Olin Announces Third Quarter Earnings Achieves Record Level of Operating Income

CLAYTON, Mo.--(Business Wire)--
Olin Corporation (NYSE:OLN) announced today it achieved record
operating income in the third quarter of 2008 of $87.0 million, which
increased 130% from the third quarter 2007 level of $37.8 million.
Income from continuing operations in the third quarter of 2008 was
$37.7 million, or $0.49 per diluted share, compared with net income
from continuing operations of $32.7 million, or $0.44 per diluted
share, in the third quarter of 2007. Third quarter 2008 income from
continuing operations included the previously announced $26.6 million
impairment charge on corporate debt securities. Third quarter 2007
earnings include one month of results from the Pioneer operations
which were acquired August 31, 2007. Sales during the third quarter of
2008 were $502.9 million compared to $350.3 million in the third
quarter of 2007.

Joseph D. Rupp, Chairman, President, and Chief Executive Officer
said, "We experienced record performance in our Chlor Alkali business
during the third quarter, despite the impact of two hurricanes, and
continued strong performance from our Winchester business. Chlor
Alkali segment earnings were $103.6 million, reflecting higher ECU
netbacks. Overall volumes in the quarter were negatively impacted by
approximately 3% due to hurricane-related outages at our St. Gabriel,
Louisiana facility and our SunBelt joint venture. We expect continued
improvement in ECU netbacks in the fourth quarter. Winchester's
segment earnings were in line with the third quarter of 2007 as
improved pricing offset higher costs and lower volumes. Third quarter
2008 earnings were also positively impacted by favorable tax
adjustments resulting from the finalization of our 2007 tax returns
and lower stock-based compensation expense."

In the fourth quarter of 2008 we anticipate earnings per share in
the $0.65 per diluted share range. In Chlor Alkali the improvement in
ECU netbacks is expected to offset seasonally weaker volumes.
Winchester expects approximately breakeven results in the seasonally
weak fourth quarter.

SEGMENT REPORTING

We define segment results as income (loss) before interest
expense, interest income, other income, and income taxes and include
the results of non-consolidated affiliates in segment results
consistent with management's monitoring of the operating segments.

CHLOR ALKALI PRODUCTS

Chlor Alkali Product sales for the third quarter of 2008 were
$362.1 million, compared to $221.3 million in the third quarter of
2007. The increase reflects the combined impact of a 29% increase in
chlorine and caustic volumes due to the inclusion of the Pioneer
operations for the entire third quarter of 2008, compared to one month
in the third quarter of 2007, and a 20% increase in combined chlorine
and caustic soda prices. Chlor Alkali segment income during the third
quarter of 2008 was $103.6 million, compared to $70.7 million in the
third quarter of 2007. The higher level of income reflects the higher
volumes resulting from the inclusion of a full quarter of the Pioneer
operations in the third quarter of 2008, the realization of cost
synergies resulting from the integration of Pioneer, and higher
selling prices, partially offset by higher electricity and
distribution costs.

WINCHESTER

Winchester third quarter 2008 sales were $140.8 million, compared
to $129.0 million in the third quarter of 2007. The combination of
higher selling prices and increased law enforcement and government,
including military, sales volumes were partially offset by lower sales
volumes to commercial customers.

Winchester segment income for the third quarter was $9.8 million,
compared to $10.0 million in the third quarter of 2007. The favorable
impact of higher selling prices was more than offset by higher raw
material costs, including copper, lead, and steel, and higher
manufacturing costs.

CORPORATE AND OTHER COSTS

In the third quarter of 2008, there was $5.2 million of pension
income associated with the defined benefit pension plan recognized in
the corporate and other segment. During the third quarter of 2007
there was $0.6 million of defined benefit pension plan expense
included in the corporate and other segment. The year-over-year change
reflects the impact of the $100 million voluntary contribution made in
May of 2007, the favorable 2007 investment returns, a required
25-basis point increase in the liability discount rate, the impact of
the plan freeze for salaried and non-bargained hourly employees that
became effective January 1, 2008, and an increase in the amortization
period for actuarial losses.

