What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2022-02-24 compared with 2021-02-22 · 298 added, 379 removed, 1457 unchanged (32% of the section changed)

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As of December 31, 2021, we maintained open positions on commodity contracts with a notional value totaling $224.3 million ($214.1 million at December 31, 2020).

Assuming a hypothetical 10% increase in commodity prices, which are currently hedged, as of December 31, 2020, we would experience an $21.4 million ($17.5 million at December 31, 2019) increase in our cost of inventory purchased, which would be substantially offset by a corresponding increase in the value of related hedging instruments.

Assuming a hypothetical 10% increase in commodity prices, which are currently hedged, as of December 31, 2021, we would experience a $22.4 million ($21.4 million at December 31, 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.

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Our current debt structure is used to fund business operations, and commitments from banks under our Senior Revolving Credit Facility, Receivables Financing Agreement and AR Facilities are sources of liquidity.

As of December 31, 2020, we had long-term

borrowings, including current installments of long-term debt and finance lease obligations, of $3,863.8 million ($3,340.8 million at December 31, 2019) of which $780.9 million ($155.9 million at December 31, 2019) was issued at variable rates.

Included within long-term borrowings on the consolidated balance sheets were deferred debt issuance costs, unamortized bond original issue discount and deferred losses on fair value interest rate swaps.

As of December 31, 2021, we had long-term borrowings, including current installments of long-term debt and finance lease obligations, of $2,779.3 million ($3,863.8 million at December 31, 2020) of which $805.9 million ($155.9 million at December 31, 2020) was issued at variable rates.

Included within long-term borrowings on the consolidated balance sheets were deferred debt issuance costs and unamortized bond original issue discount.

Assuming no changes in the $805.9 million of variable-rate debt levels from December 31, 2021, we estimate that a hypothetical change of 100-basis points in the LIBOR interest rates from 2021 would impact annual interest expense by $8.1 million.

Our interest rate swaps increased interest expense by $0.4 million in 2020 and reduced interest expense by $1.7 million and $6.8 million in 2019 and 2018, respectively.

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

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The statements contained in this report 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,” “estimate,” “project,” “forecast,” “optimistic” and variations of such words and similar expressions in this report to identify such forward-looking statements.

We have used the words “anticipate,” “intend,” “may,” “expect,” “believe,” “outlook,” “should,” “plan,” “project,” “estimate,” “forecast,” “optimistic,” “target,” and variations of such words and similar expressions in this annual 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.

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We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.

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 include those discussed under Item 1A—“Risk Factors.” You should consider all of our forward-looking statements in light of these factors.

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/s/ Scott Sutton

President and Chief Executive Officer

Chairman, President and Chief Executive Officer

Vice President and Chief Financial Officer

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Update 2016-02 - Leases and amendments thereto.

Basis for Opinions

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A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of goodwill

As discussed in Notes 2 and 11 to the consolidated financial statements, the carrying amount of goodwill as of December 31, 2020 was $1,420.2 million.

The goodwill balances of the Chlor Alkali Products and Vinyls and Epoxy reporting units as of December 31, 2020 were $1,275.3 million and $144.9 million, respectively.

The Company performs a goodwill impairment assessment on an annual basis during the fourth quarter of each fiscal year and whenever circumstances or other events indicate that impairment may have occurred.

Reporting units are tested for impairment by comparing the estimated fair value of each reporting unit with its carrying amount.

If the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is recorded.

Management generally uses the discounted cash flow method under the income approach to estimate the fair value of reporting units.

During 2020, management identified triggering events that necessitated the performance of quantitative impairment tests and recorded an impairment of goodwill of $557.6 million and $142.2 million in the Chlor Alkali Products and Vinyls and Epoxy reporting units, respectively.

We identified the evaluation of the recoverability of the carrying value of goodwill for each reporting unit as a critical audit matter.

Subjective and challenging auditor judgment was required to evaluate certain assumptions used in the Company’s estimate of the fair value of the reporting units, including the impact of those assumptions on the determination of the goodwill impairment recorded.

Specifically, the revenue projections and the discount rate assumptions underlying the Company’s determination of the fair value of the reporting units were challenging to audit as changes to those assumptions had a significant effect on the estimate of the fair value for the reporting units and the amount of impairment recorded.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s goodwill impairment assessment process, including controls related to the development of the revenue projections and discount rate assumptions.

We evaluated the Company’s revenue projections for each reporting unit, including revenue growth rates, by comparing them to the Company’s historical growth rates, industry reports, and peer companies’ financial information.

In addition, we involved a valuation professional with specialized skill and knowledge who assisted in evaluating the Company’s selection of discount rates, by comparing them against a discount rate range that was independently developed using publicly available market data for comparable entities.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of environmental obligations

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The Company accrues a liability for environmental matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based upon current law and existing technologies.

The liability is adjusted periodically as assessment and remediation efforts progress or additional technical or legal information becomes available.

The liability is adjusted periodically as assessment and remediation efforts progress or as additional technical or legal information becomes available.

We identified the evaluation of the environmental liabilities as a critical audit matter.

This required challenging auditor judgment due to the nature of the estimate and assumptions, including judgments about future events and uncertainties in required remediation activities and the time period over which remediation will occur.

This required challenging auditor judgment due to the nature of the estimate and assumptions, including judgments in determining required remediation activities designed to consider future events and uncertainties and the time period over which remediation activities will occur.

The following are the primary procedures that we performed to address this critical audit matter.

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Restructuring charges 27.9 9.0 76.5

Acquisition-related costs — — 1.0

Goodwill impairment — 699.8 —

Other operating income 1.4 0.7 0.4

Operating (loss) income ( 746.7 ) 177.8 676.9

Losses of non-consolidated affiliates — — ( 19.7 )

Operating income (loss) 1,850.8 ( 746.7 ) 177.8

Interest expense 348.0 292.7 243.2

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Income (loss) before taxes 1,538.7 ( 1,020.0 ) ( 36.9 )

Income tax (benefit) provision ( 50.1 ) ( 25.6 ) 109.4

Net (loss) income $ ( 969.9 ) $ ( 11.3 ) $ 327.9

Net (loss) income per common share:

Income tax provision (benefit) 242.0 ( 50.1 ) ( 25.6 )

Net income (loss) $ 1,296.7 $ ( 969.9 ) $ ( 11.3 )

Net income (loss) per common share:

Basic $ 8.15 $ ( 6.14 ) $ ( 0.07 )

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2021 2020 2019

Net (loss) income $ ( 969.9 ) $ ( 11.3 ) $ 327.9

Net income (loss) $ 1,296.7 $ ( 969.9 ) $ ( 11.3 )

Other comprehensive income (loss), net of tax:

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Total other comprehensive income (loss), net of tax 201.9 113.5 ( 152.4 )

Comprehensive (loss) income $ ( 856.4 ) $ ( 163.7 ) $ 247.4

Comprehensive income (loss) $ 1,498.6 $ ( 856.4 ) $ ( 163.7 )

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

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Years ended December 31

(In millions, except per share data)

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings (Accumulated Deficit) Total Shareholders’ Equity

Shares Issued Par Value

Balance at January 1, 2018 167.1 $ 167.1 $ 2,280.9 $ ( 484.6 ) $ 790.3 $ 2,753.7

Income tax reclassification adjustment — — — ( 85.9 ) 85.9 —

Net income — — — — 327.9 327.9

Other comprehensive loss — — — ( 80.5 ) — ( 80.5 )

Dividends paid:

Common stock ($0.80 per share) — — — — ( 133.6 ) ( 133.6 )

2021 2020 2019

Balance at beginning of year $ 158.0 $ 157.7 $ 165.3

Common stock repurchased and retired ( 4.7 ) — ( 8.0 )

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Other transactions 0.1 0.2 0.3

Stock-based compensation — — 9.2 — — 9.2

Balance at December 31, 2018 165.3 $ 165.3 $ 2,247.4 $ ( 651.0 ) $ 1,070.5 $ 2,832.2

Lease accounting adoption adjustment — — — — 11.2 11.2

Net loss — — — — ( 11.3 ) ( 11.3 )

Other comprehensive loss — — — ( 152.4 ) — ( 152.4 )

Dividends paid:

Common stock ($0.80 per share) — — — — ( 129.3 ) ( 129.3 )

Balance at end of year $ 156.8 $ 158.0 $ 157.7

Additional Paid-In Capital

Balance at beginning of year $ 2,137.8 $ 2,122.1 $ 2,247.4

Common stock repurchased and retired ( 247.2 ) — ( 137.9 )

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Stock-based compensation 6.7 10.3 8.2

Balance at December 31, 2019 157.7 $ 157.7 $ 2,122.1 $ ( 803.4 ) $ 941.1 $ 2,417.5

Net loss — — — — ( 969.9 ) ( 969.9 )

Other comprehensive income — — — 113.5 — 113.5

Dividends paid:

Common stock ($0.80 per share) — — — — ( 126.3 ) ( 126.3 )

Common stock issued for:

Stock options exercised 0.1 0.1 1.8 — — 1.9

Other transactions 0.2 0.2 3.6 — — 3.8

Stock-based compensation — — 10.3 — — 10.3

Balance at December 31, 2020 158.0 $ 158.0 $ 2,137.8 $ ( 689.9 ) $ ( 155.1 ) $ 1,450.8

Balance at end of year $ 1,969.6 $ 2,137.8 $ 2,122.1

Accumulated Other Comprehensive Loss

Balance at beginning of year $ ( 689.9 ) $ ( 803.4 ) $ ( 651.0 )

Other comprehensive income (loss) 201.9 113.5 ( 152.4 )

Balance at end of year $ ( 488.0 ) $ ( 689.9 ) $ ( 803.4 )

Retained Earnings (Accumulated Deficit)

Balance at beginning of year $ ( 155.1 ) $ 941.1 $ 1,070.5

Lease accounting adoption adjustment — — 11.2

Net income (loss) 1,296.7 ( 969.9 ) ( 11.3 )

Common stock dividends paid ( 127.8 ) ( 126.3 ) ( 129.3 )

Balance at end of year $ 1,013.8 $ ( 155.1 ) $ 941.1

Total Shareholders’ Equity $ 2,652.2 $ 1,450.8 $ 2,417.5

Dividends declared per share of common stock $ 0.80 $ 0.80 $ 0.80

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

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Operating Activities

Net (loss) income $ ( 969.9 ) $ ( 11.3 ) $ 327.9

Adjustments to reconcile net (loss) income to net cash and cash equivalents provided by (used for) operating activities:

Net income (loss) $ 1,296.7 $ ( 969.9 ) $ ( 11.3 )

Adjustments to reconcile net income (loss) to net cash and cash equivalents provided by (used for) operating activities:

Goodwill impairment — 699.8 —

Gain on disposition of non-consolidated affiliate — — ( 11.2 )

Losses of non-consolidated affiliates — — 19.7

Losses on disposition of property, plant and equipment — — 2.0

Gains on disposition of property, plant and equipment ( 1.4 ) — —

Stock-based compensation 8.3 13.6 10.7

Loss on debt extinguishment 152.2 20.4 —

Depreciation and amortization 582.5 568.4 597.4

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Net operating activities 1,741.0 433.0 617.3

418.4 617.3 907.8

Investing Activities

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Net investing activities ( 197.4 ) ( 835.7 ) ( 365.6 )

( 835.7 ) ( 365.6 ) ( 382.3 )

Financing Activities

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Repayments ( 1,643.1 ) ( 1,307.2 ) ( 744.2 )

Debt early redemption premiums ( 137.7 ) ( 14.6 ) —

Common stock repurchased and retired ( 251.9 ) — ( 145.9 )

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Net financing activities ( 1,552.0 ) 371.0 ( 209.3 )

385.6 ( 209.3 ) ( 564.8 )

Effect of exchange rate changes on cash and cash equivalents ( 0.8 ) 0.5 ( 0.3 )

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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:

We are a leading vertically-integrated global manufacturer and distributor of chemical products and a leading U.S.

manufacturer of ammunition.

