounts utilized	(2.8		)	—			(0.1		)	(0.2		)	(0.2		)	(3.3		)
	Currency translation adjustments	(0.4		)	(0.3		)	—			—			—			(0.7		)
Balance at March 31, 2015		$	8.0		$	4.9		$	—		$	—		$	—		$	12.9

The following table summarizes the cumulative restructuring charges of these 2014 and 2010 restructuring actions by major component through March 31, 2015:



	Chlor Alkali Products				Winchester		Total
	Becancour		Mercury		Winchester		Total
	($ in millions)
Write-off of equipment and facility	$	3.2	$	17.8	$	—	$	21.0
Employee severance and job related benefits	2.3		5.6		13.1		21.0
Facility exit costs	0.1		15.6		2.0		17.7
Pension and other postretirement benefits curtailment	0.4		—		4.1		4.5
Employee relocation costs	—		0.9		4.8		5.7
Lease and other contract termination costs	5.2		0.7		—		5.9
Total cumulative restructuring charges	$	11.2	$	40.6	$	24.0	$	75.8

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

Inventories are valued at the lower of cost or market. The Chlor Alkali Products and Winchester segments inventory costs are determined principally by the dollar value last-in, first-out (LIFO) method of inventory accounting. The Chemical Distribution segment inventory costs are determined principally by the first-in, first-out (FIFO) method of inventory accounting. Cost for other inventories has been determined principally by the average cost method, primarily operating supplies, spare parts and maintenance parts. Elements of costs in inventories included raw materials, direct labor and manufacturing overhead. Inventories under the LIFO method are based on annual estimates of quantities and costs as of year-end; therefore, the condensed financial statements at March 31, 2015 reflect certain estimates relating to inventory quantities and costs at December 31, 2015. The replacement cost of our inventories would have been approximately $66.0 million, $65.7 million and $79.4 million higher than reported at March 31, 2015, December 31, 2014 and March 31, 2014, respectively.



	March 31, 2015		December 31, 2014		March 31, 2014
	($ in millions)
Investments in non-consolidated affiliates	$	23.7	$	23.3	$	22.0
Intangible assets (less accumulated amortization of $46.3, $42.6 and $31.7)	119.8		123.5		134.4
Deferred debt issuance costs	23.3		10.3		13.5
Bleach joint venture receivable	5.8		7.8		13.6
Income tax receivable	6.6		6.6		—
Interest rate swaps	2.9		3.5		5.3
Other	16.1		16.4		16.4
Other assets	$	198.2	$	191.4	$	205.2

We are party to various government and private environmental actions associated with past manufacturing facilities and former waste disposal sites. Charges to income for investigatory and remedial efforts were material to operating results in 2014 and are expected to be material to operating results in 2015. The condensed balance sheets included reserves for future environmental expenditures to investigate and remediate known sites amounting to $136.0 million, $138.3 million and $144.9 million at March 31, 2015, December 31, 2014 and March 31, 2014, respectively, of which $117.0 million, $119.3 million and $126.9 million, respectively, were classified as other noncurrent liabilities.

Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, changes in regulatory authorities, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other potentially responsible parties (PRPs), our ability to obtain contributions from other parties and the lengthy time periods over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably to us, which could materially adversely affect our financial position or results of operations.

We, and our subsidiaries, are defendants in various legal actions (including proceedings based on alleged exposures to asbestos) incidental to our past and current business activities. As of March 31, 2015, December 31, 2014 and March 31, 2014, our condensed balance sheets included liabilities for these legal actions of $22.4 million, $22.1 million and $19.3 million, respectively. These liabilities do not include costs associated with legal representation. Based on our analysis, and considering the inherent uncertainties associated with litigation, we do not believe that it is reasonably possible that these legal actions will materially adversely affect our financial position, cash flows or results of operations.

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

On April 24, 2014, our board of directors authorized a new share repurchase program for up to 8 million shares of common stock that will terminate in three years for any of the remaining shares not yet repurchased. This authorization replaced the July 2011 share repurchase program. For the three months ended March 31, 2015, no shares were purchased and retired. For the three months ended March 31, 2014, 0.6 million shares were purchased and retired at a cost of $14.7 million. As of March 31, 2015, we had purchased a total of 1.9 million shares under the April 2014 program, and 6.1 million shares remained authorized to be purchased. Under the Merger Agreement relating to our pending acquisition of certain chlor alkali and downstream derivatives businesses from TDCC, we are restricted from repurchasing shares of our common stock prior to the consummation of the Merger. After the closing of the Merger for a period of two years, we will continue to be subject to certain restrictions on our ability to conduct share repurchases, subject to certain exceptions.



