UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



x☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2019



¨☐	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.)



190 Carondelet Plaza,	Suite 1530,	Clayton,	MO	63105
(Address of principal executive offices)				(Zip Code)

~~(314)~~ (314) 480-1400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange 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 x☒ No ¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes x☒ No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 x☒ Accelerated filer ¨☐ Non-accelerated filer ¨ ~~(Do not check if a smaller reporting company)~~

☐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. ☐

~~Act.~~ ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x☒

As of September 30, ~~2017, 166,446,950~~2019, 159,671,335 shares of the registrant’s common stock were outstanding.



TABLE OF CONTENTS
FOR FORM 10-Q		Page
Part I — ~~FINANCIAL INFORMATION~~Financial Information		~~Page~~ 3
Item 1.	Financial Statements	3
	Condensed Balance Sheets	3
	Condensed Statements of Operations	4
	Condensed Statements of Comprehensive Income (Loss)	5
	Condensed Statements of Shareholders’ Equity	6
	Condensed Statements of Cash Flows	7
	~~Notes to Condensed Financial Statements~~	8
	Notes to Condensed Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
	~~Business Background~~	39
	~~Executive Summary~~	39
	~~Consolidated Results of Operations~~	40
	~~Segment Results~~	43
	~~Outlook~~Business Background	4743
	~~Environmental Matters~~Executive Summary	4943
	~~Legal Matters and Contingencies~~Consolidated Results of Operations	5045
	Segment Results	48
	Outlook	51
	Environmental Matters	52
	Legal Matters and Contingencies	54
	Liquidity, Investment Activity and Other Financial Data	5155
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	57
~~Item 4.~~	~~Controls and Procedures~~	57
	~~Cautionary Statement Regarding Forward-Looking Statements~~	58

~~Part II — OTHER INFORMATION~~
~~Item 1.~~	~~Legal Proceedings~~	60
~~Item 1A.~~	~~Risk Factors~~	60
~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	60
~~Item 3.~~	~~Defaults Upon Senior Securities~~	60
Item 4.	~~Mine Safety Disclosures~~	60
~~Item 5.~~	~~Other Information~~	60
~~Item 6.~~	~~Exhibits~~Controls and Procedures	61

~~SIGNATURES~~Cautionary Statement Regarding Forward-Looking Statements		62
Part II — Other Information		64
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	64
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	65
Item 6.	Exhibits	65
SIGNATURES		66

Part I — Financial Information

Item 1. Financial Statements.

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

Condensed Balance Sheets

(In millions, except per share data)

(Unaudited)


	September 30, 2017			December 31, 2016			September 30, 2016			September 30, 2019			December 31, 2018			September 30, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	255.9		$	184.5		$	127.0		$	177.4		$	178.8		$	156.7
Receivables, net	729.5			675.0			744.1			849.9			776.3			1,009.2
Income taxes receivable	15.9			25.5			49.0			17.5			5.9			12.8
Inventories	689.5			630.4			617.0
Inventories, net										700.7			711.4			724.4
Other current assets	27.1			30.8			16.1			24.1			35.0			35.2
Total current assets	1,717.9			1,546.2			1,553.2			1,769.6			1,707.4			1,938.3
Property, plant and equipment (less accumulated depreciation of $2,222.8, $1,891.6 and $1,788.6)	3,579.2			3,704.9			3,713.9
Property, plant and equipment (less accumulated depreciation of $3,112.4, $2,781.0 and $2,651.2)										3,367.0			3,482.1			3,456.7
Operating lease assets, net										314.6			—			—
Deferred income taxes	141.1			119.5			112.2			30.3			26.3			24.8
Other assets	1,215.6			644.4			640.3			1,170.1			1,150.4			1,159.6
Intangible assets, net	592.9			629.6			653.8			461.9			511.6			528.3
Goodwill	2,119.8			2,118.0			2,119.4			2,119.1			2,119.6			2,119.6
Total assets	$	9,366.5		$	8,762.6		$	8,792.8		$	9,232.6		$	8,997.4		$	9,227.3
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt	$	81.7		$	80.5		$	80.3		$	1.1		$	125.9		$	0.9
Accounts payable	613.5			570.8			509.7			647.7			636.5			709.4
Income taxes payable	9.6			7.5			13.3			9.8			22.6			22.1
Current operating lease liabilities										71.2			—			—
Accrued liabilities	294.5			263.8			291.5			347.4			333.3			341.3
Total current liabilities	999.3			922.6			894.8			1,077.2			1,118.3			1,073.7
Long-term debt	3,663.5			3,537.1			3,597.5			3,339.0			3,104.4			3,336.4
Operating lease liabilities										248.2			—			—
Accrued pension liability	618.7			638.1			597.7			622.4			674.3			589.6
Deferred income taxes	1,055.5			1,032.5			1,036.6			515.5			518.9			548.6
Other liabilities	731.0			359.3			335.5			765.6			749.3			756.1
Total liabilities	7,068.0			6,489.6			6,462.1			6,567.9			6,165.2			6,304.4
Commitments and contingencies
Shareholders’ equity:
Common stock, par value $1 per share: authorized, 240.0 shares; issued and outstanding, 166.4, 165.4 and 165.3 shares	166.4			165.4			165.3
Common stock, $1.00 par value per share: authorized, 240.0 shares; issued and outstanding, 159.7, 165.3 and 166.8 shares										159.7			165.3			166.8
Additional paid-in capital	2,267.7			2,243.8			2,242.8			2,128.6			2,247.4			2,276.9
Accumulated other comprehensive loss	(470.0		)	(510.0		)	(466.7		)	(672.7		)	(651.0		)	(571.3		)
Retained earnings	334.4			373.8			389.3			1,049.1			1,070.5			1,050.5
Total shareholders’ equity	2,298.5			2,273.0			2,330.7			2,664.7			2,832.2			2,922.9
Total liabilities and shareholders’ equity	$	9,366.5		$	8,762.6		$	8,792.8		$	9,232.6		$	8,997.4		$	9,227.3

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 September 30,					Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017		2016			2017			2016			2019			2018			2019		2018
Sales	$	1,554.9	$	1,452.7		$	4,648.5		$	4,164.9		$	1,576.6		$	1,872.4		$	4,722.9	$	5,311.1
Operating expenses:
Cost of goods sold	1,345.6		1,284.4			4,143.4			3,696.7			1,357.6			1,441.7			4,168.6		4,431.1
Selling and administration	86.4		82.0			254.6			249.4			110.8			110.8			314.8		321.6
Restructuring charges	9.2		5.2			25.9			106.2			4.9			3.3			12.7		13.7
Acquisition-related costs	1.1		13.1			12.5			39.6			—			0.4			—		1.0
Other operating (expense) income	—		(0.2		)	(0.1		)	10.5
Other operating income (expense)												0.1			(1.7		)	0.3		6.4
Operating income	112.6		67.8			212.0			83.5			103.4			314.5			227.1		550.1
Earnings of non-consolidated affiliates	0.5		0.5			1.5			1.1
Earnings (losses) of non-consolidated affiliates												—			0.4			—		(20.2		)
Interest expense	53.1		47.5			158.0			143.6			63.9			59.2			179.2		184.0
Interest income	0.4		0.5			1.0			1.3			0.2			0.3			0.7		1.1
Income (loss) before taxes	60.4		21.3			56.5			(57.7		)
Income tax provision (benefit)	7.7		3.8			(3.7		)	(36.3		)
Net income (loss)	$	52.7	$	17.5		$	60.2		$	(21.4	)
Net income (loss) per common share:
Non-operating pension income												4.1			5.4			12.2		16.2
Other income												—			—			11.2		—
Income before taxes												43.8			261.4			72.0		363.2
Income tax (benefit) provision												(0.4		)	66.3			6.1		88.6
Net income												$	44.2		$	195.1		$	65.9	$	274.6
Net income per common share:
Basic	$	0.32	$	0.11		$	0.36		$	(0.13	)	$	0.27		$	1.17		$	0.40	$	1.64
Diluted	$	0.31	$	0.11		$	0.36		$	(0.13	)	$	0.27		$	1.16		$	0.40	$	1.63
Dividends per common share	$	0.20	$	0.20		$	0.60		$	0.60
Average common shares outstanding:
Basic	166.3		165.2			166.0			165.2			161.9			167.0			163.7		167.1
Diluted	168.5		166.5			168.2			165.2			162.8			168.6			164.5		168.9

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 September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income (loss) $ 52.7
$ 17.5
$ 60.2
$ (21.4 )
Other comprehensive income, net of tax:
Foreign currency translation adjustments, net 9.8
4.6
31.7
9.3
Unrealized gains (losses) on derivative contracts, net 1.3
2.6
(4.4 ) 3.8
Pension and postretirement liability adjustments, net —
3.1
—
3.1
Amortization of prior service costs and actuarial losses, net 4.3
2.3
12.7
9.6
Total other comprehensive income, net of tax 15.4
12.6
40.0
25.8
Comprehensive income $ 68.1
$ 30.1
$ 100.2
$ 4.4



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income	$	44.2		$	195.1		$	65.9		$	274.6
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments, net	(15.7		)	(2.0		)	(20.7		)	(15.7		)
Unrealized losses on derivative contracts, net	(2.5		)	(3.6		)	(17.9		)	(6.1		)
Amortization of prior service costs and actuarial losses, net	5.9			7.5			16.9			21.0
Total other comprehensive (loss) income, net of tax	(12.3		)	1.9			(21.7		)	(0.8		)
Comprehensive income	$	31.9		$	197.0		$	44.2		$	273.8

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)



	Nine Months Ended September 30, 2019
	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, 2019	165.3		$	165.3		$	2,247.4		$	(651.0	)	$	1,070.5		$	2,832.2
Lease accounting adoption adjustment	—		—			—			—			11.2			11.2
Net income	—		—			—			—			41.7			41.7
Other comprehensive loss	—		—			—			(5.9		)	—			(5.9		)
Dividends paid:
Common stock ($0.20 per share)	—		—			—			—			(33.0		)	(33.0		)
Common stock repurchased and retired	(0.6	)	(0.6		)	(12.6		)	—			—			(13.2		)
Common stock issued for:
Stock options exercised	0.1		0.1			1.3			—			—			1.4
Other transactions	0.1		0.1			0.3			—			—			0.4
Stock-based compensation	—		—			2.8			—			—			2.8
Balance at March 31, 2019	164.9		164.9			2,239.2			(656.9		)	1,090.4			2,837.6
Net loss	—		—			—			—			(20.0		)	(20.0		)
Other comprehensive loss	—		—			—			(3.5		)	—			(3.5		)
Dividends paid:
Common stock ($0.20 per share)	—		—			—			—			(32.7		)	(32.7		)
Common stock repurchased and retired	(0.6	)	(0.6		)	(12.9		)	—			—			(13.5		)
Common stock issued for:
Stock options exercised	—		—			0.1			—			—			0.1
Other transactions	—		—			0.9			—			—			0.9
Stock-based compensation	—		—			1.9			—			—			1.9
Balance at June 30, 2019	164.3		$	164.3		$	2,229.2		$	(660.4	)	$	1,037.7		$	2,770.8
Net income	—		—			—			—			44.2			44.2
Other comprehensive loss	—		—			—			(12.3		)	—			(12.3		)
Dividends paid:
Common stock ($0.20 per share)	—		—			—			—			(32.8		)	(32.8		)
Common stock repurchased and retired	(4.8	)	(4.8		)	(104.1		)	—			—			(108.9		)
Common stock issued for:
Stock options exercised	—		—			—			—			—			—
Other transactions	0.2		0.2			1.6			—			—			1.8
Stock-based compensation	—		—			1.9			—			—			1.9
Balance at September 30, 2019	159.7		$	159.7		$	2,128.6		$	(672.7	)	$	1,049.1		$	2,664.7

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)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Retained Earnings			Total Shareholders’ Equity			Nine Months Ended September 30, 2018
	Shares Issued	Par Value													Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total Shareholders’ Equity
Balance at January 1, 2016	165.1	$	165.1	$	2,236.4	$	(492.5	)	$	509.8		$	2,418.8
Net loss	—	—		—		—			(21.4		)	(21.4		)
															Shares Issued		Par Value			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total Shareholders’ Equity
Balance at January 1, 2018															167.1		$	167.1
Income tax reclassification adjustment															—		—			—			(85.9		)	85.9			—
Net income															—		—			—			—			20.9			20.9
Other comprehensive income	—	—		—		25.8			—			25.8			—		—			—			17.7			—			17.7
Dividends paid:
Common stock ($0.60 per share)	—	—		—		—			(99.1		)	(99.1		)
Common stock ($0.20 per share)															—		—			—			—			(33.4		)	(33.4		)
Common stock issued for:
Stock options exercised	—	—		0.4		—			—			0.4			0.1		0.1			0.9			—			—			1.0
Other transactions	0.2	0.2		2.8		—			—			3.0			—		—			0.5			—			—			0.5
Stock-based compensation	—	—		3.2		—			—			3.2			—		—			2.7			—			—			2.7
Balance at September 30, 2016	165.3	$	165.3	$	2,242.8	$	(466.7	)	$	389.3		$	2,330.7
Balance at January 1, 2017	165.4	$	165.4	$	2,243.8	$	(510.0	)	$	373.8		$	2,273.0
Balance at March 31, 2018															167.2		167.2			2,285.0			(552.8		)	863.7			2,763.1
Net income	—	—		—		—			60.2			60.2			—		—			—			—			58.6			58.6
Other comprehensive income	—	—		—		40.0			—			40.0
Other comprehensive loss															—		—			—			(20.4		)	—			(20.4		)
Dividends paid:
Common stock ($0.60 per share)	—	—		—		—			(99.6		)	(99.6		)
Common stock ($0.20 per share)															—		—			—			—			(33.5		)	(33.5		)
Common stock repurchased and retired															(0.3	)	(0.3		)	(8.8		)	—			—			(9.1		)
Common stock issued for:
Stock options exercised	1.0	1.0		17.5		—			—			18.5			0.1		0.1			1.1			—			—			1.2
Other transactions	—	—		1.7		—			—			1.7			—		—			0.1			—			—			0.1
Stock-based compensation	—	—		4.7		—			—			4.7			—		—			3.1			—			—			3.1
Balance at September 30, 2017	166.4	$	166.4	$	2,267.7	$	(470.0	)	$	334.4		$	2,298.5
Balance at June 30, 2018															167.0		$	167.0		$	2,280.5		$	(573.2	)	$	888.8		$	2,763.1
Net income															—		—			—			—			195.1			195.1
Other comprehensive income															—		—			—			1.9			—			1.9
Dividends paid:
Common stock ($0.20 per share)															—		—			—			—			(33.4		)	(33.4		)
Common stock repurchased and retired															(0.2	)	(0.2		)	(7.5		)	—			—			(7.7		)
Common stock issued for:
Stock options exercised															—		—			1.0			—			—			1.0
Other transactions															—		—			0.9			—			—			0.9
Stock-based compensation															—		—			2.0			—			—			2.0
Balance at September 30, 2018															166.8		$	166.8		$	2,276.9		$	(571.3	)	$	1,050.5		$	2,922.9

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)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2019			2018
Operating Activities
Net income (loss)	$	60.2		$	(21.4	)
Adjustments to reconcile net income (loss) to net cash and cash equivalents provided by (used for) operating activities:
Earnings of non-consolidated affiliates	(1.5		)	(1.1		)
Net income							$	65.9		$	274.6
Adjustments to reconcile net income to net cash and cash equivalents provided by (used for) operating activities:
Gain on disposition of non-consolidated affiliate							(11.2		)	—
Losses of non-consolidated affiliates							—			20.2
Losses on disposition of property, plant and equipment	0.4			0.6			—			1.9
Stock-based compensation	6.4			6.1			8.9			9.2
Depreciation and amortization	411.4			397.4			460.3			451.0
Deferred income taxes	(17.5		)	(34.8		)	(11.0		)	44.0
Write-off of equipment and facility included in restructuring charges	—			76.6
Qualified pension plan contributions	(1.2		)	(7.1		)	(13.2		)	(1.3		)
Qualified pension plan income	(20.3		)	(27.8		)	(6.9		)	(11.1		)
Change in:
Receivables	(48.5		)	18.2			(77.4		)	(280.1		)
Income taxes receivable/payable	10.6			(7.8		)	(24.1		)	17.1
Inventories	(46.7		)	46.1			2.5			(44.5		)
Other current assets	3.1			22.7			4.9			4.5
Accounts payable and accrued liabilities	92.9			(54.1		)	14.2			110.1
Other assets	7.7			0.5			(4.8		)	(2.0		)
Other noncurrent liabilities	(13.6		)	(7.5		)	12.9			(3.8		)
Other operating activities	11.7			0.5			(4.4		)	(3.5		)
Net operating activities	455.1			407.1			416.6			586.3
Investing Activities
Capital expenditures	(210.0		)	(199.4		)	(271.8		)	(274.5		)
Business acquired in purchase transaction, net of cash acquired	—			(69.5		)
Payments under long-term supply contracts	(209.4		)	(175.7		)
Proceeds from sale/leaseback of equipment	—			40.4
Proceeds from disposition of non-consolidated affiliate							20.0			—
Proceeds from disposition of property, plant and equipment	0.1			0.4			—			2.9
Proceeds from disposition of affiliated companies	—			6.6
Net investing activities	(419.3		)	(397.2		)	(251.8		)	(271.6		)
Financing Activities
Long-term debt:
Borrowings	2,035.0			—			825.0			570.0
Repayments	(1,907.4		)	(176.1		)	(744.1		)	(823.7		)
Common stock repurchased and retired							(135.6		)	(16.8		)
Stock options exercised	18.5			0.4			1.5			3.2
Dividends paid	(99.6		)	(99.1		)	(98.5		)	(100.3		)
Debt issuance costs	(11.2		)	(0.8		)	(14.4		)	(8.5		)
Net financing activities	35.3			(275.6		)	(166.1		)	(376.1		)
Effect of exchange rate changes on cash and cash equivalents	0.3			0.7			(0.1		)	(0.3		)
Net increase (decrease) in cash and cash equivalents	71.4			(265.0		)
Net decrease in cash and cash equivalents							(1.4		)	(61.7		)
Cash and cash equivalents, beginning of period	184.5			392.0			178.8			218.4
Cash and cash equivalents, end of period	$	255.9		$	127.0		$	177.4		$	156.7
Cash paid for interest and income taxes:
Interest, net	$	138.7		$	126.9		$	135.2		$	153.9
Income taxes, net of refunds	$	11.2		$	16.3		$	47.6		$	31.9
Non-cash investing activities:
Capital expenditures included in accounts payable and accrued liabilities	$	25.0		$	(3.2	)
Decrease (increase) in capital expenditures included in accounts payable and accrued liabilities							$	(4.6	)	$	7.0

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 manufacturer concentrated in three business segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. The Chlor Alkali Products and Vinyls segment manufactures and sells chlorine and caustic soda, ethylene dichloride (EDC) and vinyl chloride monomer, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, trichloroethylene and vinylidene chloride, hydrochloric acid, hydrogen, bleach products and potassium hydroxide. The Epoxy segment produces and sells a full range of epoxy materials, including allyl chloride, epichlorohydrin, liquid epoxy resins, solid epoxy resins and downstream products such as ~~converted~~differentiated epoxy resins and additives. The Winchester segment produces and sells sporting 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 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, ~~2016.~~2018. Certain reclassifications were made to prior year amounts to conform to the ~~2017~~2019 presentation.

NOTE 2. ACCOUNTING POLICIES

Leases

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02 “Leases,” (ASU 2016-02) which supersedes Accounting Standards Codification (ASC) 840 “Leases” and creates a new topic, ASC 842 “Leases” (ASC 842). Subsequent to the issuance of ASU 2016-02, ASC 842 was amended by various updates that amend and clarify the impact and implementation of the aforementioned update. Upon initial application, the provisions of these updates are required to be applied using the modified retrospective method which requires retrospective adoption to each prior reporting period presented with the cumulative effect of adoption recorded to the earliest reporting period presented. An optional transition method can be utilized which requires application of these updates beginning on the date of adoption with the cumulative effect of initially applying these updates recognized at the date of initial adoption. We adopted these updates on January 1, 2019 using the optional transition method. Consequently, our comparative periods have not been retrospectively adjusted for the new lease requirements. In addition, we elected the following practical expedients:


–	We elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification.


–	We elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements.


–	We elected the short-term practical expedient for all classes of lease assets, which allows us to not record leases with an initial term of 12 months or less on the balance sheet, and instead recognize the expense straight-line over the lease term.


–	We elected the practical expedient to not separate lease components from non-lease components for all asset classes.

Adoption of these updates resulted in the recording of operating lease assets and lease liabilities on our condensed balance sheet of $291.9 million as of January 1, 2019. Our assets and liabilities for finance leases remained unchanged. We also recognized the cumulative effect of applying these updates as an adjustment to retained earnings of $11.2 million, net of tax, which was primarily related to the recognition of previously deferred sale/leaseback gains. Our condensed statements of operations and cash flows, along with our compliance with all covenants and restrictions under all our outstanding credit agreements, were not impacted by this adoption.

We determine if an arrangement is a lease at inception of the contract. Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of fixed lease payments over the lease term. Our lease commitments are primarily for railcars, but also include logistics, manufacturing, storage, real estate and information technology assets. Leases with an initial term of 12 months or less are not recorded on the balance sheet; instead, we recognize lease expense for these leases on a straight-line basis over the lease term. We do not account for lease components (e.g., fixed payments to use the underlying lease asset) separately from the non-lease components (e.g., fixed payments for common-area maintenance costs and other items that transfer a good or service). Some of our leases include variable lease payments, which primarily result from changes in consumer price and other market-based indices, which are generally updated annually, and maintenance and usage charges. These variable payments are excluded from the calculation of our lease assets and liabilities.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to many years. The exercise of lease renewal options is typically at our sole discretion. Certain leases also include options to purchase the leased asset. We do not include options to renew or purchase leased assets in the measurement of lease liabilities unless those options are highly certain of exercise. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. We have operating leases with terms that require us to guarantee a portion of the residual value of the leased assets upon termination of the lease as well as other guarantees. These residual value guarantees consist primarily of leases for railcars. Residual value guarantee payments that become probable and estimable are accrued as part of the lease liability and recognized over the remaining life of the applicable lease. Our current expectation is that the likelihood of material residual guarantee payments is remote. We utilize the interest rate implicit in the lease to determine the lease liability when the interest rate can be determined. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. We estimate the incremental borrowing rate based on the geographic region for which we would borrow, on a secured basis of the lease asset, at an amount equal to the lease payments over a similar time period as the lease term. We have no additional restrictions or covenants imposed by our lease contracts.

NOTE 3. ACQUISITION

On October 5, 2015 (the Closing Date), we completed the acquisition (the Acquisition) from The Dow Chemical Company ~~(TDCC)~~(Dow) (a wholly owned subsidiary of Dow Inc., which was separated from DowDupont Inc. on April 1, 2019) of its U.S. Chlor Alkali and Vinyl, Global Chlorinated Organics and Global Epoxy businesses (collectively, the Acquired Business), whose operating results are included in the accompanying financial statements since the Closing Date.

We incurred costs related to the integration of the Acquired Business ~~which consisted~~ of ~~advisory, legal, accounting and other professional fees of $1.1~~$0.4 million and ~~$13.1~~$1.0 million for the three ~~months ended September 30, 2017~~ and ~~2016, respectively, and $12.5 million and $39.6 million for the~~ nine months ended September 30, ~~2017~~2018, respectively.

NOTE 4. RESTRUCTURING CHARGES

On December 10, 2018, we announced that we had made the decision to permanently close the ammunition assembly operations at our Winchester facility in Geelong, Australia. Subsequent to the facility’s closure, product for customers in the region will be sourced from Winchester manufacturing facilities located in the United States. For the three and ~~2016, respectively.~~

nine months ended September 30, 2019, we recorded pretax restructuring charges of $0.1 million and $0.4 million, respectively, for facility exit costs and lease and other contract termination costs related to this action. We expect to incur additional restructuring charges through 2019 of less than $1 million related to this closure. For the nine months ended September 30, ~~2016, payments~~2019, we recorded additional pretax restructuring charges of ~~$69.5~~$1.4 million ~~were made~~for employee severance and related benefit costs related to ~~certain acquisition-related liabilities, including the final working capital adjustment.~~our Winchester operations.

~~RESTRUCTURING CHARGES~~

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. Associated with this action, we have permanently closed our Henderson, NV chlor alkali plant with 153,000 tons of capacity and have reconfigured the site to manufacture bleach and distribute caustic soda and hydrochloric acid. Also, the capacity of our Niagara Falls, NY chlor alkali plant has been reduced from 300,000 tons to 240,000 tons and the chlor alkali capacity at our Freeport, TX facility was reduced by 220,000 tons. This 220,000 ton reduction was entirely from diaphragm cell capacity. For the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, we recorded pretax restructuring charges of ~~$8.8~~$4.8 million and ~~$4.9~~$3.3 million, respectively, for ~~employee relocation costs,~~ facility exit costs, employee severance and related benefit costs and lease and other contract termination costs related to these actions. For the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, we recorded pretax restructuring charges of ~~$23.7~~$10.9 million and ~~$105.0~~$12.4 million, respectively, for ~~the write-off of equipment and~~ facility exit costs, ~~lease and other contract termination costs,~~

employee severance and related benefit costs ~~employee relocation costs~~ and ~~facility exit~~lease and other contract termination costs related to these actions. We expect to incur additional restructuring charges through 2020 of approximately ~~$25~~$5 million related to these capacity reductions. This estimate of additional restructuring charges does not include any additional charges related to a contract termination that is currently in dispute. The other party to the contract has filed an Amended Demand for Arbitration alleging, among other things, that Olin breached the contract and claims damages in excess of the amount Olin believes it is obligated for under the contract. The arbitration hearing is scheduled for the fourth

quarter 2017. Any additional losses related to this contract dispute are not currently estimable because of unresolved questions of fact and law but, if resolved unfavorably to Olin, they could have a material effect on our financial results.

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 has been shut down since late June 2014. This action reduced the facility’s chlor alkali capacity by 185,000 tons. Subsequent to the shut down, the plant predominantly focuses on bleach and hydrochloric acid, which are value-added products, as well as caustic soda. For the three months ended September 30, 2017 and 2016, we recorded pretax restructuring charges of $0.4 million and less than $0.1 million, respectively, for lease and other contract termination costs and facility exit costs related to these actions. For the nine months ended September 30, ~~2017 and 2016,~~2018, we recorded pretax restructuring charges of ~~$2.2~~$1.3 million ~~and $0.4 million, respectively,~~ for ~~lease and other contract termination costs and~~ facility exit costs related to ~~these actions.~~our permanent reduction in capacity at our Becancour, Canada chlor alkali facility in 2014. We expect to incur additional restructuring charges through ~~2018~~2019 of ~~approximately $4~~less than $1 million related to ~~the shut down of~~ this ~~portion of the facility.~~action.

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. Consistent with this decision in 2010, we initiated an estimated $110 million five-year project, which included 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. During 2016, the final rifle ammunition production equipment relocation was completed. For the three and nine months ended September 30, 2016, we recorded pretax restructuring charges of $0.3 million and $0.8 million, respectively, for employee relocation costs and facility exit costs related to these actions.

The following table summarizes the ~~2017~~2019 and ~~2016~~2018 activities by major component of these restructuring actions and the remaining balances of accrued restructuring costs as of September 30, ~~2017~~2019 and ~~2016:~~2018:



	Employee severance and related benefit costs			Lease and other contract termination costs			Facility exit costs			Total
	($ in millions)
Balance at January 1, 2018	$	1.8		$	3.3		$	—		$	5.1
Restructuring charges:
First quarter	—			0.4			3.6			4.0
Second quarter	0.1			3.7			2.6			6.4
Third quarter	0.3			0.3			2.7			3.3
Amounts utilized	(1.8		)	(1.6		)	(7.9		)	(11.3		)
Balance at September 30, 2018	$	0.4		$	6.1		$	1.0		$	7.5
Balance at January 1, 2019	$	1.5		$	6.0		$	0.7		$	8.2
Restructuring charges:
First quarter	1.4			0.1			2.5			4.0
Second quarter	0.4			0.2			3.2			3.8
Third quarter	0.3			0.1			4.5			4.9
Amounts utilized	(3.4		)	(1.5		)	(10.8		)	(15.7		)
Balance at September 30, 2019	$	0.2		$	4.9		$	0.1		$	5.2

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, 2016 $ 4.6
$ 2.1
$ —
$ —
$ —
$ 6.7
Restructuring charges:
First quarter 3.9
9.2
0.2
2.9
76.6
92.8
Second quarter 0.2
—
0.8
7.2
—
8.2
Third quarter —
—
0.9
4.3
—
5.2
Amounts utilized (4.9 ) (5.6 ) (1.9 ) (12.1 ) (76.6 ) (101.1 )
Currency translation adjustments —
0.1
—
—
—
0.1
Balance at September 30, 2016 $ 3.8
$ 5.8
$ —
$ 2.3
$ —
$ 11.9
Balance at January 1, 2017 $ 3.4
$ 7.5
$ —
$ 1.8
$ —
$ 12.7
Restructuring charges:
First quarter —
5.7
0.2
2.3
—
8.2
Second quarter —
5.8
0.1
2.6
—
8.5
Third quarter —
7.0
—
2.2
—
9.2
Amounts utilized (3.0 ) (4.6 ) (0.3 ) (8.8 ) —
(16.7 )
Balance at September 30, 2017 $ 0.4
$ 21.4
$ —
$ 0.1
$ —
$ 21.9

The following table summarizes the cumulative restructuring charges of these 2018, 2016 ~~2014~~ and ~~2010~~2014 restructuring actions by major component through September 30, ~~2017:~~2019:



	Chlor Alkali Products and Vinyls				Winchester		Total
	Becancour		Capacity Reductions		Winchester		Total
	($ in millions)
Write-off of equipment and facility	$	3.5	$	78.1	$	2.6	$	84.2
Employee severance and related benefit costs	2.7		6.6		2.7		12.0
Facility exit costs	5.9		43.8		0.2		49.9
Employee relocation costs	—		1.7		—		1.7
Lease and other contract termination costs	6.1		40.4		0.4		46.9
Total cumulative restructuring charges	$	18.2	$	170.6	$	5.9	$	194.7

Chlor Alkali Products and Vinyls Winchester Total
Becancour Capacity Reductions
($ in millions)
Write-off of equipment and facility $ 3.5
$ 76.6
$ —
$ 80.1
Employee severance and job related benefits 2.7
5.1
13.1
20.9
Facility exit costs 3.5
19.6
2.3
25.4
Pension and other postretirement benefits curtailment —
—
4.1
4.1
Employee relocation costs —
1.7
6.0
7.7
Lease and other contract termination costs 5.3
32.0
—
37.3
Total cumulative restructuring charges $ 15.0
$ 135.0
$ 25.5
$ 175.5

As of September 30, ~~2017,~~2019, we have incurred cash expenditures of ~~$68.2~~$104.9 million and non-cash charges of $84.6 million related to these restructuring actions. The remaining balance of ~~$21.9~~$5.2 million is expected to be paid out through 2020.

NOTE 5. ACCOUNTS RECEIVABLES

On December 20, 2016, we entered into a ~~three year,~~three-year, $250.0 million Receivables Financing Agreement with PNC Bank, National Association, as administrative agent (Receivables Financing Agreement). Under the Receivables Financing Agreement, our eligible trade receivables are used for collateralized borrowings and continue to be serviced by us. As of September 30, 2017, $363.0 million of our trade receivables were pledged as collateral and we had $250.0 million drawn under the agreement. For the three months ended September 30, 2017, we borrowed $40.0 million under the Receivables Financing Agreement and used the proceeds to fund a portion of the payment to TDCC associated with a long-term ethylene supply contract to reserve additional ethylene at producer economics. As of September 30, 2017, we had no additional borrowing capacity under the Receivables Financing Agreement. As of December 31, 2016, $282.3 million of our trade receivables were pledged as collateral and $210.0 million was drawn under the agreement. For the year ended December 31, 2016, the proceeds of the Receivables Financing Agreement were used to repay $210.0 million of the $800.0 million Sumitomo term loan facility (the Sumitomo Credit Facility). In addition,

the Receivables Financing Agreement incorporates the leverage and coverage covenants that are contained in the senior ~~revolving~~ credit ~~facilities.~~facility. During the three months ended September 30, 2019, the outstanding balance of the Receivables Financing Agreement of $150.0 million was repaid with proceeds from the issuance of $750.0 million senior notes due 2029. On July 16, 2019, the existing agreement was extended to July 15, 2022 and downsized to $10.0 million with the option to expand to $300.0 million. As of September 30, 2019, we had 0 drawn and $10.0 million additional borrowing capacity under the Receivables Financing Agreement. As of December 31, 2018 and September 30, 2018, we had $125.0 million and $180.0 million, respectively, drawn under the Receivables Financing Agreement.

~~On June 29, 2016, we entered into a~~Olin also has trade accounts receivable factoring ~~arrangement~~arrangements (AR Facilities) and ~~on December 22, 2016, we entered into a separate trade accounts receivable factoring arrangement, which were both subsequently amended (collectively the AR Facilities). Pursuant~~pursuant to the terms of the AR Facilities, certain of our subsidiaries may sell their accounts receivable up to

a maximum of ~~$293.0~~$315.0 million. We will continue to service ~~such accounts.~~the outstanding accounts sold. These receivables qualify for sales treatment under ~~Accounting Standards Codification (ASC)~~ASC 860 “Transfers and Servicing” ~~(ASC 860)~~ and, accordingly, the proceeds are included in net cash provided by operating activities in the condensed statements of cash flows. The ~~gross amount of receivables sold for~~following table summarizes the three months ended September 30, 2017 and 2016 totaled $446.5 million and $209.9 million, respectively, and for the nine months ended September 30, 2017 and 2016 totaled $1,224.1 million and $236.7 million, respectively. AR Facilities activity:



	September 30,
	2019			2018
	($ in millions)
Balance at beginning of year	$	132.4		$	182.3
Gross receivables sold	778.9			1,199.8
Payments received from customers on sold accounts	(803.9		)	(1,247.7		)
Balance at end of period	$	107.4		$	134.4

The factoring discount paid under the AR Facilities is recorded as interest expense on the condensed statements of operations. The factoring discount was ~~$1.4~~$0.8 million and ~~$0.5~~$1.1 million for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, and ~~$2.9~~$2.3 million and ~~$0.7~~$3.9 million for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively. The agreements are without recourse and therefore no0 recourse liability ~~has~~had been recorded as of September 30, ~~2017. As of~~2019, December 31, 2018, or September 30, 2017, December 31, 2016 and September 30, 2016, $187.3 million, $126.1 million and $85.0 million, respectively, of receivables qualifying for sales treatment were outstanding and will continue to be serviced by us.2018.

NOTE 6. ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLES

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.

Allowance for doubtful accounts ~~receivable~~receivables consisted of the following:



	September 30,
	2019			2018
	($ in millions)
Balance at beginning of year	$	12.9		$	12.3
Provisions charged	1.1			1.6
Write-offs, net of recoveries	(2.1		)	—
Foreign currency translation adjustment	—			(0.4		)
Balance at end of period	$	11.9		$	13.5

September 30,
2017 2016
($ in millions)
Balance at beginning of year $ 10.1
$ 6.4
Provisions charged 1.3
3.6
Write-offs, net of recoveries —
(0.8 )
Balance at end of period $ 11.4
$ 9.2

Provisions ~~(credited)~~ charged to operations were ~~$(0.8)~~$0.2 million and ~~$1.4~~$0.3 million for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

NOTE 7. INVENTORIES

Inventories consisted of the following:



	September 30, 2019			December 31, 2018			September 30, 2018
	($ in millions)
Supplies	$	75.6		$	66.4		$	63.7
Raw materials	66.8			66.7			70.1
Work in process	141.0			139.6			155.9
Finished goods	474.9			488.5			493.6
	758.3			761.2			783.3
LIFO reserve	(57.6		)	(49.8		)	(58.9		)
Inventories, net	$	700.7		$	711.4		$	724.4

September 30, 2017 December 31,
2016 September 30, 2016
($ in millions)
Supplies $ 60.3
$ 58.1
$ 58.1
Raw materials 85.4
72.6
79.1
Work in process 120.6
110.7
114.7
Finished goods 470.7
424.9
405.9
737.0
666.3
657.8
LIFO reserve (47.5 ) (35.9 ) (40.8 )
Inventories, net $ 689.5
$ 630.4
$ 617.0

Inventories are valued at the lower of cost and net realizable value. For U.S. inventories, inventory costs are determined principally by the last-in, first-out (LIFO) method of inventory accounting while for international inventories, 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 September 30, ~~2017~~2019 reflect certain estimates relating to inventory quantities and costs at December 31, ~~2017.~~2019. The replacement cost of our inventories would have been approximately ~~$47.5~~$57.6 million, ~~$35.9~~$49.8 million and ~~$40.8~~$58.9 million higher than reported at September 30, ~~2017,~~2019, December 31, ~~2016~~2018 and September 30, ~~2016,~~2018, respectively.

NOTE 8. OTHER ASSETS

Included in other assets were the following:



	September 30, 2019		December 31, 2018		September 30, 2018
	($ in millions)
Supply contracts	$	1,122.0	$	1,099.5	$	1,108.9
Investments in non-consolidated affiliates	—		8.8		8.3
Other	48.1		42.1		42.4
Other assets	$	1,170.1	$	1,150.4	$	1,159.6

September 30, 2017 December 31, 2016 September 30, 2016
($ in millions)
Investments in non-consolidated affiliates $ 28.2
$ 26.7
$ 26.1
Deferred debt issuance costs 2.7
2.6
2.8
Tax-related receivables 13.1
17.5
15.8
Interest rate swaps 3.7
7.7
2.5
Supply contracts 1,146.3
566.7
572.8
Other 21.6
23.2
20.3
Other assets $ 1,215.6
$ 644.4
$ 640.3

On January 1, 2019, we sold our 9.1% limited partnership interest in Bay Gas Storage Company, Ltd. (Bay Gas) for $20.0 million. The sale closed on February 7, 2019 which resulted in a gain of $11.2 million for the nine months ended September 30, 2019 which was recorded to other income in the condensed statements of operations. For the nine months ended September 30, 2018, we recorded a $21.5 million non-cash impairment charge related to an adjustment to the value of our interest in Bay Gas. Bay Gas owns, leases and operates underground gas storage and related pipeline facilities which are used to provide storage in the McIntosh, AL area and delivery of natural gas. The general partner, Sempra Energy (Sempra), announced in the second quarter of 2018 its plan to sell several assets including its 90.9% interest in Bay Gas. In connection with this decision, Sempra recorded an impairment charge related to Bay Gas adjusting the related assets’ carrying values to an estimated fair value. We recorded a reduction in our investment in the non-consolidated affiliate for the proportionate share of the non-cash impairment charge. Olin has no other non-consolidated affiliates.

In connection with the Acquisition, Olin and ~~TDCC~~Dow entered into arrangements for the long-term supply of ethylene by ~~TDCC~~Dow to Olin, pursuant to which, among other things, Olin made upfront payments ~~of $433.5 million on the Closing Date~~ in order to receive ethylene at producer economics and for certain reservation fees and for the option to obtain additional ethylene at producer economics. ~~The fair value of the long-term supply contracts recorded as of the Closing Date was a long-term asset of $416.1 million which will be amortized over the life of the contracts as ethylene is received.~~ During 2016, we exercised one of the options to reserve additional ethylene at producer economics. ~~In September 2017, TDCC’s new Texas 9 ethylene cracker in Freeport, TX became operational. As a result, during the three months ended September 30,~~During 2017, a payment of $209.4 million was made in connection with this option which increased the value of the long-term asset.

~~On February 27, 2017, we exercised the remaining option to reserve additional ethylene at producer economics from TDCC. In connection with the exercise~~Amortization expense of ~~this option, we also secured a long-term customer arrangement. As a result, an additional payment will be made to TDCC of between $440~~$9.4 million ~~and $465 million on or about the fourth quarter of 2020. During~~for both the three months ended September 30, ~~2017, as a result of TDCC’s new Texas 9 ethylene cracker becoming operational, Olin recognized a long-term asset~~2019 and ~~other liabilities of $389.2~~2018 and $28.2 million ~~which represents the present value of the additional estimated payment. The discounted amount of approximately $51 million will be recorded as interest expense through the fourth quarter of 2020.~~

~~During 2016, Olin entered into arrangements to increase our supply of low cost electricity. In conjunction with these arrangements, Olin made payments of $175.7 million during~~for both the nine months ended September 30, ~~2016. The payments made under these arrangements will be amortized over the life of the contracts as electrical power is received.~~

~~Amortization expense of $6.3 million~~2019 and ~~$6.0 million for the three months ended September 30, 2017 and 2016, respectively, and $18.9 million and $14.7 million for the nine months ended September 30, 2017 and 2016, respectively,~~2018 was recognized within cost of goods sold related to these supply

contracts and is reflected in depreciation and amortization on the condensed statements of cash flows. The long-term supply contracts are monitored for impairment each reporting period.

On February 27, 2017, we exercised the remaining option to reserve additional ethylene at producer economics from Dow. In connection with the exercise of this option, we also secured a long-term customer arrangement. As a result, an additional payment will be made to Dow that is not to exceed $493 million, on or about the fourth quarter of 2020. During 2017, as a result of Dow’s Texas 9 ethylene cracker becoming operational, Olin recognized a long-term asset and other liability of $389.2 million, which represented the present value of the additional estimated payment. For the three months ended June 30, 2019, Olin increased the long-term asset and other liability by $50.7 million. The discounted amount of $52.7 million will be recorded as interest expense through the fourth quarter of 2020. For the three months ended September 30, 2019 and 2018, $4.4 million and $4.0 million, respectively, and for the nine months ended September 30, 2019 and 2018, $12.6 million and $11.9 million, respectively, of interest expense was recorded for accretion on the 2020 payment discount.

NOTE 9. 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, 2018	$	1,832.9		$	287.1		$	2,120.0
Foreign currency translation adjustment	(0.3		)	(0.1		)	(0.4		)
Balance at September 30, 2018	$	1,832.6		$	287.0		$	2,119.6
Balance at January 1, 2019	$	1,832.6		$	287.0		2,119.6
Foreign currency translation adjustment	(0.4		)	(0.1		)	(0.5		)
Balance at September 30, 2019	$	1,832.2		$	286.9		$	2,119.1

Chlor Alkali Products and Vinyls Epoxy Total
($ in millions)
Balance at January 1, 2016 $ 1,877.5
$ 296.6
$ 2,174.1
Acquisition activity (45.3 ) (9.7 ) (55.0 )
Foreign currency translation adjustment 0.2
0.1
0.3
Balance at September 30, 2016 $ 1,832.4
$ 287.0
$ 2,119.4
Balance at January 1, 2017 $ 1,831.3
$ 286.7
2,118.0
Foreign currency translation adjustment 1.4
0.4
1.8
Balance at September 30, 2017 $ 1,832.7
$ 287.1
$ 2,119.8

Intangible assets consisted of the following:



	September 30, 2019							December 31, 2018							September 30, 2018
	Gross Amount		Accumulated Amortization			Net		Gross Amount		Accumulated Amortization			Net		Gross Amount		Accumulated Amortization			Net
	($ in millions)
Customers, customer contracts and relationships	$	671.1	$	(248.0	)	$	423.1	$	675.2	$	(211.9	)	$	463.3	$	676.2	$	(199.9	)	$	476.3
Trade name	7.0		(5.6		)	1.4		7.0		(4.6		)	2.4		7.0		(4.3		)	2.7
Acquired technology	84.7		(48.5		)	36.2		85.4		(39.6		)	45.8		85.6		(36.6		)	49.0
Other	1.8		(0.6		)	1.2		0.7		(0.6		)	0.1		2.3		(2.0		)	0.3
Total intangible assets	$	764.6	$	(302.7	)	$	461.9	$	768.3	$	(256.7	)	$	511.6	$	771.1	$	(242.8	)	$	528.3

September 30, 2017 December 31, 2016 September 30, 2016
Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net
($ in millions)
Customers, customer contracts and relationships $ 678.0
$ (150.9 ) $ 527.1
$ 667.8
$ (112.9 ) $ 554.9
$ 673.3
$ (101.2 ) $ 572.1
Trade name 7.1
(2.9 ) 4.2
17.8
(12.7 ) 5.1
17.9
(9.6 ) 8.3
Acquired technology 85.8
(24.5 ) 61.3
84.2
(15.0 ) 69.2
85.1
(12.2 ) 72.9
Other 2.3
(2.0 ) 0.3
2.3
(1.9 ) 0.4
2.3
(1.8 ) 0.5
Total intangible assets $ 773.2
$ (180.3 ) $ 592.9
$ 772.1
$ (142.5 ) $ 629.6
$ 778.6
$ (124.8 ) $ 653.8

Intangible assets with indefinite useful lives are reviewed annually in the fourth quarter and/or when circumstances or other events indicate the indefinite life is no longer supportable. In connection with the integration of the Acquired Business, in the first quarter of 2016, the K.A. Steel Chemicals Inc. trade name was changed from an indefinite life intangible asset to an intangible asset with a finite useful life of one year. Amortization expense of $2.7 million and $8.2 million was recognized within cost of goods sold for the three and nine months ended September 30, 2016, respectively, related to the change in useful life.

NOTE 10. EARNINGS PER SHARE

Basic and diluted net income ~~(loss)~~ per share are computed by dividing net income ~~(loss)~~ by the weighted-average number of common shares outstanding. Diluted net income ~~(loss)~~ per share reflects the dilutive effect of stock-based compensation.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Computation of Income per Share	(In millions, except per share data)
Net income	$	44.2	$	195.1	$	65.9	$	274.6
Basic shares	161.9		167.0		163.7		167.1
Basic net income per share	$	0.27	$	1.17	$	0.40	$	1.64
Diluted shares:
Basic shares	161.9		167.0		163.7		167.1
Stock-based compensation	0.9		1.6		0.8		1.8
Diluted shares	162.8		168.6		164.5		168.9
Diluted net income per share	$	0.27	$	1.16	$	0.40	$	1.63

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Computation of Income (Loss) per Share (In millions, except per share data)
Net income (loss) $ 52.7
$ 17.5
$ 60.2
$ (21.4 )
Basic shares 166.3
165.2
166.0
165.2
Basic net income (loss) per share $ 0.32
$ 0.11
$ 0.36
$ (0.13 )
Diluted shares:
Basic shares 166.3
165.2
166.0
165.2
Stock-based compensation 2.2
1.3
2.2
—
Diluted shares 168.5
166.5
168.2
165.2
Diluted net income (loss) per share $ 0.31
$ 0.11
$ 0.36
$ (0.13 )

The computation of dilutive shares ~~from stock-based compensation~~ does not include ~~1.6~~7.4 million ~~shares~~ and ~~1.9~~2.4 million shares for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, and ~~1.6~~7.2 million ~~shares~~ and ~~6.9~~2.4 million shares for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, as their effect would have been anti-dilutive.

NOTE 11. ENVIRONMENTAL

We are party to various government and private environmental actions associated with past manufacturing facilities and former waste disposal sites. Environmental provisions (credited) charged to income, which are included in cost of goods sold, were as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	($ in millions)
Provisions (credited) charged to income	$	(0.8	)	$	(0.8	)	$	23.0		$	5.9
Recoveries for costs incurred and expensed	—			(110.0		)	(4.8		)	(110.0		)
Environmental (income) expense	$	(0.8	)	$	(110.8	)	$	18.2		$	(104.1	)

Provisions (credited) charged to income for the nine months ended September 30, 2019 include a $20.0 million increase in costs at a former manufacturing site resulting from revised remediation estimates as a result of agency action during the second quarter of 2019. During the third quarter of 2018, we settled certain disputes with respect to insurance coverage for costs at various environmental remediation sites for $120.0 million. Environmental (income) expense for both the three and nine months ended September 30, 2018 include insurance recoveries for environmental costs incurred and expensed in prior periods of $110.0 million. The recoveries were reduced by estimated liabilities of $10.0 million associated with claims by subsequent owners of certain of the settled environmental sites. Environmental (income) expense for the nine months ended September 30, 2019 included $4.8 million of recoveries associated with resolving the outstanding third party claims against the proceeds from the 2018 environmental insurance settlement. The condensed balance sheets included reserves for future environmental expenditures to investigate and remediate known sites amounting to ~~$135.3~~$140.1 million, ~~$137.3~~$125.6 million and ~~$137.5~~$129.0 million at September 30, ~~2017~~, 2019, December 31, ~~2016~~2018 and September 30, ~~2016~~,2018, respectively, of which ~~$118.3~~$123.1 million, ~~$120.3~~$108.6 million and ~~$118.5~~$109.0 million,, respectively, were classified as other noncurrent liabilities.

Environmental provisions charged to income, which are included in cost of goods sold, were $1.8 million and $0.4 million for the three months ended September 30, 2017 and 2016, respectively, and $6.2 million and $5.5 million for the nine months ended September 30, 2017 and 2016, respectively.

~~In connection with the Acquisition, TDCC retained liabilities relating to releases of hazardous materials and violations of environmental law to the extent arising prior to the Closing Date.~~

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~~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.

In connection with the October 5, 2015 acquisition of Dow’s U.S. Chlor Alkali and Vinyl, Global Chlorinated Organics and Global Epoxy businesses, the prior owner of the businesses retained liabilities relating to releases of hazardous materials and violations of environmental law to the extent arising prior to October 5, 2015.

NOTE 12. LEASES

Our lease commitments are primarily for railcars, but also include logistics, manufacturing, storage, real estate and information technology assets. Our leases have remaining lease terms of up to 95 years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the leases within one year.

The amounts for leases included in our condensed balance sheet include:



		September 30, 2019
Lease assets:	Balance sheet location:	($ in millions)
Operating	Operating lease assets, net	$	314.6
Finance	Property, plant and equipment, less accumulated depreciation⁽¹⁾	5.8
Total lease assets		$	320.4
Lease liabilities:
Current
Operating	Current operating lease liabilities	$	71.2
Finance	Current installments of long-term debt	1.1
Long-term
Operating	Operating lease liabilities	248.2
Finance	Long-term debt	4.6
Total lease liabilities		$	325.1


(1)	As of September 30, 2019, assets recorded under finance leases were $10.0 million and accumulated depreciation associated with finance leases was $4.2 million.

The components of lease expense are recorded to cost of goods sold and selling and administration expenses in the condensed statement of operations, excluding interest on finance lease liabilities which is recorded to interest expense. The components of lease expense were as follows:



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Lease expense:	($ in millions)
Operating	$	22.8	$	68.0
Other operating lease expense⁽¹⁾	4.9		16.4
Finance:
Depreciation of leased assets	0.4		1.0
Interest on lease liabilities	0.1		0.2
Total lease expense	$	28.2	$	85.6


(1)	Includes costs associated with short-term leases and variable lease expenses.

The maturities of lease liabilities were as follows:



	September 30, 2019
	Operating leases			Finance leases			Total
	($ in millions)
2019	$	21.4		$	0.3		$	21.7
2020	76.3			2.2			78.5
2021	58.0			1.2			59.2
2022	42.7			0.8			43.5
2023	33.5			0.6			34.1
Thereafter	143.9			1.0			144.9
Total lease payments	375.8			6.1			381.9
Less: Imputed interest⁽¹⁾	(56.4		)	(0.4		)	(56.8		)
Present value of lease liabilities	$	319.4		$	5.7		$	325.1


(1)	Calculated using the discount rate for each lease.

As previously disclosed in our 2018 Annual Report on Form 10-K and under ASC 840, the previous lease accounting standard, future minimum lease payments for non-cancelable operating leases were expected to be as follows:



	December 31, 2018
	($ in millions)
2019	$	82.2
2020	61.4
2021	44.2
2022	31.8
2023	23.2
Thereafter	102.6
Total lease payments	$	345.4

Other information related to leases was as follows:



	Nine Months Ended September 30, 2019
Supplemental cash flows information:	($ in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	68.0
Operating cash flows from finance leases	0.2
Financing cash flows from finance leases	0.9
Non-cash increase in lease assets and lease liabilities:
Operating leases	$	90.3
Finance leases	2.5
Weighted-average remaining lease term:	September 30, 2019
Operating leases	9.4 years
Finance leases	3.3 years
Weighted-average discount rate:
Operating leases	3.23		%
Finance leases	3.28		%

As of September 30, 2019, we have additional operating leases for office space that have not yet commenced of approximately $27 million which are expected to commence during the fourth quarter of 2019 and first quarter of 2020 with

lease terms between 10 years and 15 years. We also have additional operating leases for railcars that have not yet commenced of approximately $7 million which are expected to commence during the fourth quarter of 2019 and first quarter of 2020 with lease terms between 3 years and 10 years.

NOTE 13. COMMITMENTS AND CONTINGENCIES

We are party to a dispute relating to a contract at our Plaquemine, LA facility. The other party to the contract filed a demand for arbitration alleging, among other things, that Olin breached the contract, and claims damages in excess of the amount Olin believes it is obligated to pay under the contract. The arbitration hearing is scheduled for the fourth quarter 2019. Any additional losses related to this contract dispute are not currently estimable because of unresolved questions of fact and law but, if resolved unfavorably to Olin, they could have a material adverse effect on our financial position, cash flows or results of operations.

Olin and Oxy Vinyls, L.P. (Oxy) have a long-term chlorine supply agreement, which is the subject of a pricing dispute. The dispute is pending in the United States District Court for the Southern District of Texas. Any losses related to this contract dispute are not currently estimable because of unresolved questions of fact and law but, if resolved unfavorably to Olin, they could have a material adverse effect on our financial position, cash flows or results of operations.

Olin, K.A. Steel Chemicals (a wholly owned subsidiary of Olin) and other caustic soda producers were named as defendants in six purported class action civil lawsuits filed March 22, 25 and 26, 2019 and April 12, 2019 in the U.S. District Court for the Western District of New York on behalf of the respective named plaintiffs and a putative class comprised of all persons and entities who purchased caustic soda in the U.S. directly from one or more of the defendants, their parents, predecessors, subsidiaries or affiliates at any time between October 1, 2015 and the present. Olin, K.A. Steel Chemicals and other caustic soda producers were also named as defendants in two purported class action civil lawsuits filed July 25 and 29, 2019 in the U.S. District Court for the Western District of New York on behalf of the respective named plaintiffs and a putative class comprised of all persons and entities who purchased caustic soda in the U.S. indirectly from distributors at any time between October 1, 2015 and the present. The other defendants named in the lawsuits are Occidental Petroleum Corporation, Occidental Chemical Corporation d/b/a OxyChem, Westlake Chemical Corporation, Shin-Etsu Chemical Co., Ltd., Shintech Incorporated, Formosa Plastics Corporation, and Formosa Plastics Corporation, U.S.A. The lawsuits allege the defendants conspired to fix, raise, maintain and stabilize the price of caustic soda, restrict domestic (U.S.) supply of caustic soda and allocate caustic soda customers. Plaintiffs seek an unspecified amount of damages and injunctive relief. We believe we have meritorious legal positions and will continue to represent our interests vigorously in this matter. Any losses related to this matter are not currently estimable because of unresolved questions of fact and law, but if resolved unfavorably to Olin, could have a material adverse effect on our financial position, cash flows or results of operations.

We, and our subsidiaries, are defendants in various other legal actions (including proceedings based on alleged exposures to asbestos) incidental to our past and current business activities. As of September 30, ~~2017,~~2019, December 31, ~~2016~~2018 and September 30, ~~2016,~~2018, our condensed balance sheets included accrued liabilities for these other legal actions of ~~$15.9~~$13.2 million, ~~$13.6~~$15.6 million and ~~$22.9~~$14.8 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 other legal actions will materially adversely affect our financial position, cash flows or results of operations. In connection with the ~~Acquisition, TDCC~~October 5, 2015 acquisition of Dow’s U.S. Chlor Alkali and Vinyl, Global Chlorinated Organics and Global Epoxy businesses, the prior owner of the businesses retained liabilities related to litigation to the extent arising prior to the Closing Date. In addition to the aforementioned legal actions, we are party to a dispute relating to a contract termination. The other party to the contract has filed an Amended Demand for Arbitration alleging, among other things, that Olin breached the contract and claims damages in excess of the amount Olin believes it is obligated for under the contract. The arbitration hearing is scheduled for the fourth quarter 2017. Any additional losses related to this contract dispute are not currently estimable because of unresolved questions of fact and law but, if resolved unfavorably to Olin, they could have a material effect on our financial results.October 5, 2015.

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 “Contingencies” ~~(ASC 450)~~ and, therefore, do not record gain contingencies and recognize income until it is earned and realizable.

For the nine months ended September 30, 2016, we recognized an insurance recovery of $11.0 million in other operating (expense) income for property damage and business interruption related to a 2008 chlor alkali facility incident.

NOTE 14. SHAREHOLDERS’ EQUITY

On April ~~24, 2014,~~26, 2018, our board of directors authorized a share repurchase program for ~~up to 8 million~~the purchase of shares of common stock at an aggregate price of up to $500.0 million. This program will terminate upon the purchase of $500.0 million of our common stock. Under our April 26, 2018 share repurchase program, we may pursue various share repurchase strategies, which include entering into accelerated share repurchase (ASR) agreements with third-party financial institutions to repurchase shares of Olin’s common stock. Under an ASR agreement, Olin pays a specified amount to the financial institution and receives an

initial delivery of shares. This initial delivery of shares represents the minimum number of shares that ~~terminated on April 24, 2017.~~ Olin may receive under the agreement. Upon settlement of the ASR agreement, the financial institution delivers additional shares, with the final number of shares delivered determined with reference to the volume weighted-average price of Olin’s common stock over the term of the agreement, less an agreed-upon discount. The transactions are accounted for as liability or equity transactions and also as share retirements, similar to our other share repurchase activity, when the shares are received, at which time there is an immediate reduction in the weighted-average common shares calculation for basic and diluted earnings per share.

On August 5, 2019, we entered into an ASR agreement with Goldman Sachs & Co. LLC (Goldman Sachs), a third-party financial institution, to repurchase $100.0 million of Olin’s common stock. This transaction qualified for treatment as an equity contract. Under this agreement, Olin paid $100.0 million to Goldman Sachs and received an initial delivery of 4.3 million shares in August 2019. The transaction had not settled as of September 30, 2019; however, upon settlement of the agreement in October 2019, we received approximately 1.4 million additional shares which resulted in a total of approximately 5.7 million shares repurchased under this ASR agreement.

For the nine months ended September 30, ~~2017~~2019 and ~~2016, no~~2018, 6.0 million and 0.5 million shares, respectively, were repurchased and retired at a cost of $135.6 million and $16.8 million, respectively. Subsequent to the settlement of the ASR transaction in October 2019, 7.4 million shares were ~~purchased and retired. We purchased~~repurchased at a cost of $135.6 million. As of September 30, 2019, we had repurchased a total of ~~1.9~~$185.6 million of our common stock, representing 8.1 million shares, ~~under the April 2014 program,~~ and ~~the 6.1~~$314.4 million ~~shares that~~of common stock remained authorized to be ~~purchased have expired. Related to the Acquisition, for a period of two years subsequent to the Closing Date, we were subject to certain restrictions on our ability to conduct share repurchases.~~repurchased.

We issued ~~1.0~~0.1 million ~~shares~~ and ~~less than 0.1~~0.2 million shares representing stock options exercised for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, with a total value of ~~$18.5~~$1.5 million and ~~$0.4~~$3.2 million, respectively.

In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (ASU 2018-02) which amends ASC 220 “Income Statement—Reporting Comprehensive Income.” This update allows a reclassification from accumulated other comprehensive loss to retained earnings for the stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act (the 2017 Tax Act) during each fiscal year or quarter in which the effect of the lower tax rate is recorded. We adopted this update in March 2018 and reclassified $85.9 million related to the deferred gain resulting from the 2017 Tax Act from accumulated other comprehensive loss to retained earnings.

The following table represents the activity included in accumulated other comprehensive loss:



	Foreign Currency Translation Adjustment (net of taxes)			Unrealized Gains (Losses) on Derivative Contracts (net of taxes)			Pension and Other Postretirement Benefits (net of taxes)			Accumulated Other Comprehensive Loss
	($ in millions)
Balance at January 1, 2018	$	7.6		$	11.1		$	(503.3	)	$	(484.6	)
Unrealized gains (losses):
First quarter	12.4			2.1			—			14.5
Second quarter	(26.1		)	(0.4		)	—			(26.5		)
Third quarter	(2.0		)	(2.6		)	—			(4.6		)
Reclassification adjustments of (gains) losses into income:
First quarter	—			(2.3		)	9.4			7.1
Second quarter	—			(2.7		)	9.1			6.4
Third quarter	—			(2.2		)	9.2			7.0
Tax benefit (provision):
First quarter	—			0.1			(4.0		)	(3.9		)
Second quarter	—			0.7			(1.0		)	(0.3		)
Third quarter	—			1.2			(1.7		)	(0.5		)
Net change	(15.7		)	(6.1		)	21.0			(0.8		)
Income tax reclassification adjustment	15.3			2.4			(103.6		)	(85.9		)
Balance at September 30, 2018	$	7.2		$	7.4		$	(585.9	)	$	(571.3	)
Balance at January 1, 2019	$	0.7		$	1.8		$	(653.5	)	$	(651.0	)
Unrealized (losses) gains:
First quarter	(8.3		)	(6.6		)	—			(14.9		)
Second quarter	3.3			(22.2		)	—			(18.9		)
Third quarter	(15.7		)	(12.3		)	—			(28.0		)
Reclassification adjustments of losses into income:
First quarter	—			2.2			7.4			9.6
Second quarter	—			6.3			7.1			13.4
Third quarter	—			9.0			7.3			16.3
Tax benefit (provision):
First quarter	—			1.1			(1.7		)	(0.6		)
Second quarter	—			3.8			(1.8		)	2.0
Third quarter	—			0.8			(1.4		)	(0.6		)
Net change	(20.7		)	(17.9		)	16.9			(21.7		)
Balance at September 30, 2019	$	(20.0	)	$	(16.1	)	$	(636.6	)	$	(672.7	)

Foreign
Currency
Translation
Adjustment
(net of taxes)

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, 2016 $ (12.1 ) $ (6.9 ) $ (473.5 ) $ (492.5 )
Unrealized gains (losses):
First quarter 24.0
1.1
—
25.1
Second quarter (14.3 ) (4.6 ) —
(18.9 )
Third quarter 6.6
4.2
5.1
$ 15.9
Reclassification adjustments into income:
First quarter —
3.7
6.1
9.8
Second quarter —
1.7
5.9
7.6
Third quarter —
—
3.3
$ 3.3
Tax (provision) benefit:
First quarter (8.5 ) (1.8 ) (2.3 ) (12.6 )
Second quarter 3.5
1.1
(2.4 ) 2.2
Third quarter (2.0 ) (1.6 ) (3.0 ) $ (6.6 )
Net Change 9.3
3.8
12.7
25.8
Balance at September 30, 2016 $ (2.8 ) $ (3.1 ) $ (460.8 ) $ (466.7 )
Balance at January 1, 2017 $ (24.1 ) $ 12.8
$ (498.7 ) $ (510.0 )
Unrealized gains (losses):
First quarter 8.3
(3.1 ) —
5.2
Second quarter 28.1
(3.7 ) —
24.4
Third quarter 16.0
3.2
—
19.2
Reclassification adjustments into income:
First quarter —
(0.1 ) 6.6
6.5
Second quarter —
(2.3 ) 6.8
4.5
Third quarter —
(1.2 ) 6.8
5.6
Tax (provision) benefit:
First quarter (2.3 ) 1.2
(2.7 ) (3.8 )
Second quarter (12.2 ) 2.3
(2.3 ) (12.2 )
Third quarter (6.2 ) (0.7 ) (2.5 ) (9.4 )
Net Change 31.7
(4.4 ) 12.7
40.0
Balance at September 30, 2017 $ 7.6
$ 8.4
$ (486.0 ) $ (470.0 )

Net income, ~~(loss)~~interest expense and cost of goods sold included reclassification adjustments for realized gains and losses on derivative contracts from accumulated other comprehensive loss.

Net income ~~(loss), cost of goods sold~~ and ~~selling and administrative expenses~~non-operating pension income included the amortization of prior service costs and actuarial losses from accumulated other comprehensive loss. ~~This amortization is recognized equally in cost of goods sold and selling and administrative expenses.~~

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, and ~~include~~includes the operating results of non-consolidated affiliates. Consistent with the guidance in ASC 280 “Segment ~~Reporting” (ASC 280),~~Reporting,” we have determined it is appropriate to include the operating results of non-consolidated affiliates in the relevant segment financial results. 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 used in our Epoxy segment is transferred at cost from the Chlor Alkali Products and Vinyls segment. Sales and profits are recognized in the Chlor Alkali Products and Vinyls segment for all caustic soda generated and sold by Olin. Sales are attributed to geographic areas based on customer location.



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Sales:	($ in millions)
Chlor Alkali Products and Vinyls	$	876.3		$	1,051.1		$	2,657.7		$	3,005.9
Epoxy	511.6			647.3			1,554.4			1,794.4
Winchester	188.7			174.0			510.8			510.8
Total sales	$	1,576.6		$	1,872.4		$	4,722.9		$	5,311.1
Income before taxes:
Chlor Alkali Products and Vinyls	$	112.7		$	210.8		$	303.8		$	490.7
Epoxy	24.2			31.1			38.6			33.8
Winchester	13.9			10.3			33.1			34.1
Corporate/other:
Environmental income (expense)	0.8			110.8			(18.2		)	104.1
Other corporate and unallocated costs	(43.4		)	(42.7		)	(117.8		)	(124.5		)
Restructuring charges	(4.9		)	(3.3		)	(12.7		)	(13.7		)
Acquisition-related costs	—			(0.4		)	—			(1.0		)
Other operating income (expense)	0.1			(1.7		)	0.3			6.4
Interest expense	(63.9		)	(59.2		)	(179.2		)	(184.0		)
Interest income	0.2			0.3			0.7			1.1
Non-operating pension income	4.1			5.4			12.2			16.2
Other income	—			—			11.2			—
Income before taxes	$	43.8		$	261.4		$	72.0		$	363.2

Environmental income (expense) for the nine months ended September 30, 2019 included $4.8 million of an environmental insurance-related settlement gain. Environmental income (expense) for both the three and nine months ended September 30, 2018 included pretax insurance recoveries for environmental costs incurred and expensed in prior periods of $110.0 million. Environmental income (expense) is included in cost of goods sold in the condensed statements of operations.