Our operations are concentrated in three business segments:

Chlor Alkali Products and Vinyls, Epoxy and Winchester.

The Chlor Alkali Products and Vinyls segment manufactures and sells chlorine and caustic soda, ethylene dichloride and vinyl chloride monomer, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, trichloroethylene, hydrochloric acid, hydrogen, bleach products and potassium hydroxide.

All of our business segments are capital intensive manufacturing businesses.

The Chlor Alkali Products and Vinyls segment manufactures and sells chlorine and caustic soda, ethylene dichloride and vinyl chloride monomer, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, hydrochloric acid, hydrogen, bleach products and potassium hydroxide.

The Epoxy segment produces and sells a full range of epoxy materials and precursors, including aromatics (acetone, bisphenol, cumene and phenol), allyl chloride, epichlorohydrin, liquid epoxy resins, solid epoxy resins and downstream products such as converted epoxy resins and additives.

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However, a portion of our revenue is derived from long-term contracts which have contract periods that vary between one to multi-year.

Certain of these contracts represent contracts with minimum purchase obligations, which can be substantially different than the actual revenue recognized.

Certain of these contracts represent contracts with minimum purchase obligations, which

can be substantially different than the actual revenue recognized.

Such contracts consist of varying types of products across our chemical businesses.

Certain contracts include variable volumes and/or variable pricing with pricing provisions tied to

commodity, consumer price or other indices.

Certain contracts include variable volumes and/or variable pricing with pricing provisions tied to commodity, consumer price or other indices.

The transaction price allocated to the remaining performance obligations related to our contracts was excluded from the disclosure of our remaining performance obligations based on the following practical expedients that we elected to apply:

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Acquisition-related costs also may include costs which arise as a result of acquisitions, including contractual change in control provisions, contract termination costs, compensation payments related to the acquisition or pension and other postretirement benefit plan settlements.

On October 5, 2015 (the Closing Date), we completed the acquisition (the Acquisition) from The Dow Chemical Company (Dow) of its U.S.

Chlor Alkali and Vinyl, Global Chlorinated Organics and Global Epoxy businesses (collectively, the Acquired Business).

For the year ended December 31, 2018, we incurred costs related to the integration of the Acquired Business of $ 1.0 million which consisted of advisory, legal, accounting and other professional fees.

Other Operating Income (Expense)

Other operating income (expense) consists of miscellaneous operating income items, which are related to our business activities, and gains (losses) on disposition of property, plant and equipment.

Included in other operating income were the following:

Years Ended December 31,

2020 2019 2018

($ in millions)

Losses on disposition of property, plant and equipment, net $ ( 0.2 ) $ — $ ( 2.0 )

Gains on insurance recoveries — — 8.0

Other 0.9 0.4 0.4

Other operating income $ 0.7 $ 0.4 $ 6.4

Other operating income for 2020 included an $ 0.8 million gain on the sale of land.

Other operating income for 2018 included an $ 8.0 million insurance recovery for a second quarter 2017 business interruption at our Freeport, TX vinyl chloride monomer facility partially offset by a $ 1.7 million loss on the sale of land.

Other operating income for the year ended December 31, 2021 included a $ 1.4 million gain on the sale of a terminal facility.

Other operating income for the year ended December 31, 2020 included an $ 0.8 million gain on the sale of land.

Other Income (Expense)

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In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02 “Leases,” (ASU 2016-02) which supersedes Accounting Standards Codification (ASC) 840 “Leases” and creates a new topic, ASC 842 “Leases” (ASC 842).

Subsequent to the issuance of ASU 2016-02, ASC 842 was amended by various updates that amend and clarify the impact and implementation of the aforementioned update.

Upon initial application, the provisions of these updates are required to be applied using the modified retrospective method which requires retrospective adoption to each prior reporting period presented with the cumulative effect of adoption recorded to the earliest reporting period presented.

An optional transition method can be utilized which requires application of these updates beginning on the date of adoption with the cumulative effect of initially applying these updates recognized at the date of initial adoption.

We adopted these updates on January 1, 2019 using the optional transition method.

Consequently, our comparative periods have not been retrospectively adjusted for the new lease requirements.

Subsequent to the issuance of ASU 2016-02, ASC 842 was amended by various

updates that amend and clarify the impact and implementation of the aforementioned update.

We adopted these updates on January 1, 2019 using the optional transition method, which requires application of these updates beginning on the date of adoption with the cumulative effect of initially applying these updates recognized at the date of initial adoption.

In addition, we elected the following practical expedients:

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Comprehensive Income (Loss)

Accumulated other comprehensive loss consists of foreign currency translation adjustments, pension and postretirement liability adjustments, pension and postretirement amortization of prior service costs and actuarial losses and net unrealized (losses) gains on derivative contracts.

Goodwill is not amortized, but is reviewed for impairment annually in the fourth quarter and/or when circumstances or other events indicate that impairment may have occurred.

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therefore, actuarial gains and losses are amortized based upon the remaining life expectancy of the inactive plan participants.

For both the years ended December 31, 2020 and 2019, the average remaining life expectancy of the inactive participants in the domestic defined benefit pension plan were 18 years, respectively.

For the years ended December 31, 2021 and 2020, the average remaining life expectancy of the inactive participants in the domestic defined benefit pension plan were 17 years and 18 years, respectively.

One of the key assumptions for the net periodic pension calculation is the expected long-term rate of return on plan assets, used to determine the “market-related value of assets.” The “market-related value of assets” recognizes differences between the plan’s actual return and expected return over a five year period.

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Expected life of the option grant was based on historical exercise and cancellation patterns, as we believe that historical experience is the best estimate for future exercise patterns.

Performance share awards are denominated in shares of our stock and are paid half in cash and half in stock.

Payouts for performance share awards are based on two criteria:

(1) 50 % of the award is based on Olin’s total shareholder returns (TSR) over the applicable three -year performance cycle in relation to the TSR over the same period among a portfolio of public companies which are selected in concert with outside compensation consultants and (2) 50 % of the award is based on Olin’s net income over the applicable three -year performance cycle in relation to the net income goal for such period as set by the compensation committee of Olin’s board of directors.

The expense associated with performance shares is recorded based on our estimate of our performance relative to the respective target.

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 date 2021

Risk-free interest rate 0.23 %

Expected volatility of Olin common stock 55 %

Expected average volatility of peer companies 50 %

Average correlation coefficient of peer companies 0.50

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 granted 248,700

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 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.

Share Repurchases

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.

Under our April 26, 2018 share repurchase program, we may pursue various share repurchase strategies, which

include entering into accelerated share repurchase (ASR) agreements with third-party financial institutions to repurchase shares of Olin’s common stock.

Under our share repurchase programs, we may pursue various share repurchase strategies, which include entering into accelerated share repurchase (ASR) agreements with third-party financial institutions to repurchase shares of Olin’s common stock.

Under an ASR agreement, Olin pays a specified amount to the financial institution and receives an initial delivery of shares.

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RECENT ACCOUNTING PRONOUNCEMENTS

In March 2020, the U.S.

Securities and Exchange Commission issued final rule 33-10762, “Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities.” In October 2020, the FASB issued ASU 2020-09, “Amendments Pursuant to SEC Release No.

33-10762,” which amends ASC 470, “Debt” for this rule.

This rule simplifies the disclosure requirements related to registered securities under Rule 3-10 of Regulation S-X by modifying criteria to qualify for an exception to the requirement that an entity file separate financial statements for subsidiary issuers and guarantors.

The rule also reduces and, in some cases, eliminates the disclosures an entity must provide in lieu of the subsidiary’s audited financial statements and allows disclosures to be summarized and included within Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The rule requires certain enhanced narrative disclosures, including the terms and conditions of the guarantees and how the legal obligations of the issuer and guarantor, as well as other factors, may affect payments to holders of the debt securities.

The final rule is effective on January 4, 2021, with earlier application permitted.

We adopted the provisions of this rule during the third quarter of 2020 which did not have a material impact on our consolidated financial statements.

The adoption of this rule resulted in summarizing our supplemental guarantor financial information in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (ASU 2020-04) which creates a new topic, ASC 848 “Reference Rate Reform” (ASC 848).

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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.

We are currently evaluating the prospective impact on our consolidated financial statements;

however, for the year ended December 31, 2020, the adoption of this update did not have a material impact on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” which amends ASC 740 “Income Taxes” (ASC 740).

This update is intended to simplify accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and amending existing guidance to improve consistent application of ASC 740.

This update is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years.

The guidance in this update has various elements, some of which are applied on a prospective basis and others on a retrospective basis with earlier application permitted.

We adopted this update on January 1, 2020 which did not have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment” which amended ASC 350.

This update simplifies the measurement of goodwill impairment by eliminating Step 2 from the goodwill impairment test.

This update requires 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 did not modify the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.

This update is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

The guidance in this update is applied on a prospective basis, with earlier application permitted.

We adopted this update on January 1, 2020, see Note 11 “Goodwill and Intangible Assets” for additional information.

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” (ASU 2016-03) which amends ASC 326 “Financial Instruments—Credit Losses” (ASC 326).

Subsequent to the issuance of ASU 2016-13, ASC 326 was amended by various updates that amend and clarify the impact and implementation of the aforementioned update.

The new guidance introduces the current expected credit loss (CECL) model, which will require an entity to record an allowance for credit losses for certain financial instruments and financial assets, including trade receivables, based on expected losses rather than incurred losses.

Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument.

This update is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

The guidance in this update has various elements, some of which are applied on a prospective basis and others on a retrospective basis, with earlier application permitted.