	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, 2014	$	(0.5	)	$	0.9		$	(365.5	)	$	(365.1	)
Unrealized gains (losses)	0.7			(5.7		)	—			(5.0		)
Reclassification adjustments into income	—			0.6			6.5			7.1
Tax benefit (provision)	—			2.0			(2.5		)	(0.5		)
Net change	0.7			(3.1		)	4.0			1.6
Balance at March 31, 2014	$	0.2		$	(2.2	)	$	(361.5	)	$	(363.5	)
Balance at January 1, 2015	$	(2.3	)	$	(4.2	)	$	(436.6	)	$	(443.1	)
Unrealized losses	(1.4		)	(2.4		)	—			(3.8		)
Reclassification adjustments into income	—			1.9			8.6			10.5
Tax benefit (provision)	—			0.2			(3.5		)	(3.3		)
Net change	(1.4		)	(0.3		)	5.1			3.4
Balance at March 31, 2015	$	(3.7	)	$	(4.5	)	$	(431.5	)	$	(439.7	)

We define segment results as income (loss) before interest expense, interest income, other operating (expense) income, other (expense) income and income taxes, and include the operating results of non-consolidated affiliates. Intersegment sales of $23.2 million and $20.7 million for the three months ended March 31, 2015 and 2014, respectively, have been eliminated. These represent the sale of caustic soda, bleach, potassium hydroxide and hydrochloric acid between Chemical Distribution and Chlor Alkali Products, at prices that approximate market.



	Three Months Ended March 31,
	2015			2014
Sales:	($ in millions)
Chlor Alkali Products	$	292.7		$	328.3
Chemical Distribution	69.8			69.2
Winchester	178.7			200.6
Intersegment sales elimination	(23.2		)	(20.7		)
Total sales	$	518.0		$	577.4
Income (loss) before taxes:
Chlor Alkali Products	$	23.1		$	34.3
Chemical Distribution	1.0			(0.8		)
Winchester	29.8			38.3
Corporate/other:
Pension income	7.1			7.9
Environmental expense	(0.7		)	(3.5		)
Other corporate and unallocated costs	(22.1		)	(17.3		)
Restructuring charges	(1.2		)	(1.0		)
Acquisition costs	(10.4		)	(0.2		)
Other operating expense	(0.2		)	(0.1		)
Interest expense	(7.1		)	(9.7		)
Interest income	0.3			0.3
Income before taxes	$	19.6		$	48.2

Dividend yield for 2015 and 2014 was based on a historical average. Risk-free interest rate was based on zero coupon U.S. Treasury securities rates for the expected life of the options. Expected volatility was based on our historical stock price movements, as we believe that historical experience is the best available indicator of the expected volatility. Expected life of the option grant was based on historical exercise and cancellation patterns, as we believe that historical experience is the best estimate of future exercise patterns.

Most of our employees participate in defined contribution pension plans. We provide a contribution to an individual retirement contribution account maintained with the Contributing Employee Ownership Plan (CEOP) primarily equal to 5% of the employee’s eligible compensation if such employee is less than age 45, and 7.5% of the employee’s eligible compensation if such employee is age 45 or older. The defined contribution pension plans expense was $4.3 million and $4.1 million for the three months ended March 31, 2015 and 2014, respectively.

A portion of our bargaining hourly employees continue to participate in our domestic defined benefit pension plans under a flat-benefit formula. Our funding policy for the defined benefit pension plans is consistent with the requirements of federal laws and regulations. Our foreign subsidiaries maintain pension and other benefit plans, which are consistent with statutory practices. Our defined benefit pension plan provides that if, within three years following a change of control of Olin, any corporate action is taken or filing made in contemplation of, among other things, a plan termination or merger or other transfer of assets or liabilities of the plan, and such termination, merger, or transfer thereafter takes place, plan benefits would automatically be increased for affected participants (and retired participants) to absorb any plan surplus (subject to applicable collective bargaining requirements).



	Pension Benefits						Other Postretirement Benefits
	Three Months Ended March 31,						Three Months Ended March 31,
	2015			2014			2015		2014
Components of Net Periodic Benefit (Income) Cost	($ in millions)
Service cost	$	1.6		$	1.4		$	0.3	$	0.3
Interest cost	20.6			21.6			0.6		0.7
Expected return on plans’ assets	(35.6		)	(34.9		)	—		—
Recognized actuarial loss	7.5			5.5			0.9		1.0
Curtailment	0.1			—			0.1		—
Net periodic benefit (income) cost	$	(5.8	)	$	(6.4	)	$	1.9	$	2.0



	Three Months Ended March 31,
Effective Tax Rate Reconciliation (Percent)	2015		2014
Statutory federal tax rate	35.0	%	35.0	%
Foreign rate differential	(0.1	)	(0.1	)
Domestic manufacturing/export tax incentive	(3.0	)	(2.1	)
Dividends paid to CEOP	(0.6	)	(0.3	)
Change in valuation allowance	1.0		4.2
State income taxes, net	0.6		2.4
Remeasurement of deferred taxes	—		(0.3	)
Other, net	0.3		—
Effective tax rate	33.2	%	38.8	%

We operate primarily in North America and file income tax returns in numerous jurisdictions. Our tax returns are subject to examination by various federal, state and local tax authorities. Our U.S. federal income tax returns are under examination by the Internal Revenue Service (IRS) for tax years 2008 and 2010 to 2012. Our Canadian federal income tax returns are under examination by Canada Revenue Authority (CRA) for tax years 2010 and 2011. Our Canadian provincial income tax returns are under examination by Quebec Revenue Authority for tax years 2008 to 2011. We believe we have adequately provided for all tax positions; however, amounts asserted by taxing authorities could be greater than our accrued positions. For our primary tax jurisdictions, the tax years that remain subject to examination are as follows:

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

Energy costs, including electricity used in our Chlor Alkali Products segment, and certain raw material and energy costs, namely copper, lead, zinc, electricity and natural gas used in our Winchester and Chemical Distribution segments, are subject to price volatility. Depending on market conditions, we may enter into futures contracts and put and call option contracts in order to reduce the impact of commodity price fluctuations. The majority of our commodity derivatives expire within one year. Those commodity contracts that extend beyond one year correspond with raw material purchases for long-term fixed-price sales contracts.

