(Operator Instructions) Welcome to the Eastman Chemical Company Third Quarter Earnings Conference Call. We will now turn the call over to Mr. Greg Riddle of Eastman Chemical Company Investor Relations.

On the call with me today are Jim Rogers, President & CEO, Curt Espeland, Senior Vice President and Chief Financial Officer, and Anena Tesh, from Investor Relations Department. Before we begin I’ll cover three items. First, we posted the slides that accompany our remarks for this mornings call on our website at www.Eastman.com in the Investor section. Second, during this call you will hear certain forward looking statements concerning our plans and expectations for fourth quarter 2009. Actual results could differ materially from our plans and expectations. Certain factors related to future expectations are or will be detailed in the company’s third 2009 financial results news release on our website and in our filings with the Securities and Exchange Commission, including the Form 10-Q filed for second quarter 2009 and the Form 10-Q to be filed for third quarter 2009. Lastly, except when otherwise indicated, all financial measures referenced in the call and in the slides accompanying the call will be non-GAAP financial measures, such as sales revenue, operating earnings, and earnings per share that exclude restructuring related and other items. Our reconciliation to the most directly comparable GAAP financial measure and other associated disclosures, including a description of the restructuring related and other items, are available in our third quarter 2009 financial results news release and the tables accompanying that news release. With that I’ll turn the call over to Jim.

I’m going to start out on slide three. By looking at the outlook statements we made on our last call on July an accountability check if you will. In July we told you we expected third quarter EPS would be approximately $1.10 and in September Curt updated our guidance to above $1.10 and we came in at $1.38, above our own expectations off the strength of our CASPI and Fibers Segments. Next we told you we expected for the full year that our EPS would be slightly above $3.00 and with our fourth quarter guidance you can see we expect to be solidly above $3.00. We told you we expected the cost reduction actions we’ve taken would be evident in our results and they clearly are. We also told you we expected to generate greater then $200 million in free cash flow for the year and on this one we have greatly exceeded our expectations as Curt will discuss. I can tell you it didn’t feel over conservative when we gave the guidance in July given the poor visibility we all had. If you’re going to miss we missed in the right direction. All I can say is we do our best to call it as best we see it. Obviously it’s been difficult to do so in the current environment. Moving next to our corporate results starting with sales volume. We were down 4% year over year after excluding contract Ethylene and polymer intermediate sales from third quarter ’08 and sequentially we were up about 5%. As a result, our capacity utilization for the quarter was just over 80%. Customer demand is not quite back to where we were last year but we are making progress. Next you can see that pricing was down 18% year over year, this…

While we had strong earnings in the third quarter you can see on slide 12 we also had great cash generation. Our cash from operations was $331 million for the quarter. This starts with strong net earnings, we also benefited from continued reductions in net working capital and we benefited by over $100 million from a combination of a refund of previously paid taxes and lower estimated tax payments. This is related to the change in accounting methodology used for Federal Tax purposes to accelerate the timely deductions for manufacturing repairs that I mentioned on the call in July. Moving down the cash flow statement, you can see that our capital expenditures were $64 million for the quarter down from $153 million in third quarter 2008. This is consistent with our expected sequential declines in capital expenditures during 2009. After our dividend free cash flow was $235 million for the quarter which is really an outstanding performance. Through nine months our free cash flow now stands at $304 million which is above the $200 million full year 2009 free cash flow objective I previously discussed. This op performance has been achieved through our focus on cash throughout the company and we, quite simply, underestimated the impact and speed of the actions we have been taking including reductions in working capital. Turning next to slide 13, reductions in working capital remain a high priority. Back in March, as part of our free cash flow objective, we committed to generate $100 million in cash from working capital. As you can see, we remained very disciplined in the third quarter. At the end of the first half of the year our inventories were at historically low levels. I expected there would be a build in the third quarter but it was less then…

That concludes our prepared remarks. Please get the queue ready for questions.

(Operator Instructions) Your first question comes from Jason Miner – Deutsche Bank Jason Miner – Deutsche Bank: On some of the savings I wonder how much will full year ’09 earnings benefit from the 5% cut you guys made to salaries? Conversely maybe asked another way, how much would it add back costs if salaries across the board went back to ’08 levels?

We just happened to have been looking at that subject. We did take some extraordinary actions this year and I think we did it fairly quickly. I think we did it at the right level. I love our culture that we had the option of doing something like a pay reduction instead of having to let a lot more people go, people who actually contribute value and do meaningful work. It’s my setup to say that. I believe we did the right thing. You don’t have all the one time charges when you do a pay reduction. There was $200 million of savings there and actually how it feeds into the year and how much of it we go during the year that was more of an annualized number. We would have had most of that in this year. As I look going forward you can’t keep those extraordinary measures forever so I would expect it’s quite likely we will be reversing some of those extraordinary measures including the pay reduction around year end. We’re still waiting to get a little more visibility into the fourth quarter and next year before we make a final decision. As we look at that and maybe a couple other things that’s probably $40 million on an annual run rate that if you roll it all together that you would expect to put back in place. I would guess there’s another $50 to $60 million and that’s just a ballpark of savings that are tied more to volumes. When the volume comes back you would hire back the contractors, etc. You have to lighten up a little bit on some of the spending constraints because eventually people have got to travel you’ve got to let them spend a little bit of money. There’s at least a good solid $100 million that sticks to your ribs going forward. The other thing I’d say is we don’t talk a lot about it but we’re trying to continue to be very disciplined so since that reduction in force we had in the spring we’ve allowed attrition to run ahead of hiring almost at a ratio of 10:1 such that by end of year I’d expect we’ll be down another 2% in our headcount which again you’re not paying any severance charges, we’re very conscious of cash but you are reducing your ongoing costs. I guess that wraps up how we’re looking at the cost savings we obtained and what we have to overcome as we move from ’09 to 2010. Jason Miner – Deutsche Bank: Let’s shift gears into tow. Some have reported some volume drops in cigarettes recently. With some new capacity coming on in Korea I wonder if you could characterize for us the current situation and outlook for utilization rates in the industry for tow.

Since it’s our new capacity that’s coming on in Korea I guess we ought to have a handle on this one too. Great industry, certainly not impacted to the extent all the other businesses were by the recession but it was impacted. People did trade down on brands etc. around the world, the tax increases we had which have impacted smoking in particular in the States. Good news there is the States is a fairly small part of the world filter tow market. To come to it, we expect utilization rates next year will be less then the utilization rate were this year. Jason Miner – Deutsche Bank: Let me shift to Beaumont, I wanted to ask I know we’d spoken about loan guarantees possibly earlier in the year. If Beaumont has slowed down is there still a potential for government loan guarantees to help in that project in the long run you think or do we miss that window?

No we have not missed that window. That is still on our agenda and we think we’re still in the right place in line, let’s put it that way, for those. Bigger issue is all the other building blocks that have to come together before you can start thinking about going forward with the gasification project and we’ve listed those in the past in terms of the capital costs where energy prices are, how much government incentives do you get. We’ve also said that if we go forward we’d like to go forward with a partner, it’s a big project. There are so many things that are not in place today. The mode we’re in right now is to hold those costs down to a minimal amount to keep the option alive as we continue to review how we feel about that project and the chances of it happening any time soon.

Your next question comes from Jeff Zekauskas – JP Morgan Jeff Zekauskas – JP Morgan: On your taxes, do your book taxes and your cash taxes more or less match each other with a small delay or is there now a difference in what you’re paying versus what you’re reporting?

If you look at 2009 it’s definitely where our current taxes and our deferred taxes have a different view and that’s primarily due to the project we’ve talked about our tax project. As we go back into next year our tax department will still continue to look at all ways to impact cash and minimize tax payments but it will probably be more normalized going forward. We are looking for advantaged ways to impact our cash. Jeff Zekauskas – JP Morgan: This year what’s the difference in very rough terms between your cash taxes and your book taxes?

If you look on the cash flow statement I’d say you’d see that difference right on the deferred tax benefit. Jeff Zekauskas – JP Morgan: When you think about the cost cutting program at Eastman can you give us an idea of what your level of savings was by the end of the second quarter for this year and what your level of savings now is by the end of the third quarter?

I’d have to do some math; I guess you could do that as well. You know when our pay reduction kicked in; I think it was April 1. We did a reduction in force around then so much of it would have been in the second quarter. As I think it through, in fact we were running at lower utilization rate in the second quarter so we probably had pretty much, when you guess most all the cost cutting in place at that time. I’m not sure there was a huge difference between second and third other than we ran at a higher utilization rate in the third quarter and so we may have had to bring a few more contractors back. Jeff Zekauskas – JP Morgan: Sometimes what Dow Chemical does is gives investors an idea of how much their hydrocarbon costs decreased year over year or sequentially. How much did your hydrocarbon cost decrease sequentially?

If you’re talking about raw I’m not sure when you say hydrocarbon per se. I can tell you what our raw material costs. Jeff Zekauskas – JP Morgan: Raw materials is just great.

If you look year over year our raw material costs declined $350 million. Jeff Zekauskas – JP Morgan: What about sequentially?

I think it’s probably increased about $40 million some of that still may be tied up in inventory but it’s about $40 million.

The one thing you’ve got to watch for both of us is how does price move with that raw material. That’s the other piece to the equation that I have to focus on. What we try and do is we try and manage the spreads. Jeff Zekauskas – JP Morgan: How much did prices change sequentially?

Sequentially price was up 1%.

