OLIN CORPORATION

Annual Report Project Accounting 206 Glenn Daniels August 26th 2011 Olin Corporation Fiscal Year December 31, 2010 Gabriel Aaron Dionne Strayer University

OLIN CORPORATION When evaluating the Olin Corporation, it is imperative to take into consideration the following topics to gain clarity when deciding if and when to invest in this company: Where the company is located when it was founded and what products it produces... Discussion of the organizational governance in place which provides leadership and structure to the company. Reviewing cash flow position and all the primary sources and uses of cash along with any dividends paid to shareholders and how management made that decision. And finally, an explanation of whether or not I would invest in the Olin Corporation and any of the inherent risks that may be involved that come along with the territory of a company with this scope and magnitude.

Located in Virginia and incorporated in 1982, Olin Corporation hosts its principal offices in Clayton, MO. (Olin Corporation, 2011) The Olin Corporation is focused on two business concentrations: Winchester ammunition and Chlor Alkali Products. Chlor Alkali products in the industry for over 100 years provide Olin with the ability to manufacture and sell caustic acid, chlorine, sodium hydrosulfite, hydrochloric acid, hydrogen, bleach products, and potassium hydroxide. These products comprised 65% of the 2010 sales. Winchester products, in its 144th year of operation, produce sporting ammunition reloading components industrial cartridges and small caliber military ammunition. To gain insight into a Corporation such as Olin it helps to have a broad understanding of the organizational structure within the company. (Olin Corporation, 2011, Principles) states that Corporate Governance as follows: Ensuring legal and ethical conduct of all employees and the oversight of the company Selecting and monitoring the Board Chair and CEO Reviewing the strategic direction of the corporation

OLIN CORPORATION Giving oversight of the business Acquiring Directors and determining compensation Evaluating Olins risk assessment and management process

Olins primary goal is to conduct its business activities in a legal and ethical manner. The board feels as stock ownership by management helps to align the interest of the company with those that run it. The Board of Olin has four committees and they are as follows: Audit, Compensation, Directors, and Corporate Governance. The following individuals compose the Olin Board: Joseph D. Rupp, Chairman, President and CEO, Directors are: Gray G. Benosit, Donald W. Bogus, Robert Bunch, Randall Larrimore, John OConnor, Richard Rompala, Phillip Schulz, Vincent Smith, John Fischer: Senior Vice President, and Todd Slater Vice President and Principal Accounting Officer. Strategies to continue the growth and production of the Olin corporation are as reviewed on page 8 (Olin Corporation, 10-K 2011): Leveraging existing strengths such as the Winchester brand name and the continuance of serving a full line of ammunition products. Also, a focus on product line growth including reduced-lead and non-lead products which are growing in popularity in shooting ranges. When analyzing the cash flow position and primary sources and uses of cash within the Olin Corporation, the following chart gives clarity as reviewed on: Olin Corporation, Yahoo:

Valuation Measures Market Cap (intraday) : Enterprise Value (Aug 22, 2011) : Trailing P/E (ttm, intraday): Forward P/E (fye Dec 31, 2012) : PEG Ratio (5 yr expected) :
1 1 3 5

1.44B 1.75B 6.87 7.65 0.41

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Price/Sales (ttm): Price/Book (mrq): Enterprise Value/Revenue (ttm) : Enterprise Value/EBITDA (ttm) : Financial Highlights Fiscal Year Fiscal Year Ends: Most Recent Quarter (mrq): Profitability Profit Margin (ttm): Operating Margin (ttm): Management Effectiveness Return on Assets (ttm): Return on Equity (ttm): Income Statement Revenue (ttm): Revenue Per Share (ttm): Qtrly Revenue Growth (yoy): Gross Profit (ttm): EBITDA (ttm): Net Income Avl to Common (ttm): Diluted EPS (ttm): Qtrly Earnings Growth (yoy): Balance Sheet Total Cash (mrq): Total Cash Per Share (mrq): Total Debt (mrq): Total Debt/Equity (mrq): Current Ratio (mrq): Book Value Per Share (mrq): Cash Flow Statement Operating Cash Flow (ttm): 278.30M 3.47 583.60M 59.08 1.85 12.32
3 3

0.81 1.46 0.98 6.59

Dec 31 Jun 30, 2011

11.75% 9.72%

4.93% 23.14%

1.78B 22.39 30.40% 236.00M 265.70M 209.60M 2.61 149.10%

139.30M

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Levered Free Cash Flow (ttm):

28.76M

It seems as if this report tells us that the total cash flow is at 278.30 Million. The primary source of cash for the Olin Corporation is its concentration in sales of chemicals, materials, metals, defense, sporting ammunition and aerospace products. When discussing dividend payments and management determination of dividends paid to shareholders, the following chart offers clarity on the topic:

Trading Information Stock Price History Beta: 52-Week Change : S&P500 52-Week Change : 52-Week High (Apr 29, 2011) : 52-Week Low (Aug 25, 2010) : 50-Day Moving Average : 200-Day Moving Average : Share Statistics Avg Vol (3 month) : Avg Vol (10 day) : Shares Outstanding : Float: % Held by Insiders : % Held by Institutions : Shares Short (as of Jul 29, 2011) : Short Ratio (as of Jul 29, 2011) : Short % of Float (as of Jul 29, 2011) : Shares Short (prior month) : Dividends & Splits
3 3 3 3 1 1 5 3 3 3 3 3 3 3 3