We adopted this update on January 1, 2020 which did not have a material impact on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02 “Leases,” (ASU 2016-02) which supersedes ASC 840 “Leases” and creates a new topic, ASC 842 “Leases” (ASC 842).

Subsequent to the issuance of ASU 2016-02, ASC 842 was amended by various updates that amend and clarify the impact and implementation of the aforementioned update.

These updates require lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet.

These updates also expand the required quantitative and qualitative disclosures surrounding leases.

These updates are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with earlier application permitted.

We adopted these updates on January 1, 2019 using the optional transition method.

Accordingly, prior periods were not retrospectively adjusted.

Adoption of these updates resulted in the recording of operating lease assets and lease liabilities on our consolidated balance sheet of $ 291.9 million as of January 1, 2019.

Our assets and liabilities for finance leases remained unchanged.

We also recognized the cumulative effect of applying these updates as an adjustment to retained earnings of $ 11.2 million, net of tax, which was primarily related to the recognition of previously deferred sale/leaseback gains.

Our consolidated statements of operations and cash flows, along with our compliance with all covenants and restrictions under all our outstanding credit agreements, were not impacted by this adoption.

These updates also impacted our accounting policies, internal controls and disclosures related to leases.

Expanded disclosures regarding leases are included in Note 22 “Leases”.

The adoption of this update did not have a material impact on our consolidated financial statements.

RESTRUCTURING CHARGES

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 VDC production facility, both in Freeport, TX.

The VDC facility was closed during the fourth quarter of 2020.

The related chlor alkali plant closure is expected to be completed in the second quarter of 2021.

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 the year ended December 31, 2021, we recorded pretax restructuring charges of $ 10.3 million for employee severance and related benefit costs related to these actions.

We do not expect to incur additional restructuring charges related to these actions.

May 18, 2021, we announced that we had made the decision 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 second quarter of 2021.

We do not expect to incur restructuring charges related to these actions.

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.

The closure was completed in the first quarter of 2021.

On October 21, 2021, we announced that we had made a decision to permanently cease operations of the remaining 50 % of our diaphragm-grade chlor alkali capacity, representing an additional 200,000 tons, at our McIntosh, AL facility (collectively, McIntosh Plan).

The closure is expected to be completed by the end of the third quarter of 2022.

For the year ended December 31, 2021, we recorded pretax restructuring charges of $ 5.6 million for lease and other contract termination costs related to these actions.

We expect to incur additional restructuring charges through 2026 of approximately $ 35 million related to these actions.

On January 18, 2021, we announced we had made the decision to permanently close our trichloroethylene and anhydrous hydrogen chloride liquefaction facilities in Freeport, TX (collectively, Freeport 2021 Plan), which were completed in the fourth quarter of 2021.

For the year ended December 31, 2021, we recorded pretax restructuring charges of $ 6.5 million for facility exit costs related to these actions.

We expect to incur additional restructuring charges through 2024 of approximately $ 20 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 VDC production facility, both in Freeport, TX (collectively, Freeport 2019 Plan).

The VDC facility and related chlor alkali plant were closed during the fourth quarter of 2020 and second quarter of 2021, respectively.

For the year ended December 31, 2021, we recorded pretax restructuring charges of $ 3.9 million for facility exit costs and employee severance and related benefit costs related to these actions.

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Subsequent to the facility’s closure, products for customers in the region are sourced from Winchester manufacturing facilities located in the United States.

For the years ended December 31, 2019 and 2018, we recorded pretax restructuring charges of $ 0.4 million and $ 4.1 million, respectively for the write-off of equipment and facility costs, employee severance and related benefit costs, lease and other contract termination costs and facility exit costs related to this action.

For the year ended December 31, 2019, we recorded pretax restructuring charges of $ 0.4 million for the write-off of equipment and facility costs, employee severance and related benefit costs, lease and other contract termination costs and facility exit costs related to this action.

For the year ended December 31, 2019, we also recorded additional pretax restructuring charges of $ 1.4 million for employee severance and related benefit costs related to our Winchester operations.

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.

On March 21, 2016, we announced that we had made the decision to close a combined total of 433,000 tons of chlor alkali capacity across three separate locations (collectively, Chlor Alkali 2016 Plan).

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.

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We expect to incur additional restructuring charges through 2022 of approximately $ 1 million related to these capacity reductions.

For the year ended December 31, 2018, we recorded pretax restructuring charges of $ 2.1 million for lease and other contract termination costs and facility exit costs related to our permanent reduction in capacity at our Becancour, Canada chlor alkali facility in 2014.

The following table summarizes the 2021, 2020 and 2019 activities by major component of these restructuring actions and the remaining balances of accrued restructuring costs as of December 31, 2021, 2020 and 2019:

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The following table summarizes the cumulative restructuring charges of these restructuring actions by major component through December 31, 2021:

Chlor Alkali Products and Vinyls Total

Becancour Capacity Reductions Freeport Winchester

Chlor Alkali Products and Vinyls Corporate/other Total

McIntosh Plan Freeport 2021 Plan Freeport 2019 Plan Chlor Alkali 2016 Plan Productivity Plan

($ in millions)

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The remaining balance of $ 12.3 million is expected to be paid out through 2028.

Subsequent Event

On January 18, 2021, we announced we had made the decision to permanently close our trichloroethylene and anhydrous hydrogen chloride liquefaction facilities in Freeport, TX, before the end of 2021.

We expect to incur restructuring charges through 2023 of approximately $ 23 million related to these actions, approximately $ 2 million of which is expected to be incurred in 2021.

These restructuring costs are expected to consist of $ 21 million of facility exit costs and $ 2 million of contract termination costs.

EARNINGS PER SHARE

Basic and diluted net (loss) income per share are computed by dividing net (loss) income by the weighted-average number of common shares outstanding.

Diluted net (loss) income per share reflects the dilutive effect of stock-based compensation.

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.

Years ended December 31,

2021 2020 2019

Computation of Net (Loss) Income per Share (In millions, except per share data)

Net (loss) income $ ( 969.9 ) $ ( 11.3 ) $ 327.9

Computation of Net Income (Loss) per Share (In millions, except per share data)

Net income (loss) $ 1,296.7 $ ( 969.9 ) $ ( 11.3 )

Basic shares 159.1 157.9 162.3

Basic net (loss) income per share $ ( 6.14 ) $ ( 0.07 ) $ 1.97

Basic net income (loss) per share $ 8.15 $ ( 6.14 ) $ ( 0.07 )

Diluted shares:

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Diluted shares 163.0 157.9 162.3

Diluted net (loss) income per share $ ( 6.14 ) $ ( 0.07 ) $ 1.95

Diluted net income (loss) per share $ 7.96 $ ( 6.14 ) $ ( 0.07 )

The computation of dilutive shares from stock-based compensation does not include 0.1 million, 10.0 million and 7.8 million shares in 2021, 2020 and 2019, respectively, as their effect would have been anti-dilutive.

ACCOUNTS RECEIVABLES

On July 16, 2019, our existing $ 250.0 million Receivables Financing Agreement was extended to July 15, 2022 and downsized to $ 10.0 million with the option to expand (Receivables Financing Agreement).

In 2020, we amended the Receivables Financing Agreement to expand the borrowing capacity to $ 250.0 million.

The Receivables Financing Agreement includes a minimum borrowing requirement of 50 % of the facility limit or available borrowing capacity, whichever is lesser.

During 2021, we amended our existing $ 250.0 million Receivables Financing Agreement which expanded the borrowing capacity to $ 300.0 million (Receivables Financing Agreement) and extended the maturity to September 24, 2024.

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.

Under the Receivables Financing Agreement, our eligible trade receivables are used for collateralized borrowings and continue to be serviced by us.

addition, the Receivables Financing Agreement incorporates the secured leverage covenant that is contained in the $ 1,300.0 million senior secured credit facility.

For the year ended December 31, 2019, the outstanding balance of the $ 250.0 million Receivables Financing Agreement of $ 150.0 million was repaid with proceeds from the issuance of $ 750.0 million senior notes due 2029.

As of December 31, 2020 and 2019, we had $ 125.0 million and zero , respectively, drawn under the agreement.

As of December 31, 2020, $ 332.8 million of our trade receivables were pledged as collateral.

As of December 31, 2020, we had $ 124.0 million of additional borrowing capacity under the Receivables Financing Agreement.

Olin also has trade accounts receivable factoring arrangements (AR Facilities) and pursuant to the terms of the AR Facilities, certain of our subsidiaries may sell their accounts receivable up to a maximum of $ 228.0 million.

In addition, the Receivables Financing Agreement incorporates the net leverage ratio covenant that is contained in the $ 1,615.0 million senior credit facility.

As of December 31, 2021 and 2020, we had $ 300.0 million and $ 125.0 million, respectively, drawn under the agreement.

As of December 31, 2021, $ 556.2 million of our trade receivables were pledged as collateral and we had no additional borrowing capacity under the Receivables Financing Agreement.

Olin also has trade accounts receivable factoring arrangements (AR Facilities) and pursuant to the terms of the AR Facilities, certain of our domestic subsidiaries may sell their accounts receivable up to a maximum of $ 250.0 million and certain of our foreign subsidiaries may sell their accounts receivable up to a maximum of € 43.4 million.

We will continue to service the outstanding accounts sold.

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The agreements are without recourse and therefore no recourse liability has been recorded as of December 31, 2021.

At December 31, 2020 and 2019, our consolidated balance sheets included other receivables of $ 62.4 million and $ 87.4 million, respectively, which were classified as receivables, net.

ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLES

Allowance for doubtful accounts receivable consisted of the following:

($ in millions)

Beginning balance $ 11.9 $ 12.9

Provisions charged 0.7 1.1

Write-offs, net of recoveries ( 0.5 ) ( 2.1 )

Foreign currency translation adjustments 0.2 —

Ending balance $ 12.3 $ 11.9

Our consolidated balance sheets included an allowance for doubtful accounts receivables of $ 12.3 million, $ 12.3 million and $ 11.9 million and other receivables of $ 65.3 million, $ 62.4 million and $ 87.4 million at December 31, 2021, 2020 and 2019, respectively, which were included in receivables, net.

($ in millions)

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Interest capitalized was $ 3.2 million, $ 6.4 million and $ 10.8 million for 2021, 2020 and 2019, respectively.

The consolidated statements of cash flows for the years ended December 31, 2020, 2019 and 2018, included an increase of $ 31.0 million and decreases of $ 5.7 million and $ 25.5 million, respectively, to capital expenditures, with the corresponding change to accounts payable and accrued liabilities, related to purchases of property, plant and equipment included in accounts payable and accrued liabilities at December 31, 2020, 2019 and 2018.

