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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2023
OR
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 1-1070
Olin Corporation
(Exact name of registrant as specified in its charter)
| | | | | |
Virginia | 13-1872319 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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190 Carondelet Plaza, | Suite 1530, | Clayton, | MO | 63105 |
(Address of principal executive offices) | (Zip Code) |
(314) 480-1400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of each class: | | Trading symbol: | | Name of each exchange on which registered: |
Common Stock, $1.00 par value per share | | OLN | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of June 30, 2023, 125,826,232 shares of the registrant’s common stock were outstanding.
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TABLE OF CONTENTS FOR FORM 10-Q | Page |
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Item 1. | | |
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Item 2. | | |
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Item 3. | | |
Item 4. | | |
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Item 1. | | |
Item 1A. | | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
Item 5. | | |
Item 6. | | |
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Part I — Financial Information
Item 1. Financial Statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Balance Sheets
(In millions, except per share data)
(Unaudited) | | | | | | | | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 | | June 30, 2022 |
Assets | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | $ | 161.1 | | | $ | 194.0 | | | $ | 304.6 | |
Receivables, net | 869.8 | | | 924.6 | | | 1,299.2 | |
Income taxes receivable | 32.8 | | | 43.2 | | | 8.0 | |
Inventories, net | 1,081.2 | | | 941.9 | | | 945.7 | |
Other current assets | 53.3 | | | 52.7 | | | 109.0 | |
Total current assets | 2,198.2 | | | 2,156.4 | | | 2,666.5 | |
Property, plant and equipment (less accumulated depreciation of $4,636.9, $4,413.1 and $4,217.9) | 2,550.6 | | | 2,674.1 | | | 2,755.0 | |
Operating lease assets, net | 335.7 | | | 356.0 | | | 360.1 | |
Deferred income taxes | 82.6 | | | 60.5 | | | 86.5 | |
Other assets | 1,108.6 | | | 1,102.5 | | | 1,090.0 | |
Intangible assets, net | 255.9 | | | 273.8 | | | 296.2 | |
Goodwill | 1,420.9 | | | 1,420.9 | | | 1,420.9 | |
Total assets | $ | 7,952.5 | | | $ | 8,044.2 | | | $ | 8,675.2 | |
Liabilities and Shareholders’ Equity | | | | | |
Current liabilities: | | | | | |
Current installments of long-term debt | $ | 9.0 | | | $ | 9.7 | | | $ | 201.1 | |
Accounts payable | 750.0 | | | 837.7 | | | 983.7 | |
Income taxes payable | 139.6 | | | 133.4 | | | 112.9 | |
Current operating lease liabilities | 70.2 | | | 71.8 | | | 75.1 | |
Accrued liabilities | 426.9 | | | 508.8 | | | 483.8 | |
Total current liabilities | 1,395.7 | | | 1,561.4 | | | 1,856.6 | |
Long-term debt | 2,717.3 | | | 2,571.0 | | | 2,579.6 | |
Operating lease liabilities | 273.6 | | | 292.5 | | | 292.1 | |
Accrued pension liability | 225.4 | | | 234.5 | | | 322.6 | |
Deferred income taxes | 505.9 | | | 507.3 | | | 582.1 | |
Other liabilities | 363.0 | | | 333.9 | | | 346.1 | |
Total liabilities | 5,480.9 | | | 5,500.6 | | | 5,979.1 | |
Commitments and contingencies | | | | | |
Shareholders’ equity: | | | | | |
Common stock, $1.00 par value per share: authorized, 240.0 shares; issued and outstanding, 125.8, 132.3 and 145.1 shares | 125.8 | | | 132.3 | | | 145.1 | |
Additional paid-in capital | 313.7 | | | 682.7 | | | 1,318.5 | |
Accumulated other comprehensive loss | (483.4) | | | (495.9) | | | (535.5) | |
Retained earnings | 2,475.9 | | | 2,224.5 | | | 1,768.0 | |
Olin Corporation’s shareholders’ equity | 2,432.0 | | | 2,543.6 | | | 2,696.1 | |
Noncontrolling interests | 39.6 | | | — | | | — | |
Total equity | 2,471.6 | | | 2,543.6 | | | 2,696.1 | |
Total liabilities and equity | $ | 7,952.5 | | | $ | 8,044.2 | | | $ | 8,675.2 | |
The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Operations
(In millions, except per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Sales | $ | 1,702.7 | | | $ | 2,616.1 | | | $ | 3,547.0 | | | $ | 5,077.5 | |
Operating expenses: | | | | | | | |
Cost of goods sold | 1,392.6 | | | 1,951.4 | | | 2,834.3 | | | 3,758.9 | |
Selling and administration | 101.2 | | | 99.0 | | | 213.0 | | | 203.3 | |
Restructuring charges | 19.2 | | | 3.6 | | | 80.1 | | | 6.7 | |
Other operating income | 27.0 | | | 3.3 | | | 27.5 | | | 3.3 | |
Operating income | 216.7 | | | 565.4 | | | 447.1 | | | 1,111.9 | |
Interest expense | 45.3 | | | 34.5 | | | 87.7 | | | 67.4 | |
Interest income | 1.1 | | | 0.3 | | | 2.2 | | | 0.7 | |
Non-operating pension income | 5.4 | | | 9.5 | | | 11.1 | | | 19.1 | |
Income before taxes | 177.9 | | | 540.7 | | | 372.7 | | | 1,064.3 | |
Income tax provision | 33.2 | | | 118.6 | | | 74.0 | | | 249.2 | |
Net income | $ | 144.7 | | | $ | 422.1 | | | $ | 298.7 | | | $ | 815.1 | |
Net loss attributable to noncontrolling interests | (2.2) | | | — | | | (4.5) | | | — | |
Net income attributable to Olin Corporation | $ | 146.9 | | | $ | 422.1 | | | $ | 303.2 | | | $ | 815.1 | |
Net income attributable to Olin Corporation per common share: | | | | | | | |
Basic | $ | 1.15 | | | $ | 2.83 | | | $ | 2.35 | | | $ | 5.37 | |
Diluted | $ | 1.13 | | | $ | 2.76 | | | $ | 2.29 | | | $ | 5.24 | |
Average common shares outstanding: | | | | | | | |
Basic | 127.4 | | | 149.2 | | | 129.2 | | | 151.9 | |
Diluted | 130.4 | | | 152.8 | | | 132.4 | | | 155.6 | |
The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Comprehensive Income (Loss)
