Good day, ladies and gentlemen, and welcome to the second quarter Olin Corporation earnings conference call. My name is Nora and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference. (Operator instructions) I would now like to turn the presentation over to your host for today's conference, Mr. Joseph Rupp, Chairman, President, and Chief Executive Officer of Olin Corporation. Please proceed, sir.

Good morning and thanks for joining us today. With me this morning are John Fischer, Vice President and Chief Financial Officer; John McIntosh, Vice President and President of our Chlor Alkali Products Business; and Larry Kromidas, our Assistant Treasurer and Director of Investor Relations. Sales for the second quarter of 2008 were $428.3 million compared to $266.2 million in the second quarter of 2007. Net income from continuing operations in the second quarter of 2008 was $35.5 million or $0.47 per diluted share compared to $21.9 million or $0.29 per diluted share in the second quarter of 2007. Chlor Alkali earnings improved 27% compared to the second quarter of 2007, which reflects the contributions and synergies of the Pioneer acquisition and improved pricing. These favorable developments allowed the business to overcome lower volumes and higher costs, primarily in the areas of freight and electricity. Winchester second quarter pre-tax earnings of $9.5 million represent a record second quarter for the business. Winchester’s results reflect the combination of improved volumes and pricing. The second quarter 2008 results include $9.7 million of environmental expenses, which are approximately 90% higher than the first quarter 2008 level and approximately 70% higher than expected in the third quarter 2008. The decreased level of environmental expenses in the second quarter 2008 primarily represented cost of that decrease. The increased levels of environmental expenses in the second quarter 2008 primarily represented costs for remediation in a former manufacturing location. Second quarter 2008 results also include approximately $5 million of non-cash stock-based compensation expense which reflected the positive performance of our stock during the quarter. This level of expense is approximately twice the level experienced in the first quarter of 2008. Second quarter 2008 results included an $800,000 pre-tax pension curtailment charge associated with the transition of our McIntosh,…

Thank you, Joe. First, I would like to discuss a few items on the income statement. Selling and administration expenses increased 9% or $2.8 million during the second quarter of 2008 compared to the second quarter of 2007. The increase is attributable to the inclusion of the Pioneer operations in the second quarter 2008 results. As a point of reference, Pioneer incurred SG&A expenses in the second quarter of 2007 of $9.7 million compared to $5.2 million in the second quarter of 2008. Legal and legally-related expenses were $2.4 million lower in the second quarter of 2008 and the combination of defined benefit and defined contribution pension plan expenses declined by $3.1 million. These SG&A expense reductions were partially offset by higher incentive expenses which were primarily the result of mark-to-market adjustments on stock-based compensation. During the quarter, Olin’s common stock appreciated 32% or $6.40 per share. Every $1 change in the Olin stock price changes stock-based compensation expenses by approximately $400,000. Stock-based compensation expense in the second quarter of 2008 was $4.9 million compared to $3.3 million in the second quarter of 2007. Corporate and other expenses in the second quarter of 2008 declined by $3.7 million from the second quarter of 2007 primarily due to lower- defined benefit pension plan expenses and lower legal and legal-related costs. This will partially offset by the higher stock-based compensation expenses and a higher environmental expenses. Second quarter 2008 environmental investigatory and remediation expenses were $9.7 million compared to $7 million in the second quarter of 2007 and $5.1 million in the first quarter of 2008. These costs relate primarily to remedial and investigatory activities associated with former waste disposal sites and past operations. Increased level of environmental expenses in the second quarter primarily represents cost for remediation at a former manufacturing…

(Operator instructions) Your first question comes from the line of Don Carson from Merrill Lynch. Please proceed. Don Carson – Merrill Lynch: Yes, thank you. I’d like to walk through just the ECU pricing outlook, I know there is some pluses and minuses but on the caustic front, Joe, you mentioned that the last $160 increase which is not in the industry indices, you won’t get till Q4. But looking at the approximately the other $240 of increase you had in the quarter, just wondering what the timing of realization is there given some of the contract caps you have and also some of the takeaways in terms of lower chlorine prices and higher freight costs. So, if you could just perhaps walk us through how you see –

Don, I will talk you through that. What we did mention is we are forecasting higher ECU prices well into 2009 and John will give you a little bit on the contracts, John? Don Carson – Merrill Lynch: Okay.