The consolidated statements of cash flows for the years ended December 31, 2021, 2020 and 2019, included increases of $ 6.4 million and $ 31.0 million and a decrease of $ 5.7 million, respectively, to capital expenditures, with the corresponding change to accounts payable and accrued liabilities, related to purchases of property, plant and equipment included in accounts payable and accrued liabilities at December 31, 2021, 2020 and 2019.

Included in other assets were the following:

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Other assets $ 1,131.8 $ 1,191.3

On January 1, 2019, we sold our 9.1 % limited partnership interest in Bay Gas Storage Company, Ltd.

(Bay Gas) for $ 20.0 million.

The sale closed on February 7, 2019 which resulted in a gain of $ 11.2 million for the year ended December 31, 2019 which was recorded to other income in the consolidated statements of operations.

For the year ended December 31, 2018, we recorded a $ 21.5 million non-cash impairment charge related to an adjustment to the value of our 9.1 % limited partnership interest in Bay Gas.

Bay Gas owns, leases and operates underground gas storage and related pipeline facilities, which are used to provide storage in the McIntosh, AL area and delivery of natural gas.

The general partner, Sempra Energy (Sempra), announced in the second quarter of 2018 its plan to sell several assets including its 90.9 % interest in Bay Gas.

In connection with this decision, Sempra recorded an impairment charge related to Bay Gas adjusting the related assets’ carrying values to an estimated fair value.

We recorded a reduction in our investment in the non-consolidated affiliate for the proportionate share of the non-cash impairment charge.

Olin has no other non-consolidated affiliates.

The losses of non-consolidated affiliates were $ 19.7 million for the year ended December 31, 2018, which reflect the $ 21.5 million non-cash impairment charge.

In connection with the Acquisition, Olin and Dow entered into arrangements for the long-term supply of ethylene by Dow to Olin, pursuant to which, among other things, Olin made upfront payments in order to receive ethylene at producer economics and for certain reservation fees and for the option to obtain additional ethylene at producer economics.

On February 27, 2017, we exercised the remaining option to reserve additional ethylene at producer economics from Dow.

In connection with the exercise of this option, we also secured a long-term customer arrangement.

As a result, an additional payment was made to Dow of $ 461.0 million during the second quarter of 2020.

We have entered into various arrangements for the long-term supply of ethylene and electricity.

A payment of $ 461.0 million was made during the second quarter of 2020 associated with a previously executed option to reserve additional ethylene at producer economics.

The original liability was discounted and recorded at present value as of March 31, 2017.

The discounted amount of $ 40.9 million was recorded as interest expense from the inception through March 31, 2020.

For the years ended December 31, 2020, 2019, and 2018 interest expense of $ 4.0 million, $ 17.0 million and $ 16.0 million, respectively, was recorded for accretion on the 2020 payment discount.

During the year ended December 31, 2020, a payment of $ 75.8 million was made associated with the resolution of a dispute over the allocation to Olin of certain capital costs incurred at our Plaquemine, LA site after the Closing Date of the Acquisition.

For the years ended December 31, 2020 and 2019, $ 4.0 million and $ 17.0 million, respectively, of interest expense was recorded for accretion of the 2020 payment liability discount.

The weighted-average useful life of long-term supply contracts at December 31, 2021 was 20 years.

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The long-term supply contracts are monitored for impairment each reporting period.

On January 1, 2019, we sold our 9.1 % limited partnership interest in Bay Gas Storage Company, Ltd.

(Bay Gas) for $ 20.0 million.

The sale closed on February 7, 2019 which resulted in a gain of $ 11.2 million for the year ended December 31, 2019 which was recorded to other income in the consolidated statements of operations.

GOODWILL AND INTANGIBLE ASSETS

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Balance at January 1, 2020 $ 1,832.7 $ 287.0 $ 2,119.7

Goodwill impairment ( 557.6 ) ( 142.2 ) ( 699.8 )

Foreign currency translation adjustment 0.2 0.1 0.3

Balance at December 31, 2020 1,275.3 144.9 1,420.2

Goodwill impairment ( 557.6 ) ( 142.2 ) ( 699.8 )

Foreign currency translation adjustment 0.3 0.1 0.4

Balance at December 31, 2021 $ 1,275.6 $ 145.0 $ 1,420.6

During the fourth quarter of 2021, we performed our qualitative assessment of goodwill.

Based upon our qualitative assessment, it is more likely than not that the fair value of our reporting units are greater than their carrying amounts as of December 31, 2021.

No impairment charges were recorded for 2021.

During the first quarter of 2020, our market capitalization declined significantly compared to the fourth quarter of 2019.

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Based on the aforementioned analysis, the estimated fair value of our reporting units exceeded the carrying value of the reporting units and no impairment charges were recorded.

Throughout the second and third quarters of 2020, the spread of the COVID-19 pandemic and the associated response has caused significant disruptions in the U.S.

Throughout the second and third quarters of 2020, the spread of the COVID-19 pandemic and the associated response had caused significant disruptions in the U.S.

and global economies, resulting in the disruption of the supply and demand fundamentals of our Chemicals businesses.

The various governmental, business and consumer responses to the pandemic continued to negatively impact the demand for several of the products produced by our Chlor Alkali Products and Vinyls and Epoxy businesses resulting in lower volumes and pricing during 2020 compared to 2019.

Due to these factors, the triggering events identified in the first quarter associated with a significant adverse change in the business climate and a significant adverse reduction in near-term cash flow projections have persisted during 2020.

Throughout the second and third quarters of 2020, the equity value of our peer group companies and the overall U.S.

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As a result of this assessment, the carrying values of our Chlor Alkali Products and Vinyls and Epoxy reporting units exceeded the fair values which resulted in pre-tax goodwill impairment charges of $ 557.6 million and $ 142.2 million, respectively, for the year ended December 31, 2020.

The goodwill impairment charge was calculated as the amount that the carrying value of the reporting unit, including any goodwill, exceeded its fair value and therefore the carrying value of our reporting units equal their fair value upon completion of the goodwill impairment test.

The goodwill impairment charge was calculated as the amount that the carrying value of the reporting unit, including any goodwill, exceeded its fair value and therefore the carrying value of our reporting units equaled their fair value upon completion of the goodwill impairment test.

We believe the assumptions used in our goodwill impairment analysis are appropriate and result in reasonable estimates of the implied fair value of each reporting unit.

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It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material.

No impairment charges were recorded for 2019 or 2018.

During the fourth quarter of 2019, we performed our triennial quantitative goodwill impairment test for our reporting units.

Based on the analysis, the estimated fair value of our reporting units exceeded the carrying value of the reporting units.

No impairment charges were recorded for 2019.

Intangible assets consisted of the following:

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($ in millions)

Customers, customer contracts and relationships

10-15 Years $ 681.0 $ ( 312.5 ) $ 368.5 $ 673.5 $ ( 260.9 ) $ 412.6

Trade name 5 Years — — — 7.0 ( 6.0 ) 1.0

Acquired technology

5-7 Years 95.0 ( 65.3 ) 29.7 85.1 ( 51.8 ) 33.3

Customers, customer contracts and relationships 10-15 Years $ 674.4 $ ( 359.8 ) $ 314.6 $ 681.0 $ ( 312.5 ) $ 368.5

Acquired technology 5-7 Years 93.9 ( 77.9 ) 16.0 95.0 ( 65.3 ) 29.7

Other 10 Years 1.8 ( 0.7 ) 1.1 1.8 ( 0.6 ) 1.2

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Amortization expense relating to intangible assets was $ 63.1 million, $ 62.9 million and $ 62.8 million in 2021, 2020 and 2019, respectively.

We estimate that amortization expense will be approximately $ 63 million in 2021, approximately $ 55 million in 2022, approximately $ 37 million in both 2023 and 2024 and approximately $ 36 million in 2025.

We estimate that amortization expense will be approximately $ 55 million in 2022, approximately $ 37 million in both 2023 and 2024, approximately $ 36 million in 2025 and approximately $ 35 million in 2026.

Notes payable:

($ in millions)

Variable-rate Delayed Draw Term Loan secured facility, due 2024 (4.125% at December 31, 2020) $ 500.0 $ —

Variable-rate Recovery Zone secured bonds, due 2024-2035 (3.625% and 2.85% at December 31, 2020 and 2019, respectively) 103.0 103.0

Variable-rate Go Zone secured bonds, due 2024 (3.625% and 2.85% at December 31, 2020 and 2019, respectively) 50.0 50.0

Variable-rate Industrial development and environmental improvement unsecured obligations, due 2025 (0.21% and 1.70% at December 31, 2020 and 2019, respectively) 2.9 2.9

10.00% secured senior notes, due 2025 500.0 500.0

9.75% secured senior notes, due 2023 120.0 720.0

9.50% secured senior notes, due 2025 500.0 —

5.625% secured senior notes, due 2029 750.0 750.0

5.50% unsecured senior notes, due 2022 200.0 200.0

5.125% secured senior notes, due 2027 500.0 500.0

5.00% secured senior notes, due 2030 550.0 550.0

Variable-rate Senior Term Loans, due 2024 (1.604% and 4.125% at December 31, 2021 and 2020, respectively) $ 350.0 $ 500.0

Variable-rate Recovery Zone bonds, due 2024-2035 (1.100% and 3.625% at December 31, 2021 and 2020, respectively) 103.0 103.0

Variable-rate Go Zone bonds, due 2024 (1.100% and 3.625% at December 31, 2021 and 2020, respectively) 50.0 50.0

Variable-rate Industrial development and environmental improvement obligations, due 2025 (0.17% and 0.21% at December 31, 2021 and 2020, respectively) 2.9 2.9

10.00% senior notes, due 2025 — 500.0

9.75% senior notes, due 2023 — 120.0

9.50% senior notes, due 2025 108.6 500.0

5.625% senior notes, due 2029 669.3 750.0

5.50% senior notes, due 2022 200.0 200.0

5.125% senior notes, due 2027 500.0 500.0

5.00% senior notes, due 2030 515.3 550.0

Receivables Financing Agreement (See Note 6) 300.0 125.0

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Total notes payable 2,802.1 3,905.2

3,905.2 3,381.2

Deferred debt issuance costs ( 22.5 ) ( 37.4 )

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Total long-term debt $ 2,578.2 $ 3,837.5

On October 15, 2020, Olin redeemed $ 600.0 million of the outstanding 9.75 % senior notes due 2023 (2023 Notes).

The 2023 Notes were redeemed at 102.438 % of the principal amount of the 2023 Notes, resulting in a redemption premium of $ 14.6 million, which was recorded to interest expense.

The 2023 Notes were redeemed by drawing $ 500.0 million of the Delayed Draw Term Loan Facility along with utilizing $ 114.6 million of cash on hand.

