Welcome to the Olin Corporation third quarter 2008 earnings conference call. (Operator Instructions) I would now like to turn the call over to your host today Mr. Joseph Rupp, Chairman, President and CEO.

Thank you for joining us today. With me this morning are John Fisher, Vice President and Chief Financial Officer, John McIntosh, Vice President and President of our Chlor Alkali Product Business and [Larry Comedis] our Assistant Treasurer and Director of Investor Relations. During the third quarter of 2008 Olin earned operating income of $87 million which is a record for the company and represents a 130% increase from the third quarter of 2007. Both the Chlor Alkali and Winchester businesses performed well and both are expected to post record full year results in 2008. Sales for the third quarter of 2008 were $502.9 million compared with $350.3 million in the third quarter of 2007. Net income from continuing operations in the third quarter of 2008 was $37.7 million or $0.49 per diluted share. This includes the impact of the previously announced $26.6 million impairment charge at our corporate debt securities. Third quarter 2007 net income from continuing operations was $32.7 million or $0.44 per diluted share. Chlor Alkali earnings improved 47% compared with the third quarter of 2007 which reflects the contributions and synergies of the Pioneer acquisition and improved prices. These factors allowed the business to overcome continued increases in freight and electricity costs. Year over year ECU netbacks improved 20%. Winchester's third quarter 2008 earnings of $9.8 million reflects the positive impact of improved pricing which offset higher costs. Third quarter 2008 earnings benefited from a lower level of stock based compensation expense due to the decline in the stock price that occurred during the quarter and a $2.5 million reduction in income expense primarily associated with the finalization of the 2007 income tax returns. Finally our third quarter results include $6.4 million of environmental expenses which are 60% lower than the unusually high third quarter of 2007.…

First I'd like to discuss a few items on the income statement. Selling and administration expenses increased 15% or $4.6 million during the third quarter of 2008 compared to the third quarter of 2007. The increase is due primarily to the inclusion of the Pioneer operations for the entire quarter in 2008. Legal and legal related settlement costs were $3.4 million higher in the third quarter of 2008 and were partially offset by lower management incentive costs resulting primarily from lower mark to mark adjustments on stock based compensation. The mark to mark adjustment in the third quarter of 2008 which reflects a decline in the stock price from $25.99 per share to $19.15 reduced stock based compensation expense by $2.9 million. In the third quarter of 2007, mark to mark adjustments increased stock based compensation expense by $1.8 million. As a reminder, every one dollar change in the Olin stock price changes stock based compensation expense by approximately $450,000. Corporate and other expenses in the third quarter of 2008 increased $1.3 million compared to the third quarter of 2007. Higher legal and legal related expenses were partially offset by the lower level of stock based compensation. Third quarter 2008 environmental investigatory and remediation expenses were $6.4 million compared to $16.2 million in the third quarter of 2007. These costs relate primarily to remedial and investigatory activities associated with former waste disposal sites and past operations. The unusually high third quarter 2007 charges included a $7.8 million increase in costs at a former waste disposal site that was based on revised remediation estimates resulting from negotiations with the government agency. We believe the fourth quarter 2008 charges for environment, investigatory and remedial activities will be lower than the fourth quarter of 2007 by $8.6 million and we continue to believe…

(Operator Instructions) Your first question comes from Frank Mitsch – BB&T Capital Markets.

During the presentation you talked about the trends in ECU pricing third quarter up nicely from the second quarter, expecting the fourth quarter to be up from the third quarter. I think you talked about the first half of '09 being up further still. Can you talk about your confidence in that occurring particularly given some of the broader economic concerns that are out there?

Let me make two comments. As of the end of the third quarter, all of the $120, the lightest caustic price increase and some portion of the combined second quarter announced increases have yet to be implemented. As those are implemented in the fourth quarter we're comfortable that the impact of those will roll into the first half of next year. There are geographies in the U.S., the west coast being one where 100% realization of those price increases will probably not occur just because of the impact of caustic being exported from other parts of the world, especially from China. But we're comfortable in the markets that we serve that we're going to have continued price increase opportunities into the first half of the year.

How about on the volume side? You indicated that fourth quarter is going to be down due to seasonality as well as economic concerns, what's your expectation for volumes as we start the new year?

The volume side of the equation is the one that we have the least clarity on and it's going to be driven at least in North America what happens in the vinyl's market and what happens in the overall level of economic activity. Our business historically sees fourth and first quarter as being the lowest volume quarters of the year for us, and we don't expect that trend to change. I think the question for which I don't have an answer is just how much more downside is there for the vinyl's market. The last information I had post hurricane was the vinyl's market was operating in the mid 70% range. We wouldn't be surprised to see that number drop a little lower. However, if it does, it just adds to the continued supply side complications for the caustic buyers.

So in a reverse way it's beneficial for your caustic pricing into next year.

That's correct.

On use of cash, I know you talked about postponing $10 million of CapEx into '09. Obviously your net debt level is extremely low. You've got solid cash flows. In the fourth quarter and into next year, what are your current thoughts on uses of cash particularly with your shares below $16.00?

As we've talked about before, we continue to look at ways to expand our chemical business, and we've often said that as we get into 2009 if we can't come out with something then we have to figure a way to reward shareholders. I would also say that in this volatile situation that we're going to be real careful what we do with the cash at this point in time.

Your next question comes from Donald Carson – Merrill Lynch.

Alumina and paper demand is coming down but the offset to that would be operating rates. I know in pvc domestic demand was down 11% this year and exports were up sharply and that window looks like it's closed. Are you expecting operating rates to come down even further and that enhanced supply tightness would offset any demand erosion for caustic? And as we look sequentially, as bleach season goes away that reduces your realization somewhat, but what kind of an increase would you expect sequentially with the fade in bleach and the implementation of these previously announced price increases?

Let me talk about operating rates first. It's very likely that fourth quarter operating rates for the industry will be lower than the third quarter. The industry rates for the third quarter were 82. That number was impacted significantly by September which had in the 60% operating rate range because of the hurricanes. But as I mentioned, we continue to see weakness in vinyl's across North America and we expect fourth quarter operating rates because of that and just overall economic activity to be lower. As we move into the first part of the year, that's the big unknown for us and whatever downside there is on volume we expect an opportunity on caustic because if operating rates continue to drop, there are certain segments, especially in our business where we haven't seen significant drop off in caustic demand. Our caustic customers are running strong and we continue to be behind in shipments. So for us, an operating rate reduction going into the first half of next year isn't necessarily an overall downer for our business.

What exposure do you have to the Alumina industry either indirectly through the Alumina contract. If I recall, the Alumina contract was 645 so one would expect that to be up even if it doesn't get up to the thousand spot level.

We would expect Alumina contract to go up as well. Our exposure to Alumina directly is basically zero. We don't export caustic out of our business and consequently we don't service any part of the aluminum market either in South America or Australian market.

Looking at power costs, will the reduction in power costs in Q4 be enough to offset the ever escalating freight costs?

We don't know. Let me just talk about them separately. We do expect electricity costs to go down and that's a typical pattern for us in the fourth quarter of the year and it's driven by lower operating rates and in this case it will be helped by lower overall fuel costs, natural gas costs. Freight costs we continue to expect to go up. There are two components to freight costs; base freight rates for which the railroads have no competitive restraint and they will continue to raise those rates. The other part of overall freight is fuel surcharges, and those are tied to crude oil prices and diesel prices and with some lag in it. So we would expect to see those trend down at least based on what's happened in crude oil pricing in the last several weeks.

Your next question comes from Michael Judd – Greenwich Consultants.

I wanted to be sure I understood what you were indicating backing up for the September quarter, if you were to exclude the special charge, what was the underlying tax rate in the September quarter.

In the September quarter, there was a discrete $2.5 million credit associated with the filing of our 2007 tax return. If you exclude that we continue to believe our effective tax rate on a recurring basis is somewhere between 36% and 27%.

