What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-04-29 compared with 2021-10-22 · 136 added, 259 removed, 580 unchanged (41% of the section changed)

3 unchanged sentences

(In millions, except per share data)

September 30, 2021 December 31, 2020 September 30, 2020

March 31, 2022 December 31, 2021 March 31, 2021

Current assets:

33 unchanged sentences

Accumulated other comprehensive loss ( 461.2 ) ( 488.0 ) ( 683.7 )

Retained earnings (accumulated deficit) 739.2 ( 155.1 ) ( 90.5 )

Retained earnings 1,376.0 1,013.8 56.8

Total shareholders’ equity 2,785.9 2,652.2 1,696.6

4 unchanged sentences

(In millions, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Sales $ 2,461.4 $ 1,918.8

3 unchanged sentences

Restructuring charges 3.1 6.9

Goodwill impairment — 699.8 — 699.8

Other operating expense 0.5 0.2 — 0.1

Operating income (loss) 549.0 ( 683.8 ) 1,325.2 ( 827.1 )

Operating income 546.5 381.2

Interest expense 32.9 84.5

1 unchanged sentence

Non-operating pension income 9.6 9.3

Income (loss) before taxes 504.3 ( 753.4 ) 1,147.7 ( 1,019.4 )

Income tax provision (benefit) 113.6 ( 16.6 ) 157.6 ( 82.5 )

Net income (loss) $ 390.7 $ ( 736.8 ) $ 990.1 $ ( 936.9 )

Net income (loss) per common share:

Income before taxes 523.6 306.1

Income tax provision 130.6 62.5

Net income $ 393.0 $ 243.6

Net income per common share:

Basic $ 2.54 $ 1.54

7 unchanged sentences

(In millions)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Net income (loss) $ 390.7 $ ( 736.8 ) $ 990.1 $ ( 936.9 )

Three Months Ended March 31,

Net income $ 393.0 $ 243.6

Other comprehensive income, net of tax:

3 unchanged sentences

Total other comprehensive income, net of tax 26.8 6.2

Comprehensive income (loss) $ 401.2 $ ( 691.1 ) $ 1,036.2 $ ( 861.7 )

Comprehensive income $ 419.8 $ 249.8

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

2 unchanged sentences

(In millions, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Balance at beginning of period $ 156.8 $ 158.0

2 unchanged sentences

Stock options exercised 0.2 1.2

Other transactions — — 0.1 0.2

Balance at end of period $ 151.8 $ 159.2

13 unchanged sentences

Balance at beginning of period $ 1,013.8 $ ( 155.1 )

Net income (loss) 390.7 ( 736.8 ) 990.1 ( 936.9 )

Net income 393.0 243.6

Common stock dividends paid ( 30.8 ) ( 31.7 )

6 unchanged sentences

(In millions)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating Activities

Net income (loss) $ 990.1 $ ( 936.9 )

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

Goodwill impairment

Net income $ 393.0 $ 243.6

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

Stock-based compensation

2 unchanged sentences

Deferred income taxes

( 25.2 ) ( 61.6 )

Qualified pension plan contributions

10 unchanged sentences

Other operating activities

( 0.3 ) ( 0.1 )

Net operating activities 353.5 269.8

1 unchanged sentence

Capital expenditures ( 47.3 ) ( 51.2 )

Payments under ethylene long-term supply contracts — ( 461.0 )

Payments under other long-term supply contracts — ( 75.8 )

Net investing activities ( 47.3 ) ( 51.2 )

3 unchanged sentences

Repayments ( 65.2 ) ( 485.2 )

Debt early redemption premiums ( 37.7 ) —

Debt Early Redemption Premium — ( 18.7 )

Common stock repurchased and retired ( 263.2 ) —

7 unchanged sentences

Cash and cash equivalents, end of period $ 197.9 $ 259.9

Cash paid (received) for interest and income taxes:

Cash paid for interest and income taxes:

Interest, net $ 53.5 $ 98.2

20 unchanged sentences

RECENT ACCOUNTING PRONOUNCEMENTS

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (ASU 2020-04) which creates a new topic, Accounting Standards Codification (ASC) 848 “Reference Rate Reform.” Subsequent to the issuance of ASU 2020-04, ASC 848 was amended by ASU 2021-01, “Scope” which amended and clarified the application and scope of the aforementioned update.

This update provides optional guidance to ease the potential accounting burden associated with transition away from reference rates that are expected to be discontinued when financial institutions are no longer required to report information that is currently used to determine the London Interbank Offered Rate (LIBOR) and other reference rates.

This update allows companies to treat contract amendments to existing contracts for the purpose of establishing a new reference rate as continuations of those contracts without additional analysis, as long as the modification was made to establish a new reference rate.

This update applies prospectively to contract modifications.

The optional guidance was effective on March 12, 2020 and can be adopted beginning January 1, 2020 or any date thereafter until December 31, 2022, at which time the optional guidance can no longer be applied to contract amendments to existing contracts.

We adopted the provisions of this update on January 1, 2020 and will apply this guidance prospectively to contract modifications that are entered into for the purpose of establishing a new reference rate.

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

We do not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying condensed financial statements.

RESTRUCTURING CHARGES

We committed to a productivity initiative to align the organization with our new operating model and improve efficiencies (collectively, Productivity Plan).

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 three and nine months ended September 30, 2021, we recorded pretax restructuring charges of $ 0.2 million and $ 10.3 million, respectively, for employee severance and related benefit costs related to these actions.

We recorded pretax restructuring charges of $ 10.3 million for employee severance and related benefit costs related to these actions in the second quarter of 2021.

We do no t expect to incur additional restructuring charges related to these actions.