Don, just to give you a sense of what’s been reflected in pricing indices so far, of the $490 of announced price increases that occurred in the first half of 2008 on caustic, only $140 of that number has been reflected in one of the price indices that I looked at yesterday. So, there is a significant amount of the pricing announcements that have been announced so far, it will continue to be reflected in these indices as we move through the third quarter and into the fourth quarter. We expect indices in the end of July to reflect a significant jump from where they were at the end June but overall, we expect to continue to see even with no further price increase activity, the caustic pricing indices to go up through the balance of this year and end of the first of next year and based on our typical quarter lag experience that we tend to see, we would expect those price – the caustic size molecule on an index basis to move up into the first half of ’09. We do expect to continue see chlorine prices drop. We – as mentioned in the remarks, they dropped in the second quarter. We expect to continue to see those prices decline but I would make a point that at 89% operating rates, historically, which is what the industry reported in the second quarter, we would have seen chlorine price increases that were more significant in terms of the magnitude than we’ve seen in the second quarter and that we’ve seen reflected in our system as well. Don Carson – Merrill Lynch: And John, what’s the impact of the caps that you have in place? What percentage of your contracts does that cover and what is status of renegotiating those caps? I know some people had approached you perhaps to give up some of the cap this year and return for on going limits next year.

We have had a couple of occasions where – beginning in July 1, where we’re operating with improved pricing from customers who wanted to, I guess, stretch the pain out a little more than having to face it all at the beginning of the year. So, we’ve seen that phenomenon impact our system. We still will have some limitations through the balance of this year but that’s another reason why we believe that we’ll continue to see overall ECU pricing gains well into 2009. Don Carson – Merrill Lynch: Okay. And then John, just an industry comment, what impact, if any, are you seeing from the pending Shintech startup as they place that caustic in the market? And with these kind of prices, are you seeing any demand destruction, any caustic users trying to switch to soda ash which I know is also tight, just your comment on those two aspects.

The Shintech startup where as for most people expected there to be kind of a psychological impact on pricing is really become a non-event, and it’s our understanding that most of the caustic that will come out of that plant once it starts up will either have to be used to pay back other people on the industry or exchange caustic with them based on the delay in their start-up schedule and/or will be caustic that will be exported out of the U.S. to meet export obligations that they have. So, we really don’t expect their start-up, which we understand is sometime very soon, to have any material impact on the North American market. As a matter of fact, in some cases, it will help with the serious, serious imbalance we have, especially with all the force majeure announcements that have already occurred late in the second quarter and in the third, early in this quarter. In terms of demand destruction, we haven’t seen it yet, but the substitution that is most logical that you mentioned, which is soda ash for caustic, we haven’t seen any of that occur yet and I think the reason is just exactly what you said. Soda ash availability is such that no one can commit to a long term and continuing supply of soda ash, and so security of whatever alkali agent that you are using tends to become the overriding issue and people are really forced to continue to use caustic if that is what they are currently contracted to use. Don Carson – Merrill Lynch: Thank you.

Thanks, Don.

And your next question comes from the line of Frank Mitsch from BB&T Capital Markets. Please proceed, sir. Frank Mitsch – BB&T Capital Markets: Close enough on the name of the company. Bad sign. Good morning, gentleman.

Good morning. Frank Mitsch – BB&T Capital Markets: Joe, you mentioned that in your outlook that you thought Winchester, which show similar results to what it did in the first and the second quarter and obviously those are very strong results, traditionally, however, the third quarter is the best quarter for the Winchester business, so are you being a little a bit conservative there or are you kind of maxed out, can you talk a little bit about what’s going on there?

Yes. What we’re seeing Frank is in the third quarter, we are going to see some pretty healthy hits from pricing, particularly in the area of steel and resins that we are not going to have a chance to be able to offset our cost– we are not going to have a chance to offset from a pricing point of view. We also will anticipate potentially as we get out further that there is some moderation as we talked about from a lead perspective that may start to offset that as we get out the fourth quarter. The other concern we have a little bit was the commercial shooter – is what we talked about is that they are buying down and also the distributors are fairly cautious about what’s going to happen with this hunting season and we know that in the fishing category, for example, that that has slowed down considerably and so were trying to reflect what we think is reality as we get to the third quarter. Frank Mitsch – BB&T Capital Markets: Well, with the cost of food being what it was, I would think hunting would be up. But, yes, you got to drive pretty far to get to some of those fields. And the discussion regarding the synergies from the Pioneer transaction, I believe you said that you’d raised your expectation from $35 million to $40 million, you think you’re going to exceed that this year, so the question is– and you mentioned that the Dalhousie shutdown being about $10 million in of itself. What do you think that could get to?

Greater than $40 million. Frank Mitsch – BB&T Capital Markets: All right.

We scored on that. What's happened there is that we’re real pleased. Originally we came out with a 35 number. We felt really good about what occurred so far in the first nine months here and saw the $40 million number and our sense is that we can get past that $40 million number, Frank, and we are not getting up to $50 million. Frank Mitsch – BB&T Capital Markets: Okay. That’s fair. And then lastly, I know you guys aren't super big on the aluminum side but what percent of your caustic sales now are on the aluminum market?

Frank, this is John. We export very little caustic currently, although we will look to export more post the start up of the converted and expanded plan at St. Gabriel. But historically before the acquisition, Olin exported no caustic and right now we really don't have the ability to satisfy all of our North American contract accounts and still have caustic to export. As I said, we see that changing with the expansion and for us, the logical market and one of the fastest growing markets for exporting caustic will be South America. Frank Mitsch – BB&T Capital Markets: All right. So I'll look of that to be a 2009 event, not necessarily an '08 event.

That’s correct. Frank Mitsch – BB&T Capital Markets: All right. Thank you guys.

Thank you, Frank.

Your next question comes from the line of Christopher Butler of Sidoti. Please proceed sir. Christopher Butler – Sidoti: Hi. Good morning guys.

Good morning. Christopher Butler – Sidoti: Just sort of wanted to circle back on the ECUs, right in saying that if the markets expected there to be any impact on caustic from the Shintech startup, we'd probably already be seeing that reflected, right?

I would think that's fair, Chris. Christopher Butler – Sidoti: And looking at the chorine side of the equation, you said that you are expecting chorine to be down. Just to clarify, are you talking sequentially down here for the remainder of the year or down compared to 2007 levels?

Sequentially down for the rest of the year. Christopher Butler – Sidoti: So the stability that we may have seen here at the end of the second quarter, that's something that's temporary it sounds like.

Well, we saw chorine price decrease from the first quarter to the second quarter and our forecast is that's going to continue. Although as I said earlier, it is definitely on a different trend line that we would've seen at this kind of operating rate and looking at it in comparing to a historical chorine price changes. Christopher Butler – Sidoti: And shifting gears a little bit on the environmental expense, the remediation that caused the uptake in the quarter, could you give us a little color on this? Was this sort of a one shot and no longer a concern issue? Or is this an increase in projected cost on ongoing remediation?

No, it was one shot on a site that we shouldn’t see repeat. I think, Chris, if you went back and looked at, for example 2007, there was quite a bit of deviation from quarter to quarter in terms of what our environmental expenses were. We had one very large quarter and I think that's what we saying we are going to have this year and that quarter was the second quarter. Christopher Butler – Sidoti: And finally, just looking at the interest expense for the quarter, it was down from year-over-year and sequentially but debt remained fairly constant. Are we looking at just variable interest rates coming down here?

Well, debt is actually down about $8 million year-over-year. In the first quarter, we repaid about $8 million of industrial revenue bonds. So, in terms of total debt, it should be down and that's what’s really driving it. The other thing is interest earned on cash balances is down just because short-term interest rates are down. Christopher Butler – Sidoti: Thank you for your time.

Thank you Chris.

Your next question comes from the line of Edward Yang of Oppenheimer. Please proceed sir. Edward Yang – Oppenheimer: Hi. Good morning. I had a couple of modeling questions as well. First, from the CapEx outlook for 2009. If I recall that St. Gabriel expansion was in two stages. Will you be exercising the second phase of that expansion and what would be your CapEx guidance for 2009?

We have made no announcement that we're going to exercise the second phase of St. Gabriel and I would expect at this point the capital spending will be at a much lower level in 2009, probably slightly higher than the forecasted level of depreciation. Edward Yang – Oppenheimer: And the forecast level of depreciation is in the mid 70s?

80. We're amounting about 70 now. St. Gabriel at about 10, so that would put us at 80. Edward Yang – Oppenheimer: And is that the sort of the base CapEx going forward or are you going to basically switch that around depending on volumes?

Something in the neighborhood of depreciation levels would be what we would consider to be based and then any expansion or investments would be on top of that. Edward Yang – Oppenheimer: Okay. And there’s obviously a lot of puts and takes that goes into your overall corporate and other expense line item. When you factor all that in, what do you think your corporate and other expenses or income will be in 2008 and 2009?

The two biggest drivers that are variable in corporate and other are environmental which we just talked about and we expect that to be down 25% year-over-year from 2007 to 2008. The other big driver is the defined benefit pension plan which if you look at the numbers should be down something in the neighborhood of $20 million 2007 to 2008. I do not see significant declines on the defined benefit pension plan going forward and I don’t see significant changes in our outlook on environmental going forward so I think – Edward Yang – Oppenheimer: Okay. What about headquarters costs or (inaudible).

Well, those tend to move around in a fairly narrow range and I wouldn’t see those changing dramatically year-over-year. We talked about legal and illegal related down this quarter but some base is up. Those are the things that tend to be variable. Edward Yang – Oppenheimer: Okay, thank you and you spoke a bit about the – in response to a question on substitution on the customer side soda ash. I understand that – could you help me understand on the supplier side or are suppliers able to switch from potassium hydroxide to caustic or does that even make sense?

No, there aren’t really very many applications at all. I’m sure not any of any significant quantity where that substitution is legitimate. And even with the high price of sodium hydroxide, potassium hydroxide prices are rising at an ever increasing rate as well because of raw material input pricing, so there's just – that’s not a substitution that really makes any sense. Edward Yang – Oppenheimer: Okay, understood. And finally, I would love to get your opinion. Clearly, it’s a bit of an unusual situation in the industry with chlorine being so weak and caustic being so tight. Have you seen an environment like this in the past, and if you have, how has it resolved itself in the past and how does this all play out in the context of what could be a fairly uncertain economy?

We have seen this in the past. This is a cyclical business and chlorine cycles and caustic cycles tend to not operate in sync and so there have been periods in the past when chlorine demand has been low and industry operating rates have been low and caustic has been in short supply and prices for caustic have increased. We’ve also seen that change when demand for chlorine picks back up, industry operating rates will then increase. That makes more caustic supply available and reduces some of the pricing pressure on caustic, but it also increases the pricing pressure on chlorine because of the increased demand. So, what you see is different parts of the ECU, leading and lagging, but historically, we believe that the volatility between the low point of the market and the high point of the market is going to be significantly smaller in the future than it’s been in the past because of energy input costs and other considerations. And so we don’t expect dramatic changes in ECUs even though it may be caustic providing more value in one period of time or chlorine in a different period of time. Edward Yang – Oppenheimer: Thank you. Appreciate those insights.

Thank you.

Your next question comes from the line of Mike Judd from Greenwich Consultants. Please proceed sir. Mike Judd – Greenwich Consultants: Yes, just missed a couple of numbers. You said the operating rate in the second quarter was 87%, was that right?

89%. Mike Judd – Greenwich Consultants: Okay, great. And the ECU price was – The net back price was?

590. Mike Judd – Greenwich Consultants: Got it. Thank you.

You’re welcome.

Your next question comes from the line of Sergey Vasnetsov. Please proceed sir.

Good morning, Sergey. Sergey Vasnetsov – Lehman Brothers: Good morning. In the past few years, we have been looking at energy and metal prices escalating, so I think chemical companies were rightfully jealous and upset. Now, no chemical was able to match it until recently caustic seems to be on this trajectory. So, is caustic the new copper?

We understand that. Sergey Vasnetsov – Lehman Brothers: No, seriously, is there some limit there, sky is the limit since 2000, might well collect a bargain in one year from now? When do you see some other mechanisms, conservation, et cetera kicking in to adjust for this?

Sergey, historically, there has been a point at which either the economy or the price for caustic or a combination of both has provided some restraint on demand, but part of the dilemma we face now has really been driven by the supply side and by supply disruptions and availability issues from the producer community. And so, that over time will ultimately moderate itself as well. Another phenomenon we’ve seen in the past that’s tended to moderate or try to bring back in the balance the supply-demand for caustic has been material that’s been imported into the US from other geographies in the world, and although that phenomenon hasn’t been significant in recent quarters, if you look back far enough, there have been periods of time when the differential in the US – between US caustic prices and caustic prices in other parts of the world got high enough that it incentivized people to bring the export caustic into the US. Of course, the US has – the weak dollar provides some advantages to the US producers. So all of these things move independently but in aggregate I think we will tend to put some level of constraint upon – the trajectory will not be endlessly up, I guess, is another way to say it. Sergey Vasnetsov – Lehman Brothers: So the balance mechanism would kick in either as far as decline of the industrial economy or recovery in the caustic price [ph]?

Yes. Sergey Vasnetsov – Lehman Brothers: Okay. Thank you.

Thank you.

Your next question comes from the line of Charles Jobson from Delta Partners. Please proceed, sir. Charles Jobson – Delta Partner: Hello everyone. Can you – have you thought about implementing that freight surcharge and breaking with industry practice or you’re still going to eat the freight increases?

When we negotiate new contracts now, it is our philosophy going into those discussions to separate out the price of the product and all other costs which would include freight and fuel surcharges. And as we work through our portfolio of contracts, we will have some degree of success at doing that and then some degree – and that will give us some degree of flexibility in being able to more quickly pass on those costs, external really to the price of the product. Charles Jobson – Delta Partner: Okay. How long or short a process is it going to be to get a significant amount of contracts switched over to that?

Well, we have contracts that are three to five years in duration, so we’re talking about a contract cycle to work through our contracts of somewhere in the three-year plan period. Charles Jobson – Delta Partner: Okay, thanks.

Thank you.

Your next question comes from the line of Causus Caretano [ph] from Goldman Sachs. Please proceed. Causus Caretano – Goldman Sachs: Hi, two quick questions for John. The first question with operating rates at normal levels and actually weaker than peak levels for sure, are you surprised by the frequency of unplanned outages? And then the second question is do you have any updates on the railroad issue for transporting chlorine, John?