So if you had pre-tax income of $97 million and you applied a 36% tax rate, the underlying earnings per share was around $0.81. Is that right?

In that range, yes.

If I understand correctly, the underlying clean tax rate that we should be using for the December quarter is approximately 39%. Is that correct?

That would be the reported full year effective rate giving consideration to all the unusual items. The rate that I would suggest you use for the December quarter is the 36% to 37% I just mentioned.

We've obviously seen a pretty sharp decline in prices and other metal prices. I understand that you expect Winchester to be break even seasonally because it typically is in the December quarter. As you look to next year, it seems to me that business should improve. Shouldn't profitability be heading in the right direction for next year?

We have said that historically the most profitable times for the Winchester business are periods of slowly declining raw material costs. That doesn't typically trigger significant demands for price increases. I would not say that what we've seen in the copper and lead markets recently qualifies as slow declines. All in, I would say ultimately it should be favorable for the business. I think you will see it will all lag out at some point in time. I would also point out that last year at this time, copper dropped down well over $1.50 and then ran right back up in the first quarter. I don't what to tell you is really going to happen there.

I think you typically provide some operating rate information in your press release for the ECU's. I didn't see it this time, but you did indicate the industry operating rate was around 82%? Was your operating rate similar to that?

Our operating rate for the third quarter was higher than the industry rate. Theirs was 82%, ours was 89%. We said in the fourth quarter we would expect operating rates for Olin's system to decline and be in the low 80% range.

In terms of pricing for the ECU, you had provided some information about time lag and you have contracts that basically limit on a quarterly basis the amount of price increase. Has that changed at all since last time we got an update or is it still pretty much the same.

It's still pretty much the same. There's not really been any change in how price increases get translated into realized price changes in our system.

You've only got a few moving parts here and as I model these things out, I come up with a substantially higher earnings estimate for the fourth quarter than $0.65. Is there something else that I'm missing here?

We've said in our outlook those factors that we think are important to be considered.

Your next question comes from Christopher Butler – Sidoti & Company.

During the conversation you touched on imports coming from China. I'm just wondering if we could get a little more color on that in light of the recent strengthening of the U.S. dollar. Also, is there a tipping point with the dollar that we can look at? Can you help us out in that degree?

Caustic prices from China have trended up $100 a ton or so in the last two to three weeks. I think that reflects several things. There have been imports of caustic from China into the U.S. predominately in the west coast, but it also reflect demands for vinyl's in Asia and overall Chlor Alkali production rates in Asia are headed downward so there is a beginning supply constraint on caustic in that part of the country that would even be available for exporting. When we look at MedEx, net caustic exports from the U.S., we see both phenomena. We see that Med exports will decline by a little over 100,000 dry metric tons from 2008 to 2007 and that's on a base of over a million dry metric tons. Chinese shipments comprise an increase. European caustic shipments into the U.S. are expected to remain relatively flat. So I think that even though there has been an improving situation, if you're trying to export caustic into the U.S. from a dollar standpoint, that's not offset totally by the supply constraints that both the European producers and the Chinese producers are seeing. They just don't have it available to send.

You talked about the pension plan and the contribution in the quarter. With everything that's happened here in the market the last few weeks could you give us an idea what we're looking at for 2009 as far as the pension plan is concerned and the portfolio allocation and some changes that we might see here for the end of the year.

The pension plan allocation right now is about 75% fixed income and has been for most of the year. We do not foresee the scenario where in 2009 we're going to have to make any cash contributions. The last contribution we made was in May 2007 and we've said we don't expect to have to make additional contributions based on where we were as of September 30. I would say that view has not changed. The last three weeks have been somewhat unusual and I don't know that I can comment on that because I don't have a full view of what's exactly happened.

Your next question comes from Barrett Evnon – Brownstone

I missed the part where you talked about Pioneer's contribution to last years earnings as well as this years.

We said that Pioneer contributed $31.7 million during this quarter to the total earnings. That's all we said.