In March 2010, we entered into interest rate swaps on $125 million of our underlying fixed-rate debt obligations, whereby we agreed to pay variable rates to a counterparty who, in turn, pays us fixed rates. The counterparty to these agreements is Citibank, N.A. (Citibank), a major financial institution. In October 2011, we entered into $125 million of interest rate swaps with equal and opposite terms as the $125 million variable interest rate swaps on the 6.75% senior notes due 2016 (2016 Notes). We have agreed to pay a fixed rate to a counterparty who, in turn, pays us variable rates. The counterparty to these agreements is also Citibank. The result was a gain of $11.0 million on the $125 million variable interest rate swaps, which will be recognized through 2016. As of March 31, 2015, $3.1 million of this gain was included in long-term debt. In October 2011, we de-designated our $125 million interest rate swaps that had previously been designated as fair value hedges. The $125 million variable interest rate swaps and the $125 million fixed interest rate swaps do not meet the criteria for hedge accounting. All changes in the fair value of these interest rate swaps are recorded currently in earnings.

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

We use cash flow hedges for certain raw material and energy costs such as copper, zinc, lead, electricity and natural gas to provide a measure of stability in managing our exposure to price fluctuations associated with forecasted purchases of raw materials and energy used in the company’s manufacturing process. At March 31, 2015, we had open positions in futures contracts through 2018. If all open futures contracts had been settled on March 31, 2015, we would have recognized a pretax loss of $7.6 million.

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. We include the gain or loss on the hedged items (fixed-rate borrowings) in the same line item, interest expense, as the offsetting loss or gain on the related interest rate swaps. We had no interest rate swaps designated as fair value hedges as of March 31, 2015, December 31, 2014 and March 31, 2014.

In June 2012, we terminated $73.1 million of interest rate swaps with Wells Fargo that had been entered into on the SunBelt Notes in May 2011. The result was a gain of $2.2 million, which will be recognized through 2017. As of March 31, 2015, $0.7 million of this gain was included in long-term debt. Pursuant to a note purchase agreement dated December 22, 1997, the SunBelt Chlor Alkali Partnership (SunBelt) sold $97.5 million of Guaranteed Senior Secured Notes due 2017, Series O, and $97.5 million of Guaranteed Senior Secured Notes due 2017, Series G. We refer to these notes as the SunBelt Notes. The SunBelt Notes bear interest at a rate of 7.23% per annum, payable semi-annually in arrears on each June 22 and December 22.

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



	Asset Derivatives										Liability Derivatives
		Fair Value										Fair Value
Derivatives Designated as Hedging Instruments	Balance Sheet Location	March 31, 2015			December 31, 2014			March 31, 2014			Balance Sheet Location	March 31, 2015			December 31, 2014			March 31, 2014
		($ in millions)										($ in millions)
Interest rate contracts	Other assets	$	—		$	—		$	—		Long-term debt	$	3.8		$	4.5		$	6.6
Commodity contracts – losses	Other current assets	—			—			—			Accrued liabilities	8.1			7.2			4.8
Commodity contracts – gains	Other current assets	—			—			—			Accrued liabilities	(0.5		)	(0.1		)	(1.0		)
		$	—		$	—		$	—			$	11.4		$	11.6		$	10.4
Derivatives Not Designated as Hedging Instruments
Interest rate contracts – gains	Other assets	$	3.9		$	4.3		$	6.8		Other liabilities	$	—		$	—		$	—
Interest rate contracts – losses	Other assets	(1.0		)	(0.8		)	(1.5		)	Other liabilities	—			—			—
Commodity contracts – losses	Other current assets	—			—			—			Accrued liabilities	1.2			1.5			—
Commodity contracts – gains	Other current assets	—			—			—			Accrued liabilities	—			—			(0.4		)
		$	2.9		$	3.5		$	5.3			$	1.2		$	1.5		$	(0.4	)
Total derivatives⁽¹⁾		$	2.9		$	3.5		$	5.3			$	12.6		$	13.1		$	10.0



		Amount of Gain (Loss)
		Three Months Ended March 31,
	Location of Gain (Loss)	2015			2014
Derivatives – Cash Flow Hedges		($ in millions)
Recognized in other comprehensive loss (effective portion)	———	$	(2.4	)	$	(5.7	)

