Good day, ladies and gentlemen, and welcome to the Q1 2010 Olin Corporation Earnings Conference Call. My name is Kiana and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator instructions) As a reminder, this conference is being recorded for replay purposes. I would like to turn the conference over to your host for today, Mr. Joseph Rupp, Chairman, President and Chief Executive Officer. You may proceed.

Good morning. Thank you 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. Last night, we announced that net income in the first quarter of 2010 was $14.1 million or $0.18 per diluted share compared to $46.7 million or $0.60 per diluted share in the first quarter of 2009. Winchester achieved the highest level of first quarter earnings in its history and the second best quarterly results ever, reflecting the continuation of the stronger than normal demand that began in the fourth quarter of 2008. Winchester’s record level of quarterly earnings occurred in the third quarter of 2009. In the first quarter of 2010, Winchester benefited from lower commodity costs and reduced bad debt related expenses when compared to the first quarter of 2009, which more than offset lower sales volumes. First quarter 2010 Winchester volumes remain well above 2008 levels. Winchester’s first quarter 2010 segment earnings were $19.5 million compared to $17 million in the first quarter of 2009. Chlor Alkali 2010 segment earnings of $10.6 million reflected a sequential improvement from the fourth quarter 2009 earnings of $5.2 million. Both ECU net backs of product volumes improved during the fourth quarter of 2009. First quarter 2010 Chlor Alkali segment earnings include approximately $1.4 million of costs directly associated with the first quarter force majeure event at the McIntosh, Alabama facility. The first quarter 2010 Chlor Alkali operating rate was 75% compared to the fourth quarter 2009 rate of 70%. First quarter 2010 earnings included $2.6 million of pretax recoveries from third parties of environmental costs incurred and expense in prior periods. A $1.3 million pretax charge associated…

Thanks, Joe. First I’d like to discuss a few items on the income statement. Selling and administration expenses decreased $7.1 million or 18% in the first quarter of 2010 compared to the first quarter of 2009, primarily due to a lower provision for doubtful accounts receivable of $4.6 million. During the first quarter of 2009, we experienced multiple customer bankruptcies in both the Chlor Alkali and Winchester businesses. Legal and legal-related settlement costs declined in the first quarter of 2010 compared to the first quarter of 2009. These expenses relate to both recovery actions for environmental costs incurred and expense in prior periods, and for legacy environmental sites. Finally, first quarter 2010 incentive compensation cost declined by $2.1 million compared to the first quarter 2009, but were offset by a $2.2 million increase in stock-based compensation expense due to mark-to-market adjustments. As a point of reference every $1 change in the stock price changes pretax stock-based compensation expense by approximately $500,000. First quarter 2010 credits to income for environmental investigatory and remedial activities were $2 million, which includes the $2.6 million recovery is environmental expenses incurred and expensed in prior periods that Joe mentioned earlier. During the first quarter of 2009, that were $4.8 million in charges related to environmental investigatory and remedial activities. These charges relate primarily to remedial and investigatory activities associated with former manufacturing operations and waste disposal sites. Excluding the favorable impact of the recoveries in environmental cost incurred and expenses in prior period. We continue to forecast the charges to income for remedial and investigatory activities will increase 5% to 10% compared to 2009 levels. As Joe said in his remarks we expect these costs to be approximately $6 million to $8 million in the second quarter of 2010. We do believe there are additional…

We are now ready to take questions.

(Operator instructions) Our first question comes from the line of Frank Mitsch of BB&T Capital Markets. You may proceed. Frank Mitsch – BB&T Capital Markets: Good afternoon, gentlemen.

Hi, Frank. Frank Mitsch – BB&T Capital Markets: Joe, you discussed that the $75 per ton price increase on caustic soda was implemented in the first quarter, but some of that obviously gets put due to contracts bled into the second quarter and it was late in the first quarters also that you see much of a benefit there. And then I think you indicated that the $80 per ton increase the industry is fighting hard for and has been implemented in certain geographies. So I’m trying to get a sense looking at what this is $155 increase in caustic mean for your ECU netbacks as we look at the second quarter and as we look at the third quarter. Can you give us some idea as to how you anticipate these increases of being reflected in your ECU netbacks?