On 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 expect to incur restructuring charges through 2022 of approximately $ 2 million related to this action.

On March 15, 2021, we announced that we had made the decision to permanently close approximately 50 % of our diaphragm-grade chlor alkali capacity, representing 200,000 tons, at our McIntosh, AL facility (McIntosh Plan).

The closure was completed in the first quarter of 2021.

For the three and nine months ended September 30, 2021, we recorded pretax restructuring charges of $ 0.4 million and $ 5.2 million, respectively, for lease and other contract termination costs related to this action.

We expect to incur additional restructuring charges through 2022 of approximately $ 2 million related to this action.

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

For the three and nine months ended September 30, 2021, we recorded pretax restructuring charges of $ 1.6 million and $ 5.7 million, respectively, for facility exit costs related to these actions.

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 three months ended March 31, 2022 and 2021, we recorded pretax restructuring charges of $ 0.9 million and $ 4.4 million, respectively, for lease and other contract termination costs and for facility exit costs related to this action.

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 three months ended March 31, 2022 and 2021, we recorded pretax restructuring charges of $ 0.3 million and $ 1.3 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 vinylidene chloride (VDC) production facility, both in Freeport, TX (collectively, Freeport 2019 Plan).

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

For the three months ended September 30, 2021 and 2020, we recorded pretax restructuring charges of $ 1.0 million and $ 0.3 million, respectively, for facility exit costs related to these actions.

For the nine months ended September 30, 2021 and 2020, we recorded pretax restructuring charges of $ 2.2 million and $ 0.8 million, respectively, for facility exit costs related to these actions.

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

2021, respectively.

For the three months ended March 31, 2022 and 2021, we recorded pretax restructuring charges of $ 1.7 million and $ 0.8 million, respectively, for facility exit costs related to these actions.

We expect to incur additional restructuring charges through 2025 of approximately $ 40 million related to these actions.

3 unchanged sentences

This 220,000 ton reduction was entirely from diaphragm cell capacity.

For the three months ended September 30, 2021 and 2020, we recorded pretax restructuring charges of $ 0.4 million and $ 1.0 million, respectively, for facility exit costs and lease and other contract termination costs related to these actions.

For the nine months ended September 30, 2021 and 2020, we recorded pretax restructuring charges of $ 1.1 million and $ 3.9 million, respectively, for facility exit costs, employee severance and related benefit costs and lease and other contract termination costs related to these actions.

For the three months ended March 31, 2022 and 2021, we recorded pretax restructuring charges of $ 0.2 million and $ 0.4 million, respectively, for facility exit costs and lease and other contract termination costs related to these actions.

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

The following table summarizes the 2021 and 2020 activities by major component of these restructuring actions and the remaining balances of accrued restructuring costs as of September 30, 2021 and 2020:

Employee severance and related benefit costs Lease and other contract termination costs Facility exit costs Total

The following table summarizes the 2022 and 2021 activities by major component of these restructuring actions and the remaining balances of accrued restructuring costs as of March 31, 2022 and 2021:

Employee severance and related benefit costs Lease and other contract termination costs Facility exit costs Write-off of equipment and facility Total

($ in millions)

1 unchanged sentence

Restructuring charges — 4.6 2.3 — 6.9

First quarter 0.1 0.1 1.5 1.7

Second quarter — — 1.7 1.7

Third quarter — 0.3 1.0 1.3

Amounts utilized ( 0.4 ) ( 0.1 ) ( 2.3 ) — ( 2.8 )

Balance at September 30, 2020 $ — $ 2.5 $ — $ 2.5

Balance at March 31, 2021 $ 1.4 $ 6.2 $ — $ — $ 7.6

Balance at January 1, 2022 $ 6.9 $ 5.4 $ — $ — $ 12.3

Restructuring charges — 0.1 2.6 0.4 3.1

First quarter — 4.6 2.3 6.9

Second quarter 10.1 0.5 3.4 14.0

Third quarter 0.2 0.5 2.9 3.6

Amounts utilized ( 2.0 ) ( 0.2 ) ( 2.6 ) ( 0.4 ) ( 5.2 )

Balance at September 30, 2021 $ 8.6 $ 6.0 $ — $ 14.6

The following table summarizes the cumulative restructuring charges of these restructuring actions by major component through September 30, 2021:

Balance at March 31, 2022 $ 4.9 $ 5.3 $ — $ — $ 10.2

The following table summarizes the cumulative restructuring charges of these restructuring actions by major component through March 31, 2022:

Chlor Alkali Products and Vinyls Corporate/other Total

7 unchanged sentences

Total cumulative restructuring charges $ 6.5 $ 6.8 $ 68.3 $ 182.5 $ 10.3 $ 274.4

As of September 30, 2021, we have incurred cash expenditures of $ 115.6 million and non-cash charges of $ 137.7 million related to these restructuring actions.

As of March 31, 2022, we have incurred cash expenditures of $ 125.7 million and non-cash charges of $ 138.5 million related to these restructuring actions.

The remaining balance of $ 10.2 million is expected to be paid out through 2028.

Subsequent Event

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 200,000 tons, at our McIntosh, AL facility.

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

As a result of this action, we expect to incur approximately $ 40 million of pretax restructuring costs, none of which is expected to be incurred in 2021.

We currently estimate these restructuring costs will primarily consist of facility exit costs to be paid in cash through 2025.

ACCOUNTS RECEIVABLES

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 28, 2024.

We maintain a $ 300.0 million Receivables Financing Agreement (Receivables Financing Agreement) that is scheduled to mature on September 28, 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.

Under the Receivables Financing Agreement, our eligible

trade receivables are used for collateralized borrowings and continue to be serviced by us.