Reclassified from accumulated other comprehensive loss into income (effective portion)	Cost of goods sold	$	(1.9	)	$	(0.6	)
Derivatives – Fair Value Hedges
Interest rate contracts	Interest expense	$	0.7		$	0.7
Derivatives Not Designated as Hedging Instruments
Commodity contracts	Cost of goods sold	$	(1.7	)	$	0.6

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

Based on the agreements with our various counterparties, cash collateral is required to be provided when the net fair value of the derivatives, with the counterparty, exceed a specific threshold. If the threshold is exceeded, cash is either provided by the counterparty to us if the value of the derivatives is our asset, or cash is provided by us to the counterparty if the value of the derivatives is our liability. As of March 31, 2015, December 31, 2014 and March 31, 2014, this threshold was not exceeded. In all instances where we are party to a master netting agreement, we offset the receivable or payable recognized upon payment of cash collateral against the fair value amounts recognized for derivative instruments that have also been offset under such master netting agreements.

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

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

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

Determining which hierarchical level an asset or liability falls within requires significant judgment. We evaluate our hierarchy disclosures each quarter. The following table summarizes the assets and liabilities measured at fair value in the condensed balance sheets:



	Fair Value Measurements
Balance at March 31, 2015	Level 1		Level 2		Level 3		Total
Assets	($ in millions)
Interest rate swaps	$	—	$	2.9	$	—	$	2.9
Liabilities
Interest rate swaps	$	—	$	3.8	$	—	$	3.8
Commodity forward contracts	—		8.8		—		8.8
Balance at December 31, 2014
Assets
Interest rate swaps	$	—	$	3.5	$	—	$	3.5
Liabilities
Interest rate swaps	$	—	$	4.5	$	—	$	4.5
Commodity forward contracts	—		8.6		—		8.6
Balance at March 31, 2014
Assets
Interest rate swaps	$	—	$	5.3	$	—	$	5.3
Liabilities
Interest rate swaps	$	—	$	6.6	$	—	$	6.6
Commodity forward contracts	—		3.4		—		3.4

The fair value of the interest rate swaps was included in other assets and long-term debt as of March 31, 2015, December 31, 2014 and March 31, 2014. These financial instruments were valued using the “income approach” valuation technique. This method used valuation techniques to convert future amounts to a single present amount. The measurement was based on the value indicated by current market expectations about those future amounts. We use interest rate swaps as a means of managing interest expense and floating interest rate exposure to optimal levels.

The fair value of the commodity forward contracts was classified in accrued liabilities as of March 31, 2015, December 31, 2014 and March 31, 2014, with unrealized gains and losses included in accumulated other comprehensive loss, net of applicable taxes. These financial instruments were valued primarily based on prices and other relevant information observable in market transactions involving identical or comparable assets or liabilities including both forward and spot prices for commodities. We use commodity forward contracts for certain raw materials and energy costs such as copper, zinc, lead, electricity and natural gas to provide a measure of stability in managing our exposure to price fluctuations.

The carrying values of cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximated fair values due to the short-term maturities of these instruments. The fair value of our long-term debt was determined based on current market rates for debt of similar risk and maturities. The following table summarizes the fair value measurements of debt and the actual debt recorded on our condensed balance sheets:

On February 11, 2011 we acquired PolyOne’s 50% interest in SunBelt. With this acquisition, we agreed to a three-year earn out, which had no guaranteed minimum or maximum, based on the performance of SunBelt. The fair value of the earn out was estimated using a probability-weighted discounted cash flow model. This fair value measurement was based on significant inputs not observed in the market. Key assumptions in determining the fair value of the earn out included the discount rate and cash flow projections. The final earn out payment was made in 2014.

Our operations are concentrated in three business segments: Chlor Alkali Products, Chemical Distribution and Winchester. Chlor Alkali Products and Winchester are both capital intensive manufacturing businesses. Chlor Alkali Products operating rates are closely tied to the general economy. Each segment has a commodity element to it, and therefore, our ability to influence pricing is quite limited on the portion of the segment’s business that is strictly commodity. Our Chlor Alkali Products and Chemical Distribution businesses are commodity businesses where all supplier products are similar and price is the major supplier selection criterion. We have little or no ability to influence prices in this large, global commodity market. Cyclical price swings, driven by changes in supply/demand, can be abrupt and significant and, given the capacity in our Chlor Alkali Products business, can lead to significant changes in our overall profitability. Winchester also has a commodity element to its business, but a majority of Winchester ammunition is sold as a branded consumer product where there are opportunities to differentiate certain offerings through innovative new product development and enhanced product performance. While competitive pricing versus other branded ammunition products is important, it is not the only factor in product selection.

On March 27, 2015, Olin and TDCC announced that Olin had agreed to acquire certain chlor alkali and downstream derivatives businesses from TDCC using a Reverse Morris Trust structure. Olin and TDCC and certain affiliates have entered into an Agreement and Plan of Merger (the Merger Agreement) dated March 26, 2015 among Olin, TDCC, Blue Cube Acquisition Corporation, a wholly-owned subsidiary of Olin (Merger Sub) and Blue Cube Spinco Inc. (Spinco), pursuant to which, subject to the terms and conditions of the Merger Agreement and a Separation Agreement dated March 26, 2015 between TDCC and Spinco (the Separation Agreement), (1) TDCC will transfer its U.S. chlor alkali and vinyl, global chlorinated organics and global epoxy businesses (collectively, the Business) to Spinco, (2) TDCC will distribute Spinco’s stock to TDCC’s shareholders, at TDCC’s option, by way of a spin-off, a split-off or a combination thereof (the Distribution) and (3) Merger Sub will merge with and into Spinco, with Spinco as the surviving corporation (the Merger).

