Table of Contents

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 SeptemberJune 30, 20172021

OR

¨☐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


oln-20210630_g1.jpg
Olin Corporation
(Exact name of registrant as specified in its charter)

Virginia13-1872319
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
190 Carondelet Plaza,Suite 1530, Clayton, MOClayton,MO63105
(Address of principal executive offices)(Zip Code)

(314) 480-1400
(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class:Trading symbol:Name of each exchange on which registered:
Common Stock, $1.00 par value per shareOLNNew 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer 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 SeptemberJune 30, 2017, 166,446,9502021, 160,462,045 shares of the registrant’s common stock were outstanding.

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Table of Contents
Part I — Financial Information


Item 1.  Financial Statements.


OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Balance Sheets
(In millions, except per share data)
(Unaudited)

 June 30, 2021December 31, 2020June 30, 2020
Assets   
Current assets:   
Cash and cash equivalents$272.8 $189.7 $237.9 
Receivables, net1,033.7 770.9 700.2 
Income taxes receivable62.4 15.1 17.6 
Inventories, net736.5 674.7 619.1 
Other current assets112.7 66.7 42.0 
Total current assets2,218.1 1,717.1 1,616.8 
Property, plant and equipment (less accumulated depreciation of $3,893.8, $3,719.8 and $3,484.9)3,005.6 3,171.0 3,234.9 
Operating lease assets, net370.7 360.7 371.8 
Deferred income taxes111.0 11.2 38.3 
Other assets1,165.9 1,191.3 1,179.7 
Intangible assets, net365.7 399.4 416.9 
Goodwill1,420.2 1,420.2 2,119.7 
Total assets$8,657.2 $8,270.9 $8,978.1 
Liabilities and Shareholders’ Equity  
Current liabilities:  
Current installments of long-term debt$1.1 $26.3 $1.8 
Accounts payable806.3 729.2 520.8 
Income taxes payable35.1 10.7 7.7 
Current operating lease liabilities76.9 74.7 77.3 
Accrued liabilities426.3 358.0 318.7 
Total current liabilities1,345.7 1,198.9 926.3 
Long-term debt3,381.8 3,837.5 4,073.9 
Operating lease liabilities299.8 291.6 299.2 
Accrued pension liability683.2 733.3 768.0 
Deferred income taxes521.9 443.2 414.5 
Other liabilities350.1 315.6 307.3 
Total liabilities6,582.5 6,820.1 6,789.2 
Commitments and contingencies000
Shareholders’ equity:  
Common stock, $1.00 par value per share:  authorized, 240.0 shares; issued and outstanding, 160.5, 158.0 and 157.9 shares160.5 158.0 157.9 
Additional paid-in capital2,187.9 2,137.8 2,127.0 
Accumulated other comprehensive loss(654.3)(689.9)(773.9)
Retained earnings (accumulated deficit)380.6 (155.1)677.9 
Total shareholders’ equity2,074.7 1,450.8 2,188.9 
Total liabilities and shareholders’ equity$8,657.2 $8,270.9 $8,978.1 
 September 30, 2017 December 31, 2016 September 30, 2016
ASSETS     
Current assets:     
Cash and cash equivalents$255.9
 $184.5
 $127.0
Receivables, net729.5
 675.0
 744.1
Income taxes receivable15.9
 25.5
 49.0
Inventories689.5
 630.4
 617.0
Other current assets27.1
 30.8
 16.1
Total current assets1,717.9
 1,546.2
 1,553.2
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
Deferred income taxes141.1
 119.5
 112.2
Other assets1,215.6
 644.4
 640.3
Intangible assets, net592.9
 629.6
 653.8
Goodwill2,119.8
 2,118.0
 2,119.4
Total assets$9,366.5
 $8,762.6
 $8,792.8
LIABILITIES AND SHAREHOLDERS’ EQUITY     
Current liabilities:     
Current installments of long-term debt$81.7
 $80.5
 $80.3
Accounts payable613.5
 570.8
 509.7
Income taxes payable9.6
 7.5
 13.3
Accrued liabilities294.5
 263.8
 291.5
Total current liabilities999.3
 922.6
 894.8
Long-term debt3,663.5
 3,537.1
 3,597.5
Accrued pension liability618.7
 638.1
 597.7
Deferred income taxes1,055.5
 1,032.5
 1,036.6
Other liabilities731.0
 359.3
 335.5
Total liabilities7,068.0
 6,489.6
 6,462.1
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
Additional paid-in capital2,267.7
 2,243.8
 2,242.8
Accumulated other comprehensive loss(470.0) (510.0) (466.7)
Retained earnings334.4
 373.8
 389.3
Total shareholders’ equity2,298.5
 2,273.0
 2,330.7
Total liabilities and shareholders’ equity$9,366.5
 $8,762.6
 $8,792.8


The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

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OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Operations
(In millions, except per share data)
(Unaudited)

 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Sales$2,221.3 $1,241.2 $4,140.1 $2,666.3 
Operating expenses:  
Cost of goods sold1,712.2 1,235.7 3,136.0 2,609.9 
Selling and administration100.6 99.7 207.5 196.4 
Restructuring charges14.0 1.7 20.9 3.4 
Other operating income0.5 0.1 0.5 0.1 
Operating income (loss)395.0 (95.8)776.2 (143.3)
Interest expense65.9 69.4 150.4 132.5 
Interest income0 0.2 0.1 0.3 
Non-operating pension income8.2 4.9 17.5 9.5 
Income (loss) before taxes337.3 (160.1)643.4 (266.0)
Income tax (benefit) provision(18.5)(40.0)44.0 (65.9)
Net income (loss)$355.8 $(120.1)$599.4 $(200.1)
Net income (loss) per common share:  
Basic$2.23 $(0.76)$3.77 $(1.27)
Diluted$2.17 $(0.76)$3.69 $(1.27)
Average common shares outstanding:
Basic159.9 157.9 159.2 157.8 
Diluted163.8 157.9 162.3 157.8 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Sales$1,554.9
 $1,452.7
 $4,648.5
 $4,164.9
Operating expenses:       
Cost of goods sold1,345.6
 1,284.4
 4,143.4
 3,696.7
Selling and administration86.4
 82.0
 254.6
 249.4
Restructuring charges9.2
 5.2
 25.9
 106.2
Acquisition-related costs1.1
 13.1
 12.5
 39.6
Other operating (expense) income—
 (0.2) (0.1) 10.5
Operating income112.6
 67.8
 212.0
 83.5
Earnings of non-consolidated affiliates0.5
 0.5
 1.5
 1.1
Interest expense53.1
 47.5
 158.0
 143.6
Interest income0.4
 0.5
 1.0
 1.3
Income (loss) before taxes60.4
 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:       
Basic$0.32
 $0.11
 $0.36
 $(0.13)
Diluted$0.31
 $0.11
 $0.36
 $(0.13)
Dividends per common share$0.20
 $0.20
 $0.60
 $0.60
Average common shares outstanding:       
Basic166.3
 165.2
 166.0
 165.2
Diluted168.5
 166.5
 168.2
 165.2


The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

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OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Comprehensive Income (Loss)
(In millions)
(Unaudited)

 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net income (loss)$355.8 $(120.1)$599.4 $(200.1)
Other comprehensive income, net of tax:  
Foreign currency translation adjustments, net2.4 8.2 (9.0)(0.8)
Unrealized gains on derivative contracts, net16.3 30.0 23.3 12.1 
Amortization of prior service costs and actuarial losses, net10.7 9.0 21.3 18.2 
Total other comprehensive income, net of tax29.4 47.2 35.6 29.5 
Comprehensive income (loss)$385.2 $(72.9)$635.0 $(170.6)
 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, net9.8
 4.6
 31.7
 9.3
Unrealized gains (losses) on derivative contracts, net1.3
 2.6
 (4.4) 3.8
Pension and postretirement liability adjustments, net—
 3.1
 —
 3.1
Amortization of prior service costs and actuarial losses, net4.3
 2.3
 12.7
 9.6
Total other comprehensive income, net of tax15.4
 12.6
 40.0
 25.8
Comprehensive income$68.1
 $30.1
 $100.2
 $4.4


The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

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OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Shareholders’ Equity
(In millions, except per share data)
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
Common Stock 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Shareholders’
Equity
2021202020212020
Shares
Issued
 
Par
Value
Balance at January 1, 2016165.1
 $165.1
 $2,236.4
 $(492.5) $509.8
 $2,418.8
Net loss—
 —
 —
 —
 (21.4) (21.4)
Other comprehensive income—
 —
 —
 25.8
 —
 25.8
Dividends paid:           
Common stock ($0.60 per share)—
 —
 —
 —
 (99.1) (99.1)
Common StockCommon Stock
Balance at beginning of periodBalance at beginning of period$159.2 $157.8 $158.0 $157.7 
Common stock issued for:Common stock issued for:
Stock options exercisedStock options exercised1.2 0 2.4 0 
Other transactionsOther transactions0.1 0.1 0.1 0.2 
Balance at end of periodBalance at end of period$160.5 $157.9 $160.5 $157.9 
Additional Paid-In CapitalAdditional Paid-In Capital
Balance at beginning of periodBalance at beginning of period$2,164.3 $2,122.8 $2,137.8 $2,122.1 
Common stock issued for:           Common stock issued for:
Stock options exercised—
 —
 0.4
 —
 —
 0.4
Stock options exercised23.3 0 47.8 0.5 
Other transactions0.2
 0.2
 2.8
 —
 —
 3.0
Other transactions1.2 0.3 2.6 3.1 
Stock-based compensation—
 —
 3.2
 —
 —
 3.2
Stock-based compensation(0.9)3.9 (0.3)1.3 
Balance at September 30, 2016165.3
 $165.3
 $2,242.8
 $(466.7) $389.3
 $2,330.7
Balance at January 1, 2017165.4
 $165.4
 $2,243.8
 $(510.0) $373.8
 $2,273.0
Net income—
 —
 —
 —
 60.2
 60.2
Balance at end of periodBalance at end of period$2,187.9 $2,127.0 $2,187.9 $2,127.0 
Accumulated Other Comprehensive LossAccumulated Other Comprehensive Loss
Balance at beginning of periodBalance at beginning of period$(683.7)$(821.1)$(689.9)$(803.4)
Other comprehensive income—
 —
 —
 40.0
 —
 40.0
Other comprehensive income29.4 47.2 35.6 29.5 
Dividends paid:           
Common stock ($0.60 per share)—
 —
 —
 —
 (99.6) (99.6)
Common stock issued for:           
Stock options exercised1.0
 1.0
 17.5
 —
 —
 18.5
Other transactions—
 —
 1.7
 —
 —
 1.7
Stock-based compensation—
 —
 4.7
 —
 —
 4.7
Balance at September 30, 2017166.4
 $166.4
 $2,267.7
 $(470.0) $334.4
 $2,298.5
Balance at end of periodBalance at end of period$(654.3)$(773.9)$(654.3)$(773.9)
Retained Earnings (Accumulated Deficit)Retained Earnings (Accumulated Deficit)
Balance at beginning of periodBalance at beginning of period$56.8 $829.6 $(155.1)$941.1 
Net income (loss)Net income (loss)355.8 (120.1)599.4 (200.1)
Common stock dividends paidCommon stock dividends paid(32.0)(31.6)(63.7)(63.1)
Balance at end of periodBalance at end of period$380.6 $677.9 $380.6 $677.9 
Total Shareholders’ EquityTotal Shareholders’ Equity$2,074.7 $2,188.9 $2,074.7 $2,188.9 
Dividends declared per share of common stockDividends declared per share of common stock$0.20 $0.20 $0.40 $0.40 
The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.







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OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Cash Flows
(In millions)
(Unaudited)

 Six Months Ended June 30,
 20212020
Operating Activities  
Net income (loss)$599.4 $(200.1)
Adjustments to reconcile net income (loss) to net cash and cash equivalents provided by (used for) operating activities: 
Stock-based compensation1.3 4.1 
Loss on debt extinguishment38.9 0 
Depreciation and amortization287.2 283.0 
Deferred income taxes(26.8)(52.1)
Qualified pension plan contributions(0.6)(1.2)
Qualified pension plan income(13.7)(5.9)
Change in: 
Receivables(274.5)64.1 
Income taxes receivable/payable(22.6)(15.8)
Inventories(67.6)75.7 
Other current assets12.0 (18.3)
Accounts payable and accrued liabilities143.6 (74.9)
Other assets(2.5)0.6 
Other noncurrent liabilities32.2 (5.6)
Other operating activities1.3 1.8 
Net operating activities707.6 55.4 
Investing Activities 
Capital expenditures(86.4)(166.5)
Payments under ethylene long-term supply contracts0 (461.0)
Payments under other long-term supply contracts0 (75.8)
Net investing activities(86.4)(703.3)
Financing Activities  
Long-term debt:
Borrowings365.0 1,163.2 
Repayments(855.2)(425.8)
Debt early redemption premiums(31.0)0 
Stock options exercised50.2 0.5 
Dividends paid(63.7)(63.1)
Debt issuance costs(3.1)(9.6)
Net financing activities(537.8)665.2 
Effect of exchange rate changes on cash and cash equivalents(0.3)(0.3)
Net increase in cash and cash equivalents83.1 17.0 
Cash and cash equivalents, beginning of year189.7 220.9 
Cash and cash equivalents, end of period$272.8 $237.9 
Cash paid for interest and income taxes: 
Interest, net$153.5 $122.3 
Income taxes, net of refunds$82.6 $3.1 
Non-cash investing activities: 
Decrease in capital expenditures included in accounts payable and accrued liabilities$26.1 $38.6 
 Nine Months Ended September 30,
 2017 2016
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)
Losses on disposition of property, plant and equipment0.4
 0.6
Stock-based compensation6.4
 6.1
Depreciation and amortization411.4
 397.4
Deferred income taxes(17.5) (34.8)
Write-off of equipment and facility included in restructuring charges—
 76.6
Qualified pension plan contributions(1.2) (7.1)
Qualified pension plan income(20.3) (27.8)
Change in:   
Receivables(48.5) 18.2
Income taxes receivable/payable10.6
 (7.8)
Inventories(46.7) 46.1
Other current assets3.1
 22.7
Accounts payable and accrued liabilities92.9
 (54.1)
Other assets7.7
 0.5
Other noncurrent liabilities(13.6) (7.5)
Other operating activities11.7
 0.5
Net operating activities455.1
 407.1
Investing Activities   
Capital expenditures(210.0) (199.4)
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 property, plant and equipment0.1
 0.4
Proceeds from disposition of affiliated companies—
 6.6
Net investing activities(419.3) (397.2)
Financing Activities   
Long-term debt:   
Borrowings2,035.0
 —
Repayments(1,907.4) (176.1)
Stock options exercised18.5
 0.4
Dividends paid(99.6) (99.1)
Debt issuance costs(11.2) (0.8)
Net financing activities35.3
 (275.6)
Effect of exchange rate changes on cash and cash equivalents0.3
 0.7
Net increase (decrease) in cash and cash equivalents71.4
 (265.0)
Cash and cash equivalents, beginning of period184.5
 392.0
Cash and cash equivalents, end of period$255.9
 $127.0
Cash paid for interest and income taxes:   
Interest, net$138.7
 $126.9
Income taxes, net of refunds$11.2
 $16.3
Non-cash investing activities:   
Capital expenditures included in accounts payable and accrued liabilities$25.0
 $(3.2)


The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

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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 and precursors, including aromatics (acetone, bisphenol, cumene and phenol), allyl chloride, epichlorohydrin, liquid epoxy resins, solid epoxy resins and downstream products such as converted epoxy resins and additives. The Winchester segment produces and sells sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.


We have prepared the condensed financial statements included herein, without audit, pursuant to the rules and regulations of the U.S.United States (U.S.) Securities and Exchange Commission (SEC). The preparation of the financial statements requires estimates and assumptions that affect amounts reported and disclosed in the financial statements and related notes. In our opinion, these financial statements reflect all adjustments (consisting only of normal accruals), which are necessary to present fairly the results for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, we believe that the disclosures are appropriate. We recommend that you read these condensed financial statements in conjunction with the financial statements, accounting policies and the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2016.2020. Certain reclassifications were made to prior year amounts to conform to the 20172021 presentation.


ACQUISITIONNOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS
On October 5, 2015 (the Closing Date),
In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (ASU 2020-04) which creates a new topic, Accounting Standards Codification (ASC) 848 “Reference Rate Reform.”  Subsequent to the issuance of ASU 2020-04, ASC 848 was amended by ASU 2021-01, “Scope” which amended and clarified the application and scope of the aforementioned update. This update provides optional guidance to ease the potential accounting burden associated with transition away from reference rates that are expected to be discontinued at the end of 2021, at which time financial institutions will no longer be required to report information that is currently used to determine the London Interbank Offered Rate (LIBOR) and other reference rates.  This update allows companies to treat contract amendments to existing contracts for the purpose of establishing a new reference rate as continuations of those contracts without additional analysis, as long as the modification was made to establish a new reference rate.  This update applies prospectively to contract modifications.  The optional guidance was effective on March 12, 2020 and can be adopted beginning January 1, 2020 or any date thereafter until December 31, 2022, at which time the optional guidance can no longer be applied to contract amendments to existing contracts. We adopted the provisions of this update on January 1, 2020 and will apply this guidance prospectively to contract modifications that are entered into for the purpose of establishing a new reference rate.  The adoption of this update did not have a material impact on our consolidated financial statements.

NOTE 3. RESTRUCTURING CHARGES

Olin committed to a productivity initiative to align the organization with our new operating model and improve efficiencies (collectively, Productivity Plan). These actions and related activities were completed during the second quarter of 2021. For both the three and six months ended June 30, 2021, we completed the acquisition (the Acquisition) from The Dow Chemical Company (TDCC)recorded pretax restructuring charges of its U.S. Chlor Alkali$10.1 million for employee severance 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 incurredrelated benefit costs related to these actions. We do 0t expect to incur additional restructuring charges related to these actions.

On May 18, 2021, we announced that we had made the integrationdecision to permanently close approximately 20% of our diaphragm-grade chlor alkali capacity, representing 225,000 tons, at our Plaquemine, LA facility (Plaquemine Plan). The closure was completed in the Acquired Business which consistedsecond quarter of advisory, legal, accounting2021. We expect to incur restructuring charges through 2022 of approximately $2 million related to this action.
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On March 15, 2021, we announced that we had made the decision to permanently close approximately 50% of our diaphragm-grade chlor alkali capacity, representing 200,000 tons, at our McIntosh, AL facility (McIntosh Plan). The closure was completed in the first quarter of 2021. For the three and six months ended June 30, 2021, we recorded pretax restructuring charges of $0.4 million and $4.8 million, respectively, for lease and other professional feescontract termination costs related to this action. We expect to incur additional restructuring charges through 2022 of $1.1approximately $2 million related to this action.

On January 18, 2021, we announced that we had made the decision to permanently close our trichloroethylene and anhydrous hydrogen chloride liquefaction facilities in Freeport, TX (collectively, Freeport 2021 Plan), before the end of 2021. For the three and six months ended June 30, 2021, we recorded pretax restructuring charges of $2.8 million and $13.1$4.1 million, respectively, for facility exit costs related to these actions. We expect to incur additional restructuring charges through 2023 of approximately $25 million related to these actions.

On December 11, 2019, we announced that we had made the decision to permanently close a chlor alkali plant with a capacity of 230,000 tons and our vinylidene chloride (VDC) production facility, both in Freeport, TX (collectively, Freeport 2019 Plan).  The VDC facility and related chlor alkali plant were closed during fourth quarter of 2020 and second quarter of 2021, respectively.  For the three months ended SeptemberJune 30, 20172021 and 2016, respectively, and $12.52020, we recorded pretax restructuring charges of $0.4 million and $39.6$0.5 million, respectively, for facility exit costs related to these actions. For the ninesix months ended SeptemberJune 30, 20172021 and 2016, respectively.

For the nine months ended September 30, 2016, payments2020, we recorded pretax restructuring charges of $69.5$1.2 million were madeand $0.5 million, respectively, for facility exit costs related to certain acquisition-related liabilities, including the final working capital adjustment.these actions. We expect to incur additional restructuring charges through 2025 of approximately $45 million related to these actions.

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.locations (collectively, Chlor Alkali 2016 Plan). 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 SeptemberJune 30, 20172021 and 2016,2020, we recorded pretax restructuring charges of $8.8$0.3 million and $4.9$1.2 million, respectively, for employee relocation costs, facility exit costs and lease and other contract termination costs related to these actions. For the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, we recorded pretax restructuring charges of $23.7$0.7 million and $105.0$2.9 million, respectively, for the write-off of equipment and facility costs, lease and other contract terminationexit costs, employee severance and related benefit costs employee relocation costs and facility exitlease and other contract termination costs related to these actions. We expect to incur additional restructuring charges through 20202021 of approximately $25$2 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, we recorded pretax restructuring charges of $2.2 million and $0.4 million, respectively, for lease and other contract termination costs and facility exit costs related to these actions. We expect to incur additional restructuring charges through 2018 of approximately $4 million related to the shut down of this portion of the facility.

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 20172021 and 20162020 activities by major component of these restructuring actions and the remaining balances of accrued restructuring costs as of SeptemberJune 30, 20172021 and 2016:2020:
 Employee severance and related benefit costsLease and other contract termination costsFacility exit costsTotal
 ($ in millions)
Balance at January 1, 2020$0 $3.1 $0 $3.1 
Restructuring charges:
First quarter0.1 0.1 1.5 1.7 
Second quarter0 0 1.7 1.7 
Amounts utilized(0.1)(0.6)(3.2)(3.9)
Balance at June 30, 2020$0 $2.6 $0 $2.6 
Balance at January 1, 2021$1.8 $1.7 $0 $3.5 
Restructuring charges:
First quarter0 4.6 2.3 6.9 
Second quarter10.1 0.5 3.4 14.0 
Amounts utilized(1.3)(0.7)(5.7)(7.7)
Balance at June 30, 2021$10.6 $6.1 $0 $16.7 

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 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 quarter3.9
 9.2
 0.2
 2.9
 76.6
 92.8
Second quarter0.2
 —
 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 2016, 2014 and 2010 restructuring actions by major component through SeptemberJune 30, 2017:
2021:
Chlor Alkali Products and VinylsCorporate/otherTotal
 Plaquemine PlanMcIntosh PlanFreeport 2021 PlanFreeport 2019 PlanChlor Alkali 2016 PlanProductivity Plan
 ($ in millions)
Write-off of equipment and facility$0 $0 $0 $58.9 $78.1 $0 $137.0 
Employee severance and related benefit costs0 0 0 2.1 6.7 10.1 18.9 
Facility exit costs0 0 4.1 2.9 52.4 0 59.4 
Employee relocation costs0 0 0 0 1.7 0 1.7 
Lease and other contract termination costs0 4.8 0 0 42.5 0 47.3 
Total cumulative restructuring charges$0 $4.8 $4.1 $63.9 $181.4 $10.1 $264.3 
  Chlor Alkali Products and Vinyls Winchester Total
  Becancour Capacity Reductions  
  ($ 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 SeptemberJune 30, 2017,2021, we have incurred cash expenditures of $68.2$110.2 million and non-cash charges of $84.6$137.4 million related to these restructuring actions. The remaining balance of $21.9$16.7 million is expected to be paid out through 2020.2031.


NOTE 4. ACCOUNTS RECEIVABLES


On December 20, 2016, we entered intoWe maintain a three year, $250.0 million Receivables Financing Agreement with(Receivables Financing Agreement) that is scheduled to mature on July 15, 2022. The Receivables Financing Agreement includes a minimum borrowing requirement of 50% of the facility limit or available borrowing capacity, whichever is less. The administrative agent for our Receivables Financing Agreement is PNC Bank, National Association, as administrative agent (Receivables Financing Agreement).Association.  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 secured leverage covenant that is contained in the $1,615.0 million senior secured credit facility. As of SeptemberJune 30, 2017, $363.02021, $457.9 million of our trade receivables were pledged as collateral andcollateral. As of June 30, 2021, we had $250.0$125.0 million drawn under the agreement. For the three months ended September 30, 2017, we borrowed $40.0with $125.0 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 available under the Receivables Financing Agreement. As of December 31, 2016, $282.32020 and June 30, 2020, we had $125.0 million of our trade receivables were pledged as collateral and $210.0$240.7 million, wasrespectively, 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.Agreement.


On June 29, 2016, we entered into aOlin also has trade accounts receivable factoring arrangementarrangements (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). Pursuantpursuant to the terms of the AR Facilities, certain of our domestic subsidiaries may sell their accounts receivable up to

a maximum of $293.0$228.0 million and certain of our foreign subsidiaries may sell their accounts receivable up to a maximum of €35.3 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 forfollowing 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:

June 30,
20212020
($ in millions)
Balance at beginning of year$48.8 $63.1 
     Gross receivables sold487.3 457.5 
     Payments received from customers on sold accounts(450.4)(458.9)
Balance at end of period$85.7 $61.7 

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$0.3 million and $0.5$0.4 million for the three months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, and $2.9 million and $0.7 million and $1.0 million for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively. The agreements are without recourse and therefore no0 recourse liability hashad been recorded as of SeptemberJune 30, 2017.  As of September 30, 2017,2021, December 31, 2016 and September2020 or June 30, 2016, $187.3 million, $126.1 million and $85.0 million, respectively,2020.

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Table of receivables qualifying for sales treatment were outstanding and will continue to be serviced by us.Contents

ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLES

We evaluate the collectibility of accounts receivable based on a combination of factors. We estimateOur condensed balance sheets included an allowance for doubtful accounts as a percentagereceivables 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 consisted of the following:
 September 30,
 2017 2016
 ($ in millions)
Balance at beginning of year$10.1
 $6.4
Provisions charged1.3
 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)$12.4 million, $12.3 million and $1.4$12.5 million for the three months ended Septemberand other receivables of $72.8 million, $62.4 million and $87.7 million at June 30, 20172021, December 31, 2020 and 2016, respectively.June 30, 2020, respectively, which were included in receivables, net.

NOTE 5. INVENTORIES


Inventories consisted of the following:
 June 30, 2021December 31,
2020		June 30, 2020
 ($ in millions)
Supplies$115.0 $113.8 $111.6 
Raw materials145.1 116.3 64.6 
Work in process145.1 133.2 94.0 
Finished goods420.9 359.6 392.7 
Inventories excluding LIFO reserve826.1 722.9 662.9 
LIFO reserve(89.6)(48.2)(43.8)
Inventories, net$736.5 $674.7 $619.1 
 September 30, 2017 December 31,
2016		 September 30, 2016
 ($ in millions)
Supplies$60.3
 $58.1
 $58.1
Raw materials85.4
 72.6
 79.1
Work in process120.6
 110.7
 114.7
Finished goods470.7
 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 SeptemberJune 30, 20172021 reflect certain estimates relating to inventory quantities and costs at December 31, 2017.2021. The replacement cost of our inventories would have been approximately $47.5$89.6 million, $35.9$48.2 million and $40.8$43.8 million higher than reported at SeptemberJune 30, 2017,2021, December 31, 20162020 and SeptemberJune 30, 2016,2020, respectively.



NOTE 6. OTHER ASSETS


Included in other assets were the following:
June 30, 2021December 31, 2020June 30, 2020
($ in millions)
Supply contracts$1,091.0 $1,122.9 $1,137.9 
Other74.9 68.4 41.8 
Other assets$1,165.9 $1,191.3 $1,179.7 
 September 30, 2017 December 31, 2016 September 30, 2016
 ($ in millions)
Investments in non-consolidated affiliates$28.2
 $26.7
 $26.1
Deferred debt issuance costs2.7
 2.6
 2.8
Tax-related receivables13.1
 17.5
 15.8
Interest rate swaps3.7
 7.7
 2.5
Supply contracts1,146.3
 566.7
 572.8
Other21.6
 23.2
 20.3
Other assets$1,215.6
 $644.4
 $640.3


In connection with the Acquisition, Olin and TDCCWe have entered into various 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 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, 2017, aelectricity. A payment of $209.4$461.0 million was made in connectionduring the second quarter of 2020 associated with this option which increased the value of the long-term asset.

On February 27, 2017, we exercised the remaininga previously executed option to reserve additional ethylene at producer economics from TDCC. In connectionThe Dow Chemical Company (Dow). The original liability was discounted and recorded at present value as of March 31, 2017. For the six months ended June 30, 2020, $4.0 million of interest expense was recorded for accretion on the 2020 payment liability discount.

During the six months ended June 30, 2020, a payment of $75.8 million was made associated with the exerciseresolution of this option, we also secured a long-term customer arrangement. As a result, an additional payment will be madedispute over the allocation to TDCCOlin of between $440 million and $465 million on or aboutcertain capital costs incurred at our Plaquemine, LA site after the fourth quarter of 2020. During 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 and other liabilities of $389.2 million, which represents the present valueOctober 5, 2015 closing date of the additional estimated payment. The discounted amount of approximately $51 million will be recorded as interest expense through the fourth quarter of 2020.acquisition from Dow.

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 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$17.3 million and $6.0$11.0 million for the three months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, and $18.9amortization expense of $34.8 million and $14.7$33.3 million for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, was recognized within cost of goods sold related to theseour long-term 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.



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NOTE 7. GOODWILL AND INTANGIBLE ASSETS


Changes in the carrying value of goodwill were as follows:


Chlor Alkali Products and VinylsEpoxyTotal
($ in millions)
Balance at January 1, 2020$1,832.7 $287.0 $2,119.7 
Foreign currency translation adjustment0 0 0 
Balance at June 30, 2020$1,832.7 $287.0 $2,119.7 
Balance at January 1, 2021(1)
$1,275.3 $144.9 $1,420.2 
Foreign currency translation adjustment0 0 0 
Balance at June 30, 2021(1)
$1,275.3 $144.9 $1,420.2 
 Chlor Alkali Products and Vinyls Epoxy Total
 ($ 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 adjustment0.2
 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 adjustment1.4
 0.4
 1.8
Balance at September 30, 2017$1,832.7
 $287.1
 $2,119.8


(1)     The Chlor Alkali Products and Vinyls, Epoxy and total goodwill balances are net of $557.6 million, $142.2 million and $699.8 million of accumulated impairment losses recorded during the third quarter of 2020.

Intangible assets consisted of the following:


June 30, 2021December 31, 2020June 30, 2020
Gross AmountAccumulated AmortizationNetGross AmountAccumulated AmortizationNetGross AmountAccumulated AmortizationNet
($ in millions)
Customers, customer contracts and relationships$678.2 $(336.3)$341.9 $681.0 $(312.5)$368.5 $673.3 $(285.3)$388.0 
Trade name0 0 0 0 0 0 7.0 (6.7)0.3 
Acquired technology94.5 (71.9)22.6 95.0 (65.3)29.7 85.1 (57.7)27.4 
Other1.8 (0.6)1.2 1.8 (0.6)1.2 1.8 (0.6)1.2 
Total intangible assets$774.5 $(408.8)$365.7 $777.8 $(378.4)$399.4 $767.2 $(350.3)$416.9 

12
  September 30, 2017 December 31, 2016 September 30, 2016
  Gross AmountAccumulated AmortizationNet Gross AmountAccumulated AmortizationNet Gross AmountAccumulated AmortizationNet
  ($ 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
Table of Contents

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 8. 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 June 30,Six Months Ended June 30,
 2021202020212020
Computation of Net Income (Loss) per Share(In millions, except per share data)
Net income (loss)$355.8 $(120.1)$599.4 $(200.1)
Basic shares159.9 157.9 159.2 157.8 
Basic net income (loss) per share$2.23 $(0.76)$3.77 $(1.27)
Diluted shares:
Basic shares159.9 157.9 159.2 157.8 
Stock-based compensation3.9 0 3.1 0 
Diluted shares163.8 157.9 162.3 157.8 
Diluted net income (loss) per share$2.17 $(0.76)$3.69 $(1.27)
 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 shares166.3
 165.2
 166.0
 165.2
Basic net income (loss) per share$0.32
 $0.11
 $0.36
 $(0.13)
Diluted shares:       
Basic shares166.3
 165.2
 166.0
 165.2
Stock-based compensation2.2
 1.3
 2.2
 —
Diluted shares168.5
 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 1.6less than 0.1 million shares and 1.910.3 million shares for the three months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, and 1.61.1 million shares and 6.910.3 million shares for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, as their effect would have been anti-dilutive.


NOTE 9. ENVIRONMENTAL


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

 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
 ($ in millions)
Provisions charged to income$4.7 $2.8 $7.2 $5.4 
Recoveries for costs incurred and expensed0 0 (2.2)0 
Environmental expense$4.7 $2.8 $5.0 $5.4 

Environmental expense for the six months ended June 30, 2021 includes $2.2 million of insurance recoveries for environmental costs incurred and expensed in prior periods.  The condensed balance sheets included reserves for future environmental expenditures to investigate and remediate known sites amounting to $135.3$148.4 million, $137.3$147.2 million and $137.5$138.6 million at SeptemberJune 30, 2017, 2021, December 31, 20162020 and SeptemberJune 30, 2016,2020, respectively, of which $118.3$129.4 million, $120.3$128.2 million and $118.5$121.6 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 partiesPotentially 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.



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NOTE 10. COMMITMENTS 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 on or after October 1, 2015.  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 on or after October 1, 2015.  The other current defendants in the lawsuits are Occidental Chemical Corporation d/b/a OxyChem, Westlake Chemical Corporation, Shin-Etsu Chemical Co., Ltd., 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.

Olin, K.A. Steel Chemical, Olin Canada ULC, 3229897 Nova Scotia Co. (wholly owned subsidiaries of Olin) and other alleged caustic soda producers were named as defendants in a proposed class action civil lawsuit filed on October 7, 2020 in the Quebec Superior Court (Province of Quebec) on behalf of the respective named plaintiff and a putative class comprised of all Canadian persons and entities who, between October 1, 2015 and the date of the eventual class action certification, directly or indirectly purchased caustic soda or products containing caustic soda, produced by one or more of the defendants. Olin, K.A. Steel Chemical, Olin Canada ULC, 3229897 Nova Scotia Co. and other alleged caustic soda producers were also named as defendants in a proposed class action civil lawsuit filed November 13, 2020 in the Federal Court of Canada on behalf of the respective named plaintiff and a putative class comprised of all legal persons in Canada who, at any time on or after October 1, 2015 to the present, directly or indirectly purchased caustic soda. The other defendants named in the two Canadian lawsuits are Occidental Petroleum Corporation, Occidental Chemical Corporation, Oxy Canada Sales, Inc., Westlake Chemical Corporation, Axiall Canada, Inc., 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 control, and stabilize the price of caustic soda, divide and allocate markets, sales, customers and territories, fix, maintain, control, prevent, restrict, lessen or eliminate production and supply of caustic soda, and agree to idle capacity of production and/or refrain from increasing their production capacity. Plaintiffs seek an unspecified amount of damages, including punitive damages.

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 SeptemberJune 30, 2017,2021, December 31, 20162020 and SeptemberJune 30, 2016,2020, our condensed balance sheets included accrued liabilities for these other legal actions of $15.9$12.9 million, $13.6$13.5 million and $22.9$12.4 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 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.


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 11. SHAREHOLDERS’ EQUITY


On April 24, 2014,26, 2018, our board of directors authorized a share repurchase program for up to 8 millionthe purchase of shares of common stock that terminated on April 24, 2017. Forat an aggregate price of up to $500.0 million.  This program will terminate upon the ninepurchase of $500.0 million of our common stock.

There were 0 shares repurchased for both the three and six months ended SeptemberJune 30, 20172021 and 2016, no shares were purchased and retired. We purchased2020. As of June 30, 2021, we had repurchased a total of 1.9$195.9 million of our common stock, representing 10.1 million shares, under the April 2014 program, and the 6.1$304.1 million shares thatof common stock remained authorized to be purchased have expired. Related to the Acquisition, for a periodrepurchased.
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Table of two years subsequent to the Closing Date, we were subject to certain restrictions on our ability to conduct share repurchases.Contents


We issued 1.02.4 million shares and less than 0.1 million shares representing stock options exercised for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, with a total value of $18.5$50.2 million and $0.4$0.5 million, respectively.


The following table represents the activity included in accumulated other comprehensive loss:
 Foreign Currency Translation Adjustment (net of taxes)Unrealized (Losses) Gains on Derivative Contracts (net of taxes)Pension and Other Postretirement Benefits (net of taxes)Accumulated Other Comprehensive Loss
 ($ in millions)
Balance at January 1, 2020$(8.4)$(13.6)$(781.4)$(803.4)
Unrealized (losses) gains:
First quarter(9.0)(35.1)0 (44.1)
Second quarter8.2 29.9 0 38.1 
Reclassification adjustments of losses into income:
First quarter0 11.6 11.9 23.5 
Second quarter0 9.3 11.6 20.9 
Tax benefit (provision):
First quarter0 5.6 (2.7)2.9 
Second quarter0 (9.2)(2.6)(11.8)
Net change(0.8)12.1 18.2 29.5 
Balance at June 30, 2020$(9.2)$(1.5)$(763.2)$(773.9)
Balance at January 1, 2021$19.4 $21.4 $(730.7)$(689.9)
Unrealized (losses) gains:
First quarter(11.4)122.0 0 110.6 
Second quarter2.4 41.8 0 44.2 
Reclassification adjustments of (gains) losses into income:
First quarter0 (112.8)13.7 (99.1)
Second quarter0 (20.4)13.7 (6.7)
Tax provision:
First quarter0 (2.2)(3.1)(5.3)
Second quarter0 (5.1)(3.0)(8.1)
Net change(9.0)23.3 21.3 35.6 
Balance at June 30, 2021$10.4 $44.7 $(709.4)$(654.3)
 
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 quarter24.0
 1.1
 —
 25.1
Second quarter(14.3) (4.6) —
 (18.9)
Third quarter6.6
 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 quarter3.5
 1.1
 (2.4) 2.2
Third quarter(2.0) (1.6) (3.0) $(6.6)
Net Change9.3
 3.8
 12.7
 25.8
Balance at September 30, 2016$(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 quarter8.3
 (3.1) —
 5.2
Second quarter28.1
 (3.7) —
 24.4
Third quarter16.0
 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 Change31.7
 (4.4) 12.7
 40.0
Balance at September 30, 2017$7.6
 $8.4
 $(486.0) $(470.0)


Net income (loss) 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 expensesnon-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

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Table of goods sold and selling and administrative expenses.Contents


NOTE 12. SEGMENT INFORMATION


We define segment results as income (loss) before interest expense, interest income, goodwill impairment charges, other operating income (expense), non-operating pension income, other income and income taxes, and include the operating results of non-consolidated affiliates. Consistent with the guidance in ASC 280 “Segment Reporting” (ASC 280), we have determined it is appropriate to include the operating results of non-consolidated affiliates in the relevant segment financial results.taxes. We have three operating segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. The three operating segments reflect the organization used by our management for purposes of allocating resources and assessing performance. Chlorine 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 June 30,Six Months Ended June 30,
 2021202020212020
Sales:($ in millions)
Chlor Alkali Products and Vinyls$967.3 $651.2 $1,834.3 $1,411.1 
Epoxy850.0 397.4 1,512.6 874.6 
Winchester404.0 192.6 793.2 380.6 
Total sales$2,221.3 $1,241.2 $4,140.1 $2,666.3 
Income (loss) before taxes:  
Chlor Alkali Products and Vinyls$168.9 $(57.0)$440.0 $(91.3)
Epoxy165.3 (13.0)230.5 (1.3)
Winchester109.9 16.0 195.0 26.5 
Corporate/other:
Environmental expense(4.7)(2.8)(5.0)(5.4)
Other corporate and unallocated costs(30.9)(37.4)(63.9)(68.5)
Restructuring charges(14.0)(1.7)(20.9)(3.4)
Other operating income0.5 0.1 0.5 0.1 
Interest expense(65.9)(69.4)(150.4)(132.5)
Interest income0 0.2 0.1 0.3 
Non-operating pension income8.2 4.9 17.5 9.5 
Income (loss) before taxes$337.3 $(160.1)$643.4 $(266.0)



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 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
Epoxy489.9
 470.1
 1,549.5
 1,380.3
Winchester183.8
 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
Winchester17.2
 36.0
 61.3
 95.9
Corporate/other:       
Pension income11.1
 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 income0.4
 0.5
 1.0
 1.3
Income (loss) before taxes$60.4
 $21.3
 $56.5
 $(57.7)
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Sales by geography:($ in millions)
     Chlor Alkali Products and Vinyls
United States$713.6 $450.3 $1,290.6 $984.2 
Europe39.4 26.8 68.9 57.0 
Other foreign214.3 174.1 474.8 369.9 
               Total Chlor Alkali Products and Vinyls967.3 651.2 1,834.3 1,411.1 
     Epoxy
United States253.6 122.5 411.9 281.3 
Europe403.8 140.4 723.8 334.8 
Other foreign192.6 134.5 376.9 258.5 
               Total Epoxy850.0 397.4 1,512.6 874.6 
     Winchester
United States373.6 178.6 738.6 352.7 
Europe6.3 2.3 10.1 4.8 
Other foreign24.1 11.7 44.5 23.1 
               Total Winchester404.0 192.6 793.2 380.6 
     Total
United States1,340.8 751.4 2,441.1 1,618.2 
Europe449.5 169.5 802.8 396.6 
Other foreign431.0 320.3 896.2 651.5 
               Total sales$2,221.3 $1,241.2 $4,140.1 $2,666.3 



 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Sales by product line:($ in millions)
     Chlor Alkali Products and Vinyls
          Caustic soda$400.8 $320.2 $747.8 $680.4 
          Chlorine, chlorine-derivatives and other co-products566.5 331.0 1,086.5 730.7 
               Total Chlor Alkali Products and Vinyls967.3 651.2 1,834.3 1,411.1 
     Epoxy
          Aromatics and allylics366.5 167.0 678.5 384.4 
          Epoxy resins483.5 230.4 834.1 490.2 
               Total Epoxy850.0 397.4 1,512.6 874.6 
     Winchester
          Commercial281.5 135.6 542.5 262.7 
          Military and law enforcement122.5 57.0 250.7 117.9 
               Total Winchester404.0 192.6 793.2 380.6 
          Total sales$2,221.3 $1,241.2 $4,140.1 $2,666.3 

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NOTE 13. STOCK-BASED COMPENSATION


Stock-based compensation granted includes stock options, performance stock awards, restricted stock awards and deferred directors’ compensation. Stock-based compensation expense was as follows:
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
 ($ in millions)
Stock-based compensation$7.2 $4.3 $11.9 $6.3 
Mark-to-market adjustments6.0 (0.1)14.1 (3.1)
Total expense$13.2 $4.2 $26.0 $3.2 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
 ($ in millions)
Stock-based compensation$3.0
 $3.8
 $14.5
 $9.8
Mark-to-market adjustments2.6
 (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 date2021
Dividend yield2.76 %
Risk-free interest rate0.94 %
Expected volatility of Olin common stock44 %
Expected life (years)7.0
Weighted-average grant fair value (per option)$9.91 
Weighted-average exercise price$28.99 
Options granted1,094,700
Grant date2017 2016
Dividend yield2.69% 6.09%
Risk-free interest rate2.06% 1.35%
Expected volatility34% 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 granted1,572,000
 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 of Olin common stock 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.


Performance share awards are denominated in shares of our stock and are paid half in cash and half in stock. Payouts for performance share awards are based on two criteria: (1) 50% of the award is based on Olin’s total shareholder returns (TSR) over the applicable 3-year performance cycle in relation to the TSR over the same period among a portfolio of public companies which are selected in concert with outside compensation consultants and (2) 50% of the award is based on Olin’s net income over the applicable 3-year performance cycle in relation to the net income goal for such period as set by the compensation committee of Olin’s board of directors. The expense associated with performance shares is recorded based on our estimate of our performance relative to the respective target. The fair value of each performance stock award based on net income was estimated on the date of grant, using the current stock price. The fair value of each performance stock award based on TSR was estimated on the date of grant, using a Monte Carlo simulation model with the following weighted average assumptions:
Grant date2021
Risk-free interest rate0.23 %
Expected volatility of Olin common stock55 %
Expected average volatility of peer companies50 %
Average correlation coefficient of peer companies0.50
Expected life (years)3.0
Grant date fair value (TSR based award)$39.96 
Grant date fair value (net income based award)$28.99 
Awards granted248,700

Risk-free interest rate was based on zero coupon U.S. Treasury securities rates for the expected life of the performance stock awards. Expected volatility of Olin common stock and peer companies was based on historical stock price movements, as
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we believe that historical experience is the best available indicator of the expected volatility. The average correlation coefficient of peer companies was determined based on historical trends of Olin’s common stock price compared to the peer companies. Expected life of the performance stock award grant was based on historical exercise and cancellation patterns, as we believe that historical experience is the best estimate of future exercise patterns.

NOTE 14. DEBT


During 2021, activity of our debt outstanding included:

Long-term Debt Borrowings (Repayments)
Loss on Debt Extinguishment(1)
Six Months Ended June 30, 2021Three Months Ended June 30, 2021Six Months Ended June 30, 2021
Debt Instrument($ in millions)
Borrowings:
Senior Secured Term Loans$315.0 
Receivables Financing Agreement50.0 
Total borrowings$365.0 
Repayments:
10.00% senior notes due 2025$(500.0)$11.3 $30.9 
9.75% senior notes due 2023(120.0)0 3.7 
5.625% senior notes due 2029(26.5)2.9 2.9 
5.00% senior notes due 2030(8.0)0.6 0.6 
Senior Secured Term Loans(150.0)0.6 0.8 
Receivables Financing Agreement(50.0)0 0 
Finance leases(0.7)0 0 
Total repayments$(855.2)$15.4 $38.9 
Long-term debt repayments, net$(490.2)

(1)     Loss on debt extinguishment is included as interest expense in the condensed statements of operations. The loss includes the payment of bond redemption premiums of $12.3 million and $31.0 million for the three and six months ended June 30, 2021, respectively, as well as the write-off of deferred debt issuance costs and recognition of deferred fair value interest rate swap losses of $3.1 million and $7.9 million for the three and six months ended June 30, 2021, respectively, associated with the optional prepayment of existing debt. The cash payments related to the early redemption premiums for the debt extinguishments are classified as cash outflows from financing activities on the condensed statement of cash flows for the six months ended June 30, 2021. The condensed statement of cash flows reflects a correction to the loss on debt extinguishment and early redemption premiums from the previously issued condensed statement of cash flows for the three months ended March 31, 2021, which increased cash flows from net operating activities and decreased cash flows from net financing activities by $18.7 million. During the fourth quarter of 2021, the previously issued statement of cash flows for the year ended December 31, 2020 will reflect the correction of previously presented early redemption premiums, which will increase cash flows from net operating activities and decrease cash flows from net financing activities by $14.6 million.

On March 9, 2017,February 24, 2021, we entered into a new five-year $1,975.0$1,615.0 million senior secured credit facility which(Senior Secured Credit Facility) that amended and restated theour existing $1,850.0$1,300.0 million senior secured credit facility (thefacility. The Senior Secured Credit Facility). Pursuant to the agreement, the aggregate principal amount under theFacility includes a senior secured delayed-draw term loan facility was increased to $1,375.0 million (Term Loan Facility), and thewith aggregate commitments underof $315.0 million (Delayed Draw Term Loan), a senior secured term loan facility with aggregate commitments of $500.0 million (2020 Term Loan and together with the Delayed Draw Term Loan, the Senior Secured Term Loans) and a senior secured revolving credit facility were increasedwith aggregate commitments in an amount equal to $600.0$800.0 million (Senior Revolving Credit Facility). The maturity date for the Senior Secured Credit Facility and, together withis July 16, 2024. The amendment modified the pricing grid for the Senior Secured Credit Facility by reducing applicable interest rates on the borrowings under the facility.

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On March 30, 2021, Olin drew the entire $315.0 million of the Delayed Draw 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 portionthe redemption of the payment10.00% senior notes due October 15, 2025. The Senior Secured Term Loans include principal amortization amounts payable beginning June 30, 2021 at a rate of 1.25% per quarter through the end of 2022, increasing to TDCC associated with a long-term ethylene supply contract to reserve additional ethylene at producer economics. At September1.875% per quarter during 2023 and 2.50% per quarter thereafter until maturity. During the six months ended June 30, 2017,2021, we had $461.4 million available under our $600.0 million Senior Revolving Credit Facility because we had borrowed $120.0 million and issued $18.6repaid $150.0 million of lettersthe Senior Secured Term Loans, of credit. In March 2017, we drewwhich $10.2 million was a required quarterly installment. These repayments eliminated the entire $1,375.0 million term loan and used the proceeds to redeem the remaining balancerequired quarterly installments of the existing Senior Credit Facility and a portion of the Sumitomo Credit Facility.Secured Term Loans through December 2023. The maturity date for the Amended 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 million letter of credit subfacility. The Term LoanAt June 30, 2021, we had $799.6 million available under our $800.0 million Senior Revolving Credit Facility includes amortization payablebecause we had issued $0.4 million of letters of credit.

Annual maturities of long-term debt at June 30, 2021, including finance lease obligations, are $0.6 million in equal quarterly installments at2021, $326.1 million in 2022, $1.0 million in 2023, $735.8 million in 2024, $503.1 million in 2025 and a ratetotal of 5.0% per annum$1,848.5 million thereafter.

For the six months ended June 30, 2021, we paid debt issuance costs of $3.1 million for the first two years, increasingamendments to 7.5% per annum for the following year and to 10.0% per annum for the last two years. For the nine months ended September 30, 2017 and 2016, we repaid $34.4 million and $50.6 million under the required quarterly installments of the term loan facilities, respectively.our Senior Secured Credit Facility.


Under the Amended Senior Secured Credit Facility, we may select various floating rate borrowing options. The actual interest rate paid on borrowings under the Amended Senior Secured Credit Facility is based on a pricing grid which is dependent upon the net leverage ratio as calculated under the terms of the applicable facility for the prior fiscal quarter.  The facilitySenior Secured Credit Facility includes various customary restrictive covenants, including restrictions related to the ratio of secured debt to earnings before interest expense, taxes, depreciation and amortization (leverage(secured leverage ratio) and the ratio of earnings before interest expense, taxes, depreciation and amortization to interest expense (coverage ratio).  The calculation of secured debt in our secured leverage ratio excludes borrowings under the Receivables Financing Agreement, up to a maximum of $250.0 million. As of June 30, 2021, the only secured borrowings included in the secured leverage ratio were $665.0 million for our Senior Secured Term Loans and $153.0 million for our Go Zone and Recovery Zone bonds. Compliance with these covenants is determined quarterly based on the operating cash flows.quarterly. We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of SeptemberJune 30, 2017,2021, and no event of default had occurred that would permit the lenders under our outstanding credit agreements to accelerate the debt if not cured. In the future, our ability to generate sufficient operating cash flows, among other factors, will determine the amounts available to be borrowed under these facilities. As a result of Septemberour restrictive covenant related to the secured leverage ratio, the maximum additional borrowings available to us could be limited in the future.  The limitation, if an amendment or waiver from our lenders is not obtained, could restrict our ability to borrow the maximum amounts available under the Senior Revolving Credit Facility and the Receivables Financing Agreement.  As of June 30, 2017,2021, there were no covenants or other restrictions that would have limited our ability to borrow under these facilities.borrow.


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

For the nine months ended September 30, 2017, we recognized interest expense of $2.7 million for the write-off of unamortized deferred debt issuance costs related to these actions. For the nine months ended September 30, 2017, we paid debt issuance costs of $11.2 million relating to the Amended Senior Credit Facility and the 2027 Notes.

NOTE 15. 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 SeptemberJune 30, 20172021 and 20162020 was $7.0$8.6 million and $7.1$6.8 million, respectively, and for the ninesix months ended SeptemberJune 30, 20172021 and 20162020 was $22.4$17.3 million and $20.5$15.0 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 SeptemberJune 30, 20172021 and 20162020 were $3.0$3.7 million and $0.7 million, respectively, and for both the ninesix months ended SeptemberJune 30, 20172021 and 20162020 were $8.7 million.$6.9 million and $1.5 million, respectively. Effective January 1, 2020, we suspended the match on all salaried and non-bargaining hourly employees’ contributions, and moved to a discretionary contribution model with contributions contingent upon company-wide financial performance. During 2020, we did 0t make a discretionary matching contribution. Effective January 1, 2021, we reinstated the match on all salaried and non-bargaining hourly employees’ contributions, which provides for a maximum 3.0% matching contribution based on the level of participant contributions.


NOTE 16. 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
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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 BenefitsOther Postretirement Benefits
 Three Months Ended June 30,Three Months Ended June 30,
2021202020212020
Components of Net Periodic Benefit (Income) Cost($ in millions)
Service cost$2.8 $2.7 $0.3 $0.4 
Interest cost12.8 18.8 0.3 0.3 
Expected return on plans’ assets(35.0)(35.6)0 0 
Amortization of prior service cost(0.2)0 0.1 0 
Recognized actuarial loss13.2 11.1 0.6 0.5 
Net periodic benefit (income) cost$(6.4)$(3.0)$1.3 $1.2 
 Pension Benefits Other Postretirement
Benefits
 Three Months Ended September 30, Three Months Ended September 30,
 2017 2016 2017 2016
Components of Net Periodic Benefit (Income) Cost($ in millions)
Service cost$4.3
 $3.3
 $0.3
 $0.2
Interest cost21.8
 21.8
 0.3
 0.3
Expected return on plans’ assets(39.2) (39.5) —
 —
Amortization of prior service cost—
 (0.1) (0.6) (2.0)
Recognized actuarial loss6.8
 5.2
 0.6
 0.2
Net periodic benefit (income) cost$(6.3) $(9.3) $0.6
 $(1.3)

Pension BenefitsOther Postretirement Benefits
 Six Months Ended June 30,Six Months Ended June 30,
2021202020212020
Components of Net Periodic Benefit (Income) Cost($ in millions)
Service cost$5.8 $5.7 $0.7 $0.7 
Interest cost25.6 37.5 0.6 0.7 
Expected return on plans’ assets(71.1)(71.2)0 0 
Amortization of prior service cost(0.3)0 0.1 0 
Recognized actuarial loss26.3 22.3 1.3 1.2 
Net periodic benefit (income) cost$(13.7)$(5.7)$2.7 $2.6 
 Pension Benefits
Other Postretirement
Benefits
 Nine Months Ended September 30,
Nine Months Ended September 30,
 2017
2016
2017
2016
Components of Net Periodic Benefit (Income) Cost($ in millions)
Service cost$12.7

$9.2

$0.9

$0.9
Interest cost65.0

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 loss20.2

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$0.6 million and $1.1$1.2 million for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively. For the nine months ended September 30, 2016, we made a discretionary cash contribution to our domestic qualified defined benefit pension plans of $6.0 million.



NOTE 17. INCOME TAXES

The following table accounts 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 rate35.0 % 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 earnings8.8
 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 contingencies0.4
 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, net0.7
 2.1
 0.7
 (0.8)
Effective tax rate12.7 % 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 nine 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 ratesrate for the three and nine months ended SeptemberJune 30, 20172021 included a benefit of $0.5 million and $2.9 million, respectively,from a net decrease in the valuation allowance related to deferred tax assets in foreign jurisdictions, a benefit associated with prior year tax positions, a benefit associated with stock-based compensation and an expense from a change in tax contingencies. These factors resulted in a net $93.9 million tax benefit. After giving consideration to these items, the effective tax rate for the three months ended June 30, 2021 of 22.4% was higher than the 21% U.S. federal statutory rate primarily due to state taxes, foreign income inclusions and foreign income taxes, partially offset by a net decrease in the valuation allowance related to utilization of losses in foreign jurisdictions and favorable permanent salt depletion deductions. The effective tax rate for the three months ended June 30, 2020 of 25.0% was higher than the 21% U.S. federal statutory rate primarily due to state taxes, foreign income taxes and favorable permanent salt depletion deductions, partially offset by foreign income inclusions and a net increase in the valuation allowance related to losses in foreign jurisdictions.

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The effective tax rate for the six months ended June 30, 2021 included a benefit from a net decrease in the valuation allowance related to deferred tax assets in foreign jurisdictions, a benefit associated with prior year tax positions, a benefit associated with stock-based compensation, an expense from remeasurement of $1.9deferred taxes due to an increase in our state effective tax rates and an expense from a change in tax contingencies. These factors resulted in a net $95.2 million tax benefit. After giving consideration to these items, the effective tax rate for the six months ended June 30, 2021 of 21.6% was higher than the 21% U.S. federal statutory rate primarily due to state taxes, foreign income inclusions and $1.0 million, respectively,foreign income taxes, partially offset by a net decrease in the valuation allowance related to utilization of losses in foreign jurisdictions and favorable permanent salt depletion deductions. The effective tax rate for the six months ended June 30, 2020 included an expense associated with stock-based compensation, an expense associated with prior year tax positions and an expense from a benefit of $4.3change in tax contingencies. These factors resulted in a net $1.0 million relatedtax expense. After giving consideration to these items, the remeasurement of deferred taxes due to a decrease in our state effective tax rates. The effective tax rate for the ninesix months ended SeptemberJune 30, 2017 also included2020 of 25.2% was higher than the 21% U.S. federal statutory rate primarily due to state taxes, foreign income taxes and favorable permanent salt depletion deductions, partially offset by foreign income inclusions and a net increase in the valuation allowance related to losses in foreign jurisdictions.

During the three months ended June 30, 2021, we released the valuation allowance related to deferred tax assets of our German operations that resulted in a net tax benefit of $9.5 million related to an agreement reached with$103.8 million. As a result of significant taxable income during the Internal Revenue Service (IRS)first six months of 2021, our German operations reported cumulative income before tax (adjusted for permanent items) over the previous twelve quarters. Additionally, we project taxable income in our German operations for the years 2008remainder of 2021 and 2010we expect that net operating loss carryovers and other deductible amounts in Germany will ultimately be realizable against future income. We concluded, based upon the preponderance of positive evidence over negative evidence and the anticipated ability to 2012use the deferred tax examinations.assets, that it was more likely than not that the deferred tax assets in Germany would be realizable due to U.S. GAAP forecasted income. If there are unfavorable changes to actual operating results or to projections of future income, we may determine that it is more likely than not such deferred tax assets may not be realizable.

The effective tax rate for the nine months ended September 30, 2016 included a benefit of $5.2 million associated with a return to provision adjustment 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 of benefit primarily associated with a change in estimate related to the calculation of salt depletion and $9.7 million of expense associated with the correction of an immaterial error related to non-deductible acquisition costs. The effective tax rate for the nine months ended September 30, 2016 also included an expense of $4.1 million related to changes in uncertain tax positions for prior tax years.



As of SeptemberJune 30, 2017,2021, we had $35.0$40.8 million of gross unrecognized tax benefits, which would have a net $33.5$40.6 million impact on the effective tax rate, if recognized. As of SeptemberJune 30, 2016,2020, we had $38.0$22.0 million of gross unrecognized tax benefits, of which $36.3$21.8 million would have impacted the effective tax rate, if recognized. The amount of unrecognized tax benefits was as follows:

September 30, June 30,
2017 2016 20212020
($ in millions) ($ in millions)
Balance at beginning of year$38.4
 $35.1
Balance at beginning of year$21.3 $22.8 
Increases for prior year tax positions4.9
 5.8
Increases for prior year tax positions20.5 0 
Decreases for prior year tax positions(9.2) (1.8)Decreases for prior year tax positions(3.8)(1.8)
Increases for current year tax positions2.0
 1.3
Increases for current year tax positions2.8 1.0 
Settlement with taxing authorities(1.0) (2.1)
Reductions due to statute of limitations(0.1) (0.3)
Balance at end of period$35.0
 $38.0
Balance at end of period$40.8 $22.0 


Increases for prior year tax positions primarily are the result of ongoing discussions with tax auditors in a major foreign jurisdiction during the second quarter of 2021. In May 2017, we reached an agreement in principle withApril 2021, the IRS regarding their examinationreview of ourcertain U.S. income tax returnsclaims by the Internal Revenue Service for 2008 and 2010 to 2012. The settlementthe year 2016 was finalized which resulted in a reduction of$3.8 million income tax expense of $9.5 millionbenefit related primarily to favorable adjustments in uncertain tax positions for prior tax years.


As of SeptemberJune 30, 2017,2021, we believe it is reasonably possible that our total amount of unrecognized tax benefits will decrease by approximately $5.5$15.6 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.


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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 U.S. federal income tax returnsExaminations are 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.ongoing in various states and foreign jurisdictions. We believe we have adequately provided for all tax positions; however, amounts asserted by taxing authorities could be greater than our accrued position. For our primary tax jurisdictions, the tax years that remain subject to examination are as follows:


Tax Years
Tax Years
U.S. federal income tax20132017 - 20162020
U.S. state income tax20062012 - 20162020
Canadian federal income tax20122013 - 20162020
Brazil2015 - 2020
Germany2015 - 2020
China2014 - 20162020
GermanyThe Netherlands2015 - 2016
China2014 - 2016
The Netherlands2014 - 2016
South Korea2014 - 20162020



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NOTE 18. 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 positionbalance 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.


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. The majority of our commodity derivatives expire within one year. Those commodity contracts that extend beyond one year correspond with raw material purchases for long-term, fixed-price sales contracts.


OlinWe actively managesmanage 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 SeptemberJune 30, 2017,2021, we had outstanding forward contracts to buy foreign currency with a notional value of $106.1$270.8 million and to sell foreign currency with a notional value of $94.1$99.7 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, 2016,2020, we had outstanding forward contracts to buy foreign currency with a notional value of $73.2$169.9 million and to sell foreign currency with a notional value of $100.8$113.6 million. At SeptemberJune 30, 2016,2020, we had outstanding forward contracts to buy foreign currency with a notional value of $89.5$176.6 million and to sell foreign currency with a notional value of $110.7$111.7 million.


Cash flow hedgesFlow 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 amountamounts of outstanding commodity contracts that were entered into to hedge forecasted purchases:
 June 30, 2021December 31, 2020June 30, 2020
 ($ in millions)
Natural gas$57.3 $74.1 $59.3 
Ethane44.8 51.8 48.2 
Metals148.7 88.2 117.6 
Total notional$250.8 $214.1 $225.1 
 September 30, 2017 December 31, 2016 September 30, 2016
 ($ in millions)
Copper$42.1
 $35.8
 $37.3
Zinc8.0
 8.0
 7.1
Lead—
 3.4
 5.5
Natural gas38.4
 54.4
 51.4


As of SeptemberJune 30, 2017,2021, 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 Bank of America Corporation, 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 SeptemberJune 30, 2017,2021, we had open derivative contract positions in futures contracts

through 2022.2027. If all open futures contracts had been settled on SeptemberJune 30, 2017,2021, we would have recognized a pretax gain of $4.8$59.0 million.


If commodity prices were to remain at SeptemberJune 30, 20172021 levels, approximately $0.6$33.6 million of deferred gains, 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.

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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 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. We have designated the swaps as cash flow hedges of the risk of changes in interest payments associated with our variable-rate borrowings. Accordingly, the swap agreements have been recorded at their fair market value of $8.7 million and are included 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. For the three and nine months ended September 30, 2017, $1.2 million and $1.7 million, respectively, of income was recorded to interest expense on the accompanying condensed statement 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 inmanaging interest rates of our variable-rate borrowings. Theseexpense 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 wereexposure 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, December 31, 2016 and September 30, 2016,

In August 2019, we terminated the total notional amounts of our interest rate swaps designated as fair value hedges were $500.0which resulted in a loss of $2.3 million $500.0 million and $250.0 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 ratesthat was deferred as an offset 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 faircarrying 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, the swap agreements have been recorded at their fair market value of $23.9 million and are included in other long-term liabilities on the accompanying condensed balance sheet as of September 30, 2017, with a corresponding decrease in the carrying amount of the related debt.debt and was subsequently recognized to interest expense. In 2021, we redeemed the 2025 Notes, which resulted in recognition of the outstanding deferred swap loss. For the three months ended SeptemberJune 30, 20172021 and 2016, $0.5June 30, 2020, $0.6 million and $0.7$0.1 million, respectively, and for the ninesix months ended SeptemberJune 30, 20172021 and 2016, $2.4June 30, 2020, $1.8 million and $1.2$0.2 million, respectively, of incomeexpense was recorded to interest expense on the accompanying condensed statementstatements 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 impactsStatement 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.


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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:


 June 30, 2021December 31, 2020June 30, 2020
 ($ in millions)
Asset derivatives:
Other current assets
     Derivatives designated as hedging instruments:
          Commodity contracts - gains$45.5 $25.0 $5.1 
Commodity contracts - losses(1.3)(3.1)(2.8)
     Derivatives not designated as hedging instruments:
          Foreign exchange contracts - gains0 2.5 5.3 
          Foreign exchange contracts - losses0 (0.2)(2.9)
Total other current assets44.2 24.2 4.7 
Other assets
     Derivatives designated as hedging instruments:
          Commodity contracts - gains14.9 7.4 3.0 
          Commodity contracts - losses0 (0.2)(0.7)
Total other assets14.9 7.2 2.3 
Total asset derivatives(1)
$59.1 $31.4 $7.0 
Liability derivatives:
Accrued liabilities
     Derivatives designated as hedging instruments:
          Commodity contracts - losses$0.7 $1.4 $8.8 
          Commodity contracts - gains(0.7)(1.3)(2.4)
     Derivatives not designated as hedging instruments:
          Foreign exchange contracts - losses6.5 0 1.3 
          Foreign exchange contracts - gains(0.4)0 (0.1)
Total accrued liabilities6.1 0.1 7.6 
Other liabilities
     Derivatives designated as hedging instruments:
          Commodity contracts - losses0 0.8 0.2 
          Commodity contracts - gains0 (0.2)(0.1)
Total other liabilities0 0.6 0.1 
Total liability derivatives(1)
$6.1 $0.7 $7.7 

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

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  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
Table of Contents

(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 Gain (Loss)
  Three Months Ended June 30,Six Months Ended June 30,
 Location of Gain (Loss)2021202020212020
Derivatives – Cash Flow Hedges($ in millions)
Recognized in other comprehensive loss:
Commodity contracts———$41.8 $29.9 $163.8 $(5.2)
Reclassified from accumulated other comprehensive loss into income:
Commodity contractsCost of goods sold$20.4 $(9.3)$133.2 $(20.9)
Derivatives – Fair Value Hedges  
Interest rate contractsInterest expense$(0.6)$(0.1)$(1.8)$(0.2)
Derivatives Not Designated as Hedging Instruments  
Foreign exchange contractsSelling and administration$(6.2)$0.6 $(8.2)$7.1 
   Amount of Gain (Loss) Amount of Gain (Loss)
   Three Months Ended September 30, Nine Months Ended September 30,
 Location of Gain (Loss) 2017 2016 2017 2016
Derivatives – Cash Flow Hedges ($ 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 contractsInterest expense $1.2
 $—
 $1.7
 $—
Commodity contractsCost of goods sold —
 —
 1.9
 (5.4)
   $1.2
 $—
 $3.6
 $(5.4)
Derivatives – Fair Value Hedges        
Interest rate contractsInterest expense $0.5
 $0.7
 $2.5
 $2.6
Derivatives Not Designated as Hedging Instruments        
Commodity contractsCost of goods sold $—
 $—
 $—
 $(0.4)
Foreign exchange contractsSelling 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 riskRisk and collateralCollateral


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 nonperformancenon-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 SeptemberJune 30, 2017,2021, December 31, 20162020 and SeptemberJune 30, 2016,2020, 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 19. 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.

27
Table of Contents

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 June 30, 2021Level 1Level 2Level 3Total
Assets($ in millions)
Commodity contracts$0 $59.1 $0 $59.1 
Total Assets$0 $59.1 $0 $59.1 
Liabilities 
Foreign exchange contracts$0 $6.1 $0 $6.1 
Total Liabilities$0 $6.1 $0 $6.1 
Balance at December 31, 2020    
Assets 
Commodity contracts$0 $29.1 $0 $29.1 
Foreign exchange contracts0 2.3 0 2.3 
Total Assets$0 $31.4 $0 $31.4 
Liabilities    
Commodity contracts$0 $0.7 $0 $0.7 
Total Liabilities$0 $0.7 $0 $0.7 
Balance at June 30, 2020    
Assets 
Commodity contracts$0 $4.6 $0 $4.6 
Foreign exchange contracts0 2.4 0 2.4 
Total Assets$0 $7.0 $0 $7.0 
Liabilities    
Commodity contracts$0 $6.5 $0 $6.5 
Foreign exchange contracts0 1.2 0 1.2 
Total Liabilities$0 $7.7 $0 $7.7 

28
 Fair Value Measurements
Balance at September 30, 2017Level 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 outTable of Level 1, Level 2 or Level 3.Contents

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, ethane, 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. TheSince our long-term debt instruments may not be actively traded, the inputs used to measure the fair value of our long-term debt was determinedare based on current market rates for debt of similar risk and maturities. The following table summarizesmaturities and is classified as Level 2 in the fair value measurement hierarchy. As of June 30, 2021, December 31, 2020 and June 30, 2020, the fair value measurements of debt were $3,669.2 million, $4,177.2 million and the actual debt recorded on our condensed balance sheets:$4,056.7 million, respectively.
 Fair Value Measurements Amount recorded
on balance sheets
 Level 1 Level 2 Level 3 Total 
 ($ 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 or liabilities measured at fair value on a nonrecurring basis as of SeptemberJune 30, 2017,2021, December 31, 20162020 and SeptemberJune 30, 2016.2020.


SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

In October 2015, Blue Cube Spinco Inc. (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 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, December 31, 2016 and September 30, 2016, the related condensed consolidating statements of operations and comprehensive income (loss) for each of the three and nine months ended September 30, 2017 and 2016, and the related statements of cash flows for the nine months ended September 30, 2017 and 2016, 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
(In millions)
(Unaudited)
          
 Parent Guarantor Issuer Subsidiary
Non-Guarantor		 Eliminations Total
Assets         
Current assets:         
Cash and cash equivalents$36.9
 $—
 $219.0
 $—
 $255.9
Receivables, net106.0
 —
 623.5
 —
 729.5
Intercompany receivables—
 —
 1,948.4
 (1,948.4) —
Income taxes receivable13.4
 —
 4.6
 (2.1) 15.9
Inventories172.2
 —
 517.3
 —
 689.5
Other current assets180.5
 —
 5.0
 (158.4) 27.1
Total current assets509.0
 —
 3,317.8
 (2,108.9) 1,717.9
Property, plant and equipment, net513.0
 —
 3,066.2
 —
 3,579.2
Investment in subsidiaries6,155.3
 3,828.7
 —
 (9,984.0) —
Deferred income taxes140.9
 —
 127.0
 (126.8) 141.1
Other assets45.5
 —
 1,170.1
 —
 1,215.6
Long-term receivables—affiliates—
 2,174.0
 —
 (2,174.0) —
Intangible assets, net0.3
 5.7
 586.9
 —
 592.9
Goodwill—
 966.3
 1,153.5
 —
 2,119.8
Total assets$7,364.0
 $6,974.7
 $9,421.5
 $(14,393.7) $9,366.5
Liabilities and Shareholders' Equity         
Current liabilities:         
Current installments of long-term debt$0.7
 $68.8
 $12.2
 $—
 $81.7
Accounts payable69.6
 —
 548.3
 (4.4) 613.5
Intercompany payables1,948.4
 —
 —
 (1,948.4) —
Income taxes payable—
 —
 11.7
 (2.1) 9.6
Accrued liabilities146.0
 —
 305.0
 (156.5) 294.5
Total current liabilities2,164.7
 68.8
 877.2
 (2,111.4) 999.3
Long-term debt944.1
 2,470.1
 249.3
 —
 3,663.5
Accrued pension liability405.7
 —
 213.0
 —
 618.7
Deferred income taxes—
 250.5
 931.8
 (126.8) 1,055.5
Long-term payables—affiliates1,267.2
 —
 906.8
 (2,174.0) —
Other liabilities283.8
 5.6
 441.6
 —
 731.0
Total liabilities5,065.5
 2,795.0
 3,619.7
 (4,412.2) 7,068.0
Commitments and contingencies         
Shareholders' equity:         
Common stock166.4
 —
 14.6
 (14.6) 166.4
Additional paid-in capital2,267.7
 4,125.7
 4,808.2
 (8,933.9) 2,267.7
Accumulated other comprehensive loss(470.0) —
 (5.7) 5.7
 (470.0)
Retained earnings334.4
 54.0
 984.7
 (1,038.7) 334.4
Total shareholders' equity2,298.5
 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

CONDENSED CONSOLIDATING BALANCE SHEETS
December 31, 2016
(In millions)
(Unaudited)
          
 Parent Guarantor Issuer Subsidiary
Non-Guarantor		 Eliminations Total
Assets         
Current assets:         
Cash and cash equivalents$25.2
 $—
 $159.3
 $—
 $184.5
Receivables, net88.3
 —
 586.7
 —
 675.0
Intercompany receivables—
 —
 1,912.3
 (1,912.3) —
Income taxes receivable19.0
 —
 7.3
 (0.8) 25.5
Inventories167.7
 —
 462.7
 —
 630.4
Other current assets164.7
 3.4
 1.2
 (138.5) 30.8
Total current assets464.9
 3.4
 3,129.5
 (2,051.6) 1,546.2
Property, plant and equipment, net510.1
 —
 3,194.8
 —
 3,704.9
Investment in subsidiaries6,035.2
 3,734.7
 —
 (9,769.9) —
Deferred income taxes133.5
 —
 103.5
 (117.5) 119.5
Other assets48.1
 —
 596.3
 —
 644.4
Long-term receivables—affiliates—
 2,194.2
 —
 (2,194.2) —
Intangible assets, net0.4
 5.7
 623.5
 —
 629.6
Goodwill—
 966.3
 1,151.7
 —
 2,118.0
Total assets$7,192.2
 $6,904.3
 $8,799.3
 $(14,133.2) $8,762.6
Liabilities and Shareholders' Equity         
Current liabilities:         
Current installments of long-term debt$0.6
 $67.5
 $12.4
 $—
 $80.5
Accounts payable45.3
 —
 527.4
 (1.9) 570.8
Intercompany payables1,882.8
 29.5
 —
 (1,912.3) —
Income taxes payable—
 —
 8.3
 (0.8) 7.5
Accrued liabilities124.9
 —
 277.5
 (138.6) 263.8
Total current liabilities2,053.6
 97.0
 825.6
 (2,053.6) 922.6
Long-term debt913.9
 2,413.3
 209.9
 —
 3,537.1
Accrued pension liability453.7
 —
 184.4
 —
 638.1
Deferred income taxes—
 223.6
 926.4
 (117.5) 1,032.5
Long-term payables—affiliates1,209.1
 —
 985.1
 (2,194.2) —
Other liabilities288.9
 6.6
 63.8
 —
 359.3
Total liabilities4,919.2
 2,740.5
 3,195.2
 (4,365.3) 6,489.6
Commitments and contingencies         
Shareholders' equity:         
Common stock165.4
 —
 14.6
 (14.6) 165.4
Additional paid-in capital2,243.8
 4,125.7
 4,808.2
 (8,933.9) 2,243.8
Accumulated other comprehensive loss(510.0) —
 (7.0) 7.0
 (510.0)
Retained earnings373.8
 38.1
 788.3
 (826.4) 373.8
Total shareholders' equity2,273.0
 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


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, net64.4
 —
 679.7
 —
 744.1
Intercompany receivables—
 8.3
 1,732.5
 (1,740.8) —
Income taxes receivable38.5
 —
 11.1
 (0.6) 49.0
Inventories163.8
 —
 453.2
 —
 617.0
Other current assets145.5
 —
 4.2
 (133.6) 16.1
Total current assets427.7
 8.3
 2,992.2
 (1,875.0) 1,553.2
Property, plant and equipment, net451.4
 —
 3,262.5
 —
 3,713.9
Investment in subsidiaries6,000.5
 3,690.5
 —
 (9,691.0) —
Deferred income taxes153.7
 —
 90.2
 (131.7) 112.2
Other assets40.4
 —
 599.9
 —
 640.3
Long-term receivables—affiliates—
 2,211.1
 —
 (2,211.1) —
Intangible assets, net0.4
 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 payable55.4
 —
 456.4
 (2.1) 509.7
Intercompany payables1,740.8
 —
 —
 (1,740.8) —
Income taxes payable—
 —
 13.9
 (0.6) 13.3
Accrued liabilities158.1
 —
 266.8
 (133.4) 291.5
Total current liabilities1,954.9
 67.5
 749.3
 (1,876.9) 894.8
Long-term debt1,154.9
 2,430.3
 12.3
 —
 3,597.5
Accrued pension liability141.3
 —
 456.4
 —
 597.7
Deferred income taxes—
 241.5
 926.8
 (131.7) 1,036.6
Long-term payables—affiliates1,226.0
 —
 985.1
 (2,211.1) —
Other liabilities266.3
 —
 69.2
 —
 335.5
Total liabilities4,743.4
 2,739.3
 3,199.1
 (4,219.7) 6,462.1
Commitments and contingencies         
Shareholders' equity:         
Common stock165.3
 —
 15.1
 (15.1) 165.3
Additional paid-in capital2,242.8
 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 earnings389.3
 16.9
 801.6
 (818.5) 389.3
Total shareholders' equity2,330.7
 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
Nine Months Ended September 30, 2017
(In millions)
(Unaudited)
          
 Parent Guarantor Issuer Subsidiary
Non-Guarantor		 Eliminations Total
Sales$1,000.9
 $—
 $3,976.9
 $(329.3) $4,648.5
Operating expenses:         
Cost of goods sold883.3
 —
 3,589.4
 (329.3) 4,143.4
Selling and administration99.7
 —
 154.9
 —
 254.6
Restructuring charges—
 —
 25.9
 —
 25.9
Acquisition-related costs12.5
 —
 —
 —
 12.5
Other operating (expense) income(7.1) —
 7.0
 —
 (0.1)
Operating (loss) income(1.7) —
 213.7
 —
 212.0
Earnings of non-consolidated affiliates1.5
 —
 —
 —
 1.5
Equity income (loss) in subsidiaries72.9
 94.0
 —
 (166.9) —
Interest expense33.3
 123.8
 5.5
 (4.6) 158.0
Interest income4.7
 —
 0.9
 (4.6) 1.0
Income (loss) before taxes44.1
 (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


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 sold313.8
 —
 1,146.7
 (114.9) 1,345.6
Selling and administration31.1
 —
 55.3
 —
 86.4
Restructuring charges—
 —
 9.2
 —
 9.2
Acquisition-related costs1.1
 —
 —
 —
 1.1
Other operating (expense) income(2.6) —
 2.6
 —
 —
Operating (loss) income(0.6) —
 113.2
 —
 112.6
Earnings of non-consolidated affiliates0.5
 —
 —
 —
 0.5
Equity income (loss) in subsidiaries54.5
 54.7
 —
 (109.2) —
Interest expense11.9
 41.0
 1.5
 (1.3) 53.1
Interest income1.7
 —
 —
 (1.3) 0.4
Income (loss) before taxes44.2
 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) $4,164.9
Operating expenses:         
Cost of goods sold861.3
 —
 3,225.4
 (390.0) 3,696.7
Selling and administration106.2
 —
 143.2
 —
 249.4
Restructuring charges0.8
 —
 105.4
 —
 106.2
Acquisition-related costs39.6
 —
 —
 —
 39.6
Other operating (expense) income(1.7) —
 12.2
 —
 10.5
Operating income—
 —
 83.5
 —
 83.5
Earnings of non-consolidated affiliates1.1
 —
 —
 —
 1.1
Equity (loss) income in subsidiaries(6.2) 94.8
 —
 (88.6) —
Interest expense30.6
 114.0
 3.2
 (4.2) 143.6
Interest income2.3
 —
 3.2
 (4.2) 1.3
Income (loss) before taxes(33.4) (19.2) 83.5
 (88.6) (57.7)
Income tax (benefit) provision(12.0) (40.7) 16.4
 —
 (36.3)
Net (loss) income$(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 sold300.6
 —
 1,139.5
 (155.7) 1,284.4
Selling and administration33.4
 —
 48.6
 —
 82.0
Restructuring charges0.2
 —
 5.0
 —
 5.2
Acquisition-related costs14.3
 —
 (1.2) —
 13.1
Other operating (expense) income(0.6) —
 0.4
 —
 (0.2)
Operating income10.0
 —
 57.8
 —
 67.8
Earnings of non-consolidated affiliates0.5
 —
 —
 —
 0.5
Equity income (loss) in subsidiaries15.0
 35.5
 —
 (50.5) —
Interest expense9.6
 38.0
 1.3
 (1.4) 47.5
Interest income0.8
 —
 1.1
 (1.4) 0.5
Income (loss) before taxes16.7
 (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 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, net11.6
 —
 1.1
 —
 12.7
Total other comprehensive income, net of tax7.2
 —
 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, net1.3
 —
 —
 —
 1.3
Amortization of prior service costs and actuarial losses, net3.6
 —
 0.7
 —
 4.3
Total other comprehensive income, net of tax4.9
 —
 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) $(21.4)
Other comprehensive income, net of tax:         
Foreign currency translation adjustments, net—
 —
 9.3
 —
 9.3
Unrealized gains on derivative contracts, net3.8
 —
 —
 —
 3.8
Pension and postretirement liability adjustments, net
3.1
 —
 —
 —
 3.1
Amortization of prior service costs and actuarial losses, net8.6
 —
 1.0
 —
 9.6
Total other comprehensive income, net of tax15.5
 —
 10.3
 —
 25.8
Comprehensive (loss) income$(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, net2.6
 —
 —
 —
 2.6
Pension and postretirement liability adjustments, net
3.1
 —
 —
 —
 3.1
Amortization of prior service costs and actuarial losses, net1.9
 —
 0.4
 —
 2.3
Total other comprehensive income, net of tax7.6
 —
 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:         
Borrowings620.0
 1,375.0
 40.0
 —
 2,035.0
Repayments(590.5) (1,316.9) —
 —
 (1,907.4)
Stock options exercised18.5
 —
 —
 —
 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 equivalents11.7
 —
 59.7
 —
 71.4
Cash and cash equivalents, beginning of period25.2
 —
 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 equipment0.1
 —
 0.3
 —
 0.4
Proceeds from disposition of affiliated companies6.6
 —
 —
 —
 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 exercised0.4
 —
 —
 —
 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 period119.4
 —
 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.United States (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.it.


Our Chlor Alkali Products and Vinyls segment is partially a commodity business where all supplier products are similar and price is the major supplier selection criterion. We have little or no abilityPricing for these products is subject to influence prices in the large, global commodity markets.a variety of factors, some of which are outside of our control. 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 changesChanges 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 some products manufactured by the Chlor Alkali Products and Vinyls segment. The Epoxy segment’s upstream and midstream products are partially commodity markets. Pricing for these products is subject to a variety of factors, some of which are outside of our control. 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.


29
Table of Contents
Executive Summary


2017Winter Storm Uri

Olin’s Freeport, TX facility was affected by Winter Storm Uri and was forced to halt production due to the lack of electrical power, natural gas, and other raw materials. All of Olin’s Freeport operations were impacted. In addition, production at Olin’s Plaquemine, LA; St. Gabriel, LA; Oxford, MS; and McIntosh, AL facilities were also negatively impacted. As a result, by February 18, 2021, Olin declared Force Majeure on all chemical product shipments from North America. As of March 31, 2021, our facilities had returned to operation.

The first quarter 2021 included a net pretax favorable impact of $99.9 million associated with Winter Storm Uri due to Olin’s customary financial hedges and contracts maintained to provide protection from rapid and dramatic changes in energy costs, partially offset by unabsorbed fixed manufacturing costs and storm-related maintenance costs. For the six months ended June 30, 2021, Chlor Alkali Products and Vinyls segment results included a favorable impact of $121.4 million and Epoxy segment results included an unfavorable impact of $21.5 million associated with Winter Storm Uri.

2021 Overview


Net income for the three and six months ended June 30, 2021 was $355.8 million and $599.4 million, respectively, compared to net loss of $120.1 million and $200.1 million, respectively, for the comparable prior year periods in 2020. The increase in results from the prior year was due to improved operating results across all our business segments.

Chlor Alkali Products and Vinyls generatedreported segment income of $129.7$168.9 million and $270.0$440.0 million for the three and ninesix months ended SeptemberJune 30, 2017,2021, respectively. Without the impact of Winter Storm Uri, Chlor Alkali Products and Vinyls segment income wasresults were higher than in the comparable prior year periods primarily due to higher product prices of $112.3 millionpricing across all products. During the second quarter, Chlor Alkali Products and $296.6 million, respectively, primarily due to caustic soda. Partially offsetting these increasesVinyls segment results 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 and raw material availability. The nine months ended September 30, 2017 was alsonegatively impacted by higher costs from turnaroundsraw material and outages, electricity costs, primarily driven by natural gas prices, and ethyleneoperating costs compared to the prior year period. Chlor Alkali Products and Vinyls segment incomeresults included depreciation and amortization expense of $106.8$114.5 million and $106.3$108.5 million for the three months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, and $318.0$230.3 million and $311.6$227.0 million for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, 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, North America caustic soda price contract indices increased an additional $95 per ton. During August 2017, an additional caustic soda price increase of $100 per ton was announced. The 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, if realized, would impact fourth quarter of 2017 and first quarter of 2018 results.


Epoxy reported a segment lossincome of $1.7$165.3 million and $11.0$230.5 million for the three and ninesix months ended SeptemberJune 30, 2017,2021, respectively. Without Winter Storm Uri, Epoxy segment results are lowerwere higher than in the comparable prior year periods primarily due to increased raw material costs, primarily associated with benzene and propylene,higher product prices, partially offset by increased product prices.higher raw materials costs, primarily benzene and propylene. Epoxy segment results were also negatively impacted by incremental costs to continue operations, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with Hurricane Harvey. Epoxy segment income included depreciation and amortization expense of $24.4$20.3 million and $22.6$21.6 million for the three months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, and $69.6$42.4 million and $67.3$43.1 million for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively.



Winchester reported segment income of $17.2$109.9 million and $61.3$195.0 million for the three and ninesix months ended SeptemberJune 30, 2017,2021, respectively. On October 1, 2020, Winchester assumed full management and operational control of the Lake City U.S. Army Ammunition Plant (Lake City) in Independence, MO. Winchester segment income declined fromresults were higher than in the comparable prior year periods primarily due to a lower level ofhigher volumes, which includes ammunition produced at Lake City, and higher commercial demand for shotshell, pistol and rifle ammunition a less favorable product mix and increased commodity and other material costs, partially offset by increased shipments to military customers and law enforcement agencies.pricing. Winchester segment incomeresults included depreciation and amortization expense of $4.8$5.5 million and $4.7 million for the three months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, and $14.2$11.1 million and $13.8$9.7 million for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively.


Financing

On March 9, 2017, we entered into a new five-year $1,975.0 million senior credit facility consisting 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 ofDuring 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 mature in March 2022.

On March 9, 2017, we issued $500.0 million aggregate principal amount of 5.125% senior notes due September 15, 2027. The proceeds of the 2027 Notes were used to redeem the remaining balance of the Sumitomo Credit Facility.

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.

For the ninesix months ended SeptemberJune 30, 2017,2021, we maderepaid $490.2 million of long-term debt. In connection with these financing transactions, we recognized a loss on extinguishment of debt repayments of $1,907.4$15.4 million including $1,282.5and $38.9 million related tofor the existing term loan facility, $590.0three and six months ended June 30, 2021, respectively, which includes the payment of early redemption premiums of $12.3 million related toand $31.0 million for the Sumitomo Credit Facilitythree and $34.4 million under the required quarterly installmentssix months ended June 30, 2021, respectively.

30
Table of the $1,375.0 million term loan facility.Contents
Consolidated Results of Operations
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
($ in millions, except per share data)
Sales$2,221.3 $1,241.2 $4,140.1 $2,666.3 
Cost of goods sold1,712.2 1,235.7 3,136.0 2,609.9 
Gross margin509.1 5.5 1,004.1 56.4 
Selling and administration100.6 99.7 207.5 196.4 
Restructuring charges14.0 1.7 20.9 3.4 
Other operating income0.5 0.1 0.5 0.1 
Operating income (loss)395.0 (95.8)776.2 (143.3)
Interest expense65.9 69.4 150.4 132.5 
Interest income— 0.2 0.1 0.3 
Non-operating pension income8.2 4.9 17.5 9.5 
Income (loss) before taxes337.3 (160.1)643.4 (266.0)
Income tax (benefit) provision(18.5)(40.0)44.0 (65.9)
Net income (loss)$355.8 $(120.1)$599.4 $(200.1)
Net income (loss) per common share:
Basic$2.23 $(0.76)$3.77 $(1.27)
Diluted$2.17 $(0.76)$3.69 $(1.27)
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
 ($ in millions, except per share data)
Sales$1,554.9
 $1,452.7
 $4,648.5
 $4,164.9
Cost of goods sold1,345.6
 1,284.4
 4,143.4
 3,696.7
Gross margin209.3
 168.3
 505.1
 468.2
Selling and administration86.4
 82.0
 254.6
 249.4
Restructuring charges9.2
 5.2
 25.9
 106.2
Acquisition-related costs1.1
 13.1
 12.5
 39.6
Other operating (expense) income—
 (0.2) (0.1) 10.5
Operating income112.6
 67.8
 212.0
 83.5
Earnings of non-consolidated affiliates0.5
 0.5
 1.5
 1.1
Interest expense53.1
 47.5
 158.0
 143.6
Interest income0.4
 0.5
 1.0
 1.3
Income (loss) before taxes60.4
 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:       
Basic$0.32
 $0.11
 $0.36
 $(0.13)
Diluted$0.31
 $0.11
 $0.36
 $(0.13)



Three Months Ended SeptemberJune 30, 20172021 Compared to Three Months Ended SeptemberJune 30, 20162020


Sales for the three months ended SeptemberJune 30, 20172021 were $1,554.9$2,221.3 million compared to $1,452.7$1,241.2 million in the same period last year, an increase of $102.2$980.1 million, or 7%79%. Chlor Alkali Products and Vinyls sales increased by $101.8$316.1 million, primarily due to higher caustic soda product prices.pricing across all products and increased volumes. Epoxy sales increased by $19.8$452.6 million, primarily due to higher product prices. Both Chlor Alkali Productsprices and Vinyls and Epoxy sales volumes were negatively impacted by Hurricane Harvey.increased volumes. Winchester sales decreasedincreased by $19.4$211.4 million, primarily due to decreased shipments tohigher commercial customers, partially offset byand military sales volumes, which included ammunition produced at Lake City, and increased shipments to military customers and law enforcement agencies.commercial ammunition pricing.


Gross margin increased $41.0$503.6 million compared tofor the three months ended SeptemberJune 30, 2016.2021 compared to the prior year. Chlor Alkali Products and Vinyls gross margin increased by $76.2$224.4 million, primarily due to higher caustic soda prices.pricing and volumes, partially offset by higher raw material and operating costs. Epoxy gross margin decreased $12.3increased by $180.7 million, primarily due to increased raw material costs, primarily associated with benzenehigher product prices and propylene,volumes, 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.primarily raw materials. Winchester gross margin decreased $19.9increased by $100.9 million, primarily due to a lower level of commercial demand for shotshell, pistol and riflehigher sales volumes, which included ammunition and a less favorable product mixproduced at Lake City, and increased commodity and other material costs, partially offset by increased shipments to military customers and law enforcement agencies.commercial ammunition pricing. Gross margin as a percentage of sales increased to 13%23% in 20172021 from 12%0% in 2016.2020.


Selling and administration expenses for the three months ended SeptemberJune 30, 20172021 were $86.4$100.6 million, an increase of $4.4$0.9 million from the same period lastprior year. The increase was primarily due to higher consulting and contract services of $4.1 million and higher stock-basedvariable incentive compensation expense of $2.7$15.0 million, which includes mark-to-market adjustments on stock-based compensation expense, and selling and administration expenses associated with Lake City operations of $7.2 million. These increases were partially offset by lower legal and legal-related settlement expensesthe absence of $4.6 million. Selling and administration expenses for the three 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(Information Technology Project) of $2.9 million.$20.4 million, which was completed in late 2020. Selling and administration expenses as a percentage of sales were 6%decreased to 5% in 2017 and 2016.2021 from 8% in 2020.


Restructuring charges for the three months ended SeptemberJune 30, 20172021 and 2016 of $9.22020 were $14.0 million and $5.2$1.7 million, respectively, wererespectively. The increase in charges was primarily associateddue to a productivity initiative to align the organization with the closure of 433,000 tons of chlor alkali capacity across three separate locationsour new operating model 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,improve efficiencies which was completed in 2016.during the second quarter of 2021.


Acquisition-related costs of $1.1 million and $13.1Interest expense decreased by $3.5 million for the three months ended SeptemberJune 30, 20172021. Interest expense for the three months ended June 30, 2021 included $12.3 million of bond redemption premiums and 2016, respectively, were related$3.1 million for write-off of deferred debt issuance costs and recognition of deferred fair value interest rate swap losses. Interest expense for the three months ended
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June 30, 2020 included $1.6 million for the write-off of unamortized deferred debt issuance costs. Without these items, interest expense decreased by $17.3 million, primarily due to the integrationlower interest rates and a lower level of the Acquired Business, and consisteddebt outstanding.

Non-operating pension income includes all components of advisory, legal, accountingpension and other professional fees.

Interest expensepostretirement income (costs) other than service costs. Non-operating pension income increased by $5.6$3.3 million for the three months ended SeptemberJune 30, 2017,2021 compared to the prior year primarily due to highera decrease in the discount rate used to determine interest rates and a higher level of debt outstanding.costs.


The effective tax rate for the three months ended SeptemberJune 30, 20172021 included a benefit of $4.3 millionfrom a net decrease in the valuation allowance related to the remeasurement of deferred taxes due to a decreasetax assets in our state effective tax rates,foreign jurisdictions, a benefit of $1.9 million associated with prior year tax positions, and a benefit of $0.5 million associated with stock-based compensation.compensation and an expense from a change in tax contingencies. These factors resulted in a net $93.9 million tax benefit. After giving consideration to these items, the effective tax rate for the three months ended SeptemberJune 30, 20172021 of 23.8%22.4% was lowerhigher than the 35.0%21% U.S. federal statutory rate primarily due to state taxes, foreign income inclusions and foreign income taxes, partially offset by a net decrease in the valuation allowance related to utilization of losses in foreign jurisdictions and favorable permanent salt depletion deductions. The effective tax rate for the three months ended SeptemberJune 30, 20162020 of 17.8%25.0% was lowerhigher than the 35%21% U.S. federal statutory rate primarily due to state taxes, foreign income taxes and favorable permanent salt depletion deductions.deductions, partially offset by foreign income inclusions and a net increase in the valuation allowance related to losses in foreign jurisdictions.




NineSix Months Ended SeptemberJune 30, 20172021 Compared to NineSix Months Ended SeptemberJune 30, 20162020


Sales for the ninesix months ended SeptemberJune 30, 20172021 were $4,648.5$4,140.1 million compared to $4,164.9$2,666.3 million in the same period last year, an increase of $483.6$1,473.8 million, or 12%55%. Chlor Alkali Products and Vinyls sales increased by $366.5$423.2 million, primarily due to higher caustic soda and EDC product pricespricing across all products and increased volumes. Epoxy sales increased by $169.2$638.0 million, primarily due to higher product prices and increased volumes. Both Chlor Alkali Products and Vinyls and EpoxyOur chemicals businesses segment sales volumes in the first quarter 2021 were negatively impacted by Hurricane Harvey.Winter Storm Uri. Winchester sales decreasedincreased by $52.1$412.6 million, primarily due to decreased shipments tohigher commercial customers, partially offset byand military sales volumes, which included ammunition produced at Lake City, and increased shipments to military customers and law enforcement agencies.commercial ammunition pricing.


Gross margin increased $36.9$947.7 million for the six months ended June 30, 2021 compared to the nine months ended September 30, 2016.prior year. Chlor Alkali Products and Vinyls gross margin increased by $112.0$529.5 million, primarily due to higher caustic sodapricing 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.effect of Winter Storm Uri. Epoxy gross margin decreased $36.2increased by $235.3 million, primarily due to increased raw material costs, primarily associated with benzene and propylene,higher product prices, 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 manufacturingraw material costs and reduced profit from lost sales associated with Hurricane Harvey.the effect of Winter Storm Uri. Winchester gross margin decreased $38.0increased by $181.9 million, primarily due to lowerhigher sales volumes, and a less favorable product mix, primarily due to a lower level of commercial demand for shotshell, pistol and riflewhich included ammunition produced at Lake City, and increased commodity and other material costs, partially offset by increased shipments to military customers and law enforcement agencies.commercial ammunition pricing. Gross margin as a percentage of sales was 11%increased to 24% in 2017 and 2016.2021 from 2% in 2020.


Selling and administration expenses for the ninesix months ended SeptemberJune 30, 20172021 were $254.6$207.5 million, an increase of $5.2$11.1 million from the same period lastprior year. The increase was primarily due to higher stock-basedvariable incentive compensation expense of $7.3$33.5 million, which includes mark-to-market adjustments on stock-based compensation expense, and higher consultingselling and contract servicesadministration expenses associated with Lake City operations of $5.1 million,$13.8 million. These increases were partially offset by lower legal and legal-related settlement expensesthe absence of $10.6 million. Selling and administration expenses for the nine months ended September 30, 2017 also included costs associated with the implementationInformation Technology Project of new enterprise resource planning, manufacturing, and engineering systems, and related infrastructure costs of $2.9 million.$35.1 million, which was completed in late 2020. Selling and administration expenses as a percentage of sales weredecreased to 5% in 2017 and 6%2021 from 7% in 2016.2020.


Restructuring charges for the ninesix months ended SeptemberJune 30, 20172021 and 2016 of $25.92020 were $20.9 million and $106.2$3.4 million, respectively, wererespectively. The increase in charges was primarily associateddue to a productivity initiative to align the organization with our new operating model and improve efficiencies, which was completed during the closuresecond quarter of 433,000 tons2021, and the March 2021 decision to permanently close approximately 50% of our diaphragm-grade chlor alkali capacity, across three separate locations and permanently closing a portion of the Becancour, Canada chlor alkalirepresenting 200,000 tons, at our McIntosh, AL 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 related to the integration of the Acquired Business, 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 million insurance recovery for property damage and business interruption related to a 2008 chlor alkali facility incident.


Interest expense increased by $14.4$17.9 million for the ninesix months ended SeptemberJune 30, 2017, primarily due to higher2021. Interest expense for the six months ended June 30, 2021 included $31.0 million of bond redemption premiums and $7.9 million for write-off of deferred debt issuance costs and recognition of deferred fair value interest rates andrate swap losses. Interest expense for the six months ended June 30, 2020 included $1.6 million for the write-off of unamortized deferred debt issuance costs and $4.0 million of $2.7accretion expense related to the 2020 ethylene payment discount. Interest expense for the six months ended June 30, 2021 and 2020 was reduced by capitalized interest of $1.9 million associated withand $4.2 million, respectively. Without these items, interest expense decreased by $17.7 million, primarily due to lower interest rates and a lower level of debt outstanding.

Non-operating pension income includes all components of pension and other postretirement income (costs) other than service costs. Non-operating pension income increased by $8.0 million for the redemptionsix months ended June 30, 2021 compared to the prior year primarily due to a decrease in the discount rate used to determine interest costs.

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Table of the Sumitomo Credit Facility and the Senior Credit Facility.Contents


The effective tax rate for the ninesix months ended SeptemberJune 30, 20172021 included a benefit of $9.5 millionfrom a net decrease in the valuation allowance related to an agreement reached with the Internal Revenue Service (IRS) for the years 2008 and 2010 to 2012deferred tax examinations,assets in foreign jurisdictions, a benefit of $4.3 million related to theassociated with prior year tax positions, a benefit associated with stock-based compensation, an expense from remeasurement of deferred taxes due to a decreasean increase in our state effective tax rates and an expense from a benefit of $2.9change in tax contingencies. These factors resulted in a net $95.2 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 ninesix months ended SeptemberJune 30, 20172021 of 24.8%21.6% was lowerhigher than the 35.0%21% U.S. federal statutory rate primarily due to state taxes, foreign income inclusions and foreign income taxes, partially offset by a net decrease in the valuation allowance related to utilization of losses in foreign jurisdictions and favorable permanent salt depletion deduction.deductions. The effective tax rate for the ninesix months ended SeptemberJune 30, 20162020 included a benefit of $5.2 millionan expense associated with return to provision adjustments for the finalization of ourstock-based compensation, an expense associated with prior years’ U.S. federalyear tax positions and state income tax returns. The return to provision adjustment for the nine months ended September 30, 2016 included $14.9 million of benefit primarily associated withan expense from a change in estimate related to the calculation of salt depletion and $9.7tax contingencies. These factors resulted in a net $1.0 million of expense associated with the correction of an immaterial error related to non-deductible acquisition costs. The effective tax rate for the nine months ended September 30, 2016 also included an expense of $4.1 million related to changes in uncertain tax positions for prior tax years.expense. After giving consideration to these items, the effective tax rate for the ninesix months ended SeptemberJune 30, 20162020 of 61.0%25.2% was higher than the 35%21% U.S. federal statutory rate primarily due to state taxes, foreign income taxes and favorable permanent salt depletion deductions, partially offset by foreign income inclusions and a net increase in combination with a pretax loss.the valuation allowance related to losses in foreign jurisdictions.


Segment Results


We define segment results as income (loss) before interest expense, interest income, goodwill impairment charges, other operating income (expense), non-operating pension income, other income and income taxes, and include the operating results of non-consolidated affiliates. Consistent with the guidance in ASC 280, “Segment Reporting” (ASC 280), we have determined it is appropriate to include the operating results of non-consolidated affiliates in the relevant segment financial results.taxes. We have three operating segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. The three operating segments reflect the organization used by our management for purposes of allocating resources and assessing performance. Chlorine 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 June 30,Six Months Ended June 30,
 2021202020212020
Sales:($ in millions)
Chlor Alkali Products and Vinyls$967.3 $651.2 $1,834.3 $1,411.1 
Epoxy850.0 397.4 1,512.6 874.6 
Winchester404.0 192.6 793.2 380.6 
Total sales$2,221.3 $1,241.2 $4,140.1 $2,666.3 
Income (loss) before taxes:
Chlor Alkali Products and Vinyls$168.9 $(57.0)$440.0 $(91.3)
Epoxy165.3 (13.0)230.5 (1.3)
Winchester109.9 16.0 195.0 26.5 
Corporate/other:  
Environmental expense(1)
(4.7)(2.8)(5.0)(5.4)
Other corporate and unallocated costs(2)
(30.9)(37.4)(63.9)(68.5)
Restructuring charges(14.0)(1.7)(20.9)(3.4)
Other operating income0.5 0.1 0.5 0.1 
Interest expense(3)
(65.9)(69.4)(150.4)(132.5)
Interest income— 0.2 0.1 0.3 
Non-operating pension income8.2 4.9 17.5 9.5 
Income (loss) before taxes$337.3 $(160.1)$643.4 $(266.0)

(1)Environmental expense for the six months ended June 30, 2021 includes $2.2 million of insurance recoveries for environmental costs incurred and expensed in prior periods.

(2)Other corporate and unallocated costs included costs associated with the implementation of the Information Technology Project for the three and six months ended June 30, 2020 of $20.4 million and $35.1 million, respectively.

(3)Interest expense for the three and six months ended June 30, 2021 included a loss on extinguishment of debt of $15.4 million and $38.9 million, respectively, which includes bond redemption premiums, write-off of deferred debt issuance costs and recognition of deferred fair value interest rate swap losses associated with the optional prepayment of existing
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 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Sales:($ in millions)
Chlor Alkali Products and Vinyls$881.2
 $779.4
 $2,583.2
 $2,216.7
Epoxy489.9
 470.1
 1,549.5
 1,380.3
Winchester183.8
 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(1)
$129.7
 $53.7
 $270.0
 $152.5
Epoxy(1.7) 10.3
 (11.0) 18.5
Winchester17.2
 36.0
 61.3
 95.9
Corporate/other:       
Pension income(2)
11.1
 15.4
 32.1
 40.2
Environmental expense(1.8) (0.4) (6.2) (5.5)
Other corporate and unallocated costs(3)
(31.1) (28.2) (94.2) (81.7)
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
Interest expense(53.1) (47.5) (158.0) (143.6)
Interest income0.4
 0.5
 1.0
 1.3
Income (loss) before taxes$60.4
 $21.3
 $56.5
 $(57.7)
debt. Interest expense for both the three and six months ended June 30, 2020 included $1.6 million for write-off of deferred debt issuance costs and for the six months ended June 30, 2020 also included $4.0 million related to the 2020 ethylene payment discount.

(1)Earnings 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 million for both the three months ended September 30, 2017 and 2016, and $1.5 million and $1.1 million for the nine months ended September 30, 2017 and 2016, respectively.


(2)The service cost and the amortization of prior service cost components of pension expense related to the employees of the operating segments are allocated to the operating segments based on their respective estimated census data. All other components of pension costs are included in corporate/other and include items such as the expected return on plan assets, interest cost and recognized actuarial gains and losses.

(3)Other corporate and unallocated costs for both the three and nine months ended September 30, 2017 included costs associated with the implementation 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. 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 three and 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.

(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 included an $11.0 million insurance recovery for property damage and business interruption related to a 2008 chlor alkali facility incident.


Chlor Alkali Products and Vinyls


Three Months Ended SeptemberJune 30, 20172021 Compared to Three Months Ended SeptemberJune 30, 20162020


Chlor Alkali Products and Vinyls sales for the three months ended SeptemberJune 30, 20172021 were $881.2$967.3 million compared to $779.4$651.2 million for the same period in 2016,2020, an increase of $101.8$316.1 million, or 13%49%. The sales increase was primarily due to higher pricing across all products and increased volumes. Chlor Alkali Products and Vinyls sales increase was also due to higher VCM sales as a result of our primary VCM contract transitioning from a toll manufacturing arrangement to a direct customer sale agreement beginning on January 1, 2021.

Chlor Alkali Products and Vinyls segment income was $168.9 million for the three months ended June 30, 2021 compared to segment loss of $57.0 million for the same period in 2020, an increase of $225.9 million. The increase in Chlor Alkali Products and Vinyls segment results was primarily due to higher product prices ($223.9 million) and increased volumes ($38.6 million). These increases were partially offset by higher raw material and operating costs ($36.6 million). Chlor Alkali Products and Vinyls segment results included depreciation and amortization expense of $114.5 million and $108.5 million for the three months ended June 30, 2021 and 2020, respectively.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Chlor Alkali Products and Vinyls sales for the six months ended June 30, 2021 were $1,834.3 million compared to $1,411.1 million for the same period in 2020, an increase of $423.2 million, or 30%. The sales increase was primarily due to higher pricing across all product lines. Chlor Alkali Products and Vinyls sales increase was also due to higher VCM sales as a result of our primary VCM contract transitioning from a toll manufacturing arrangement to a direct customer sale agreement beginning on January 1, 2021. These increases were partially offset by lower volumes, which were impacted during the first quarter of 2021 by Winter Storm Uri.

Chlor Alkali Products and Vinyls segment income was $440.0 million for the six months ended June 30, 2021 compared to segment loss of $91.3 million for the same period in 2020, an increase of $531.3 million. The increase in Chlor Alkali Products and Vinyls segment results was primarily due to higher product prices ($351.1 million), the favorable impact of Winter Storm Uri ($121.4 million), increased volumes ($48.8 million) and lower raw material and operating costs ($10.0 million). The impact of Winter Storm Uri includes a net one-time benefit associated with Olin’s customary financial hedges and contracts maintained to provide protection from rapid and dramatic changes in energy costs, partially offset by unabsorbed fixed manufacturing costs and storm-related maintenance costs. Chlor Alkali Products and Vinyls segment results included depreciation and amortization expense of $230.3 million and $227.0 million for the six months ended June 30, 2021 and 2020, respectively.

Epoxy

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Epoxy sales for the three months ended June 30, 2021 were $850.0 million compared to $397.4 million for the same period in 2020, an increase of $452.6 million, or 114%. The sales increase was primarily due to higher product prices ($112.3367.5 million), partially offset by lowerincreased volumes and mix changes ($10.546.1 million) and a favorable effect of foreign currency translation ($39.0 million). The higher product prices were primarily related to caustic soda partially offset by lower EDC product prices. Chlor Alkali Products and Vinyls sales volumes were negatively impacted by Hurricane Harvey.


Chlor Alkali Products and VinylsEpoxy segment income was $129.7$165.3 million for the three months ended SeptemberJune 30, 20172021 compared to $53.7segment loss of $13.0 million for the same period in 2016,2020, an increase of $76.0 million, or 142%. Chlor Alkali Products and Vinyls$178.3 million. The increase in segment incomeresults was higherprimarily due to higher product prices ($112.3367.5 million) and increased volumes and mix changes ($13.3 million), partially offset by higher raw material costs ($180.2 million), primarily related to caustic soda,benzene and a favorable product mixpropylene, and higher operating and maintenance turnaround costs ($11.322.3 million). These increases were partiallyA 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 incremental costs to continue operations, unabsorbed fixedthe impact of foreign currency translation on raw materials and manufacturing costs 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 million). Chlor Alkali Products and Vinylsalso denominated in Euros. Epoxy segment incomeresults included depreciation and amortization expense of $106.8$20.3 million and $106.3$21.6 million for the three months ended SeptemberJune 30, 20172021 and 2016,2020, respectively.

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Nine
Six Months Ended SeptemberJune 30, 20172021 Compared to NineSix Months Ended SeptemberJune 30, 20162020


Chlor Alkali Products and VinylsEpoxy sales for the ninesix months ended SeptemberJune 30, 20172021 were $2,583.2$1,512.6 million compared to $2,216.7$874.6 million for the same period in 2016,2020, an increase of $366.5$638.0 million, or 17%. The sales increase 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 caustic soda and EDC. Chlor Alkali Products and Vinyls sales volumes were negatively impacted by Hurricane Harvey.


Chlor Alkali Products and Vinyls segment income was $270.0 million for the nine months ended September 30, 2017 compared to $152.5 million for the same period in 2016, an increase of $117.5 million, or 77%. Chlor Alkali Products and Vinyls segment income was higher due to higher product prices ($296.6 million), increased volumes and a favorable product mix ($16.2 million). The higher product prices and increased volumes 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) and operating costs ($9.0 million) were also higher compared to the prior year. Chlor Alkali Products and Vinyls segment income included depreciation and amortization expense of $318.0 million and $311.6 million for the nine months ended September 30, 2017 and 2016, respectively.

Epoxy

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

Epoxy sales for the three months ended September 30, 2017 were $489.9 million compared to $470.1 million for the same period in 2016, an increase of $19.8 million, or 4%73%. The sales increase was primarily due to higher product prices ($45.7471.1 million), partially offset by lower productincreased volumes and mix changes ($25.9100.8 million) and a favorable effect of foreign currency translation ($66.1 million). Epoxy salesSales volumes in the first quarter 2021 were negatively impacted by Hurricane Harvey.Winter Storm Uri.


Epoxy segment lossincome was $1.7$230.5 million for the threesix months ended SeptemberJune 30, 2017,2021 compared to segment incomeloss of $10.3$1.3 million for the same period in 2016, a decrease2020, an increase of $231.8 million. The increase in segment results of $12.0 million. Epoxy segment results were negatively impactedwas primarily due to higher product prices ($471.1 million) and increased volumes and mix changes ($11.4 million), partially offset by incrementalhigher raw material costs to continue operations, unabsorbed fixed manufacturing costs($208.8 million), primarily benzene and reduced profit from lost sales associated with Hurricane Harvey ($18.7 million).propylene. Epoxy segment results were also impacted by increased raw material coststhe unfavorable impact of Winter Storm Uri ($30.821.5 million), primarily associated with benzene and propylene, and higher operating costs ($8.220.4 million). These decreases were partially compared to the prior year period. The impact of Winter Storm Uri includes unabsorbed fixed manufacturing costs and storm-related maintenance costs. 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 incomeresults included depreciation and amortization expense of $24.4$42.4 million and $22.6$43.1 million for the six months ended June 30, 2021 and 2020, respectively.

Winchester

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Winchester sales were $404.0 million for the three months ended SeptemberJune 30, 2017 and 2016, respectively.

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

Epoxy sales for the nine months ended September 30, 2017 were $1,549.5 million2021 compared to $1,380.3$192.6 million for the same period in 2016,2020, an increase of $169.2$211.4 million, or 12%110%. The sales increase was primarily due to higher product pricesammunition sales to commercial customers ($127.8145.9 million) and increased volumesmilitary customers ($60.0 million), both of which includes ammunition produced at Lake City, and a favorable product mixlaw enforcement agencies ($41.45.5 million). Epoxy sales volumes were negatively impacted by Hurricane Harvey.


EpoxyWinchester segment lossincome was $11.0$109.9 million for the ninethree months ended SeptemberJune 30, 20172021 compared to segment income of $18.5$16.0 million for the same period in 2016, a decrease2020, an increase of $93.9 million. The increase in segment results of $29.5 million. Epoxy segmentwas due to higher product pricing ($52.6 million) and increased sales volumes ($45.1 million), which includes ammunition produced at Lake City, partially offset by higher commodity and operating costs ($7.6 million). 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 resultsin 2020 were also impacted by increased raw materialtransition 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 forrelating to 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 million for the three months ended September 30, 2017 compared to $203.2 million for the same period in 2016, a decrease of $19.4 million, or 10%. The sales decrease was primarily due to lower ammunition sales to commercial customersLake City contract ($30.2 million), partially offset by increased shipments to military customers and law enforcement agencies ($10.8 million). The decrease 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 lower volumes and a less favorable product mix ($12.7 million), increased commodity and other material costs ($3.6 million) and lower product prices ($2.53.8 million). Winchester segment income included depreciation and amortization expense of $4.8$5.5 million and $4.7 million for the three months ended SeptemberJune 30, 20172021 and 2016,2020, respectively.


NineSix Months Ended SeptemberJune 30, 20172021 Compared to NineSix Months Ended SeptemberJune 30, 20162020


Winchester sales were $515.8$793.2 million for the ninesix months ended SeptemberJune 30, 20172021 compared to $567.9$380.6 million for the same period in 2016, a decrease2020, an increase of $52.1$412.6 million, or 9%108%. The sales decreaseincrease was primarily due to lowerhigher ammunition sales to commercial customers ($79.9279.8 million) and military customers ($124.0 million), partially offset by increased shipments to military customersboth of which includes ammunition produced at Lake City, and law enforcement agencies ($27.88.8 million). The decrease in commercial sales primarily reflects lower demand in shotshell, pistol and rifle ammunition.


Winchester reported segment income was $61.3$195.0 million for the ninesix months ended SeptemberJune 30, 20172021 compared to $95.9$26.5 million for the same period in 2016, a decrease2020, an increase of $34.6 million, or 36%.$168.5 million. The decreaseincrease in segment results was due to lowerincreased sales volumes and a less favorable product mix ($24.091.5 million), increasedwhich includes ammunition produced at Lake City, and higher product pricing ($84.7 million), partially offset by higher commodity and other materialoperating costs ($5.614.3 million) and lower product prices. Segment results in 2020 were also impacted by transition costs relating to the Lake City contract ($5.06.6 million). Winchester segment income included depreciation and amortization expense of $14.2$11.1 million and $13.8$9.7 million for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively.


Corporate/Other


Three Months Ended SeptemberJune 30, 20172021 Compared to Three Months Ended SeptemberJune 30, 20162020


For the three months ended SeptemberJune 30, 2017, pension income included in corporate/other was $11.1 million compared to $15.4 million for the three months ended September 30, 2016. On a total company basis, defined benefit pension income for the three 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, 2017,2021, charges to income for environmental investigatory and remedial activities were $1.8$4.7 million compared to $0.4$2.8 million for the three months ended SeptemberJune 30, 2016.2020. These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites.


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For the three months ended SeptemberJune 30, 2017,2021, other corporate and unallocated costs were $31.1$30.9 million compared to $28.2$37.4 million for the three months ended SeptemberJune 30, 2016, an increase2020, a decrease of $2.9$6.5 million. The increasedecrease was primarily due to higher stock-based compensation expensethe absence 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 coststhe Information Technology Project of $2.9$20.4 million, which was completed in late 2020, partially offset by decreased legal and legal-related settlement expenseshigher variable incentive compensation costs of $2.7 million.$14.0 million, which includes mark-to-market adjustments on stock-based compensation expense.


NineSix Months EndedSeptember June 30, 20172021 Compared to NineSix Months Ended SeptemberJune 30, 20162020


For the ninesix months ended SeptemberJune 30, 2017, pension income included in corporate/other was $32.1 million compared to $40.2 million for the nine months ended September 30, 2016. On 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, 2017,2021, charges to income for environmental investigatory and remedial activities were $6.2$5.0 million, which includes $2.2 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 for the six months ended June 30, 2021 would have been $7.2 million, compared to $5.5$5.4 million for the ninesix months ended SeptemberJune 30, 2016.2020. These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites.


For the ninesix months ended SeptemberJune 30, 2017,2021, other corporate and unallocated costs were $94.2$63.9 million compared to $81.7$68.5 million for the ninesix months ended SeptemberJune 30, 2016, an increase2020, a decrease of $12.5$4.6 million. The increasedecrease was primarily due to higher stock-based compensation expensethe absence 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 coststhe Information Technology Project of $2.9 million. Partially offsetting these increases were decreased legal and legal-related settlement expenses of $5.2 million.


Outlook

Net income$35.1 million, which was completed 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 earnings are expected to improve sequentially from the third quarter of 2017. Fourth quarter earnings are expected to benefit from higher caustic soda pricing and reduced impact from Hurricane Harveylate 2020, partially offset by higher maintenance turnaround activity. Thevariable incentive compensation costs of $31.1 million, which includes mark-to-market adjustments on stock-based compensation expense.

Outlook

In 2021, we expect to continue to implement and benefit from Olin’s new operating model of optimizing value across our chemicals businesses. Olin drove pricing improvement in the first half of 2021 for chlorine and almost all chlorine derivatives, including epoxy resins, and caustic soda. During 2021, we expect to deliver ECU pricing improvement compared to 2020, partially offset by higher raw material costs, primarily benzene and propylene. In 2021, we expect year over year improvement in both Chlor Alkali Products and Vinyls business in fourth quarter 2017 is forecast 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 sequentially from the third quarter to the fourth quarter. Epoxy fourth quarter 2017 segment results will reflect a 35-day planned maintenance turnaround at our production facility in Stade, Germany. results.

Winchester fourth quarter 2017 segment earnings are expected to be below fourth quarter 2016 levels due to the continuation of lower commercial ammunition sales combined with higher commodity and other material costs.

Chlor Alkali Products and Vinyls 20172021 segment income is expected to be higher compared to 2016improve from 2020 segment income of $224.9$92.3 million reflectingdue to higher chlorine, caustic sodacommercial product pricing and EDC prices and additional cost synergy realization. These increases are expectedincreased sales volumes, which includes ammunition produced at Lake City. During 2020, Winchester segment results included transition costs related to be partially offset by the impactLake City contract 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 segment income is expected to be lower than 2016 segment income of $15.4 million as improved volumes and pricing year over year 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.

Winchester 2017 segment income is expected to be in the $75 million to $80 million range, compared to $120.9 million of segment income achieved during 2016. The forecast for Winchester is primarily driven by lower commercial ammunition demand, due primarily to both an overall reduction in purchases and inventory reductions by our customers and higher commodity and material costs. We expect the decrease in commercial sales 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$13.5 million.


Other Corporate and Unallocated costs in 20172021 are expected to be higher than 2016 Other Corporate and Unallocated costs of $100.2 million driven by stock-based compensation, consulting costs, the full year effect of the increased corporate infrastructure costs to support the integration of the Acquired Business and costs associated with the implementation of new enterprise resource planning, manufacturing, and engineering systems, and related infrastructure costs.

During 2017, we are anticipating environmental expenses in the $8 million to $10 million range compared to $9.2 million 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.

We expect qualified defined benefit pension plan income in 2017 to be lower than the 2016 level by approximately $10 million.$154.3 million in 2020, primarily due to 2020 results including $73.9 million of costs associated with the Information Technology Project. The Information Technology Project was concluded in late 2020. Partially offsetting these lower costs in 2021 will be higher variable incentive costs, including mark-to-market adjustments on stock-based compensation expense.

During 2021, we anticipate environmental expenses in the $20 million to $25 million range compared to $20.9 million in 2020.

We expect non-operating pension income in 2021 to be in the $30 million to $35 million range compared to $18.9 million in 2020. Based on our plan assumptions and estimates, we will not be required to make any cash contributions to our domestic qualified defined benefit pension plan in 2017.2021. We do have several international qualified defined benefit pension plans tofor which we anticipate cash contributions of less than $5 million in 2017.2021.

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 2017,2021, we currently expect our capital spending to be in the $300 million to $325$200 million range, which includeswould be approximately $35$100 million of synergy-related capital, which we believe is necessary to realize the anticipated synergies.lower than 2020 levels. We expect 20172021 depreciation and amortization expense to be in the $545$575 million to $555$600 million range.



The effective tax rate for 2017 includes a benefit of $9.5 million related to an agreement reached with the IRS regarding tax examination years 2008 and 2010 to 2012. After giving consideration to this item, weWe currently believe the 20172021 effective tax rate will be in the 20% to 25% range.range, excluding the impact of the second quarter 2021 release of the valuation allowance related to deferred tax assets of our German operations. We expect cash taxes will be in the 10% to 15% range, which primarily reflects the utilization of tax loss carryforwards.



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Environmental Matters


Environmental provisions charged to income, which are included in costs of goods sold, were $1.8 million and $0.4 millionas follows:

 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
 ($ in millions)
Provisions charged to income$4.7 $2.8 $7.2 $5.4 
Recoveries for costs incurred and expensed— — (2.2)— 
Environmental expense$4.7 $2.8 $5.0 $5.4 

Environmental expense for the threesix months ended SeptemberJune 30, 20172021 includes $2.2 million of insurance recoveries for environmental costs incurred and 2016, respectively, and $6.2 million and $5.5 million for the nine months ended September 30, 2017 and 2016, respectively.expensed in prior periods.


Our liabilities for future environmental expenditures were as follows:
 June 30,
 20212020
 ($ in millions)
Balance at beginning of year$147.2 $139.0 
Charges to income7.2 5.4 
Remedial and investigatory spending(6.2)(5.6)
Foreign currency translation adjustments0.2 (0.2)
Balance at end of period$148.4 $138.6 
 September 30,
 2017 2016
 ($ in millions)
Balance at beginning of year$137.3
 $138.1
Charges to income6.2
 5.5
Remedial and investigatory spending(8.7) (6.6)
Currency translation adjustments0.5
 0.5
Balance at end of period$135.3
 $137.5


Environmental investigatory and remediation activities spending was associated with former waste disposal sites and past manufacturing operations. Spending in 20172021 for investigatory and remedial efforts, the timing of which is subject to regulatory approvals and other uncertainties, is estimated to be approximately $17.0$20 million. Cash outlays for remedial and investigatory activities associated with former waste disposal sites and past manufacturing operations were not charged to income, but instead, were charged to reserves established for such costs identified and expensed to income in prior periods. Associated costs of investigatory and remedial activities are provided for in accordance with generally accepted accounting principles governing probability and the ability to reasonably estimate future costs. Our ability to estimate future costs depends on whether our investigatory and remedial activities are in preliminary or advanced stages. With respect to unasserted claims, we accrue liabilities for costs that, in our experience, we mayexpect to incur to protect our interestinterests against those unasserted claims. Our accrued liabilities for unasserted claims amounted to $6.1$9.0 million at SeptemberJune 30, 2017.2021. With respect to asserted claims, we accrue liabilities based on remedial investigation, feasibility study, remedial action and Operation, Maintenanceoperation, maintenance and Monitoringmonitoring (OM&M) expenses that, in our experience, we mayexpect 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 couldwere material to our operating results in 2020 and may be material to our operating results in 2017.2021.


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.

OurThe condensed balance sheets included liabilitiesreserves for future environmental expenditures to investigate and remediate known sites amounting to $135.3$148.4 million, $147.2 million and $138.6 million at SeptemberJune 30, 2017, $137.3 million at2021, December 31, 20162020 and $137.5 million at SeptemberJune 30, 2016,2020, respectively, of which $118.3$129.4 million, $120.3$128.2 million and $118.5$121.6 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
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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


We,Discussion of legal matters and our subsidiaries, are defendants in various legal actions (including proceedings based on alleged exposurescontingencies can be referred to asbestos) incidental to our pastunder Item 1, within Note 10, “Commitments and current business activities. As of September 30, 2017, December 31, 2016 and September 30, 2016, our condensed balance sheets included liabilities for these legal actions of $15.9 million, $13.6 million and $22.9 million, respectively. These liabilities do not include costs associated with legal representation. Based on our analysis, and considering the inherent uncertainties associated with litigation, we do not believe that it is reasonably possible that these legal actions will materially adversely affect our financial position, cash flows or results of operations. In connection with the Acquisition, TDCC 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.Contingencies.”


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

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.


Liquidity, Investment Activity and Other Financial Data


Cash Flow Data
 Six Months Ended June 30,
 20212020
Provided By (Used For)($ in millions)
Net operating activities$707.6 $55.4 
Capital expenditures(86.4)(166.5)
Payments under long-term supply contracts— (536.8)
Net investing activities(86.4)(703.3)
Long-term debt (repayments) borrowings, net(490.2)737.4 
Debt early redemption premium(31.0)— 
Stock options exercised50.2 0.5 
Debt issuance costs(3.1)(9.6)
Net financing activities(537.8)665.2 
 Nine Months Ended September 30,
 2017 2016
Provided By (Used For)($ in millions)
Net operating activities$455.1
 $407.1
Capital expenditures(210.0) (199.4)
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
Net investing activities(419.3) (397.2)
Long-term debt borrowings (repayments), net127.6
 (176.1)
Stock options exercised18.5
 0.4
Debt issuance costs(11.2) (0.8)
Net financing activities35.3
 (275.6)


Operating Activities


For the ninesix months ended SeptemberJune 30, 2017,2021, cash provided by operating activities increased by $48.0$652.2 million from the ninesix months ended SeptemberJune 30, 2016,2020, primarily due to an increase in our operating results.results, partially offset by working capital increases to support operations. For the ninesix months ended SeptemberJune 30, 2017,2021, working capital decreased $11.4increased $209.1 million compared to a decrease of $25.1$30.8 million for the ninesix months ended SeptemberJune 30, 2016.2020. The working capital increase reflects normal seasonal working capital growth and a higher sales level. Receivables increased by $274.5 million from December 31, 2016, by $48.5 million2020, primarily as a result of higher sales induring 2021. For the third quarter of 2017 compared to the fourth quarter of 2016, partially offsetsix months ended June 30, 2021, our days sales outstanding (DSO), which was calculated by additional receivables sold under thedividing period end accounts receivable factoring arrangement.by average daily sales for the period, improved from the comparable prior year period. Inventories increased by $67.6 million from December 31, 2016, by $46.7 million2020 and accounts payable and accrued liabilities increased from December 31, 2016, by $92.9 million. The increase in inventories and accounts payable and accrued liabilities was$143.6 million, which were both primarily due to an increase inas a result of increased raw material costs, primarily associated with benzene and propylene.costs.


Investing Activities


Capital spending of $210.0$86.4 million for the ninesix months ended SeptemberJune 30, 20172021 was $10.6$80.1 million higherlower than the corresponding period in 2016. Capital spending for the nine months ended September 30, 2017 included approximately $25 million of synergy-related capital.2020. For the total year 2017,2021, we expect our capital spending to be in the $300 million to $325$200 million range, which includeswould be approximately $35$100 million of capital which we believe is necessary to realize the anticipated synergies.lower than 2020 levels. For the total year 2017,2021, depreciation and amortization expense is forecast to be in the $545$575 million to $555$600 million range.


During 2017, we began a multi-year implementation of new enterprise resource planning, manufacturing, and engineering systems.the Information Technology Project. The project includes the required information technology infrastructure. The project is planned to standardizestandardizes business processes across the chemicalsChemicals businesses with the objective of maximizing cost effectiveness, efficiency and control across our global operations. The project is anticipated to bewas completed duringin late 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 $40six months ended June 30, 2020 included $32.8 million of capital spending and approximately $7$35.1 million of expenses associated with this project.


For the ninesix months ended SeptemberJune 30, 2017,2020, a payment of $209.4$461.0 million was made associated with long-term supply contracts to reserve additional ethylene at producer economics.

During the nine months ended September 30, 2016, paymentseconomics from The Dow Chemical Company (Dow) and a payment of $69.5$75.8 million werewas 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 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 connectionassociated with the Acquisition. We received proceeds fromresolution of a dispute over the salesallocation to Olin of $40.4 million.

During the nine months ended September 30, 2016, we received $6.6 million fromcertain capital costs incurred at our Plaquemine, LA site after the October 2013 sale5, 2015 closing date of a bleach joint venture.the Dow acquisition.


Financing Activities

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For the six months ended June 30, 2021, we had long-term debt repayments, net of long-term debt borrowings of $490.2 million.

During the six months ended June 30, 2021, we repaid $150.0 million of the Senior Secured Term Loans, of which $10.2 million was a required quarterly installment. These repayments eliminated the required quarterly installments of the Senior Secured Term Loans through December 2023.

During the six months ended June 30, 2021, we repurchased, through open market transactions, a principal amount of $26.5 million of the outstanding aggregate principal amount of 5.625% senior notes due August 1, 2029 (2029 Notes) and $8.0 million of the outstanding aggregate principal amount of 5.00% senior notes due February 1, 2030 (2030 Notes). These actions resulted in a total redemption premium of $3.1 million for both the three and six months ended June 30, 2021.

On March 9, 2017, we entered into31, 2021, Olin redeemed $315.0 million of the Amended Senior Credit Facility. Pursuant tooutstanding 10.00% senior notes due October 15, 2025 (Blue Cube 2025 Notes) and on May 14, 2021, Olin redeemed the agreement,remaining $185.0 million of the aggregateoutstanding Blue Cube 2025 Notes. The Blue Cube 2025 Notes were redeemed at 105.0% of the principal amount underof the Blue Cube 2025 Notes, resulting in a redemption premium of $25.0 million. The Blue Cube 2025 Notes were redeemed by drawing $315.0 million of the Delayed Draw Term Loan Facility was increased to $1,375.0along with utilizing cash on hand.

On January 15, 2021, Olin redeemed the remaining $120.0 million andof the aggregate commitments under9.75% senior notes due 2023 (2023 Notes). The 2023 Notes were redeemed at 102.438% of the Senior Revolving Credit Facilityprincipal amount of the 2023 Notes, resulting in a redemption premium of $2.9 million. The remaining 2023 Notes were increased to $600.0redeemed by utilizing cash on hand.

For the six months ended June 30, 2020, we had long-term debt borrowings, net of long-term debt repayments of $737.4 million, which primarily included $497.5 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 balanceissuance of the existing Senior Credit Facility9.50% senior notes due June 1, 2025 (2025 Notes) 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$240.7 million under the Senior Revolving Credit Facility and $40.0 million under theour 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.Agreement.


On March 9, 2017,May 19, 2020, Olin issued $500.0 million aggregate principal amount of 5.125%9.50% senior notes due September 15, 2027,June 1, 2025. The 2025 Notes were issued at 99.5% of par value, the discount from which were registered underis included within long-term debt in the Securities Act of 1933, as amended.condensed balance sheet. Interest on the 20272025 Notes began accruing from March 9, 2017 and is paidpayable semi-annually beginning on September 15, 2017.December 1, 2020. Proceeds from the 20272025 Notes were used to redeem the remaining balance of the Sumitomo Credit Facility.for general corporate purposes.


For the ninesix months ended SeptemberJune 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 2017,2021, we paid debt issuance costs of $11.2$3.1 million relatingfor the amendments to the Amendedour Senior Secured Credit Facility and the 2027 Notes.Facility. For the ninesix months ended SeptemberJune 30, 2016,2020, we paid deferred debt issuance costs of $0.8$9.6 million for the registrationissuance of the Notes.2025 Notes and amendments to our Senior Secured Credit Facility and Receivables Financing Agreement.

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


We issued 1.02.4 million and less than 0.1 million shares representing stock options exercised for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, with a total value of $18.5$50.2 million and $0.4$0.5 million, respectively.


The percent of total debt to total capitalization increaseddecreased to 62.0% as of SeptemberJune 30, 20172021 from 61.4%72.7% as of December 31, 20162020 as a result of an increaseda lower level of debt outstanding.outstanding and higher shareholders’ equity primarily resulting from our operating results.


In the first threeand second quarters of 20172021 and 2016,2020, we paid a quarterly dividend of $0.20 per share. Dividends paid for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, were $99.6$63.7 million and $99.1$63.1 million, respectively. On October 25, 2017,July 22, 2021, our board of directors declared a dividend of $0.20 per share on our common stock, payable on December 11, 2017September 10, 2021 to shareholders of record on NovemberAugust 10, 2017.2021.


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 Senior Revolving Credit Facility, AR Facilities and Receivables Financing Agreement.Agreement and AR Facilities. Additionally, we believe that we have access to the high-yield debt and equity markets.

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In connection2021, we are targeting a reduction in our outstanding debt of approximately $1.0 billion using cash generated from operations. During 2021, activity of our debt outstanding included:
Long-term Debt Borrowings (Repayments)
Six Months Ended June 30, 2021
Debt Instrument($ in millions)
Borrowings:
Senior Secured Term Loans$315.0 
Receivables Financing Agreement50.0 
Total borrowings$365.0 
Repayments:
10.00% senior notes due 2025$(500.0)
9.75% senior notes due 2023(120.0)
5.625% senior notes due 2029(26.5)
5.00% senior notes due 2030(8.0)
Senior Secured Term Loans(150.0)
Receivables Financing Agreement(50.0)
Finance leases(0.7)
Total repayments$(855.2)
Long-term debt repayments, net$(490.2)

On February 24, 2021, we entered into a $1,615.0 million senior secured credit facility (Senior Secured Credit Facility) that amended our existing $1,300.0 million senior secured credit facility. The Senior Secured Credit Facility includes a senior delayed-draw term loan facility with aggregate commitments of $315.0 million (Delayed Draw Term Loan), a senior secured term loan facility with aggregate commitments of $500.0 million (2020 Term Loan and together with the Acquisition, OlinDelayed Draw Term Loan, the Senior Secured Term Loans) and TDCC entered into arrangementsa senior secured revolving credit facility with aggregate commitments in an amount equal to $800.0 million (Senior Revolving Credit Facility). The maturity date for the long-term supplySenior Secured Credit Facility is July 16, 2024. The amendment modified the pricing grid for the Senior Secured Credit Facility by reducing applicable interest rates on the borrowings under the facility.

On March 30, 2021, Olin drew the entire $315.0 million of ethylene by TDCCthe Delayed Draw Term Loan and used the proceeds to Olin, pursuantfund the redemption of the Blue Cube 2025 Notes. The Senior Secured Term Loans include principal amortization amounts payable beginning June 30, 2021 at a rate of 1.25% per quarter through the end of 2022, 1.875% per quarter during 2023 and 2.50% per quarter thereafter until maturity. During the six months ended June 30, 2021, we repaid $150.0 million of the Senior Secured Term Loans, of which $10.2 million was a required quarterly installment. These repayments eliminated the required quarterly installments of the Senior Secured Term Loans through December 2023. The Senior Revolving Credit Facility includes a $100.0 million letter of credit subfacility. At June 30, 2021, we had $799.6 million available under our $800.0 million Senior Revolving Credit Facility because we had issued $0.4 million of letters of credit. 

Under the Senior Secured Credit Facility, we may select various floating-rate borrowing options. The actual interest rate paid on borrowings under the Senior Secured Credit Facility is based on a pricing grid which is dependent upon the net leverage ratio as calculated under the terms of the applicable facility for the prior fiscal quarter.  The Senior Secured Credit Facility includes various customary restrictive covenants, including restrictions related to which,the ratio of secured debt to earnings before interest expense, taxes, depreciation and amortization (secured leverage ratio) and the ratio of earnings before interest expense, taxes, depreciation and amortization to interest expense (coverage ratio).  The calculation of secured debt in our secured leverage ratio excludes borrowings under the Receivables Financing Agreement, up to a maximum of $250.0 million. As of June 30, 2021, the only secured borrowings included in the secured leverage ratio were $665.0 million for our Senior Secured Term Loans and $153.0 million for our Go Zone and Recovery Zone bonds. Compliance with these covenants is determined quarterly. We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of June 30, 2021, and no event of default had occurred that would permit the lenders under our outstanding credit agreements to accelerate
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the debt if not cured. In the future, our ability to generate sufficient operating cash flows, among other things, Olin made upfront payments of $433.5 million onfactors, will determine the Closing Date in orderamounts available 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.be borrowed under these facilities. As a result duringof our restrictive covenant related to the three months ended Septembersecured leverage ratio, the maximum additional borrowings available to us could be limited in the future.  The limitation, if an amendment or waiver from our lenders is not obtained, could restrict our ability to borrow the maximum amounts available under the Senior Revolving Credit Facility and the Receivables Financing Agreement.  As of June 30, 2017, a payment of $209.4 million was made in connection with this option. On February 27, 2017, we exercised the remaining option2021, there were no covenants or other restrictions that limited our ability 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.borrow.


The overall increase in cash for the ninesix months ended SeptemberJune 30, 20172021 primarily reflects our operating results, and long-term debt borrowings, net, partially offset by debt repayments, capital spending, and payments associated with long-term supply contracts.dividends paid. 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, 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, make amortization payments under the Term Loan Facility, make required payments under long-term supply agreements, fund our operating needs, fund working capital and our capital expenditure requirements and comply with the financial ratios in our debt agreements.requirements.


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. There were no shares repurchased for both the six months ended June 30, 2021 and 2020. As of June 30, 2021, we entered intohad repurchased a total of $195.9 million of our common stock, representing 10.1 million shares, and $304.1 million of common stock remained authorized to be repurchased.

We maintain a $250.0 million Receivables Financing Agreement (Receivables Financing Agreement) that is scheduled to mature on July 15, 2022. The Receivables Financing Agreement includes a minimum borrowing requirement of 50% of the Amended Senior Credit Facility. Pursuantfacility limit or available borrowing capacity, whichever is less. The administrative agent for our Receivables Financing Agreement is PNC Bank, National Association.  Under the Receivables Financing Agreement, our eligible trade receivables are used for collateralized borrowings and continue to be serviced by us. In addition, the agreement,Receivables Financing Agreement incorporates the aggregate principal amountsecured leverage covenant that is contained in the $1,615.0 million senior secured credit facility. As of June 30, 2021, $457.9 million of our trade receivables were pledged as collateral. As of June 30, 2021, we had $125.0 million drawn with $125.0 million of additional borrowing capacity available under the Term Loan Facility was increased to $1,375.0Receivables Financing Agreement. As of December 31, 2020 and June 30, 2020, we had $125.0 million and the aggregate commitments$240.7 million, respectively, drawn under the Senior Revolving Credit Facility 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 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. The $600.0 million Senior Revolving Credit Facility includes a $100.0 million letter of credit subfacility. The Term Loan Facility includes amortization payable in equal quarterly installments 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.Receivables Financing Agreement.


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, 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, there were no covenants or other restrictions that would have limited our ability to borrow under these facilities.

On March 9, 2017, Olin issued $500.0 million aggregate principal amount of 5.125% senior notes due September 15, 2027, which were registered under the Securities Act of 1933, as amended. Interest on the 2027 Notes began accruing from March 9, 2017 and is paid semi-annually beginning on September 15, 2017. Proceeds from the 2027 Notes were used to redeem the remaining balance of the Sumitomo Credit Facility.

On June 29, 2016, we entered into aalso has trade accounts receivable factoring arrangementarrangements (AR Facilities) and on December 22, 2016, we entered into a separate trade accounts receivable factoring arrangement, which were both subsequently amended. Pursuantpursuant to the terms of the AR Facilities, certain of our domestic subsidiaries may sell their accounts receivable up to a maximum of $293.0$228.0 million and certain of our foreign subsidiaries may sell their accounts receivable up to a maximum of €35.3 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 SeptemberJune 30, 20172021 and 20162020 totaled $446.5$487.3 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$457.5 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$0.3 million and $0.5$0.4 million for the three months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, and $2.9 million and $0.7 million and $1.0 million for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively. The

agreements are without recourse and therefore no recourse liability has been recorded as of SeptemberJune 30, 2017.2021, December 31, 2020 and June 30, 2020. As of SeptemberJune 30, 2017,2021, December 31, 20162020 and SeptemberJune 30, 2016, $187.32020, $85.7 million, $126.1$48.8 million and $85.0$61.7 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 caustic soda, EDC and chlorine 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 caustic soda equates to an approximate $30 million annual change in our revenues and pretax profit, 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.

For the nine months ended September 30, 2017, cash provided by operating activities increased by $48.0 million from the nine months ended September 30, 2016, primarily due to an increase in our operating results. For the nine months ended September 30, 2017, working capital decreased $11.4 million compared to a decrease of $25.1 million for the nine months ended September 30, 2016. Receivables increased from December 31, 2016, by $48.5 million primarily as a result of higher sales 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 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 liabilities was primarily due to an increase in raw material costs, primarily associated with benzene and propylene.

Capital spending of $210.0 million for the nine months ended September 30, 2017 was $10.6 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. For the total year 2017, we expect our capital spending to be in the $300 million to $325 million range, which includes approximately $35 million of capital which we believe is necessary to realize the anticipated synergies. For the total year 2017, depreciation and amortization expense is forecast to be in the $545 million to $555 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. 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 SeptemberJune 30, 2017,2021, we had total letters of credit of $71.8$81.3 million outstanding, of which $18.6$0.4 million were issued under our $600.0 million 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, certain international payment obligations and certain Canadianinternational pension funding requirements.


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Our current debt structure is used to fund our business operations. As of SeptemberJune 30, 2017,2021, we had long-term borrowings, including the current installmentsinstallment and capitalfinance lease obligations, of $3,745.2$3,382.9 million, of which $1,878.6$945.9 million was issuedwere at variable rates. Included within long-term borrowings on the condensed balance sheets were deferred debt issuance costs and unamortized bond original issue discount. Commitments from banks under our Senior Revolving Credit Facility, Receivables Financing Agreement and AR Facilities are an additional sourcesources of liquidity.


In April 2016, we entered into three tranches of forward starting interest rate swaps whereby we agreed to pay fixed rates toOn May 14, 2021, following 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. We have designated the swaps as cash flow hedgesredemption of the riskremaining Blue Cube 2025 Notes, all subsidiary guarantees of changesthe 2025 Notes, 5.125% senior notes due 2027, 2029 Notes and 2030 Notes (collectively, the Senior Notes) were released in interest payments associated with our variable-rate borrowings. Accordingly, the swap agreements have been recorded at their fair market value of $8.7 million and are included in other current assets and other assets on the accompanying condensed balance sheet as of September 30, 2017,accordance with the corresponding gain deferred as a component of other comprehensive loss. For the three and nine months ended September 30, 2017, $1.2 million and $1.7 million, respectively, of income was recorded to interest expense on the accompanying condensed statement of operations related to these swap agreements. No gain or loss has been recorded in earnings as a result of ineffectiveness.

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 hedgesterms of the riskindentures governing the Senior Notes. Our obligations under the Senior Notes are no longer guaranteed by any of changes in the valueOlin’s subsidiaries and there are no outstanding debt securities issued by any of fixed-rate debt due to changes in interest rates for a portionOlin’s subsidiaries that are guaranteed by Olin or any other of our fixed-rate borrowings. Accordingly, the swap agreements have been recorded at their fair market value of $23.9 million and are included in other long-term liabilities on the accompanying condensed balance sheet as of September 30, 2017, with a corresponding decrease in the carrying amount of the related debt. For the three months ended September 30, 2017 and 2016, $0.5 million and $0.7 million, respectively, and for the nine months ended September 30, 2017 and 2016, $2.4 million and $1.2 million, respectively, of income was recorded to interest expense on the accompanying condensed statement of operations related to these swap agreements. No gain or loss has been recorded in earnings as a result of ineffectiveness.Olin’s subsidiaries.

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.


Off-Balance Sheet Arrangements


Non-cancelable operating leases and purchasingPurchasing commitments are utilized in our normal course of business for our projected needs. In connectionWe 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 StandardsPronouncements


In August 2017, the FinancialDiscussion of new accounting pronouncements can be referred to under Item 1, within Note 2, “Recent 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.Pronouncements.” 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 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 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments” which amends ASC 230 “Statement of Cash Flows.” 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. The new standard will require adoption 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. We plan to adopt this update on January 1, 2018 and will require certain reclassifications on our consolidated statements of cash flows.

In March 2016, the FASB issued ASU 2016-09 “Improvements 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.

In February 2016, the FASB issued ASU 2016-02 “Leases,” which supersedes ASC 840 “Leases” and creates a new topic, ASC 842 “Leases.” This update requires 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 also expands the required quantitative and qualitative disclosures surrounding leases. This update is 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 using the modified retrospective transition method. We continue to evaluate the impact these updates will have on our consolidated financial statements. Based on the analysis conducted to date, we believe the most significant impact the updates will have will be on our accounting policies and disclosures on revenue recognition. Preliminarily, we do not expect that these updates will materially impact our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.


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.


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 SeptemberJune 30, 2017,2021, we maintained open positions on commodity contracts with a notional value totaling $88.5$250.8 million ($101.6214.1 million at December 31, 20162020 and $101.3$225.1 million at SeptemberJune 30, 2016)2020). Assuming a hypothetical 10% increase in commodity prices which are currently hedged, as of SeptemberJune 30, 2017,2021, we would experience an $8.9a $25.1 million ($10.221.4 million at December 31, 20162020 and $10.1$22.5 million at SeptemberJune 30, 2016)2020) 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$37.0 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 Senior Revolving Credit Facility, AR Facilities and Receivables Financing Agreement and AR Facilities are a sourceadditional sources of liquidity. As of SeptemberJune 30, 2017,2021, December 31, 20162020 and SeptemberJune 30, 2016,2020, we had long-term borrowings, including current installments and capitalfinance lease obligations, of $3,745.2$3,382.9 million, $3,617.6$3,863.8 million and $3,677.8$4,075.7 million, respectively, of which $1,878.6$945.9 million, $2,238.4$780.9 million and $2,255.3$396.6 million at SeptemberJune 30, 2017,2021, December 31, 20162020 and SeptemberJune 30, 2016,2020, respectively, were issued at variable rates.

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 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.

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.

In June 2012, we terminated $73.1 million of interest rate swaps with Wells Fargo that had been entered into Included within long-term borrowings 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.condensed balance sheets were deferred debt issuance costs and unamortized bond original issue discount.


Assuming no changes in the $1,878.6$945.9 million of variable-rate debt levels from SeptemberJune 30, 2017,2021, we estimate that a hypothetical change of 100-basis points in the LIBOR interest rates would impact annual interest expense by $18.8$9.5 million. A portion
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Table of this hypothetical change would be offset by our interest rate swaps.Contents


Our interest rate swaps reducedincreased interest expense by $1.7$0.6 million and $0.7$0.1 million for the three months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, and by $4.2$1.8 million and $2.6$0.2 million for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, 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 SeptemberJune 30, 2017.2021. 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 have been no changes in our internal control over financial reporting that occurred during the quarter ended SeptemberJune 30, 2017,2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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, theThe 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, 2016,2020, include, but are not limited to the following:


Business, Industry and Operational Risks

•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;us;


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;•unsuccessful implementation of our operating model, which prioritizes Electrochemical Unit (ECU) margins over sales volumes;


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;


•failure to control costs or to achieve targeted cost reductions;


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

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


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

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

•the negative impact from the COVID-19 pandemic and the global response to the pandemic; 

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

•the loss of a substantial customer for either chlorine or caustic soda could cause an imbalance in customer demand for these products;

•failure to attract, retain and motivate key employees;

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•risks associated with our international sales and operations, including economic, political or regulatory changes;

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

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

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

Legal, Environmental and Regulatory Risks

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


•changes in, or failure to comply with, legislation or government regulations or policies;policies, including changes within the international markets in which we operate;


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; and


the integration of the Acquired Business may not be successful in realizing the benefits of the anticipated synergies;•various risks associated with our Lake City U.S. Army Ammunition Plant contract, including performance and compliance with governmental contract provisions.

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;

fluctuations in foreign currency exchange rates;

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



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Part II — Other Information


Item 1. Legal Proceedings.


Not Applicable.


Item 1A. Risk Factors.


Not Applicable.


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


(a)Not Applicable.

(a)    Not Applicable.
(b)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 ProgramsMaximum Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs 
April 1-30, 2021— $——   
May 1-31, 2021— ——   
June 1-30, 2021— ——   
Total   304,075,829 (1)

(1)On 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. Through June 30, 2021, 10,072,741 shares had been repurchased at a total value of $195,924,171 and $304,075,829 of common stock remained available for purchase under the program.

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)

(1)On April 24, 2014, we announced 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. Through September 30, 2017, 1,937,343 shares had been repurchased, and 6,062,657 shares that 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.

Item 3. Defaults Upon Senior Securities.


Not Applicable.


Item 4. Mine Safety Disclosures.


Not Applicable.


Item 5. Other Information.


Not Applicable.



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Item 6. Exhibits.


ExhibitExhibit No.
Description
31.1
11
Computation of Per Share Earnings (included in the Note—“Earnings Per Share” to Notes to Consolidated 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
31.2
Section 302 Certification Statement of Chief Financial Officer
32
32
Section 906 Certification Statement of Chief Executive Officer and Chief Financial Officer
101.INS
101.INS
XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the XBRL document)
101.SCH
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
104Cover 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.





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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

July 28, 2021
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