(In millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Net income | $ | 144.7 | | | $ | 422.1 | | | $ | 298.7 | | | $ | 815.1 | |
Other comprehensive (loss) income, net of tax: | | | | | | | |
Foreign currency translation adjustments | (8.5) | | | (26.0) | | | (3.0) | | | (36.5) | |
Unrealized losses (gains) on derivative contracts, net | 7.4 | | | (55.0) | | | 14.8 | | | (24.3) | |
Amortization of prior service costs and actuarial losses, net | 0.4 | | | 6.7 | | | 0.7 | | | 13.3 | |
Total other comprehensive (loss) income, net of tax | (0.7) | | | (74.3) | | | 12.5 | | | (47.5) | |
Comprehensive income | 144.0 | | | 347.8 | | 311.2 | | | 767.6 | |
Comprehensive loss attributable to noncontrolling interests | (2.2) | | | — | | | (4.5) | | | — | |
Comprehensive income attributable to Olin Corporation | $ | 146.2 | | | $ | 347.8 | | | $ | 315.7 | | | $ | 767.6 | |
The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Shareholders’ Equity
(In millions, except per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Common Stock | | | | | | | |
Balance at beginning of period | $ | 129.3 | | | $ | 151.8 | | | $ | 132.3 | | | $ | 156.8 | |
Common stock repurchased and retired | (3.5) | | | (7.4) | | | (7.1) | | | (12.6) | |
Common stock issued for: | | | | | | | |
Stock options exercised | — | | | 0.7 | | | 0.4 | | | 0.9 | |
Other transactions | — | | | — | | | 0.2 | | | — | |
Balance at end of period | $ | 125.8 | | | $ | 145.1 | | | $ | 125.8 | | | $ | 145.1 | |
Additional Paid-In Capital | | | | | | | |
Balance at beginning of period | $ | 491.6 | | | $ | 1,719.3 | | | $ | 682.7 | | | $ | 1,969.6 | |
Common stock repurchased and retired | (183.4) | | | (419.1) | | | (385.9) | | | (677.1) | |
Common stock issued for: | | | | | | | |
Stock options exercised | 0.7 | | | 15.0 | | | 11.5 | | | 20.0 | |
Other transactions | 0.1 | | | 0.8 | | | 1.5 | | | 3.0 | |
Stock-based compensation | 4.7 | | | 2.5 | | | 3.9 | | | 3.0 | |
Balance at end of period | $ | 313.7 | | | $ | 1,318.5 | | | $ | 313.7 | | | $ | 1,318.5 | |
Accumulated Other Comprehensive Loss | | | | | | | |
Balance at beginning of period | $ | (482.7) | | | $ | (461.2) | | | $ | (495.9) | | | $ | (488.0) | |
Other comprehensive (loss) income | (0.7) | | | (74.3) | | | 12.5 | | | (47.5) | |
Balance at end of period | $ | (483.4) | | | $ | (535.5) | | | $ | (483.4) | | | $ | (535.5) | |
Retained Earnings | | | | | | | |
Balance at beginning of period | $ | 2,354.6 | | | $ | 1,376.0 | | | $ | 2,224.5 | | | $ | 1,013.8 | |
Net income | 146.9 | | | 422.1 | | | 303.2 | | | 815.1 | |
Common stock dividends paid | (25.6) | | | (30.1) | | | (51.8) | | | (60.9) | |
Balance at end of period | $ | 2,475.9 | | | $ | 1,768.0 | | | $ | 2,475.9 | | | $ | 1,768.0 | |
Olin Corporation’s Shareholders’ Equity | $ | 2,432.0 | | | $ | 2,696.1 | | | $ | 2,432.0 | | | $ | 2,696.1 | |
Noncontrolling Interests | | | | | | | |
Balance at beginning of period | $ | 41.8 | | | $ | — | | | $ | — | | | $ | — | |
Net loss | (2.2) | | | — | | | (4.5) | | | — | |
Contributions from noncontrolling interests | — | | | — | | | 44.1 | | | — | |
Balance at end of period | $ | 39.6 | | | $ | — | | | $ | 39.6 | | | $ | — | |
Total Equity | $ | 2,471.6 | | | $ | 2,696.1 | | | $ | 2,471.6 | | | $ | 2,696.1 | |
| | | | | | | |
Dividends declared per share of common stock | $ | 0.20 | | | $ | 0.20 | | | $ | 0.40 | | | $ | 0.40 | |
The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Cash Flows
(In millions)
(Unaudited)
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2023 | | 2022 |
Operating Activities | | | |
Net income | $ | 298.7 | | | $ | 815.1 | |
Adjustments to reconcile net income to net cash and cash equivalents provided by (used for) operating activities: | | | |
Gains on disposition of property, plant and equipment | (27.0) | | | — | |
Stock-based compensation | 8.4 | | | 6.3 | |
Depreciation and amortization | 273.9 | | | 300.5 | |
Deferred income taxes | (27.7) | | | 31.9 | |
Write-off of equipment and facility included in restructuring charges | 17.7 | | | — | |
Qualified pension plan contributions | (1.5) | | | (0.8) | |
Qualified pension plan income | (9.9) | | | (16.3) | |
Change in: | | | |
Receivables | 52.8 | | | (228.5) | |
Income taxes receivable/payable | 14.3 | | | 12.8 | |
Inventories | (137.9) | | | (90.4) | |
Other current assets | (1.8) | | | (16.1) | |
Accounts payable and accrued liabilities | (141.1) | | | 138.6 | |
Other assets | (13.4) | | | 2.5 | |
Other noncurrent liabilities | 43.1 | | | 0.7 | |
Other operating activities | (5.6) | | | 2.9 | |
Net operating activities | 343.0 | | | 959.2 | |
Investing Activities | | | |
Capital expenditures | (128.8) | | | (103.9) | |
Payments under other long-term supply contracts | (29.6) | | | — | |
Proceeds from disposition of property, plant and equipment | 28.8 | | | — | |
Other investing activities | (1.0) | | | — | |
Net investing activities | (130.6) | | | (103.9) | |
Financing Activities | | | |
Long-term debt: | | | |
Borrowings | 415.0 | | | 115.0 | |
Repayments | (271.3) | | | (115.5) | |
Common stock repurchased and retired | (393.0) | | | (689.7) | |
Stock options exercised | 11.9 | | | 20.9 | |
Dividends paid | (51.8) | | | (60.9) | |
Contributions received from noncontrolling interests | 44.1 | | | — | |
Net financing activities | (245.1) | | | (730.2) | |
Effect of exchange rate changes on cash and cash equivalents | (0.2) | | | (1.0) | |
Net (decrease) increase in cash and cash equivalents | (32.9) | | | 124.1 | |
Cash and cash equivalents, beginning of year | 194.0 | | | 180.5 | |
Cash and cash equivalents, end of period | $ | 161.1 | | | $ | 304.6 | |
Cash paid for interest and income taxes: | | | |
Interest, net | $ | 84.6 | | | $ | 63.5 | |