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

As of September 30, 2021, $ 542.0 million of our trade receivables were pledged as collateral.

As of September 30, 2021, we had $ 150.0 million drawn with $ 150.0 million of additional borrowing capacity available under the Receivables Financing Agreement.

As of both December 31, 2020 and September 30, 2020, we had $ 125.0 million drawn under the Receivables Financing Agreement.

As of March 31, 2022, $ 642.4 million of our trade receivables were pledged as collateral and we had $ 300.0 million drawn with no additional borrowing capacity available under the Receivables Financing Agreement.

As of December 31, 2021 and March 31, 2021, we had $ 300.0 million and $ 125.0 million, respectively, drawn 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.

2 unchanged sentences

The following table summarizes the AR Facilities activity:

September 30,

($ in millions)

4 unchanged sentences

The factoring discount paid under the AR Facilities is recorded as interest expense on the condensed statements of operations.

The factoring discount was $ 0.3 million and $ 0.2 million for the three months ended September 30, 2021 and 2020, respectively, and $ 1.0 million and $ 1.2 million for the nine months ended September 30, 2021 and 2020, respectively.

The agreements are without recourse and therefore no recourse liability had been recorded as of September 30, 2021, December 31, 2020 or September 30, 2020.

Our condensed balance sheets included an allowance for doubtful accounts receivables of $ 12.2 million, $ 12.3 million and $ 12.1 million and other receivables of $ 68.1 million, $ 62.4 million and $ 73.9 million at September 30, 2021, December 31, 2020 and September 30, 2020, respectively, which were included in receivables, net.

The factoring discount was $ 0.5 million and $ 0.4 million for the three months ended March 31, 2022 and 2021, respectively.

The agreements are without recourse and therefore no recourse liability had been recorded as of March 31, 2022, December 31, 2021 or March 31, 2021.

Our condensed balance sheets included an allowance for doubtful accounts receivables of $ 15.2 million, $ 12.3 million and $ 12.2 million and other receivables of $ 65.6 million, $ 65.3 million and $ 60.3 million at March 31, 2022, December 31, 2021 and March 31, 2021, respectively, which were included in receivables, net.

Inventories consisted of the following:

September 30, 2021 December 31,

2020 September 30, 2020

March 31, 2022 December 31,

2021 March 31, 2021

($ in millions)

11 unchanged sentences

Inventories under the LIFO method are based on annual estimates of quantities and costs as of year-end;

therefore, the condensed financial statements at September 30, 2021 reflect certain estimates relating to inventory quantities and costs at December 31, 2021.

The replacement cost of our inventories would have been approximately $ 95.7 million, $ 48.2 million and $ 45.7 million higher than reported at September 30, 2021, December 31, 2020 and September 30, 2020, respectively.

therefore, the condensed financial statements at March 31, 2022 reflect certain estimates relating to inventory quantities and costs at December 31, 2022.

The replacement cost of our inventories would have been approximately $ 144.1 million, $ 106.5 million and $ 58.0 million higher than reported at March 31, 2022, December 31, 2021 and March 31, 2021, respectively.

Included in other assets were the following:

September 30, 2021 December 31, 2020 September 30, 2020

March 31, 2022 December 31, 2021 March 31, 2021

($ in millions)

1 unchanged sentence

Other 71.7 70.0 64.8

$ 1,152.4 $ 1,191.3 $ 1,177.0

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 from The Dow Chemical Company (Dow).

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

For the nine months ended September 30, 2020, $ 4.0 million of interest expense was recorded for accretion on the 2020 payment liability discount.

During the nine months ended September 30, 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 October 5, 2015 closing date of the acquisition from Dow.

Amortization expense of $ 17.3 million and $ 11.3 million for the three months ended September 30, 2021 and 2020, respectively, and amortization expense of $ 52.1 million and $ 44.6 million for the nine months ended September 30, 2021 and 2020, respectively, was recognized within cost of goods sold related to our long-term supply contracts and is reflected in depreciation and amortization on the condensed statements of cash flows.

Other assets $ 1,116.3 $ 1,131.8 $ 1,171.0

Amortization expense of $ 17.6 million and $ 17.5 million for the three months ended March 31, 2022 and 2021, respectively, was recognized within cost of goods sold related to our long-term supply contracts and is reflected in depreciation and amortization on the condensed statements of cash flows.

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

4 unchanged sentences

Balance at January 1, 2021 $ 1,275.3 $ 144.9 $ 1,420.2

Goodwill impairment ( 557.6 ) ( 142.2 ) ( 699.8 )

Foreign currency translation adjustment ( 0.1 ) — ( 0.1 )

Balance at September 30, 2020 $ 1,275.3 $ 144.8 $ 1,420.1

Balance at March 31, 2021 $ 1,275.2 $ 144.9 $ 1,420.1

Balance at January 1, 2022 $ 1,275.6 $ 145.0 $ 1,420.6

Foreign currency translation adjustment 0.1 — 0.1

Balance at September 30, 2021 $ 1,275.4 $ 144.9 $ 1,420.3

During the three months ended September 30, 2020, we identified a triggering event associated with a sustained significant overall decrease in our stock price.

As a result, we performed an updated quantitative goodwill impairment test during the third quarter of 2020.

We used a discounted cash flow approach to develop the estimated fair value of our reporting

As a further indicator that each reporting unit had been valued appropriately using a discounted cash flow model, the aggregate fair value of all reporting units was reconciled to the total market value of Olin.

Due to the sustained decline in our stock price, the decrease in the value of our reporting units reflected a market participant’s perceived risk in the valuation implied by the sustained reduction in our stock price.

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.

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 was equal their fair value upon completion of the goodwill impairment test.