On a total company basis, defined benefit pension plan income for
the three months ended September 30, 2008 was $2.9 million, compared
to $13.0 million of expense in 2007. The reduction in defined benefit
pension plan expense was partially offset by higher defined
contribution pension costs. During the third quarter of 2008, total
company pension expense related to defined contribution plans was $2.8
million, compared to $0.6 million in the third quarter of 2008.

Third quarter 2008 charges to income for environmental
investigatory and remedial activities were $6.4 million, compared to
$16.2 million in 2007. Third quarter 2007 charges included a $7.8
million increase in costs at a former waste disposal site based on
revised remediation estimates resulting from negotiations with a
government agency. The third quarter 2008 charges relate primarily to
future investigatory and remediation activities associated with former
waste disposal sites and past manufacturing operations.

During the third quarter of 2008, other corporate and unallocated
costs were $13.6 million, compared with $12.3 million in the third
quarter of 2007. Higher legal and legal related expenses were
partially offset by lower mark-to-market adjustments on stock-based
compensation. During the third quarter of 2008 mark-to-market
adjustments reduced stock-based compensation expenses by $2.9 million.
In the third quarter of 2007, mark-to-market adjustments increased
stock-based compensation expenses by $1.8 million.

OTHER (EXPENSE) INCOME

Other (expense) income for the third quarter of 2008 included an
impairment charge representing the full value of a $26.6 million
investment in corporate debt securities. The impairment occurred as a
result of a decline in market values. On October 1, 2008, the issuer
of these debt securities announced it would cease trading and appoint
a receiver as a result of financial market turmoil. At June 30, 2008,
a temporary impairment for these corporate debt securities of $6.1
million was recorded as a charge to equity. No tax benefit was
recognized in conjunction with this impairment charge.

INCOME TAXES

During the third quarter of 2008, income tax expense included a
reduction in expense of $2.5 million associated with the filing of the
final 2007 tax returns. No tax benefit was recorded in conjunction
with the $26.6 million impairment charge recorded in the quarter.

CASH FLOW

Cash and cash equivalents increased $13.8 million during the third
quarter of 2008. Working capital increased $37.7 million reflecting
the higher level of quarter end receivables, and the impact of higher
selling prices. Capital spending during the quarter was $51.9 million,
of which $38.6 million supported the ongoing conversion and expansion
project at the St. Gabriel, Louisiana facility. These uses of cash
were partially offset by $32 million of cash proceeds associated with
an unusually high level of stock options exercised in the quarter.

DIVIDEND

Today, Olin's Board of Directors declared a dividend of $0.20 on
each share of Olin common stock. The dividend is payable on December
10, 2008 to shareholders of record at the close of business on
November 10, 2008. This is the 328th consecutive quarterly dividend to
be paid by the Company.

CONFERENCE CALL INFORMATION

The Company's third quarter earnings conference call with
securities analysts is scheduled for 10:00 A.M. Eastern Time, Friday,
October 24. The call will feature remarks by Joseph D. Rupp, Olin's
Chairman, President and Chief Executive Officer, and John E. Fischer,
Olin's Vice President and Chief Financial Officer. Anyone wishing to
listen to the call may do so via the Internet by following the
instructions posted under the Conference Call icon on Olin's website,
www.olin.com. Listeners should log on to the website at least 5
minutes before the call. The call will also be audio archived on the
Olin website for future replay. A text of the prepared remarks from
the conference call will be available on the website in the Investor
section.

COMPANY DESCRIPTION

Olin Corporation is a manufacturer concentrated in two business
segments: Chlor Alkali Products and Winchester. Chlor Alkali Products
manufactures chlorine and caustic soda, sodium hydrosulfite,
hydrochloric acid, hydrogen, potassium hydroxide and bleach products.
Winchester products include sporting ammunition, reloading components,
small caliber military ammunition and components, and industrial
cartridges.

FORWARD-LOOKING STATEMENTS

This communication 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. The statements contained in this communication 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," and variations of
such words and similar expressions in this communication to identify
such forward-looking statements. These statements are not guarantees
of future performance and involve certain risks, uncertainties and
assumptions, which are difficult to predict and many of which are
beyond our control. Therefore, actual outcomes and results may differ
materially from those matters expressed or implied in such
forward-looking statements. We undertake no obligation to update
publicly any forward-looking statements, whether as a result of future
events, new information or otherwise. Relative to the dividend, the
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, 2007 include, but are not limited to, the following:

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

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

-- 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;

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

-- unexpected litigation outcomes;

-- 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;

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

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

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

-- an increase in our indebtedness or higher-than-expected
interest rates, affecting our ability to generate sufficient
cash flow for debt service; and

-- adverse conditions in the credit market, limiting or
preventing our ability to borrow.

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.

2008 - 25

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Olin Corporation
Consolidated Statements of Income (a)

----------------------------------------------------------------------
Three Months Nine Months
Ended September Ended September
30, 30,
(In millions, except per share
amounts) 2008 2007 2008 2007
----------------------------------------------------------------------

Sales $502.9 $350.3 $1,330.3 $872.0
Operating Expenses:
Cost of Goods Sold 380.7 281.8 1,042.0 700.1
Selling and Administration 35.6 31.0 104.5 95.0
Other Operating Income 0.4 0.3 1.5 0.5
----------------------------------------------------------------------
Operating Income 87.0 37.8 185.3 77.4
Earnings of Non-consolidated
Affiliates 12.0 14.1 31.1 34.4
Interest Expense 3.3 6.0 11.5 15.9
Interest Income 1.0 2.7 5.2 9.2
Other (Expense) Income (b) (26.4) - (26.1) 0.2
----------------------------------------------------------------------
Income from Continuing Operations
before Taxes 70.3 48.6 184.0 105.3
Income Tax Provision 32.6 15.9 73.5 34.1
----------------------------------------------------------------------
Income from Continuing Operations 37.7 32.7 110.5 71.2
Income from Discontinued
Operations, Net - 9.5 - 29.7
Loss on Disposal of Discontinued
Operations, Net - (125.4) - (125.4)
----------------------------------------------------------------------
Net Income (Loss) $37.7 $(83.2) $110.5 $(24.5)
----------------------------------------------------------------------
Net Income (Loss) Per Common Share:
Basic Income (Loss) per Common
Share:
Income from Continuing
Operations $0.49 $0.44 $1.47 $0.96
Income from Discontinued
Operations, Net - 0.13 - 0.41
Loss on Disposal of
Discontinued Operations, Net - (1.69) - (1.70)
----------------------------------------------------------------------
Net Income (Loss) $0.49 $(1.12) $1.47 $(0.33)
----------------------------------------------------------------------
Diluted Income (Loss) per Common
Share:
Income from Continuing
Operations $0.49 $ 0.44 $1.46 $0.96
Income from Discontinued
Operations, Net - 0.12 - 0.40
Loss on Disposal of
Discontinued Operations, Net - (1.68) - (1.69)
----------------------------------------------------------------------
Net Income (Loss) $0.49 $(1.12) $1.46 $(0.33)
----------------------------------------------------------------------
Dividends Per Common Share $0.20 $0.20 $0.60 $0.60
----------------------------------------------------------------------
Average Common Shares Outstanding -
Basic 76.3 74.1 75.4 73.8
----------------------------------------------------------------------
Average Common Shares Outstanding -
Diluted 76.7 74.6 75.7 74.2
----------------------------------------------------------------------