During 2015, we expect to incur one-time costs in connection with the Merger and related transactions, including approximately $40 million to $45 million of advisory, legal, accounting and other professional fees, approximately $50 million of costs associated with the change in control mandatory acceleration of expenses under deferred compensation plans as a result of the transaction and approximately $25 million to $30 million financing-related fees. For the three months ended March 31, 2015 acquisition costs included $10.4 million associated with advisory, legal, accounting and other professional fees and interest expense included $0.4 million for financing fees.

Chlor Alkali Products’ segment income was $23.1 million for the three months ended March 31, 2015, compared to segment income of $34.3 million for the three months ended March 31, 2014. Chlor Alkali Products’ segment income was lower than the comparable period in the prior year primarily as a result of decreased chlorine and caustic soda volumes, partially offset by lower operating costs in 2015. Operating costs for the three months ended March 31, 2014 included unusual winter weather-related costs of $5.5 million. Our operating rate for the three months ended March 31, 2015 was 81%, which reflected the capacity reductions that occurred in the fourth quarter of 2014, compared to the operating rate of 79% for the three months ended March 31, 2014.

First quarter of 2015 ECU netbacks of approximately $505 were 3% lower than the first quarter of 2014 ECU netbacks of approximately $520 and 3% higher than the fourth quarter of 2014 ECU netbacks of approximately $490. The decrease from the first quarter of 2014 was due to both lower chlorine and caustic soda prices. The increase from the fourth quarter of 2014 was due to both higher chlorine and caustic soda prices. ECU netbacks in the second quarter of 2015 are forecast to be higher than the first quarter of 2015 as a result of higher chlorine prices. In the first quarter of 2015, we announced a chlorine price increase of $75 per ton and a caustic soda price increase of $75 per ton. In May 2015, we announced an additional chlorine price increase of $40 per ton. Chlorine price indices increased $20 per ton in March 31, 2015, which is the first increase in the chlorine price index since the second quarter of 2011. While the success of these price increases is not yet known, the majority of the benefit, if realized, would impact second quarter of 2015 results.

Chemical Distribution segment income was $1.0 million for the three months ended March 31, 2015 compared to a loss of $0.8 million for the three months ended March 31, 2014. Chemical Distribution segment income was higher than the comparable period in the prior year primarily due to increased shipments of potassium hydroxide and hydrochloric acid. Chemical Distribution segment income included depreciation and amortization expense of $3.9 million and $4.0 million for the three months ended March 31, 2015 and 2014, respectively.

Winchester segment income was $29.8 million for the three months ended March 31, 2015 compared to $38.3 million for the three months ended March 31, 2014. Winchester first quarter 2015 segment income declined compared to the first quarter last year which reflects a lower level of demand for pistol, shotshell and rifle ammunition. The decrease was partially offset by lower commodity and other material costs and decreased operating costs, which include the impact of decreased costs associated with our new centerfire operation in Oxford, MS.



	Three Months Ended March 31,
	2015		2014
	($ in millions, except per share data)
Sales	$	518.0	$	577.4
Cost of goods sold	433.2		475.4
Gross margin	84.8		102.0
Selling and administration	47.0		43.5
Restructuring charges	1.2		1.0
Acquisition Costs	10.4		0.2
Other operating expense	0.2		0.1
Operating income	26.0		57.2
Earnings of non-consolidated affiliates	0.4		0.4
Interest expense	7.1		9.7
Interest income	0.3		0.3
Income before taxes	19.6		48.2
Income tax provision	6.5		18.7
Net income	$	13.1	$	29.5
Net income per common share:
Basic	$	0.17	$	0.37
Diluted	$	0.17	$	0.37

Sales for the three months ended March 31, 2015 were $518.0 million compared to $577.4 million in the same period last year, a decrease of $59.4 million, or 10%. Chlor Alkali Products sales decreased by $35.6 million primarily due to lower chlorine and caustic soda volumes. Winchester sales decreased by $21.9 million primarily due to decreased shipments of pistol, shotshell and rifle ammunition to domestic commercial customers. These decreases were partially offset by increased Chemical Distribution sales of $0.6 million primarily due to increased shipments of potassium hydroxide and hydrochloric acid.

Gross margin decreased $17.2 million, or 17%, compared to the three months ended March 31, 2014. Chlor Alkali Products gross margin decreased by $12.4 million, primarily due to decreased chlorine and caustic soda volumes, partially offset by lower operating costs primarily associated with unusual winter weather-related costs experienced during the three months ended March, 31, 2014. Winchester gross margin was lower by $8.9 million primarily due to decreased shipments of pistol, shotshell and rifle ammunition to domestic commercial customers, which was partially offset by decreased commodity and other material costs and decreased operating costs, which include the impact of decreased costs associated with our new centerfire operation in Oxford, MS. These decreases were partially offset by increased Chemical Distribution gross margin of $1.5 million primarily due to increased shipments of potassium hydroxide and hydrochloric acid. Gross margin as a percentage of sales decreased to 16% in 2015 from 18% in 2014.