Balance at March 31, 2022 $ 1,275.7 $ 145.0 $ 1,420.7

Intangible assets consisted of the following:

September 30, 2021 December 31, 2020 September 30, 2020

March 31, 2022 December 31, 2021 March 31, 2021

Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net

2 unchanged sentences

$ 672.0 $ ( 371.4 ) $ 300.6 $ 674.4 $ ( 359.8 ) $ 314.6 $ 677.2 $ ( 323.5 ) $ 353.7

Trade name — — — — — — 7.1 ( 7.1 ) —

Acquired technology

4 unchanged sentences

EARNINGS PER SHARE

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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

Net income (loss) $ 390.7 $ ( 736.8 ) $ 990.1 $ ( 936.9 )

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

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

Three Months Ended March 31,

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

Net income $ 393.0 $ 243.6

Basic shares 154.7 158.6

Basic net income (loss) per share $ 2.44 $ ( 4.67 ) $ 6.21 $ ( 5.94 )

Basic net income per share $ 2.54 $ 1.54

Diluted shares:

2 unchanged sentences

Diluted shares 158.6 160.8

Diluted net income (loss) per share $ 2.38 $ ( 4.67 ) $ 6.07 $ ( 5.94 )

The computation of dilutive shares does not include less than 0.1 million shares for both the three and nine months ended September 30, 2021 and 10.3 million shares for both the three and nine months ended September 30, 2020, as their effect would have been anti-dilutive.

Diluted net income per share $ 2.48 $ 1.51

The computation of dilutive shares does not include 0.8 million and 3.2 million shares for the three months ended March 31, 2022 and 2021, respectively, as their effect would have been anti-dilutive.

ENVIRONMENTAL

1 unchanged sentence

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

($ in millions)

2 unchanged sentences

Environmental expense $ 5.6 $ 0.3

Environmental expense for the nine months ended September 30, 2021 includes $ 2.2 million of insurance recoveries for environmental costs incurred and expensed in prior periods.

The condensed balance sheets included reserves for future environmental expenditures to investigate and remediate known sites amounting to $ 147.7 million, $ 147.2 million and $ 146.7 million at September 30, 2021, December 31, 2020 and September 30, 2020, respectively, of which $ 128.7 million, $ 128.2 million and $ 129.7 million, respectively, were classified as other noncurrent liabilities.

Environmental expense for the three months ended March 31, 2021 includes $ 2.2 million of insurance recoveries for environmental costs incurred and expensed in prior periods.

The condensed balance sheets included reserves for future environmental expenditures to investigate and remediate known sites amounting to $ 149.5 million, $ 147.3 million and $ 147.2 million at March 31, 2022, December 31, 2021 and March 31, 2021, respectively, of which $ 124.5 million, $ 122.3 million and $ 128.2 million, respectively, were classified as other noncurrent liabilities.

Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, changes in regulatory authorities, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other Potentially Responsible Parties (PRPs), our ability to obtain contributions from other parties and the lengthy time periods over which site remediation occurs.

20 unchanged sentences

We, and our subsidiaries, are defendants in various other legal actions (including proceedings based on alleged exposures to asbestos) incidental to our past and current business activities.

As of September 30, 2021, December 31, 2020 and September 30, 2020, our condensed balance sheets included accrued liabilities for these other legal actions of $ 13.1 million, $ 13.5 million and $ 13.0 million, respectively.

As of March 31, 2022, December 31, 2021 and March 31, 2021, our condensed balance sheets included accrued liabilities for these other legal actions of $ 13.5 million, $ 14.2 million and $ 13.8 million, respectively.

These liabilities do not include costs associated with legal representation.

6 unchanged sentences

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.

For the nine months ended September 30, 2021, 1.5 million shares were repurchased and retired at a cost of $ 68.3 million.

There were zero shares repurchased for the nine months ended September 30, 2020.

As of September 30, 2021, we had repurchased a total of $ 264.2 million of our common stock, representing 11.5 million shares, and $ 235.8 million of common stock remained authorized to be repurchased under the program.

We issued 2.8 million and less than 0.1 million shares representing stock options exercised for the nine months ended September 30, 2021 and 2020, respectively, with a total value of $ 58.3 million and $ 0.5 million, respectively.

This program terminated upon the purchase of $ 500.0 million of our common stock during the first quarter of 2022.

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 three months ended March 31, 2022, 5.2 million shares of common stock were repurchased and retired at a total value of $ 263.2 million.

There were zero shares repurchased for the three months ended March 31, 2021.

As of March 31,

2022, a total of 15.7 million shares of common stock were repurchased and retired at a total value of $ 500.0 million under the 2018 Repurchase Authorization program, terminating the program.

As of March 31, 2022, 4.3 million shares of common stock have been repurchased and retired at a total value of $ 211.0 million under the 2021 Repurchase Authorization program, and $ 789.0 million of common stock remained authorized to be repurchased under the program.

We issued 0.2 million and 1.2 million shares representing stock options exercised for the three months ended March 31, 2022 and 2021, respectively, with a total value of $ 5.2 million and $ 25.7 million, respectively.

