Good morning, and welcome to Olin's Third Quarter 2011 Earnings Conference Call. [Operator Instructions] Please 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.

With me this morning are John Fischer, 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 third quarter of 2011 was $47.2 million or $0.58 per diluted share compared to $31.8 million or $0.40 per diluted share in the third quarter of 2010. Sales in the third quarter of 2011 were $550 million compared to $432.8 million in the third quarter of 2010. Third quarter 2011 sales were the highest for Olin since the sale of the metals business that occurred in 2007. The Chlor Alkali business's third quarter segment earnings of $76.7 million were the third highest quarterly earnings in history, and were realized despite an approximately $3 million negative impact due to a 10-day unplanned outage at our Charleston, Tennessee facility due to flooding caused by Tropical Storm Lee, and also due to weaker than expected chlorine demand that occurred late in the quarter. The Chlor Alkali business continued to experience positive pricing with ECU netbacks increasing sequentially for the eighth consecutive quarter. Also during the third quarter, bleach shipments were a record. Winchester's third quarter results were in line with expectations but continue to be impacted by higher commodity metal costs. Also included in our third quarter results were pretax environmental recoveries of $1.5 million, a $3.7 million pretax gain on the sale of a former manufacturing site, and a pretax restructuring charge of $4.1 million associated with the Chlor Alkali mercury cell technology conversion in Charleston, Tennessee and the Winchester centerfire relocation project. Fourth quarter 2011 net income is forecast to be in the $0.15 to $0.20 per diluted share range, reflecting normal seasonal weakness in both Chlor Alkali and Winchester…

Thanks, Joe. First, I'd like to discuss a few items on the income statement. Selling and administration expenses increased $6.5 million or 20% in the third quarter of 2011 compared to the third quarter of 2010. The year-over-year increase reflects the inclusion of approximately $3 million of Sunbelt selling and administration expenses as consolidated Olin expenses, higher salary and benefit cost, higher employee relocation expense and higher bad debt expense, partially offset by lower management incentive costs, which included mark-to-market adjustments that reduced stock-based compensation and lower legal and legal-related settlement costs. The inclusion of the Sunbelt expenses of approximately $6 million have caused absolute year-over-year selling and administration expenses to be unfavorable on a year-to-date basis in 2011, and this will continue for the balance of the year. Third quarter 2011 charges to income for environmental investigatory and remedial activities were $2.5 million, which included $1.5 million of recoveries from third parties for environmental costs incurred and expensed in prior periods. During the third quarter of 2010, there were $8.4 million of charges related to environmental, investigatory and remedial activities, which included $200,000 of recoveries for environmental costs incurred in expense from prior periods. After giving consideration to the recoveries in both periods, year-over-year expense related to environmental remedial and investigatory activities decreased by $4.6 million. These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites. We forecast that full year 2011 expenses for environmental, investigatory and remedial activities, prior to any recoveries, will increase as much as 25% from 2010 levels. We currently do not expect additional recoveries in 2011 of environmental costs incurred and expensed in prior periods. On a total company basis, defined benefit pension plan income was $6 million in the third quarter of…

[Operator Instructions] The first question comes from Frank Mitsch of Wells Fargo.

I wanted to try and size the Chlor Alkali outages that you're planning in the fourth quarter and also talk a little bit about operating rates. In the third quarter, your operating rates, on average, were 85%, which was in line with the industry even though you had planned and unplanned outages, et cetera. But obviously, business started to slow down, and you're forecasting mid-70% in the fourth quarter. Do you expect the industry to also be dropping that far down? Or is it mainly related to some of the outages that you -- or the unplanned downtime or planned downtime that you have?

Frank, I expect the industry to be in roughly the same operating rate range in the fourth quarter. We've seen pretty significant falloff in demand for chlorine, chlorine derivatives, and I expect that to translate across the industry. I would add that if you look at our outages, total outages in the fourth quarter, it represents, in our system, about 5% of capacity. Our expected operating rate for the fourth quarter, you know, mid-70s, is about the midrange of our fourth quarter operating rate for the last 3 years. So what we're seeing is not out of the ordinary for a fourth quarter for Olin's system.

All right. Terrific. And John you mentioned that -- or the comment was that the 2 large chlorine customers, multi-month outages. When do you anticipate that they'll be back up?

We have one customer that shut down in the end of July that should be starting up or is scheduled to start up next week. Another customer that started down -- shut down the end of August, that’s supposed to start up the end of November.

All right. Great. And then --

One of those customers, Frank -- one of the customers -- length of their shutdown is combined with a capital investment that they're doing. That's why it's pretty lengthy.

That's why it's a little bit long.

All right. Terrific. Terrific. And just if you guys could offer a comment with respect to the share buyback, $2.2 million in the third quarter. Any comments on the pace that you're planning to execute on that $5 million share buyback?

I think, Frank, we intend to be an opportunistic buyer of Olin shares and with a goal to offset dilution over time. And that's what we're targeting.

The next question comes from Edward Yang of Oppenheimer. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Joe mentioned that you still expect the Chlor Alkali business to improve in 2012 year-over-year. So how much can we extrapolate the operating rate that you expect in the fourth quarter in the mid-70s out into 2012? What would your expectation be, for example, for first quarter of next year?

We have historically seen operating rates from fourth quarter of one year to first quarter of another -- of a subsequent year increase in the 5% to 8% range. And for us, peak quarters from an operating rate standpoint tend to be the second and third quarter, when we have the full benefit of all the seasonal business that we serve, especially our bleach business. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: And John, accounting for that seasonality then, would you expect your operating rate to be down year-over-year in the second quarter of next year versus today under -- given your current assumptions?

No. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Okay. And you mentioned that the mid-70s range that you see for the fourth quarter is kind of the average of what you've seen in the last 3 years, but that included a pretty severe recession. I would think that an operating rate this low -- that would sorry, go ahead.

If you take the recession year out and just take the last 3 years -- and we're right in the midpoint of that to be quite frank about it. Forget '08, when everything collapsed. That was when we had the 67% operating rate.

'07, '09 and '10 averaged out to 75%.

75%. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Okay. I thought that fourth quarter -- kind of a typically year would be more in the 80s or the mid-80s or so. But this mid-70s, you believe is -- okay. All right. So it's in the midpoint then. Okay. Got you. Are there any cost-cutting actions that you could take as you've this drop-off in chlorine demand?

Well, for the kind of just one quarter demand that we see, it's pretty hard to make major changes on the cost side. What we do do is it does afford us the opportunity to take opportunistic shutdowns in a period of time in which we can do that in the most cost-effective manner, and it also allows us to manage the logistics side of our business in a manner in which we can limit out-of-order purchase shipments and take full advantage of our multi-plant network and really lower the supply chain cost that we have. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Maybe following up on that line of thinking then, John. When you made the SunBelt acquisition, I believe it was -- the final payment was going to be contingent on earn-outs, but that's probably one of your most profitable plants. So would the demand -- the diminished demand you're seeing on the chlorine side, does that -- would you see any benefit from that from, let's say, paying out less of the Sunbelt earn-outs or reversing any accruals that you might have had for that?

We haven't really talked about the amount of the earn-out. It is a 3-year earn-out, and I think we will run the business in the manner that generates the best financial return for Olin's shareholders.

The next question comes from Christopher Butler of Sidoti & Company. Christopher W. Butler - Sidoti & Company, LLC: Just wanted to shift gears over to Winchester here a bit. Now that we have some visibility into the full year of kind of 2009 post peak demand Winchester, how do guts see this working out here over the next year, the next 2 years? Is this going to be a slow decline back to normal? Have we kind of found a stabilization here above where we expected? What do you think?

Chris, we think we're troughed out is where we are. We're -- we'll stay stable, with the ability to increase as time marches on. Christopher W. Butler - Sidoti & Company, LLC: And the pullout from Iraq is -- and things of that nature not a concern to you at this point?

Not in the immediate future. Longer term, it will be, but not as we look forward here in the next year or 2.

Chris, one point I think we should make about the recent second source award. We were a participant in the prior second source award, but we only performed between 40% and 50% of that total contract value. The new contract provides us the opportunity to perform 100%, which if volumes are equal, that would double that component of our sales. Now we're not thinking that, because we do believe there'll be budget reductions and stuff and as we move through time. So that's actually an opportunity for us to actually have better military sales than we've had historically. And at worst, if the volume is purchased and the new second source are only half of what they were in the prior second source, we'd still be even. So I think that's really good news for us in terms of the business base. Christopher W. Butler - Sidoti & Company, LLC: And looking at the profitability side of the equation, could you talk to the pricing environment and your ability to offset some of these higher metal costs that you've been dealing with?

We actually have pricing action. It took effect the 1st of July, Chris. It's working its way in, and you know how we buy our metal. We're -- our -- we're hedged out a couple of quarters, and so that's all going to work its way through the system. So we would anticipate that as we get out further, that our pricing will start to offset the commodity cost increase. Christopher W. Butler - Sidoti & Company, LLC: And just looking at the balance sheet really quick, you had mentioned that working capital normally increases during the year and falls by the end. But if we're look at working capital sequentially here into the third quarter, it looks like you reduced it when normally, it's fairly flat. With demand weakening in Chlor Alkali at the very end of the quarter, I'm surprised that there wasn't an uptick on inventory as a result. Can -- have you done anything differently there?

The bigger driver of the third quarter and most of the working capital growth during the year is Winchester. And we saw a very robust third quarter sales for Winchester, and that's really the bigger driver than the Chlor Alkali piece.

The next question comes from Herb Hardt of Monness. Herbert Hardt - Monness, Crespi, Hardt & Co., Inc., Research Division: Question is potential for overseas ammunition contracts. Is there anything in the wings on that?

Not much, Herb. There's periodically are opportunities there but not many. Most of our sales are pretty much domestic.

The next question comes from Don Carson of Susquehanna.

Question on ECU pricing. You were $590 in the quarter. That was only up $7. Just wondering what the dynamics were of how much of the cost of increase rolled through and what the offset was on chlorine. And just remind me, your bleach realizations are not in that ECU number. Is that correct?

I think, Don, the quarter-over-quarter increase was $40. We were at $550, and now, we're at $590. And you're right. The bleach realizations are not in that number.

Okay. And what's was the dynamics? How much was chlorine down versus caustic up?

Chlorine was roughly flat. It was all cost caustic up.

Offset by higher -- then you get the higher transportation cost, as you know, Don.

Now as we look into the fourth quarter, you said you're hoping to get a portion of that 65%, maybe 20% to 25%, but I assume that chlorine is going to offset much of that. So are you looking at relatively flat ECUs here in Q4?

That's correct.

Okay. And then as you go forward with your bleach expansions, ultimately, just say if you look out a year, what proportion of your overall ECUs will be going into bleach? And is that -- are you still able to realize about $100, $150 ECU premium on bleach?

In 2011, Don, a little over 10% of our total capacity will be sold as bleach. And to date, we have continued to realize at the high end of the $100 to $200 per ton premium that we have talked about.

Don, when you look at the addition of the high-pure bleach capacity that Joe alluded to in his remarks, the -- which will occur within the next 2 years, that will basically add 1/3 of our current system capacity. So we will have the opportunity to grow that 10% correspondingly.

We stated that our -- we're trying to get it to 15% to 20%. That's where we're trying to get to.

And just a question on ECU pricing as we get into 2012. Obviously, caustic's being held up here, because there's not much of an outlet for chlorine, but how would you see that unfolding? And I'm just wondering how much -- clearly, end market demands weakened for chlorine derivatives, not just vinyls, but it's a sign as well. But I'm wondering what impact this new capacity we've seen this year for Chlor Alkali has also contributed to the weakness in operating rates.

We don't think it's contributing at this point, the new capacity. And what we think is going to happen is that caustic's going to be tight, and it's going to be tight into the first quarter. And then I think everybody's crystal ball will be what happens to the economy. Normally, what would start to happen is chlorine starts to pick up in the late February, early March period. It will for us, because we'll be heading into the bleach season.

Okay. And what's your outlook for freight rates next year, Joe? I know that's a subject of...

I think they're going to continue to go up.

The next question comes from Alex Yefremov of BofA Merrill Lynch.

I just wanted to ask a question on ECU, your expectation of higher ECU realizations in Q1 2012. Does this assumption include improvement or flattening in chlorine prices or continued decreases there?

It assumes chlorine prices will stay relatively where they are. Just to comment on caustic, if you look at 2011 and you add up all the price increases in the year, there were a total of $240 of price increases announced. If you look at the benchmark indexes, through the third quarter of this year, only $100 of that $240 has been realized in the marketplace. We feel like there's still a lot of room to go, and we've actually seen improvement in caustic pricing in the fourth quarter, so far in the fourth quarter. So we believe, as has been said in earlier comments, that we have opportunity for caustic pricing to continue into the first part of 2012.

Okay. And a question on the high-strength bleach facility. Could you help us size potential impact on sales and EBIT after the startup sort of based on a steady state run rate in 2012?

John just said that we are expanding our bleach capacity by roughly 1/3, and we said today it's about 200,000 tons. So it would be roughly 60,000 tons, and we've set the margin. Favorable margin impact is between $100 and $200 per ton. I will caution you that that is a seasonal business, where about 70% of what we sell, we sell in quarters 2 and 3.

Sort of, I guess, a follow-up to that. Do you think as you ramp your bleach volumes, your seasonality would increase, and that's part of what's happening this year already, because your bleach volumes are higher?

That's absolutely one of the factors that's contributing to the move from Q3 to Q4. I would also add that we have seen a much more normal move in Winchester seasonally than we've seen in the last couple of years, because the surge sort of overcame some of that.

I see. Do you see any other end markets where sort of there's more pronounced seasonality this year I guess other than maybe -- within chlorine derivatives, which markets are doing worse than others?

I don't know that you can attribute it as much to seasonality as just kind of attribute it to worldwide demand patterns. But the derivative product, the derivative exports, chlorine-based derivative exports have really dropped off the end of the third quarter and at least, so far, in the fourth quarter. And I don't think that's seasonality as much as it's just worldwide economic -- worldwide demand driven by what the economies are doing.

The next question comes from Dmitry Silversteyn of Longbow Research.

I'm still struggling a little bit with fourth quarter guidance. I understand the seasonal decline from the third quarter to the fourth quarter from point of view of bleach and lower chlorine demand and volumes. But it you just compare it to the third -- to the fourth quarter of 2010, I mean, you got more than -- $50 more in ECU netback if not greater. Volumes, actually, including SunBelt, are going to be up. So I'm just trying to understand -- how do I get my number down below $50 million in profits, I guess, is my question.

I think, Dmitry, if you look at last year's fourth quarter and you look at the segment results and you look at the corporate and other line, there's about a $10 million to $12 million year-over-year change. Last year's fourth quarter essentially included no environmental expenses because of the absence of discrete events and some recoveries. There were some good news in terms of a reimbursement from the government on retiree medical that went with the healthcare law, and there were some adjustments to asset retirement obligations. They ran through as a result of the restructuring charge. Those 3 alone, on a year-over-year basis, are -- 2011 is $10 million higher than it was in 2010, and I think that's probably the piece that you're missing.

Okay. So basically, you're talking about a higher corporate expense then. And your Chlor Alkali production or profitably is going to be -- I don't want to say 50% higher but significantly higher than it was in December of 2010 quarter, right?

That's correct.

Okay. All right. So that explains or helps to explain that a little bit. Secondly, on your tax rate, I mean it’s been fluctuating a little bit here. So what should we think about not just for the fourth quarter but as we look longer term at your tax rate?

I think after adjustments, it's a 36% to 37% rate, which is what we've set for the full year 2011.

Okay. So -- oh, even for the full year 2011, it'll be that high?

Yes. I think it was quite a bit higher than that in Q1.

Right. It was 35% in Q1, and it was 32% in Q3. So for us to get to 37% or 36%, we have to assume almost a 40% Q4 tax rate. Is that the right way to think about that?

No. I think if you go back and look at Q1 and Q2, I think we're above that 36% to 37% rate. To answer your question on future guidance, I would guide you to a 36% to 37% rate on a consistent basis going forward.

The next question comes from Gregg Goodnight of UBS.

You mentioned that you're going to take some opportunistic shutdowns and do some tie-ins in the fourth quarter related to projects and others. My question is, is that work going to be expensed or capitalized? If it's going to be expensed, how much of an incremental cost of that is in the fourth quarter?

There really isn't a significant incremental expense cost associated with it. The opportunistic stuff we're doing is really capital related.

Okay. So it's -- it doesn't have an EPS impact then in the fourth quarter.

Yes, sir.

Okay. The second question I had was the -- any -- are there going to be any other environmental expenses or unusual charges in the fourth quarter that's included in your guidance for your corporate area?

I wouldn't call it unusual. There is variability in environmental expenses. We do not see any recoveries in Q4 of '11, whereas in Q4 of '10, we did, and so there's a year-over-year unfavorable comparison. But I think if you look at environmental across 2011, as we said, it'd be about 25% higher than 2010 but well within historic range.

Okay. And the last question I have is your guidance that you're giving is on a GAAP basis, I assume. It's not an adjusted basis.

That's correct.

Okay. Oh, I'm sorry. I do have one more question. Energy costs, could you typify your energy cost in third quarter versus second and then fourth quarter versus third? Is it fairly flat? Or are we seeing any trends at all?

We typically -- energy costs -- although the difference isn't significant, energy costs, during the peak times of the year, which are typically second quarter, third quarter, do tend to be a little bit higher. A lot of that's driven by operating rate, but it's also driven by just the fact that overall demand is higher in those quarters. And we buy a little bit higher price to mix of electricity because of that, but it's not a significant delta from those quarter-to-quarter.

This concludes our question-and-answer session. I would like to turn the conference back over to Joseph Rupp for any closing remarks.

I'd like to thank you for joining us today as we've reported our third quarter results, and we look forward to speaking with you in January of 2012 when we report on the results of our full year and our fourth quarter. Thank you.

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