On May 19, 2020, Olin issued $ 500.0 million aggregate principal amount of 9.50 % senior notes due June 1, 2025 (2025 Notes).

The 2025 Notes were issued at 99.5 % of par value, the discount from which is included within long-term debt in the consolidated balance sheets.

Interest on the 2025 Notes is payable semi-annually beginning on December 1, 2020.

Proceeds from the 2025 Notes were used for general corporate purposes.

On May 8, 2020, we entered into a $ 1,300.0 million senior secured credit facility (Senior Secured Credit Facility) that amended our existing five-year, $ 2,000.0 million senior credit facility.

The Senior Secured Credit Facility included a senior secured delayed-draw term loan facility with aggregate commitments of $ 500.0 million (Delayed Draw Term Loan Facility) and a 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 Senior Secured Credit Facility is July 16, 2024.

The amendment modified the financial covenants of the Senior Secured Credit Facility to be less restrictive and expanded the permitted use of proceeds of the Delayed Draw Term Loan Facility to include general corporate purposes.

The amendment also requires that the obligations under the Senior Secured Credit Facility be guaranteed by certain of our domestic subsidiaries, which are also guarantors of Olin’s outstanding notes, with the exception of the $ 200.0 million senior notes due 2022.

The obligations under the Senior Secured Credit Facility are also secured by liens on substantially all of Olin’s and the subsidiary guarantors’ personal property (Collateral), other than certain principal properties and capital stock of subsidiaries, and subject to certain other exceptions.

The amendment provides that substantially all guarantees under the Senior

Secured Credit Facility and liens on the Collateral may be released when our net leverage ratio is below 3.50 to 1.00 for two consecutive fiscal quarters.

On October 15, 2020, Olin drew the entire $ 500.0 million of the Delayed Draw Term Loan Facility.

The Delayed Draw Term Loan Facility includes principal amortization amounts payable beginning the quarter ending after the facility is fully drawn 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.

Senior Credit Facility

On February 24, 2021, we entered into a $ 1,615.0 million senior secured credit facility (Senior Credit Facility) that amended our existing $ 1,300.0 million senior secured credit facility.

On July 28, 2021, the liens on the collateral provided under the Senior Credit Facility were released based on the achievement of a net leverage ratio below 3.50 for the prior two consecutive fiscal quarters.

The Senior Credit Facility includes a senior delayed-draw term loan facility with aggregate commitments of $ 315.0 million (2021 Delayed Draw Term Loan), a senior term loan facility with aggregate commitments of $ 500.0 million (2020 Term Loan and together with the 2021 Delayed Draw Term Loan, the Senior Term Loans) and a senior revolving credit facility with aggregate commitments in an amount equal to $ 800.0 million (Senior Revolving Credit Facility).

The maturity date for the Senior Credit Facility is July 16, 2024.

The amendment modified the pricing grid for the Senior 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 the 2021 Delayed Draw Term Loan and used the proceeds to fund the redemption of the 10.00 % senior notes due October 15, 2025.

During the year ended December 31, 2021, we repaid $ 465.0 million of the Senior Term Loans.

These repayments satisfied all future required quarterly installments of the Senior Term Loans.

The Senior Revolving Credit Facility includes a $ 100.0 million letter of credit subfacility.

At December 31, 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 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 December 31, 2020, the only secured borrowings included in the secured leverage ratio were $ 500.0 million for our Delayed Draw Term Loan Facility and $ 153.0 million for our Go Zone and Recovery Zone bonds.

On May 8, 2020, we entered into a $ 1,300.0 million senior secured credit facility (Senior Secured Credit Facility) that amended our then existing five-year, $ 2,000.0 million senior credit facility.

The Senior Secured Credit Facility included a senior secured delayed-draw term loan facility with aggregate commitments of $ 500.0 million (2020 Delayed Draw Term Loan) and a senior secured revolving credit facility with aggregate commitments in an amount equal to $ 800.0 million (Senior Secured Revolving Credit Facility).

The maturity date for the Senior Secured Credit Facility was July 16, 2024.

The amendment modified the financial covenants of the Senior Secured Credit Facility to be less restrictive and expanded the permitted use of proceeds of the 2020 Delayed Draw Term Loan to include general corporate purposes.

The amendment also required that the obligations under the Senior Secured Credit Facility be guaranteed by certain of our domestic subsidiaries, which were also guarantors of Olin’s outstanding notes, with the exception of the $ 200.0 million senior notes due 2022.

The obligations under the Senior Secured Credit Facility were also secured by liens on substantially all of Olin’s and the subsidiary guarantors’ personal property (Collateral), other than certain principal properties and capital stock of subsidiaries, and subject to certain other exceptions.

The amendment provided that substantially all guarantees under the Senior Secured Credit Facility and liens on the Collateral could be released when our net leverage ratio was below 3.50 to 1.00 for two consecutive fiscal quarters.

On October 15, 2020, Olin drew the entire $ 500.0 million of the 2020 Delayed Draw Term Loan.

The 2020 Delayed Draw Term Loan included principal amortization amounts payable beginning the quarter ending after the facility was fully drawn 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.

Under the Senior Credit Facility, we may select various floating-rate borrowing options.

The actual interest rate paid on borrowings under the Senior 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 Credit Facility includes various customary restrictive covenants, including restrictions related to the ratio of debt to earnings before interest expense, taxes, depreciation and amortization (net leverage ratio) and the ratio of earnings before interest expense, taxes, depreciation and amortization to interest expense (coverage ratio).

The calculation of debt in our net leverage ratio excludes borrowings under the Receivables Financing Agreement, up to a maximum of $ 250.0 million, and is reduced by all unrestricted cash and cash equivalents.

Compliance with these covenants is determined quarterly.

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In the future, our ability to generate sufficient operating cash flows, among other factors, will determine the amounts available to be borrowed under these facilities.

As a result of our restrictive covenant related to the secured leverage ratio, the maximum additional borrowings available to us could be limited in the future.

As a result of our restrictive covenant related to the net leverage ratio, the maximum additional borrowings available to us could be limited in the future.

The limitation, if an amendment or waiver from our lenders is not obtained, could restrict our ability to borrow the maximum amounts available under the Senior Revolving Credit Facility and the Receivables Financing Agreement.

As of December 31, 2021, there were no covenants or other restrictions that limited our ability to borrow.

On July 16, 2019, Olin issued $ 750.0 million aggregate principal amount of 5.625 % senior notes due August 1, 2029 (2029 Notes), which were registered under the Securities Act of 1933, as amended.

Interest on the 2029 Notes began accruing from July 16, 2019 and is payable semi-annually beginning on February 1, 2020.

Proceeds from the 2029 Notes were used to redeem the remaining balance of the $ 1,375.0 million term loan facility of $ 493.0 million and $ 150.0 million of the Receivables Financing Agreement.

On July 16, 2019, Olin entered into a five-year, $ 2,000.0 million senior credit facility (2019 Senior Credit Facility), which replaced the existing $ 1,975.0 million senior credit facility.

The 2019 Senior Credit Facility included a senior unsecured delayed-draw term loan facility in an aggregate principal amount of up to $ 1,200.0 million.

The 2019 Senior Credit Facility also included a senior unsecured revolving credit facility with aggregate commitments in an amount equal to $ 800.0 million (2019 Senior Revolving Credit Facility), which was increased from $ 600.0 million.

The 2019 Senior Revolving Credit Facility included a $ 100.0 million letter of credit subfacility.

In December 2019, Olin amended the 2019 Senior Credit Facility which amended the restrictive covenants of the agreement, including expanding the coverage and leverage ratios to be less restrictive over the next two and a half years.

On January 19, 2018, Olin issued $ 550.0 million aggregate principal amount of 5.00 % senior notes due February 1, 2030 (2030 Notes), which were registered under the Securities Act of 1933, as amended.

Interest on the 2030 Notes began accruing from January 19, 2018 and is paid semi-annually beginning on August 1, 2018.

Proceeds from the 2030 Notes were used to redeem $ 550.0 million of debt under the $ 1,375.0 million term loan facility.

For the year ended December 31, 2020, we recognized interest expense of $ 5.8 million for the write-off of unamortized deferred debt issuance costs related to the reduction of commitments under the Senior Secured Credit Facility and partial redemption of the 2023 Notes.

For the year ended December 31, 2019, we recognized interest expense of $ 2.8 million for the write-off of unamortized deferred debt issuance costs related to the replacement of the existing $ 1,975.0 million senior credit facility, including the redemption of the remaining balance of the $ 1,375.0 million term loan facility, and the redemption of the remaining balance of and reduction in the borrowing capacity under the Receivables Financing Agreement.

For the year ended December 31, 2018, we recognized interest expense of $ 2.6 million for the write-off of unamortized deferred debt issuance costs related to redemption of $ 550.0 million of debt under the $ 1,375.0 million term loan facility.

In 2020, we paid debt issuance costs of $ 10.3 million for the issuance of the 2025 Notes and amendments to our Senior Secured Credit Facility and Receivables Financing Agreement.

In 2019, we paid debt issuance costs of $ 16.6 million for the

issuance of the 2029 Notes and 2019 Senior Credit Facility.

In 2018, we paid debt issuance costs of $ 8.5 million relating to the 2030 Notes.

Senior Notes and Other Financing

During 2021 and 2020, activity of our outstanding debt included:

Long-term Debt Borrowings (Repayments) Loss on Debt Extinguishment (1)

December 31, 2021 Year Ended

December 31, 2020

Debt Instrument ($ in millions)

Senior Term Loans $ 315.0 $ 675.0

Receivables Financing Agreement 225.0 655.0

9.50% senior notes due 2025 — 497.5

Total borrowings $ 540.0 $ 1,827.5

10.00% senior notes due 2025 $ ( 500.0 ) $ 30.9 $ — $ —

9.50% senior notes due 2025 ( 391.4 ) 103.8 — —

9.75% senior notes due 2023 ( 120.0 ) 3.7 ( 600.0 ) 20.4

5.625% senior notes due 2029 ( 80.7 ) 9.0 — —

5.00% senior notes due 2030 ( 34.7 ) 2.8 — —

Senior Term Loans ( 465.0 ) 2.0 ( 175.0 ) —

Receivables Financing Agreement ( 50.0 ) — ( 530.0 ) —

Finance leases ( 1.3 ) — ( 2.2 ) —

Total repayments $ ( 1,643.1 ) $ 152.2 $ ( 1,307.2 ) $ 20.4

Long-term debt (repayments) borrowings, net $ ( 1,103.1 ) $ 520.3

(1) Loss on debt extinguishment is included as interest expense in the consolidated statements of operations.