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

3 unchanged sentences

Unrealized (losses) gains ( 11.4 ) 122.0 — 110.6

First quarter ( 9.0 ) ( 35.1 ) — ( 44.1 )

Second quarter 8.2 29.9 — 38.1

Third quarter 17.0 26.0 — 43.0

Reclassification adjustments of losses into income:

First quarter — 11.6 11.9 23.5

Second quarter — 9.3 11.6 20.9

Third quarter — 0.1 11.5 11.6

Tax benefit (provision):

First quarter — 5.6 ( 2.7 ) 2.9

Second quarter — ( 9.2 ) ( 2.6 ) ( 11.8 )

Third quarter — ( 6.3 ) ( 2.6 ) ( 8.9 )

Reclassification adjustments of (gains) losses into income — ( 112.8 ) 13.7 ( 99.1 )

Tax provision — ( 2.2 ) ( 3.1 ) ( 5.3 )

Net change ( 11.4 ) 7.0 10.6 6.2

Balance at September 30, 2020 $ 7.8 $ 18.3 $ ( 754.3 ) $ ( 728.2 )

Balance at March 31, 2021 $ 8.0 $ 28.4 $ ( 720.1 ) $ ( 683.7 )

Balance at January 1, 2022 $ ( 10.9 ) $ 22.8 $ ( 499.9 ) $ ( 488.0 )

Unrealized (losses) gains ( 10.5 ) 52.8 — 42.3

First quarter ( 11.4 ) 122.0 — 110.6

Second quarter 2.4 41.8 — 44.2

Third quarter ( 14.0 ) 41.7 — 27.7

Reclassification adjustments of (gains) losses into income — ( 12.4 ) 8.9 ( 3.5 )

First quarter — ( 112.8 ) 13.7 ( 99.1 )

Second quarter — ( 20.4 ) 13.7 ( 6.7 )

Third quarter — ( 23.5 ) 13.4 ( 10.1 )

Tax provision — ( 9.7 ) ( 2.3 ) ( 12.0 )

First quarter — ( 2.2 ) ( 3.1 ) ( 5.3 )

Second quarter — ( 5.1 ) ( 3.0 ) ( 8.1 )

Third quarter — ( 4.4 ) ( 2.7 ) ( 7.1 )

Net change ( 10.5 ) 30.7 6.6 26.8

Balance at September 30, 2021 $ ( 3.6 ) $ 58.5 $ ( 698.7 ) $ ( 643.8 )

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

Net income (loss) and non-operating pension income included the amortization of prior service costs and actuarial losses from accumulated other comprehensive loss.

Balance at March 31, 2022 $ ( 21.4 ) $ 53.5 $ ( 493.3 ) $ ( 461.2 )

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

Net income and non-operating pension income included the amortization of prior service costs and actuarial losses from accumulated other comprehensive loss.

SEGMENT INFORMATION

We define segment results as income (loss) before interest expense, interest income, goodwill impairment charges, other operating income (expense), non-operating pension income, other income and income taxes.

We define segment results as income (loss) before interest expense, interest income, other operating income (expense), non-operating pension income, other income and income taxes.

We have three operating segments:

2 unchanged sentences

Chlorine used in our Epoxy segment is transferred at cost from the Chlor Alkali Products and Vinyls segment.

Sales and profits are recognized in the Chlor Alkali Products and Vinyls segment for all caustic soda generated and sold by Olin.

Sales are attributed to geographic areas based on customer location.

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

($ in millions)

3 unchanged sentences

Total sales $ 2,461.4 $ 1,918.8

Income (loss) before taxes:

Income before taxes:

Chlor Alkali Products and Vinyls $ 328.6 $ 271.1

5 unchanged sentences

Restructuring charges ( 3.1 ) ( 6.9 )

Goodwill impairment — ( 699.8 ) — ( 699.8 )

Other operating expense ( 0.5 ) ( 0.2 ) — ( 0.1 )

Interest expense ( 32.9 ) ( 84.5 )

1 unchanged sentence

Non-operating pension income 9.6 9.3

Income (loss) before taxes $ 504.3 $ ( 753.4 ) $ 1,147.7 $ ( 1,019.4 )

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Income before taxes $ 523.6 $ 306.1

Three Months Ended March 31,

Sales by geography:

17 unchanged sentences

Total sales $ 2,461.4 $ 1,918.8

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Sales by product line:

14 unchanged sentences

Stock-based compensation expense (benefit) was as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

($ in millions)

37 unchanged sentences

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.

During 2021, activity of our outstanding debt included:

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

Nine Months Ended September 30, 2021 Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

Debt Instrument ($ in millions)

Senior Term Loans $ 315.0

Receivables Financing Agreement 75.0

Total borrowings $ 390.0

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

9.75% senior notes due 2023 ( 120.0 ) — 3.7

5.625% senior notes due 2029 ( 79.0 ) 6.0 8.9

5.00% senior notes due 2030 ( 26.0 ) 1.5 2.1

Senior Term Loans ( 465.0 ) 1.2 2.0

Receivables Financing Agreement ( 50.0 ) — —

Finance leases ( 1.1 ) — —

Total repayments $ ( 1,241.1 ) $ 8.7 $ 47.6

Long-term debt repayments, net $ ( 851.1 )

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

The loss includes the payment of bond redemption premiums of $ 6.7 million and $ 37.7 million for the three and nine months ended September 30, 2021, respectively, as well as the write-off of deferred debt issuance costs and recognition of deferred fair value interest rate swap losses of $ 2.0 million and $ 9.9 million for the three and nine months ended September 30, 2021, respectively, associated with the optional prepayment of existing debt.

The cash payments related to the early redemption premiums for the debt extinguishments are classified as cash outflows from financing activities on the condensed statement of cash flows for the nine months ended September 30, 2021.

The condensed statement of cash flows reflects a correction to the loss on debt extinguishment and early redemption premiums from the previously issued condensed statement of cash flows for the three months ended March 31, 2021, which increased cash flows from net operating activities and decreased cash flows from net financing activities by $ 18.7 million.

During the fourth quarter of 2021, the previously issued statement of cash flows for the year ended December 31, 2020 will reflect the correction of previously presented early redemption premiums, which will increase cash flows from net operating activities and decrease cash flows from net financing activities by $ 14.6 million.

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.

3 unchanged sentences

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 Delayed Draw Term Loan and used the proceeds to fund the redemption of the 10.00 % senior notes due October 15, 2025.

During the nine months ended September 30, 2021, we repaid $ 465.0 million of the Senior Term Loans.

On March 30, 2021, Olin drew the entire $ 315.0 million of the Delayed Draw Term Loan and used the proceeds to fund the redemption of the 10.00 % senior notes due October 15, 2025 (2025 Notes).

During 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 September 30, 2021, we had $ 799.6 million available under our $ 800.0 million Senior Revolving Credit Facility because we had issued $ 0.4 million of letters of credit.

Annual maturities of long-term debt at September 30, 2021, including finance lease obligations, are $ 0.2 million in 2021, $ 201.1 million in 2022, $ 1.0 million in 2023, $ 570.8 million in 2024, $ 503.1 million in 2025 and a total of $ 1,778.0 million thereafter.

For the nine months ended September 30, 2021, we paid debt issuance costs of $ 3.8 million primarily for the amendments to our Senior Credit Facility.

At March 31, 2022, 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 Credit Facility, we may select various floating-rate borrowing options.

3 unchanged sentences

Compliance with these covenants is determined quarterly.

We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of September 30, 2021, and no event of default had occurred that would permit the lenders under our outstanding credit agreements to accelerate the debt if not cured.

We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of March 31, 2022, and no event of default had occurred that would permit the lenders under our outstanding credit agreements to accelerate the debt if not cured.

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

1 unchanged sentence

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 September 30, 2021, there were no covenants or other restrictions that limited our ability to borrow.

As of March 31, 2022, there were no covenants or other restrictions that limited our ability to borrow.

Other Financing

Interest expense for the three months ended March 31, 2021 included a loss on extinguishment of debt of $ 23.5 million, which included $ 18.7 million of bond redemption premiums and $ 4.8 million for write-off of deferred debt issuance costs and recognition of deferred fair value interest rate swap losses related to financing transactions during first quarter 2021.

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 the three months ended March 31, 2021.

For the three months ended March 31, 2021, we paid debt issuance costs of $ 3.1 million primarily for the amendments to our Senior Credit Facility.

CONTRIBUTING EMPLOYEE OWNERSHIP PLAN

1 unchanged sentence

We provide a contribution to an individual retirement contribution account maintained with the CEOP equal to an amount of between 5.0 % and 7.5 % of the employee’s eligible compensation.

The defined contribution plan expense for the three months ended September 30, 2021 and 2020 was $ 9.3 million and $ 6.5 million, respectively, and for the nine months ended September 30, 2021 and 2020 was $ 26.6 million and $ 21.5 million, respectively.

The defined contribution plan expense for the three months ended March 31, 2022 and 2021 was $ 10.6 million and $ 8.7 million, respectively.

Company matching contributions are invested in the same investment allocation as the employee’s contribution.

Our matching contributions for eligible employees for the three months ended September 30, 2021 and 2020 were $ 3.5 million and $ 0.8 million, respectively, and for the nine months ended September 30, 2021 and 2020 were $ 10.4 million and $ 2.3 million, respectively.

Effective January 1, 2020, we suspended the match on all salaried and non-bargaining hourly employees’ contributions, and moved to a discretionary contribution model with contributions contingent upon company-wide financial performance.

During 2020, we did no t make a discretionary matching contribution.

Effective January 1, 2021, we reinstated the match on all salaried and non-bargaining hourly employees’ contributions, which provides for a maximum 3.0 % matching contribution based on the level of participant contributions.

Our matching contributions for eligible employees for the three months ended March 31, 2022 and 2021 were $ 3.1 million and $ 3.2 million, respectively.

PENSION PLANS AND RETIREMENT BENEFITS

4 unchanged sentences

Our foreign subsidiaries maintain pension and other benefit plans, which are consistent with local statutory practices.

transfer of assets or liabilities of the plan, and such termination, merger, or transfer thereafter takes place, plan benefits would automatically be increased for affected participants (and retired participants) to absorb any plan surplus (subject to applicable collective bargaining requirements).

Our domestic qualified defined benefit pension plan provides that if, within three years following a change of control of Olin, any corporate action is taken or filing made in contemplation of, among other things, a plan termination or merger or other transfer of assets or liabilities of the plan, and such termination, merger, or transfer thereafter takes place, plan benefits would automatically be increased for affected participants (and retired participants) to absorb any plan surplus (subject to applicable collective bargaining requirements).

We also provide certain postretirement healthcare (medical) and life insurance benefits for eligible active and retired domestic employees.

1 unchanged sentence

Pension Benefits Other Postretirement Benefits

Three Months Ended September 30, Three Months Ended September 30,

2021 2020 2021 2020

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

Service cost $ 2.8 $ 2.8 $ 0.3 $ 0.2

Interest cost 12.8 18.8 0.2 0.3

Expected return on plans’ assets ( 35.6 ) ( 35.5 ) — —

Amortization of prior service cost ( 0.1 ) — — —

Recognized actuarial loss 13.2 11.2 0.3 0.3

Net periodic benefit (income) cost $ ( 6.9 ) $ ( 2.7 ) $ 0.8 $ 0.8

Pension Benefits Other Postretirement Benefits

Nine Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31, Three Months Ended March 31,

2022 2021 2022 2021

6 unchanged sentences

Net periodic benefit (income) cost $ ( 8.1 ) $ ( 7.3 ) $ 1.1 $ 1.4

We made cash contributions to our international qualified defined benefit pension plans of $ 1.0 million and $ 1.3 million for the nine months ended September 30, 2021 and 2020, respectively.

The effective tax rate for the three months ended September 30, 2021 included a benefit associated with prior year tax positions, a benefit associated with stock-based compensation, an expense from a net increase in the valuation allowance related to deferred tax assets in foreign jurisdictions and an expense from a change in tax contingencies.

These factors resulted in a net $ 1.1 million tax benefit.

After giving consideration to these items, the effective tax rate for the three months ended September 30, 2021 of 22.7 % was higher than the 21 % U.S.

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

The effective tax rate for the three months ended September 30, 2020 included a benefit associated with prior year tax positions and an expense from a net increase in the valuation allowance related to foreign tax credits.

These factors resulted in a net $ 1.7 million tax expense.

For the three months ended September 30, 2020, a tax benefit of $ 10.8 million was recognized associated with the $ 699.8 million goodwill impairment charge.

After giving consideration to these items, including the goodwill impairment charge on Olin’s loss before taxes, the effective tax rate for the three months ended September 30, 2020 of 14.0 % was lower than the 21 % U.S.

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

The effective tax rate for the nine months ended September 30, 2021 included a benefit from a net decrease in the valuation allowance related to deferred tax assets in foreign jurisdictions, a benefit associated with prior year tax positions, a benefit associated with stock-based compensation, an expense from remeasurement of deferred taxes due to an increase in our state effective tax rates and an expense from a change in tax contingencies.

We made cash contributions to our international qualified defined benefit pension plans of $ 0.4 million and $ 0.1 million for the three months ended March 31, 2022 and 2021, respectively.

The effective tax rate for the three months ended March 31, 2022 included a benefit associated with prior year tax, stock-based compensation and a change in tax contingencies, resulting in a net $ 2.3 million tax benefit.

After giving consideration to these items, the effective tax rate for the three months ended March 31, 2022 of 25.4 % was higher than the 21 % U.S.

federal statutory rate primarily due to state and foreign income taxes, partially offset by foreign income exclusions and favorable permanent salt depletion deductions.

The effective tax rate for the three months ended March 31, 2021 included 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 $ 1.3 million tax benefit.

After giving consideration to these items, the effective tax rate for the nine months ended September 30, 2021 of 22.2 % was higher than the 21 % U.S.

The effective tax rate for the nine months ended September 30, 2020 included a benefit associated with prior year tax positions, an expense associated with stock-based compensation, an expense from a net increase in the valuation allowance related to foreign tax credits and an expense from a change in tax contingencies.

These factors resulted in a net $ 2.8 million tax expense.

For the nine months ended September 30, 2020, a tax benefit of $ 10.8 million was recognized associated with the $ 699.8 million goodwill impairment charge.

After giving consideration to these items, including the goodwill impairment charge on Olin’s loss before taxes, the effective tax rate for the nine months ended September 30, 2020 of 23.3 % was higher than the 21 % U.S.

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

During the second quarter of 2021, we released the valuation allowance related to deferred tax assets of our German operations that resulted in a net tax benefit of $ 103.8 million.

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 project taxable income in our German operations for the remainder of 2021 and we expect that net operating loss carryovers and other deductible amounts in Germany will ultimately be realizable against future income.

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

As of September 30, 2021, we had $ 44.6 million of gross unrecognized tax benefits, which would have a net $ 44.4 million impact on the effective tax rate, if recognized.

As of September 30, 2020, we had $ 22.7 million of gross unrecognized tax benefits, of which $ 22.6 million would have impacted the effective tax rate, if recognized.

After giving consideration to these items, the effective tax rate for the three months ended March 31, 2021 of 20.8 % was lower than the 21 % U.S.

federal statutory rate primarily due to a net decrease in

the valuation allowance related to losses in foreign jurisdictions and favorable permanent salt depletion deductions, partially offset by state taxes, foreign income inclusions and foreign income taxes.

As of March 31, 2022, we had $ 45.1 million of gross unrecognized tax benefits, which would have a net $ 44.6 million impact on the effective tax rate, if recognized.

As of March 31, 2021, we had $ 21.6 million of gross unrecognized tax benefits, of which $ 21.5 million would have impacted the effective tax rate, if recognized.

The amount of unrecognized tax benefits was as follows:

September 30,

($ in millions)

Balance at beginning of year $ 43.4 $ 21.3

Increases for prior year tax positions 23.4 2.1

Decreases for prior year tax positions ( 0.7 ) —

2 unchanged sentences

Balance at end of period $ 45.1 $ 21.6

Increases for prior year tax positions primarily are the result of ongoing discussions with tax auditors in a major foreign jurisdiction during the second quarter of 2021.

In April 2021, the review of certain U.S.

income tax claims by the Internal Revenue Service for the year 2016 was finalized which resulted in a $ 3.8 million income tax benefit related to favorable adjustments in uncertain tax positions for prior tax years.

As of September 30, 2021, we believe it is reasonably possible that our total amount of unrecognized tax benefits will decrease by approximately $ 16.2 million over the next twelve months.

As of March 31, 2022, we believe it is reasonably possible that our total amount of unrecognized tax benefits will decrease by approximately $ 12.9 million over the next twelve months.

The anticipated reduction primarily relates to settlements with taxing authorities and the expiration of federal, state and foreign statutes of limitation.

24 unchanged sentences

We enter into forward sales and purchase contracts to manage currency risk to offset our net exposures, by currency, related to the foreign currency denominated monetary assets and liabilities of our operations.

At September 30, 2021, we had outstanding forward contracts to buy foreign currency with a notional value of $ 320.6 million and to sell foreign currency with a notional value of $ 114.6 million.

At March 31, 2022, we had outstanding forward contracts to buy foreign currency with a notional value of $ 259.2 million and to sell foreign currency with a notional value of $ 120.6 million.

All of the currency derivatives expire within one year and are for U.S.

3 unchanged sentences

At December 31, 2021, we had outstanding forward contracts to buy foreign currency with a notional value of $ 199.0 million and to sell foreign currency with a notional value of $ 124.4 million.

At September 30, 2020, we had outstanding forward contracts to buy foreign currency with a notional value of $ 186.1 million and to sell foreign currency with a notional value of $ 127.7 million.

At March 31, 2021, we had outstanding forward contracts to buy foreign currency with a notional value of $ 212.3 million and to sell foreign currency with a notional value of $ 110.8 million.

Cash Flow Hedges

1 unchanged sentence

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

September 30, 2021 December 31, 2020 September 30, 2020

March 31, 2022 December 31, 2021 March 31, 2021

($ in millions)

3 unchanged sentences

Total notional $ 204.7 $ 224.3 $ 238.1

As of September 30, 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.

As of March 31, 2022, 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.

At September 30, 2021, we had open derivative contract positions through 2027.

If all open futures contracts had been settled on September 30, 2021, we would have recognized a pretax gain of $ 77.1 million.

If commodity prices were to remain at September 30, 2021 levels, approximately $ 48.7 million of deferred gains, net of tax, would be reclassified into earnings during the next twelve months.

At March 31, 2022, we had open derivative contract positions through 2027.

If all open futures contracts had been settled on March 31, 2022, we would have recognized a pretax gain of $ 70.7 million.

If commodity prices were to remain at March 31, 2022 levels, approximately $ 46.8 million of deferred gains, net of tax, would be reclassified into earnings during the next twelve months.

The actual effect on earnings will be dependent on actual commodity prices when the forecasted transactions occur.

3 unchanged sentences

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 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 three months ended September 30, 2020, $ 0.1 million and for the nine months ended September 30, 2021 and 2020, $ 1.8 million and $ 0.3 million, respectively, of expense was recorded to interest expense on the accompanying condensed statements of operations related to these swap agreements.

For the three months ended March 31, 2021, $ 1.2 million of expense was recorded to interest expense on the accompanying condensed statements of operations related to these swap agreements.

Financial Statement Impacts

3 unchanged sentences

The table disaggregates our net derivative assets and liabilities into gross components on a contract-by-contract basis before giving effect to master netting arrangements:

September 30, 2021 December 31, 2020 September 30, 2020

March 31, 2022 December 31, 2021 March 31, 2021

($ in millions)

33 unchanged sentences

Amount of Gain (Loss)

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Location of Gain (Loss) 2022 2021

9 unchanged sentences

Derivatives Not Designated as Hedging Instruments

Commodity contracts Cost of goods sold $ 0.5 $ —

Foreign exchange contracts Selling and administration $ — $ ( 2.0 )

8 unchanged sentences

If the threshold is exceeded, cash is either provided by the counterparty to us if the value of the derivatives is our asset, or cash is provided by us to the counterparty if the value of the derivatives is our liability.

As of September 30, 2021, December 31, 2020 and September 30, 2020, this threshold was not exceeded.

As of March 31, 2022, December 31, 2021 and March 31, 2021, this threshold was not exceeded.

In all instances where we are party to a master netting agreement, we offset the receivable or payable recognized upon payment of cash collateral against the fair value amounts recognized for derivative instruments that have also been offset under such master netting agreements.

14 unchanged sentences

We evaluate our hierarchy disclosures each quarter.

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

The following table summarizes the assets and liabilities measured at fair value in the

condensed balance sheets:

Fair Value Measurements

Balance at September 30, 2021 Level 1 Level 2 Level 3 Total

Balance at March 31, 2022 Level 1 Level 2 Level 3 Total

Assets ($ in millions)

10 unchanged sentences

Commodity contracts $ — $ 3.2 $ — $ 3.2

Foreign exchange contracts — 0.6 — 0.6

Total Liabilities $ — $ 3.8 $ — $ 3.8

Balance at September 30, 2020

Balance at March 31, 2021

Commodity contracts $ — $ 38.1 $ — $ 38.1

13 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.

As of September 30, 2021, December 31, 2020 and September 30, 2020, the fair value measurements of debt were $ 3,287.9 million, $ 4,177.2 million and $ 4,078.7 million, respectively.

As of March 31, 2022, December 31, 2021 and March 31, 2021, the fair value measurements of debt were $ 2,807.2 million, $ 2,921.0 million and $ 4,011.5 million, respectively.

Nonrecurring Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis as required by ASC 820.

There were no assets or liabilities measured at fair value on a nonrecurring basis as of September 30, 2021 and December 31, 2020.

For the three months ended September 30, 2020, the carrying value of the Chlor Alkali Products and Vinyls and Epoxy reporting units’ goodwill was remeasured to fair value on a nonrecurring basis.

The fair value of each reporting unit was calculated utilizing an income approach.

The income approach uses a discounted cash flow model that requires various observable and nonobservable inputs, such as prices, volumes, expenses, capital expenditures, discount rates and projected long-term growth rates and terminal values.

The resulting fair value Level 3 estimates were less than the reporting units’ carrying value which resulted in pre-tax goodwill impairment charge of $ 699.8 million.

As part of our impairment analysis, the fair value of all reporting units was reconciled to the company’s market capitalization.

See Note 7 “Goodwill and Intangibles” for additional information on the goodwill impairment.

There were no assets or liabilities measured at fair value on a nonrecurring basis as of March 31, 2022, December 31, 2021 and March 31, 2021.

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-Q

Item 1. Financial Statements