Quickly, I think John can talk in more detail. I think what we are going to see is we are going to see cost to coming up in the second quarter, chlorine coming down in the second quarter and then we will see increases in ECU in the third quarter. Frank Mitsch – BB&T Capital Markets: Joe, would you anticipate that the chlorine would be anywhere near the order of magnitude at the cost of increase?

You are talking about the chlorine decrease? Frank Mitsch – BB&T Capital Markets: Yes, that’s right. Is the order of magnitude of the chlorine decrease are not to offset the order of magnitude of the cost of increase?

Unfortunately it will offset a big piece of it. If you look at as an example in the last two quarters CMAI is reflected an $85 decrease in their index chlorine pricing and $105 increase in their index caustic pricing. So you use those as a proxy, there is a pretty significant erosion of the improvement in caustic pricing that chlorine will lead into. The first quarter is a transition quarter in some respects. Chlorine pricing is moving down, but that’s not a reflection of chlorine demand. We believe that the demand is such that in out quarters chlorine pricing will stabilize and if demand continues then we expect to see upward pressure on chlorine pricing as well. Frank Mitsch – BB&T Capital Markets: I think Joe said that the use of chlorine in PVC was up 4% sequentially. Certainly, we expect much greater than that in the second quarter which is not?

We believe that would be the case. The first quarter theme was really on the demand side, was really exports, we saw chlorine derivative of exports strong, both in the vinyls chain but even stronger in MDI, TDI. We also saw pulp exports strong in the first quarter, which has the direct connection with caustic demand. And in the second quarter we don’t see that trend doing anything, but continuing. So as we look at all the different market segments we serve we see the demand improvement quarter-over-quarter being very broad. Frank Mitsch – BB&T Capital Markets: You should also be realizing some benefit from lower energy costs, correct?

Correct. Frank Mitsch – BB&T Capital Markets: All right. So the way to think about it that is your ECUs are better Q2 but should be even much better than that in the third quarter with chlorine erosion having stocks?

That’s exactly right, Frank. Frank Mitsch – BB&T Capital Markets: And lastly, Joe, I think you said that bleach volumes were up 12% in the first quarter yet you are anticipating it to be up 30% for the full year. And so, is that mostly a second half have been or we are going to see this ramp in the second quarter as well? How should we think about that?

When you think about bleach demand, Frank, you have to really partition of into the seasonal, non-seasonal quarters, and the second and third being quarters where you see the high seasonal demand. And we expect to see the significant improvement in demand to occur during the peak part of the season.

Second and third quarters.

Second and third quarters. Frank Mitsch – BB&T Capital Markets: All right, perfect, thank you.

Thank you, Frank.

Our next question comes from the line of Christopher Butler of Sidoti & Company. You may proceed. Christopher Butler – Sidoti & Company: Hi, good morning, guys.

Good morning. Christopher Butler – Sidoti & Company: Just wanted to circle back with the ECU pricing question a little bit more. As far as any declines that we’re seeing on the pricing for chlorine is that the lag in that pricing similar to what we experienced with on the caustic side or is there a difference there?

No, it’s pretty similar. When you look at index pricing, in the first quarter of 2010, for chlorine that index pricing went down, and so, we will see the negative impact of that in the second quarter when you look at index pricing for caustic soda. In the first quarter it went up. And so we will see the positive benefit of that in the second quarter and on. Christopher Butler – Sidoti & Company: And on the netback expense side, you guys had given us the bunch of numbers, the breakout there, but just simply, sequentially from the fourth quarter to the first quarter, could you give us an idea of what that is and what you’re expecting going into the second quarter, do you expect that to be down sequentially again?

We said in our remarks that our electricity costs were down year-over-year. We would expect that trend to continue, right. Christopher Butler – Sidoti & Company: But you had also said that your freight costs were down but your rail costs were up, so I was just trying to simplify all of that. Is there a way to do that?

Freight costs are going to continue to escalate, as we said in our earnings remarks. We will continue to get a benefit as St. Gabriel continues to operate and as we continue to increase operating rates there and take advantage of the benefit of that volume not having to move on the rails and not incurring freight to get from some other locations to the pipeline in St. Gabriel. So we will continue to see that positive benefit. I can’t forecast what the rail roads are going to do with freight increases, so I really can’t forecast what the net of those two trends are going to be but their bulk is going to continue in place. Increasing freight rates and a positive benefit to our system because of St. Gabriel when you compare year-over-year. Christopher Butler – Sidoti & Company: And on that notice well with the outages that you are expecting for the second quarter. Could you give us any help as far as what you’re expecting for increased costs to do the maintenance and then possible outage shipping cost as well there?

The outages have been in planning for a significant period of time which means you’ve been buying long lead time, components to do the outage, so our best forecast now is that there is not significant incremental costs that you will see in the quarter, that’s directly tied to the outages that are scheduled. Christopher Butler – Sidoti & Company: I appreciate your time.

Thanks, Chris.

Our next question comes from the line of Edward Yang of Oppenheimer. You may proceed. Edward Yang – Oppenheimer: Hi, good morning. I apologize if I missed this, but in prior quarters you’ve given more specific ECU netback and capacity utilization guidance. Have you done that this quarter?

Normally, we report on what it has been with our given guidance I don’t believe. What we’ve said was that we were 75% in the quarter that we were running at 80% in March is what we said and that we felt higher rate was going to continue into the second quarter.

We also said year-over-year operating rates went from 75% in this quarter, up from 65% in 2009. Edward Yang – Oppenheimer: Okay, one of your competitors was talking about operating rates closer to the 90% range and some industry sources are talking about the industry operating at that rate down as well. Any guidance in terms of what you’re seeing for April?

We had said that we expect that the operating rate improvement in the first quarter to continue or possibly even improve. In a lot of demand environment like we’re in right now, a merchant player like Olin is a little bit disadvantage because of our inability to export chlorine into some of the derivative chains that some of the other producers can satisfy. And so as a result of that, our operating rates would be lower than some of these fully integrated producers are publicizing in this kind of environment. Where we will catch up and make up some of that difference is in the parts of the year once when some of our seasonal product demand like bleach demand kicks in and we will see an improvement in our operating rates as a result of that and some closure between our numbers and what some of the integrated players are talking about. Edward Yang – Oppenheimer: Okay, John isn’t TPG a merchant player as well?

Well, they are partially integrated like Charles; they have the ability to move chlorine into the EDC export market like Charles. Edward Yang – Oppenheimer: Okay, and on the price –

Let me give you a range.

Just, just to summarize that what we believe is that the operating rate in the second quarter will be in the low-to-mid 80% range and we said that ECU netbacks would improve sequentially in Q2 compared to Q1. Edward Yang – Oppenheimer: Okay. And the Q2 improvement just to summarize again reflects some chlorine decline with the $75 caustic increase and the $80 caustic increase once it gets accepted you will see most likely in the third quarter?

That’s correct Edward Yang – Oppenheimer: And just moving onto Winchester, Joe, you kind of referenced it to 2008, so it’s still well above and you’ve been saying consistently that it’s been over earning or above normal level. And you mentioned the price increase set for April, 3% to 5% price increase and you said that it’s a little uncertain whether that’s going to get accepted or not. You were to kind of characterize all those statements together I mean is Winchester finally starting to drift down to more normal levels than we’ve seen in recent history in terms of slowing down of volumes and margin expansion?

I would say characterize it as plateauing in the second quarter. Edward Yang – Oppenheimer: But not meaningful volume or demand erosion?