Income taxes, net of refunds | $ | 70.9 | | | $ | 185.6 | |
Non-cash investing activities: | | | |
Decrease in capital expenditures included in accounts payable and accrued liabilities | $ | 18.3 | | | $ | 15.3 | |
The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Financial Statements
(Unaudited)
NOTE 1. DESCRIPTION OF BUSINESS
Olin Corporation (Olin) is a Virginia corporation, incorporated in 1892, having its principal executive offices in Clayton, MO. We are a leading vertically-integrated global manufacturer and distributor of chemical products and a leading U.S. manufacturer of ammunition. Our operations are concentrated in three business segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. All of our business segments are capital intensive manufacturing businesses. The Chlor Alkali Products and Vinyls segment manufactures and sells chlorine and caustic soda, ethylene dichloride and vinyl chloride monomer, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, hydrochloric acid, hydrogen, bleach products and potassium hydroxide. The Epoxy segment produces and sells a full range of epoxy materials and precursors, including aromatics (acetone and phenol), allyl chloride, epichlorohydrin, liquid epoxy resins, solid epoxy resins and systems and growth products such as converted epoxy resins and additives. The Winchester segment produces and sells sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.
On January 10, 2023, Blue Water Alliance (BWA), our joint venture with Mitsui & Co., Ltd. (Mitsui), began operations after receiving all necessary regulatory approvals. BWA is an independent global trader of ECU-based derivatives, focused on globally traded caustic soda and ethylene dichloride. Olin holds 51% interest and exercises control in BWA and the joint venture is consolidated in our consolidated financial statements with Mitsui’s 49% interest in BWA classified as noncontrolling interest. All intercompany accounts and transactions are eliminated in consolidation.
We have prepared the condensed financial statements included herein, without audit, pursuant to the rules and regulations of the United States (U.S.) Securities and Exchange Commission (SEC). The preparation of the 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, 2022.
NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS
We do not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying condensed financial statements.
NOTE 3. RESTRUCTURING CHARGES
As a result of weak global resin demand and higher cost structures within the European region, we began a review of our global Epoxy asset footprint to optimize the most productive and cost effective assets to support our strategic operating model. As part of this review we announced operational cessations in the fourth quarter of 2022 and the first and second quarters of 2023 (collectively, Epoxy Optimization Plan). The foregoing actions will complete the rightsizing plan of our Epoxy business.
On June 20, 2023, we announced we had made the decision to cease all remaining operations at our Gumi, South Korea facility, reduce epoxy resin capacity at our Freeport, TX facility, and reduce our sales and support staffing across Asia. These actions are expected to be substantially completed by December 31, 2023. On March 21, 2023, we announced we had made the decision to cease operations at our cumene facility in Terneuzen, Netherlands and solid epoxy resin production at our facilities in Gumi, South Korea and Guaruja, Brazil. The closures were completed in the first quarter 2023. During the fourth quarter of 2022, we committed to and completed a plan to close down one of our bisphenol production lines at our Stade, Germany site. For the three and six months ended June 30, 2023, we recorded pretax restructuring charges of $13.3 million and $71.1 million, respectively, for the write-off of equipment and facility costs, employee severance and related benefit costs, contract
termination costs and facility exit costs related to these actions. We expect to incur additional restructuring charges through 2026 of approximately $50 million related to these actions.
During 2021, we announced that we had made the decision to permanently close our diaphragm-grade chlor alkali capacity, representing 400,000 tons, at our McIntosh, AL facility (McIntosh Plan). The closure was completed during third quarter of 2022. For the three months ended June 30, 2023 and 2022, we recorded pretax restructuring charges of $2.5 million and $0.7 million, respectively, for lease and other contract termination costs and for facility exit costs related to this action. For the six months ended June 30, 2023 and 2022, we recorded pretax restructuring charges of $3.9 million and $1.6 million, respectively, for lease and other contract termination costs and for facility exit costs related to this action. We expect to incur additional restructuring charges through 2027 of approximately $30 million related to these actions.
On January 18, 2021, we announced we had made the decision to permanently close our trichloroethylene and anhydrous hydrogen chloride liquefaction facilities in Freeport, TX (collectively, Freeport 2021 Plan), which were completed in the fourth quarter of 2021. For the three months ended June 30, 2023 and 2022, we recorded pretax restructuring charges of $1.4 million and $1.2 million, respectively, for facility exit costs related to these actions. For the six months ended June 30, 2023 and 2022, we recorded pretax restructuring charges of $2.1 million and $1.5 million, respectively, for facility exit costs related to these actions. We expect to incur additional restructuring charges through 2025 of approximately $15 million related to these actions.
On December 11, 2019, we announced that we had made the decision to permanently close a chlor alkali plant with a capacity of 230,000 tons and our vinylidene chloride (VDC) production facility, both in Freeport, TX (collectively, Freeport 2019 Plan). The VDC facility and related chlor alkali plant were closed during the fourth quarter of 2020 and second quarter of 2021, respectively. For the three months ended June 30, 2023 and 2022, we recorded pretax restructuring charges of $2.0 million and $1.5 million, respectively, for facility exit costs related to these actions. For the six months ended June 30, 2023 and 2022, we recorded pretax restructuring charges of $3.0 million and $3.2 million, respectively, for facility exit costs related to these actions. We expect to incur additional restructuring charges through 2026 of approximately $30 million related to these actions.
On March 21, 2016, we announced that we had made the decision to close a combined total of 433,000 tons of chlor alkali capacity across three separate locations (collectively, Chlor Alkali 2016 Plan). For the three and six months ended June 30, 2022, we recorded pretax restructuring charges of $0.2 million and $0.4 million, respectively, for facility exit costs and lease and other contract termination costs related to these actions. We do not expect to incur additional restructuring charges related to these capacity reductions.
The following table summarizes the 2023 and 2022 activities by major component of these restructuring actions and the remaining balances of accrued restructuring costs as of June 30, 2023 and 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Employee severance and related benefit costs | | Lease and other contract termination costs | | Facility exit costs | | Write-off of equipment and facility | | Total |
| ($ in millions) |
Balance at January 1, 2022 | $ | 6.9 | | | $ | 5.4 | | | $ | — | | | $ | — | | | $ | 12.3 | |
Restructuring charges: | | | | | | | | | |
First quarter | — | | | 0.1 | | | 2.6 | | | 0.4 | | | 3.1 | |
Second quarter | — | | | 0.2 | | | 3.1 | | | 0.3 | | | 3.6 | |
| | | | | | | | | |
Amounts utilized | (3.7) | | | (1.0) | | | (5.7) | | | (0.7) | | | (11.1) | |
Balance at June 30, 2022 | $ | 3.2 | | | $ | 4.7 | | | $ | — | | | $ | — | | | $ | 7.9 | |
Balance at January 1, 2023 | $ | 9.4 | | | $ | 4.2 | | | $ | — | | | $ | — | | | $ | 13.6 | |
Restructuring charges: | | | | | | | | | |
First quarter | — | | | 39.7 | | | 8.4 | | | 12.8 | | | 60.9 | |
Second quarter | 3.3 | | | 1.7 | | | 9.3 | | | 4.9 | | | 19.2 | |
| | | | | | | | | |
Amounts utilized | (1.4) | | | (7.2) | | | (17.7) | | | (17.7) | | | (44.0) | |
Balance at June 30, 2023 | $ | 11.3 | | | $ | 38.4 | | | $ | — | | | $ | — | | | $ | 49.7 | |
The following table summarizes the cumulative restructuring charges of these restructuring actions by major component through June 30, 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Chlor Alkali Products and Vinyls | | Epoxy | | Corporate/other | | Total |
| | McIntosh Plan | | Freeport 2021 Plan | | Freeport 2019 Plan | | Chlor Alkali 2016 Plan | | Epoxy Optimization Plan | | Productivity Plan | |
| | ($ in millions) |
Write-off of equipment and facility | | $ | 2.7 | | | $ | — | | | $ | 58.9 | | | $ | 78.1 | | | $ | 18.3 | | | $ | — | | | $ | 158.0 | |
Employee severance and related benefit costs | | — | | | — | | | 2.1 | | | 6.7 | | | 10.7 | | | 10.3 | | | 29.8 | |
Facility exit costs | | 8.7 | | | 11.2 | | | 14.6 | | | 53.2 | | | 8.7 | | | — | | | 96.4 | |
Employee relocation costs | | — | | | — | | | — | | | 1.7 | | | — | | | — | | | 1.7 | |
Lease and other contract termination costs | | 6.4 | | | — | | | — | | | 43.0 | | | 41.4 | | | — | | | 90.8 | |
Total cumulative restructuring charges | | $ | 17.8 | | | $ | 11.2 | | | $ | 75.6 | | | $ | 182.7 | | | $ | 79.1 | | | $ | 10.3 | | | $ | 376.7 | |
As of June 30, 2023, we have incurred cash expenditures of $169.0 million and non-cash charges of $158.0 million related to these restructuring actions. The remaining balance of $49.7 million is expected to be paid out through 2028.
NOTE 4. EARNINGS PER SHARE
Basic and diluted net income attributable to Olin Corporation per share are computed by dividing net income attributable to Olin Corporation by the weighted-average number of common shares outstanding. Diluted net income attributable to Olin Corporation per share reflects the dilutive effect of stock-based compensation.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Computation of Net Income per Share | (In millions, except per share data) |
Net income | $ | 144.7 | | | $ | 422.1 | | | $ | 298.7 | | | $ | 815.1 | |
Net loss attributable to noncontrolling interests | (2.2) | | | — | | | (4.5) | | | — | |
Net income attributable to Olin Corporation | $ | 146.9 | | | $ | 422.1 | | | $ | 303.2 | | | $ | 815.1 | |
Basic shares | 127.4 | | | 149.2 | | | 129.2 | | | 151.9 | |
Basic net income attributable to Olin Corporation per share | $ | 1.15 | | | $ | 2.83 | | | $ | 2.35 | | | $ | 5.37 | |
Diluted shares: | | | | | | | |
Basic shares | 127.4 | | | 149.2 | | | 129.2 | | | 151.9 | |
Stock-based compensation | 3.0 | | | 3.6 | | | 3.2 | | | 3.7 | |
Diluted shares | 130.4 | | | 152.8 | | | 132.4 | | | 155.6 | |
Diluted net income attributable to Olin Corporation per share | $ | 1.13 | | | $ | 2.76 | | | $ | 2.29 | | | $ | 5.24 | |
The computation of dilutive shares does not include 1.3 million shares for both the three and six months ended June 30, 2023 and 0.8 million shares for both the three and six months ended June 30, 2022, as their effect would have been anti-dilutive.