(a)Unaudited.
(b)Other (expense) income for the three and nine months ended
September 30, 2008 included an impairment charge of the full value
of a $26.6 million investment in corporate debt securities. No tax
benefit is expected to be realized from this impairment charge.
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Olin Corporation
Segment Information (a)
(In millions)
----------------------------------------------------------------------
Three Months Nine Months
Ended September Ended September
30, 30,
2008 2007 2008 2007
----------------------------------------------------------------------
Sales:
Chlor Alkali Products $362.1 $221.3 $962.6 $543.0
Winchester 140.8 129.0 367.7 329.0
----------------------------------------------------------------------
Total Sales $502.9 $350.3 $1,330.3 $872.0
----------------------------------------------------------------------
Income from Continuing Operations
before Taxes:
Chlor Alkali Products (b) $103.6 $70.7 $241.0 $169.2
Winchester 9.8 10.0 29.3 23.7
Corporate/Other:
Pension Income (Expense) (c) 5.2 (0.6) 13.3 (4.1)
Environmental Provision (6.4) (16.2) (21.2) (29.3)
Other Corporate and
Unallocated Costs (13.6) (12.3) (47.5) (48.2)
Other Operating Income 0.4 0.3 1.5 0.5
Interest Expense (3.3) (6.0) (11.5) (15.9)
Interest Income 1.0 2.7 5.2 9.2
Other (Expense) Income (d) (26.4) - (26.1) 0.2
----------------------------------------------------------------------
Income from Continuing
Operations before Taxes $70.3 $48.6 $184.0 $105.3
----------------------------------------------------------------------

(a)Unaudited.
(b)Earnings of non-consolidated affiliates are included in the Chlor
Alkali Products segment results consistent with management's
monitoring of the operating segments. The earnings from non-
consolidated affiliates were $12.0 million and $14.1 million for
the three months ended September 30, 2008 and 2007, respectively
and $31.1 million and $34.4 million for the nine months ended
September 30, 2008 and 2007, respectively.
(c)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. Pension income for the nine
months ended September 30, 2008 included a curtailment charge of
$0.8 million resulting from the conversion of our McIntosh, AL
chlor alkali hourly workforce from a defined benefit pension plan
to a defined contribution pension plan.
(d)Other (expense) income for the three and nine months ended
September 30, 2008 included an impairment charge of the full value
of a $26.6 million investment in corporate debt securities. No tax
benefit is expected to be realized from this impairment charge.
*T

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Olin Corporation
Consolidated Balance Sheets (a)
(In millions, except per share data)
----------------------------------------------------------------------
September December September
30, 31, 30,
2008 2007 2007
----------------------------------------------------------------------

Assets:
Cash & Cash Equivalents $200.2 $306.0 $42.1
Short-Term Investments - 26.6 26.6
Accounts Receivable, Net 264.4 202.0 234.2
Inventories 146.1 106.7 114.0
Current Deferred Income Taxes 1.5 15.0 18.9
Other Current Assets 18.4 14.7 31.2
Current Assets of Discontinued
Operations - - 385.7
----------------------------------------------------------------------
Total Current Assets 630.6 671.0 852.7
Property, Plant and Equipment
(Less Accumulated Depreciation of
$950.3, $912.6 and $903.1) 592.1 503.6 481.5
Prepaid Pension Costs 160.9 139.7 -
Deferred Income Taxes 45.1 26.3 101.4
Other Assets 66.2 58.9 26.1
Goodwill 303.7 301.9 299.1
Assets of Discontinued Operations - - 195.9
----------------------------------------------------------------------
Total Assets $1,798.6 $1,701.4 $1,956.7
----------------------------------------------------------------------

Liabilities and Shareholders' Equity:
Current Installments of Long-Term Debt $- $9.8 $70.6
Accounts Payable 138.5 150.6 113.4
Income Taxes Payable 2.1 3.1 24.1
Accrued Liabilities 241.1 244.7 222.0
Current Liabilities of Discontinued
Operations - - 179.9
----------------------------------------------------------------------
Total Current Liabilities 381.7 408.2 610.0
Long-Term Debt 249.7 249.2 360.1
Accrued Pension Liability 51.2 50.5 141.6
Other Liabilities 334.4 329.8 314.4
Liabilities of Discontinued Operations - - 9.0
----------------------------------------------------------------------
Total Liabilities 1,017.0 1,037.7 1,435.1
----------------------------------------------------------------------
Commitments and Contingencies
Shareholders' Equity:
Common Stock, Par Value $1 Per
Share, Authorized 120.0 Shares:
Issued and Outstanding 76.9
Shares (74.5 and 74.2 in
2007) 76.9 74.5 74.2
Additional Paid-In Capital 794.4 742.0 736.4
Accumulated Other Comprehensive
Loss (153.5) (151.2) (287.0)
Retained Earnings (Accumulated
Deficit) 63.8 (1.6) (2.0)
----------------------------------------------------------------------
Total Shareholders' Equity 781.6 663.7 521.6
----------------------------------------------------------------------
Total Liabilities and Shareholders'
Equity $1,798.6 $1,701.4 $1,956.7
----------------------------------------------------------------------