The loss includes the payment of bond redemption premiums of $ 137.7 million and $ 14.6 million for the years ended December 31, 2021 and 2020, respectively, as well as the write-off of deferred debt issuance costs, write-off of bond original issue discount and recognition of deferred fair value interest rate swap losses of $ 14.5 million and $ 5.8 million for the years ended December 31, 2021 and 2020, 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 consolidated statements of cash flows for year ended December 31, 2021 and 2020.

The consolidated statements of cash flows for the year ended December 31, 2020 reflects the correction of previously presented early redemption premiums, which increased cash flows from net operating activities and decreased cash flows from net financing activities by $ 14.6 million.

In the fourth quarter of 2021, we completed a cash tender offer to purchase a principal amount of $ 391.4 million of the outstanding 9.50 % Senior Notes due 2025 (2025 Notes).

This action resulted in total redemption premiums of $ 99.4 million.

The 2025 Notes were redeemed by drawing $ 150.0 million of the Receivables Financing Agreement along with utilizing cash on hand.

During the year ended December 31, 2021, we repurchased, through open market transactions, a principal amount of $ 80.7 million of the outstanding aggregate principal amount of 5.625 % senior notes due August 1, 2029 (2029 Notes) and $ 34.7 million of the outstanding aggregate principal amount of 5.00 % senior notes due February 1, 2030 (2030 Notes).

These actions resulted in total redemption premiums of $ 10.4 million.

On March 31, 2021, Olin redeemed $ 315.0 million of the outstanding 10.00 % senior notes due October 15, 2025 (Blue Cube 2025 Notes) and on May 14, 2021, Olin redeemed the remaining $ 185.0 million of the outstanding Blue Cube 2025 Notes.

The Blue Cube 2025 Notes were redeemed at 105.00 % of the principal amount of 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 along with utilizing cash on hand.

On January 15, 2021, Olin redeemed the remaining $ 120.0 million of the outstanding 9.75 % senior notes due 2023 (2023 Notes).

The 2023 Notes were redeemed at 102.438 % of the principal amount of the 2023 Notes, resulting in a redemption premium of $ 2.9 million.

The remaining 2023 Notes were redeemed by utilizing $ 122.9 million of cash on hand.

On October 15, 2020, Olin redeemed $ 600.0 million of the outstanding 2023 Notes.

The 2023 Notes were redeemed at 102.438 % of the principal amount of the 2023 Notes, resulting in a redemption premium of $ 14.6 million.

The 2023 Notes were redeemed by drawing $ 500.0 million of the Delayed Draw Term Loan Facility along with utilizing $ 114.6 million of cash on hand.

On May 19, 2020, Olin issued $ 500.0 million aggregate principal amount of 9.50 % senior notes due June 1, 2025 (2025 Notes).

The 2025 Notes were issued at 99.5 % of par value, the discount from which is included within long-term debt in the consolidated balance sheets.

Interest on the 2025 Notes is payable semi-annually beginning on December 1, 2020.

Proceeds from the 2025 Notes were used for general corporate purposes.

For the years ended December 31, 2021, 2020 and 2019, we recognized interest expense of $ 14.5 million, $ 5.8 million and $ 2.8 million, respectively, for the write-off of deferred debt issuance costs, write-off of bond original issue discount and recognition of deferred fair value interest rate swap losses.

For the years ended December 31, 2021, 2020 and 2019, we paid debt issuance costs of $ 3.9 million, $ 10.3 million and $ 16.6 million, respectively, related to financing transactions.

At December 31, 2021, we had total letters of credit of $ 81.1 million outstanding, of which $ 0.4 million were issued under our Senior Revolving Credit Facility.

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Annual maturities of long-term debt, including finance lease obligations, are $ 201.1 million in 2022, $ 1.0 million in 2023, $ 720.8 million in 2024, $ 111.7 million in 2025, $ 83.0 million in 2026 and a total of $ 1,684.5 million thereafter.

In August 2019, we terminated the April 2016 and October 2016 interest rate swaps which resulted in a loss of $ 2.3 million that will be deferred as an offset to the carrying value of the related debt and will be recognized to interest expense through October 2025.

Our interest rate swaps increased interest expense by $ 0.4 million in 2020 and reduced interest expense by $ 1.7 million and $ 6.8 million in 2019 and 2018, respectively.

The difference between interest paid and interest received is included as an adjustment to interest expense.

Subsequent Event

On January 15, 2021, Olin redeemed the remaining $ 120.0 million of the outstanding 2023 Notes.

The 2023 Notes were redeemed at 102.438 % of the principal amount of the 2023 Notes, resulting in a redemption premium of $ 2.9 million.

The remaining 2023 Notes were redeemed by utilizing $ 122.9 million of cash on hand.

PENSION PLANS

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Interest cost 48.4 2.9 51.3 70.7 4.4 75.1

Actuarial loss 203.5 31.6 235.1 299.5 64.6 364.1

Actuarial (gain) loss ( 163.7 ) ( 41.7 ) ( 205.4 ) 203.5 31.6 235.1

Benefits paid ( 138.5 ) ( 11.4 ) ( 149.9 ) ( 136.4 ) ( 4.8 ) ( 141.2 )

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Total funded status $ ( 76.4 ) $ ( 306.2 ) $ ( 382.6 ) $ ( 375.1 ) $ ( 361.1 ) $ ( 736.2 )

Under ASC 715, we recorded a $ 17.9 million after-tax benefit ($ 30.7 million pretax) to shareholders’ equity as of December 31, 2020 for our pension plans.

This benefit primarily reflected favorable performance on plan assets during 2020, partially offset by a 80 -basis point decrease in the domestic pension plans’ discount rate.

In 2019, we recorded a $ 145.5 million after-tax charge ($ 177.7 million pretax) to shareholders’ equity as of December 31, 2019 for our pension plans.

This charge primarily reflected a 100 -basis point decrease in the domestic pension plans’ discount rate, partially offset by favorable performance on plan assets during 2019.

The $ 235.1 million actuarial loss for 2020 was primarily due to a 80 -basis point decrease in the domestic pension plans’ discount rate.

The $ 364.1 million actuarial loss for 2019 was primarily due to a 100 -basis point decrease in the domestic pension plans’ discount rate.

We recorded a $ 185.6 million after-tax benefit ($ 245.9 million pretax) to shareholders’ equity as of December 31, 2021 for our pension plans.

This benefit primarily reflected a 50 -basis point increase in the domestic pension plans’ discount rate and favorable performance on plan assets during 2021.

In 2020, we recorded a $ 17.9 million after-tax benefit ($ 30.7 million pretax) to shareholders’ equity as of December 31, 2020 for our pension plans.

This benefit primarily reflected favorable performance on plan assets during 2020, partially offset by an 80 -basis point decrease in the domestic pension plans’ discount rate.

The $ 205.4 million actuarial gain for 2021 was primarily due to a 50 -basis point increase in the domestic pension plans’ discount rate.

The $ 235.1 million actuarial loss for 2020 was primarily due to an 80 -basis point decrease in the domestic pension plans’ discount rate.

Amounts recognized in the consolidated balance sheets consisted of:

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2021 2020 2019

Components of Net Periodic Benefit (Income) Costs ($ in millions)

Components of Net Periodic Benefit Income ($ in millions)

Service cost $ 11.4 $ 10.9 $ 11.3

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Recognized actuarial loss 52.7 44.4 27.0

Net periodic benefit (income) costs $ ( 11.7 ) $ ( 8.8 ) $ ( 14.5 )

Included in Other Comprehensive Loss (Pretax)

Net periodic benefit income $ ( 27.5 ) $ ( 11.7 ) $ ( 8.8 )

Included in Other Comprehensive Income (Loss) (Pretax)

Liability adjustment $ ( 245.9 ) $ ( 30.7 ) $ 177.7

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The following table summarizes our domestic and foreign defined benefit pension plan assets measured at fair value as of December 31, 2021:

Asset Class Investments Measured at Net Asset Value Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total

Asset Class Investments Measured at Net Asset Value Quoted Prices In Active Markets for Identical Assets

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 3) Total

Equity securities ($ in millions)

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The following table summarizes our domestic and foreign defined benefit pension plan assets measured at fair value as of December 31, 2020:

Asset Class Investments Measured at Net Asset Value Quoted Prices In Active Markets for Identical Assets

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 3) Total

Equity securities ($ in millions)

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Interest cost 0.7 0.3 1.0 1.1 0.3 1.4

Actuarial loss 3.5 0.6 4.1 5.5 0.7 6.2

Actuarial (gain) loss ( 2.7 ) ( 1.1 ) ( 3.8 ) 3.5 0.6 4.1

Benefits paid ( 3.8 ) ( 0.3 ) ( 4.1 ) ( 3.1 ) ( 0.4 ) ( 3.5 )

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Funded status $ ( 39.3 ) $ ( 11.2 ) $ ( 50.5 ) $ ( 44.2 ) $ ( 11.9 ) $ ( 56.1 )

Under ASC 715, we recorded a $ 3.1 million after-tax charge ($ 4.1 million pretax) to shareholders’ equity as of December 31, 2020 for our other postretirement plans.

We recorded a $ 2.9 million after-tax benefit ($ 3.8 million pretax) to shareholders’ equity as of December 31, 2021 for our other postretirement plans.

In 2020, we recorded an after-tax charge of $ 3.1 million ($ 4.1 million pretax) to shareholders’ equity as of December 31, 2020 for our other postretirement plans.

16 unchanged sentences

Net periodic benefit cost $ 4.5 $ 4.9 $ 4.9

Included in Other Comprehensive Loss (Pretax)

Included in Other Comprehensive Income (Loss) (Pretax)

Liability adjustment $ ( 3.8 ) $ 4.1 $ 6.2

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Income (loss) before taxes $ 1,538.7 $ ( 1,020.0 ) $ ( 36.9 )

Components of Income Tax (Benefit) Provision

Current (benefit) provision:

Components of Income Tax Provision (Benefit)

Current provision (benefit):

Federal $ 139.6 $ ( 42.9 ) $ 9.3

2 unchanged sentences

295.4 ( 29.9 ) 20.1

Deferred (benefit) provision:

Deferred provision (benefit):

Federal 39.1 ( 36.0 ) ( 32.4 )

2 unchanged sentences

( 53.4 ) ( 20.2 ) ( 45.7 )

Income tax (benefit) provision $ ( 50.1 ) $ ( 25.6 ) $ 109.4

Income tax provision (benefit) $ 242.0 $ ( 50.1 ) $ ( 25.6 )

The following table accounts for the difference between the actual tax provision and the amounts obtained by applying the statutory U.S.

11 unchanged sentences

Change in tax contingencies 1.5 0.2 35.4

Tax Cuts and Jobs Act — — ( 0.8 )

Share-based payments ( 0.7 ) — 0.7

5 unchanged sentences

Effective tax rate 15.7 % 4.9 % 69.4 %

The effective tax rate for 2021 included benefits from a net decrease in the valuation allowance related to deferred tax assets in foreign jurisdictions and domestic tax credits, a benefit associated with prior year tax positions, a benefit associated with stock-based compensation, an expense from remeasurement of deferred 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 $ 103.6 million tax benefit.

After giving consideration to these items, the effective tax rate for 2021 of 22.5 % 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 2020 included expenses associated with a net increase in the valuation allowance related to foreign and domestic tax credits and deferred tax assets in foreign jurisdictions, a remeasurement of deferred taxes due to an increase in our state effective tax rates and a change in tax contingencies, and stock-based compensation, partially offset by a benefit associated with prior year tax positions.

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federal statutory rate primarily due to state taxes and a net increase in the valuation allowance related to losses in foreign jurisdictions, partially offset by foreign income taxes and favorable permanent salt depletion deductions.

The effective tax rate for 2018 included benefits associated with the U.S.

Tax Cuts and Jobs Act (2017 Tax Act), stock-based compensation, changes in tax contingencies, a foreign dividend payment, changes associated with prior year tax positions and the remeasurement of deferred taxes due to a decrease in our state effective tax rates.

The effective tax rate also included expenses associated with a net increase in the valuation allowance related to deferred tax assets in foreign jurisdictions and the remeasurement of deferred taxes due to changes in our foreign tax rates.

These factors resulted in a net $ 2.9 million tax benefit, of which $ 3.8 million related to the increase of the 2017 Tax Act benefit.

After giving consideration to these items, the effective tax rate for 2018 of 25.7 % was higher than the 21 % U.S.

federal statutory rate primarily due to state and foreign income taxes, foreign income inclusions and a net increase in the valuation allowance related to current year losses in foreign jurisdictions, partially offset by favorable permanent salt depletion deductions.

Components of Deferred Tax Assets and Liabilities 2021 2020

10 unchanged sentences

Interest deduction limitation — 7.0

Other miscellaneous items — 20.2

Total deferred tax assets 346.5 574.8

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Although realization is not assured, we believe that it is more likely than not that the net deferred tax assets will be realized.

At December 31, 2020, we had a U.S.

federal net operating loss (NOL) of $ 253.1 million (representing $ 53.2 million of deferred tax assets), which do not expire.

At December 31, 2021, we had deferred state tax assets of $ 14.2 million relating to state NOLs, which will expire in years 2022 through 2042, if not utilized.

1 unchanged sentence

At December 31, 2021, we had a capital loss carryforward of $ 2.2 million (representing $ 0.5 million of deferred tax assets) which is available to offset future consolidated capital gains that will expire in years 2022 through 2025, if not utilized.

At December 31, 2020, we had U.S.

federal tax credits of $ 10.5 million, that will expire in years 2038 through 2040, if not utilized.

At December 31, 2021, we had foreign tax credits of $ 18.5 million, that will expire in years 2027 through 2031, if not utilized.

3 unchanged sentences

As of December 31, 2021, we had recorded a valuation allowance of $ 70.1 million, compared to $ 239.6 million as of December 31, 2020.

The increase of $ 57.5 million is primarily due to the recent history of cumulative losses within foreign jurisdictions and projections of future taxable income insufficient to overcome the loss history.

The decrease of $ 169.5 million is primarily due to a release of the $ 156.9 million valuation allowance related to deferred tax assets of our German operations, of which $ 103.8 million was released in the second quarter of 2021.

As a result of significant taxable income during the first six months of 2021, our German operations reported cumulative income before tax (adjusted for permanent items) over the previous twelve quarters.

Additionally, we projected taxable income in our German operations for the remainder of 2021 and we expected that net operating loss carryovers and other deductible amounts in Germany would ultimately be realizable against future income.

We concluded, based upon the preponderance of positive evidence over negative evidence and the anticipated ability to use the deferred tax 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.

All German net operating loss carryovers were realized in 2021.

We continue to have net deferred tax assets in several jurisdictions which we expect to realize, assuming sufficient taxable income can be generated to utilize these deferred tax benefits, which is based on certain estimates and assumptions.

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Decrease for prior year tax positions ( 4.1 ) ( 3.5 )

Decrease due to tax settlements — ( 0.2 )

Reduction due to lapse in statute of limitations ( 3.0 ) —

Foreign currency translation adjustments ( 1.0 ) 0.1

Ending balance $ 43.4 $ 21.3

In July 2019, the review of certain U.S.

income tax claims by the IRS for the years 2013 to 2015 was finalized which resulted in a $ 14.3 million income tax benefit primarily related to favorable adjustments in uncertain tax positions for prior tax years.

We recognize interest and penalty expense related to unrecognized tax positions as a component of the income tax provision.

As of both December 31, 2020 and 2019, interest and penalties accrued were $ 0.1 million.

For 2020, 2019 and 2018, we recorded (benefit) expense related to interest and penalties of $( 0.1 ) million, $( 1.5 ) million and $ 0.4 million, respectively.

As of December 31, 2021 and 2020, interest and penalties accrued were $ 0.5 million and $ 0.1 million, respectively.

For 2021, 2020 and 2019, we recorded expense (benefit) related to interest and penalties of $ 0.5 million, $( 0.1 ) million and $( 1.5 ) million, respectively.

As of December 31, 2021, we believe it is reasonably possible that our total amount of unrecognized tax benefits will decrease by approximately $ 13.5 million over the next twelve months.

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Our tax returns are subject to examination by various federal, state and local tax authorities.

Our 2016 U.S.

federal income tax return is currently under examination by the IRS.

Additionally, examinations are ongoing in various states and foreign jurisdictions.

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Restructuring reserves (current portion only) 12.2 2.6

Derivative contracts 0.1 19.0

Other 61.5 37.7

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At December 31, 2021, the average exercise period for all outstanding and exercisable options was 79 months and 66 months, respectively.

At December 31, 2020, the aggregate intrinsic value (the difference between the exercise price and market value) for outstanding options was $ 33.8 million and exercisable options was $ 16.0 million.

At December 31, 2021, the aggregate intrinsic value (the difference between the exercise price and market value) for outstanding options was $ 189.6 million, which includes exercisable options of $ 115.7 million.

The total intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019 was $ 73.1 million, $ 0.6 million and $ 1.3 million, respectively.

16 unchanged sentences

2018 long term incentive plan 9,389,001 4,790,339

2021 long term incentive plan 2,750,000 2,750,000

Total under stock option plans 14,808,235 7,540,339

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If an employee leaves the company before the end of the performance cycle, the performance shares may be prorated based on the number of months of the performance cycle worked and are settled in cash instead of half in cash and half in stock when the three-year performance cycle is completed.

Granted shares reflects changes in assumptions associated with the expected achievement of the aforementioned criteria.

Performance share transactions were as follows:

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This program will terminate upon the purchase of $ 500.0 million of our common stock.

There were no shares repurchased for the year ended December 31, 2020.

On November 1, 2021, our board of directors authorized an additional share repurchase program for the purchase of shares of common stock at an aggregate price of up to $ 1.0 billion.

This program will terminate upon the purchase of $ 1.0 billion of our common stock.

For the year ended December 31, 2021, 4.7 million were repurchased and retired at a cost of $ 251.9 million.

On August 5, 2019, we entered into an accelerated share repurchase (ASR) agreement with Goldman Sachs & Co.

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For the year ended December 31, 2019, 8.0 million shares were repurchased and retired at a cost of $ 145.9 million.

As of December 31, 2020, a cumulative total of 10.1 million shares were repurchased and retired at a cost of $ 195.9 million and $ 304.1 million of common stock remained authorized to be repurchased.

As of December 31, 2021, a cumulative total of 14.7 million shares were repurchased and retired at a cost of $ 447.8 million and $ 52.2 million of common stock remained authorized to be repurchased under the 2018 Repurchase Authorization program.

As of December 31, 2021, there have been no repurchases under the 2021 Repurchase Authorization program and $ 1.0 billion of common stock remained authorized to be repurchased under this plan.

During 2021, 2020 and 2019, we issued 3.4 million, 0.1 million and 0.1 million shares, respectively, with a total value of $ 72.4 million, $ 1.9 million and $ 1.7 million, respectively, representing stock options exercised.

We have registered an undetermined amount of securities with the SEC, so that, from time-to-time, we may issue debt securities, preferred stock and/or common stock and associated warrants in the public market under that registration statement.

In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” which amends ASC 220 “Income Statement—Reporting Comprehensive Income.” This update allows a reclassification from accumulated other comprehensive loss to retained earnings for the stranded tax effects resulting from the 2017 Tax Act during each fiscal year or quarter in which the effect of the lower tax rate is recorded.

We adopted this update in March 2018 and reclassified $ 85.9 million related to the deferred gain resulting from the 2017 Tax Act from accumulated other comprehensive loss to retained earnings.

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

3 unchanged sentences

Unrealized losses ( 9.1 ) ( 47.1 ) ( 183.9 ) ( 240.1 )

Reclassification adjustments of (gains) losses into income

— ( 14.3 ) 37.0 22.7

Tax benefit — 3.7 14.9 18.6

Net change ( 22.2 ) ( 11.7 ) ( 46.6 ) ( 80.5 )

Income tax reclassification adjustment 15.3 2.4 ( 103.6 ) ( 85.9 )

Balance at December 31, 2018 0.7 1.8 ( 653.5 ) ( 651.0 )

Unrealized losses ( 9.1 ) ( 47.1 ) ( 183.9 ) ( 240.1 )

Reclassification adjustments of losses into income — 26.9 29.1 56.0

7 unchanged sentences

Balance at December 31, 2020 19.4 21.4 ( 730.7 ) ( 689.9 )

Unrealized (losses) gains ( 30.3 ) 182.0 249.7 401.4

Reclassification adjustments of (gains) losses into income — ( 180.1 ) 54.3 ( 125.8 )

Tax provision — ( 0.5 ) ( 73.2 ) ( 73.7 )

Net change ( 30.3 ) 1.4 230.8 201.9

Balance at December 31, 2021 $ ( 10.9 ) $ 22.8 $ ( 499.9 ) $ ( 488.0 )

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

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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.

Years ended December 31,

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Corporate/Other:

Environmental (expense) income ( 20.9 ) ( 20.5 ) 103.7

Environmental expense ( 14.0 ) ( 20.9 ) ( 20.5 )

Other corporate and unallocated costs ( 135.1 ) ( 154.3 ) ( 156.3 )

Restructuring charges ( 27.9 ) ( 9.0 ) ( 76.5 )

Acquisition-related costs — — ( 1.0 )

Goodwill impairment — ( 699.8 ) —

5 unchanged sentences

Income (loss) before taxes $ 1,538.7 $ ( 1,020.0 ) $ ( 36.9 )

Losses of non-consolidated affiliates:

Chlor Alkali Products and Vinyls $ — $ — $ ( 19.7 )

Depreciation and amortization expense:

51 unchanged sentences

Caustic soda $ 1,869.3 $ 1,408.3 $ 1,737.4

Chlorine, chlorine derivatives and other co-products 1,551.6 1,682.7 1,788.1

Chlorine, chlorine derivatives and other products 2,271.5 1,551.6 1,682.7

Total Chlor Alkali Products and Vinyls 4,140.8 2,959.9 3,420.1

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At seven of the nine sites, part of the site is in the long-term OM&M stage.

At six of the nine sites, a remedial action plan is being developed for part of the site.

At seven of the nine sites, a remedial action plan is being developed for part of the site.

At five of the nine sites, a remedial design is being developed at part of the site and at four of the nine sites, part of the site is subject to a remedial investigation.

1 unchanged sentence

None of the nine largest sites represents more than 22 % of the liabilities reserved on our consolidated balance sheet at December 31, 2021 for future environmental expenditures.

Environmental provisions charged (credited) to income, which are included in cost of goods sold, were as follows:

Environmental provisions charged to income, which are included in cost of goods sold, were as follows:

Years ended December 31,

3 unchanged sentences

Insurance recoveries for costs incurred and expensed ( 2.2 ) — ( 4.8 )

Environmental expense (income) $ 20.9 $ 20.5 $ ( 103.7 )

During 2018, we settled certain disputes with respect to insurance coverage for costs at various environmental remediation sites for $ 121.0 million.

Environmental expense (income) for the year ended December 31, 2018 include insurance recoveries for environmental costs incurred and expensed in prior periods of $ 111.0 million.

The recoveries are reduced by estimated liabilities of $ 10.0 million associated with claims by subsequent owners of certain of the settled environmental sites.

Environmental expense (income) for the year ended December 31, 2019 included $ 4.8 million of recoveries associated with resolving the outstanding third party claims against the proceeds from the 2018 environmental insurance settlement.

Environmental expense $ 14.0 $ 20.9 $ 20.5

Environmental expense for the years ended December 31, 2021 and 2019 included $ 2.2 million and $ 4.8 million, respectively, of insurance recoveries for environmental costs incurred and expensed in prior periods.

These charges relate primarily to remedial and investigatory activities associated with past manufacturing operations and former waste disposal sites and may be material to operating results in future years.

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Our lease commitments are primarily for railcars, but also include logistics, manufacturing, storage, real estate and information technology assets.

Our leases have remaining lease terms of up to 94 years, some of which may include options to extend the leases for up to five years , and some of which may include options to terminate the leases within one year .

Our leases have remaining lease terms of up to 93 years ( 16 years excluding land leases), some of which may include options to extend the leases for up to five years , and some of which may include options to terminate the leases within one year .

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

11 unchanged sentences

Total lease liabilities $ 381.8 $ 370.6

(1) As of December 31, 2020, assets recorded under finance leases were $ 8.0 million and accumulated depreciation associated with finance leases was $ 3.5 million.

(1) As of December 31, 2021 and 2020, assets recorded under finance leases were $ 7.6 million and $ 8.0 million, respectively, and accumulated depreciation associated with finance leases was $ 4.3 million and $ 3.5 million, respectively.

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

1 unchanged sentence

Years Ended December 31,

2021 2020 2019

Lease expense:

2 unchanged sentences

Other operating lease expense (1)

28.7 24.3 27.5

Depreciation of leased assets 1.1 1.3 1.3

19 unchanged sentences

Years Ended December 31,

2021 2020 2019

Supplemental cash flows information:

8 unchanged sentences

Weighted-average remaining lease term:

Operating leases 9.5 years 9.4 years

Finance leases 3.1 years 3.2 years

2021 2020 2019

Operating leases 9.3 years 9.5 years 9.4 years

Finance leases 2.4 years 3.1 years 3.2 years

Weighted-average discount rate:

1 unchanged sentence

Finance leases 3.4 % 3.3 % 3.3 %

As of December 31, 2020, we have additional operating leases for railcars that have not yet commenced of approximately $ 64 million which are expected to commence during 2021 with lease terms between 2 years and 15 years.

We also have additional operating leases for logistics equipment that have not yet commenced of approximately $ 5 million which are expected to commence during 2021 with lease terms of 15 years.

As of December 31, 2021, we have additional operating leases for railcars that have not yet commenced of approximately $ 28 million which are expected to commence during 2022 and 2023 with lease terms between 3 years and 10 years.

We also have additional operating leases for logistics equipment and real estate that have not yet commenced of approximately $ 6 million which are expected to commence during 2022 with lease terms between 3 years and 5 years.

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

($ in millions)

2022 $ 1,244.0

Thereafter 3,057.9

1 unchanged sentence

The above purchase commitments include raw material, capital expenditure and utility purchasing commitments utilized in our normal course of business for our projected needs.

In connection with the Acquisition, certain additional agreements have been entered into with Dow, including, long-term purchase agreements for raw materials.

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 Dow include ethylene, electricity, propylene and benzene.

Legal Matters

19 unchanged sentences

At December 31, 2021 and 2020, our consolidated balance sheets included liabilities for these other legal actions of $ 14.2 million and $ 13.5 million, respectively.

These liabilities do not include costs associated with legal representation.

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.

3 unchanged sentences

We account for gain contingencies in accordance with the provisions of ASC 450 “Contingencies” and therefore do not record gain contingencies and recognize income until it is earned and realizable.

For the year ended December 31, 2018, we recognized an insurance recovery of $ 8.0 million in other operating income for a second quarter 2017 business interruption at our Freeport, TX vinyl chloride monomer facility.

DERIVATIVE FINANCIAL INSTRUMENTS

23 unchanged sentences

Total notional $ 224.3 $ 214.1

As of December 31, 2020, the counterparties to these commodity contracts were Wells Fargo Bank, N.A., Citibank, N.A., JPMorgan Chase Bank, National Association, Intesa Sanpaolo S.p.A.

and Bank of America Corporation, all of which are major financial institutions.

As of December 31, 2021, the counterparties to these commodity contracts were Wells Fargo Bank, N.A., Citibank, N.A., JPMorgan Chase Bank, National Association, 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.

5 unchanged sentences

In July 2019, we terminated the remaining interest rate swaps designated as cash flow hedges which resulted in a gain of $ 1.8 million that was recognized in interest expense for the year ended December 31, 2019.

For the years ended December 31, 2019 and 2018, $ 4.3 million and $ 8.9 million, respectively, of income was recorded to interest expense on the accompanying consolidated statements of operations related to these swap agreements.

For the year ended December 31, 2019, $ 4.3 million of income was recorded to interest expense on the accompanying consolidated statements of operations related to these swap agreements.

Fair Value Hedges

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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.

In August 2019, we terminated the interest rate swaps designated as fair value hedges which resulted in a loss of $ 2.3 million that will be deferred as an offset to the carrying value of the related debt and will be recognized to interest expense through October 2025.

In August 2019, we terminated the interest rate swaps designated as fair value hedges which resulted in a loss of $ 2.3 million that was deferred as an offset to the carrying value of the related 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 years ended December 31, 2021, 2020 and 2019, $ 1.8 million, $ 0.4 million and $ 2.6 million, respectively, of expense was recorded to interest expense on the accompanying consolidated statements of operations related to these swap agreements.

19 unchanged sentences

Total Asset Derivatives (1)

$ 34.7 $ 31.4

Liability Derivatives:

19 unchanged sentences

Derivatives – Cash Flow Hedges ($ in millions)

Recognized in other comprehensive loss:

Recognized in other comprehensive income (loss):

Commodity contracts ——— $ 182.0 $ 31.1 $ ( 46.1 )

27 unchanged sentences

The following table summarizes the assets and liabilities measured at fair value in the consolidated balance sheets:

Balance at December 31, 2020 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total

Balance at December 31, 2021 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 3) Total

Assets ($ in millions)

3 unchanged sentences

Commodity contracts $ — $ 3.2 $ — $ 3.2

Foreign exchange contracts — 0.6 — 0.6

Total Liabilities $ — $ 3.8 $ — $ 3.8

4 unchanged sentences

Commodity contracts $ — $ 0.7 $ — $ 0.7

Foreign exchange contracts — 1.2 — 1.2

Total Liabilities $ — $ 0.7 $ — $ 0.7

8 unchanged sentences

Since our long-term debt instruments may not be actively traded, the inputs used to measure the fair value of our long-term debt are based on current market rates for debt of similar risk and maturities and is classified as Level 2 in the fair value measurement hierarchy.

The following table summarizes the fair value measurements of debt and the actual debt recorded on our balance sheets:

Fair Value Measurements

Level 1 Level 2 Level 3 Total Amount recorded on balance sheets

($ in millions)

Balance at December 31, 2020 $ — $ 4,177.2 $ — $ 4,177.2 $ 3,863.8

Balance at December 31, 2019 — 3,572.7 — 3,572.7 3,340.8

As of December 31, 2021 and 2020, the fair value measurements of debt were $ 2,921.0 million and $ 4,177.2 million, respectively.

Nonrecurring Fair Value Measurements

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There were no other assets measured at fair value on a nonrecurring basis as of, or for the years ended, December 31, 2021 and 2020.

OTHER FINANCIAL DATA

Quarterly Data (Unaudited)

($ in millions, except per share data)

2020 First Quarter Second Quarter Third Quarter Fourth Quarter Year

Sales $ 1,425.1 $ 1,241.2 $ 1,437.6 $ 1,654.1 $ 5,758.0

Cost of goods sold 1,374.2 1,235.7 1,307.4 1,457.3 5,374.6

Net loss ( 80.0 ) ( 120.1 ) ( 736.8 ) ( 33.0 ) ( 969.9 )

Net loss per common share:

Basic ( 0.51 ) ( 0.76 ) ( 4.67 ) ( 0.21 ) ( 6.14 )

Diluted ( 0.51 ) ( 0.76 ) ( 4.67 ) ( 0.21 ) ( 6.14 )

Common dividends per share 0.20 0.20 0.20 0.20 0.80

2019 First Quarter Second Quarter Third Quarter Fourth Quarter Year

Sales $ 1,553.4 $ 1,592.9 $ 1,576.6 $ 1,387.1 $ 6,110.0

Cost of goods sold 1,347.3 1,463.7 1,357.6 1,270.6 5,439.2

Net income (loss) 41.7 ( 20.0 ) 44.2 ( 77.2 ) ( 11.3 )

Net income (loss) per common share:

Basic 0.25 ( 0.12 ) 0.27 ( 0.49 ) ( 0.07 )

Diluted 0.25 ( 0.12 ) 0.27 ( 0.49 ) ( 0.07 )

Common dividends per share 0.20 0.20 0.20 0.20 0.80

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk