Good morning, and welcome to the Olin Second Quarter 2011 Earnings Conference Call. [Operator Instructions] Please also note, this event is being recorded. I would now like to turn the conference over to Joseph Rupp, Chairman, President and CEO. Please go ahead.

Good morning, and thank you for joining us today. With me this morning are John Fischer, our Senior Vice President and Chief Financial Officer; John McIntosh, Senior Vice President of Operations; and Larry Kromidas, our Assistant Treasurer and Director of Investor Relations. Last night, we announced that net income in the second quarter of 2011 was $42.1 million or $0.52 per diluted share. That compares to $16.9 million or $0.21 per diluted share in the second quarter of 2010. Our second quarter 2011 earnings included better-than-expected results from both the Chlor Alkali and Winchester businesses, and these more than offset a $2.4 million pretax restructuring charge recorded primarily as a result of the ratification of the new Winchester, East Alton, Illinois 5.5-year labor agreement. This new labor agreement will facilitate a smooth transition as work is really relocated from East Alton, Illinois to Oxford, Mississippi. The Chlor Alkali business continued to experience positive pricing and volume trends. ECU netbacks increased sequentially for the seventh consecutive quarter. Our shipments of chlorine and caustic soda reached their highest levels since the third quarter of 2008. We expect the positive pricing momentum to continue in the third quarter. Second quarter 2011 Chlor Alkali earnings included approximately $11.3 million of incremental contribution related to the first quarter 2011 acquisition of the balance of the 50% of the SunBelt Partnership that we did not previously own. Winchester's second quarter sales exceeded expectations and reflect continued high levels of demand for handgun ammunition. Second quarter 2011 earnings included $9 million of pretax recoveries from third parties of environmental costs incurred and expensed in prior periods and $900,000 of favorable income tax adjustments. Third quarter 2011 net income is forecast to be in the $0.50 to $0.55 per diluted share range. Third quarter 2011 Chlor Alkali segment…

Thanks, Joe. First, I'd like to discuss a few items on the income statement. Selling and administrative expenses increased $6.6 million or 18% in the second quarter of 2011 compared to the second quarter of 2010. The year-over-year increase primarily reflects the inclusion of SunBelt's selling and administrative expenses as consolidated Olin expenses, higher management incentive costs, higher employee relocation expense and higher legal and legal-related settlement costs, partially offset by lower bad debt expense. The inclusion of the SunBelt expenses would cause absolute year-over-year selling and administrative expenses to be unfavorable for the balance of 2011. Second quarter 2011 credits to income for environmental, investigatory and remedial activities were $1.1 million, which included $9 million of recoveries from third parties for environmental costs incurred and expensed in prior periods. There were approximately $1.5 million of additional environmental recoveries that we had expected to be realized in the second quarter that were delayed until the third quarter. During the second quarter of 2010, there were $2.7 million of charges related to environmental, investigatory and remedial activities, which included $2.8 million of recoveries from environmental costs incurred and expensed in prior periods. After giving consideration to the recoveries in both periods, year-over-year expense related to environmental, remedial and investigatory activities increased by $2.4 million. These charges relate primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites. We continue to forecast full year 2011 expenses for environmental, investigatory and remedial activities prior to any recoveries will increase as much as 50% from 2010 levels. We also do not expect significant recoveries of environmental costs incurred and expensed in prior periods beyond the $1.5 million forecast we received in the third quarter of 2011. On a total company basis, defined benefit pension plan income…

[Operator Instructions] Our first question comes from Frank Mitsch of Wells Fargo Securities. Frank Mitsch - BB&T Capital Markets: Just a clarification, first, on the $11.3 million profit from SunBelt, is that above what you're 50% ownership stake would have contributed? Or was that an all-in figure?

That's the amount above of what the 50% ownership stake would have contributed. Frank Mitsch - BB&T Capital Markets: All right. Terrific. And I was wondering in terms of your operating rate, you said you were 85% in the second quarter on Chlor Alkali. You're currently running north of 90%, but you seemed obviously very cautious about the back half of the core given the 2 chlorine customer outages. Is your expectation, overall, that your volumes or the 85% operating rate is maybe where you'll end up again in the third quarter? Or should it be higher than that given the bleach season?

Frank, this is John. We believe that we're going to be operating as we are in July for at least the first 2 months of the quarter. We're still late on both products in terms of shipments. The softness or the customer-related reduction in demand is going to be an end of the quarter result. So I guess, I would forecast that we would be in the high 80s for operating rates for the quarter.