NOTE 5. ACCOUNTS RECEIVABLES
We maintain a $425.0 million Receivables Financing Agreement (Receivables Financing Agreement) that is scheduled to mature on October 14, 2025. Under the Receivables Financing Agreement, our eligible trade receivables are used for collateralized borrowings and continue to be serviced by us. In addition, the Receivables Financing Agreement incorporates the net leverage ratio covenant that is contained in the $1,550.0 million senior credit facility. As of June 30, 2023, December 31, 2022 and June 30, 2022, we had $234.8 million, $300.0 million and $300.0 million, respectively, drawn under the agreement.
As of June 30, 2023, $478.6 million of our trade receivables were pledged as collateral and we had $120.0 million of additional borrowing capacity under the Receivables Financing Agreement, which was limited by our borrowing base.
Olin also has trade accounts receivable factoring arrangements (AR Facilities) and pursuant to the terms of the AR Facilities, certain of our domestic subsidiaries may sell their accounts receivable up to a maximum of $207.7 million and certain of our foreign subsidiaries may sell their accounts receivable up to a maximum of €42.9 million. We will continue to service the outstanding accounts sold. These receivables qualify for sales treatment under ASC 860 “Transfers and Servicing” and, accordingly, the proceeds are included in net cash provided by operating activities in the condensed statements of cash flows. The following table summarizes the AR Facilities activity:
| | | | | | | | | | | |
| June 30, |
| 2023 | | 2022 |
| ($ in millions) |
Balance at beginning of year | $ | 111.8 | | | $ | 83.3 | |
Gross receivables sold | 532.6 | | | 477.2 | |
Payments received from customers on sold accounts | (567.2) | | | (450.6) | |
Balance at end of period | $ | 77.2 | | | $ | 109.9 | |
The factoring discount paid under the AR Facilities is recorded as interest expense on the condensed statements of operations. The factoring discount was $1.3 million and $0.4 million for the three months ended June 30, 2023 and 2022, respectively, and $2.5 million and $0.9 million for the six months ended June 30, 2023 and 2022, respectively. The agreements are without recourse and therefore no recourse liability had been recorded as of June 30, 2023, December 31, 2022 or June 30, 2022.
Our condensed balance sheets included an allowance for doubtful accounts receivables of $13.0 million, $12.6 million and $15.0 million and other receivables of $81.7 million, $71.6 million and $50.3 million at June 30, 2023, December 31, 2022 and June 30, 2022, respectively, which were included in receivables, net.
NOTE 6. INVENTORIES
Inventories consisted of the following: | | | | | | | | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 | | June 30, 2022 |
| ($ in millions) |
Supplies | $ | 145.1 | | | $ | 137.6 | | | $ | 136.8 | |
Raw materials | 181.6 | | | 201.2 | | | 202.0 | |
Work in process | 202.5 | | | 199.6 | | | 192.7 | |
Finished goods | 725.8 | | | 559.3 | | | 580.2 | |
Inventories excluding LIFO reserve | 1,255.0 | | | 1,097.7 | | | 1,111.7 | |
LIFO reserve | (173.8) | | | (155.8) | | | (166.0) | |
Inventories, net | $ | 1,081.2 | | | $ | 941.9 | | | $ | 945.7 | |
Inventories under the LIFO method are based on annual estimates of quantities and costs as of year-end; therefore, the condensed financial statements at June 30, 2023 reflect certain estimates relating to inventory quantities and costs at December 31, 2023. The replacement cost of our inventories would have been approximately $173.8 million, $155.8 million and $166.0 million higher than reported at June 30, 2023, December 31, 2022 and June 30, 2022, respectively.
NOTE 7. OTHER ASSETS
Included in other assets were the following:
| | | | | | | | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 | | June 30, 2022 |
| ($ in millions) |
Supply contracts | $ | 1,052.9 | | | $ | 1,048.0 | | | $ | 1,026.9 | |
Other | 55.7 | | | 54.5 | | | 63.1 | |
Other assets | $ | 1,108.6 | | | $ | 1,102.5 | | | $ | 1,090.0 | |
Amortization expense of $17.8 million and $17.6 million for the three months ended June 30, 2023 and 2022, respectively, and amortization expense of $35.6 million and $35.2 million for the six months ended June 30, 2023 and 2022, respectively, was recognized within cost of goods sold related to our long-term supply contracts and is reflected in depreciation and amortization on the condensed statements of cash flows.
NOTE 8. GOODWILL AND INTANGIBLE ASSETS
Changes in the carrying value of goodwill were as follows:
| | | | | | | | | | | | | | | | | |
| Chlor Alkali Products and Vinyls | | Epoxy | | Total |
| ($ in millions) |
Balance at January 1, 2022 | $ | 1,275.6 | | | $ | 145.0 | | | $ | 1,420.6 | |
Foreign currency translation adjustment | 0.3 | | | — | | | 0.3 | |
Balance at June 30, 2022 | $ | 1,275.9 | | | $ | 145.0 | | | $ | 1,420.9 | |
Balance at January 1, 2023 | $ | 1,275.8 | | | $ | 145.1 | | | $ | 1,420.9 | |
Foreign currency translation adjustment | — | | | — | | | — | |
Balance at June 30, 2023 | $ | 1,275.8 | | | $ | 145.1 | | | $ | 1,420.9 | |
Intangible assets consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 | | June 30, 2022 |
| Gross Amount | | Accumulated Amortization | | Net | | Gross Amount | | Accumulated Amortization | | Net | | Gross Amount | | Accumulated Amortization | | Net |
| ($ in millions) |
Customers, customer contracts and relationships | $ | 670.5 | | | $ | (419.5) | | | $ | 251.0 | | | $ | 669.1 | | | $ | (401.2) | | | $ | 267.9 | | | $ | 667.4 | | | $ | (382.2) | | | $ | 285.2 | |
Acquired technology | 93.2 | | | (89.4) | | | 3.8 | | | 93.1 | | | (88.3) | | | 4.8 | | | 92.7 | | | (82.8) | | | 9.9 | |
Other | 1.8 | | | (0.7) | | | 1.1 | | | 1.8 | | | (0.7) | | | 1.1 | | | 1.8 | | | (0.7) | | | 1.1 | |
Total intangible assets | $ | 765.5 | | | $ | (509.6) | | | $ | 255.9 | | | $ | 764.0 | | | $ | (490.2) | | | $ | 273.8 | | | $ | 761.9 | | | $ | (465.7) | | | $ | 296.2 | |
NOTE 9. DEBT
| | | | | | | | | | | | | | |
| | Long-term Debt Borrowings (Repayments) for the Six Months Ended |
| | June 30, 2023 | | June 30, 2022 |
Debt Instruments | | ($ in millions) |
Borrowings: | | | | |
Senior Revolving Credit Facility | | 215.0 | | | 70.0 | |
Receivables Financing Agreement | | 200.0 | | | 45.0 | |
Total borrowings | | $ | 415.0 | | | $ | 115.0 | |
Repayments: | | | | |
Senior Term Loan | | (4.4) | | | — | |
Senior Revolving Credit Facility | | — | | | (70.0) | |
Receivables Financing Agreement | | (265.2) | | | (45.0) | |
Finance leases | | (1.7) | | | (0.5) | |
Total repayments | | $ | (271.3) | | | $ | (115.5) | |
Long-term debt borrowings (repayments), net | | $ | 143.7 | | | $ | (0.5) | |
| | | | |
Senior Credit Facility
On October 11, 2022, we entered into a new $1,550.0 million senior credit facility (Senior Credit Facility) that replaced our previous senior credit facility (2021 Senior Credit Facility), which included outstanding term loans of $350.0 million and a senior revolving credit facility with aggregate commitments in an amount equal to $800.0 million. The Senior Credit Facility includes a senior term loan facility with aggregate commitments of $350.0 million (Term Loan Facility) and a senior revolving credit facility with aggregate commitments of $1,200.0 million (Senior Revolving Credit Facility). The Term Loan Facility was fully drawn on the closing date with the proceeds of the Term Loan Facility used to refinance the loans and commitments outstanding under the 2021 Senior Credit Facility. The Term Loan Facility requires principal amortization amounts payable beginning March 31, 2023 at a rate of 0.625% per quarter through the end of 2024, increasing to 1.250% per quarter thereafter until maturity. The maturity date for the Senior Credit Facility is October 11, 2027.
The Senior Revolving Credit Facility includes a $100.0 million letter of credit subfacility. At June 30, 2023, we had $984.6 million available under our $1,200.0 million Senior Revolving Credit Facility because we had $215.0 million borrowed under the facility and issued $0.4 million of letters of credit.
We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of June 30, 2023, and no event of default had occurred that would permit the lenders under our outstanding credit agreements to accelerate the debt if not cured. In the future, our ability to generate sufficient operating cash flows, among other factors, will determine the amounts available to be borrowed under these facilities. As a result of our restrictive covenant related to the net leverage ratio, the maximum additional borrowings available to us could be limited in the future. The limitation, if an amendment or waiver from our lenders is not obtained, could restrict our ability to borrow the maximum amounts available under the Senior Revolving Credit Facility and the Receivables Financing Agreement. As of June 30, 2023, there were no covenants or other restrictions that limited our ability to borrow.
NOTE 10. PENSION PLANS AND RETIREMENT BENEFITS
We sponsor domestic and foreign defined benefit pension plans for eligible employees and retirees. Most of our domestic employees participate in defined contribution plans. However, a portion of our bargaining hourly employees continue to participate in our domestic qualified defined benefit pension plans under a flat-benefit formula. Our funding policy for the qualified 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 local statutory practices.
Our domestic qualified 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).
We also provide certain postretirement healthcare (medical) and life insurance benefits for eligible active and retired domestic employees. The healthcare plans are contributory with participants’ contributions adjusted annually based on medical rates of inflation and plan experience.
| | | | | | | | | | | | | | | | | | | | | | | |
| Pension Benefits | | Other Postretirement Benefits |
| Three Months Ended June 30, | | Three Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Components of Net Periodic Benefit (Income) Cost | ($ in millions) |
Service cost | $ | 1.4 | | | $ | 2.2 | | | $ | 0.2 | | | $ | 0.3 | |
Interest cost | 26.4 | | | 15.5 | | | 0.4 | | | 0.3 | |
Expected return on plans’ assets | (32.7) | | | (34.3) | | | — | | | — | |
Amortization of prior service cost | (0.1) | | | (0.2) | | | 0.1 | | | 0.1 | |
Recognized actuarial loss | 0.3 | | | 8.6 | | | 0.2 | | | 0.5 | |
Net periodic benefit (income) cost | $ | (4.7) | | | $ | (8.2) | | | $ | 0.9 | | | $ | 1.2 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Pension Benefits | | Other Postretirement Benefits |
| Six Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Components of Net Periodic Benefit (Income) Cost | ($ in millions) |
Service cost | $ | 2.8 | | | $ | 4.5 | | | $ | 0.4 | | | $ | 0.6 | |
Interest cost | 52.7 | | | 30.9 | | | 0.9 | | | 0.6 | |
Expected return on plans’ assets | (65.6) | | | (68.5) | | | — | | | — | |
Amortization of prior service cost | (0.2) | | | (0.4) | | | 0.1 | | | 0.1 | |
Recognized actuarial loss | 0.6 | | | 17.2 | | | 0.4 | | | 1.0 | |
Net periodic benefit (income) cost | $ | (9.7) | | | $ | (16.3) | | | $ | 1.8 | | | $ | 2.3 | |
We made cash contributions to our international qualified defined benefit pension plans of $1.5 million and $0.8 million for the six months ended June 30, 2023 and 2022, respectively.
NOTE 11. INCOME TAXES
The effective tax rate for the three months ended June 30, 2023 included a benefit associated with stock-based compensation, a benefit associated with prior year tax positions, an expense from a net increase in the valuation allowance related to deferred tax assets in foreign jurisdictions, and an expense from a change in tax contingencies, resulting in a net $12.0 million tax benefit. After giving consideration to these items, the effective tax rate for the three months ended June 30, 2023 of 25.4% was higher than the 21% U.S. federal statutory rate primarily due to state income tax and an increase in the valuation allowance related to losses in foreign jurisdictions, partially offset by favorable permanent salt depletion deductions. The effective tax rate for the three months ended June 30, 2022 included a benefit associated with prior year tax positions and stock-based compensation, resulting in a net $8.5 million tax benefit. After giving consideration to these items, the effective tax rate for the three months ended June 30, 2022 of 23.5% was higher than the 21% U.S. federal statutory rate primarily due to state and foreign income taxes, partially offset by foreign income exclusions and favorable permanent salt depletion deductions.
The effective tax rate for the six months ended June 30, 2023 included a benefit associated with stock-based compensation, a benefit from remeasurement of deferred taxes due to a decrease in our state effective tax rates, a benefit associated with prior year tax positions, an expense from a net increase in the valuation allowance related to deferred tax assets in foreign jurisdictions, and an expense from a change in tax contingencies, resulting in a net $17.2 million tax benefit. After
giving consideration to these items, the effective tax rate for the six months ended June 30, 2023 of 24.5% was higher than the 21% U.S. federal statutory rate primarily due to state income tax and an increase in the valuation allowance related to losses in foreign jurisdictions, partially offset by favorable permanent salt depletion deductions. The effective tax rate for the six months ended June 30, 2022 included a benefit associated with prior year tax positions and stock-based compensation, resulting in a net $10.8 million tax benefit. After giving consideration to these items, the effective tax rate for the six months ended June 30, 2022 of 24.4% was higher than the 21% U.S. federal statutory rate primarily due to state and foreign income taxes, partially offset by foreign income exclusions and favorable permanent salt depletion deductions.
As of June 30, 2023, we had $58.7 million of gross unrecognized tax benefits, which would have a net $56.8 million impact on the effective tax rate, if recognized. As of June 30, 2022, we had $46.0 million of gross unrecognized tax benefits, of which $45.4 million would have impacted the effective tax rate, if recognized. The amounts of unrecognized tax benefits were as follows:
| | | | | | | | | | | |
| June 30, |
| 2023 | | 2022 |
| ($ in millions) |
Balance at beginning of year | $ | 51.6 | | | $ | 43.4 | |
Increases for prior year tax positions | 1.3 | | | 0.3 | |
Decreases for prior year tax positions | (0.3) | | | (0.7) | |
Increases for current year tax positions | 5.4 | | | 5.3 | |
Foreign currency translation adjustments | 0.7 | | | (2.3) | |
Balance at end of period | $ | 58.7 | | | $ | 46.0 | |
As of June 30, 2023, we believe it is reasonably possible that our total amount of unrecognized tax benefits will decrease by approximately $38.1 million over the next twelve months. The anticipated reduction primarily relates to settlements with taxing authorities and the expiration of federal, state and foreign statutes of limitation.
We operate globally and file income tax returns in numerous jurisdictions. Our tax returns are subject to examination by various federal, state and local tax authorities. Additionally, examinations are ongoing in various states and foreign jurisdictions. We believe we have adequately provided for all tax positions; however, amounts asserted by taxing authorities could be greater than our accrued position. For our primary tax jurisdictions, the tax years that remain subject to examination are as follows:
| | | | | |
| Tax Years |
U.S. federal income tax | 2018 - 2022 |
U.S. state income tax | 2012 - 2022 |
Canadian federal income tax | 2016 - 2022 |
Brazil | 2016 - 2022 |
Germany | 2015 - 2022 |
China | 2014 - 2022 |
The Netherlands | 2016 - 2022 |
NOTE 12. CONTRIBUTING EMPLOYEE OWNERSHIP PLAN
The Contributing Employee Ownership Plan (CEOP) is a defined contribution plan available to essentially all domestic employees. We provide a contribution to an individual retirement contribution account maintained with the CEOP equal to an amount of between 5.0% and 7.5% of the employee’s eligible compensation. The defined contribution plan expense for the three months ended June 30, 2023 and 2022 was $8.6 million and $8.8 million, respectively, and for the six months ended June 30, 2023 and 2022 was $20.3 million and $19.4 million, respectively.
Company matching contributions are invested in the same investment allocation as the employee’s contribution. Our matching contributions for eligible employees for the three months ended June 30, 2023 and 2022 was $3.7 million and $3.6 million, respectively, and for the six months ended June 30, 2023 and 2022 was $7.4 million and $6.7 million, respectively.
NOTE 13. STOCK-BASED COMPENSATION
Stock-based compensation granted includes stock options, performance stock awards, restricted stock awards and deferred directors’ compensation. Stock-based compensation expense (benefit) was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| ($ in millions) |
Stock-based compensation | $ | 8.3 | | | $ | 9.6 | | | $ | 12.8 | | | $ | 14.2 | |
Mark-to-market adjustments | (1.6) | | | (5.6) | | | (0.1) | | | (8.5) | |
Total expense | $ | 6.7 | | | $ | 4.0 | | | $ | 12.7 | | | $ | 5.7 | |
The fair value of each stock option granted, which typically vests ratably over three years, but not less than one year, was estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted-average assumptions:
| | | | | | | | |
Grant date | 2023 | 2022 |
Dividend yield | 1.32 | % | 1.60 | % |
Risk-free interest rate | 4.07 | % | 1.93 | % |
Expected volatility of Olin common stock | 47 | % | 48 | % |
Expected life (years) | 7.0 | 7.0 |
Weighted-average grant fair value (per option) | $ | 28.74 | $ | 21.18 |
Weighted-average exercise price | $ | 60.55 | $ | 49.71 |
Options granted | 562,124 | 737,100 |
Dividend yield was based on our current dividend yield as of the option grant date. 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 for future exercise patterns.