For the nine months ended September 30, 2019, other income included a gain of $11.2 million on the sale of our equity interest in a non-consolidated affiliate.

Earnings (losses) of non-consolidated affiliates are included in the Chlor Alkali Products and Vinyls segment results consistent with management’s monitoring of the operating segments. The earnings of non-consolidated affiliates were $0.4 million for the three months ended September 30, 2018. The losses of non-consolidated affiliates were $20.2 million for the nine months ended September 30, 2018, which reflect a $21.5 million non-cash impairment charge recorded during the second quarter of 2018.

Other operating income (expense) for both the three and nine months ended September 30, 2018 included a $1.7 million loss on the sale of land. For the nine months ended September 30, 2018, we also recognized an insurance recovery of $8.0 million in other operating income (expense) for a second quarter 2017 business interruption at our Freeport, TX vinyl chloride monomer facility.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Sales: ($ in millions)
Chlor Alkali Products and Vinyls $ 881.2
$ 779.4
$ 2,583.2
$ 2,216.7
Epoxy 489.9
470.1
1,549.5
1,380.3
Winchester 183.8
203.2
515.8
567.9
Total sales $ 1,554.9
$ 1,452.7
$ 4,648.5
$ 4,164.9
Income (loss) before taxes:
Chlor Alkali Products and Vinyls $ 129.7
$ 53.7
$ 270.0
$ 152.5
Epoxy (1.7 ) 10.3
(11.0 ) 18.5
Winchester 17.2
36.0
61.3
95.9
Corporate/other:
Pension income 11.1
15.4
32.1
40.2
Environmental expense (1.8 ) (0.4 ) (6.2 ) (5.5 )
Other corporate and unallocated costs (31.1 ) (28.2 ) (94.2 ) (81.7 )
Restructuring charges (9.2 ) (5.2 ) (25.9 ) (106.2 )
Acquisition-related costs (1.1 ) (13.1 ) (12.5 ) (39.6 )
Other operating (expense) income —
(0.2 ) (0.1 ) 10.5
Interest expense (53.1 ) (47.5 ) (158.0 ) (143.6 )
Interest income 0.4
0.5
1.0
1.3
Income (loss) before taxes $ 60.4
$ 21.3
$ 56.5
$ (57.7 )



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Sales by geography:	($ in millions)
Chlor Alkali Products and Vinyls
United States	$	613.7	$	682.8	$	1,818.7	$	1,956.0
Europe	27.2		40.1		104.9		136.2
Other foreign	235.4		328.2		734.1		913.7
Total Chlor Alkali Products and Vinyls	876.3		1,051.1		2,657.7		3,005.9
Epoxy
United States	177.7		209.1		517.2		589.9
Europe	199.6		289.3		657.6		763.0
Other foreign	134.3		148.9		379.6		441.5
Total Epoxy	511.6		647.3		1,554.4		1,794.4
Winchester
United States	174.5		155.5		462.6		460.2
Europe	2.8		1.8		7.9		7.0
Other foreign	11.4		16.7		40.3		43.6
Total Winchester	188.7		174.0		510.8		510.8
Total
United States	965.9		1,047.4		2,798.5		3,006.1
Europe	229.6		331.2		770.4		906.2
Other foreign	381.1		493.8		1,154.0		1,398.8
Total sales	$	1,576.6	$	1,872.4	$	4,722.9	$	5,311.1



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Sales by product line:	($ in millions)
Chlor Alkali Products and Vinyls
Caustic soda	$	421.7	$	580.3	$	1,344.8	$	1,682.0
Chlorine, chlorine-derivatives and other co-products	454.6		470.8		1,312.9		1,323.9
Total Chlor Alkali Products and Vinyls	876.3		1,051.1		2,657.7		3,005.9
Epoxy
Aromatics and allylics	237.9		345.6		716.5		891.8
Epoxy resins	273.7		301.7		837.9		902.6
Total Epoxy	511.6		647.3		1,554.4		1,794.4
Winchester
Commercial	131.0		118.2		341.0		335.3
Military and law enforcement	57.7		55.8		169.8		175.5
Total Winchester	188.7		174.0		510.8		510.8
Total sales	$	1,576.6	$	1,872.4	$	4,722.9	$	5,311.1

NOTE 16. STOCK-BASED COMPENSATION

Stock-based compensation granted includes stock options, performance stock awards, restricted stock awards and deferred directors’ compensation. Stock-based compensation expense was as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	($ in millions)
Stock-based compensation	$	4.2		$	4.1		$	8.5		$	15.0
Mark-to-market adjustments	(1.4		)	(1.5		)	(1.0		)	(6.1		)
Total expense	$	2.8		$	2.6		$	7.5		$	8.9

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
($ in millions)
Stock-based compensation $ 3.0
$ 3.8
$ 14.5
$ 9.8
Mark-to-market adjustments 2.6
(1.4 ) 3.9
1.0
Total expense $ 5.6
$ 2.4
$ 18.4
$ 10.8

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	2019			2018
Dividend yield	3.05		%	2.43		%
Risk-free interest rate	2.51		%	2.72		%
Expected volatility	34		%	32		%
Expected life (years)	6.0			6.0
Weighted-average grant fair value (per option)	$	6.76		$	8.89
Weighted-average exercise price	$	26.26		$	32.94
Shares granted	1,575,900			927,000

Grant date 2017 2016
Dividend yield 2.69 % 6.09 %
Risk-free interest rate 2.06 % 1.35 %
Expected volatility 34 % 32 %
Expected life (years) 6.0
6.0
Weighted-average grant fair value (per option) $ 7.78
$ 1.90
Weighted-average exercise price $ 29.75
$ 13.14
Shares granted 1,572,000
1,670,400

Dividend yield ~~for 2017 and 2016~~ 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 of future exercise patterns.

NOTE 17. DEBT

On ~~March 9, 2017, we entered into a new five-year $1,975.0~~July 16, 2019, Olin issued $750.0 million ~~senior credit facility, which amended and restated the existing $1,850.0 million senior credit facility (the Senior Credit Facility). Pursuant to the agreement, the~~ aggregate principal amount of 5.625% senior notes due August 1, 2029 (2029 Notes), which were registered under the ~~term loan facility was increased to $1,375.0 million (Term Loan Facility),~~Securities Act of 1933, as amended. Interest on the 2029 Notes began accruing from July 16, 2019 and is payable semi-annually beginning on February 1, 2020. Proceeds from the ~~aggregate commitments under the senior revolving credit facility~~2029 Notes were increased to $600.0 million (Senior Revolving Credit Facility and, together with the Term Loan Facility, the Amended Senior Credit Facility), from $500.0 million. In September 2017, we borrowed $120.0 million under the Senior Revolving Credit Facility and used the proceeds to fund a portion of the payment to TDCC associated with a long-term ethylene supply contract to reserve additional ethylene at producer economics. At September 30, 2017, we had $461.4 million available under our $600.0 million Senior Revolving Credit Facility because we had borrowed $120.0 million and issued $18.6 million of letters of credit. In March 2017, we drew the entire $1,375.0 million term loan and used the proceeds to redeem the remaining balance of the $1,375.0 million term loan facility (Term Loan Facility) of $493.0 million and $150.0 million of the Receivables Financing Agreement. In connection with the repayment of the Receivables Financing Agreement, the existing agreement was extended to July 15, 2022 and downsized to $10.0 million with the option to expand to $300.0 million.

On July 16, 2019, Olin entered into a new five-year, $2,000.0 million senior credit facility (2019 Senior Credit ~~Facility and a portion of~~Facility), which replaces the ~~Sumitomo Credit Facility.~~existing $1,975.0 million senior credit facility. The ~~maturity date for the Amended~~2019 Senior ~~Credit Facility was extended from October 5, 2020 to March 9, 2022. The $600.0 million Senior Revolving~~ Credit Facility includes a ~~$100.0~~senior unsecured delayed-draw term loan facility in an aggregate principal amount of up to $1,200.0 million ~~letter of credit subfacility.~~(Delayed Draw Term Loan Facility). The Delayed Draw Term Loan Facility will be available on a delayed basis in up to 3 draws to be made on or prior to November 29, 2020. The Delayed Draw Term Loan Facility includes principal amortization amounts payable ~~in equal quarterly installments~~beginning the quarter ending after the facility is borrowed upon at a rate of 5.0% per annum for the first two years, increasing to 7.5% per annum for the following year and to 10.0% per annum for the last two years. ~~For~~We expect the ~~nine months ended~~proceeds from the Delayed Draw Term Loan Facility will be used to redeem the 9.75% senior notes due 2023 and the 10.00% senior notes due 2025 on or about October 15, 2020. The 2019 Senior Credit Facility also includes a senior unsecured revolving credit facility with aggregate commitments in an amount equal to $800.0 million (2019 Senior Revolving Credit Facility), which was increased from $600.0 million. The 2019 Senior Revolving Credit Facility includes a $100.0 million letter of credit subfacility. At September 30, ~~2017~~2019, we had $796.5 million available under our $800.0 million 2019 Senior Revolving Credit Facility because we had issued $3.5 million of letters of credit. The maturity date for the 2019 Senior Credit Facility is July 16, 2024 at which point all outstanding Delayed Draw Term Loan Facility and ~~2016, we repaid $34.4 million~~2019 Senior Revolving Credit Facility balances will become due and ~~$50.6 million under the required quarterly installments of the term loan facilities, respectively.~~payable.

Under the ~~Amended~~2019 Senior Credit Facility, we may select various floating rate borrowing options. The actual interest rate paid on borrowings under the ~~Amended~~2019 Senior Credit Facility is based on a pricing grid which is dependent upon the leverage ratio as calculated under the terms of the applicable facility for the prior fiscal quarter. The ~~facility~~2019 Senior Credit Facility includes various customary restrictive covenants, including restrictions related to the ratio of debt to earnings before interest expense, taxes, depreciation and amortization (leverage ratio) and the ratio of earnings before interest expense, taxes, depreciation and amortization to interest expense (coverage ratio). Compliance with these covenants is determined quarterly based on ~~the~~ operating cash flows. We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of September 30, ~~2017,~~2019, 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 of September 30, ~~2017,~~2019, there were no covenants or other restrictions that would have limited our ability to borrow under these facilities.

For both the three and nine months ended September 30, 2019, we recognized interest expense of $2.8 million for the write-off of unamortized deferred debt issuance costs related to the redemption of the remaining balance of the Term Loan Facility, redemption of the remaining balance of and reduction in the borrowing capacity under the Receivables Financing Agreement and issuance of the 2019 Senior Credit Facility. For the nine months ended September 30, 2019, we paid debt issuance costs of $14.4 million, primarily for the issuance of the 2029 Notes and 2019 Senior Credit Facility.

On ~~March 9, 2017,~~January 19, 2018, Olin issued ~~$500.0~~$550.0 million aggregate principal amount of ~~5.125%~~5.00% senior notes due ~~September 15, 2027 (2027~~February 1, 2030 (2030 Notes), which were registered under the Securities Act of 1933, as amended. Interest on the ~~2027~~2030 Notes began accruing from ~~March 9, 2017~~January 19, 2018 and is paid semi-annually beginning on ~~September 15, 2017.~~August 1, 2018. Proceeds from the ~~2027~~2030 Notes were used to redeem $550.0 million of debt under the ~~remaining balance of the Sumitomo Credit~~$1,375.0 million Term Loan Facility.

For the nine months ended September 30, ~~2017,~~2018, we recognized interest expense of ~~$2.7~~$2.6 million for the write-off of unamortized deferred debt issuance costs related to ~~these actions.~~the redemption of $550.0 million of debt under the $1,375.0 million Term Loan Facility. For the nine months ended September 30, ~~2017,~~2018, we paid debt issuance costs of ~~$11.2~~$8.5 million ~~relating to~~for the ~~Amended Senior Credit Facility and~~issuance of the ~~2027~~2030 Notes.

NOTE 18. 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%5.0% and ~~10%~~7.5% of the employee’s eligible compensation. The defined contribution plan expense for the three months ended September 30, ~~2017~~2019 and ~~2016~~2018 was ~~$7.0~~$6.9 million and ~~$7.1~~$6.7 million, respectively, and for the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 was ~~$22.4~~$23.2 million and ~~$20.5~~$22.0 million, respectively.

Company matching contributions are invested in the same investment allocation as the employee’s contribution. Our matching contributions for eligible employees for ~~both~~ the three months ended September 30, ~~2017~~2019 and ~~2016~~2018 were ~~$3.0~~$4.0 million and $3.9 million, respectively, and for ~~both~~ the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 were ~~$8.7 million.~~$11.9 million and $11.3 million, respectively.

NOTE 19. 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						Pension Benefits						Other Postretirement Benefits
	Three Months Ended September 30,						Three Months Ended September 30,						Three Months Ended September 30,						Three Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019		2018
Components of Net Periodic Benefit (Income) Cost	($ in millions)												($ in millions)
Service cost	$	4.3		$	3.3		$	0.3		$	0.2		$	2.7		$	3.3		$	0.2	$	0.3
Interest cost	21.8			21.8			0.3			0.3			23.7			21.5			0.4		0.3
Expected return on plans’ assets	(39.2		)	(39.5		)	—			—			(35.5		)	(36.5		)	—		—
Amortization of prior service cost	—			(0.1		)	(0.6		)	(2.0		)
Recognized actuarial loss	6.8			5.2			0.6			0.2			6.8			8.6			0.5		0.6
Net periodic benefit (income) cost	$	(6.3	)	$	(9.3	)	$	0.6		$	(1.3	)	$	(2.3	)	$	(3.1	)	$	1.1	$	1.2



	Pension Benefits						Other Postretirement Benefits
	Nine Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019		2018
Components of Net Periodic Benefit (Income) Cost	($ in millions)
Service cost	$	8.5		$	8.5		$	0.8	$	1.0
Interest cost	71.0			64.8			1.3		1.1
Expected return on plans’ assets	(106.3		)	(109.9		)	—		—
Recognized actuarial loss	20.2			25.9			1.6		1.8
Net periodic benefit (income) cost	$	(6.6	)	$	(10.7	)	$	3.7	$	3.9

Pension Benefits
Other Postretirement
Benefits
Nine Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Components of Net Periodic Benefit (Income) Cost ($ in millions)
Service cost $ 12.7

$ 9.2

$ 0.9

$ 0.9
Interest cost 65.0

66.0

1.1

1.2
Expected return on plans’ assets (117.6 )
(118.4 )
—

—
Amortization of prior service cost —
—
(1.9 ) (2.0 )
Recognized actuarial loss 20.2

15.5

1.9

1.8
Net periodic benefit (income) cost $ (19.7 )
$ (27.7 )
$ 2.0

$ 1.9

We made cash contributions to our international qualified defined benefit pension plans of ~~$1.2~~$0.7 million and ~~$1.1~~$1.3 million for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively. For the nine months ended September 30, ~~2016,~~2019, we made a discretionary cash contribution to our domestic qualified defined benefit pension ~~plans~~plan of ~~$6.0~~$12.5 million.

NOTE 20. INCOME TAXES

The ~~following table accounts~~effective tax rate for the ~~difference between the actual tax provision and the amounts obtained by applying the statutory U.S. federal income tax rate of 35.0% to income before taxes.~~

Three Months Ended September 30, Nine Months Ended September 30,
Effective Tax Rate Reconciliation (Percent) 2017 2016 2017 2016
Statutory federal tax rate 35.0 % 35.0 % 35.0 % 35.0 %
Salt depletion (11.6 ) (17.3 ) (11.6 ) 19.6
Stock-based compensation (0.9 ) —
(5.1 ) —
Foreign rate differential (8.9 ) (4.1 ) (8.9 ) 3.6
U.S. tax on foreign earnings 8.8
4.0
8.8
(3.4 )
Dividends paid to CEOP (0.5 ) (0.8 ) (0.5 ) 1.1
State income taxes, net —
2.8
—
6.1
Change in valuation allowance —
1.0
—
(0.8 )
Change in tax contingencies 0.4
0.6
(16.9 ) (7.2 )
Return to provision (3.2 ) (3.5 ) (0.5 ) 9.0
Impact of tax rate changes (7.1 ) (2.0 ) (7.5 ) 0.7
Other, net 0.7
2.1
0.7
(0.8 )
Effective tax rate 12.7 % 17.8 % (6.5 )% 62.9 %

Under ASC 740 “Income Taxes” (ASC 740), companies are required to apply their estimated annual tax rate on a year-to-date basis in each interim period. Under ASC 740, companies should not apply the estimated annual tax rate to interim financial results if the estimated annual tax rate is not reliably predictable. In this situation, the interim tax rate should be based on the actual year-to-date results. Based on the losses for the ninethree months ended September 30, 2016 and the full year pretax projections as of September 30, 2016, as well as the existence of large favorable permanent book-tax differences for 2016, a reliable projection of our annual effective tax rate as of September 30, 2016 was difficult to determine, producing significant variations in the customary relationship between income tax expense and pretax book income in interim periods, as a small change in forecasted pretax income could cause a significant change in the estimated annual effective tax rate. Consequently, the effective tax rates for the three and nine months ended September 30, 2016 were determined based on year-to-date results rather than utilizing the method of calculating an estimated annual effective tax rate which was used up until the period ended March 31, 2016 and for the three and nine months ended September 30, 2017. The year-to-date actual discrete method was applied for the remainder of 2016.

~~The effective tax rates for the three and nine months ended September 30, 2017~~2019 included a benefit associated with the finalization of ~~$0.5 million and $2.9 million, respectively,~~the Internal Revenue Service (IRS) review of years 2013 to 2015 U.S. income tax claims, a benefit associated with stock-based compensation, a benefit ~~of $1.9 million and $1.0 million, respectively,~~ associated with prior year tax positions, a benefit from foreign tax law changes, a benefit from the remeasurement of deferred taxes due to a decrease in our state effective tax rates, an expense from a change in tax contingencies and an expense from a net increase in the valuation allowance related to state deferred tax assets. These factors resulted in a net $24.0 million tax benefit. After giving consideration to these items, the effective tax rate for the three months ended September 30, 2019 of 53.9% was higher than the 21% U.S. federal statutory rate, primarily due to state taxes, foreign income taxes and foreign income inclusions and a net 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 September 30, 2018 included a benefit associated with stock-based compensation, a benefit associated with the estimated increase of the one-time 2017 Tax Act provisional tax benefit, 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 a benefit ~~of $4.3 million related to~~from the remeasurement of deferred taxes due to a decrease in our state effective tax rates. ~~The~~These factors resulted in a net $0.5 million tax benefit. After giving consideration to these items, the effective tax rate for the ~~nine~~three months ended September 30, ~~2017 also included a benefit~~2018 of ~~$9.5 million related~~25.6% was higher than the 21% U.S. federal statutory rate, primarily due to ~~an agreement reached with the Internal Revenue Service (IRS) for the years 2008~~state taxes, foreign income taxes and ~~2010 to 2012~~U.S. minimum tax ~~examinations.~~on foreign earnings, partially offset by favorable permanent salt depletion deductions.

The effective tax rate for the nine months ended September 30, ~~2016~~2019 included a benefit ~~of $5.2 million~~ associated with ~~a return to provision adjustment for~~ the finalization of ~~our prior years’~~the IRS review of years 2013 to 2015 U.S. ~~federal and state~~ income tax ~~returns. The return~~claims, a benefit associated with stock-based compensation, a benefit associated with prior year tax positions, a benefit from foreign tax law changes, a benefit from the remeasurement of deferred

taxes due to ~~provision adjustment~~a decrease in our state effective tax rates, a benefit from a net decrease in the valuation allowance related to state deferred tax assets and an expense from a change in tax contingencies. These factors resulted in a net $24.3 million tax benefit. After giving consideration to these items, the effective tax rate for the nine months ended September 30, ~~2016 included $14.9 million~~2019 of ~~benefit~~42.2% was higher than the 21% U.S. federal statutory rate primarily ~~associated with~~due to state taxes, foreign income taxes and foreign income inclusions and a ~~change~~net increase in ~~estimate~~the valuation allowance related to ~~the calculation of~~losses in foreign jurisdictions, partially offset by favorable permanent salt depletion ~~and $9.7 million of expense associated with the correction of an immaterial error related to non-deductible acquisition costs.~~deductions. The effective tax rate for the nine months ended September 30, ~~2016 also~~2018 included a benefit associated with stock-based compensation, a benefit from a change in tax contingencies, a benefit related to a foreign dividend payment, a benefit associated with the estimated increase of the one-time 2017 Tax Act provisional tax benefit, a benefit associated with prior year tax positions, an expense ~~of $4.1 million~~from a net increase in the valuation allowance related to ~~changes~~deferred tax assets in ~~uncertain~~foreign jurisdictions and a benefit from the remeasurement of deferred taxes due to a decrease in our state effective tax ~~positions~~rates. These factors resulted in a net $2.7 million tax benefit. After giving consideration to these items, the effective tax rate for ~~prior~~the nine months ended September 30, 2018 of 25.1% was higher than the 21% U.S. federal statutory rate primarily due to state taxes, foreign income taxes and U.S. minimum tax ~~years.~~on foreign earnings, partially offset by favorable permanent salt depletion deductions.

As of September 30, ~~2017,~~2019, we had ~~$35.0~~$22.3 million of gross unrecognized tax benefits, which would have a net ~~$33.5~~$21.8 million impact on the effective tax rate, if recognized. As of September 30, ~~2016,~~2018, we had ~~$38.0~~$33.3 million of gross unrecognized tax benefits, of which ~~$36.3~~$32.4 million would have impacted the effective tax rate, if recognized. The amount of unrecognized tax benefits was as follows:


	September 30,						September 30,
	2017			2016			2019			2018
	($ in millions)						($ in millions)
Balance at beginning of year	$	38.4		$	35.1		$	33.8		$	36.3
Increases for prior year tax positions	4.9			5.8			1.6			—
Decreases for prior year tax positions	(9.2		)	(1.8		)	(14.3		)	(4.6		)
Increases for current year tax positions	2.0			1.3			1.4			1.6
Settlement with taxing authorities	(1.0		)	(2.1		)
Reductions due to statute of limitations	(0.1		)	(0.3		)
Settlements with taxing authorities							(0.2		)	—
Balance at end of period	$	35.0		$	38.0		$	22.3		$	33.3

In ~~May 2017, we reached an agreement in principle with~~July 2019, the ~~IRS regarding their examination~~review of ~~our~~certain U.S. income tax ~~returns~~claims by the IRS for ~~2008 and 2010~~the years 2013 to ~~2012. The settlement~~2015 was finalized which resulted in a ~~reduction of~~$14.3 million income tax ~~expense of $9.5 million~~benefit primarily related ~~primarily~~ to favorable adjustments in uncertain tax positions for prior tax years.

As of September 30, ~~2017,~~2019, we believe it is reasonably possible that our total amount of unrecognized tax benefits will decrease by approximately ~~$5.5~~$3.8 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. ~~None of our~~Our 2016 U.S. federal income tax ~~returns are~~return is currently under examination by the IRS. ~~In connection with the Acquisition, TDCC retained liabilities relating to taxes to the extent arising prior to the Closing Date.~~ 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	~~2013~~2016 - ~~2016~~2018
U.S. state income tax	2006 - ~~2016~~2018
Canadian federal income tax	2012 - ~~2016~~2018
Brazil	2014 - ~~2016~~2018
Germany	2015 - ~~2016~~2018
China	2014 - ~~2016~~2018
The Netherlands	2014 - ~~2016~~
~~South Korea~~	~~2014 - 2016~~2018

NOTE 21. DERIVATIVE FINANCIAL INSTRUMENTS

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 condensed ~~statement of financial position~~balance sheets 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 derivative contracts as cash flow hedges of forecasted purchases of commodities and forecasted interest payments related to variable-rate borrowings and designate 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.

~~Olin~~We actively ~~manages~~manage currency exposures that are associated with net monetary asset positions, currency purchases and sales commitments denominated in foreign currencies and foreign currency denominated assets and liabilities created in the normal course of business. We enter into forward sales and purchase contracts to manage currency risk to offset our net exposures, by currency, related to the foreign currency denominated monetary assets and liabilities of our operations. At September 30, ~~2017,~~2019, we had outstanding forward contracts to buy foreign currency with a notional value of ~~$106.1~~$98.5 million and to sell foreign currency with a notional value of ~~$94.1~~$105.6 million. All of the currency derivatives expire within one year and are for U.S. dollar (USD) equivalents. The counterparties to the forward contracts are large financial institutions; however, the risk of loss to us in the event of nonperformance by a counterparty could be significant to our financial position or results of operations. At December 31, ~~2016,~~2018, we had outstanding forward contracts to buy foreign currency with a notional value of ~~$73.2~~$123.7 million and to sell foreign currency with a notional value of ~~$100.8~~$82.6 million. At September 30, ~~2016,~~2018, we had outstanding forward contracts to buy foreign currency with a notional value of ~~$89.5~~$166.2 million and to sell foreign currency with a notional value of ~~$110.7~~$126.0 million.

Cash ~~flow hedges~~Flow Hedges

~~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 (loss) until the hedged item is recognized in earnings. ~~Gains and losses on the derivatives representing hedge ineffectiveness are recognized currently in earnings.~~

We had the following notional ~~amount~~amounts of outstanding commodity contracts that were entered into to hedge forecasted purchases:



	September 30, 2019		December 31, 2018		September 30, 2018
	($ in millions)
Natural gas	$	56.6	$	58.4	$	65.6
Other commodities	111.0		58.1		57.2
Total notional	$	167.6	$	116.5	$	122.8

September 30, 2017 December 31, 2016 September 30, 2016
($ in millions)
Copper $ 42.1
$ 35.8
$ 37.3
Zinc 8.0
8.0
7.1
Lead —
3.4
5.5
Natural gas 38.4
54.4
51.4

As of September 30, ~~2017,~~2019, the counterparties to these commodity contracts were Wells Fargo Bank, N.A. (Wells Fargo) ~~($33.2 million)~~, Citibank, ~~($29.1 million)~~N.A., ~~Merrill Lynch Commodities, Inc. ($18.4 million) and~~ JPMorgan Chase Bank, National Association ~~($7.8 million),~~and The Bank of Nova Scotia, all of which are major financial institutions.

We use cash flow hedges for certain raw material and energy costs such as copper, zinc, lead, ethane, 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 our manufacturing process. At September 30, ~~2017,~~2019, we had open derivative contract positions ~~in futures contracts~~

through ~~2022.~~2027. If all open futures contracts had been settled on September 30, ~~2017,~~2019, we would have recognized a pretax ~~gain~~loss of ~~$4.8~~$20.9 million.

If commodity prices were to remain at September 30, ~~2017~~2019 levels, approximately ~~$0.6~~$13.9 million of deferred ~~gains~~losses, net of tax, would be reclassified into earnings during the next twelve months. The actual effect on earnings will be dependent on actual commodity prices when the forecasted transactions occur.

We use interest rate swaps as a means of minimizing cash flow fluctuations that may arise from volatility in interest rates of our variable-rate borrowings. In April 2016, we entered into three tranches of forward starting interest rate swaps whereby we agreed to pay fixed rates to the counterparties who, in turn, pay us floating rates on $1,100.0 million, $900.0 million, and $400.0 million of our underlying floating-rate debt obligations. Each tranche’s term length iswas for twelve months beginning on December 31, 2016, December 31, 2017 and December 31, 2018, respectively. The counterparties to the agreements ~~are~~were SMBC Capital Markets, Inc., Wells Fargo, PNC Bank, National Association and Toronto-Dominion Bank. These counterparties are large financial institutions; however, the risk of loss to us in the event of nonperformance by a counterparty could be significant to our financial position or results of operations. We ~~have~~ designated the swaps as cash flow hedges of the risk of changes in interest payments associated with our variable-rate borrowings. ~~Accordingly,~~In July 2019, we terminated the remaining interest rate swap ~~agreements have been recorded at their fair market value~~which resulted in a gain of ~~$8.7~~$1.8 million ~~and are included~~that was recognized in ~~other current assets and other assets on the accompanying condensed balance sheet as of September 30, 2017, with the corresponding gain deferred as a component of other comprehensive loss.~~interest expense. For the three months ended September 30, 2019 and 2018, $1.8 million and $2.5 million, respectively, and for the nine months ended September 30, ~~2017, $1.2~~2019 and 2018, $4.3 million and ~~$1.7~~$5.9 million, respectively, of income was recorded to interest expense on the accompanying condensed ~~statement~~statements of operations related to these swap agreements. ~~No gain or loss has been recorded in earnings as a result of ineffectiveness.~~

Fair Value Hedges

We use interest rate swaps as a means of ~~minimizing cash flow fluctuations that may arise from volatility in~~managing interest ~~rates of our variable-rate borrowings. These~~expense and floating interest rate swaps are treated as cash flow hedges. At September 30, 2017, we had open interest rate swaps designated as cash flow hedges with maximum terms through 2019. If all open interest rate swap contracts had been settled on September 30, 2017, we would have recognized a pretax gain of $8.7 million.

~~If interest rates were~~exposure to remain at September 30, 2017 levels, $3.1 million of deferred gains would be reclassified into earnings during the next twelve months. The actual effect on earnings will be dependent on actual interest rates when the forecasted transactions occur.

~~Fair value hedges~~

optimal levels. 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. As of September 30, ~~2017,~~2019, December 31, ~~2016~~2018 and September 30, ~~2016,~~2018, the total notional amounts of our interest rate swaps designated as fair value hedges were ~~$500.0 million,~~0, $500.0 million and ~~$250.0~~$500.0 million, respectively.

In April 2016, we entered into interest rate swaps on $250.0 million of our underlying fixed-rate debt obligations, whereby we agreed to pay variable rates to the counterparties who, in turn, pay us fixed rates. The counterparties to these agreements are Toronto-Dominion Bank and SMBC Capital Markets, Inc., both of which are major financial institutions.

In October 2016, we entered into interest rate swaps on an additional $250.0 million of our underlying fixed-rate debt obligations, whereby we agreed to pay variable rates to the counterparties who, in turn, pay us fixed rates. The counterparties to these agreements are PNC Bank, National Association and Wells Fargo, both of which are major financial institutions.

We ~~have~~ designated the April 2016 and October 2016 interest rate swap agreements as fair value hedges of the risk of changes in the value of fixed-rate debt due to changes in interest rates for a portion of our fixed-rate borrowings. ~~Accordingly,~~In August 2019, we terminated the ~~swap agreements have been recorded at their fair market~~April 2016 and October 2016 interest rate swaps which resulted in a loss of $2.3 million that will be deferred as an offset to the carrying value of ~~$23.9 million~~the related debt and ~~are included in other long-term liabilities on the accompanying condensed balance sheet as~~will be recognized to interest expense through October 2025. As of September 30, ~~2017, with a corresponding decrease~~2019, $2.3 million of this loss was included in ~~the carrying amount of the related~~long-term debt. For the three months ended September 30, ~~2017~~2019 and ~~2016, $0.5~~2018, $0.9 million and ~~$0.7~~$0.6 million, respectively, and for the nine months ended September 30, ~~2017~~2019 and ~~2016, $2.4~~2018, $2.6 million and ~~$1.2~~$0.9 million, respectively, of ~~income~~expense was recorded to interest expense on the accompanying condensed ~~statement~~statements of operations related to these swap agreements. ~~No gain or loss has been recorded in earnings as a result of ineffectiveness.~~

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 September 30, 2017, less than $0.1 million of this gain was included in current installments of long-term debt.

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.

Financial ~~statement impacts~~Statement Impacts

We present our derivative assets and liabilities in our condensed balance sheets on a net basis whenever we have a legally enforceable master netting agreement with the counterparty to our derivative contracts. We use these agreements to manage and substantially reduce our potential counterparty credit risk.

The following table summarizes the location and fair value of the derivative instruments on our condensed balance sheets. The table disaggregates our net derivative assets and liabilities into gross components on a contract-by-contract basis before giving effect to master netting arrangements:

Asset Derivatives Liability Derivatives
Fair Value Fair Value
Balance Sheet Location September 30, 2017 December 31, 2016 September 30, 2016 Balance Sheet Location September 30, 2017 December 31, 2016 September 30, 2016
($ in millions) ($ in millions)
Derivatives Designated as Hedging Instruments
Interest rate contracts Other current assets $ 5.0
$ 1.9
$ —
Current installments of long-term debt $ —
$ 0.1
$ —
Interest rate contracts Other assets —
—
—
Long-term debt —
—
0.2
Interest rate contracts Other assets 3.7
7.7
2.5
Other liabilities 23.9
28.5
2.3
Commodity contracts – gains Other current assets 7.8
13.2
1.9
Accrued liabilities —
—
(1.1 )
Commodity contracts – losses Other current assets (0.4 ) (1.7 ) (1.0 ) Accrued liabilities 2.6
—
5.0
$ 16.1
$ 21.1
$ 3.4
$ 26.5
$ 28.6
$ 6.4
Derivatives Not Designated as Hedging Instruments
Foreign exchange contracts – gains Other current assets $ 0.5
$ 0.6
$ 0.1
Accrued liabilities $ (0.5 ) $ (0.5 ) $ —
Foreign exchange contracts – losses Other current assets (0.3 ) (0.5 ) (0.1 ) Accrued liabilities 0.6
1.7
0.8
$ 0.2
$ 0.1
$ —
$ 0.1
$ 1.2
$ 0.8
Total derivatives⁽¹⁾
$ 16.3
$ 21.2
$ 3.4
$ 26.6
$ 29.8
$ 7.2



	September 30, 2019			December 31, 2018			September 30, 2018
	($ in millions)
Asset derivatives:
Other current assets
Derivatives designated as hedging instruments:
Interest rate contracts - gains	$	—		$	5.3		$	7.6
Commodity contracts - gains	—			—			2.2
Derivatives not designated as hedging instruments:
Foreign exchange contracts - gains	1.0			0.9			0.3
Foreign exchange contracts - losses	(0.2		)	(0.5		)	(0.1		)
Total other current assets	0.8			5.7			10.0
Other assets
Derivatives designated as hedging instruments:
Interest rate contracts - gains	—			—			1.6
Commodity contracts - gains	0.1			0.9			—
Commodity contracts - losses	—			(0.2		)	—
Total other assets	0.1			0.7			1.6
Total asset derivatives⁽¹⁾	$	0.9		$	6.4		$	11.6
Liability derivatives:
Accrued liabilities
Derivatives designated as hedging instruments:
Commodity contracts - losses	$	19.1		$	4.9		$	3.7
Commodity contracts - gains	(0.8		)	(1.9		)	(3.0		)
Derivatives not designated as hedging instruments:
Foreign exchange contracts - losses	1.2			0.6			2.6
Foreign exchange contracts - gains	(0.3		)	(0.1		)	(0.4		)
Total accrued liabilities	19.2			3.5			2.9
Other liabilities
Derivatives designated as hedging instruments:
Interest rate contracts - losses	—			33.7			47.8
Commodity contracts - losses	3.0			0.5			0.9
Commodity contracts - gains	(0.3		)	(0.1		)	(0.1		)
Total other liabilities	2.7			34.1			48.6
Total liability derivatives⁽¹⁾	$	21.9		$	37.6		$	51.5


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

The following table summarizes the effects of derivative instruments on our condensed statements of operations:



		Amount of (Loss) Gain
		Three Months Ended September 30,						Nine Months Ended September 30,
	Location of (Loss) Gain	2019			2018			2019			2018
Derivatives – Cash Flow Hedges		($ in millions)
Recognized in other comprehensive loss:
Commodity contracts	———	$	(12.4	)	$	(2.9	)	$	(40.1	)	$	(5.4	)
Interest rate contracts	———	0.1			0.3			(1.0		)	4.5
		$	(12.3	)	$	(2.6	)	$	(41.1	)	$	(0.9	)
Reclassified from accumulated other comprehensive loss into income:
Interest rate contracts	Interest expense	$	1.8		$	2.5		$	4.3		$	5.9
Commodity contracts	Cost of goods sold	(10.8		)	(0.3		)	(21.8		)	1.3
		$	(9.0	)	$	2.2		$	(17.5	)	$	7.2
Derivatives – Fair Value Hedges
Interest rate contracts	Interest expense	$	(0.9	)	$	(0.6	)	$	(2.6	)	$	(0.9	)
Derivatives Not Designated as Hedging Instruments
Foreign exchange contracts	Selling and administration	$	(1.4	)	$	0.3		$	(4.4	)	$	(0.3	)

Amount of Gain (Loss) Amount of Gain (Loss)
Three Months Ended September 30, Nine Months Ended September 30,
Location of Gain (Loss) 2017 2016 2017 2016
Derivatives – Cash Flow Hedges ($ in millions)
Recognized in other comprehensive income (loss) (effective portion):
Commodity contracts ——— $ 2.9
$ 0.3
$ (4.5 ) $ 3.0
Interest rate contracts ——— 0.3
3.9
0.9
(2.3 )
$ 3.2
$ 4.2
$ (3.6 ) $ 0.7
Reclassified from accumulated other comprehensive loss into income (effective portion):
Interest rate contracts Interest expense $ 1.2
$ —
$ 1.7
$ —
Commodity contracts Cost of goods sold —
—
1.9
(5.4 )
$ 1.2
$ —
$ 3.6
$ (5.4 )
Derivatives – Fair Value Hedges
Interest rate contracts Interest expense $ 0.5
$ 0.7
$ 2.5
$ 2.6
Derivatives Not Designated as Hedging Instruments
Commodity contracts Cost of goods sold $ —
$ —
$ —
$ (0.4 )
Foreign exchange contracts Selling and administration (0.2 ) (2.3 ) 0.4
(9.6 )
$ (0.2 ) $ (2.3 ) $ 0.4
$ (10.0 )

~~The ineffective portion of changes in fair value resulted in zero charged or credited to earnings for the three and nine months ended September 30, 2017 and 2016.~~

Credit ~~risk~~Risk and ~~collateral~~Collateral

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 ~~nonperformance~~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, exceeds 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 September 30, ~~2017,~~2019, December 31, ~~2016~~2018 and September 30, ~~2016,~~2018, 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.

NOTE 22. FAIR VALUE MEASUREMENTS

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:

Level 1 — Inputs were unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 — Inputs (other than quoted prices included in Level 1) were either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the ~~instruments’~~instrument’s anticipated life.

Level 3 — Inputs reflected management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration was given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

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 for impairment 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 September 30, 2019	Level 1		Level 2		Level 3		Total
Assets	($ in millions)
Commodity contracts	$	—	$	0.1	$	—	$	0.1
Foreign exchange contracts	—		0.8		—		0.8
Total assets	$	—	$	0.9	$	—	$	0.9
Liabilities
Commodity contracts	$	—	$	21.0	$	—	$	21.0
Foreign exchange contracts	—		0.9		—		0.9
Total liabilities	$	—	$	21.9	$	—	$	21.9
Balance at December 31, 2018
Assets
Interest rate swaps	$	—	$	5.3	$	—	$	5.3
Commodity contracts	—		0.7		—		0.7
Foreign exchange contracts	—		0.4		—		0.4
Total assets	$	—	$	6.4	$	—	$	6.4
Liabilities
Interest rate swaps	$	—	$	33.7	$	—	$	33.7
Commodity contracts	—		3.4		—		3.4
Foreign exchange contracts	—		0.5		—		0.5
Total liabilities	$	—	$	37.6	$	—	$	37.6
Balance at September 30, 2018
Assets
Interest rate swaps	$	—	$	9.2	$	—	$	9.2
Commodity contracts	—		2.2		—		2.2
Foreign exchange contracts	—		0.2		—		0.2
Total assets	$	—	$	11.6	$	—	$	11.6
Liabilities
Interest rate swaps	$	—	$	47.8	$	—	$	47.8
Commodity contracts	—		1.5		—		1.5
Foreign exchange contracts	—		2.2		—		2.2
Total liabilities	$	—	$	51.5	$	—	$	51.5

Fair Value Measurements
Balance at September 30, 2017 Level 1 Level 2 Level 3 Total
Assets ($ in millions)
Interest rate swaps $ —
$ 8.7
$ —
$ 8.7
Commodity contracts —
7.4
—
7.4
Foreign exchange contracts —
0.2
—
0.2
Liabilities
Interest rate swaps $ —
$ 23.9
$ —
$ 23.9
Commodity contracts —
2.6
—
2.6
Foreign exchange contracts —
0.1
—
0.1
Balance at December 31, 2016
Assets
Interest rate swaps $ —
$ 9.6
$ —
$ 9.6
Commodity contracts —
11.5
—
11.5
Foreign exchange contracts —
0.1
—
0.1
Liabilities
Interest rate swaps $ —
$ 28.6
$ —
$ 28.6
Foreign exchange contracts —
1.2
—
1.2
Balance at September 30, 2016
Assets
Interest rate swaps $ —
$ 2.5
$ —
$ 2.5
Commodity contracts —
0.9
—
0.9
Foreign exchange contracts —
—
—
—
Liabilities
Interest rate swaps $ —
$ 2.5
$ —
$ 2.5
Commodity contracts —
3.9
—
3.9
Foreign exchange contracts —
0.8
—
0.8

~~For the nine months ended September 30, 2017, there were no transfers into or out of Level 1, Level 2 or Level 3.~~

Interest Rate Swaps

Interest rate swap 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.

Commodity Forward Contracts

Commodity contract 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 derivative 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.

Foreign Currency Contracts

Foreign currency contract financial instruments were valued primarily based on relevant information observable in market transactions involving identical or comparable assets or liabilities including both forward and spot prices for currencies. We enter into forward sales and purchase contracts to manage currency risk resulting from purchase and sale commitments denominated in foreign currencies.

Financial Instruments

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:



	Fair Value Measurements								Amount recorded on balance sheets
	Level 1		Level 2		Level 3		Total		Amount recorded on balance sheets
	($ in millions)
Balance at September 30, 2019	$	—	$	3,399.6	$	153.0	$	3,552.6	$	3,340.1
Balance at December 31, 2018	—		3,137.2		153.0		3,290.2		3,230.3
Balance at September 30, 2018	—		3,331.9		153.0		3,484.9		3,337.3

Fair Value Measurements Amount recorded
on balance sheets
Level 1 Level 2 Level 3 Total
($ in millions)
Balance at September 30, 2017 $ —
$ 3,920.5
$ 153.0
$ 4,073.5
$ 3,745.2
Balance at December 31, 2016 —
3,703.7
153.0
3,856.7
3,617.6
Balance at September 30, 2016 —
3,732.7
153.0
3,885.7
3,677.8

Nonrecurring Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis as required by ASC 820. There were no assets measured at fair value on a nonrecurring basis as of September 30, ~~2017,~~2019, December 31, ~~2016~~2018 and September 30, ~~2016.~~2018.

NOTE 23. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

In October 2015, Blue Cube Spinco ~~Inc.~~LLC (the Issuer) issued $720.0 million aggregate principal amount of 9.75% senior notes due October 15, 2023 (2023 Notes) and $500.0 million aggregate principal amount of 10.00% senior notes due October 15, 2025 (2025 Notes and, together with the 2023 Notes, the Notes). During 2016, the Notes were registered under the Securities Act of 1933, as amended. The Issuer was formed on March 13, 2015 as a wholly owned subsidiary of ~~TDCC~~Dow and

upon closing of the Acquisition became a 100% owned subsidiary of Olin (the Parent Guarantor). The ~~Exchange~~ Notes are fully and unconditionally guaranteed by the Parent Guarantor.

The following condensed consolidating financial information presents the condensed consolidating balance sheets as of September 30, ~~2017,~~2019, December 31, ~~2016~~2018 and September 30, ~~2016,~~2018, the related condensed consolidating statements of operations and comprehensive income (loss) for each of the three and nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018 and the related condensed consolidating statements of cash flows for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018 of (a) the Parent Guarantor, (b) the Issuer, (c) the non-guarantor subsidiaries, (d) elimination entries necessary to consolidate the Parent Guarantor with the Issuer and the non-guarantor subsidiaries and (e) Olin on a consolidated basis. Investments in consolidated subsidiaries are presented under the equity method of accounting.

																														CONDENSED CONSOLIDATING BALANCE SHEETS
September 30, 2017
September 30, 2019															September 30, 2019
(In millions)																													(Unaudited)

	Parent Guarantor			Issuer		Subsidiary Non-Guarantor			Eliminations			Total			Parent Guarantor			Issuer		Subsidiary Non-Guarantor			Eliminations			Total
Assets
Current assets:
Cash and cash equivalents	$	36.9		$	—	$	219.0		$	—		$	255.9		$	19.0		$	—	$	158.4		$	—		$	177.4
Receivables, net	106.0			—		623.5			—			729.5			43.4			—		807.6			(1.1		)	849.9
Intercompany receivables	—			—		1,948.4			(1,948.4		)	—			—			—		2,734.8			(2,734.8		)	—
Income taxes receivable	13.4			—		4.6			(2.1		)	15.9			13.4			—		5.7			(1.6		)	17.5
Inventories	172.2			—		517.3			—			689.5
Inventories, net															162.1			—		538.6			—			700.7
Other current assets	180.5			—		5.0			(158.4		)	27.1			222.9			—		4.1			(202.9		)	24.1
Total current assets	509.0			—		3,317.8			(2,108.9		)	1,717.9			460.8			—		4,249.2			(2,940.4		)	1,769.6
Property, plant and equipment, net	513.0			—		3,066.2			—			3,579.2			688.8			—		2,678.2			—			3,367.0
Operating lease assets, net															47.8			—		266.8			—			314.6
Investment in subsidiaries	6,155.3			3,828.7		—			(9,984.0		)	—			7,144.2			4,400.8		—			(11,545.0		)	—
Deferred income taxes	140.9			—		127.0			(126.8		)	141.1			—			—		31.3			(1.0		)	30.3
Other assets	45.5			—		1,170.1			—			1,215.6			17.3			—		1,152.8			—			1,170.1
Long-term receivables—affiliates	—			2,174.0		—			(2,174.0		)	—			73.4			627.0		—			(700.4		)	—
Intangible assets, net	0.3			5.7		586.9			—			592.9			0.3			—		461.6			—			461.9
Goodwill	—			966.3		1,153.5			—			2,119.8			—			966.3		1,152.8			—			2,119.1
Total assets	$	7,364.0		$	6,974.7	$	9,421.5		$	(14,393.7	)	$	9,366.5		$	8,432.6		$	5,994.1	$	9,992.7		$	(15,186.8	)	$	9,232.6
Liabilities and Shareholders' Equity
Liabilities and Shareholders’ Equity
Current liabilities:
Current installments of long-term debt	$	0.7		$	68.8	$	12.2		$	—		$	81.7		$	1.1		$	—	$	—		$	—		$	1.1
Accounts payable	69.6			—		548.3			(4.4		)	613.5			—			—		649.8			(2.1		)	647.7
Intercompany payables	1,948.4			—		—			(1,948.4		)	—			2,734.8			—		—			(2,734.8		)	—
Income taxes payable	—			—		11.7			(2.1		)	9.6			—			—		11.4			(1.6		)	9.8
Current operating lease liabilities															7.9			—		63.3			—			71.2
Accrued liabilities	146.0			—		305.0			(156.5		)	294.5			205.9			—		341.5			(200.0		)	347.4
Total current liabilities	2,164.7			68.8		877.2			(2,111.4		)	999.3			2,949.7			—		1,066.0			(2,938.5		)	1,077.2
Long-term debt	944.1			2,470.1		249.3			—			3,663.5			2,135.1			1,203.9		—			—			3,339.0
Operating lease liabilities															41.1			—		207.1			—			248.2
Accrued pension liability	405.7			—		213.0			—			618.7			390.2			—		232.2			—			622.4
Deferred income taxes	—			250.5		931.8			(126.8		)	1,055.5			2.6			7.1		506.8			(1.0		)	515.5
Long-term payables—affiliates	1,267.2			—		906.8			(2,174.0		)	—			—			—		700.4			(700.4		)	—
Other liabilities	283.8			5.6		441.6			—			731.0			249.2			5.6		510.8			—			765.6
Total liabilities	5,065.5			2,795.0		3,619.7			(4,412.2		)	7,068.0			5,767.9			1,216.6		3,223.3			(3,639.9		)	6,567.9
Commitments and contingencies
Shareholders' equity:
Shareholders’ equity:
Common stock	166.4			—		14.6			(14.6		)	166.4			159.7			—		14.6			(14.6		)	159.7
Additional paid-in capital	2,267.7			4,125.7		4,808.2			(8,933.9		)	2,267.7			2,128.6			4,125.7		4,808.2			(8,933.9		)	2,128.6
Accumulated other comprehensive loss	(470.0		)	—		(5.7		)	5.7			(470.0		)	(672.7		)	—		(7.0		)	7.0			(672.7		)
Retained earnings	334.4			54.0		984.7			(1,038.7		)	334.4			1,049.1			651.8		1,953.6			(2,605.4		)	1,049.1
Total shareholders' equity	2,298.5			4,179.7		5,801.8			(9,981.5		)	2,298.5
Total liabilities and shareholders' equity	$	7,364.0		$	6,974.7	$	9,421.5		$	(14,393.7	)	$	9,366.5
Total shareholders’ equity															2,664.7			4,777.5		6,769.4			(11,546.9		)	2,664.7
Total liabilities and shareholders’ equity															$	8,432.6		$	5,994.1	$	9,992.7		$	(15,186.8	)	$	9,232.6

																														CONDENSED CONSOLIDATING BALANCE SHEETS
December 31, 2016
December 31, 2018															December 31, 2018
(In millions)																													(Unaudited)

	Parent Guarantor			Issuer		Subsidiary Non-Guarantor			Eliminations			Total			Parent Guarantor			Issuer		Subsidiary Non-Guarantor			Eliminations			Total
Assets
Current assets:
Cash and cash equivalents	$	25.2		$	—	$	159.3		$	—		$	184.5		$	92.0		$	—	$	86.8		$	—		$	178.8
Receivables, net	88.3			—		586.7			—			675.0			99.7			—		676.6			—			776.3
Intercompany receivables	—			—		1,912.3			(1,912.3		)	—			—			—		2,558.2			(2,558.2		)	—
Income taxes receivable	19.0			—		7.3			(0.8		)	25.5			2.6			—		3.3			—			5.9
Inventories	167.7			—		462.7			—			630.4
Inventories, net															161.4			—		550.0			—			711.4
Other current assets	164.7			3.4		1.2			(138.5		)	30.8			220.2			—		1.8			(187.0		)	35.0
Total current assets	464.9			3.4		3,129.5			(2,051.6		)	1,546.2			575.9			—		3,876.7			(2,745.2		)	1,707.4
Property, plant and equipment, net	510.1			—		3,194.8			—			3,704.9			651.4			—		2,830.7			—			3,482.1
Investment in subsidiaries	6,035.2			3,734.7		—			(9,769.9		)	—			6,943.3			4,286.9		—			(11,230.2		)	—
Deferred income taxes	133.5			—		103.5			(117.5		)	119.5			7.3			—		27.4			(8.4		)	26.3
Other assets	48.1			—		596.3			—			644.4			24.3			—		1,126.1			—			1,150.4
Long-term receivables—affiliates	—			2,194.2		—			(2,194.2		)	—			—			1,247.2		—			(1,247.2		)	—
Intangible assets, net	0.4			5.7		623.5			—			629.6			0.3			—		511.3			—			511.6
Goodwill	—			966.3		1,151.7			—			2,118.0			—			966.3		1,153.3			—			2,119.6
Total assets	$	7,192.2		$	6,904.3	$	8,799.3		$	(14,133.2	)	$	8,762.6		$	8,202.5		$	6,500.4	$	9,525.5		$	(15,231.0	)	$	8,997.4
Liabilities and Shareholders' Equity
Liabilities and Shareholders’ Equity
Current liabilities:
Current installments of long-term debt	$	0.6		$	67.5	$	12.4		$	—		$	80.5		$	0.9		$	—	$	125.0		$	—		$	125.9
Accounts payable	45.3			—		527.4			(1.9		)	570.8			90.1			—		549.4			(3.0		)	636.5
Intercompany payables	1,882.8			29.5		—			(1,912.3		)	—			2,558.2			—		—			(2,558.2		)	—
Income taxes payable	—			—		8.3			(0.8		)	7.5			3.9			—		18.7			—			22.6
Accrued liabilities	124.9			—		277.5			(138.6		)	263.8			150.3			—		367.5			(184.5		)	333.3
Total current liabilities	2,053.6			97.0		825.6			(2,053.6		)	922.6			2,803.4			—		1,060.6			(2,745.7		)	1,118.3
Long-term debt	913.9			2,413.3		209.9			—			3,537.1			1,357.5			1,746.9		—			—			3,104.4
Accrued pension liability	453.7			—		184.4			—			638.1			439.1			—		235.2			—			674.3
Deferred income taxes	—			223.6		926.4			(117.5		)	1,032.5			—			6.0		521.3			(8.4		)	518.9
Long-term payables—affiliates	1,209.1			—		985.1			(2,194.2		)	—			469.6			—		777.6			(1,247.2		)	—
Other liabilities	288.9			6.6		63.8			—			359.3			300.7			5.5		443.1			—			749.3
Total liabilities	4,919.2			2,740.5		3,195.2			(4,365.3		)	6,489.6			5,370.3			1,758.4		3,037.8			(4,001.3		)	6,165.2
Commitments and contingencies
Shareholders' equity:
Shareholders’ equity:
Common stock	165.4			—		14.6			(14.6		)	165.4			165.3			—		14.6			(14.6		)	165.3
Additional paid-in capital	2,243.8			4,125.7		4,808.2			(8,933.9		)	2,243.8			2,247.4			4,125.7		4,808.2			(8,933.9		)	2,247.4
Accumulated other comprehensive loss	(510.0		)	—		(7.0		)	7.0			(510.0		)	(651.0		)	—		(6.9		)	6.9			(651.0		)
Retained earnings	373.8			38.1		788.3			(826.4		)	373.8			1,070.5			616.3		1,671.8			(2,288.1		)	1,070.5
Total shareholders' equity	2,273.0			4,163.8		5,604.1			(9,767.9		)	2,273.0
Total liabilities and shareholders' equity	$	7,192.2		$	6,904.3	$	8,799.3		$	(14,133.2	)	$	8,762.6
Total shareholders’ equity															2,832.2			4,742.0		6,487.7			(11,229.7		)	2,832.2
Total liabilities and shareholders’ equity															$	8,202.5		$	6,500.4	$	9,525.5		$	(15,231.0	)	$	8,997.4



CONDENSED CONSOLIDATING BALANCE SHEETS
September 30, 2018
(In millions)
(Unaudited)

	Parent Guarantor			Issuer		Subsidiary Non-Guarantor			Eliminations			Total
Assets
Current assets:
Cash and cash equivalents	$	23.1		$	—	$	133.6		$	—		$	156.7
Receivables, net	227.8			—		781.4			—			1,009.2
Intercompany receivables	—			—		2,402.8			(2,402.8		)	—
Income taxes receivable	10.0			—		2.8			—			12.8
Inventories, net	171.2			—		553.2			—			724.4
Other current assets	211.9			—		3.6			(180.3		)	35.2
Total current assets	644.0			—		3,877.4			(2,583.1		)	1,938.3
Property, plant and equipment, net	597.6			—		2,859.1			—			3,456.7
Investment in subsidiaries	6,862.8			4,192.8		—			(11,055.6		)	—
Deferred income taxes	—			1.0		31.1			(7.3		)	24.8
Other assets	23.6			—		1,136.0			—			1,159.6
Long-term receivables—affiliates	—			1,336.2		—			(1,336.2		)	—
Intangible assets, net	0.3			—		528.0			—			528.3
Goodwill	—			966.3		1,153.3			—			2,119.6
Total assets	$	8,128.3		$	6,496.3	$	9,584.9		$	(14,982.2	)	$	9,227.3
Liabilities and Shareholders’ Equity
Current liabilities:
Current installments of long-term debt	$	0.9		$	—	$	—		$	—		$	0.9
Accounts payable	72.3			—		640.9			(3.8		)	709.4
Intercompany payables	2,402.8			—		—			(2,402.8		)	—
Income taxes payable	0.4			—		21.7			—			22.1
Accrued liabilities	157.5			—		361.7			(177.9		)	341.3
Total current liabilities	2,633.9			—		1,024.3			(2,584.5		)	1,073.7
Long-term debt	1,347.6			1,808.8		180.0			—			3,336.4
Accrued pension liability	360.7			—		228.9			—			589.6
Deferred income taxes	16.1			4.1		535.7			(7.3		)	548.6
Long-term payables—affiliates	536.6			—		799.6			(1,336.2		)	—
Other liabilities	310.5			5.5		440.1			—			756.1
Total liabilities	5,205.4			1,818.4		3,208.6			(3,928.0		)	6,304.4
Commitments and contingencies
Shareholders’ equity:
Common stock	166.8			—		14.6			(14.6		)	166.8
Additional paid-in capital	2,276.9			4,125.7		4,808.2			(8,933.9		)	2,276.9
Accumulated other comprehensive loss	(571.3		)	—		(6.3		)	6.3			(571.3		)
Retained earnings	1,050.5			552.2		1,559.8			(2,112.0		)	1,050.5
Total shareholders’ equity	2,922.9			4,677.9		6,376.3			(11,054.2		)	2,922.9
Total liabilities and shareholders’ equity	$	8,128.3		$	6,496.3	$	9,584.9		$	(14,982.2	)	$	9,227.3

CONDENSED CONSOLIDATING BALANCE SHEETS
September 30, 2016
(In millions)
(Unaudited)

Parent Guarantor Issuer Subsidiary
Non-Guarantor Eliminations Total
Assets
Current assets:
Cash and cash equivalents $ 15.5
$ —
$ 111.5
$ —
$ 127.0
Receivables, net 64.4
—
679.7
—
744.1
Intercompany receivables —
8.3
1,732.5
(1,740.8 ) —
Income taxes receivable 38.5
—
11.1
(0.6 ) 49.0
Inventories 163.8
—
453.2
—
617.0
Other current assets 145.5
—
4.2
(133.6 ) 16.1
Total current assets 427.7
8.3
2,992.2
(1,875.0 ) 1,553.2
Property, plant and equipment, net 451.4
—
3,262.5
—
3,713.9
Investment in subsidiaries 6,000.5
3,690.5
—
(9,691.0 ) —
Deferred income taxes 153.7
—
90.2
(131.7 ) 112.2
Other assets 40.4
—
599.9
—
640.3
Long-term receivables—affiliates —
2,211.1
—
(2,211.1 ) —
Intangible assets, net 0.4
5.7
647.7
—
653.8
Goodwill —
966.3
1,153.1
—
2,119.4
Total assets $ 7,074.1
$ 6,881.9
$ 8,745.6
$ (13,908.8 ) $ 8,792.8
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt $ 0.6
$ 67.5
$ 12.2
$ —
$ 80.3
Accounts payable 55.4
—
456.4
(2.1 ) 509.7
Intercompany payables 1,740.8
—
—
(1,740.8 ) —
Income taxes payable —
—
13.9
(0.6 ) 13.3
Accrued liabilities 158.1
—
266.8
(133.4 ) 291.5
Total current liabilities 1,954.9
67.5
749.3
(1,876.9 ) 894.8
Long-term debt 1,154.9
2,430.3
12.3
—
3,597.5
Accrued pension liability 141.3
—
456.4
—
597.7
Deferred income taxes —
241.5
926.8
(131.7 ) 1,036.6
Long-term payables—affiliates 1,226.0
—
985.1
(2,211.1 ) —
Other liabilities 266.3
—
69.2
—
335.5
Total liabilities 4,743.4
2,739.3
3,199.1
(4,219.7 ) 6,462.1
Commitments and contingencies
Shareholders' equity:
Common stock 165.3
—
15.1
(15.1 ) 165.3
Additional paid-in capital 2,242.8
4,125.7
4,750.5
(8,876.2 ) 2,242.8
Accumulated other comprehensive loss (466.7 ) —
(20.7 ) 20.7
(466.7 )
Retained earnings 389.3
16.9
801.6
(818.5 ) 389.3
Total shareholders' equity 2,330.7
4,142.6
5,546.5
(9,689.1 ) 2,330.7
Total liabilities and shareholders' equity $ 7,074.1
$ 6,881.9
$ 8,745.6
$ (13,908.8 ) $ 8,792.8



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Three Months Ended September 30, 2019
(In millions)
(Unaudited)

	Parent Guarantor			Issuer			Subsidiary Non-Guarantor			Eliminations			Total
Sales	$	348.0		$	—		$	1,363.4		$	(134.8	)	$	1,576.6
Operating expenses:
Cost of goods sold	328.6			—			1,163.8			(134.8		)	1,357.6
Selling and administration	58.2			—			52.6			—			110.8
Restructuring charges	—			—			4.9			—			4.9
Other operating income	0.1			—			—			—			0.1
Operating (loss) income	(38.7		)	—			142.1			—			103.4
Equity income in subsidiaries	81.6			69.9			—			(151.5		)	—
Interest expense	30.1			31.5			4.1			(1.8		)	63.9
Interest income	1.1			—			0.9			(1.8		)	0.2
Non-operating pension income (expense)	5.5			—			(1.4		)	—			4.1
Income before taxes	19.4			38.4			137.5			(151.5		)	43.8
Income tax (benefit) provision	(24.8		)	(7.5		)	31.9			—			(0.4		)
Net income	$	44.2		$	45.9		$	105.6		$	(151.5	)	$	44.2



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 2019
(In millions)
(Unaudited)

	Parent Guarantor			Issuer			Subsidiary Non-Guarantor			Eliminations			Total
Sales	$	1,004.8		$	—		$	4,088.4		$	(370.3	)	$	4,722.9
Operating expenses:
Cost of goods sold	942.5			—			3,596.4			(370.3		)	4,168.6
Selling and administration	157.8			—			157.0			—			314.8
Restructuring charges	1.4			—			11.3			—			12.7
Other operating (expense) income	(4.3		)	—			4.6			—			0.3
Operating (loss) income	(101.2		)	—			328.3			—			227.1
Equity income in subsidiaries	155.1			113.9			—			(269.0		)	—
Interest expense	65.8			103.3			15.8			(5.7		)	179.2
Interest income	3.7			—			2.7			(5.7		)	0.7
Non-operating pension income (expense)	16.6			—			(4.4		)	—			12.2
Other income	11.2						—						11.2
Income before taxes	19.6			10.6			310.8			(269.0		)	72.0
Income tax (benefit) provision	(46.3		)	(24.9		)	77.3			—			6.1
Net income	$	65.9		$	35.5		$	233.5		$	(269.0	)	$	65.9

																															CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 2017
Three Months Ended September 30, 2018															Three Months Ended September 30, 2018
(In millions)																														(Unaudited)

	Parent Guarantor			Issuer			Subsidiary Non-Guarantor		Eliminations			Total			Parent Guarantor			Issuer			Subsidiary Non-Guarantor			Eliminations			Total
Sales	$	1,000.9		$	—		$	3,976.9	$	(329.3	)	$	4,648.5		$	360.9		$	—		$	1,621.7		$	(110.2	)	$	1,872.4
Operating expenses:
Cost of goods sold	883.3			—			3,589.4		(329.3		)	4,143.4			208.3			—			1,343.6			(110.2		)	1,441.7
Selling and administration	99.7			—			154.9		—			254.6			51.4			—			59.4			—			110.8
Restructuring charges	—			—			25.9		—			25.9			—			—			3.3			—			3.3
Acquisition-related costs	12.5			—			—		—			12.5			0.4			—			—			—			0.4
Other operating (expense) income	(7.1		)	—			7.0		—			(0.1		)	(3.5		)	—			1.8			—			(1.7		)
Operating (loss) income	(1.7		)	—			213.7		—			212.0
Operating income															97.3			—			217.2			—			314.5
Earnings of non-consolidated affiliates	1.5			—			—		—			1.5			0.4			—			—			—			0.4
Equity income (loss) in subsidiaries	72.9			94.0			—		(166.9		)	—
Equity income in subsidiaries															122.2			85.2			—			(207.4		)	—
Interest expense	33.3			123.8			5.5		(4.6		)	158.0			17.3			37.3			6.1			(1.5		)	59.2
Interest income	4.7			—			0.9		(4.6		)	1.0			1.8			—			—			(1.5		)	0.3
Income (loss) before taxes	44.1			(29.8		)	209.1		(166.9		)	56.5
Income tax (benefit) provision	(16.1		)	(45.7		)	58.1		—			(3.7		)
Net income (loss)	$	60.2		$	15.9		$	151.0	$	(166.9	)	$	60.2
Non-operating pension income (expense)															6.5			—			(1.1		)	—			5.4
Income before taxes															210.9			47.9			210.0			(207.4		)	261.4
Income tax provision (benefit)															15.8			(9.1		)	59.6			—			66.3
Net income															$	195.1		$	57.0		$	150.4		$	(207.4	)	$	195.1



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 2018
(In millions)
(Unaudited)

	Parent Guarantor			Issuer			Subsidiary Non-Guarantor			Eliminations			Total
Sales	$	1,083.1		$	—		$	4,554.6		$	(326.6	)	$	5,311.1
Operating expenses:
Cost of goods sold	853.2			—			3,904.5			(326.6		)	4,431.1
Selling and administration	151.7			—			169.9			—			321.6
Restructuring charges	—			—			13.7			—			13.7
Acquisition-related costs	1.0			—			—			—			1.0
Other operating (expense) income	(0.9		)	—			7.3			—			6.4
Operating income	76.3			—			473.8			—			550.1
Losses of non-consolidated affiliates	(20.2		)	—			—			—			(20.2		)
Equity income in subsidiaries	249.1			195.5			—			(444.6		)	—
Interest expense	52.4			116.4			19.6			(4.4		)	184.0
Interest income	4.7			—			0.8			(4.4		)	1.1
Non-operating pension income (expense)	19.9			—			(3.7		)	—			16.2
Income before taxes	277.4			79.1			451.3			(444.6		)	363.2
Income tax provision (benefit)	2.8			(28.2		)	114.0			—			88.6
Net income	$	274.6		$	107.3		$	337.3		$	(444.6	)	$	274.6

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Three Months Ended September 30, 2017
(In millions)
(Unaudited)

Parent Guarantor Issuer Subsidiary
Non-Guarantor Eliminations Total
Sales $ 348.0
$ —
$ 1,321.8
$ (114.9 ) $ 1,554.9
Operating expenses:
Cost of goods sold 313.8
—
1,146.7
(114.9 ) 1,345.6
Selling and administration 31.1
—
55.3
—
86.4
Restructuring charges —
—
9.2
—
9.2
Acquisition-related costs 1.1
—
—
—
1.1
Other operating (expense) income (2.6 ) —
2.6
—
—
Operating (loss) income (0.6 ) —
113.2
—
112.6
Earnings of non-consolidated affiliates 0.5
—
—
—
0.5
Equity income (loss) in subsidiaries 54.5
54.7
—
(109.2 ) —
Interest expense 11.9
41.0
1.5
(1.3 ) 53.1
Interest income 1.7
—
—
(1.3 ) 0.4
Income (loss) before taxes 44.2
13.7
111.7
(109.2 ) 60.4
Income tax (benefit) provision (8.5 ) (15.0 ) 31.2
—
7.7
Net income (loss) $ 52.7
$ 28.7
$ 80.5
$ (109.2 ) $ 52.7



CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three Months Ended September 30, 2019
(In millions)
(Unaudited)

	Parent Guarantor			Issuer		Subsidiary Non-Guarantor			Eliminations			Total
Net income	$	44.2		$	45.9	$	105.6		$	(151.5	)	$	44.2
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net	—			—		(15.7		)	—			(15.7		)
Unrealized losses on derivative contracts, net	(2.5		)	—		—			—			(2.5		)
Amortization of prior service costs and actuarial losses, net	4.9			—		1.0			—			5.9
Total other comprehensive income (loss), net of tax	2.4			—		(14.7		)	—			(12.3		)
Comprehensive income	$	46.6		$	45.9	$	90.9		$	(151.5	)	$	31.9



CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Nine Months Ended September 30, 2019
(In millions)
(Unaudited)

	Parent Guarantor			Issuer		Subsidiary Non-Guarantor			Eliminations			Total
Net income	$	65.9		$	35.5	$	233.5		$	(269.0	)	$	65.9
Other comprehensive loss, net of tax:
Foreign currency translation adjustments, net	—			—		(20.7		)	—			(20.7		)
Unrealized losses on derivative contracts, net	(17.9		)	—		—			—			(17.9		)
Amortization of prior service costs and actuarial losses, net	14.8			—		2.1			—			16.9
Total other comprehensive loss, net of tax	(3.1		)	—		(18.6		)	—			(21.7		)
Comprehensive income	$	62.8		$	35.5	$	214.9		$	(269.0	)	$	44.2

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 2016
(In millions)
(Unaudited)

Parent Guarantor Issuer Subsidiary
Non-Guarantor Eliminations Total
Sales $ 1,009.6
$ —
$ 3,545.3
$ (390.0 ) $ 4,164.9
Operating expenses:
Cost of goods sold 861.3
—
3,225.4
(390.0 ) 3,696.7
Selling and administration 106.2
—
143.2
—
249.4
Restructuring charges 0.8
—
105.4
—
106.2
Acquisition-related costs 39.6
—
—
—
39.6
Other operating (expense) income (1.7 ) —
12.2
—
10.5
Operating income —
—
83.5
—
83.5
Earnings of non-consolidated affiliates 1.1
—
—
—
1.1
Equity (loss) income in subsidiaries (6.2 ) 94.8
—
(88.6 ) —
Interest expense 30.6
114.0
3.2
(4.2 ) 143.6
Interest income 2.3
—
3.2
(4.2 ) 1.3
Income (loss) before taxes (33.4 ) (19.2 ) 83.5
(88.6 ) (57.7 )
Income tax (benefit) provision (12.0 ) (40.7 ) 16.4
—
(36.3 )
Net (loss) income $ (21.4 ) $ 21.5
$ 67.1
$ (88.6 ) $ (21.4 )



CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three Months Ended September 30, 2018
(In millions)
(Unaudited)

	Parent Guarantor			Issuer		Subsidiary Non-Guarantor			Eliminations			Total
Net income	$	195.1		$	57.0	$	150.4		$	(207.4	)	$	195.1
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net	—			—		(2.0		)	—			(2.0		)
Unrealized losses on derivative contracts, net	(3.6		)	—		—			—			(3.6		)
Amortization of prior service costs and actuarial losses, net	6.6			—		0.9			—			7.5
Total other comprehensive income (loss), net of tax	3.0			—		(1.1		)	—			1.9
Comprehensive income	$	198.1		$	57.0	$	149.3		$	(207.4	)	$	197.0



CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Nine Months Ended September 30, 2018
(In millions)
(Unaudited)

	Parent Guarantor			Issuer		Subsidiary Non-Guarantor			Eliminations			Total
Net income	$	274.6		$	107.3	$	337.3		$	(444.6	)	$	274.6
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net	—			—		(15.7		)	—			(15.7		)
Unrealized losses on derivative contracts, net	(6.1		)	—		—			—			(6.1		)
Amortization of prior service costs and actuarial losses, net	19.7			—		1.3			—			21.0
Total other comprehensive income (loss), net of tax	13.6			—		(14.4		)	—			(0.8		)
Comprehensive income	$	288.2		$	107.3	$	322.9		$	(444.6	)	$	273.8



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2019
(In millions)
(Unaudited)

	Parent Guarantor			Issuer			Subsidiary Non-Guarantor			Eliminations		Total
Net operating activities	$	63.5		$	—		$	353.1		$	—	$	416.6
Investing Activities
Capital expenditures	(115.4		)	—			(156.4		)	—		(271.8		)
Proceeds from disposition of non-consolidated affiliate	20.0			—			—			—		20.0
Net investing activities	(95.4		)	—			(156.4		)	—		(251.8		)
Financing Activities
Long-term debt:
Borrowings	800.0			—			25.0			—		825.0
Repayments	(51.1		)	(543.0		)	(150.0		)	—		(744.1		)
Common stock repurchased and retired	(135.6		)	—			—			—		(135.6		)
Stock options exercised	1.5			—			—			—		1.5
Dividends paid	(98.5		)	—			—			—		(98.5		)
Debt issuance costs	(14.4		)	—			—			—		(14.4		)
Intercompany financing activities	(543.0		)	543.0			—			—		—
Net financing activities	(41.1		)	—			(125.0		)	—		(166.1		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(0.1		)	—		(0.1		)
Net (decrease) increase in cash and cash equivalents	(73.0		)	—			71.6			—		(1.4		)
Cash and cash equivalents, beginning of period	92.0			—			86.8			—		178.8
Cash and cash equivalents, end of period	$	19.0		$	—		$	158.4		$	—	$	177.4

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Three Months Ended September 30, 2016
(In millions)
(Unaudited)

Parent Guarantor Issuer Subsidiary
Non-Guarantor Eliminations Total
Sales $ 359.1
$ —
$ 1,249.3
$ (155.7 ) $ 1,452.7
Operating expenses:
Cost of goods sold 300.6
—
1,139.5
(155.7 ) 1,284.4
Selling and administration 33.4
—
48.6
—
82.0
Restructuring charges 0.2
—
5.0
—
5.2
Acquisition-related costs 14.3
—
(1.2 ) —
13.1
Other operating (expense) income (0.6 ) —
0.4
—
(0.2 )
Operating income 10.0
—
57.8
—
67.8
Earnings of non-consolidated affiliates 0.5
—
—
—
0.5
Equity income (loss) in subsidiaries 15.0
35.5
—
(50.5 ) —
Interest expense 9.6
38.0
1.3
(1.4 ) 47.5
Interest income 0.8
—
1.1
(1.4 ) 0.5
Income (loss) before taxes 16.7
(2.5 ) 57.6
(50.5 ) 21.3
Income tax (benefit) provision (0.8 ) (12.5 ) 17.1
—
3.8
Net income (loss) $ 17.5
$ 10.0
$ 40.5
$ (50.5 ) $ 17.5



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2018
(In millions)
(Unaudited)

	Parent Guarantor			Issuer			Subsidiary Non-Guarantor			Eliminations			Total
Net operating activities	$	287.9		$	—		$	298.4		$	—		$	586.3
Investing Activities
Capital expenditures	(110.5		)	—			(164.0		)	—			(274.5		)
Proceeds from disposition of property, plant and equipment	—			—			2.9			—			2.9
Distributions from consolidated subsidiaries, net	95.0			95.0			—			(190.0		)	—
Net investing activities	(15.5		)	95.0			(161.1		)	(190.0		)	(271.6		)
Financing Activities
Long-term debt:
Borrowings	550.0			—			20.0			—			570.0
Repayments	(20.6		)	(713.4		)	(89.7		)	—			(823.7		)
Common stock repurchased and retired	(16.8		)	—			—			—			(16.8		)
Stock options exercised	3.2			—			—			—			3.2
Dividends paid	(100.3		)	(95.0		)	(95.0		)	190.0			(100.3		)
Debt issuance costs	(8.5		)	—			—			—			(8.5		)
Intercompany financing activities	(713.4		)	713.4			—			—			—
Net financing activities	(306.4		)	(95.0		)	(164.7		)	190.0			(376.1		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(0.3		)	—			(0.3		)
Net decrease in cash and cash equivalents	(34.0		)	—			(27.7		)	—			(61.7		)
Cash and cash equivalents, beginning of period	57.1			—			161.3			—			218.4
Cash and cash equivalents, end of period	$	23.1		$	—		$	133.6		$	—		$	156.7

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Nine Months Ended September 30, 2017
(In millions)
(Unaudited)

Parent Guarantor Issuer Subsidiary
Non-Guarantor Eliminations Total
Net income (loss) $ 60.2
$ 15.9
$ 151.0
$ (166.9 ) $ 60.2
Other comprehensive income, net of tax:
Foreign currency translation adjustments, net —
—
31.7
—
31.7
Unrealized losses on derivative contracts, net (4.4 ) —
—
—
(4.4 )
Amortization of prior service costs and actuarial losses, net 11.6
—
1.1
—
12.7
Total other comprehensive income, net of tax 7.2
—
32.8
—
40.0
Comprehensive income (loss) $ 67.4
$ 15.9
$ 183.8
$ (166.9 ) $ 100.2

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three Months Ended September 30, 2017
(In millions)
(Unaudited)

Parent Guarantor Issuer Subsidiary
Non-Guarantor Eliminations Total
Net income (loss) $ 52.7
$ 28.7
$ 80.5
$ (109.2 ) $ 52.7
Other comprehensive income, net of tax:
Foreign currency translation adjustments, net —
—
9.8
—
9.8
Unrealized gains on derivative contracts, net 1.3
—
—
—
1.3
Amortization of prior service costs and actuarial losses, net 3.6
—
0.7
—
4.3
Total other comprehensive income, net of tax 4.9
—
10.5
—
15.4
Comprehensive income (loss) $ 57.6
$ 28.7
$ 91.0
$ (109.2 ) $ 68.1

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Nine Months Ended September 30, 2016
(In millions)
(Unaudited)

Parent Guarantor Issuer Subsidiary
Non-Guarantor Eliminations Total
Net (loss) income $ (21.4 ) $ 21.5
$ 67.1
$ (88.6 ) $ (21.4 )
Other comprehensive income, net of tax:
Foreign currency translation adjustments, net —
—
9.3
—
9.3
Unrealized gains on derivative contracts, net 3.8
—
—
—
3.8
Pension and postretirement liability adjustments, net
3.1
—
—
—
3.1
Amortization of prior service costs and actuarial losses, net 8.6
—
1.0
—
9.6
Total other comprehensive income, net of tax 15.5
—
10.3
—
25.8
Comprehensive (loss) income $ (5.9 ) $ 21.5
$ 77.4
$ (88.6 ) $ 4.4

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three Months Ended September 30, 2016
(In millions)
(Unaudited)

Parent Guarantor Issuer Subsidiary
Non-Guarantor Eliminations Total
Net income (loss) $ 17.5
$ 10.0
$ 40.5
$ (50.5 ) $ 17.5
Other comprehensive income, net of tax:
Foreign currency translation adjustments, net —
—
4.6
—
4.6
Unrealized gains on derivative contracts, net 2.6
—
—
—
2.6
Pension and postretirement liability adjustments, net
3.1
—
—
—
3.1
Amortization of prior service costs and actuarial losses, net 1.9
—
0.4
—
2.3
Total other comprehensive income, net of tax 7.6
—
5.0
—
12.6
Comprehensive income (loss) $ 25.1
$ 10.0
$ 45.5
$ (50.5 ) $ 30.1

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2017
(In millions)
(Unaudited)

Parent Guarantor Issuer Subsidiary
Non-Guarantor Eliminations Total
Net operating activities $ 290.3
$ —
$ 164.8
$ —
$ 455.1
Investing Activities
Capital expenditures (64.5 ) —
(145.5 ) —
(210.0 )
Payments under long-term supply contracts —
—
(209.4 ) —
(209.4 )
Proceeds from disposition of property, plant and equipment —
—
0.1
—
0.1
Net investing activities (64.5 ) —
(354.8 ) —
(419.3 )
Financing Activities
Long-term debt:
Borrowings 620.0
1,375.0
40.0
—
2,035.0
Repayments (590.5 ) (1,316.9 ) —
—
(1,907.4 )
Stock options exercised 18.5
—
—
—
18.5
Dividends paid (99.6 ) —
—
—
(99.6 )
Debt issuance costs (8.3 ) (2.9 ) —
—
(11.2 )
Intercompany financing activities (154.2 ) (55.2 ) 209.4
—
—
Net financing activities (214.1 ) —
249.4
—
35.3
Effect of exchange rate changes on cash and cash equivalents —
—
0.3
—
0.3
Net increase in cash and cash equivalents 11.7
—
59.7
—
71.4
Cash and cash equivalents, beginning of period 25.2
—
159.3
—
184.5
Cash and cash equivalents, end of period $ 36.9
$ —
$ 219.0
$ —
$ 255.9

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2016
(In millions)
(Unaudited)

Parent Guarantor Issuer Subsidiary
Non-Guarantor Eliminations Total
Net operating activities $ 409.0
$ —
$ (1.9 ) $ —
$ 407.1
Investing Activities
Capital expenditures (39.2 ) —
(160.2 ) —
(199.4 )
Business acquired in purchase transaction, net of cash acquired (69.5 ) —
—
—
(69.5 )
Payments under long-term supply contracts —
—
(175.7 ) —
(175.7 )
Proceeds from sale/leaseback of equipment —
—
40.4
—
40.4
Proceeds from disposition of property, plant and equipment 0.1
—
0.3
—
0.4
Proceeds from disposition of affiliated companies 6.6
—
—
—
6.6
Net investing activities (102.0 ) —
(295.2 ) —
(397.2 )
Financing Activities
Long-term debt repayments (125.5 ) (50.6 ) —
—
(176.1 )
Stock options exercised 0.4
—
—
—
0.4
Dividends paid (99.1 ) —
—
—
(99.1 )
Debt and equity issuance costs —
(0.8 ) —
—
(0.8 )
Intercompany financing activities (186.7 ) 51.4
135.3
—
—
Net financing activities (410.9 ) —
135.3
—
(275.6 )
Effect of exchange rate changes on cash and cash equivalents —
—
0.7
—
0.7
Net decrease in cash and cash equivalents (103.9 ) —
(161.1 ) —
(265.0 )
Cash and cash equivalents, beginning of period 119.4
—
272.6
—
392.0
Cash and cash equivalents, end of period $ 15.5
$ —
$ 111.5
$ —
$ 127.0

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Business Background

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. Chlor Alkali Products and Vinyls 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 Vinyls segment is a commodity business where all supplier products are similar and price is the major supplier selection criterion. We have little or no ability to influence prices in the large, global commodity markets. Our Chlor Alkali Products and Vinyls segment produces some of the most widely used chemicals in the world that can be upgraded into a wide variety of downstream chemical products used in many end-markets. Cyclical price swings, driven by changes in supply/demand, can be abrupt and significant and, given capacity in our Chlor Alkali Products and Vinyls segment, can lead to very significant changes in our overall profitability.

The Epoxy segment consumes products manufactured by the Chlor Alkali Products and Vinyls segment. The Epoxy segment’s upstream and midstream products are predominately commodity markets. We have little or no ability to influence prices in these large, global commodity markets. While competitive differentiation exists through downstream customization and product development opportunities, pricing is extremely competitive with a broad range of competitors across the globe.

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.

Executive Summary

~~2017~~2019 Overview

Net income was $44.2 million and $65.9 million for the three and nine months ended September 30, 2019, respectively, compared to net income of $195.1 million and $274.6 million, respectively, for the comparable prior year periods. The decrease in income from the prior year was primarily due to lower Chlor Alkali Products and Vinyls segment results, the 2018 pretax insurance recoveries for environmental costs incurred and expensed in prior years of $110.0 million and increased costs associated with the Information Technology Project (as defined below). Net income for the nine months ended September 30, 2019 also included a pretax gain of $11.2 million on the sale of our equity interest in a non-consolidated affiliate. In 2017, we began a multi-year implementation of new enterprise resource planning, manufacturing and engineering systems, and related infrastructure (collectively, the Information Technology Project).

Chlor Alkali Products and Vinyls generated segment income of ~~$129.7~~$112.7 million and ~~$270.0~~$303.8 million for the three and nine months ended September 30, ~~2017,~~2019, respectively. Chlor Alkali Products and Vinyls segment income was ~~higher~~lower than in the comparable prior year periods ~~due to higher product prices of $112.3 million and $296.6 million, respectively,~~ primarily due to lower caustic soda. Partially offsetting these increases were incremental costs to continue operations, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with Hurricane Harvey. As a result of the flooding from Hurricane Harvey, we were forced to reduce production at our Freeport, TX facility from late August through mid-October due to logistics constraints, customer outages andsoda pricing partially offset by lower raw material ~~availability.~~costs. The nine months ended September 30, ~~2017 was~~2019 also ~~impacted by higher costs from turnarounds and outages, electricity costs, primarily driven by natural gas prices, and ethylene costs compared to the prior year period.~~included lower maintenance turnaround costs. Chlor Alkali Products and Vinyls segment income included depreciation and amortization expense of ~~$106.8~~$122.2 million and ~~$106.3~~$122.3 million for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, and ~~$318.0~~$360.8 million and ~~$311.6~~$355.4 million for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

~~For the final nine months of 2016, caustic soda price indices increased creating positive product price momentum entering 2017.~~ During ~~the first three quarters of 2017,~~2018, North America caustic soda price contract indices increased $40 per ton while the caustic soda export price indices decreased approximately $270 per metric ton. During the first half of 2019, North America caustic soda price contract indices decreased $55 per ton and caustic soda export price indices decreased an additional ~~$95~~$30 per metric ton. During the third quarter, North America caustic soda price contract indices decreased $5 per ton and caustic soda export price indices decreased $55 per metric ton from June. During August ~~2017, an additional~~2019, a caustic soda price increase of ~~$100~~$30 per ton was announced. ~~The~~This price increase is in the process of being implemented and while the extent to which this price increase is achieved is uncertain, the majority of the ~~benefit,~~benefits, if realized, would impact fourth quarter ~~of 2017~~2019 and first quarter ~~of 2018~~2020 results.

Epoxy reported a segment ~~loss~~income of ~~$1.7~~$24.2 million and ~~$11.0~~$38.6 million for the three and nine months ended September 30, ~~2017,~~2019, respectively. Epoxy segment ~~results are~~income was impacted by lower ~~than the comparable prior year periods primarily due to increased~~ product prices and lower volumes, partially offset by lower

raw material costs, primarily ~~associated with~~ benzene and propylene, ~~partially offset by increased product prices.~~compared to the prior year. For the nine months ended September 30, 2019, Epoxy segment results were also ~~negatively~~positively impacted by ~~incremental~~lower maintenance costs ~~to continue operations,~~and unabsorbed fixed manufacturing costs ~~and reduced profit from lost sales~~ associated with ~~Hurricane Harvey.~~maintenance turnarounds. Epoxy segment income included depreciation and amortization expense of ~~$24.4~~$26.9 million and ~~$22.6~~$25.2 million for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, and ~~$69.6~~$79.2 million and ~~$67.3~~$77.0 million for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

Winchester reported segment income of ~~$17.2~~$13.9 million and ~~$61.3~~$33.1 million for the three and nine months ended September 30, ~~2017,~~2019, respectively. Winchester segment income ~~declined from~~is higher than the ~~comparable prior year periods~~three months ended September 30, 2018 primarily due to ahigher sales volumes and lower ~~level of commercial demand for shotshell, pistol~~costs, primarily commodity and ~~rifle ammunition,~~other material costs. Winchester segment income is slightly lower than the nine months ended September 30, 2018 due to lower product prices and a less favorable product mix, ~~and increased~~partially offset by lower costs, primarily commodity and other material ~~costs, partially offset by increased shipments to military customers and law enforcement agencies.~~costs. Winchester segment income included depreciation and amortization expense of ~~$4.8~~$5.2 million and ~~$4.7~~$4.9 million for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, and ~~$14.2~~$15.2 million and ~~$13.8~~$14.9 million for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

~~Financing~~

On ~~March 9, 2017,~~January 1, 2019, we ~~entered into~~sold our 9.1% limited partnership interest in Bay Gas for $20.0 million. The sale closed on February 7, 2019 which resulted in a ~~new five-year $1,975.0~~pretax gain of $11.2 million ~~senior credit facility consisting~~for the nine months ended September 30, 2019. For the year ended December 31, 2018, Chlor Alkali Products and Vinyls recorded a $21.5 million non-cash impairment charge related to an adjustment to the value of ~~a $600.0 million senior revolving credit facility, which replaced~~ our previous $500.0 million senior revolving credit facility, and a $1,375.0 million term loan facility. The proceeds of the term loan facility were used to redeem the remaining balance of the existing Senior Credit Facility and a portion of the Sumitomo Credit Facility. The Amended Senior Credit Facility will matureinterest in ~~March 2022.~~Bay Gas.

On ~~March 9, 2017, we~~July 16, 2019, Olin issued ~~$500.0~~$750.0 million aggregate principal amount of ~~5.125%~~5.625% senior notes due ~~September 15, 2027. The proceeds~~August 1, 2029 (2029 Notes), which were registered under the Securities Act of 1933, as amended. Proceeds from the ~~2027~~2029 Notes were used to redeem the remaining balance of the ~~Sumitomo Credit Facility.~~

~~In September 2017, we borrowed $120.0~~$1,375.0 million ~~under the Senior Revolving Credit~~Term Loan Facility of $493.0 million and ~~$40.0~~$150.0 million ~~under~~of the Receivables Financing ~~Agreement and used~~Agreement.

On July 16, 2019, Olin also entered into a new five-year, $2,000.0 million senior credit facility (2019 Senior Credit Facility), which replaces the ~~proceeds to fund~~existing $1,975.0 million senior credit facility. The 2019 Senior Credit Facility will mature in July 2024. The 2019 Senior Credit Facility includes a ~~portion of the $209.4 million payment to TDCC associated with a long-term ethylene supply contract to reserve additional ethylene at producer economics.~~

~~For the nine months ended September 30, 2017, we made long-term debt repayments of $1,907.4 million including $1,282.5 million related to the existing~~senior unsecured delayed-draw term loan facility ~~$590.0~~in an aggregate principal amount of up to $1,200.0 million ~~related~~(Delayed Draw Term Loan Facility) and an $800.0 million senior unsecured revolving credit facility. The Delayed Draw Term Loan Facility will be available on a delayed basis in up to three draws to be made on or prior to November 29, 2020. We expect the ~~Sumitomo Credit~~proceeds from the Delayed Draw Term Loan Facility will be used to redeem the 9.75% senior notes due 2023 and ~~$34.4~~the 10.00% senior notes due 2025 on or about October 15, 2020.

On August 5, 2019, we entered into an accelerated share repurchase (ASR) agreement with Goldman Sachs & Co. LLC (Goldman Sachs), a third-party financial institution, to repurchase $100.0 million ~~under the required quarterly installments~~of Olin’s common stock. Under this agreement, Olin paid $100.0 million to Goldman Sachs and received an initial delivery of 4.3 million shares in August 2019. The transaction had not settled as of September 30, 2019; however, upon settlement of the ~~$1,375.0~~agreement in October 2019, we received approximately 1.4 million additional shares which resulted in a total of approximately 5.7 million shares repurchased under this ASR agreement.

On September 27, 2019, Winchester was notified that it had been selected by the United States Army to operate and manage the Lake City Army Ammunition Plant (Lake City Plant) in Independence, MO. Following a one-year transition period, Winchester will assume full operational control of the Lake City Plant on October 1, 2020. The contract has an initial term ~~loan facility.~~of seven years and may be extended by the United States Army for up to three additional years.

Consolidated Results of Operations


	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017		2016			2017			2016			2019			2018			2019		2018
	($ in millions, except per share data)											($ in millions, except per share data)
Sales	$	1,554.9	$	1,452.7		$	4,648.5		$	4,164.9		$	1,576.6		$	1,872.4		$	4,722.9	$	5,311.1
Cost of goods sold	1,345.6		1,284.4			4,143.4			3,696.7			1,357.6			1,441.7			4,168.6		4,431.1
Gross margin	209.3		168.3			505.1			468.2			219.0			430.7			554.3		880.0
Selling and administration	86.4		82.0			254.6			249.4			110.8			110.8			314.8		321.6
Restructuring charges	9.2		5.2			25.9			106.2			4.9			3.3			12.7		13.7
Acquisition-related costs	1.1		13.1			12.5			39.6			—			0.4			—		1.0
Other operating (expense) income	—		(0.2		)	(0.1		)	10.5
Other operating income (expense)												0.1			(1.7		)	0.3		6.4
Operating income	112.6		67.8			212.0			83.5			103.4			314.5			227.1		550.1
Earnings of non-consolidated affiliates	0.5		0.5			1.5			1.1
Earnings (losses) of non-consolidated affiliates												—			0.4			—		(20.2		)
Interest expense	53.1		47.5			158.0			143.6			63.9			59.2			179.2		184.0
Interest income	0.4		0.5			1.0			1.3			0.2			0.3			0.7		1.1
Income (loss) before taxes	60.4		21.3			56.5			(57.7		)
Income tax provision (benefit)	7.7		3.8			(3.7		)	(36.3		)
Net income (loss)	$	52.7	$	17.5		$	60.2		$	(21.4	)
Net income (loss) per common share:
Non-operating pension income												4.1			5.4			12.2		16.2
Other income												—			—			11.2		—
Income before taxes												43.8			261.4			72.0		363.2
Income tax (benefit) provision												(0.4		)	66.3			6.1		88.6
Net income												$	44.2		$	195.1		$	65.9	$	274.6
Net income per common share:
Basic	$	0.32	$	0.11		$	0.36		$	(0.13	)	$	0.27		$	1.17		$	0.40	$	1.64
Diluted	$	0.31	$	0.11		$	0.36		$	(0.13	)	$	0.27		$	1.16		$	0.40	$	1.63

Three Months Ended September 30, ~~2017~~2019 Compared to Three Months Ended September 30, ~~2016~~2018

Sales for the three months ended September 30, ~~2017~~2019 were ~~$1,554.9~~$1,576.6 million compared to ~~$1,452.7~~$1,872.4 million in the same period last year, ~~an increase~~a decrease of ~~$102.2~~$295.8 million, or 7%16%. Chlor Alkali Products and Vinyls sales decreased by $174.8 million primarily due to lower caustic soda pricing. Epoxy sales decreased by $135.7 million primarily due to lower product prices, lower volumes and an unfavorable effect of foreign currency translation. Winchester sales increased by ~~$101.8~~$14.7 million primarily due to higher ~~caustic soda product prices. Epoxy~~ammunition sales increased by $19.8 million primarily due to higher product prices. Both Chlor Alkali Products and Vinyls and Epoxy sales volumes were negatively impacted by Hurricane Harvey. Winchester sales decreased by $19.4 million primarily due to decreased shipments to commercial ~~customers, partially offset by increased shipments to military customers and law enforcement agencies.~~customers.

Gross margin ~~increased $41.0~~decreased $211.7 million ~~compared to~~for the three months ended September 30, ~~2016.~~2019 compared to the prior year. Chlor Alkali Products and Vinyls gross margin decreased by $95.9 million, primarily due to lower caustic soda pricing. Epoxy gross margin decreased $7.9 million, primarily due to lower product prices and lower volumes, partially offset by lower raw material costs, primarily benzene and propylene. Winchester gross margin increased ~~by $76.2~~$3.4 million primarily due to higher ~~caustic soda prices. Epoxy gross~~sales volumes and lower costs. Gross margin decreased $12.3 million primarily due to increased raw material costs, primarily associated with benzene and propylene, partially offset by higher product prices. Both Chlor Alkali Products and Vinyls and Epoxy gross margins were also negativelyin 2018 was positively impacted by ~~incremental~~insurance recoveries for environmental costs ~~to continue operations, unabsorbed fixed manufacturing costs~~incurred and ~~reduced profit from lost sales associated with Hurricane Harvey. Winchester gross margin decreased $19.9 million primarily due to a lower level~~expensed in prior periods of commercial demand for shotshell, pistol and rifle ammunition and a less favorable product mix and increased commodity and other material costs, partially offset by increased shipments to military customers and law enforcement agencies.$110.0 million. Gross margin as a percentage of sales ~~increased~~decreased to ~~13%~~14% in ~~2017~~2019 from ~~12%~~23% in ~~2016.~~2018.

Selling and administration expenses for the three months ended September 30, ~~2017~~2019 were $86.4 million, an increase of $4.4 million from the same period last year. The increase was primarily due to higher consulting and contract services of $4.1 million and higher stock-based compensation expense of $2.7$110.8 million, which ~~includes mark-to-market adjustments, partially offset by lower~~is comparable to the prior year. Lower legal and legal-related settlement expenses of ~~$4.6 million. Selling~~$8.6 million, primarily due to the legal fees associated with the environmental recovery actions in 2018, lower consulting and ~~administration expenses for the three months ended September 30, 2017 also included~~contract services of $3.7 million and lower management incentive compensation expense of $3.5 million, which includes mark-to-market adjustments on stock-based compensation expense, were primarily offset by higher costs associated with the ~~implementation~~Information Technology Project of ~~new enterprise resource planning, manufacturing, and engineering systems, and related infrastructure costs of $2.9~~$17.0 million. Selling and administration expenses as a percentage of sales ~~were~~increased to 7% in 2019 from 6% in ~~2017 and 2016.~~2018.

Restructuring charges for the three months ended September 30, ~~2017~~2019 and ~~2016~~2018 of ~~$9.2~~$4.9 million and ~~$5.2~~$3.3 million, respectively, were primarily associated with the March 2016 closure of 433,000 tons of chlor alkali capacity across three separate locations and permanently closing a portion of the Becancour, Canada chlor alkali facility. Restructuring charges for the three months ended September 30, 2016 were also associated with the relocation of our Winchester centerfire ammunition manufacturing operations from East Alton, IL to Oxford, MS, which was completed in 2016.locations.

~~Acquisition-related costs of $1.1 million and $13.1~~Interest expense increased by $4.7 million for the three months ended September 30, ~~2017 and 2016, respectively, were related~~2019, primarily due to ~~the integration of the Acquired Business, and consisted of advisory, legal, accounting and other professional fees.~~

higher interest rates. Interest expense ~~increased by $5.6 million~~ for the three months ended September 30, ~~2017, primarily due~~2019 and 2018 included $4.4 million and $4.0

million, respectively, of accretion expense related to ~~higher~~the 2020 ethylene payment discount. Interest expense for the three months ended September 30, 2019 also included $2.8 million for the write-off of unamortized deferred debt issuance costs associated with the 2029 Notes and 2019 Senior Credit Facility issuance. Interest expense for the three months ended September 30, 2019 and 2018 was reduced by capitalized interest ~~rates~~of $3.0 million and $2.1 million, respectively.

Other operating income (expense) for the three months ended September 30, 2018 included a ~~higher level~~$1.7 million loss on the sale of ~~debt outstanding.~~land.

Non-operating pension income includes all components of pension and other postretirement income (costs) other than service costs.

The effective tax rate for the three months ended September 30, ~~2017~~2019 included a benefit associated with the finalization of ~~$4.3 million~~the Internal Revenue Service (IRS) review of years 2013 to 2015 U.S. income tax claims, a benefit associated with stock-based compensation, a benefit associated with prior year tax positions, a benefit from foreign tax law changes, a benefit from the remeasurement of deferred taxes due to a decrease in our state effective tax rates, an expense from a change in tax contingencies and an expense from a net increase in the valuation allowance related to state deferred tax assets. These factors resulted in a net $24.0 million tax benefit. After giving consideration to these items, the effective tax rate for the three months ended September 30, 2019 of 53.9% was higher than the 21% U.S. federal statutory rate, primarily due to state taxes, foreign income taxes and foreign income inclusions and a net 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 September 30, 2018 included a benefit associated with stock-based compensation, a benefit associated with the estimated increase of the one-time 2017 Tax Act provisional tax benefit, 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 a benefit from the remeasurement of deferred taxes due to a decrease in our state effective tax rates. These factors resulted in a net $0.5 million tax benefit. After giving consideration to these items, the effective tax rate for the three months ended September 30, 2018 of 25.6% was higher than the 21% U.S. federal statutory rate, primarily due to state taxes, foreign income taxes and U.S. minimum tax on foreign earnings, partially offset by favorable permanent salt depletion deductions.

Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018

Sales for the nine months ended September 30, 2019 were $4,722.9 million compared to $5,311.1 million in the same period last year, a decrease of $588.2 million, or 11%. Chlor Alkali Products and Vinyls sales decreased by $348.2 million, primarily due to lower caustic soda pricing, partially offset by higher ethylene dichloride (EDC), chlorine and other chlorine-derivatives pricing. Epoxy sales decreased by $240.0 million primarily due to lower product prices and an unfavorable effect of foreign currency translation.

Gross margin decreased $325.7 million for the nine months ended September 30, 2019 compared to the prior year. Chlor Alkali Products and Vinyls gross margin decreased by $203.2 million, primarily due to lower caustic soda pricing, partially offset by lower raw material costs. Winchester gross margin decreased $1.9 million primarily due to lower product prices, partially offset by lower costs. Epoxy gross margin increased $2.0 million primarily due to lower maintenance costs and unabsorbed fixed manufacturing costs associated with maintenance turnarounds and lower raw material costs, primarily benzene and propylene, partially offset by lower product prices. Gross margin in 2018 was positively impacted by insurance recoveries for environmental costs incurred and expensed in prior periods of $110.0 million. Gross margin as a percentage of sales decreased to 12% in 2019 from 17% in 2018.

Selling and administration expenses for the nine months ended September 30, 2019 were $314.8 million, a decrease of $6.8 million from the prior year. The decrease was primarily due to lower legal and legal-related settlement expenses of $20.4 million, primarily due to the legal fees associated with the environmental recovery actions in 2018, lower consulting and contract services of $11.6 million and lower management incentive compensation expense of $7.4 million, which includes mark-to-market adjustments on stock-based compensation expense. The nine months ended September 30, 2019 also included higher costs associated with the Information Technology Project of $34.6 million. Selling and administration expenses as a percentage of sales increased to 7% in 2019 from 6% in 2018.

Restructuring charges for the nine months ended September 30, 2019 and 2018 of $12.7 million and $13.7 million, respectively, were primarily associated with the March 2016 closure of 433,000 tons of chlor alkali capacity across three separate locations.

Other operating income (expense) for the nine months ended September 30, 2018 included a $1.7 million loss on the sale of land and an $8.0 million insurance recovery for a second quarter 2017 business interruption at our Freeport, TX vinyl chloride monomer facility.

Earnings (losses) of non-consolidated affiliates for the nine months ended September 30, 2018 reflect a $21.5 million non-cash impairment charge.

Interest expense decreased by $4.8 million for the nine months ended September 30, 2019, primarily due to a lower level of debt outstanding partially offset by higher interest rates. Interest expense for the nine months ended September 30, 2019 and 2018 included $12.6 million and $11.9 million, respectively, of accretion expense related to the 2020 ethylene payment discount. Interest expense for the nine months ended September 30, 2019 and 2018 was reduced by capitalized interest of $8.7 million and $4.7 million, respectively.

Non-operating pension income includes all components of pension and other postretirement income (costs) other than service costs.

Other income for the nine months ended September 30, 2019 included a gain of $11.2 million on the sale of our equity interest in a non-consolidated affiliate.

The effective tax rate for the nine months ended September 30, 2019 included a benefit associated with the finalization of the IRS review of years 2013 to 2015 U.S. income tax claims, a benefit associated with stock-based compensation, a benefit associated with prior year tax positions, a benefit from foreign tax law changes, a benefit from the remeasurement of deferred taxes due to a decrease in our state effective tax rates, a benefit ~~of $1.9 million associated with prior year tax positions and~~from a benefit of $0.5 million associated with stock-based compensation. After giving consideration to these items, the effective tax rate for the three months ended September 30, 2017 of 23.8% was lower than the 35.0% U.S. federal statutory rate, primarily due to favorable permanent salt depletion deductions. The effective tax rate for the three months ended September 30, 2016 of 17.8% was lower than the 35% U.S. federal statutory rate, primarily due to favorable permanent salt depletion deductions.

~~Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016~~

~~Sales for the nine months ended September 30, 2017 were $4,648.5 million compared to $4,164.9 million~~net decrease in the same period last year, an increase of $483.6 million, or 12%. Chlor Alkali Products and Vinyls sales increased by $366.5 million primarily due to higher caustic soda and EDC product prices and increased volumes. Epoxy sales increased by $169.2 million primarily due to higher product prices and increased volumes. Both Chlor Alkali Products and Vinyls and Epoxy sales volumes were negatively impacted by Hurricane Harvey. Winchester sales decreased by $52.1 million primarily due to decreased shipments to commercial customers, partially offset by increased shipments to military customers and law enforcement agencies.

Gross margin increased $36.9 million compared to the nine months ended September 30, 2016. Chlor Alkali Products and Vinyls gross margin increased by $112.0 million, primarily due to higher caustic soda and EDC product prices and increased volumes. Partially offsetting these increases were higher electricity costs, primarily driven by higher natural gas prices, and ethylene costs compared to the prior year period. Chlor Alkali Products and Vinyls gross margin was also impacted by higher maintenance costs, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with turnarounds and outages. Epoxy gross margin decreased $36.2 million primarily due to increased raw material costs, primarily associated with benzene and propylene, partially offset by higher product prices. Both Chlor Alkali Products and Vinyls and Epoxy gross margins were also negatively impacted by incremental costs to continue operations, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with Hurricane Harvey. Winchester gross margin decreased $38.0 million primarily due to lower volumes and a less favorable product mix, primarily due to a lower level of commercial demand for shotshell, pistol and rifle ammunition and increased commodity and other material costs, partially offset by increased shipments to military customers and law enforcement agencies. Gross margin as a percentage of sales was 11% in 2017 and 2016.

Selling and administration expenses for the nine months ended September 30, 2017 were $254.6 million, an increase of $5.2 million from the same period last year. The increase was primarily due to higher stock-based compensation expense of $7.3 million, which includes mark-to-market adjustments, and higher consulting and contract services of $5.1 million, partially offset by lower legal and legal-related settlement expenses of $10.6 million. Selling and administration expenses for the nine months ended September 30, 2017 also included costs associated with the implementation of new enterprise resource planning, manufacturing, and engineering systems, and related infrastructure costs of $2.9 million. Selling and administration expenses as a percentage of sales were 5% in 2017 and 6% in 2016.

Restructuring charges for the nine months ended September 30, 2017 and 2016 of $25.9 million and $106.2 million, respectively, were primarily associated with the closure of 433,000 tons of chlor alkali capacity across three separate locations and permanently closing a portion of the Becancour, Canada chlor alkali facility. For the nine months ended September 30, 2016, $76.6 million of these charges were non-cash asset impairment charges for equipment and facilities. Restructuring charges for the nine months ended September 30, 2016 were also associated with the relocation of our Winchester centerfire ammunition manufacturing operations from East Alton, IL to Oxford, MS, which was completed in 2016.

~~Acquisition-related costs of $12.5 million and $39.6 million for the nine months ended September 30, 2017 and 2016, respectively, were~~valuation allowance related to ~~the integration of the Acquired Business,~~state deferred tax assets and ~~consisted of advisory, legal, accounting and other professional fees.~~

~~Other operating (expense) income for the nine months ended September 30, 2016 included~~ an ~~$11.0~~expense from a change in tax contingencies. These factors resulted in a net $24.3 million ~~insurance recovery for property damage and business interruption related to a 2008 chlor alkali facility incident.~~

Interest expense increased by $14.4 million for the nine months ended September 30, 2017, primarily due to higher interest rates and the write-off of unamortized deferred debt issuance costs of $2.7 million associated with the redemption of the Sumitomo Credit Facility and the Senior Credit Facility.

~~The effective~~ tax rate for the nine months ended September 30, 2017 included a benefit of $9.5 million related to an agreement reached with the Internal Revenue Service (IRS) for the years 2008 and 2010 to 2012 tax examinations, a benefit of $4.3 million related to the remeasurement of deferred taxes due to a decrease in our state effective tax rates, a benefit of $2.9 million associated with stock-based compensation and a benefit of $1.0 million associated with prior year tax positions.benefit. After giving consideration to these items, the effective tax rate for the nine months ended September 30, ~~2017~~2019 of ~~24.8%~~42.2% was ~~lower~~higher than the ~~35.0%~~21% U.S. federal statutory rate primarily due to state taxes, foreign income taxes and foreign income inclusions and a net increase in the valuation allowance related to losses in foreign jurisdictions, partially offset by favorable permanent salt depletion ~~deduction.~~deductions. The effective tax rate for the nine months ended September 30, ~~2016~~2018 included a benefit ~~of $5.2 million~~ associated with return to provision adjustments for the finalization of our prior years’ U.S. federal and state income tax returns. The return to provision adjustment for the nine months ended September 30, 2016 included $14.9 million ofstock-based compensation, a benefit ~~primarily associated with~~from a change in ~~estimate~~tax contingencies, a benefit related to ~~the calculation of salt depletion and $9.7 million of expense~~a foreign dividend payment, a benefit associated with the ~~correction~~estimated increase of the one-time 2017 Tax Act provisional tax benefit, a benefit associated with prior year tax positions, an ~~immaterial error~~expense from a net increase in the valuation allowance related to ~~non-deductible acquisition costs. The~~deferred tax assets in foreign jurisdictions and a benefit from the remeasurement of deferred taxes due to a decrease in our state effective tax ~~rate for the nine months ended September 30, 2016 also included an expense of $4.1~~rates. These factors resulted in a net $2.7 million ~~related to changes in uncertain~~ tax ~~positions for prior tax years.~~benefit. After giving consideration to these items, the effective tax rate for the nine months ended September 30, ~~2016~~2018 of ~~61.0%~~25.1% was higher than the ~~35%~~21% U.S. federal statutory rate primarily due to state taxes, foreign income taxes and U.S. minimum tax on foreign earnings, partially offset by favorable permanent salt depletion ~~deductions in combination with a pretax loss.~~deductions.

Segment Results

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, and ~~include~~includes the operating results of non-consolidated affiliates. Consistent with the guidance in ~~ASC~~Accounting Standards Codification (ASC) 280, “Segment ~~Reporting” (ASC 280),~~Reporting,” we have determined it is appropriate to include the operating results of non-consolidated affiliates in the relevant segment financial results. 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 used in our Epoxy segment is transferred at cost from the Chlor Alkali Products and Vinyls segment. Sales and profits are recognized in the Chlor Alkali Products and Vinyls segment for all caustic soda generated and sold by Olin.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018
Sales:	($ in millions)												($ in millions)
Chlor Alkali Products and Vinyls	$	881.2		$	779.4		$	2,583.2		$	2,216.7		$	876.3		$	1,051.1		$	2,657.7		$	3,005.9
Epoxy	489.9			470.1			1,549.5			1,380.3			511.6			647.3			1,554.4			1,794.4
Winchester	183.8			203.2			515.8			567.9			188.7			174.0			510.8			510.8
Total sales	$	1,554.9		$	1,452.7		$	4,648.5		$	4,164.9		$	1,576.6		$	1,872.4		$	4,722.9		$	5,311.1
Income (loss) before taxes:
Income before taxes:
Chlor Alkali Products and Vinyls⁽¹⁾	$	129.7		$	53.7		$	270.0		$	152.5		$	112.7		$	210.8		$	303.8		$	490.7
Epoxy	(1.7		)	10.3			(11.0		)	18.5			24.2			31.1			38.6			33.8
Winchester	17.2			36.0			61.3			95.9			13.9			10.3			33.1			34.1
Corporate/other:
Pension income⁽²⁾	11.1			15.4			32.1			40.2
Environmental expense	(1.8		)	(0.4		)	(6.2		)	(5.5		)
Environmental income (expense)⁽²⁾													0.8			110.8			(18.2		)	104.1
Other corporate and unallocated costs⁽³⁾	(31.1		)	(28.2		)	(94.2		)	(81.7		)	(43.4		)	(42.7		)	(117.8		)	(124.5		)
Restructuring charges⁽⁴⁾	(9.2		)	(5.2		)	(25.9		)	(106.2		)
Acquisition-related costs⁽⁵⁾	(1.1		)	(13.1		)	(12.5		)	(39.6		)
Other operating (expense) income⁽⁶⁾	—			(0.2		)	(0.1		)	10.5
Restructuring charges													(4.9		)	(3.3		)	(12.7		)	(13.7		)
Acquisition-related costs													—			(0.4		)	—			(1.0		)
Other operating income (expense)⁽⁴⁾													0.1			(1.7		)	0.3			6.4
Interest expense	(53.1		)	(47.5		)	(158.0		)	(143.6		)	(63.9		)	(59.2		)	(179.2		)	(184.0		)
Interest income	0.4			0.5			1.0			1.3			0.2			0.3			0.7			1.1
Income (loss) before taxes	$	60.4		$	21.3		$	56.5		$	(57.7	)
Non-operating pension income													4.1			5.4			12.2			16.2
Other income⁽⁵⁾													—			—			11.2			—
Income before taxes													$	43.8		$	261.4		$	72.0		$	363.2

(1)

Earnings (losses) of non-consolidated affiliates are included in the Chlor Alkali Products and Vinyls segment results consistent with management’s monitoring of the operating segments. The earnings of non-consolidated affiliates were ~~$0.5~~$0.4 million for ~~both~~ the three months ended September 30, ~~2017 and 2016, and $1.5 million and $1.1~~2018. The losses of non-consolidated affiliates were $20.2 million for the nine months ended September 30, ~~2017 and 2016, respectively.~~2018, which reflect a $21.5 million non-cash impairment charge recorded during the second quarter of 2018.

(2)

~~The service cost~~Environmental income (expense) for the nine months ended September 30, 2019 included $4.8 million of an environmental insurance-related settlement gain. Environmental income (expense) for both the three and ~~the amortization~~nine months ended September 30, 2018 included pretax insurance recoveries for environmental costs incurred and expensed in prior periods of prior service cost components of pension expense related to the employees of the operating segments are allocated to the operating segments based on their respective estimated census data. All other components of pension costs are included in corporate/other and include items such as the expected return on plan assets, interest cost and recognized actuarial gains and losses.$110.0 million.


(3)	Other corporate and unallocated costs included costs associated with the implementation of the Information Technology Project for the three months ended September 30, 2019 and 2018 of $24.5 million and $7.5 million, respectively, and for the nine months ended September 30, 2019 and 2018 of $60.1 million and $25.5 million, respectively.


(4)	Other operating income (expense) for both the three and nine months ended September 30, ~~2017~~2018 included ~~costs associated with~~a $1.7 million loss on the ~~implementation~~sale of ~~new enterprise resource planning, manufacturing, and engineering systems, and related infrastructure costs of $2.9 million.~~

~~(4)~~

Restructuring charges for the three months ended September 30, 2017 and 2016 of $9.2 million and $5.2 million, respectively, and for the nine months ended September 30, 2017 and 2016 of $25.9 million and $106.2 million, respectively, were primarily associated with the closure of 433,000 tons of chlor alkali capacity across three separate locations and permanently closing a portion of the Becancour, Canada chlor alkali facility.land. For the nine months ended September 30, ~~2016, $76.6~~2018, we also recognized an insurance recovery of $8.0 million ~~of these charges were non-cash asset impairment charges~~in other operating income (expense) for ~~equipment and facilities. Restructuring charges for the three and nine months ended September 30, 2016 were also associated with the relocation of~~a second quarter 2017 business interruption at our ~~Winchester centerfire ammunition manufacturing operations from East Alton, IL to Oxford, MS which was completed in 2016.~~Freeport, TX vinyl chloride monomer facility.


(5)	Acquisition-related costs for the three and nine months ended September 30, 2017 and 2016 were related to the integration of the Acquired Business, and consisted of advisory, legal, accounting and other professional fees.


~~(6)~~	Other ~~operating (expense)~~ income for the nine months ended September 30, ~~2016~~2019 included ~~an $11.0~~a gain of $11.2 million ~~insurance recovery for property damage and business interruption related to~~on the sale of our equity interest in a ~~2008 chlor alkali facility incident.~~non-consolidated affiliate.

Chlor Alkali Products and Vinyls

Three Months Ended September 30, ~~2017~~2019 Compared to Three Months Ended September 30, ~~2016~~2018

Chlor Alkali Products and Vinyls sales for the three months ended September 30, ~~2017~~2019 were ~~$881.2~~$876.3 million compared to ~~$779.4~~$1,051.1 million for the same period in ~~2016, an increase~~2018, a decrease of ~~$101.8~~$174.8 million, or ~~13%~~17%. The sales ~~increase~~decrease was primarily due to ~~higher product prices ($112.3 million), partially offset by~~ lower ~~volumes ($10.5 million). The higher product prices were primarily related to~~ caustic soda ~~partially offset by lower EDC product prices. Chlor Alkali Products~~pricing and ~~Vinyls sales volumes were negatively impacted by Hurricane Harvey.~~volumes.

Chlor Alkali Products and Vinyls segment income was ~~$129.7~~$112.7 million for the three months ended September 30, ~~2017~~2019 compared to ~~$53.7~~$210.8 million for the same period in ~~2016, an increase~~2018, a decrease of ~~$76.0~~$98.1 million, or ~~142%~~47%. The decrease in Chlor Alkali Products and Vinyls segment income was ~~higher~~primarily due to ~~higher~~lower product prices ($~~112.3~~102.5 million) and lower volumes ($39.5 million), both primarily ~~related to~~ caustic soda, ~~and a favorable product mix ($11.3 million). These increases were~~ partially offset by ~~incremental costs to continue operations, unabsorbed fixed manufacturing costs~~lower raw materials and ~~reduced profit from lost sales associated with Hurricane Harvey ($24.0 million), higher~~ operating costs ($~~19.9 million), primarily due to increased planned maintenance turnarounds, and higher electricity costs, primarily driven by natural gas prices ($3.7~~43.9 million). Chlor Alkali Products and Vinyls segment income included depreciation and amortization expense of ~~$106.8~~$122.2 million and ~~$106.3~~$122.3 million for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

Nine Months Ended September 30, ~~2017~~2019 Compared to Nine Months Ended September 30, ~~2016~~2018

Chlor Alkali Products and Vinyls sales for the nine months ended September 30, ~~2017~~2019 were ~~$2,583.2~~$2,657.7 million compared to ~~$2,216.7~~$3,005.9 million for the same period in ~~2016, an increase~~2018, a decrease of ~~$366.5~~$348.2 million, or ~~17%~~12%. The sales ~~increase~~decrease was primarily due to ~~increased product prices ($296.6 million) and increased volumes ($69.9 million). The higher product prices and increased volumes were primarily related to~~lower caustic soda pricing and ~~EDC. Chlor Alkali Products~~lower volumes, partially offset by higher EDC, chlorine and ~~Vinyls sales volumes were negatively impacted by Hurricane Harvey.~~other chlorine-derivatives pricing.

Chlor Alkali Products and Vinyls segment income was ~~$270.0~~$303.8 million for the nine months ended September 30, ~~2017~~2019 compared to ~~$152.5~~$490.7 million for the same period in ~~2016, an increase~~2018, a decrease of ~~$117.5~~$186.9 million, or ~~77%~~38%. The decrease in Chlor Alkali Products and Vinyls segment income was ~~higher~~primarily due to ~~higher~~lower product prices ($~~296.6~~250.3 million) and lower volumes ($37.7 million), ~~increased volumes and a favorable product mix ($16.2 million). The higher product prices and increased volumes~~both primarily caustic soda. Partially offsetting these decreases were primarily related to caustic soda and EDC. These increases were partially offset by higher maintenance costs, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with turnarounds and outages ($102.5 million) and incremental costs to continue operations, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with Hurricane Harvey ($24.0 million). Electricity costs, primarily driven by higher natural gas prices, and ethylene costs ($59.8 million)lower raw material and operating costs ($~~9.0~~54.0 million) ~~were~~and lower maintenance turnaround costs ($25.6 million). Chlor Alkali Products and Vinyls 2018 segment income was also ~~higher compared to the prior year.~~negatively impacted by a non-cash impairment charge associated with our investment in a non-consolidated affiliate ($21.5 million). Chlor Alkali Products and Vinyls segment income included depreciation and amortization expense of ~~$318.0~~$360.8 million and ~~$311.6~~$355.4 million for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

Epoxy

Three Months Ended September 30, ~~2017~~2019 Compared to Three Months Ended September 30, ~~2016~~2018

Epoxy sales for the three months ended September 30, ~~2017~~2019 were ~~$489.9~~$511.6 million compared to ~~$470.1~~$647.3 million for the same period in ~~2016, an increase~~2018, a decrease of ~~$19.8~~$135.7 million, or 4%21%. The sales ~~increase~~decrease was primarily due to ~~higher~~lower product prices ($~~45.7~~75.5 million), ~~partially offset by lower product~~decreased volumes ($~~25.9~~48.8 million) and an unfavorable effect of foreign currency translation ($11.4 million). ~~Epoxy sales volumes were negatively impacted by Hurricane Harvey.~~

Epoxy segment ~~loss~~income was ~~$1.7~~$24.2 million for the three months ended September 30, ~~2017,~~2019 compared to ~~segment income of $10.3~~$31.1 million for the same period in ~~2016,~~2018, a decrease of $6.9 million, or 22%. The decrease in segment ~~results of $12.0 million. Epoxy segment results were negatively impacted~~income was primarily due to lower product prices ($75.5 million) and lower volumes ($10.5 million), partially offset by incremental costs to continue operations, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with Hurricane Harvey ($18.7 million). Epoxy segment results were also impacted by increasedlower raw material costs ($~~30.8~~67.7 million)~~, primarily associated with benzene~~ and ~~propylene, and higher~~lower operating costs ($~~8.2~~11.4 million). ~~These decreases were partially~~The impact of foreign currency translation on Epoxy segment income was not material as a significant percentage of our Euro denominated sales are of products manufactured within Europe. As a result, the impact of foreign currency translation on revenue is primarily offset by ~~higher product prices ($45.7 million).~~the impact of foreign currency translation on raw materials and manufacturing costs also denominated in Euros. Epoxy segment income included depreciation and amortization expense of ~~$24.4~~$26.9 million and ~~$22.6~~$25.2 million for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

Nine Months Ended September 30, ~~2017~~2019 Compared to Nine Months Ended September 30, ~~2016~~2018

Epoxy sales for the nine months ended September 30, ~~2017~~2019 were ~~$1,549.5~~$1,554.4 million compared to ~~$1,380.3~~$1,794.4 million for the same period in ~~2016,~~2018, a decrease of $240.0 million, or 13%. The sales decrease was primarily due to lower product prices ($185.0 million), an unfavorable effect of foreign currency translation ($52.9 million) and decreased volumes ($2.1 million).

Epoxy segment income was $38.6 million for the nine months ended September 30, 2019 compared to $33.8 million for the same period in 2018, an increase of ~~$169.2~~$4.8 million, or ~~12%~~14%. The increase in segment income was primarily due to lower maintenance costs and unabsorbed fixed manufacturing costs associated with maintenance turnarounds ($40.2 million), decreased operating costs ($7.9 million) and lower raw material costs ($158.9 million), primarily benzene and propylene, partially offset by lower product prices ($185.0 million) and decreased volumes with an unfavorable product mix ($17.2 million). A significant percentage of our Euro denominated sales are of products manufactured within Europe. As a result, the impact of foreign currency translation on revenue is primarily offset by the impact of foreign currency translation on raw materials and manufacturing costs also denominated in Euros. Epoxy segment income included depreciation and amortization expense of $79.2 million and $77.0 million for the nine months ended September 30, 2019 and 2018, respectively.

Winchester

Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018

Winchester sales were $188.7 million for the three months ended September 30, 2019 compared to $174.0 million for the same period in 2018, an increase of $14.7 million, or 8%. The sales increase was primarily due to higher ~~product prices~~ammunition sales to commercial customers ($~~127.8~~12.8 million) and increased ~~volumes~~sales to military customers and ~~a favorable product mix~~law enforcement agencies ($~~41.4~~1.9 million). ~~Epoxy sales volumes were negatively impacted by Hurricane Harvey.~~

~~Epoxy segment loss was $11.0 million for the nine months ended September 30, 2017 compared to~~Winchester segment income of $18.5 million for the same period in 2016, a decrease in segment results of $29.5 million. Epoxy segment results were negatively impacted by incremental costs to continue operations, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with Hurricane Harvey ($18.7 million). Epoxy segment results were also impacted by increased raw material costs ($165.0 million), primarily associated with benzene and propylene, and higher operating costs ($8.8 million). These decreases were partially offset by higher product prices ($127.8 million), increased volumes and a favorable product mix ($35.2 million). Epoxy segment income included depreciation and amortization expense of $69.6 million and $67.3 million for the nine months ended September 30, 2017 and 2016, respectively.

~~Winchester~~

~~Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2016~~

~~Winchester sales were $183.8~~was $13.9 million for the three months ended September 30, ~~2017~~2019 compared to ~~$203.2~~$10.3 million for the same period in ~~2016, a decrease~~2018, an increase of ~~$19.4~~$3.6 million, or ~~10%~~35%. The sales decrease was primarily due to lower ammunition sales to commercial customers ($30.2 million), partially offset by increased shipments to military customers and law enforcement agencies ($10.8 million). The decreaseincrease in ~~commercial sales primarily reflects lower demand in shotshell, pistol and rifle ammunition.~~

~~Winchester reported~~ segment income was ~~$17.2 million for the three months ended September 30, 2017 compared to $36.0 million for the same period in 2016, a decrease of $18.8 million, or 52%. The decrease was~~ due to higher sales volumes ($3.7 million) and lower ~~volumes and a less favorable product mix~~costs ($~~12.7~~1.5 million), ~~increased~~primarily commodity and other material costs, ~~($3.6 million) and~~partially offset by lower product prices ($~~2.5~~1.6 million). Winchester segment income included depreciation and amortization expense of ~~$4.8~~$5.2 million and ~~$4.7~~$4.9 million for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

Nine Months Ended September 30, ~~2017~~2019 Compared to Nine Months Ended September 30, ~~2016~~2018

Winchester sales were ~~$515.8~~$510.8 million for both the nine months ended September 30, 2019 and 2018. Higher ammunition sales to commercial customers ($5.7 million) were offset by lower ammunition sales to military customers and law enforcement agencies ($5.7 million).

Winchester segment income was $33.1 million for the nine months ended September 30, ~~2017~~2019 compared to ~~$567.9~~$34.1 million for the same period in ~~2016,~~2018, a decrease of ~~$52.1~~$1.0 million, or 9%. The sales decrease was primarily due to lower ammunition sales to commercial customers ($79.9 million), partially offset by increased shipments to military customers and law enforcement agencies ($27.8 million)3%. The decrease in ~~commercial sales primarily reflects lower demand in shotshell, pistol and rifle ammunition.~~

~~Winchester reported~~ segment income ~~was $61.3 million for the nine months ended September 30, 2017 compared to $95.9 million for the same period in 2016, a decrease of $34.6 million, or 36%. The decrease~~ was due to lower ~~volumes~~product prices ($6.3 million) and a less favorable product mix ($~~24.0~~2.5 million), ~~increased~~partially offset by lower costs ($7.8 million), primarily commodity and other material ~~costs ($5.6 million) and lower product prices ($5.0 million).~~costs. Winchester segment income included depreciation and amortization expense of ~~$14.2~~$15.2 million and ~~$13.8~~$14.9 million for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

Corporate/Other

Three Months Ended September 30, ~~2017~~2019 Compared to Three Months Ended September 30, ~~2016~~2018

For the three months ended September 30, 2019, credits to income for environmental investigatory and remedial activities were $0.8 million compared to $110.8 million for the three months ended September 30, 2018, which include $110.0 million of insurance recoveries for environmental costs incurred and expensed in prior periods. Without these recoveries in 2018, credits to income for environmental investigatory and remedial activities would have been $0.8 million. These credits related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites.

For the three months ended September 30, ~~2017, pension income included in corporate/~~2019, other ~~was $11.1~~corporate and unallocated costs were $43.4 million compared to ~~$15.4~~$42.7 million for the three months ended September 30, ~~2016. On~~2018, an increase of $0.7 million. The increase was primarily due to higher costs associated with the Information Technology Project of $17.0 million partially offset by lower legal and legal-related settlement expenses of $8.7 million, primarily due to the legal fees associated with the environmental recovery actions in 2018, decreased management incentive expense of $2.4 million, which includes mark-to-market adjustments on stock-based compensation expense, a ~~total company basis, defined benefit pension income for~~favorable foreign currency impact of $2.2 million and lower consulting charges of $1.6 million.

Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018

For the ~~three~~nine months ended September 30, ~~2017, was $6.3 million compared to $9.3 million for the three months ended September 30, 2016.~~

~~For the three months ended September 30, 2017,~~2019, charges to income for environmental investigatory and remedial activities were ~~$1.8~~$18.2 million, ~~compared to $0.4~~which includes $4.8 million ~~for~~of an environmental insurance-related settlement gain. For the ~~three~~nine months ended September 30, ~~2016.~~2018, credits to income for environmental investigatory and remedial activities were $104.1 million, which include $110.0 million of insurance recoveries for environmental costs incurred and expensed in prior periods. Without these recoveries, charges to income for environmental investigatory and remedial activities in 2019 and 2018 would have been $23.0 million and $5.9 million, respectively. The increase in environmental expense from the prior year primarily relates to a $20.0 million increase in costs at a former manufacturing site resulting from revised remediation estimates as a result of agency action. These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites.

For the three months ended September 30, 2017, other corporate and unallocated costs were $31.1 million compared to $28.2 million for the three months ended September 30, 2016, an increase of $2.9 million. The increase was primarily due to higher stock-based compensation expense of $3.6 million, which includes mark-to-market adjustments and costs associated with the implementation of new enterprise resource planning, manufacturing, and engineering systems, and related infrastructure costs of $2.9 million, partially offset by decreased legal and legal-related settlement expenses of $2.7 million.

~~Nine Months EndedSeptember 30, 2017 Compared to Nine Months Ended September 30, 2016~~

For the nine months ended September 30, ~~2017, pension income included in corporate/~~2019, other ~~was $32.1~~corporate and unallocated costs were $117.8 million compared to ~~$40.2~~$124.5 million for the nine months ended September 30, ~~2016. On~~2018, a ~~total company basis, defined benefit pension income for the nine months ended September 30, 2017, was $19.7 million compared to $27.7 million for the nine months ended September 30, 2016.~~

For the nine months ended September 30, 2017, charges to income for environmental investigatory and remedial activities were $6.2 million compared to $5.5 million for the nine months ended September 30, 2016. These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites.

~~For the nine months ended September 30, 2017, other corporate and unallocated costs were $94.2 million compared to $81.7 million for the nine months ended September 30, 2016, an increase~~decrease of ~~$12.5~~$6.7 million. The ~~increase~~decrease was primarily due to higher stock-based compensation expense of $7.3 million, which includes mark-to-market adjustments, increased consulting charges of $4.2 million, an unfavorable foreign currency impact of $3.1 million and costs associated with the implementation of new enterprise resource planning, manufacturing, and engineering systems, and related infrastructure costs of $2.9 million. Partially offsetting these increases were decreasedlower legal and legal-related settlement expenses of ~~$5.2~~$20.1 million, primarily due to the legal fees associated with the environmental recovery actions in 2018, lower consulting charges of $8.8 million, a favorable foreign currency impact of $6.4 million and decreased management incentive expense of $6.2 million, which includes mark-to-market adjustments on stock-based compensation expense. These decreases were partially offset by higher costs associated with the Information Technology Project of $34.6 million.

Outlook

Net income in 2017 is projected to be in the $0.65 to $0.80 per diluted share range, which includes pretax restructuring charges and pretax acquisition-related integration costs totaling approximately $50 million. Net loss in 2016 was $0.02 per diluted share, which included pretax acquisition-related integration costs of $48.8 million and pretax restructuring charges of $112.9 million.

Fourth quarter ~~2017~~2019 earnings are ~~expected~~forecast to ~~improve~~be lower compared to third quarter 2019. We expect fourth quarter 2019 Chlor Alkali Products and Vinyls segment earnings to decrease sequentially from the third quarter ~~of 2017. Fourth quarter earnings are expected~~primarily due to ~~benefit from higher caustic soda pricing and reduced impact from Hurricane Harvey partially offset by higher maintenance turnaround activity. The Chlor Alkali Products and Vinyls business in~~lower pricing. We expect fourth quarter ~~2017 is forecast~~2019 Epoxy segment earnings to ~~benefit from stronger year over year volumes across all products, sequentially improved caustic soda and chlorine prices and lower ethylene costs. EDC pricing is forecast to decline~~decrease sequentially from the third quarter primarily due to ~~the fourth~~lower product pricing and decreased volumes from normal seasonality. Raw material costs, primarily benzene and propylene, are expected to be comparable to third quarter. ~~Epoxy fourth quarter 2017 segment results will reflect a 35-day planned maintenance turnaround at our production facility in Stade, Germany.~~ Winchester fourth quarter ~~2017~~ segment earnings are expected to ~~be below~~decline sequentially in the fourth quarter ~~2016 levels due to~~which is the ~~continuation of lower~~weakest seasonal period for commercial ammunition ~~sales combined with higher commodity and other material costs.~~sales.

Chlor Alkali Products and Vinyls 2017 segment income is expected to be higher compared to 2016 segment income of $224.9 million reflecting higher chlorine, caustic soda and EDC prices and additional cost synergy realization. These increases are expected to be partially offset by the impact of higher maintenance turnaround costs, higher electricity costs, driven by increased natural gas costs, and incremental costs to continue operations, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with Hurricane Harvey.

~~Epoxy 2017~~2019 segment income is expected to be lower than ~~2016~~2018 segment income of ~~$15.4~~$637.1 million reflecting lower pricing, primarily caustic soda, partially offset by lower raw material and operating costs and lower maintenance turnaround costs.

Epoxy 2019 segment results are expected to be lower to the 2018 segment income of $52.8 million as ~~improved volumes~~lower raw material costs, primarily benzene and ~~pricing year over year~~propylene, and lower planned maintenance turnaround costs are expected to be more than offset by the higher raw material costs, associated with benzene and propylene, increased turnaround and outage costs, and incremental costs to continue operations, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with Hurricane Harvey.lower product pricing.

Winchester ~~2017~~2019 segment income is expected to be insimilar to the ~~$75 million to $80 million range, compared to $120.9 million of~~2018 segment income ~~achieved during 2016. The forecast for Winchester is~~of $38.4 million primarily ~~driven by~~due to lower ~~commercial ammunition demand, due primarily to both an overall reduction in purchases and inventory reductions by our customers and higher~~ commodity and other material ~~costs. We expect the decrease~~costs and lower operating costs offset by declines in commercial pricing. Military and other government sales are expected to be partially offset by an increase year over year in military sales. The Oxford, MS relocation project was completed during 2016. This relocation reduced Winchester's annual operating costs by approximately $40 million in 2016 and, in 2017, we expect the cost savings from the completed project to reach approximately $45 million.consistent with 2018.

Other Corporate and Unallocated costs in ~~2017~~2019 are expected to be ~~higher than 2016~~similar to the 2018 Other Corporate and Unallocated costs of ~~$100.2~~$158.3 million ~~driven by stock-based compensation, consulting costs, the full year effect of the increased corporate infrastructure costs~~due to ~~support the integration of the Acquired Business and~~higher costs associated with the ~~implementation of~~Information Technology Project, offset by lower legal and legal-related settlement expenses and lower management incentive expense, which includes mark-to-market adjustments on stock-based compensation. Costs associated with the Information Technology Project are estimated to increase approximately $40 million in 2019 compared to 2018, which includes duplicative costs incurred to maintain legacy systems while transitioning to new ~~enterprise resource planning, manufacturing, and engineering systems, and related infrastructure costs.~~systems.

~~During 2017,~~Excluding the $4.8 million environmental insurance-related settlement gain, we ~~are anticipating~~anticipate full year 2019 environmental expenses in the $8$25 million to ~~$10~~$30 million range compared to ~~$9.2~~$7.3 million, excluding the $111.0 million of insurance recoveries, in 2016. We do not expect to recover any environmental costs incurred and expensed in prior periods in 2017. In connection with the Acquisition, TDCC has retained liabilities relating to litigation, releases of hazardous materials and violations of environmental law to the extent arising prior to the Closing Date.2018.

We expect 2019 to also include pretax restructuring costs totaling approximately $15 million and a pretax gain of $11.2 million on the sale of our equity interest in a non-consolidated affiliate.

We expect non-operating pension income in 2019 to be in the $15 million to $20 million range compared to $21.7 million in 2018. During the third quarter of 2019, we made a discretionary cash contribution to our domestic qualified defined benefit pension plan ~~income in 2017 to be lower than the 2016 level by approximately $10~~of $12.5 million. Based on our plan assumptions and estimates, we will not be required to make any additional cash contributions to our domestic qualified defined benefit pension plan in ~~2017.~~2019. We do have several international qualified defined benefit pension plans tofor which we anticipate cash contributions of less than $5 million in ~~2017.~~2019.

~~Approximately 30% of our debt is at variable rates, including the impact of our interest rate swaps. We are estimating our 2017 average interest rate on outstanding debt will be approximately 5%.~~

In ~~2017,~~2019, we currently expect our capital spending to be in the ~~$300~~$350 million to ~~$325~~$400 million range, ~~which includes~~including the investment associated with the Information Technology Project of approximately ~~$35 million of synergy-related capital, which we believe is necessary to realize the anticipated synergies.~~$70 million. We expect ~~2017~~2019 depreciation and amortization expense to be in the ~~$545~~$590 million to ~~$555~~$610 million range.

~~The effective~~We currently believe 2019 income tax ~~rate for 2017 includes~~will be a benefit of ~~$9.5~~$21 million ~~related~~ to ~~an agreement reached with the IRS regarding tax examination years 2008 and 2010~~zero. We expect cash taxes paid to ~~2012. After giving consideration to this item, we currently believe the 2017 effective tax rate will~~ be in the ~~20%~~$30 to ~~25% range.~~$35 million range, primarily due to earnings in foreign jurisdictions.

Environmental Matters

Environmental provisions (credited) charged to income, which are included in ~~costs~~cost of goods sold, were ~~$1.8 million and $0.4 million for the three months ended September 30, 2017 and 2016, respectively, and $6.2 million and $5.5 million~~as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	($ in millions)
Provisions (credited) charged to income	$	(0.8	)	$	(0.8	)	$	23.0		$	5.9
Recoveries for costs incurred and expensed	—			(110.0		)	(4.8		)	(110.0		)
Environmental (income) expense	$	(0.8	)	$	(110.8	)	$	18.2		$	(104.1	)

Provisions (credited) charged to income for the nine months ended September 30, ~~2017~~2019 include a $20.0 million increase in costs at a former manufacturing site resulting from revised remediation estimates as a result of agency action during the second quarter of 2019. During the third quarter of 2018, we settled certain disputes with respect to insurance coverage for costs at various environmental remediation sites for $120.0 million. Environmental (income) expense for both the three and ~~2016, respectively.~~nine months ended September 30, 2018 include insurance recoveries for environmental costs incurred and expensed in prior periods of $110.0 million. The recoveries were reduced by estimated liabilities of $10.0 million associated with claims by subsequent owners of certain of the settled environmental sites. Environmental (income) expense for the nine months ended September 30, 2019 included $4.8 million of recoveries associated with resolving the outstanding third party claims against the proceeds from the 2018 environmental insurance settlement.

Our liabilities for future environmental expenditures were as follows:


	September 30,						September 30,
	2017			2016			2019			2018
	($ in millions)						($ in millions)
Balance at beginning of year	$	137.3		$	138.1		$	125.6		$	131.6
Charges to income	6.2			5.5			23.0			5.9
Remedial and investigatory spending	(8.7		)	(6.6		)	(8.7		)	(8.4		)
Currency translation adjustments	0.5			0.5
Foreign currency translation adjustments							0.2			(0.1		)
Balance at end of period	$	135.3		$	137.5		$	140.1		$	129.0

Environmental investigatory and remediation activities spending was associated with former waste disposal sites and past manufacturing operations. Spending in ~~2017~~2019 for investigatory and remedial efforts, the timing of which is subject to regulatory approvals and other uncertainties, is estimated to be approximately ~~$17.0~~$14 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~~expect to incur to protect our ~~interest~~interests against those unasserted claims. Our accrued liabilities for unasserted claims amounted to ~~$6.1~~$8.6 million at September 30, ~~2017.~~2019. With respect to asserted claims, we accrue liabilities based on remedial investigation, feasibility study, remedial action and ~~Operation, Maintenance~~operation, maintenance and ~~Monitoring~~monitoring (OM&M) expenses that, in our experience, we ~~may~~expect to 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 ~~could~~were material to our operating results in 2019 and may be material to our operating results in ~~2017.~~2020.

~~In connection with the Acquisition, TDCC retained liabilities relating to releases of hazardous materials and violations of environmental law to the extent arising prior to the Closing Date.~~

~~Our~~The condensed balance sheets included ~~liabilities~~reserves for future environmental expenditures to investigate and remediate known sites amounting to ~~$135.3~~$140.1 million, $125.6 million and $129.0 million at September 30, ~~2017, $137.3 million at~~2019, December 31, ~~2016~~2018 and ~~$137.5 million at~~ September 30, ~~2016,~~2018, respectively, of which ~~$118.3~~$123.1 million, ~~$120.3~~$108.6 million and ~~$118.5~~$109.0 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,~~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.

Legal Matters and Contingencies

Olin, K.A. Steel Chemicals (a wholly owned subsidiary of Olin) and other caustic soda producers were named as defendants in six purported class action civil lawsuits filed March 22, 25 and 26, 2019 and April 12, 2019 in the U.S. District Court for the Western District of New York on behalf of the respective named plaintiffs and a putative class comprised of all persons and entities who purchased caustic soda in the U.S. directly from one or more of the defendants, their parents, predecessors, subsidiaries or affiliates at any time between October 1, 2015 and the present. Olin, K.A. Steel Chemicals and other caustic soda producers were also named as defendants in two purported class action civil lawsuits filed July 25 and 29, 2019 in the U.S. District Court for the Western District of New York on behalf of the respective named plaintiffs and a putative class comprised of all persons and entities who purchased caustic soda in the U.S. indirectly from distributors at any time between October 1, 2015 and the present. The other defendants named in the lawsuits are Occidental Petroleum Corporation, Occidental Chemical Corporation d/b/a OxyChem, Westlake Chemical Corporation, Shin-Etsu Chemical Co., Ltd., Shintech Incorporated, Formosa Plastics Corporation, and Formosa Plastics Corporation, U.S.A. The lawsuits allege the defendants conspired to fix, raise, maintain and stabilize the price of caustic soda, restrict domestic (U.S.) supply of caustic soda and allocate caustic soda customers. Plaintiffs seek an unspecified amount of damages and injunctive relief. We believe we have meritorious legal positions and will continue to represent our interests vigorously in this matter. Any losses related to this matter are not currently estimable because of unresolved questions of fact and law, but, if resolved unfavorably to Olin, could have a material adverse effect on 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 ASC 450 “Contingencies,” and therefore, do not record gain contingencies and recognize income until it is earned and realizable.

Liquidity, Investment Activity and Other Financial Data

Cash Flow Data


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2019			2018
Provided By (Used For)	($ in millions)						($ in millions)
Net operating activities	$	455.1		$	407.1		$	416.6		$	586.3
Capital expenditures	(210.0		)	(199.4		)	(271.8		)	(274.5		)
Business acquired in purchase transaction, net of cash acquired	—			(69.5		)
Payments under long-term supply contracts	(209.4		)	(175.7		)
Proceeds from sale/leaseback of equipment	—			40.4
Proceeds from disposition of non-consolidated affiliate							20.0			—
Net investing activities	(419.3		)	(397.2		)	(251.8		)	(271.6		)
Long-term debt borrowings (repayments), net	127.6			(176.1		)	80.9			(253.7		)
Stock options exercised	18.5			0.4
Common stock repurchased and retired							(135.6		)	(16.8		)
Debt issuance costs	(11.2		)	(0.8		)	(14.4		)	(8.5		)
Net financing activities	35.3			(275.6		)	(166.1		)	(376.1		)

Operating Activities

For the nine months ended September 30, ~~2017,~~2019, cash provided by operating activities ~~increased~~decreased by ~~$48.0~~$169.7 million from the nine months ended September 30, ~~2016,~~2018, primarily due to ~~an increase~~a decrease in ~~our~~ operating ~~results.~~results partially offset by a decrease in the investment in working capital from the prior year. For the nine months ended September 30, ~~2017,~~2019, working capital ~~decreased $11.4~~increased $79.9 million compared to ~~a decrease~~an increase of ~~$25.1~~$192.9 million for the nine months ended September 30, ~~2016.~~2018. Receivables increased by $77.4 million from December 31, ~~2016, by $48.5 million~~2018, primarily as a result of ~~higher sales~~a decrease in ~~the third quarter of 2017 compared to the fourth quarter of 2016, partially offset by additional~~ receivables sold under the accounts receivable factoring arrangement. ~~Inventories~~The increased from December 31, 2016, by $46.7 million and accounts payable and accrued liabilities increased from December 31, 2016, by $92.9 million. The increase in inventories and accounts payable and accrued liabilitiesworking capital for the nine months ended September 30, 2018 was primarily due to ~~an increase~~a $120.0 million receivable of insurance recoveries for environmental costs, which was collected in ~~raw material costs, primarily associated with benzene and propylene.~~October 2018.

Investing Activities

Capital spending of ~~$210.0~~$271.8 million for the nine months ended September 30, ~~2017~~2019 was ~~$10.6~~$2.7 million higher than the corresponding period in ~~2016. Capital spending for the nine months ended September 30, 2017 included approximately $25 million of synergy-related capital.~~2018. For the total year ~~2017,~~2019, we expect our capital spending to be in the ~~$300~~$350 million to ~~$325~~$400 million range, which ~~includes approximately $35~~is expected to include $70 million ~~of capital which we believe is necessary to realize~~for the ~~anticipated synergies.~~Information Technology Project. For the total year ~~2017,~~2019, depreciation and amortization expense is forecast to be in the ~~$545~~$590 million to ~~$555~~$610 million range.

During 2017, we began a multi-year implementation of ~~new enterprise resource planning, manufacturing, and engineering systems. The project includes~~ the ~~required information technology infrastructure.~~Information Technology Project. The project is planned to standardize business processes across the chemicals businesses with the objective of maximizing cost effectiveness, efficiency and control across our global operations. The project is anticipated to be substantially completed during 2020. Total capital spending is forecast to be $250 million and associated expenses are forecast to be $100 million. Our results for the ~~total year 2017 are expected to include approximately $40~~nine months ended September 30, 2019 included $53.3 million of capital spending and ~~approximately $7~~$60.1 million of expenses associated with this project. Our results for the nine months ended September 30, 2018 included $54.2 million of capital spending and $25.5 million of expenses associated with this project.

On January 1, 2019, we sold our 9.1% limited partnership interest in Bay Gas for $20.0 million. The sale closed on February 7, 2019 which resulted in a gain of $11.2 million.

Financing Activities

For the nine months ended September 30, ~~2017, a payment~~2019, we made long-term debt repayments of ~~$209.4~~$744.1 million, ~~was made associated with long-term supply contracts~~which included $543.0 million related to ~~reserve additional ethylene at producer economics.~~the $1,375.0 million term loan facility and $150.0 million related to the Receivables Financing Agreement.

~~During~~For the nine months ended September 30, ~~2016, payments~~2018, we made long-term debt repayments, net of ~~$69.5 million were made related to the Acquisition for certain acquisition-related liabilities including the final working capital adjustment.~~

~~During the nine months ended September 30, 2016, payments~~long-term debt borrowings, of ~~$175.7 million were made related to arrangements for the long-term supply of low cost electricity.~~

During the three months ended September 30, 2016, we entered into sale/leaseback transactions for railcars that we acquired in connection with the Acquisition. We received proceeds from the sales of $40.4$253.7 million.

~~During the nine months ended September 30, 2016, we received $6.6 million from the October 2013 sale of a bleach joint venture.~~

~~Financing Activities~~

On March 9, 2017, we entered into the Amended Senior Credit Facility. Pursuant to the agreement, the aggregate principal amount under the Term Loan Facility was increased to $1,375.0 million, and the aggregate commitments under the Senior Revolving Credit Facility were increased to $600.0 million, from $500.0 million. In March 2017, we drew the entire $1,375.0 million term loan and used the proceeds to redeem the remaining balance of the existing Senior Credit Facility and a portion of the Sumitomo Credit Facility. The maturity date for the Amended Senior Credit Facility was extended from

~~October 5, 2020 to March 9, 2022.~~

In September 2017, we borrowed $120.0 million under the Senior Revolving Credit Facility and $40.0 million under the Receivables Financing Agreement and used the proceeds to fund a portion of the $209.4 million payment to TDCC associated with a long-term ethylene supply contract to reserve additional ethylene at producer economics.

~~On March 9, 2017,~~July 16, 2019, Olin issued ~~$500.0~~$750.0 million aggregate principal amount of ~~5.125%~~5.625% senior notes due ~~September~~August 1, 2029, which were registered under the Securities Act of 1933, as amended. Proceeds from the 2029 Notes were used to redeem the

remaining balance of the $1,375.0 million Term Loan Facility of $493.0 million and $150.0 million of the Receivables Financing Agreement.

On July 16, 2019, Olin also entered into a new five-year, $2,000.0 million senior credit facility, which replaces the existing $1,975.0 million senior credit facility. The 2019 Senior Credit Facility will mature in July 2024. The 2019 Senior Credit Facility includes a senior unsecured delayed-draw term loan facility in an aggregate principal amount of up to $1,200.0 million and an $800.0 million senior unsecured revolving credit facility. The Delayed Draw Term Loan Facility will be available on a delayed basis in up to three draws to be made on or prior to November 29, 2020. We expect the proceeds from the Delayed Draw Term Loan Facility will be used to redeem the 9.75% senior notes due 2023 and the 10.00% senior notes due 2025 on or about October 15, ~~2027,~~2020.

On January 19, 2018, Olin issued $550.0 million aggregate principal amount of 5.00% senior notes due February 1, 2030 (2030 Notes), which were registered under the Securities Act of 1933, as amended. Interest on the ~~2027~~2030 Notes began accruing from ~~March 9, 2017~~January 19, 2018 and is paid semi-annually beginning on ~~September 15, 2017.~~August 1, 2018. Proceeds from the ~~2027~~2030 Notes were used to redeem $550.0 million of debt under the ~~remaining balance of the Sumitomo Credit~~Term Loan Facility.

For the nine months ended September 30, 2017, we made long-term debt repayments of $1,907.4 million including $1,282.5 million related to the existing term loan facility, $590.0 million related to the Sumitomo Credit Facility and $34.4 million under the required quarterly installments of the $1,375.0 million term loan facility.

~~In March 2017,~~2019, we paid debt issuance costs of ~~$11.2~~$14.4 million, ~~relating to~~primarily for the ~~Amended~~issuance of the 2029 Notes and 2019 Senior Credit ~~Facility and the 2027 Notes.~~Facility. For the nine months ended September 30, ~~2016,~~2018, we paid ~~deferred~~ debt issuance costs of ~~$0.8~~$8.5 million for the ~~registration~~issuance of the 2030 Notes.

~~In June 2016, $125.0 million under the 2016 Notes became due and was repaid.~~ For the nine months ended September 30, ~~2016,~~2019 and 2018, we ~~repaid $50.6 million under the required quarterly installments of the $1,350.0 million term loan facility.~~

~~We issued 1.0~~repurchased and retired 6.0 million and ~~less than 0.1~~0.5 million shares, ~~representing stock options exercised for the nine months ended September 30, 2017 and 2016,~~ respectively, with a total ~~value~~cost of ~~$18.5~~$135.6 million and ~~$0.4~~$16.8 million, respectively. Subsequent to the settlement of the ASR transaction in October 2019, 7.4 million shares were repurchased at a cost of $135.6 million.

The percent of total debt to total capitalization increased to ~~62.0%~~55.6% as of September 30, ~~2017~~2019 from ~~61.4%~~53.3% as of December 31, ~~2016~~2018 as a result of ~~an increased level~~lower shareholders’ equity primarily resulting from the payment of ~~debt outstanding.~~quarterly cash dividends and share repurchases.

In the first three quarters of ~~2017~~2019 and ~~2016,~~2018, we paid a quarterly dividend of $0.20 per share. Dividends paid for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, were ~~$99.6~~$98.5 million and ~~$99.1~~$100.3 million, respectively. On October ~~25, 2017,~~23, 2019, our board of directors declared a dividend of $0.20 per share on our common stock, payable on December ~~11, 2017~~10, 2019 to shareholders of record on November ~~10, 2017.~~12, 2019.

The payment of cash dividends is subject to the discretion of our board of directors and will be determined in light of then-current conditions, including our earnings, our operations, our financial condition, our capital requirements and other factors deemed relevant by our board of directors. In the future, our board of directors may change our dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions.

Liquidity and Other Financing Arrangements

Our principal sources of liquidity are from cash and cash equivalents, cash flow from operations and ~~short-term~~ borrowings under our Delayed Draw Term Loan, 2019 Senior Revolving Credit Facility, ~~AR Facilities and~~ Receivables Financing ~~Agreement.~~Agreement and AR Facilities. Additionally, we believe that we have access to the debt and equity markets.

In connection with the Acquisition, Olin and TDCC entered into arrangements for the long-term supply of ethylene by TDCC to Olin, pursuant to which, among other things, Olin made upfront payments of $433.5 million on the Closing Date in order to receive ethylene at producer economics and for certain reservation fees and for the option to obtain additional future ethylene supply at producer economics. During 2016, we exercised one of the options to reserve additional ethylene at producer economics. In September 2017, TDCC’s new Texas 9 ethylene cracker in Freeport, TX became operational. As a result, during the three months ended September 30, 2017, a payment of $209.4 million was made in connection with this option. On February 27, 2017, we exercised the remaining option to reserve additional ethylene at producer economics from TDCC. In connection with the exercise of this option, we also secured a long-term customer arrangement. As a result, an additional payment will be made to TDCC of between $440 million and $465 million on or about the fourth quarter of 2020.

The overall increase in cash for the nine months ended September 30, 2017 primarily reflects our operating results and long-term debt borrowings, net, partially offset by capital spending and payments associated with long-term supply contracts. We believe, based on current and projected levels of cash flow from our operations, together with our cash and cash equivalents on hand and the availability to borrow under our Senior Revolving Credit Facility, we have sufficient liquidity to meet our short-term and long-term needs to make required payments of interest on our debt, make amortization payments under the Term Loan Facility, make required payments under long-term supply agreements, fund our operating needs, fund working capital and capital expenditure requirements and comply with the financial ratios in our debt agreements.

On ~~March 9, 2017, we entered into the Amended Senior Credit Facility. Pursuant to the agreement, the~~July 16, 2019, Olin issued $750.0 million aggregate principal amount of 5.625% senior notes due August 1, 2029, which were registered under the ~~Term Loan Facility was increased to $1,375.0 million, and~~Securities Act of 1933, as amended. Proceeds from the ~~aggregate commitments under the Senior Revolving Credit Facility~~2029 Notes were ~~increased to $600.0 million, from $500.0 million. In September 2017, we borrowed $120.0 million under the Senior Revolving Credit Facility and~~ used the proceeds to fund a portion of the payment to TDCC associated with a long-term ethylene supply contract to reserve additional ethylene at producer economics. At September 30, 2017 we had $461.4 million available under our $600.0 million Senior Revolving Credit Facility because we had borrowed $120.0 million and issued $18.6 million of letters of credit. In March 2017, we drew the entire $1,375.0 million term loan and used the proceeds to redeem the remaining balance of the $1,375.0 million Term Loan Facility of $493.0 million and $150.0 million of the Receivables Financing Agreement.

On July 16, 2019, Olin also entered into a new five-year, $2,000.0 million senior credit facility, which replaces the existing $1,975.0 million senior credit facility. The 2019 Senior Credit Facility ~~and a portion of the Sumitomo Credit Facility.~~will mature in July 2024. The ~~maturity date for the Amended~~2019 Senior Credit Facility ~~was extended from October 5, 2020~~includes a senior unsecured delayed-draw term loan facility in an aggregate principal amount of up to ~~March 9, 2022.~~$1,200.0 million and an $800.0 million senior unsecured revolving credit facility. The ~~$600.0 million~~2019 Senior Revolving Credit Facility includes a $100.0 million letter of credit subfacility. At September 30, 2019, we had $796.5 million available under our $800.0 million 2019 Senior Revolving Credit Facility because we had issued $3.5 million of letters of credit. The Delayed Draw Term Loan Facility ~~includes amortization payable~~will be available on a delayed basis in ~~equal quarterly installments at a rate of 5.0% per annum for~~up to three draws to be made on or prior to November 29, 2020. We expect the ~~first two years, increasing~~proceeds from the Delayed Draw Term Loan Facility will be used to ~~7.5% per annum for~~redeem the ~~following year~~9.75% senior notes due 2023 and ~~to 10.0% per annum for~~ the ~~last two years.~~10.00% senior notes due 2025 on or about October 15, 2020.

Under the ~~Amended~~ Senior Credit Facility, we may select various floating-rate borrowing options. The actual interest rate paid on borrowings under the ~~Amended~~ Senior Credit Facility is based on a pricing grid which is dependent upon the leverage ratio as calculated under the terms of the applicable facility for the prior fiscal quarter. The facility includes various customary restrictive covenants, including restrictions related to the ratio of debt to earnings before interest expense, taxes, depreciation and amortization (leverage ratio) and the ratio of earnings before interest expense, taxes, depreciation and amortization to interest expense (coverage ratio). Compliance with these covenants is determined quarterly based on the operating cash flows. We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of September 30, ~~2017,~~2019, 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 of September 30, ~~2017,~~2019, there were no covenants or other restrictions that would have limited our ability to borrow under these facilities.

The overall decrease in cash for the nine months ended September 30, 2019 primarily reflects our dividend payments, capital spending and share repurchases, partially offset by our operating results. We believe, based on current and projected levels of cash flow from our operations, together with our cash and cash equivalents on hand and the availability to borrow under our 2019 Senior Revolving Credit Facility, Delayed Draw Term Loan Facility, Receivables Financing Agreement and AR Facilities, we have sufficient liquidity to meet our short-term and long-term needs to make required payments of interest on our debt, fund our operating needs, fund working capital, fund the fourth quarter 2020 ethylene investment to Dow and capital expenditure requirements and comply with the financial ratios in our debt agreements.

On ~~March 9, 2017,~~April 26, 2018, our board of directors authorized a share repurchase program for the purchase of shares of common stock at an aggregate price of up to $500.0 million. This program will terminate upon the purchase of $500.0 million of our common stock. For the nine months ended September 30, 2019 and 2018, 6.0 million and 0.5 million shares, respectively, were repurchased and retired at a cost of $135.6 million and $16.8 million, respectively. As of September 30, 2019, we had repurchased a total of $185.6 million of our common stock, representing 8.1 million shares, and $314.4 million of common stock remained authorized to be repurchased.

On August 5, 2019, we entered into an ASR agreement with Goldman Sachs, a third-party financial institution to repurchase $100.0 million of Olin’s common stock. Under this agreement, Olin paid $100.0 million to Goldman Sachs and received an initial delivery of 4.3 million shares in August 2019. The transaction had not settled as of September 30, 2019; however, upon settlement of the agreement in October 2019, we received approximately 1.4 million additional shares which resulted in a total of approximately 5.7 million shares repurchased under this ASR agreement.

On January 19, 2018, Olin issued ~~$500.0~~$550.0 million aggregate principal amount of ~~5.125%~~5.00% senior notes due ~~September 15, 2027,~~February 1, 2030, which were registered under the Securities Act of 1933, as amended. Interest on the ~~2027~~2030 Notes began accruing from ~~March 9, 2017~~January 19, 2018 and is paid semi-annually beginning on ~~September 15, 2017.~~August 1, 2018. Proceeds from the ~~2027~~2030 Notes were used to redeem $550.0 million of debt under the $1,375.0 million Term Loan Facility.

In connection with the Acquisition, Olin and Dow entered into arrangements for the long-term supply of ethylene by Dow to Olin, pursuant to which, among other things, Olin made upfront payments in order to receive ethylene at producer economics and for certain reservation fees and for the option to obtain additional future ethylene supply at producer economics. On February 27, 2017, we exercised the remaining ~~balance~~option to reserve additional ethylene at producer economics from Dow. In connection with the exercise of this option, we also secured a long-term customer arrangement. As a result, an additional payment will be made to Dow that is not to exceed $493 million, on or about the ~~Sumitomo Credit Facility.~~fourth quarter of 2020.

On ~~June 29,~~December 20, 2016, we entered into a three-year, $250.0 million Receivables Financing Agreement with PNC Bank, National Association, as administrative agent (Receivables Financing Agreement). 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 leverage and coverage covenants that are contained in the 2019 Senior Credit Facility. During the three months ended September 30, 2019, the outstanding balance of the Receivables Financing Agreement of $150.0 million was repaid with proceeds from the issuance of $750.0 million senior notes due 2029. On July 16, 2019, the existing agreement was extended to July 15, 2022 and downsized to $10.0 million with the option to expand to $300.0 million. As of September 30, 2019, we had zero drawn and $10.0 million additional borrowing capacity under the Receivables Financing Agreement. As of December 31, 2018 and September 30, 2018, we had $125.0 million and $180.0 million, respectively, drawn under the Receivables Financing Agreement.

Olin also has trade accounts receivable factoring ~~arrangement~~arrangements (AR Facilities) and ~~on December 22, 2016, we entered into a separate trade accounts receivable factoring arrangement, which were both subsequently amended. Pursuant~~pursuant to the terms of the AR Facilities, certain of our subsidiaries may sell their accounts receivable up to a maximum of ~~$293.0~~$315.0 million. We will continue to service ~~such accounts.~~the outstanding accounts sold. These receivables qualify for sales treatment under ASC 860 and, accordingly, the

proceeds are included in net cash provided by operating activities in the condensed statements of cash flows. The gross amount of receivables sold for the ~~three months ended September 30, 2017 and 2016 totaled $446.5 million and $209.9 million, respectively, and for the~~ nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 totaled ~~$1,224.1~~$778.9 million and ~~$236.7~~$1,199.8 million, respectively. The factoring discount paid under the AR Facilities is recorded as interest expense on the condensed statements of operations. The factoring discount was $1.4 million and $0.5 million for the three months ended September 30, 2017 and 2016, respectively, and $2.9 million and $0.7 million for the nine months ended September 30, 2017 and 2016, respectively. The

agreements are without recourse and therefore no recourse liability has been recorded as of September 30, ~~2017.~~2019, December 31, 2018 and September 30, 2018. As of September 30, ~~2017,~~2019, December 31, ~~2016~~2018 and September 30, ~~2016, $187.3~~2018, $107.4 million, ~~$126.1~~$132.4 million and ~~$85.0~~$134.4 million, respectively, of receivables qualifying for sales treatment were outstanding and will continue to be serviced by us.

On December 20, 2016, we entered into a three year, $250.0 million Receivables Financing Agreement. Under the Receivables Financing Agreement, our eligible trade receivables are used for collateralized borrowings and continue to be serviced by us. As of September 30, 2017, $363.0 million of our trade receivables were pledged as collateral and we had $250.0 million drawn under the agreement. For the three months ended September 30, 2017, we borrowed $40.0 million under the Receivables Financing Agreement and used the proceeds to fund a portion of the payment to TDCC associated with a

long-term ethylene supply contract to reserve additional ethylene at producer economics. As of September 30, 2017, we had no additional borrowing capacity under the Receivables Financing Agreement. As of December 31, 2016, $282.3 million of our trade receivables were pledged as collateral. For the year ended December 31, 2016, the proceeds of the Receivables Financing Agreement were used to repay $210.0 million of the Sumitomo Credit Facility. In addition, the Receivables Financing Agreement incorporates the leverage and coverage covenants that are contained in the Amended Senior Credit Facility.

Cash flow from operations is variable as a result of both the seasonal and the cyclical nature of our operating results, which have been affected by seasonal and economic cycles in many of the industries we serve, such as the vinyls, urethanes, bleach, ammunition and pulp and paper. ~~The Acquired Business has significantly diversified our product and geographic base.~~ Cash flow from operations is affected by changes in chlorine, caustic soda ~~EDC~~ and ~~chlorine~~EDC selling prices caused by the changes in the supply/demand balance of these products, resulting in the Chlor Alkali Products and Vinyls segment having significant leverage on our earnings and cash flow. For example, assuming all other costs remain constant, internal consumption remains approximately the same and we are operating at full capacity, a $10 selling price change per ton of chlorine equates to an approximate $10 million annual change in our revenues and pretax profit, a $10 selling price change per ton of caustic soda equates to an approximate $30 million annual change in our revenues and pretax profit, and a $0.01 selling price change per pound of EDC equates to an approximate $20 million annual change in our revenues and pretax ~~profit, and a $10 selling price change per ton of chlorine equates to an approximate $10 million annual change in our revenues and pretax~~ profit.

During 2017, we began a multi-year implementation of new enterprise resource planning, manufacturing, and engineering systems. The project includes the required information technology infrastructure. The project is planned to standardize business processes across the chemicals businesses with the objective of maximizing cost effectiveness, efficiency and control across our global operations. The project is anticipated to be completed during 2020. Total capital spending is forecast to be $250 million and associated expenses are forecast to be $100 million. Our results for the total year 2017 are expected to include approximately $40 million of capital spending and approximately $7 million of expenses associated with this project.

On April 24, 2014, our board of directors authorized a share repurchase program for up to 8 million shares of common stock that terminated on April 24, 2017. For the nine months ended September 30, 2017, no shares were purchased and retired. We purchased a total of 1.9 million shares under the April 2014 program, and the 6.1 million shares that remained authorized to be purchased have expired. Related to the Acquisition, for a period of two years subsequent to the Closing Date, we were subject to certain restrictions on our ability to conduct share repurchases.

At September 30, ~~2017,~~2019, we had total letters of credit of ~~$71.8~~$71.2 million outstanding, of which ~~$18.6~~$3.5 million were issued under our ~~$600.0 million~~2019 Senior Revolving Credit Facility. The letters of credit were used to support certain long-term debt,

certain workers compensation insurance policies, certain plant closure and post-closure obligations and certain ~~Canadian~~international pension funding requirements.

Our current debt structure is used to fund our business operations. As of September 30, ~~2017,~~2019, we had long-term borrowings, including the current ~~installments~~installment and capital lease obligations, of ~~$3,745.2~~$3,340.1 million, of which ~~$1,878.6~~$155.9 million was ~~issued~~ at variable rates. Included within long-term borrowings on the condensed balance sheets were deferred debt issuance costs and deferred losses on fair value interest rate swaps. Commitments from banks under our 2019 Senior Revolving Credit Facility, Delayed Draw Term Loan Facility, Receivables Financing Agreement and AR Facilities are an additional ~~source~~sources of liquidity.

In April 2016, we entered into three tranches of forward starting interest rate swaps whereby we agreed to pay fixed rates to the counterparties who, in turn, pay us floating rates on $1,100.0 million, $900.0 million, and $400.0 million of our underlying floating-rate debt obligations. Each tranche’s term length iswas for twelve months beginning on December 31, 2016, December 31, 2017, and December 31, 2018, respectively. The counterparties to the agreements ~~are~~were SMBC Capital Markets, Inc., Wells Fargo, PNC Bank, National Association and Toronto-Dominion Bank. These counterparties are large financial institutions; however, the risk of loss to us in the event of nonperformance by a counterparty could be significant to our financial position or results of operations. We ~~have~~ designated the swaps as cash flow hedges of the risk of changes in interest payments associated with our variable-rate borrowings. ~~Accordingly,~~In July 2019, we terminated the remaining interest rate swap ~~agreements have been recorded at their fair market value~~which resulted in a gain of ~~$8.7~~$1.8 million ~~and are included~~that was recognized in ~~other current assets and other assets on the accompanying condensed balance sheet as of September 30, 2017, with the corresponding gain deferred as a component of other comprehensive loss.~~interest expense. For the three months ended September 30, 2019 and 2018, $1.8 million and $2.5 million, respectively, and for the nine months ended September 30, ~~2017, $1.2~~2019 and 2018, $4.3 million and ~~$1.7~~$5.9 million, respectively, of income was recorded to interest expense on the accompanying condensed ~~statement~~statements of operations related to these swap agreements. ~~No gain or loss has been recorded in earnings as a result of ineffectiveness.~~

Off-Balance Sheet Arrangements

~~Non-cancelable operating leases and purchasing~~Purchasing commitments are utilized in our normal course of business for our projected needs. ~~In connection~~We have supply contracts with ~~the Acquisition,~~various third parties for certain ~~additional agreements have been entered into with TDCC,~~raw materials including ~~long-term purchase agreements for raw materials.~~ethylene, electricity, propylene and benzene. These agreements are maintained through long-term cost based contracts that provide us with a reliable supply of key raw materials. ~~Key raw materials received from TDCC include ethylene, electricity, propylene and benzene.~~

New Accounting Standards

In ~~August~~January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-12, “Targeted Improvements to Accounting for Hedge Activities” which amends ASC 815 “Derivatives and Hedging.” This update is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting guidance, and increase transparency as to the scope and results of hedge programs. The standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with earlier application permitted. We are currently evaluating the effect of this update on our consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” which amends ASC 715 “Compensation—Retirement Benefits.” This update requires the presentation of the service cost component of net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. The update requires the presentation of the other components of the net periodic benefit cost separately from the line item that includes the service cost and outside of any subtotal of operating income. The standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The guidance in this update is applied on a retrospective basis with earlier application permitted. We are currently evaluating the effect of this update on our consolidated financial statements.

~~In January 2017, the FASB issued ASU~~ 2017-04, “Simplifying the Test for Goodwill Impairment” which amends ASC 350 “Intangibles—Goodwill and Other.” This update will simplify the measurement of goodwill impairment by eliminating Step 2 from the goodwill impairment test. This update will require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The update does not modify the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This ~~standard~~update is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The guidance in this update is applied on a prospective basis with earlier application permitted. We plan to adopt this update on January 1, 2020 and do not expect the update to have a material impact on our consolidated financial statements.

In ~~August~~June 2016, the FASB issued ASU ~~2016-15, “Classification~~2016-03, “Measurement of ~~Certain Cash Receipts and Cash Payments”~~Credit Losses on Financial Instruments,” (ASU 2016-03) which amends ASC ~~230 “Statement~~326 “Financial Instruments—Credit Losses.” Subsequent to the issuance of ~~Cash Flows.”~~ASU 2016-03, ASC 326 was amended by various updates that amend and clarify the impact and implementation of the aforementioned update. The new guidance introduces the current expected credit loss (CECL) model, which will require an entity to record an allowance for credit losses for certain financial instruments and financial assets, including trade receivables, based on expected losses rather than incurred losses. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. This ~~update will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The~~ update is effective for fiscal years beginning after December 15, ~~2017.~~2019, and interim periods within those fiscal years. The ~~new standard will require adoption~~guidance in this update has various elements, some of which are applied on a prospective basis and others on a retrospective basis, ~~unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable.~~with earlier application permitted. We plan to adopt this update on January 1, ~~2018~~2020 and ~~will require certain reclassifications on our consolidated statements of cash flows.~~

~~In March 2016,~~do not expect the ~~FASB issued ASU 2016-09 “Improvements~~update to Employee Share-Based Payment Accounting” which amends ASC 718 “Compensation—Stock Compensation.” This update will simplify the income tax consequences, accounting for forfeitures and classification on the statements of cash flows of share-based payment arrangements. This standard is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with earlier application permitted. We adopted ASU 2016-09 on January 1, 2017, which was applied prospectively; therefore, prior periods have not been retrospectively adjusted. The adoption of this update did not have a material impact on our consolidated financial ~~statements.~~statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02 “Leases,” (ASU 2016-02) which supersedes ASC 840 “Leases” and creates a new topic, ASC 842 ~~“Leases.” This update requires~~“Leases” (ASC 842). Subsequent to the issuance of ASU 2016-02, ASC 842 was amended by various updates that amend and clarify the impact and implementation of the aforementioned update. These updates require lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. ~~The update~~Upon initial application, the provisions of these updates are required to be applied using the modified retrospective method which requires retrospective adoption to each prior reporting period presented with the cumulative effect of adoption recorded to the earliest reporting period presented. An optional transition method can be utilized which requires application of these updates beginning on the date of adoption with the cumulative effect of initially applying these updates recognized at the date of initial adoption. These updates also ~~expands~~expand the required quantitative and qualitative disclosures surrounding leases. ~~This update is~~These updates are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with earlier application permitted. This update will be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. We are currently evaluating the effect of this update on our consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11 “Simplifying the Measurement of Inventory,” which amends ASC 330 “Inventory.” This update requires entities to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonable predictable costs of completion, disposal and transportation. This update simplifies the current guidance under which an entity must measure inventory at the lower of cost or market. This update does not impact inventory measured using LIFO. This update is effective for fiscal years beginning after December 15, 2016. We adopted ASU 2015-11 on January 1, 2017, which was applied prospectively; therefore, prior periods have not been retrospectively adjusted. The adoption of this update did not have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (ASU 2014-09), which amends ASC 605 “Revenue Recognition” and creates a new topic, ASC 606 “Revenue from Contracts with Customers” (ASC 606). Subsequent to the issuance of ASU 2014-09, ASC 606 was amended by various updates that amend and clarify the impact and implementation of the aforementioned standard. These updates provide guidance on how an entity should recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Upon initial application, the provisions of these updates are required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application. These updates also expand the disclosure requirements surrounding revenue recorded from contracts with customers. These updates are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We expect to adopt these updates on January 1, ~~2018~~2019 using the ~~modified retrospective~~optional transition method. ~~We continue to evaluate the impact~~Accordingly, prior periods were not retrospectively adjusted. Adoption of these updates ~~will have~~resulted in the recording of operating lease assets and lease liabilities on our ~~consolidated financial statements. Based on~~condensed balance sheet of $291.9 million as of January 1, 2019. Our assets and liabilities for finance leases remained unchanged. We also recognized the ~~analysis conducted~~cumulative effect of applying these updates as an adjustment to ~~date, we believe~~retained earnings of $11.2 million, net of tax, which was primarily related to the ~~most significant impact the~~recognition of previously deferred sale/leaseback gains. Our condensed statements of operations and cash flows, along with our compliance with all covenants and restrictions under all our outstanding credit agreements, were not impacted by this adoption. These updates ~~will have will be on~~also impacted our accounting policies, internal controls and disclosures ~~on revenue recognition. Preliminarily, we do not expect that these updates will materially impact our~~related to leases. Expanded disclosures regarding leases are included in Note 12 “Leases” in the notes to the consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Energy costs, including electricity and natural gas, and certain raw materials used in our production processes are subject to price volatility. Depending on market conditions, we may enter into futures contracts, forward contracts, commodity swaps and put and call option contracts in order to reduce the impact of commodity price fluctuations. As of September 30, ~~2017,~~2019, we maintained open positions on commodity contracts with a notional value totaling ~~$88.5~~$167.6 million ($~~101.6~~116.5 million at December 31, ~~2016~~2018 and ~~$101.3~~$122.8 million at September 30, ~~2016)~~2018). Assuming a hypothetical 10% increase in commodity prices which are currently hedged, as of September 30, ~~2017,~~2019, we would experience ~~an $8.9~~a $16.8 million ($~~10.2~~11.7 million at December 31, ~~2016~~2018 and ~~$10.1~~$12.3 million at September 30, ~~2016)~~2018) increase in our cost of inventory purchased, which would be substantially offset by a corresponding increase in the value of related hedging instruments.

We transact business in various foreign currencies other than the USD which exposes us to movements in exchange rates which may impact revenue and expenses, assets and liabilities and cash flows. Our significant foreign currency exposure is denominated with European currencies, primarily the Euro, although exposures also exist in other currencies of Asia Pacific, Latin America, Middle East and Africa. For all derivative positions, we ~~have~~ evaluated the effects of a 10% shift in exchange rates between those currencies and the USD, holding all other assumptions constant. Unfavorable currency movements of 10% would negatively affect the fair values of the derivatives held to hedge currency exposures by ~~$15.6~~$20.4 million. These unfavorable changes would generally have been offset by favorable changes in the values of the underlying exposures.

We are exposed to changes in interest rates primarily as a result of our investing and financing activities. Our current debt structure is used to fund business operations, and commitments from banks under our 2019 Senior Revolving Credit Facility, ~~AR Facilities and~~Delayed Draw Term Loan, Receivables Financing Agreement and AR Facilities are ~~a source~~additional sources of liquidity. As of September 30, ~~2017,~~2019, December 31, ~~2016~~2018 and September 30, ~~2016,~~2018, we had long-term borrowings, including current installments and capital lease obligations, of ~~$3,745.2~~$3,340.1 million, ~~$3,617.6~~$3,230.3 million and ~~$3,677.8~~$3,337.3 million, respectively, of which ~~$1,878.6~~$155.9 million, ~~$2,238.4~~$823.9 million and ~~$2,255.3~~$945.9 million at September 30, ~~2017,~~2019, December 31, ~~2016~~2018 and September 30, ~~2016,~~2018, respectively, were issued at variable rates.

~~In April 2016, we entered into three tranches of forward starting~~ Included within long-term borrowings on the condensed balance sheets were deferred debt issuance costs and deferred losses on fair value interest rate swaps whereby we agreed to pay fixed rates to the counterparties who, in turn, pay us floating rates on $1,100.0 million, $900.0 million, and $400.0 million of our underlying floating-rate debt obligations. Each tranche’s term length is for twelve months beginning on December 31, 2016, December 31, 2017 and December 31, 2018, respectively. The counterparties to the agreements are SMBC Capital Markets, Inc., Wells Fargo, PNC Bank, National Association and Toronto-Dominion Bank. These counterparties are large financial institutions; however, the risk of loss to us in the event of nonperformance by a counterparty could be significant to our financial position or results of operations.swaps.

Assuming no changes in the ~~$1,878.6~~$155.9 million of variable-rate debt levels from September 30, ~~2017,~~2019, we estimate that a hypothetical change of 100-basis points in the LIBOR interest rates would impact annual interest expense by ~~$18.8~~$1.6 million. ~~A portion of this hypothetical change would be offset by our interest rate swaps.~~

Our interest rate swaps reduced interest expense by ~~$1.7~~$0.9 million and ~~$0.7~~$1.9 million for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, and ~~by $4.2~~$1.7 million and ~~$2.6~~$5.0 million for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

If the actual changes in commodities, foreign currency, or interest pricing is substantially different than expected, the net impact of commodity risk, foreign currency risk, or interest rate risk on our cash flow may be materially different than that disclosed above.

We do not enter into any derivative financial instruments for speculative purposes.

Item 4. Controls and Procedures.

Our chief executive officer and our chief financial officer evaluated the effectiveness of our disclosure controls and procedures as of September 30, ~~2017~~2019. Based on that evaluation, our chief executive officer and chief financial officer have concluded that, as of such date, our disclosure controls and procedures were effective to ensure that information Olin is required to disclose in the reports that it files or submits with the SEC under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and to ensure that information we are required to disclose in such reports is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

~~There~~In 2017, we began a multi-year implementation of new enterprise resource planning, manufacturing, and engineering systems. The project includes the required information technology infrastructure (collectively, the Information Technology Project). Implementing the Information Technology Project involves significant changes in business processes and extensive organizational training. During the second and third quarters of 2019, we implemented portions of the Information Technology Project to support and integrate significant processes, some of which relate to internal control over financial reporting and disclosure controls and procedures. We believe we have taken and will continue to take the necessary steps to implement, monitor and maintain appropriate internal controls during the Information Technology Project transition period. In connection with the Information Technology Project, we expect there will be a significant redesign of our business processes, some of which relate to internal control over financial reporting and disclosure controls. Other than the aforementioned Information Technology Project, there have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, ~~2017~~,2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Cautionary Statement Regarding Forward-Looking Statements

This quarterly report on Form 10-Q includes forward-looking statements. These statements relate to analyses and other information that are based on management’s beliefs, certain assumptions made by management, forecasts of future results, and current expectations, estimates and projections about the markets and economy in which we and our various segments operate. These statements may include statements regarding the acquisition of the Acquired Business from TDCC, the expected benefits and synergies of the transaction, and future opportunities for the combined company following the transaction. The statements contained in this quarterly report on Form 10-Q that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.

We have used the words “anticipate,” “intend,” “may,” “expect,” “believe,” “should,” “plan,” “project,” “estimate,” “forecast,” “optimistic,” and variations of such words and similar expressions in this quarterly report to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control.

Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise. ~~Relative to the dividend, the~~The payment of cash dividends is subject to the discretion of our board of directors and will be determined in light of then-current conditions, including our earnings, our operations, our financial conditions, our capital requirements and other factors deemed relevant by our board of directors. In the future, our board of directors may change our dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions.

The risks, uncertainties and assumptions involved in our forward-looking statements, many of which are discussed in more detail in our filings with the SEC, including without limitation the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2018, include, but are not limited to the following:

sensitivity to economic, business and market conditions in the United States and overseas, including economic instability or a downturn in the sectors served by us, such as ammunition, vinyls, urethanes, and pulp and paper, and the migration by United States customers to ~~low-cost~~ foreign locations;

the cyclical nature of our operating results, particularly declines in average selling prices in the chlor alkali industry and the supply/demand balance for our products, including the impact of excess industry capacity or an imbalance in demand for our chlor alkali products;

~~higher-than-expected raw material and energy, transportation and/or logistics costs;~~

~~our substantial amount of indebtedness and significant debt service obligations;~~

~~weak industry conditions could affect our ability to comply with the financial maintenance covenants in our senior credit facilities and certain tax-exempt bonds;~~

our reliance on a limited number of suppliers for specified feedstock and services and our reliance on third-party transportation;

higher-than-expected raw material, energy, transportation and/or logistics costs;

failure to control costs or to achieve targeted cost reductions;

new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities;

the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions and production hazards;

~~new regulations or public policy changes regarding the transportation of hazardous chemicals~~complications resulting from our multiple enterprise resource planning systems and the ~~security of chemical manufacturing facilities;~~conversion to a new system;

changes in, or failure to comply with, legislation or government regulations or policies;

the failure or an interruption of our information technology systems;

economic and industry downturns that result in diminished product demand and excess manufacturing capacity in any of our segments and that, in many cases, result in lower selling prices and profits;

~~complications resulting from our multiple enterprise resource planning systems;~~

~~the failure or an interruption of our information technology systems;~~

~~unexpected litigation outcomes;~~

~~costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings;~~

~~the integration of the Acquired Business may not be successful in realizing the benefits of the anticipated synergies;~~

the effects of any declines in global equity markets on asset values and any declines in interest rates used to value the liabilities in our pension plan;

unexpected litigation outcomes;

~~fluctuations~~adverse changes in ~~foreign currency exchange rates;~~international markets, including economic, political or regulatory changes;

weak industry conditions affecting our ability to comply with the financial maintenance covenants in our senior credit facility;

failure to attract, retain and motivate key employees;

our substantial amount of indebtedness and significant debt service obligations;

costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings;

our long range plan assumptions not being realized causing a non-cash impairment charge of long-lived assets; and

adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise ~~capital;~~capital.

~~failure to attract, retain and motivate key employees;~~

~~our assumptions included in long range plans not realized causing a non-cash impairment charge of long-lived assets;~~

~~the effects of restrictions imposed on our business following the transaction with TDCC in order to avoid significant tax-related liabilities; and~~

~~differences between the historical financial information of Olin and the Acquired Business and our future operating performance.~~

All of our forward-looking statements should be considered in light of these factors. In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of our forward-looking statements.

Part II — Other Information

Item 1. Legal Proceedings.

~~Not Applicable.~~Olin and several other companies entered into an Administrative Order on Consent (AOC) with the United States Environmental Protection Agency in 1997 to perform a remedial investigation and feasibility study with respect to the Central Chemical Superfund Site (the Site) in Hagerstown, Maryland. Olin and several other companies also are parties to a Consent Decree with the United States and the State of Maryland to perform remedial design and action with respect to a portion of the Site. The Consent Decree was entered by the United States District Court for the District of Maryland on September 29, 2015. The United States and the State of Maryland contend that Olin and the other parties to the AOC and the Consent Decree have violated the terms of the AOC and the Consent Decree with respect to sampling reporting and analysis. The United States and the State of Maryland made a demand for stipulated penalties under the AOC and Consent Decree that, after the dispute resolution process, resulted in a negotiated settlement payment of stipulated penalties in the amount of $0.7 million. Olin’s portion of the stipulated penalty was $0.1 million, which has been satisfied.

Item 1A. Risk Factors.

Not Applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.


(a)	Not Applicable.


(b)	Not Applicable.

(c)

Issuer Purchases of Equity Securities

~~Period~~

~~Total Number of~~

~~Shares (or Units)~~

~~Purchased~~⁽¹⁾

~~Average Price Paid per Share~~

~~(or Unit)~~

~~Total Number of~~

~~Shares (or Units)~~

~~Purchased as~~

~~Part of~~

~~Publicly~~

~~Announced~~

~~Plans or Programs~~

~~Maximum~~

~~Number of~~

~~Shares~~

~~(or Units) that~~

~~May Yet Be~~

~~Purchased~~

~~Under the Plans or~~

~~Programs~~

~~July 1-31, 2017~~

—

~~August 1-31, 2017~~

—

~~September 1-30, 2017~~

—

~~Total~~

—

⁽¹⁾



Period	Total Number of Shares (or Units) Purchased⁽¹⁾	Average Price Paid per Share (or Unit)	Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs⁽²⁾	Maximum Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
July 1-31, 2019	328,886	$21.30	328,886
August 1-31, 2019	4,428,694	$18.48	4,428,694
September 1-30, 2019	—	—	—
Total				314,377,184	⁽¹⁾

(1)

On April ~~24, 2014, we announced~~26, 2018, our board of directors authorized a share repurchase program ~~approved by the board of directors~~ for the purchase of ~~up to 8 million~~ shares of common stock ~~that terminated on April 24, 2017.~~at an aggregate price of up to $500.0 million. This program will terminate upon the purchase of $500.0 million of our common stock. Through September 30, ~~2017, 1,937,343~~2019, 8,100,057 shares had been repurchased at a total value of $185,622,816 and ~~6,062,657 shares that~~$314,377,184 of common stock remained available for purchase under ~~this program have expired. Related to~~ the ~~Acquisition, for a period of two years subsequent to the Closing Date, we were subject to certain restrictions on our ability to conduct share repurchases.~~program.

(2)

On August 5, 2019, we entered into an accelerated share repurchase (ASR) agreement with Goldman Sachs & Co. LLC, a third-party financial institution, to repurchase $100.0 million of Olin’s common stock. This authorization was granted under the April 26, 2018 share repurchase program and reduced the remaining authorized repurchase amount under that program by $100.0 million. In connection with this agreement, we initially received 4,333,694 shares which have been included in the August share repurchase total. The transaction had not settled as of September 30, 2019; however, upon settlement of the agreement in October 2019, we received approximately 1.4 million additional shares which resulted in a total of approximately 5.7 million shares repurchased under this ASR agreement.

Item 3. Defaults Upon Senior Securities.

Not Applicable.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

Not Applicable.

Item 6. Exhibits.



Exhibit	Exhibit Description

10.1	Master Confirmation - Accelerated Share Repurchase, dated August 5, 2019, between Olin Corporation and Goldman Sachs & Co. LLC—Exhibit ~~No.~~10.1 to Olin’s Form 8-K dated August 5, 2019*

10.2	~~Description~~ Olin Stock Option/Performance Share Continuation Provisions for Olin Employees, as amended effective August 20, 2019—Exhibit 10.1 to Olin’s Form 8-K dated August 20, 2019*

11		Computation of Per Share Earnings (included in ~~the Note—“Earnings~~Note 10 “Earnings Per Share” to Notes to ~~Consolidated~~Condensed Financial Statements in Item 1)

12		~~Computation of Ratio of Earnings to Fixed Charges (Unaudited)~~

31.1		Section 302 Certification Statement of Chief Executive Officer

31.2		Section 302 Certification Statement of Chief Financial Officer

32		Section 906 Certification Statement of Chief Executive Officer and Chief Financial Officer

101.INS		XBRL Instance ~~Document~~Document**

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (embedded in the Exhibit 101 Interactive Data Files)

*Previously filed as indicated and incorporated herein by reference. Exhibits incorporated by reference are located in SEC file No. 1-1070 unless otherwise indicated.

**The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline eXtensible Business Reporting Language (iXBRL) document. The condensed financial statements and notes thereto contained in Part I, Item 1 were formatted in iXBRL in this Quarterly Report on Form 10-Q.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	OLIN CORPORATION
	(Registrant)

	By:	/s/ Todd A. Slater
		Vice President and Chief Financial Officer (Authorized Officer)

Date: ~~October 31, 2017~~November 1, 2019

6266



	September 30, 2017			December 31, 2016			September 30, 2016
	($ in millions)
Supplies	$	60.3		$	58.1		$	58.1
Raw materials	85.4			72.6			79.1
Work in process	120.6			110.7			114.7
Finished goods	470.7			424.9			405.9
	737.0			666.3			657.8
LIFO reserve	(47.5		)	(35.9		)	(40.8		)
Inventories, net	$	689.5		$	630.4		$	617.0



	Foreign Currency Translation Adjustment (net of taxes)			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, 2016	$	(12.1	)	$	(6.9	)	$	(473.5	)	$	(492.5	)
Unrealized gains (losses):
First quarter	24.0			1.1			—			25.1
Second quarter	(14.3		)	(4.6		)	—			(18.9		)
Third quarter	6.6			4.2			5.1			$	15.9
Reclassification adjustments into income:
First quarter	—			3.7			6.1			9.8
Second quarter	—			1.7			5.9			7.6
Third quarter	—			—			3.3			$	3.3
Tax (provision) benefit:
First quarter	(8.5		)	(1.8		)	(2.3		)	(12.6		)
Second quarter	3.5			1.1			(2.4		)	2.2
Third quarter	(2.0		)	(1.6		)	(3.0		)	$	(6.6	)
Net Change	9.3			3.8			12.7			25.8
Balance at September 30, 2016	$	(2.8	)	$	(3.1	)	$	(460.8	)	$	(466.7	)
Balance at January 1, 2017	$	(24.1	)	$	12.8		$	(498.7	)	$	(510.0	)
Unrealized gains (losses):
First quarter	8.3			(3.1		)	—			5.2
Second quarter	28.1			(3.7		)	—			24.4
Third quarter	16.0			3.2			—			19.2
Reclassification adjustments into income:
First quarter	—			(0.1		)	6.6			6.5
Second quarter	—			(2.3		)	6.8			4.5
Third quarter	—			(1.2		)	6.8			5.6
Tax (provision) benefit:
First quarter	(2.3		)	1.2			(2.7		)	(3.8		)
Second quarter	(12.2		)	2.3			(2.3		)	(12.2		)
Third quarter	(6.2		)	(0.7		)	(2.5		)	(9.4		)
Net Change	31.7			(4.4		)	12.7			40.0
Balance at September 30, 2017	$	7.6		$	8.4		$	(486.0	)	$	(470.0	)



	Three Months Ended September 30,				Nine Months Ended September 30,
Effective Tax Rate Reconciliation (Percent)	2017		2016		2017		2016
Statutory federal tax rate	35.0	%	35.0	%	35.0	%	35.0	%
Salt depletion	(11.6	)	(17.3	)	(11.6	)	19.6
Stock-based compensation	(0.9	)	—		(5.1	)	—
Foreign rate differential	(8.9	)	(4.1	)	(8.9	)	3.6
U.S. tax on foreign earnings	8.8		4.0		8.8		(3.4	)
Dividends paid to CEOP	(0.5	)	(0.8	)	(0.5	)	1.1
State income taxes, net	—		2.8		—		6.1
Change in valuation allowance	—		1.0		—		(0.8	)
Change in tax contingencies	0.4		0.6		(16.9	)	(7.2	)
Return to provision	(3.2	)	(3.5	)	(0.5	)	9.0
Impact of tax rate changes	(7.1	)	(2.0	)	(7.5	)	0.7
Other, net	0.7		2.1		0.7		(0.8	)
Effective tax rate	12.7	%	17.8	%	(6.5	)%	62.9	%



	Asset Derivatives										Liability Derivatives
		Fair Value										Fair Value
	Balance Sheet Location	September 30, 2017			December 31, 2016			September 30, 2016			Balance Sheet Location	September 30, 2017			December 31, 2016			September 30, 2016
		($ in millions)										($ in millions)
Derivatives Designated as Hedging Instruments
Interest rate contracts	Other current assets	$	5.0		$	1.9		$	—		Current installments of long-term debt	$	—		$	0.1		$	—
Interest rate contracts	Other assets	—			—			—			Long-term debt	—			—			0.2
Interest rate contracts	Other assets	3.7			7.7			2.5			Other liabilities	23.9			28.5			2.3
Commodity contracts – gains	Other current assets	7.8			13.2			1.9			Accrued liabilities	—			—			(1.1		)
Commodity contracts – losses	Other current assets	(0.4		)	(1.7		)	(1.0		)	Accrued liabilities	2.6			—			5.0
		$	16.1		$	21.1		$	3.4			$	26.5		$	28.6		$	6.4
Derivatives Not Designated as Hedging Instruments
Foreign exchange contracts – gains	Other current assets	$	0.5		$	0.6		$	0.1		Accrued liabilities	$	(0.5	)	$	(0.5	)	$	—
Foreign exchange contracts – losses	Other current assets	(0.3		)	(0.5		)	(0.1		)	Accrued liabilities	0.6			1.7			0.8
		$	0.2		$	0.1		$	—			$	0.1		$	1.2		$	0.8
Total derivatives⁽¹⁾		$	16.3		$	21.2		$	3.4			$	26.6		$	29.8		$	7.2



		Amount of Gain (Loss)						Amount of Gain (Loss)
		Three Months Ended September 30,						Nine Months Ended September 30,
	Location of Gain (Loss)	2017			2016			2017			2016
Derivatives – Cash Flow Hedges		($ in millions)
Recognized in other comprehensive income (loss) (effective portion):
Commodity contracts	———	$	2.9		$	0.3		$	(4.5	)	$	3.0
Interest rate contracts	———	0.3			3.9			0.9			(2.3		)
		$	3.2		$	4.2		$	(3.6	)	$	0.7
Reclassified from accumulated other comprehensive loss into income (effective portion):
Interest rate contracts	Interest expense	$	1.2		$	—		$	1.7		$	—
Commodity contracts	Cost of goods sold	—			—			1.9			(5.4		)
		$	1.2		$	—		$	3.6		$	(5.4	)
Derivatives – Fair Value Hedges
Interest rate contracts	Interest expense	$	0.5		$	0.7		$	2.5		$	2.6
Derivatives Not Designated as Hedging Instruments
Commodity contracts	Cost of goods sold	$	—		$	—		$	—		$	(0.4	)
Foreign exchange contracts	Selling and administration	(0.2		)	(2.3		)	0.4			(9.6		)
		$	(0.2	)	$	(2.3	)	$	0.4		$	(10.0	)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Three Months Ended September 30, 2017
(In millions)
(Unaudited)

	Parent Guarantor			Issuer			Subsidiary Non-Guarantor		Eliminations			Total
Sales	$	348.0		$	—		$	1,321.8	$	(114.9	)	$	1,554.9
Operating expenses:
Cost of goods sold	313.8			—			1,146.7		(114.9		)	1,345.6
Selling and administration	31.1			—			55.3		—			86.4
Restructuring charges	—			—			9.2		—			9.2
Acquisition-related costs	1.1			—			—		—			1.1
Other operating (expense) income	(2.6		)	—			2.6		—			—
Operating (loss) income	(0.6		)	—			113.2		—			112.6
Earnings of non-consolidated affiliates	0.5			—			—		—			0.5
Equity income (loss) in subsidiaries	54.5			54.7			—		(109.2		)	—
Interest expense	11.9			41.0			1.5		(1.3		)	53.1
Interest income	1.7			—			—		(1.3		)	0.4
Income (loss) before taxes	44.2			13.7			111.7		(109.2		)	60.4
Income tax (benefit) provision	(8.5		)	(15.0		)	31.2		—			7.7
Net income (loss)	$	52.7		$	28.7		$	80.5	$	(109.2	)	$	52.7



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 2016
(In millions)
(Unaudited)

	Parent Guarantor			Issuer			Subsidiary Non-Guarantor		Eliminations			Total
Sales	$	1,009.6		$	—		$	3,545.3	$	(390.0	)	$	4,164.9
Operating expenses:
Cost of goods sold	861.3			—			3,225.4		(390.0		)	3,696.7
Selling and administration	106.2			—			143.2		—			249.4
Restructuring charges	0.8			—			105.4		—			106.2
Acquisition-related costs	39.6			—			—		—			39.6
Other operating (expense) income	(1.7		)	—			12.2		—			10.5
Operating income	—			—			83.5		—			83.5
Earnings of non-consolidated affiliates	1.1			—			—		—			1.1
Equity (loss) income in subsidiaries	(6.2		)	94.8			—		(88.6		)	—
Interest expense	30.6			114.0			3.2		(4.2		)	143.6
Interest income	2.3			—			3.2		(4.2		)	1.3
Income (loss) before taxes	(33.4		)	(19.2		)	83.5		(88.6		)	(57.7		)
Income tax (benefit) provision	(12.0		)	(40.7		)	16.4		—			(36.3		)
Net (loss) income	$	(21.4	)	$	21.5		$	67.1	$	(88.6	)	$	(21.4	)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Three Months Ended September 30, 2016
(In millions)
(Unaudited)

	Parent Guarantor			Issuer			Subsidiary Non-Guarantor			Eliminations			Total
Sales	$	359.1		$	—		$	1,249.3		$	(155.7	)	$	1,452.7
Operating expenses:
Cost of goods sold	300.6			—			1,139.5			(155.7		)	1,284.4
Selling and administration	33.4			—			48.6			—			82.0
Restructuring charges	0.2			—			5.0			—			5.2
Acquisition-related costs	14.3			—			(1.2		)	—			13.1
Other operating (expense) income	(0.6		)	—			0.4			—			(0.2		)
Operating income	10.0			—			57.8			—			67.8
Earnings of non-consolidated affiliates	0.5			—			—			—			0.5
Equity income (loss) in subsidiaries	15.0			35.5			—			(50.5		)	—
Interest expense	9.6			38.0			1.3			(1.4		)	47.5
Interest income	0.8			—			1.1			(1.4		)	0.5
Income (loss) before taxes	16.7			(2.5		)	57.6			(50.5		)	21.3
Income tax (benefit) provision	(0.8		)	(12.5		)	17.1			—			3.8
Net income (loss)	$	17.5		$	10.0		$	40.5		$	(50.5	)	$	17.5