Selling and administration expenses for the three months ended March 31, 2015 increased $3.5 million, or 8%, from the three months ended March 31, 2014 primarily due to increased stock-based compensation expense of $7.6 million, which includes mark-to-market adjustments. This increase was partially offset by decreased legal and legal-related settlement expenses of $1.4 million, a favorable foreign currency impact of $1.3 million and decreased consulting fees of $1.0 million. Selling and administration expenses as a percentage of sales were 9% in 2015 and 8% in 2014.

Restructuring charges for the three months ended March 31, 2015 were associated with permanently closing a portion of the Becancour, Canada chlor alkali facility and the ongoing relocation of our Winchester centerfire ammunition manufacturing operations from East Alton, IL to Oxford, MS. Restructuring charges for the three months ended March 31, 2014 were associated with exiting the use of mercury cell technology in the chlor alkali manufacturing process and the ongoing relocation of our Winchester centerfire ammunition manufacturing operations from East Alton, IL to Oxford, MS.

The effective tax rate for the three months ended March 31, 2015 of 33.2% was lower than the the 35% U.S. federal statutory rate, primarily due to favorable permanent tax deduction items, such as the domestic manufacturing deduction and tax deductible dividends paid to the CEOP, partially offset by the effect of state income taxes net of the utilization of certain state tax credits. The effective tax rate for the three months ended March 31, 2014 included $1.6 million of expense primarily associated with increases in valuation allowances on certain state tax credit carryforwards associated with a change in a state tax law. After giving consideration to this item of $1.6 million, the effective tax rate for the three months ended March 31, 2014 of 35.5% was higher than the 35% U.S. federal statutory rate, primarily due to state income taxes net of the utilization of certain state tax credits, partially offset by favorable permanent tax deduction items, such as the domestic manufacturing deduction and tax deductible dividends paid to the CEOP.



	Three Months Ended March 31,
	2015			2014
Sales:	($ in millions)
Chlor Alkali Products	$	292.7		$	328.3
Chemical Distribution	69.8			69.2
Winchester	178.7			200.6
Intersegment sales elimination	(23.2		)	(20.7		)
Total sales	$	518.0		$	577.4
Income (loss) before taxes:
Chlor Alkali Products⁽¹⁾	$	23.1		$	34.3
Chemical Distribution	1.0			(0.8		)
Winchester	29.8			38.3
Corporate/other:
Pension income⁽²⁾	7.1			7.9
Environmental expense	(0.7		)	(3.5		)
Other corporate and unallocated costs	(22.1		)	(17.3		)
Restructuring charges⁽³⁾	(1.2		)	(1.0		)
Acquisition costs⁽⁴⁾	(10.4		)	(0.2		)
Other operating expense	(0.2		)	(0.1		)
Interest expense⁽⁵⁾	(7.1		)	(9.7		)
Interest income	0.3			0.3
Income before taxes	$	19.6		$	48.2

Chlor Alkali Products’ sales for the three months ended March 31, 2015 were $292.7 million compared to $328.3 million for the three months ended March 31, 2014, a decrease of $35.6 million, or 11%. The sales decrease was primarily due to lower volumes of chlorine and caustic soda ($28.9 million) and potassium hydroxide ($4.6 million). Our ECU netbacks were approximately $505 for the three months ended March 31, 2015 compared to approximately $520 for the three months ended March 31, 2014. Our operating rate for the three months ended March 31, 2015 was 81%, which reflected the capacity reductions that occurred in the fourth quarter of 2014, compared to the operating rate of 79% for the three months ended March 31, 2014.

Chlor Alkali Products segment income was $23.1 million for the three months ended March 31, 2015, compared to $34.3 million for the same period in 2014, a decrease of $11.2 million, or 33%. Chlor Alkali Products segment income was lower primarily due to decreased volumes ($16.1 million), primarily chlorine and caustic soda, and lower product prices ($0.8 million). Product prices for caustic soda, chlorine and bleach were lower, partially offset by increased hydrochloric acid prices. These decreases were partially offset by lower operating costs in 2015 ($5.7 million). Operating costs for the three months ended March 31, 2014 included unusual winter weather-related costs of $5.5 million.

Chemical Distribution sales for the three months ended March 31, 2015 were $69.8 million compared to $69.2 million for the three months ended March 31, 2014, an increase of $0.6 million, or 1%. The sales increase was primarily due to increased shipments of potassium hydroxide and hydrochloric acid ($3.8 million). This increase was partially offset by lower caustic soda prices ($2.4 million) and decreased caustic soda volumes ($0.8 million).