Our next question comes from Edward Yang of Oppenheimer. Edward Yang - Oppenheimer & Co. Inc.: On operating rates, going back to that issue in the second quarter, you exited April at 95%, so I'm kind of surprised that you ended up 85% for the full quarter. So why was that?

We had -- in April, we had a significant outage, 2 weeks in duration at the McIntosh and SunBelt plants, so kind of we really started off because of the outage. We're in a pretty well operating rate into the first month of the quarter. Edward Yang - Oppenheimer & Co. Inc.: So that was the entire reason for the 10% drop off, John?

Yes, sir. Edward Yang - Oppenheimer & Co. Inc.: Okay. And DuPont and OxyChem, there's been an announcement that Oxy is going to build a plant for Dupont, so I guess TiO2 operations, the way they work, do you know how big that will be? Or -- and what is your opinion on -- in the past, you've felt that industry supply will remain relatively disciplined. Has this changed your outlook at all on that?

The announcement just came out yesterday, so we obviously haven't had a lot of time to look at it. I did see a number in an announcement that said it was roughly 180,000 ECU plant in terms of size, which was the first question you asked. Our take on it is that over the long haul, there's still is an industry bias towards producing capacity. We believe that, coupled with the fact that over the next 5 years or some period of time, chlorine demand in North America is going to grow. We've announced capacity rationalizations at both our Charleston, Tennessee and Augusta, Georgia locations late last year. And so the combination of all those facts doesn't really change our long-term perspective. We're going to be able to operate our plants and our capacity efficiently. Edward Yang - Oppenheimer & Co. Inc.: And the expected hit to demand from the reduced chlorovinyl end market. What do you think that would be in terms of the effect on your operating rates?

Well, we don't have a heavy concentration in terms of our market segments in the chlorovinyl's process. And we really are only reacting to some very early signs that they're may be some weakness out there in some very early reports in the trade press. So I would be very hesitant at this point in time to try to put an impact on it. We don't -- we do expect and can obviously reflect in our thinking our own customers' outage plans during the quarter. And those will be much more significant we believe than the phenomenon you're questioning. Edward Yang - Oppenheimer & Co. Inc.: So at this point, it's just something to monitor?

That's correct. Edward Yang - Oppenheimer & Co. Inc.: And just finally, John, what's your opinion in terms of where we are in terms of the Chlor Alkali cycle. Obviously, there's still positive pricing momentum and industry pricing for industry ECU netback, for example, was up 8.5% in the second quarter. You mentioned both you and Dow announcing that additional $25 caustic soda price increase. At the same time, again, there are some headwinds on the PVC side which could impact your volumes but possibly boost caustic soda pricing. So when you kind of net all this out, what's your gut feel in terms of, are we starting to approach a peak in the cycle? Do you think that there's more to go in terms of your ability to grow Chlor Alkali earnings?

I think there's a couple of fundamentals that I reflect in having a very positive outlook. I mean, North America is still in energy, very competitive, a leading place for chlorine derivatives to be produced. And with the exception of some potential softness on the vinyl's derivatives sides, we're continuing to see very strong export numbers in the other chlorine derivatives. And we look at our customer portfolio, we're confident that we're going to continue to see demand strength. We obviously believe we have lots of pricing opportunity in front of us. And so when we look at it overall, we feel positive about where we are.

Our next question comes from Don Carson of Susquehanna Financial.

John, a couple of questions on pricing, the $100 did take effect during the quarter. I think one of the indexes was showing it up $75. If you only had a $25 realization, I just wonder how will the rest of that $75 or $100 kind of roll through on Olin's realizations? And then the $50 price initiative, the trade rags are still saying that, that's very tentative that customers haven't accepted that. And I'm wondering whether the pending Formosa and Shintech startups are having a negative effect on not only that $50 but on the $25 subsequent increase that you now posted?

Don, you're right. I mean, the indexes that are published, some have moved $75, some have actually moved a little higher than that up to $90. There were $100 worth of increases that were announced. So some portion of that $100 has been implemented. When we look at our system, all of the price index movement was in the second quarter of the year. And as we've said before, pricing impact for us lags, and so we would not have expected even in the normal situation to see that pricing movement really translated into our results until the third quarter and some in the fourth quarter of the year. So that's behind my earlier comment that we feel like we've still got a lot of opportunity for price movement based on what's been announced and when it's been recognized in pricing indexes. The $50 and the $25, you're right, there's been some press that those increases are potentially not going to happen. I'll just go back again to what I say, our fundamentals across our portfolios would indicate both those caustic price increases should occur over the balance of the year or late in making shipments. And if there is any validity to some softening on the vinyls derivative side that has any impact on operating rates in North America, that's only going to tighten up the caustic side of a molecule, which might facilitate implementation of those price increases sooner than some of the current trade press might lead you to believe.

So just to clarify, so you'd expect full realization of the $100 by fourth quarter then?

Well, we have always said that we don't -- we never achieve for a variety of reasons, 100% of what is implemented in the market. What we have said is that the price improvement we see in our system is typically realized in the first and second quarters following when those prices show up in the indexes.

And do you have any remaining capture collars in your contracts that would prevent -- if you do get the $50 and/or the $25 -- would -- is there anything in your contracts that would prevent that from being realized? I mean, are you capped at how much you are going to raise prices within a certain...

Generally, no. I mean, there are some situations where we're in a limited number of contracts where we provide a little longer term, longer terms on when prices change and how much they change. But when we are only talking about a cumulative $100 price increase, that's not at the level that would typically be an issue for us. Those provisions are typically in contracts to protect customers from the kinds of run-ups we saw a couple of years ago when caustic went up $300, $400, $500 in a quarter. And that's why they're in there. But they wouldn't be operational at the kind of caustic increases for in front of us now.

It's a final question, John. Can you talk a little about your power cost, and what happened there sequentially in Q2 and what you're expecting in Q3?

Our power cost is, just in general, were relatively flat relative to last year and the first half of this year, so there wasn't an impact.

Our next question comes from Chris Butler of Sidoti & Company. Christopher Butler - Sidoti & Company, LLC: Joe, just shifting gears here a little bit, the Winchester business. You'd said that you're not seeing, kind of a, the post-peak trough that historically has occurred after a couple of years of solid demand. Is the best way to look at this as kind of an orderly decline to post-peak volumes? And could you talk to law enforcement sales? From I've heard, their inventories have been low. Is this just a situation where demand's weak because of budget cuts, that sort of thing?

I think your comment about orderly decline is appropriate. That's what we're seeing. We're pleased really with the volume levels that we're seeing at this point in time. And I think the law enforcement situation is a somewhat of a reflection of tightness in some of these local budgets. But it is being more than -- it's being offset as we've talked about it in the comments with improved military and also with at the federal budget line with people like the FBI. Christopher Butler - Sidoti & Company, LLC: And could you give us in what you're expecting as far as cost savings here over the next few years as you move down to Mississippi? I know that we've got kind of the total number, but were you expecting next year 2012, 2013, how is this going to rollout now?

Chris, we would not expect to realize any significant cost savings until probably the second half of 2013. And I think you'll probably really recognize the cost savings starting in 2014. Christopher Butler - Sidoti & Company, LLC: And looking at the authorization for repurchases, a little bit of surprise, especially with the significant CapEx that you're going to be using for the plant upgrades and the bleach production. Could you give us a little color around your thoughts on the repurchase with this spending and the possibility of maybe even adding capacity, a year or 2 down the road?

Well, Chris, the announcement isn't that big. And when we look at the balance sheet, and we look at our financial profile, understanding network commodity chemical company that's cyclical and that we need to maintain a conservative financial profile, we were comfortable that it was appropriate to use some of our excess liquidity to return value to the shareholders. And we thought the timing was appropriate considering where we are financially. And as Joe said in his remarks, the program itself does not impact from our perspective, our ability to pursue any strategic options.

Our next question comes from Alex Yefremov from Bank of America Merrill Lynch.

I just wanted to get back to ECU netbacks. In the second quarter, your netbacks improved by $25 sequentially. In your guidance, are you assuming ECU netback improvement of higher than that $25 or lower?

We would have based higher, more improvement in our guidance.

More improvement. And then I wanted to get your help in understanding competitive capacity, additions and their impact on the market. So Shintech started up in early July. But from what I understand, they may have started marketing their material earlier. So is it fair to say at this point that Shintech's plant is in the market and that capacity is priced in or not yet?

I think we would believe that, that is the case.

We would believe, based on our knowledge of the market that a pretty significant part of that caustic moved offshore to support strong demand for caustic in South America and in other geographies. And so we believe, for the most part, that capacity is in the market.

Just so no big change in competitive dynamics domestically after the startup, in other words?

We have not seen any yet.

And question on the freight cost, what do you expect -- what are your expectations for freight cost sequentially in the third quarter? Could they come down potentially?

No.

So up basically?

Yes.

And if I may just, just a quick follow-up on the OXY announcement, your plant -- your Charleston plant is obviously geographically pretty close. So could you could make any comments as to, would you see potentially any outsize impact on your profits there just because of the proximity to this new capacity? And also could it alter your potentially go or no-go decision on the conversion there?

No. The reality of it, as you know, we're shutting down Augusta which is 100,000 tons. And we're downsizing Charleston from 260 to 200. So it wouldn't our decision-making on that.

Our next question comes from Dmitry Silversteyn from Longbow Research. Actually, it looks like we have Herb Hardt in the queue right now.

If your power cost were roughly flat in the first half, can you give us some sense of the outlook in the second half? And with that in mind and price increases coming, can we assume margins will go up?

We would assume that price increases in the second half -- or the electricity in the second half of the year will be relatively flat as well. We do expect to see freight increases, freight cost increases in the second half. Margins may improve in the second half of the year, but I don't think it's going to be a significant improvement.

Our next question comes from Dmitry Silversteyn of Longbow Research.

A lot of my questions have been answered, but I just want to understand the comment that you made about the EBITDA for 2011 being at record levels. Was that for just for the Winchester business at all or for the company overall?

Dmitry, talking about the corporation, I think in 2008 was a record level of about $328 million of EBITDA. So we're saying we think we'll be in a position to exceed that.

That's helpful. Secondly, given all the puts and takes in the reversals in the environmental cost, you kind of -- I think you said that you expect your environmental cost to be up about 50% year-over-year for 2011, so you did about, if my model is correct, about $9 million in environmental cost in 2010. So should we expect about $13 million, $14 million cost level in 2011? Is that the right way to think about it?

The comment was if you exclude the recoveries, and if you go back and look excluding recoveries last year, it was about $16 million of expense, which would suggest we expect expenses to be in the mid-20s in 2011 excluding recoveries.

But you had about $7 million in recoveries in 2010 and you're already $1 million this year, and you expect to get more in the second half of the year. So the net of recoveries, are we looking at comparable numbers in environmental year-over-year?

No, we're still looking at 2011 being higher. If you do it net, it's about $9 million last year. And I think we've talked about a total of about $11 million of recoveries this year against the mid-20s number, which would put you at $14 million or $15 million.

Got it. That's what I was getting at, $14 million, $15 million, good. Then the next question is on the Winchester recovery and profitability. I mean, you commented that you expect the third quarter to be better than second, in terms of profits. But should these kind of levels of profitability be maintained through the balance of the year? Or is this kind of a mid-season peak, and then you go to drop down into the [indiscernible].

We're go back to where we used to be. The normal cycle is the third quarter will be a strong quarter for us, and then the fourth quarter is like a breakeven quarter oftentimes in the past. That's when the hunting season's over with and inventories are depleted. And then we go back and start all over again, first, second, third quarter peak, peaking out in the third, in the third quarter. Our only point that we want to make is just that, our levels of operation and profitability are equal to are greater than the best years we had prior to the surge. So I mean that's -- we're encouraged with what's going on in that business. It's only going to get better when we this Oxford situation up and running.

Got it. And then we talked about the -- so the transportation cost you expect to be up sequentially. Kind of in the same mid- to high-single-digit level, sequential transportation cost increases?

We wish not, but probably that's correct.

Our next question comes from Andy Cash with UBS.

I'm just curious, could you say why these 2 chlorine customers are having this multi-month outage?

I can speak generally to that, Andy. One of them is a situation where a customer typically has an extended outage, and for this year, they moved it from the end of the year to the third quarter. And I don't know why. But I know it's typical, and they've just moved the calendar around. The other one is a customer that is investing and doing some significant capital investment in their facility, which necessitated them being down a little longer than normal.

So it sounds that those 2 cases are temporary.

Yes.

Now you indicated there's some early signs, I think, of weakening. I think you're referring to the chlorine demand. Is that right?

Chlorine demand and to vinyl derivatives.

Now I mean, there's been some signs for a while in the Far East, and you're saying early signs, are you talking about something kind of in the last quarter? And the second quarter, are you starting to see that? What specifically, are you referring to?

As we look forward, I think that's what we're really trying to say there.

But I mean, there's some words that things are actually kind of stabilizing in the Far East where it sounds like things kind of started to deteriorate. But what you're saying is, actually opposite of that. You're now saying things are weakening when some are saying things are improving? Is that what I'm hearing?

In the chlorovinyl's export market. That's what we're saying. Yes.

Now that doubly goes back to your comment about the Japanese plants starting back up?

That's exactly right.

Our next question comes from Gregg Goodnight of UBS.

Some clarity with respect to chlorine, my understanding was there were several announcements for April 1 in the $40, $60 a ton range. And originally the reporting or the consultant said some of this actually got into the market. Could you help clarify? Did any of that in your opinion get into the market? What is the status? And did you, your company specifically, see any tailwind for improved chlorine prices?

There was a chlorine price increase announcement going back to March of this year 2011, and we did see some of that price increase implemented in the marketplace. And we did see some improvement in chlorine pricing in our system, although some of those were offset by increasing freight cost, as I mentioned earlier.

So for the quarter, were you net-net, sequentially up in chlorine? Did it contribute any to your ECU improvement?

It did contribute to the ECU improvement.

The second question, your -- the Charleston plant, could you give us an update? My understanding is that will be pretty much complete by the end of 2012 and starting up in early '13. Has that project broken ground yet? Is the timing still what I said?

Your timing is correct, and the project is on schedule, Gregg.

Operating rates, I'm sorry to bring this up again, but in the second quarter, you mentioned the 14-day outage at, I guess, it was SunBelt?

Plus our McIntosh plants.

The entire site.

So there were actually 2 outages then.

[indiscernible]

One outage affecting both plants.

Did -- if you total up the lost availability of those outages. It still seems like you're operating rate was significantly lower than what could be explained by the outages. Do you agree with that? And if so, were you demand-constrained in the second quarter? Or were there other issues that kept the operating rates depressed?

Let me clarify that there was one other factor that we faced in the quarter, especially early in the quarter, but I didn't mention it in an earlier answer, and that was, there were several operating issues with the railroads that impacted our plant operations early in the second quarter. So that was also another source of some operating rate issues. There was no demand constraint. As a matter of fact, we've been allocating caustic, and an order control for caustic and late in both chlorine and caustic shipments really since the beginning of the year.

And that will be my final question, if I could sneak one more. And I've talked to people in the industry that typify the current of caustic supply situation is more balanced than it was in the first quarter. In other words, more inventory to be had, a better balance between supply and demand. Do you think that is an accurate assessment of caustic in the U.S. market now?

I would say the only thing that I would -- the only part of the caustic market that, that may be true based on our portfolio of customers is for diaphragm caustic. I think membrane caustic is still very tight, and that's why we find ourselves in the late list, and why we feel like the caustic price increases still are positive opportunities for us.

Our next question comes from Richard O'Reilly, of Standard & Poor's. Richard O'Reilly - S&P Equity Research: I also want to ask, get back to the ECUs, the press release used a 26% increase in your price. And I just don't know what that number is off of, or it's a blend of the 2 numbers that you gave us with SunBelt. Can you explain that?

That's the increase from the second quarter of 2010, and it excludes SunBelt in both cases. Richard O'Reilly - S&P Equity Research: So 550 versus 470. That's the math.

Our next question comes from Rafael Smith of JPMorgan.

Just a question on consolidation in the Chlor Alkali segment. I mean, would you envision any type of consolidation with the other Chlor Alkali players? And second question is, would you envision any split of the company between the Chlor Alkali business, chemical business and Winchester?

Yes, as you know, there has been consolidation over the past cycle. We bought Pioneer. Oxy bought Vulcan. You know that we believe that there is the opportunity potentially for one more consolidation. But that's what we'd say, there is that potential. And from our perspective, we think that we have 2 businesses that we understand very, very well. And while we are a chemical company, we do have a very successful ammunition company at this time. And so that's how we look at it.

Thank you. This concludes today's question-and-answer session. I would like to turn the conference back over to our speakers for any final remarks they may have.

We'd like to thank you for joining us today for our second quarter results, and we look forward to talking with you in October when we report on our third quarter results. Thank you very much.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines.