Good morning everyone and welcome to the Sealed Air conference call discussing the company's second quarter 2009 results. This call is being recorded. Leading the call today we have William V. Hickey, President and Chief Executive Officer and David H. Kelsey, Senior Vice President and Chief Financial Office. (Operator Instructions). Now at this time I would like to turn the call over to Amanda Butler, Director of Investor Relations. Please go ahead Ms. Butler.

Thank you, Shannon. Good morning, everyone. Before we begin our call today I would like to remind you that statements made during this call stating management's outlook or predictions for the future are forward-looking statements. These statements are made solely on information that is now available to us. Our future performance may be different due to a number of factors. Many of these factors are listed in our most recent annual report on Form 10-K. We have also posted supplemental financial information and reconciliations of non-U.S. GAAP measures that we expect to discuss on our website at sealedair.com, in the investor information section, under quarterly results. And now I will turn it over to Bill Hickey, our CEO. Bill?

Thank you, Amanda. Good morning, everyone. I'm Bill Hickey, President and CEO of Sealed Air Corporation. With me on the call today, in addition to Amanda, we have David Kelsey, our Chief Financial Officer. During today's call, I would like to highlight our business performance and touch upon our 2009 full year guidance. Dave, will then discuss details of our financial results. After Dave's remarks, we will take your questions; both from the telephone lines and from text submitted on our webcast. Earlier today, we reported our second quarter diluted earnings per share of $0.34 which was in line with consensus expectations for the second quarter. This excludes the $0.01 charge for our global manufacturing strategy or GMS. I believe that our performance reinforces the effectiveness of our ongoing expense control efforts. It also reflects the benefits of our GMS program and the cost reduction in productivity programs which combined delivered approximately $20 million of benefits in the quarter or approximately $40 million year-to-date. The quarter also highlighted our ability to remain disciplined on price which was evident in our $23 million price mix contribution in the quarter. Also the quarter reflected a $60 million reduction in the resin spread versus 2008 or flat resin prices sequentially. There are three additional factors that held back potential gross margin expansion in Q2. First, we continue to move forward with our plant startups in Louisville, Kentucky, and Poland. Although, this negatively impacted the quarter, we continue to believe that these new facilities along with other new facilities in China and Mexico will be positive contributors to profit when the economy does turnaround. Second, we reduced inventory by approximately $50 million which actually had the effective of increasing costs of good by approximately $5 million in the quarter. Lastly, due to the slow…

Thank you, Bill. As Bill stated our sales were $1.28 billion for the quarter. For those of you participating in the call who would like additional detail, tables posted on our website, sealedair.com present the components of the change in net sales by business segment and by geography, the impact of currency translation on sales by geographic region, and the percentage of sales by geographic region. Moving down the P&L statement, gross profit was $288 million, a decrease of $42 million in the second quarter compared to the prior year. Excluding foreign currency translation of $27 million, gross profit would have been $315 million, lower than last year by approximately $15 million. Our lower sales volume particularly in the Protective Packaging segment was the primary contributing factor, which as Bill mentioned, is more sensitive to the recessionary environment and the global decline in manufacturing output and retail sales. Marketing, administrative and development expenses decreased to $34 million in the second quarter compared to the prior year. On a constant dollar basis operating expenses were $185 million, lower by $18 million or a decrease of 9% as compared to the prior year. Approximately one-third of the year-over-year improvement is attributable to our cost reduction in productivity program. Also travel and entertainment expense has been managed down approximately $3 million from the prior year as we have made greater use of teleconferencing and required less travel for GMS and SAP related projects. Operating profit decreased $8 million in the second quarter compared to the prior year. Excluding the effects of currency translation, operating profit for the second quarter would have been $128 million or 2% higher than the prior year, reflecting the benefits from our various cost initiatives in an otherwise weaker demand environment. Interest expense increased by $8 million in 2009…

Thank you, Dave. Operator, I would now like to open the call up to any questions from the participants and we will follow-up with any questions from our webcast participants as well.

(Operator Instructions). We'll go first to George Staphos, with Bank of America. George Staphos - Bank of America/Merrill Lynch: Couple of quick questions to start, number one, was there any appreciable effect on volume do you think, Dave or Bill form H1N1? And then the related follow-on, can you give us a bit more color on trends within case-ready by geography, have you seen a pick up in North America after some of the volume loss that's occurred in the last couple of years? Thanks

George, on HINI, our numbers in may show; pork was really down 27% in May, but that's the total market in terms of information we have. That's not our sales. But the total pork and pork meats from the U.S. government report show down 27%. We did have slightly down numbers in pork in the second quarter. Our numbers were down more, 3% to 5% range in North America. In Mexico, we did see an effect in pork meat and that was again over a very hectic three week period. So the answer to your question is yes, but it was short lived. It was mainly in May. George Staphos - Bank of America/Merrill Lynch: It could have been a point or two in your food volume [significant].

I don't think it was a point or two. George Staphos - Bank of America/Merrill Lynch: Okay. All right. Trying to help you out there…

Okay. Yes… George Staphos - Bank of America/Merrill Lynch: So for case-ready…

On case-ready, case-ready volumes are reasonably consistent around the world. The numbers I have is down 11% for the quarter year-over-year, and that's equally spread between North America and Europe. Latin America, I think, was more pretty stable in case-ready and Asia was actually also stable in case-ready. There is no particular trend, Europe is actually doing a little better in case-ready because of Mirabella they've been an early adopter of Mirabella in case-ready where the U.S. has been a little bit slow on that. That's sort of a quick outlook on it. And what was your sort of third piece? George Staphos - Bank of America/Merrill Lynch: No, you've generally hit it there. Just maybe a quick aside, why is Europe adopting Mirabella quicker? Thanks.

Yeah, I guess you see a lot of the food innovations come out of Europe. But Europe tends to be more open to making reasonably quick changes in their packaging formats, and that's the only reason I can attribute it to. George Staphos - Bank of America/Merrill Lynch: All right. Thanks, guys.

And we will go next to Ghansham Panjabi with Robert W. Baird.

Hey, Bill, as it relates to your guidance, volumes do fail to recover in the second half of the year. It seems like you are pointing towards the low end of the range. Does that also assume that resin stays flat from current levels or are you assuming a decline in the fourth quarter in resin? Thanks.

I think the resin number, we are essentially saying, our guidance suggested perhaps a slight uptick, but that's kind of still in the cards, there are announced price increases out there. There are announced price increases. But we haven't seen them at this point, Ghansham and a lot of it depends on what you see for coming on stream in the Middle East.

Okay and then just given what you have announced from a restructuring standpoint but putting into context with the volumes declines you are seeing. Are there plans to expand the scope of your restructuring plans? Thanks.

Dave, you want to address that?

I'm sorry, Ghansham I didn't catch that restructuring plan? You are referring to the plan that we announced in June of last year?

Yes.

Okay. Right now we are still seeing benefit as we mentioned $13 million in the second quarter. I think any further actions will depend on what happens in the economy in the second half of the year. As Bill indicated, we think we are very well positioned to address increased volume when the economy comes back and I will emphasize when and not if. So we want to make sure that we have that readiness to serve capacity in place.

We will go next to Claudia Hueston with JP Morgan.

Just following up on the question on the guidance, I just want to be clear that has your outlook for EBIT changed? Did your guidance before take into account the incremental interest expense and the increase in that share count that you'll see for the rest of the year? Is the operating profit outlook better now versus last quarter?

I'll let Dave answer but share count actually goes down Claudia.

Yeah, down, sorry.

The guidance we gave back at the start of the year which is the $1.25 to $1.45. So we have been consistent with that since January, did assume the 12% notes that we issued in the first quarter. The more recent financing we did in June does have about a $0.03 dilutive effect for the balance of the year but we are absorbing that into the guidance range rather than change our guidance.

What's the timing for the startup of the new facilities? In other words, when should those costs that have been hurting your results a little bit, start to go away?

Actually, the third quarter, Louisville is on-stream. Poland actually came on-stream end of the second quarter. So they will be flowing through normal operations, both of them, in the third quarter. But unfortunately they will be underutilized, Claudia, because of the lower volumes in the economy, but they will be running as part of normal operations.

Okay. Thank you very much.

We will go next to Al Kabili with Macquarie.

I was wondering if you could comment a little bit on price trends throughout the quarter and what you saw there in competitive activity.

I will just comment generally that there continues to be reasonable price pressure due to lower resin prices. Although you see if you look at the price volume mix numbers which are posted on the website, actually for the quarter price continued to be positive in the protective business, little softer on the food business, and primarily because the number of contracts that we do have with certain large customers do ratchet down automatically based on index cost. So you will see that on the food side little bit of a ratcheting down in costs, little up in protective through the second quarter. Competitive activity continues to be primarily price based. There is a number of people in our space, both on the food and protective side that continue to try to seek share by lowering prices. We were countering the best way we know how is to work on the value of our offer and continue to show the benefits of the in-use cost of our products versus the purchase price of the competitors.

And then to follow up on that, can you just comment on kind of exiting the quarter what price trends look like. And then also recent volume trends have you seen any kind of a pick up more recently in volume trends? Thank you.

I will answer the second part of your question first because I just looked at that yesterday afternoon. Volume trends continues stable. Volume trends continues stable in terms of no appreciable pick up in terms of what we are looking at either in orders per day or sales per week. They are tracking pretty consistently. So, we have not experienced an upturn in the economy at this point yet. On the look forward on price, we are probably looking at flat pricing through the food side of the business to the second half of the year and perhaps an additional 3% or so concessions on the protective side.

Great, thanks a lot and good luck in the quarter.

Thank you.

And we will go next to Richard Skidmore with Goldman Sachs.

Kind of just a follow up on that volume question Bill, can you talk a little bit more about protective and what you are seeing in the protective business specifically on volumes? Why you think you have not yet seen any meaningful or at least some slight improvement on the protective side? Goldman Sachs: Kind of just a follow up on that volume question Bill, can you talk a little bit more about protective and what you are seeing in the protective business specifically on volumes? Why you think you have not yet seen any meaningful or at least some slight improvement on the protective side?

Well, protective volumes have been reasonably flat since probably February. If you look at a kind of a graph of sales from February through, even through early in the third quarter, it's essentially a reasonably flat line, and it's reasonably consistent in U.S., North America which are two biggest markets. I had the benefit of being in Asia back in May, the end of May, and went to some of our protective customers in May and a number of companies in China whose principal business is to export to the U.S. and Europe were running at less than 50% of capacity and that's as recently as May and a number of them were feeling that they wouldn't see turnarounds until probably third quarter when they hope that the U.S. customers will begin to look for holiday orders which generally hit Asia in the August-September period. Now, Protective is more of a coincident indicator, so I wouldn't look at Protective as being a leading indicator because I know most of the media and most analysts are saying that leading indicators are looking more positive. If you actually look at the production cycle, we are usually the last product to be ordered. A lot of our manufacturing customers will order their raw materials, go through the production cycle and since most of our Protective products are one to three days lead time, we are generally at the end of the cycle, so by the time the products are ordered from us, the early signs of recovery are starting to happen. So if I look at the last couple of recessions whether it was 2001 in the tech or '91 we tended to be more coincident with the market and I wouldn't expect it to be any different at this time.

Okay. Just to follow-up, the geographic mix then, it sounds like maybe North America is down similar to what may be corrugated packaging is down kind of the 10% or 12% in the quarter, and Asia and Europe are down something larger than the 20% volume decline that you posted for this segment. Is that correct? Goldman Sachs: Okay. Just to follow-up, the geographic mix then, it sounds like maybe North America is down similar to what may be corrugated packaging is down kind of the 10% or 12% in the quarter, and Asia and Europe are down something larger than the 20% volume decline that you posted for this segment. Is that correct?

Yes, that's fairly right. Europe is a little bit lower than North America but not down as low as Asia.

The other thing that we've tracked, I think we mentioned it back on our first quarter call, is the experience that 3M has had in their industrial and transportation sector and their electronics and communication sector, both of which match up against a lot of the end markets globally that we sell into in Protective. Looking at the 3M earnings release last week, they were down 21% in volume in their industrial businesses and 27% in their electronics business. We feel very comfortable. We are tracking exactly what's going on in the economy.

We will go to Peter Ruschmeier with Barclays Capital.

I wanted to follow up with your comments, Bill, on equipment sales being down 35%, 40% and whether those kinds of numbers are sustainable? How soon might the customers need to replenish almost regardless of the economic outlook or is it something that could remain weak? Do you have much visibility over the next couple of quarters on those equipment sales coming back?

Let me answer your question. I am of the view that probably like a lot of people is, at some point people are going to have, have to replace equipment, have to replace inventory. To me it's a matter of time. I know our prospect list is good. We were able to place even in this environment a million dollar piece of equipment at a customer in Europe. So, the prospect list is good. It hasn't converted to orders yet. Our visibility in equipment generally goes out only generally five to six weeks. So, I can't see it on the horizon yet at this point.

Okay. That's helpful. And I was also hoping you could elaborate, I didn't quite follow your commentary initially, Bill, on passing the legacy higher resin costs through the higher cost from December, following that logic I would think you would start to be passing through the lower resin costs from 1Q, 2Q which I would think will be showing up as a benefit in 3Q, 4Q?

Yes, let me try to keep this simple. At the end of December, we canceled a supply agreement that we had with Dow Chemical, when we bought the Ethafoam business; we bought the product line but not the manufacturing facility. So, we entered into a supply agreement which ran for an 18 month period where Dow Chemical would supply us with Ethafoam product while we built the capacity to manufacture that product ourselves. We wanted to cancel that agreement at the end of December. However, we knew our new plants would not be up and running until early 2009. So, we ordered several months worth of inventory from Dow Chemical which we received in December at a transfer price per the acquisition agreement that we anticipated we would sell through the first quarter. Because of the slowdown in the economy, a fair amount of that inventory carried over into the second quarter. We actually sold almost all of it with the balance at the end of the second quarter being only several million dollars. So, we were selling December inventory in both the first and the second quarter and that is the impact that flows through cost.

That is helpful. And just not to belabor the point but is the cash flow benefit noteworthy in terms of your cash production costs of making that product relative to your purchase prices? Is that a noteworthy item of flux as we look at 3Q versus what you have experienced in the first half?

I think we said last year sometime that on an annual basis the difference between making the product ourselves and buying it under the supply agreement could be as much as $0.04 to $0.05 per share.

We will go next to Mark Wilde, with Deutsche Bank.

Just curious, is there a point here whereof the volumes don't pickup or don't pickup appreciably that you will think about more capacity rationalization?

That's one has to always think about and to say, not only in capacity rationalization but we just put in four new plants in the last 18 months, four new state-of-the-art plants that have actually added to our capacity over the last 18 months. To come right to your question, yes, we are looking at it and we do look at it, and if need be, we will take the necessary action.

Okay. Then just as a follow on. Dave Kelsey, can you just talk about what you're doing to kind of watch potential credit losses? I guess I am thinking particularly of potential problems with some of the big meat packers, if one of the big poultry companies go out of business earlier this year?

The best way to do that is to try our best to see into the future. We do have longstanding relationships with most of our customers. So we have various early warning systems in terms of looking at their order trends. We have people with very good industry knowledge that are regularly collecting information from the market, so that we have historically done a very good job in avoiding balance run-ups prior to a customer getting into a serious trouble. Our ability to recover on the back-end has also been very good, because as long as that customer stays in business in a restructuring mode, it needs to continue to package its end product. If we are the preferred supplier as they get into trouble we are usually the preferred supplier as they restructure which has tended to work to our benefit. I think even more important in terms of our focus in the domestic situation is the global situation in the emerging markets and we have people on the ground in those markets that have the same close customer contact that we have with our customers in North America and Europe. And so it is a time of certainly of high diligence in this environment. But so far we are very pleased with the performance relative to our accounts receivable.

Okay thanks, Dave. That's helpful.

I just want to remind you if you listen to Dave's comment earlier he basically said are actually days sales outstanding are better. In fact, yesterday afternoon I just went through a list of our credit exposures and I will tell you the group's done a very, very good job on keeping tight reins on potentially problem accounts. Next, operator?

And we will go next to Rosemarie Morbelli with Ingalls & Snyder. Rosemarie Morbelli - Ingalls & Snyder : Bill, could you give us a little more detail on the consumer interest and the pilot test that you refer to in your press release, in which categories are they and what could be the potential size and timing of those new products?

Well, I think the one we talked about is in case-ready Mirabella which I think you may have seen the product, we did show it in Atlanta when we had some people down the platform. It is a tray with a much lower profile than the earlier versions of case-ready and because of the technology the top film can actually touch the meat in the tray without changing the color of the meat, keeping the meat red, so it looks much more like store packed meat. The other item which is in my quote earlier in the press release is in the Business Week article there was a collage of our Marinade on Demand, which allows the consumer to buy a fresh piece of meat with a marinade package right next to it in the same overall wrap with a frangible seal. That is being introduced by one of our customers in the north central part of the country. The third is the deli packed product. So, those are the three new items that we referred to in our communications and press release. Rosemarie Morbelli - Ingalls & Snyder : Nothing on the Protective Packaging side?

We have got automation continuing to drive in Protective Package. The thing that we are bringing to the market in Protective Packaging is more automated systems. You heard me say in my prepared comments priority pack which is probably, to answer an earlier question, is different trend than the equipment trend overall. Priority pack which is actually our highest price protective packaging system piece of equipment actually had a sales increase because the customer benefits in terms of labor savings and productivity far, far outweigh what the customers were doing before. They are willing to step-up to that investment with a very, very short payback. Rosemarie Morbelli - Ingalls & Snyder : Thanks. That is very helpful. If you could talk about any sign or [like the roles] of pick up on the e-commerce side, is it as bad as the rest of Protective or do you see a little light at that end?

If I look at the numbers and I'm just drawing kind of take a couple of accounts that I know if you look the Protective being down close to 20%. Some of the e-commerce are more down in the 12% to 13% on the e-commerce side, while the retail piece which is the over-the-counter sales of Bubble Wrap is probably down more than 20%. But those that go through e-commerce fulfillment which is not the consumer segment, but it's a different segment for us on e-commerce is more 13% to 15%.

And we will go next to George Staphos with Bank of America. George Staphos - Bank of America/Merrill Lynch: A couple of questions, bigger picture to wrap-up, at least from my side. Bill, first off, what do you think the impact if any, will there be from some of the recent consolidation that we have seen within the flexible packaging sector? Could it make for more competition or do you think perhaps it might bring more focus on returns within this sector? How do you think about that? Then I have a follow on.

Sure. Any answer I have will be speculation. George Staphos - Bank of America/Merrill Lynch: I understand.

If you look at other industries, consolidation has generally led to more discipline in the marketplace. So, I see that more likely than not, but I'm not going to predict behaviors of other companies and other organizations. But in other industries I have looked at and you can see it over time that has generally been the trend. George Staphos - Bank of America/Merrill Lynch: And I guess just to finish the thought you are not as concerned perhaps then about any kind of pick up from competition then?

Well, it's interesting. I don't think the competition kind of changes. They just form different parts of different organizations. Basically they are still there. George Staphos - Bank of America/Merrill Lynch: The other question I had and I will turn it over, you know, the implication in your guidance, some of the earlier comments, is that ultimately when the economy recovers obviously your volumes are going to pick up and you would expect to see an improvement in earnings progressions and cash flow and alike and that's understandable. But I will go back and look at some of the longer term trends, in periods where volumes have been strong for you in prior years, there has been margin pressure. When you get some margin relief like we have had this year, volumes have been under pressure because of the economy and your EBITDA while it's been stable, and that's not bad, it's been between, call it $650 million and $750 million, over the last 10 years. So, as we look out to the future, what do you think the reasons are, that going forward as the economy picks up, you will actually be able to see that leverage in your margins and ultimately in your earnings per share? Thanks, guys. Good luck in the quarter.

Okay, thank you. Let me answer your question, but let me also go back and be sure that I gave you the right answer on case-ready. I think I gave you the sales number and I get the impression you asked for the volume number. The volume number is essentially flat in North America and slightly negative in Europe on a case-ready unit volume.

Okay.

The number I gave you for down 11% is a sales number globally for case-ready which includes some of the pricing and mix issues. Volumes are flat, slightly down in Europe and the sales number the 11% I gave you was the sales number. Okay? George Staphos - Bank of America/Merrill Lynch: Thanks for that.

Now coming back to what's different this time, well, I think that the global manufacturing strategy has redesigned [for] so the manufacturing footprint for the company. We have lowered our break even cost. We've lowered our ongoing cost structure and we can still crank out the same amount of sales. The leverage on the upside is substantially more than it had been five years ago. I consider that really a positive for the longer term. The second is when you go through the really turndown in the economy and I know earlier in the year, late last year, a number of people asked numerous times about how does Sealed Air usually perform in an economic downturn? The references we looked at, we looked at 2001, we looked at 1991, we looked at 1982 and in all of those downturns, the Protective business never declined more than single digits. Clearly, as we are all finding out the dramatic downturn in the economy this time around has exceeded those three recessions. Numbers I look at and I'm sure you see the same thing is that, this downturn is perhaps the worst since the great downturn of the '30s. The numbers we felt earlier about trying to weather our way through and low single-digit downturns in Protective clearly didn't turn out to be the case. But it has forced us to really look at how we go to market. How we produce and how we sell? And we will learn and take the benefit of that learning through the upturn. I mean, we are as lean as we ever been and are smarter than we've ever been. We have really gone through a detailed analysis of what it costs to serve all of our customers. What it costs to produce and deliver all of our products, and the information availability on a global basis through the new technology we have in the SAP system. It's amazing how much more we know and how quickly, so the combination of taking costs out of the business that we cannot allow to creep back in and using the information technology we have to manage products and customers. I think that we will be able to be more profitable on the upturn this time around than we had been in '82 and '91 and 2001. George Staphos - Bank of America/Merrill Lynch: Okay. Thanks. We will turn it over and we will pick it up next time. Good luck in the quarter.

We got a couple of quick questions on the Internet I'd like to go through. Some of them have probably been covered. One person asked, what do we mean by currency translation? Is that another way of saying a stronger U.S. dollar? That's correct. As the dollar is stronger, our earnings in other parts of the world have been less and that's what I mean by currency translation. Someone asked me to refresh, new capacities come on-stream in emerging markets. Over the last 18 months, we have brought on a new factory in China. We brought on a new factory in Poland. We brought on a new factory in Mexico. And we brought on a new factory in Louisville, Kentucky, in the U.S. Those factories, three of them serve the food business and three of them serve a combination of the Protective business and the Specialty Materials business. And our footprint there is a lot of growth in the future is going to come out of those markets and we wanted to produce in places where our costs are much lower than the manufacturing production we previously had to serve those markets in the U.S. and Western Europe. Someone asked have we finished raising cash to fund the Grace settlement. Let me ask Dave to address that quickly.

As I mentioned in my scripted remarks, we have a $1 billion plus liquidity in July. The Grace obligation today is about $725 million. So, we are well set to fund that Grace settlement when it comes due.

Okay and the very last question from the Internet is comment that last quarter we mentioned that the sales personnel we are really calling and are calling for price increases that we are starting to gain new customers. This is happening. We are signing up new business, particularly in some of the newer products. Obviously the economy has had a factor on that. But as we look at our business, we have not lost any significant customers, at customers where we had long term relationships; we definitely see volumes are down. But we are continuing to place new systems in the Protective side, particularly with Pack-Tiger and our new high speed inflatable Bubble material. We are actually for the first time, we had a customer ask us to slow it down because it was so fast. With that, I would like to wrap up the call here. Before we leave today, I would like to recognize all of Sealed Air people around the world who help drive innovation which is a real source of pride and our long term success. During the quarter, our innovation gained recognition in a number of places, including our Marinade on Demand product which was showcased in the Business Week review of the grocery store of the future. Additionally our Renew-a-Pak bake ware product from our Biosphere venture won the DuPont Award for packaging innovation in the area of sustainability. We are proud of our accomplishments which give us great momentum for the second half of the year when we will be launching several new products into the market. Lastly, thank you for participating in the call. We are looking ahead to the second year, focused on expense control, recognizing the benefits of our various costs and productivity initiatives and delivering measurable value for our customers and our shareholders, while navigating through one of the most challenging economies in our lifetimes. Thank you very much for taking the time to listen.

Once again that does conclude today's conference. We thank you for your participation.