Chemical Distribution segment income was $1.0 million for the three months ended March 31, 2015 compared to a loss of $0.8 million for the three months ended March 31, 2014, an increase of $1.8 million. Chemical Distribution segment income was higher than the comparable period in the prior year primarily as a result of increased shipments of potassium hydroxide and hydrochloric acid ($1.6 million). Chemical Distribution segment income included depreciation and amortization expense of $3.9 million and $4.0 million for the three months ended March 31, 2015 and 2014, respectively.

Winchester sales were $178.7 million for the three months ended March 31, 2015 compared to $200.6 million for the three months ended March 31, 2014, a decrease of $21.9 million, or 11%. The sales decrease was primarily due to lower shipments of ammunition to domestic commercial customers ($23.1 million), primarily due to a lower level of demand for pistol, shotshell and rifle ammunition, lower shipments to law enforcement agencies ($1.5 million) and lower shipments to industrial customers ($0.8 million), who primarily supply the construction sector. These decreases were partially offset by increased shipments to military customers ($2.8 million) and international customers ($0.7 million).

Winchester reported segment income of $29.8 million for the three months ended March 31, 2015 compared to $38.3 million for the three months ended March 31, 2014, a decrease of $8.5 million, or 22%. The decrease was due to lower volumes ($11.6 million), primarily due to a lower level of demand for pistol, shotshell and rifle ammunition. The decrease was partially offset by lower commodity and other material costs ($2.3 million) and decreased operating costs ($0.8 million), which include the impact of decreased costs associated with our new centerfire operation in Oxford, MS ($3.8 million).

For the three months ended March 31, 2015, pension income included in corporate/other was $7.1 million compared to $7.9 million for the three months ended March 31, 2014. On a total company basis, defined benefit pension income for the three months ended March 31, 2015 was $5.8 million compared to $6.4 million for the three months ended March 31, 2014. The decrease in pension income was primarily due to the impact of the newly mandated mortality tables issued in the fourth quarter of 2014.

For the three months ended March 31, 2015, other corporate and unallocated costs were $22.1 million compared to $17.3 million for the three months ended March 31, 2014, an increase of $4.8 million, or 28%. The increase was primarily due to increased stock-based compensation expense of $7.7 million, which includes mark-to-market adjustments. This increase was partially offset by decreased legal and legal-related settlement expenses of $1.8 million, decreased consulting fees of $0.6 million and a favorable foreign currency impact of $0.5 million.

In Chlor Alkali Products, the second quarter of 2015 segment income is expected to be similar to the first quarter of 2015 segment income of $23.1 million, as higher ECU netbacks and seasonal improvement in bleach volumes are anticipated to be offset by decreased contributions from hydrochloric acid of approximately $5 million and higher costs associated with planned plant maintenance outages. The Chlor Alkali Products operating rate in the second quarter of 2015 is expected to be in the 85% to 90% range.

Chemical Distribution second quarter 2015 segment income is expected to improve compared to segment income in the first quarter of 2015 of $1.0 million and second quarter of 2014. We expect sales volumes in the second quarter of 2015 to increase compared to the first quarter of 2015 due to the seasonal increase in bleach and we expect to see continued earnings contributions from Olin-produced hydrochloric acid and potassium hydroxide.

Winchester second quarter 2015 segment income is expected to be similar to the $33.1 million of segment income achieved during the second quarter of 2014 as lower operating costs associated with our new centerfire operation in Oxford, MS are anticipated to be offset by a less favorable product mix of pistol, shotshell and rifle ammunition. Although the consumer demand for pistol, shotshell and rifle ammunition has declined compared to the historically high demand levels, it remains strong. The Winchester commercial backlog on March 31, 2015 was $281.5 million compared to $137.0 million at March 31, 2012. Winchester full year 2015 segment income is expected to be higher than the full year 2014 segment income of $127.3 million, primarily due to lower operating costs associated with our new centerfire operation in Oxford, MS. Commercial ammunition shipments for the second half of 2015 are expected to experience a year-over-year improvement compared to 2014.

In October 2011, Winchester opened the new centerfire production facility in Oxford, MS. During the first quarter of 2015, all pistol and rifle ammunition was produced in Oxford. This relocation, which is projected to be completed in 2016, is forecast to reduce Winchester's annual operating costs by approximately $40 million. We expect the centerfire relocation project to generate operating costs savings of approximately $35 million in 2015 compared to $24.1 million realized in 2014.

First quarter 2015 included $10.4 million of acquisition costs associated with Olin’s pending acquisition of a significant portion of the TDCC’s chlor alkali and downstream derivatives businesses. We anticipate second quarter 2015 to include approximately $8 million of acquisition-related costs and approximately $10 million of acquisition financing expenses. During 2015, we expect to incur one-time costs in connection with the Merger and related transactions, including approximately $40 million to $45 million of advisory, legal, accounting and other professional fees, approximately $50 million of costs associated with the change in control mandatory acceleration of expenses under the non-qualified pension plan expected to result from the consummation of the transaction and $25 million to $30 million related to financing fees.

During the second quarter of 2015, we are anticipating environmental expenses in the $2 million to $4 million range compared to $3.5 million in the second quarter of 2014. We anticipate that full year 2015 charges for environmental investigatory and remedial activities will be in the $15 million to $20 million range. We do not believe that there will be recoveries of environmental costs incurred and expensed in prior periods in 2015.

We expect defined benefit pension plan income in 2015 to be lower than the 2014 level by approximately $2 million due to the impact of the newly mandated mortality tables issued in the fourth quarter of 2014. Based on our plan assumptions and estimates, we will not be required to make any cash contributions to our domestic qualified defined benefit pension plan in 2015, and under the pension funding relief laws passed in 2012 and 2014, we may not be required to make any additional contributions for at least five years. We do have a small Canadian qualified defined benefit pension plan to which we anticipate cash contributions of approximately $1 million in 2015.

Environmental investigatory and remediation activities spending was associated with former waste disposal sites and past manufacturing operations. Spending in 2015 for investigatory and remedial efforts, the timing of which is subject to regulatory approvals and other uncertainties, is estimated to be approximately $20 million. Cash outlays for remedial and investigatory activities associated with former waste disposal sites and past manufacturing operations were not charged to income, but instead, were charged to reserves established for such costs identified and expensed to income in prior periods. Associated costs of investigatory and remedial activities are provided for in accordance with generally accepted accounting principles governing probability and the ability to reasonably estimate future costs. Our ability to estimate future costs depends on whether our investigatory and remedial activities are in preliminary or advanced stages. With respect to unasserted claims, we accrue liabilities for costs that, in our experience, we may incur to protect our interest against those unasserted claims. Our accrued liabilities for unasserted claims amounted to $1.9 million at March 31, 2015. With respect to asserted claims, we accrue liabilities based on remedial investigation, feasibility study, remedial action and Operation, Maintenance and Monitoring (OM&M) expenses that, in our experience, we may incur in connection with the asserted claims. Required site OM&M expenses are estimated and accrued in their entirety for required periods not exceeding 30 years, which reasonably approximates the typical duration of long-term site OM&M. Charges to income for investigatory and remedial efforts were material to operating results in 2014 and are expected to be material to operating results in 2015.

Our condensed balance sheets included liabilities for future environmental expenditures to investigate and remediate known sites amounting to $136.0 million at March 31, 2015, $138.3 million at December 31, 2014 and $144.9 million at March 31, 2014, of which $117.0 million, $119.3 million and $126.9 million, respectively, were classified as other noncurrent liabilities. These amounts do not take into account any discounting of future expenditures or any consideration of insurance recoveries or advances in technology. These liabilities are reassessed periodically to determine if environmental circumstances have changed and/or remediation efforts and our estimate of related costs have changed. As a result of these reassessments, future charges to income may be made for additional liabilities.

Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, changes in regulatory authorities, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other PRPs, our ability to obtain contributions from other parties and the lengthy time periods over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably to us, which could materially adversely affect our financial position or results of operations.

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



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, 2015			December 31, 2014			March 31, 2014
	($ in millions)
Supplies	$	40.2		$	39.2		$	42.5
Raw materials	63.6			63.3			74.0
Work in process	37.2			31.8			34.3
Finished goods	141.1			141.5			116.2
	282.1			275.8			267.0
LIFO reserve	(66.0		)	(65.7		)	(79.4		)
Inventories, net	$	216.1		$	210.1		$	187.6



Grant date	2015			2014
Dividend yield	2.92		%	3.13		%
Risk-free interest rate	1.69		%	2.13		%
Expected volatility	34		%	42		%
Expected life (years)	6.0			7.0
Weighted average grant fair value (per option)	$	6.80		$	8.34
Weighted average exercise price	$	27.40		$	25.69
Shares granted	776,750			624,200



	Tax Years
U.S. federal income tax	2008; 2010 – 2014
U.S. state income tax	2006 – 2014
Canadian federal income tax	2010 – 2014
Canadian provincial income tax	2008 – 2014



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



	March 31,
	2015			2014
	($ in millions)
Balance at beginning of year	$	3.0		$	3.4
Provisions charged	0.2			0.3
Write-offs, net of recoveries	(0.1		)	—
Balance at end of period	$	3.1		$	3.7


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



	Fair Value Measurements								Amount recorded on balance sheets
	Level 1		Level 2		Level 3		Total		Amount recorded on balance sheets
	($ in millions)
Balance at March 31, 2015	$	—	$	538.7	$	153.0	$	691.7	$	673.3
Balance at December 31, 2014	—		531.9		153.0		684.9		675.1
Balance at March 31, 2014	—		558.5		153.0		711.5		690.1


(1)	Earnings of non-consolidated affiliates are included in the Chlor Alkali Products segment results consistent with management’s monitoring of the operating segments. The earnings of non-consolidated affiliates were $0.4 million for both the three months ended March 31, 2015 and 2014.


(4)	Acquisition costs for the three months ended March 31, 2015 and 2014 were associated with Olin’s pending acquisition of a significant portion of TDCC's chlor alkali and downstream derivatives businesses.


(5)	Interest expense for the three months ended March 31, 2015 included amortization of deferred debt issuance costs of $0.4 million for the Bridge Financing associated with Olin’s pending acquisition of a significant portion of TDCC's chlor alkali and downstream derivatives businesses.