1.54 -1.37% 4.84% 27.16 17.25 21.18 21.77

935,295 1,117,880 80.18M 79.56M 0.57% 80.20% 3.68M 3.80 6.60% 3.71M

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Forward Annual Dividend Rate : Forward Annual Dividend Yield : Trailing Annual Dividend Yield : Trailing Annual Dividend Yield : 5 Year Average Dividend Yield : Payout Ratio : Dividend Date : Ex-Dividend Date : Last Split Factor (new per old) : Last Split Date :
3 2 4 3 4 4 3 3 4

0.80 4.40% 0.80 4.40% N/A 31.00% Sep 8, 2011 Aug 8, 2011 2:1 Oct 31, 1996

We can ascertain from this information that the 52 week high of the stock was 27.16 and that the 52 week low was 17.25. It also is relevant to note the dividend date of September 8 2011, which is the time in which the board of directors will declare the years dividend payout. Stated on page 9 of (Olin Corporation, 10K 2011), as of January 31, 2011, there are 4,584 record holders of Olin Stock. A dividend of $0.20 per common share was paid during each of the four quarters in 2010. When declaring the dividend the board of directors will review and take into account: how much the company made, what the last dividend payment was, and the affect the dividend payment will be on company operations. After reading the annual report of the Olin corporation and taking an internalized neutral look at the information, I have found some concerns: Olin being a chemical and arms manufacture has certain risk in their business environment and these risk are as follows: (Olin Corporation, 10K 2011), Environmental and toxic substance control, Sensitivity to Global economic conditions and cyclicality, Cyclical pricing pressure, Imbalance in demand of Chlor Alkali products, labor matter, effects of government legislation, Production hazards, Cost control, Credit facilities, Pension Plan amounts and funding, Indebtedness, Debt Service, Credit

OLIN CORPORATION

and capital market conditions, and other unforeseen economic, competitive, and business factors. Other factors of risk as stated on page 13 of (Olin Corporation, 10K 2011) are litigation and claims, Olin is a defendant in a number of pending legal proceedings relating to mercury contamination and alleged exposure to asbestos. My other concern in respects to the potentiality of litigation is the harmful effects that chlorine has on the human body when swam in or consumed in artificial sweeteners, and processed foods along with tap water which is regularly consumed by the American public. The following is indicative of the above statement: As reviewed on the website (healthy new age): What the heck are Trihalomethanes? There is a lot of well founded concern about chlorine. When chlorine is added to our water, it combines with other natural compounds to form Trihalomethanes (chlorination byproducts), or THMs. These chlorine byproducts trigger the production of free radicals in the body, causing cell damage, and are highly carcinogenic. "Although concentrations of these carcinogens (THMs) are low, it is precisely these low levels that cancer scientists believe are responsible for the majority of human cancers in the United States." The Environmental Defense Fund Simply stated chlorine is a pesticide, as defined by the U.S. EPA, whose sole purpose is to kill living organisms. When we consume water containing chlorine, it kills some part of us, destroying cells and tissue inside our body. Dr. Robert Carlson, a highly respected University of Minnesota researcher whose work is sponsored by the Federal Environmental Protection Agency, sums it up by claiming , "the chlorine problem is similar to that of air pollution", and adds that "chlorine is the greatest crippler and killer of modern times!"

OLIN CORPORATION Breast cancer, which now affects one in every eight women in North America, has recently been linked to the accumulation of chlorine compounds in the breast tissue. A study carried out in Hartford Connecticut, the first of its kind in North America, found that, "women with breast cancer have 50% to 60% higher levels of organochlorines (chlorination byproducts) in their breast tissue than women without breast cancer." One of the most shocking components to all of these studies is that up to 2/3s of our harmful exposure to chlorine is due to inhalation of steam and skin absorption while showering. A warm shower opens up the pores of the skin and allows for accelerated absorption of chlorine and other chemicals in water. The steam we inhale while showering can contain up to 50 times the level of chemicals

than tap water due to the fact that chlorine and most other contaminants vaporize much faster and at a lower temperature than water. Inhalation is a much more harmful means of exposure since the chlorine gas (chloroform) we inhale goes directly into our blood stream. When we drink contaminated water the toxins are partially filtered out by our kidneys and digestive system. So based upon this information the likely hood of a class action lawsuit against the creators and distributors of chlorine products to water plants and pools around the world is not likely to occur but most definitely going to occur at some point. However, Olin Corporation announced on August 1, 2011 that the Winchester division has been awarded a five year contract by the United States Army for production of .50 caliber, 5.56 millimeter and 7.62 millimeter ammunition. This contract is anticipated to generate revenues over the next five years of approximately $300 million dollars. In my opinion its relevant and intelligent to invest in industries that are not affected by economic downturns. This list includes pharmaceuticals, consumer staples, utilities and tobacco. One thing is certain, if our

OLIN CORPORATION world and society goes to hell in a hand basket, people will take more anti depressants, smoke more, and stays at home longer there by using more energy and water. So based upon this premise, we will always need bullets, always clean with bleach and always eat processed foods, Olin corporation will prosper and pay its dividend for this reason alone, even with the very real possibility of litigation looming over the horizon.

OLIN CORPORATION References

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Olin Corporation (2011). Annual Report Form 10-K. Filed with the United States Securities and Exchange Commission, 1-133. Retrieved August 17, 2011, from http://www.sec.gov/Archives/edgar/data Olin Corporation (2011, February). Olin Corporation Amended and Restated Principles of Corporate Governance. Retrieved August 17, 2011, from http://www.olin.com/Board/dir Olin Corporation (2011, August 17). Yahoo Finance. Retrieved August 18, 2011, from http://Finance.yahoo.com

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