Your next question comes from Kevin McCarthy – Bank of America/Merrill Lynch Kevin McCarthy – Bank of America/Merrill Lynch: I was wondering if you could comment on the fourth quarter profit outlook in CASPI. Most years you see a seasonal dip there but it’s not always the case. I think you had improvement in 2003 and 2006. As you look at raw material trends and what you see volumetrically what should we expect for that segment in the fourth quarter?

Forgive me if I take this opportunity to comment of CASPI. I was waiting for the question. What a great quarter for that business. Let me remember a few things. I will get to your question but I can’t resist thinking about all the stuff that’s been done in that business going all the way back to some of the restructuring and selling off the resonates and monomers businesses quite a while ago to more recent things like getting out of the crude tall oil and our adhesives business. I think about people changes that were made down in the organization more recently getting the right players in the right jobs. It’s like everything was clicking. We had the raws come off in this third quarter and we know that they’re turning around going back up so that’s one of the things that tells us yes we are definitely coming down from that third quarter high. We know we normally have seasonality, we don’t think this year is going to be any different. We will come off just given the markets they sell into will come off from third to fourth quarters. The point is it’s still going to be a very strong quarter for CASPI and just such a great business. I know you guys looked at it and you’re probably wondering how do I think about that going forward. The fourth quarter, yes we’re coming off but if I look longer term remember I used to build up how I thought we could set peak earnings higher then the last peak just within our core businesses. I had CASPI be around $200 or back better than $200 and you’re seeing the potential to set a new level of earnings in CASPI. One quarter doesn’t do that, we had a lot of stuff go our way, all the businesses clicked at the same time whether it was in adhesives or coatings, that doesn’t happen very often. Still you can just see the strength of that underlying business and that’s one of the things that I count on when I talk about setting much higher earnings in the future on these core businesses. Kevin McCarthy – Bank of America/Merrill Lynch: It is nice to quadruple operating profit over two quarter. Well done.

Part of that is how weak it was two quarters ago too. Kevin McCarthy – Bank of America/Merrill Lynch: Those record levels though. Shifting gears, you mentioned you’re excited about acetic and hydride off take from Sipcam. Can you give us some kind of feel for the timing and magnitude of that in terms of financial impact?

I’m not sure it will have that great a financial impact. I’m excited just because it gets us out more globally. Its part of the world I think we should have a bigger presence in, in the Middle East. I can tell you they have built one beautiful plant that any North American chemical site would be proud to have. I’ll let them say their exact timing but I think they’re planning on being operational early next year is my guess. They’ll give you the definitive term. To me it’s just one more way we’re playing off of our acetyl stream just working everything from logistics to cost position and serving the growing market. It wasn’t so much it’s going to have a material impact 50,000 tons of hydride but its more that it’s the right direction that we want to go. Kevin McCarthy – Bank of America/Merrill Lynch: On the subject of cash deployment obviously things have changed dramatically in terms of the capital markets over the past eight, nine months. You’re at a point now where you’ve generated a lot more cash; your net debt to EBITDA is not very far from one. I was wondering if you might comment on the dividend. It’s been flat for something like 12 years. I realize it’s a Board decision but at what point should we be thinking about resuming increases there?

When you say resuming increases I think the last increase was like ’95 or ’96. The way we look at that is we believe in getting a return to our shareholders. It’s a very legitimate use of cash to give it back to shareholders but we’re guided too by our yield in reference to the rest of the industry and we think it’s still quite an attractive yield now. Assuming that we continue to run our businesses well and the price moves up we’ll be looking for ways to get a return to shareholders. I’m not going to say it’ll necessarily be by increasing the dividend.

Your next question comes from P.J. Juvekar – Citigroup P.J. Juvekar – Citigroup: As you said, PCA did really well especially compared to the last recession. I was wondering if you can talk a bout the supply/demand of oxo and acetyls now versus back then.

I’m not sure how much better the markets are then back then. I know we’re doing business differently. This was such a severe recession I believe I’d be correct if I said there was some capacity that exited the market. I can’t remember if that also happened back in that ’01-’03 timeframe. When I think about the difference I think about things like swap arrangements we’ve done with other producers such that we have product in a right region without all the logistics costs and so do they. I think about in particular a lot of work we did on pricing and deciding what segments of the market we want to play in. You know for example we have a different acidic asset strategy albeit we’re much smaller player anyway but how we have more of a North American specialty strategy there as compared to other players. It’s a laundry list of things that are more internal to us I think then the marketplace in total but you wouldn’t know that by looking at the other guys and seeing what they’re doing compared to that last recession. P.J. Juvekar – Citigroup: What are your current operating rates?

I think I said we’re just slightly over 80% so say 81%. That’s part of the reason we’re looking at the fourth quarter coming off as we’re expecting that utilization rate to come back down a few points. P.J. Juvekar – Citigroup: Many institutions are banning the use of single serve PET bottles. On the flip side they’re encouraging the use of plastics like [inaudible]. Can you talk about the shift that’s taking place?