The first question in terms of unplanned or unscheduled outages across the industry, I guess the only answer I have to that or perspective I have to that is, this industry has been pushed pretty hard from an output standpoint for several years and everybody has been dealing with the strain that puts on as producing assets and there have been and we’ve suffered in our own system some unplanned outages that have really disrupted the supply side. Hopefully, if everyone is focusing as we are on improved reliability, then that’s not going to be a continuing issue for the industry. Your second question on update on rail, we mentioned in our comments that our freight rates have increased quarter-over-quarter 27% in the first half of the year, 30% something and we don’t expect those increases to go away and we’re working very diligently with our carriers and with other companies through trade associations to look for ways – to pursue ways to mitigate some of these very significant increases in freight cost. Causus Caretano – Goldman Sachs: Thanks.

Your next question comes from the line of Don Carson from Merrill Lynch. Please proceed, sir. Don Carson – Merrill Lynch: Hi. Just a follow-up in terms of cash flow and the balance sheet. As you get through the St. Gabriel capital expenditures, and also you are going to have some pretty strong cash flow generation for the next few years, you’ve already got pretty strong balance sheet, so what are your priorities in terms of use of your cash position and your cash flow? What capital expenditure opportunities do you see and what are your thoughts about returning cash back to shareholders either through a dividend increase or share repurchase?

Don, our first option would be to continue to try to grow our chemical business. And from an M&A activity and from a strategic activity, you have to assume that we’re looking at ways that we could expand our business. And absent the opportunity to do that in this market, then as we get out into 2009, et cetera, then we have to consider what you’ve just talked about. We have to reward our shareholders in some form and that’s on our minds constantly. We prefer to do it by growing the business, but if we can’t do that then there’s other ways that we’ll have to reward shareholders. Don Carson – Merrill Lynch:

I would prefer to say chemical, Don, because there’s limitations on what we may or may not be able to do from a Chlor Alkali perspective, but these Chlor Alkali are related business. Don Carson – Merrill Lynch: Okay. All right, yes, that’s what I was wondering if you just sort of outlined your plans in Chlor Alkali, but I guess there’s just limited further consolidation opportunities there.

Right. Don Carson – Merrill Lynch: Great. Thank you.

Thank you.

Your next question comes from the line of Richard O'Reilly from Standard and Poor's. Please proceed, sir. Richard O'Reilly – Standard and Poor's: Okay. Thank you. Good morning, gentleman. Good morning, Larry. Another question for John, if he could give us an idea what the exposure of the system to natural gas power supply is and I think traditionally, Olin had a low exposure. Can you bring us up to date on that?

Let me try. If you stack the power exposure to the different fuels up in descending percentage with the coal being the highest, the top four are coal, hydro, natural gas and then nuclear. And although we haven’t given out individual numbers for each of those, I think it would be fair to say that coal and natural gas together represents slightly more than half of our fuel exposure. That obviously means hydro and nuclear represents slightly less than half. Richard O'Reilly – Standard and Poor's: Okay. And just for clarification, the ECU price for the quarter came in slightly higher than what you have thought a couple of months ago. Was that on the rose price side or is it on the cost side? What was the improvement?

Well, I guess the improvement was a little a bit above. The 590 is the net number so it has freight already discounted from it. We had better mix than we have forecasted in the quarter and a little bit less of impact from the cost side, and our net backs were improved slightly. Richard O'Reilly – Standard and Poor's: Okay great. Okay, good. Thank you guys.

Thank you.

Your last question comes from the line of Barrett Eiman [ph]. Please proceed.

Just a question to make sure I heard you right, you said that of the improving Chlor Alkali operating income, $24.3 million is from Pioneer, and of that $24.3 million, $10 million is from synergies? Is that right?

That’s correct.

And the one other question, you guys don't – none of your products goes into – you don’t sell any PVC or VCM, correct?

We do not but we sell chlorine into the vinyls.

Right, which is used by that. Okay, thanks.

If you have no questions at this time, I would now like to turn the call over to Mr. Joseph Rupp for closing remarks.

Thank you for joining us this morning and we look forward to reporting our results of our third quarter in October. Thank you.

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes your presentation. You may now disconnect. Good day.