What were the caustic prices in the second quarter versus the third quarter this year for you?

We don't break those out.

ECU prices in the third quarter, in our remarks we said $660. ECU prices in the second quarter of this year were roughly $590.

What were they last year in the third quarter?

Last year in the third quarter $542.

You see them going higher in the fourth quarter?

We've said that we see the trend improving in the fourth quarter.

On the caustic exposure, you're heavily exposed to Alumina? I understand the idea of reducing capacity rate they're going to be higher to support prices, but overall if demand declines. What do you think supports prices falling from where they are now? Is there something that you're exposed to personally that's going to keep your prices higher?

It's all supply and at least in North America we feel very comfortable that the impact of Alumina will be felt other places conceivable before it would be felt in North America. As we look forward for the next several quarters, we're comfortable that we see continuing improved bcu pricing.

Are there certain sectors that use caustic that you are more exposed than others in the industry are? Are you benefiting from that or no?

We have our caustic market segment exposure in North America that the largest is probably pulp and paper and in the geographies where we serve the pulp and paper market, we historically believe that our customers are more cost competitive than some of the people they compete with. In recent history in terms of pulp and paper mills that have been closed or have been forced to reduce size or reconfigure would support that. Our customers tend to be in market geographies where they remain more competitive than in some other geographies in North America.

On the EPS front, what was your EPS excluding any one time charges for the quarter?

The best way to do that is to take $26.6 million added to net income and divide by the shares outstanding.

It came around $0.68?

I think that's low. I think it's something up in the '80's.

Your next question comes from [Costas Carastonis – Goldman Sachs]. [Costas Carastonis: Have you seen the weaker CDP starting to reduce the domestic cost of demand? You mentioned China, prices over there are over $100, but again China slowed down. Do you see a gain cost to demand decline over there and the whole import/export situation changing?

We have not seen in North America any reduction in demand or any signs of weakness in the caustic consuming market segments that we serve. In terms of China, let me reiterate again. What's happening in China based on the information that we have is that [pro-oplyrates] operating rates are heading down because there's less demand for vinyl's and vinyl related products both for internal consumption and for export purposes out of China. That reduction in operating rates is lowering the amount of caustic that's available and therefore the lower end of the amount of caustic available for export. We see that trend, although it won't eliminate imported caustic from China, it will put a supply side constraint on how much of it will show up so we don't see it being a significant impact at least in the short term. [Costas Carastonis: I understand the supply part of the question. I was talking more of the demand equation, if the slowdown over there is going to reduce the actual users of caustic.

It may, but I think you have to remember that the swing for caustic demand in most of those countries is export, so to the extent that they have less caustic available on the supply side, that's going to have more of an impact on the amount they export than it's going to have on what they consumer internally. So even if there is a reduction in what they consume internally, we still don't expect that to be significant enough to make a big difference in the world wide trade and flow patterns for caustic.

Your next question comes from [Keith Wiley – Goldman Sachs]. [Keith Wiley: Could you break down your shipments? How much goes into pulp and paper industry for caustic and what are the other top three industries? What percentage goes into each of those industries?

We've not done that with Olin's business before. We have provided some information from an industry standpoint and I'd be glad to do that. For North America caustic core end demand by end use, the three largest segments are vinyl's, organics which includes eurothane, polycarbonates and then several smaller uses and then a whole host of others. Those two in and of themselves are the biggest two and account for nearly 65% of all chlorine consumption in North America. From a caustic standpoint, caustic uses are much more evenly spread out and much more diverse. Pulp and paper is one of the largest organics which again includes eurothane, polycarbonates and other chemicals is another large category. Inorganics which is titanium dioxide, silicates, is another significant category for caustic consumption in North America. [Keith Wiley: If we just see the pulp and paper industry, is that maybe 30% of shipments of total industry caustic?

It's less than that for North America.

You have no further questions. I will turn it back to Mr. Rupp for closing remarks.

Thank you for joining us and we look forward to reporting our full year results in January. Have a good holiday season.