I don’t know about banning PET per se. I know there’s polyethylene bans. P.J. Juvekar – Citigroup: I should say they’re frowning on the use of PET.

That is one trend in the plastics world where everyone is looking for greener plastics and I think we’re hitting the timing just right with our Triton product, its just such a great product with a great future. You know its BPA free, it does so many things in terms of having a higher TG you can use it in the dishwasher a lot of other places. We’re winning contracts with some brand names that we think it’s really going to drive growth and we think there’s going to be generations of products, families of products after this initial wave. That wave, what we call the sustainability wave, we are very conscious of that looking at our portfolio where we can take advantage of that wave. Its not just there, there’s a number of places. You’ll be hearing more about that if we get together here in a few weeks on Investors Day.

Your next question comes from Frank Mitsch – BB&T Capital Markets Frank Mitsch – BB&T Capital Markets: Donald DuPont mentioned at their investor day nine times in their conference call, I took the under on you guys, I’m feeling pretty good about that bet right now because you’ve only mentioned it twice so I appreciate that. With the overall results on an operational basis the best since ’05 and given a lackluster market, speculate with me where could your earnings have been if you’ve got back to ’05 type operating rates?

That’s the dream at night as go to bed. I think about we did this on 81% utilization rates. Admittedly we had some extraordinary measures in place for costs. Last time we had a pay raise was back in April ’08. There are some extraordinary measures we took which you can’t count on but I’m very pleased with the power of these core businesses to run at this rate. Just to give you an idea, CASPI’s utilization rate isn’t much different then the company overall, its right around there, especially plastics is actually less, Fibers is noticeably more. One of the benefits you get in these businesses such as Fibers you know the utilization rate I don’t think went up from second to third or not by much is the fact that we’re integrated. As other businesses tick up their volumes and they absorb more costs from the stream every business benefits. I feel very confident when I say that if we get back to those run rates, utilization rates, a strong year that we’re going to have no problem setting peak earnings higher then the last peak. Frank Mitsch – BB&T Capital Markets: That perfect because of course the biggest peak obviously was jacked up by PET back in the mid 90’s.

It wasn’t that big a difference. I think the last peak was $5.73 and I think if I go back to ’95 it was $6 something. You’re seeing the $1.30 something plus $0.16 you’re seeing a pretty decent quarter at 81% run rate. Again admittedly a lot of stuff went our way; raw materials versus price, cost savings, etc. Frank Mitsch – BB&T Capital Markets: It’s been previously mentioned on the call, your nice cash position and the strong balance sheet. You went out of your way to discuss your trip to Saudi Arabia and talk about possible opportunities and partnerships etc. in that part of the world. What sort of things would you be considering?

It’s too early to mention anything specific. I know what you’re driving for and our game plan is to be more global, we want to get more then our fair share of the regional growth that’s happening out there in the developing world. We very much like the idea of advantaged feed stocks you’ve seen that here in Kingsport with what we start with coal, we think we can do that we can have advantaged feed stocks in other parts of the world. You know we think that our CASPI business and parts of our performance chemicals and intermediates business could be good hunting grounds for add on acquisitions. Just to give you a sense, the idea of advantaged feed stocks, differentiated products I think we can really create some value going with that strategy around the world. Frank Mitsch – BB&T Capital Markets: When is your next trip?

That’s a good question; I’ll probably be making some big tour in the first quarter.

Your next question comes from Jason Miner – Deutsche Bank Jason Miner – Deutsche Bank: Back on Fibers for a moment, if the volumes in that business came from lower sales of chemicals I know that you do sell some to competitors, could that suggest that you’re taking any market share there?

I wouldn’t read it that way. Some of the sale of chemicals goes to a joint venture we have right here in Kingsport, Premistere. We do sell to a few other players around the world. Frankly I see the market share in Fibers as fairly steady I would guess. That’s probably the way Rick Johnson, who runs that business would characterize it as well. Jason Miner – Deutsche Bank: If I can revisit my utilization question one last time forgive me. Do you think we can keep global utilization above 90% in Fibers across the industry?

I think that is the current thinking for 2010. We’re bringing on a few extra tons there in Korea but the Asian market is still growing even through this period of time. Of course when we bring that Korean facility on we’re going to have some startup costs next year, we’re going to have to do some product qualifying with our major customers so you might not, specific to Eastman, see a lot of the benefit of that Korean facility until 2011. The market is still growing strong in Asia and that’s where we want the capacity.

Being no further questions in queue, Mr. Riddle I’d like to turn the conference back over to you for any additional or closing remarks.

Thanks again everyone for joining this morning. An audio replay of this conference call will be available on our website this afternoon through next Monday, November 2. Have a great day.

Thank you for your participation. This will conclude today’s conference call.