Not yet. Edward Yang – Oppenheimer: Okay. And just a question on the capital structure. You don’t have any net debt but interest expense is eating up a pretty significant portion of your pretax operating income, is there anything that you could do in the near-term or the interim where you can bring down the interest expense somewhat because it is very high relative to again your net debt?

Edward, that all goes to the use of cash question. I would say that we did enter into some interest rate swaps that you will see in our 10Q we file tonight that should reduce interest expense at least through the balance of 2010 and probably in a fairly meaningful way. The rest of it goes to, as we have said, we have to be able to finance the business and we have this $50 million to $100 million increase in working capital that we experience every season, we saw a lot of that in the Q1. We did talk when we raised $150 million of debt in the third quarter of last year that we’re looking at making sure we had pre-funded to $75 million of debt debentures next year so that the position we wanted to be in. The last question really goes to investments in the business. And that continues to be a focus. What we talked about in this quarter where internal investments, such as the low salt, high-strength bleach in the investment in our joint venture. What we have been seeing is our opportunities to get superior returns at the moment are coming from internal investments rather than from the acquisition side. That said we continue to look at acquisitions that would enhance both the bleach business and the Chlor Alkali business. Edward Yang – Oppenheimer: Okay. And just a final housekeeping question. Earnings of non-consolidated affiliates was pretty like this quarter. And what was driving that? Was that the SunBelt portion or the other businesses?

SunBelt. The SunBelt issues really revolve around two things. Volume was off in the first quarter due to an extended customer shut down that occurred at their site and pricing was off, as we previously mentioned, the trend on chlorine pricing was down. The contracts related to the SunBelt affiliate are little different and that there is not the typical lag in those contracts that we see in some of the other portfolio of contracts that we have. So pricing changes both positive and negative tend to occur sooner in the pricing at SunBelt. The volume that we missed in the first quarter will be made up during the remainder of the year based on the structure of that contract. So that’s not going to be something that we’re not going to recoup. Edward Yang – Oppenheimer: Okay, thank you very much.

Thank you.

Our next question comes from the line of Sergey Vasnetsov of Barclays Capital. You may proceed Sergey Vasnetsov – Barclays Capital: Good morning

Good morning Sergey Vasnetsov – Barclays Capital: Joe, you commented these profiles look for Olin for the U.S. Chlor Alkali industry has been little better than the last trough. Hopefully, we have already seen the worst of the trough. In the meantime Olin continues to carry very large cash position and presumably I thought in the past was done preparation for the trough, now if trough is better, maybe changes with you on what the appropriate level of cash should be fall in, in 2010 and 2011? So maybe you can comment on this since I guess my views are trying to be conservative, but certainly, a penalty for missed opportunities for being extra conservative, so where do you think you are on the scale of conservatism?

Well, I think you now look exactly right, Sergey. I think everybody has been conservative based upon where we were last year. What we are feeling stronger as I stated in my comments we feel like we’re stabilized and so and actually we continue to look for opportunities that way we could redeploy the cash to get a better return for the shareholders and we did it a little bit with the swaps but the reality of it we are continuing to look for investments or acquisitions that will work for us really downstream primarily in our bleach business. Sergey Vasnetsov – Barclays Capital: Okay, well I realize you cannot talk about specific opportunities of timing of those, but can you talk about what’s the appropriate level of cash for Olin should be you think in '10-11?

Sergey, I would answer that from the standpoint of what the appropriate level of debt Sergey Vasnetsov – Barclays Capital: Okay.

We’re going to try to run the business with no more than 35% debt to total capital. Sergey Vasnetsov – Barclays Capital: The gross debt or net debt>

That’s gross debt. Sergey Vasnetsov – Barclays Capital: How about net debt?

We probably need at all points in time about $200 million of cash to run the business given the seasonal nature of our working capital. And the fact that while we are not faced with it today, we have a very large pension plan relative to the size of the company. We have to keep some level of protection against that. And the last point that I make is we have a fairly significant call on cash associated with legacy environmental liability. So we think about it in the $200 million and $250 million range and I would admit right now we are high Sergey Vasnetsov – Barclays Capital: Okay, all right, thank you.

Thank you.

Our next question comes from the line of Don Carson of UBS. You may proceed. Don Carson – UBS: Thank you. Joe, question on just on you mentioned Winchester plateauing and your commercial sales were down. I know you also mentioned discrepancy between for stocks of pistol ammunition and hunting ammunition for a long arm so is that more reflect of the fact that the desire people to buy ammunition for personal defense that you don’t see that plateauing in I guess potentially going into an election year you can get into further concerns about wanting to preserve gun rates and issues like that. So you do think this is sustainable?

I think the pistol ammunition is done. Don Carson – UBS: Okay. And what would the hunting ammunition being in reasonable supply, again, that is a seasonality figure that you are going to building up, preparing to put product into the pipeline ahead of hunting season?

I think that all manufacturers got little bit caught up on hunting, which normally would happen at this time of the year. It didn’t happen last year because of what was going on with the surge. I think there has been a little bit of catch up there on the hunting. But as I mentioned there has not been on the pistol. Don Carson – UBS: So overall, Winchester then were in what the sixth quarter now they sustained high demand and you do think that they well may not increase from here that is still sustainable at least going through the rest of the calendar year?

I would say it’s definitely sustainable going through the Q2 end of the Q3. It’s hard to predict way out there, but definitely through the second quarter into the third quarter. Don Carson – UBS: Okay. And then question for John McIntosh on Chlor Alkali. What impact did the outage at McIntosh have on your operating rate in the quarter? And I’m just wondering you mentioned pulp and paper exports were strong which obviously creates demand for caustic, but your sense there is a lot of restocking going on and hearing the distributor tanks are pretty full now. So were they buying aggressively ahead of the second $80 April 1st price increase which appears to differ until at least May 1st and maybe split into from here?

I think that on the caustic side, supply is pretty tight right now, especially for high purity caustic. So we’re still on order control for caustic in our system. So where any indication than there hasn’t been the ability for people to go out and do a lot of forward buying to avoid potential price increase, that’s coming in a subsequent month or a subsequent quarter. I think there has been some restocking when you talk about pulp, but also if you talk to as we have to a lot of the big pulp producers, they have been servicing demand, not just inventory replenishment, but servicing export demand for pulp that has really helped their results in the first quarter. And quite frankly, we were concerned about that segment and caustic consumption. Because the tax that was creating an energy subsidy for them ended at the end of the year and we’ve been positively confident as a result of seeing their results in the second quarter. They appeared to have gone on and not really missed a lick. Don Carson – UBS: And so you are saying caustic is high despite these very high operating rates against what 89% in for the industry in March as they took advantage of the vinyls export opportunities?

Yes, caustic suppliers balanced too tight, at least what we see, we actually tried to source caustic and been unable to do that from other producers. We see no indication that there is an excess or surplus of caustic. Don Carson – UBS: And then just finally on the caustic side, could you talk about demand trends from the aluminum sector? Are you seeing any pick up there?

Well we have to talk anecdotally about that because we don’t directly serve much of that market at all. However, we do continue to stay close to it because it has such an impact on the trade flow patterns for caustic around the world. What we hear and what we have seen evidence of is that aluminum production is going to be up 15% to 18% in 2010 versus 2009. And that supported by the fact that we know that at some alumina facilities we know operating rates have moved up, we also know, in some cases, there are plans being made and sourcing arrangements being put in place to restart idle units, idle aluminum units in the second half of the year. So we see all evidence of positive consumption trends in that market segment as well. Don Carson – UBS: Okay, thank you.

Yes sir.

With no further questions in the queue I will now like to turn the call over to Mr. Joseph Rupp for final remark

We want to thank you for joining us this morning and we look forward to speaking with you in July as we report the results of our second quarter. Thank you and have a good day

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect and have a great day.