(a) Unaudited.
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Olin Corporation
Consolidated Statements of Cash Flows (a)
(In millions)
----------------------------------------------------------------------

Nine Months Ended September 30, 2008 2007
----------------------------------------------------------------------
Operating Activities:
Net Income (Loss) $110.5 $(24.5)
Loss from Discontinued Operations, Net - 95.7
Earnings of Non-consolidated Affiliates (31.1) (34.4)
Stock-Based Compensation 4.9 4.4
Depreciation and Amortization 52.2 31.2
Deferred Income Taxes (6.1) 29.5
Qualified Pension Plan Contribution - (100.0)
Qualified Pension Plan (Income) Expense (11.0) 18.0
Impairment of Investment in Corporate Debt Securities 26.6 -
Common Stock Issued Under Employee Benefit Plans 3.4 2.6
Changes in:
Receivables (60.9) (39.6)
Inventories (39.7) (5.8)
Other Current Assets (3.7) (9.4)
Accounts Payable and Accrued Liabilities (42.3) (6.1)
Income Taxes Payable (8.2) 9.2
Other Assets 1.6 4.8
Other Noncurrent Liabilities 11.1 26.7
Other Operating Activities (7.8) 6.4
----------------------------------------------------------------------
Cash (Used for) Provided by Continuing Operations (0.5) 8.7
Discontinued Operations:
Income from Discontinued Operations, Net - 29.7
Operating Activities from Discontinued Operations - 70.8
----------------------------------------------------------------------
Cash Provided by Discontinued Operations - 100.5
----------------------------------------------------------------------
Net Operating Activities (0.5) 109.2
----------------------------------------------------------------------
Investing Activities:
Capital Expenditures (123.4) (40.1)
Business Acquired through Purchase Transaction - (426.1)
Cash Acquired through Business Acquisition - 126.4
Proceeds from Disposition of Property, Plant and
Equipment 0.5 0.3
Proceeds from Sale of Short-Term Investments - 50.0
Proceeds from Sale/Leaseback of Equipment - 14.8
Distributions from Affiliated Companies, Net 20.9 24.5
Other Investing Activities (0.6) 0.7
----------------------------------------------------------------------
Cash Used for Continuing Operations (102.6) (249.5)
Investing Activities from Discontinued Operations - (12.2)
----------------------------------------------------------------------
Net Investing Activities (102.6) (261.7)
----------------------------------------------------------------------
Financing Activities:
Long-Term Debt:
Borrowings - 30.0
Repayments (9.8) (1.7)
Issuance of Common Stock 7.9 10.3
Stock Options Exercised 38.1 1.5
Excess Tax Benefits from Stock Options Exercised 6.2 0.6
Dividends Paid (45.1) (44.3)
Deferred Debt Issuance Costs - (1.6)
----------------------------------------------------------------------
Net Financing Activities (2.7) (5.2)
----------------------------------------------------------------------
Net Decrease in Cash and Cash Equivalents (105.8) (157.7)
Cash and Cash Equivalents, Beginning of Year 306.0 199.8
----------------------------------------------------------------------
Cash and Cash Equivalents, End of Period $200.2 $42.1
----------------------------------------------------------------------

(a) Unaudited.
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Olin Corporation
Investor Contact:
Larry P. Kromidas
(618) 258-3206

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