Performance share awards are denominated in shares of our stock and are paid half in cash and half in stock. Payouts for performance share awards are based on two criteria: (1) 50% of the award is based on Olin’s total shareholder returns (TSR) over the applicable three-year performance cycle in relation to the TSR over the same period among a portfolio of public companies which are selected in concert with outside compensation consultants and (2) 50% of the award is based on Olin’s net income over the applicable three-year performance cycle in relation to the net income goal for such period as set by the compensation committee of Olin’s board of directors. The expense associated with performance shares is recorded based on our estimate of our performance relative to the respective target. If an employee leaves the company before the end of the performance cycle, the performance shares may be prorated based on the number of months of the performance cycle worked and are settled in cash instead of half in cash and half in stock when the three-year performance cycle is completed.
The fair value of each performance share award based on net income was estimated on the date of grant, using the current stock price. The fair value of each performance share award based on TSR was estimated on the date of grant, using a Monte Carlo simulation model with the following weighted average assumptions:
| | | | | | | | |
Grant date | 2023 | 2022 |
Risk-free interest rate | 4.46 | % | 1.74 | % |
Expected volatility of Olin common stock | 52 | % | 59 | % |
Expected average volatility of peer companies | 42 | % | 47 | % |
Average correlation coefficient of peer companies | 0.51 | 0.51 |
Expected life (years) | 3.0 | 3.0 |
Grant date fair value (TSR based award) | $ | 86.98 | $ | 64.13 |
Grant date fair value (net income based award) | $ | 60.55 | $ | 49.71 |
Awards granted | 161,474 | 184,000 |
Risk-free interest rate was based on zero coupon U.S. Treasury securities rates for the expected life of the performance stock awards. Expected volatility of Olin common stock and peer companies was based on historical stock price movements, as we believe that historical experience is the best available indicator of the expected volatility. The average correlation coefficient of peer companies was determined based on historical trends of Olin’s common stock price compared to the peer companies. Expected life of the performance share award grant was based on historical exercise and cancellation patterns, as we believe that historical experience is the best estimate of future exercise patterns.
NOTE 14. SHAREHOLDERS’ EQUITY
On July 28, 2022, our Board of Directors authorized a share repurchase program for the purchase of shares of common stock at an aggregate price of up to $2.0 billion (the 2022 Repurchase Authorization). This program will terminate upon the purchase of $2.0 billion of common stock.
For the six months ended June 30, 2023 and 2022, 7.1 million and 12.6 million shares, respectively, of common stock were repurchased and retired at a total value of $393.0 million and $689.7 million, respectively. As of June 30, 2023, 13.0 million shares of common stock have been repurchased and retired at a total value of $687.8 million under the 2022 Repurchase Authorization program, and $1,312.2 million of common stock remained authorized to be repurchased under the program.
We issued 0.4 million and 0.9 million shares representing stock options exercised for the six months ended June 30, 2023 and 2022, respectively, with a total value of $11.9 million and $20.9 million, respectively.
The following table represents the activity included in accumulated other comprehensive loss:
| | | | | | | | | | | | | | | | | | | | | | | |
| Foreign Currency Translation Adjustment | | Unrealized (Losses) Gains on Derivative Contracts (net of taxes) | | Pension and Other Postretirement Benefits (net of taxes) | | Accumulated Other Comprehensive Loss |
| ($ in millions) |
Balance at January 1, 2022 | $ | (10.9) | | | $ | 22.8 | | | $ | (499.9) | | | $ | (488.0) | |
Unrealized (losses) gains: | | | | | | | |
First quarter | (10.5) | | | 52.8 | | | — | | | 42.3 | |
Second quarter | (26.0) | | | (36.4) | | | — | | | (62.4) | |
| | | | | | | |
Reclassification adjustments of (gains) losses into income: | | | | | | | |
First quarter | — | | | (12.4) | | | 8.9 | | | (3.5) | |
Second quarter | — | | | (36.1) | | | 9.0 | | | (27.1) | |
| | | | | | | |
Tax (provision) benefit: | | | | | | | |
First quarter | — | | | (9.7) | | | (2.3) | | | (12.0) | |
Second quarter | — | | | 17.5 | | | (2.3) | | | 15.2 | |
| | | | | | | |
Net change | (36.5) | | | (24.3) | | | 13.3 | | | (47.5) | |
Balance at June 30, 2022 | $ | (47.4) | | | $ | (1.5) | | | $ | (486.6) | | | $ | (535.5) | |
Balance at January 1, 2023 | $ | (38.6) | | | $ | (32.5) | | | $ | (424.8) | | | $ | (495.9) | |
Unrealized gains (losses): | | | | | | | |
First quarter | 5.5 | | | (20.8) | | | — | | | (15.3) | |
Second quarter | (8.5) | | | (10.7) | | | — | | | (19.2) | |
| | | | | | | |
Reclassification adjustments of losses into income: | | | | | | | |
First quarter | — | | | 30.7 | | | 0.4 | | | 31.1 | |
Second quarter | — | | | 20.5 | | | 0.5 | | | 21.0 | |
| | | | | | | |
Tax provision: | | | | | | | |
First quarter | — | | | (2.5) | | | (0.1) | | | (2.6) | |
Second quarter | — | | | (2.4) | | | (0.1) | | | (2.5) | |
| | | | | | | |
Net change | (3.0) | | | 14.8 | | | 0.7 | | | 12.5 | |
Balance at June 30, 2023 | $ | (41.6) | | | $ | (17.7) | | | $ | (424.1) | | | $ | (483.4) | |
Net income and cost of goods sold included reclassification adjustments for realized gains and losses on derivative contracts from accumulated other comprehensive loss.
Net income and non-operating pension income included the amortization of prior service costs and actuarial losses from accumulated other comprehensive loss.
NOTE 15. SEGMENT INFORMATION
We define segment results as income (loss) before interest expense, interest income, other operating income (expense), non-operating pension income, other income and income taxes. We have three operating segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. The three operating segments reflect the organization used by our management for purposes of allocating resources and assessing performance. Chlorine and caustic soda used in our Epoxy segment is transferred at cost from the Chlor Alkali Products and Vinyls segment. BWA is consolidated in our Chlor Alkali Products and Vinyls segment. Sales are attributed to geographic areas based on customer location.
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| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | |