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

Thank you. Good morning, and thank you for joining us today. With me this morning are John Fischer, Senior Vice President, Chief Financial Officer; John McIntosh, our Senior Vice President of Operations; and Larry Kromidas, our Assistant Treasurer and Director of Investor Relations. Last night, we announced the net income in the third quarter of 2012 was $28.7 million or $0.35 per diluted share, which compares to $47.2 million or $0.58 per diluted share in the third quarter of 2011. Third quarter 2012 earnings in our Chlor Alkali business declined compared to the third quarter of 2011 due to lower chlorine and caustic soda volumes and lower ECU netbacks. These declines more than offset increased bleach and potassium hydroxide volumes and improved hydrochloric acid pricing. Third quarter 2012 bleach shipments of 50,000 ECU set a record, and the Winchester third quarter 2012 segment earnings improved compared to the third quarter of 2011 segment earnings, and that was due to improved pricing and lower commodity costs. During the third quarter of 2012, Olin generated adjusted EBITDA of $81.3 million, and we continue to believe that we have the opportunity to generate a record level of adjusted EBITDA in 2012. Fourth quarter 2012 net income is forecast to be in the $0.30 to $0.35 per diluted share range. Chlor Alkali Segment earnings in the fourth quarter of 2012 are expected to increase slightly compared to the fourth quarter of 2011 with higher volumes more than offset lower pricing. Fourth quarter 2012 Chlor Alkali volumes are forecasted to be negatively impacted by anticipated seasonal customer outages and weaker-than-expected customer demand. The fourth quarter Chlor Alkali forecast also includes onetime costs totaling approximately $3 million associated with 4 scheduled plant maintenance outages. Winchester earnings in the seasonally weak fourth quarter are expected to more…

Thanks, Joe. First, I'd like to discuss a few items on the income statement. Selling and administration expenses increased $2.6 million or 7% in the third quarter of 2012 compared to the third quarter of 2011. This increase was primarily due to an increase in mark-to-market adjustments for stock-based compensation and expenses associated with the acquired K.A. Steel business. Selling and administration expenses were approximately 7% of sales in both the third quarter 2012 and the third quarter of 2011. Third quarter 2012 charges to income for environmental investigatory and remedial activities were $3.6 million. 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 from environmental costs incurred and expensed in prior periods. After giving considerations to the recoveries in 2011, year-over-year expense related to environmental, remedial and investigatory activities decreased by $400,000. These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites. We now estimate that full year 2012 expenses for environmental, investigatory and remedial activities will be in the $8 million to $12 million range. We do not expect any environmental recoveries in the fourth quarter of 2012. On a total company basis, defined benefit pension plan income was $5.6 million in the third quarter of 2012 compared to $6 million in the third quarter of 2011. We are not required to make any cash contributions to our domestic defined benefit pension plan in 2012. Under the pension funding relief provisions of the Moving Ahead for Progress in the 21st Century legislation, we may not be required to make any additional contributions to our domestic defined benefit pension plans for several years. The plan will, however, face higher PBGC fees as a…

[Operator Instructions] Our first question will come from Frank Mitsch of Wells Fargo.

Joe, I got to tell you, your facility in Oxford is something to behold. Very impressive, and I must say the food is great, too. You're talking about the chlor alkali demand and chlorine demand being down, I think, 15% for PVC customers and 24% in the TiO2 arena. How -- what are you hearing from your customers with respect to the fourth quarter in those areas?

Frank, this is John. We don't -- we've not heard anything that would indicate to us that there's going to be a dramatic change in demand. We're looking really for volumes to be relatively flat.

All right, great. And as I -- and I would assume then that if your operating rates are in the mid-80s, something like that, that you've got a lot of confidence with respect to the caustic price increases being realized?

We do. If you look at the last industry operating rate numbers that were are released, there was a pretty significant drop in the industry operating rates. And we don't expect that to get significantly better in the fourth quarter either. So we think we're positioned well for caustic pricing momentum to be positive.

So that September rate, I think it was 79% for the industry overall, so that September rate is indicative of where you think the fourth quarter is trending, might trend?

Yes, sir. I believe that to be the case. The operating rate dropped 5%, and from September to October. So we -- as we look at operating rates for the industry, we think that's going to be indicative of what we're going to see in the fourth quarter. There have been several outages, including some in our system that have been announced by the various producers, so everything seems to support that same trend.

All right. Great. And Mr. Fischer, you talked about lower capital spending next year and a lack of pension contribution, et cetera. So can you just remind us of your priority uses of cash with respect to debt pay down share buyback, et cetera.

Well, debt pay down, we're just going to pay down based on the terms of the debt we have. So we don't have any significant maturities until 2016. We have between now and then about $12 million a year to repay on the SunBelt notes, and there's one other small issuance of $11 million or $12 million that gets repaid next year. So that's not a priority. I think our priorities would go in order of -- we continue to look for opportunities to invest in the business that will improve cash flow and EBITDA. I think as we've said historically, we believe that the dividend is a key component of our shareholder value proposition. And that Olin has had a lot more success over a long period of time, rewarding shareholders with dividends than we have with share repurchases.

And our next question will come from Christopher Butler of Sidoti & Company. Christopher W. Butler - Sidoti & Company, LLC: This question may be better suited for your customers than you, but as you look at the demand environment for chlorine, looking out a little bit, and with some of the more optimistic numbers coming in from the U.S. housing market, how do you see volumes beyond the fourth quarter as we look into 2013 a bit?

I would guess that at face value with very little historical information, you would tend to believe that operating rates are going to go up. But the first quarter again doesn't have much seasonal chlorine demand in it, and even the vinyls demand associated with housing use typically isn't first quarter -- -- seen as a first quarter impact. So in order to be -- we're going to have get a lot closer to the second quarter of next year, I think, Chris, to really be confident that there's really increased demand behind some of this anecdotal evidence on housing improvement. Christopher W. Butler - Sidoti & Company, LLC: And I'd have to imagine, correct me if I'm wrong, but due to your position in the supply chain and when vinyl often gets used in the construction of a house, that there's generally a decent lag before you would start to see any real benefit, does that sound about right?

That's why I mentioned the second quarter, yes, that would be right. Christopher W. Butler - Sidoti & Company, LLC: And shifting gears to Winchester a little bit. Could you give us an idea of what the savings were here in the third quarter from the restructuring? And could you talk to the demand environment this year with the election and how you think this plays out next year in a post-election year?

The savings in Q3 were not significant that would -- Q3 was the quarter where we actually went from them being a negative to them being a positive. And we talked about fourth quarter savings actually becoming significant. So we talked about the doubling, more than doubling of Winchester's earnings driven by that in the year-over-year in the fourth quarter.

And you have the demand has certainly picked up. The question is, what's the major driver for one big piece of it is that we're in the peak season for hunting right now. So historically, our demand picks up very dramatically right now and it has -- we've had a pretty good hunting season. And of course, there's concerns as what happens from an election perspective as you recall. So we forecast that they'll a pretty reasonable demand through the balance of the year, and then actually, our sense is that, that will carry over into the first quarter. Christopher W. Butler - Sidoti & Company, LLC: And just to be clear, when you're saying just kind of turning the corner on the savings versus the cost, that's net the restructuring cost that you point out, correct?

No. That is the cost that are embedded in the Winchester results.

Our next question will come from Edward Yang of Oppenheimer. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Maybe start with some modeling questions. The $1.1 million charge to eliminate the K.A. Steel contribution, how does that work? Was it eliminated on the revenue line, and then well, maybe an explanation there.

That represent sales of caustic soda from Olin Chlor Alkali to K.A. Steel. The revenues are eliminated and to the extent that, that the product that was shipped from Chlor Alkali to K.A. Steel was not sold by K.A. Steel, the profit recognized by Chlor Alkali was reversed. That is showing up as a charge in our corporate and other segment line. That number will -- there will be a number there every quarter because we will be selling caustic to K.A. Steel from our Chlor Alkali business and it will get trued up every next year. Our expectation is that the volumes sold through there will not change dramatically in the short run, so that number will not be significant moving forward. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Okay. Well, why don't you just eliminate it as an intercompany elimination versus closing up the numbers and then taking a charge?

We're going to do that, and we're going to just take it as an intercompany elimination in the corporate and other line. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Okay, got it, got it. And then the interest expense on the $200 million notes, you pay that I believe, semiannually, but from a book purpose, are you accruing the interest quarterly?

The interest was accrued in the third quarter from August 22 forward. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Okay. And then -- but again, accruing going forward, it's going to be quarterly, although you pay it out semiannually?

That's correct.

Yes. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Okay, got it. And the 4 scheduled outages that you're going to have in the Chlor Alkali business s, how much is that subtracting out from your utilization?

We -- in one of the earlier questions we were talking about in industry operating rates, in mid- to high 70s, these outages will reduce our available capacity by about 3%. So we're talking about, for our system, a mid-70s number for the fourth quarter. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Got it. And staying with Chlor Alkali, John, maybe thinking longer term, operating rates really over the last 2 to 3 years have been in the mid-70s to the low 80s, et cetera. And historically, those levels are not indicative of a very healthy demand and more associated with kind of a sluggish demand levels. If we see this types of operating rates going forward, what do you think, I mean, how close are we in terms of like you're seeing some additional industry capacity rationalization? And is there any movement on that front in terms of taking down capacity in this industry?

First and foremost, Edward, we're taking -- we took capacity out of his quarter, as you know. So there's 160,000 tons that has come out in September and October of right now. So it's a -- that's a first step. There is still a little dab of mercury cell capacity sitting out there unknown to us exactly what those who own it will do. But I don't think as we think that, that might be kind of capacity would come out. And there's some other stranded capacities that I'm sure the higher cost facilities that would be taking a look at in an environment of over-capacity. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Well, do you think that if we could just kind of stay within a range here in the 70s and the 80s, that are we going to see pricing continue to flatten out or are there improvements. I know, in the short term, you're seeing some improvement on caustic soda pricing, but I would assume that you're not going to have a lot of pricing power -- or the industry's not going to have a lot of pricing power until you see operating rates move up higher.than current levels

I think our thinking is that the caustic -- this slowdown that we're experiencing on the chlorine side is going to strengthen caustic, as you know, which will allow the remainder of announced price increases to come into fruition in the first quarter of next year. If things remain that way, it will keep caustic tight. If the economy picks up, with building and the repair and replacement market picks up, as well for the building, ultimately and exports pickup, you'd see higher operating rates on chlorine, which ultimately will manifest itself in increase prices on the the chlorine side.

Our next question will come from Don Carson of Susquehanna Financial.

John, I just wanted to clarify a few things on Chlor Alkali. So you're indicating that, that 81% September effective industry rate was already down 5 points in October?

Yes, sir. That was the announcement that came out just very recently. 81% was the September number, which was down 5% from August. October won't be available for another...

Okay . I heard you say -- I thought that I heard you say that October was down another 5 points.

Yes. [indiscernible]

Okay. And then secondly, just remind me, what was your ECU realization this quarter versus last?

It was approximately 560, third quarter was approximately 570.

All right, okay. And John, what's your TiO2 customer telling you about their level of demand in Q1? Are you still expecting some weak TiO2 end markets going into next year as well?

Well, I don't know that we've really gotten an indication directly from any of our TiO2 customers about anything past the current quarter. I believe there are long-term trends into 2013 indicate that they expect that market to pick back up. But I'm not seeing any indication whether that's a first quarter, second quarter or when in '13 that expectation is.

Okay. And then shifting over to the caustic side. With the slowing industrial economy, what are you seeing from a demand standpoint from your caustic customer domestically?

We've not seen a significant change. I mean, if you look at our last quarter segment analysis, we did see relatively flat pulp and open paper numbers. Demand on pulp and paper, we did see a little bit of decrease on the superabsorbents' market segment. But that was driven in some case by customer normally -- normal scheduled outages. We've not seen much change in caustic. We have a minimal caustic inventory in our system. We built some caustic inventory to deal with outages we have scheduled in the fourth quarter. And we're still operating on 100% order controlled basis with our caustic customer base.

Okay. And then final question. Do you think previous people have been trying to get what sort of your sweet spot in terms of operating rates. But what would think of as a threshold where industry operating rate where caustic would lose pricing power? Is that getting up over 90% operating rates again?

I think if you look historically, that's been the range at which chlorine demand will cause caustic supply to move to the long -- to a long position. So that would be a pretty good number to use, I think, based on history.

And our next question will come from Herb Hardt of Monness, Crespi, and Hardt. Herbert Hardt - Monness, Crespi, Hardt & Co., Inc., Research Division: Now that you've got this capacity pretty much online, what is your maintenance CapEx expected to be next year?

Maintenance capital is probably in the $70 million to $90 million range across the spectrum of Chlor Alkali and Winchester.

And K.A. Steel.

And K.A. Steel, yes. Herbert Hardt - Monness, Crespi, Hardt & Co., Inc., Research Division: Second question is the $60 million tax benefit from the K.A. Steel. Is that just going to show up as a lower tax rate or is it a one-time item? How will that be reported?

It's going to show up as lower cash taxes, it will not run through the effective tax rate and it will be realized over a 10 to 15-year period. We talked about it, Herb, it's actually that gross value of the benefit is about $120 million, the $60 million is the net present value of it. Herbert Hardt - Monness, Crespi, Hardt & Co., Inc., Research Division: Our next question will come from Alex Yefremov from Bank of America Merrill Lynch.

John, could you talk about latest trends in freight rates and also electricity cost?

Freight rates have been relatively flat. Our third quarter freight rates, sequentially, were flat with what we saw in the second quarter of this year. And when you look at year-to-year on freight, the freight rates actually down marginally in the third quarter of 2012. Electricity rates, as we move into the fourth quarter, which is the nonpeak period for electricity, we, for sure, won't see any peak pricing. The industry operating rates are such that we should see relatively flat, no change kind of electricity pricing.

Great. And in terms of your volumes this quarter, were are your volumes impacted at all by your, I guess, outages, plant shutdowns and startups? Or is this purely a function of a customer demand?

Purely a function of demand. The outages that we had associated with the conversions and the normal maintenance outages we're well within the window that we could have -- would have made -- would have met demand regardless.

Okay. And finally, if I may. On -- could you just talk about K.A. Steel? K.A. Steel transition, how is it going so far, customer feedback, et cetera?

We have -- it's been very positive so far. We have seen nothing that would deter us from what we have said before that it's a very positive investment opportunity for Olin. We've seen nothing that would change our commitment to the synergy levels in year 1 and year 3, that were mentioned in the remarks. We're very comfortable with our ability to retain customers and suppliers. So, so far, no surprises.

Our next question will come from Dmitry Silversteyn of Longbow.

A couple of questions, the shipping rates have been answered. But can you talk about what your capacity is going to be like once you're done with the mercury transformation. You've shut down 1 plant, you're in the process of shutting down or converting the production in the other . I heard your capacity at just under 2,000 short tons. Is that sort of the right number to look at?

I think it's higher. It ends up 2,050 when the capacity comes out. We can't give you the exact number on that, but our capacity is actually coming down 160,000 tons.

Which is about 7%.

Okay, so it will be down to about 2.05 then from about 2.2.

[indiscernible] can validate that for you.

Okay, that's fine. That's great. Even with that 7% of capacity coming out, you're still looking at a fairly low utilization rate in the fourth quarter, so that's based off of new capacity? That needs -- coming each was way that you were talking about?

Yes.

Okay, just wanted to confirm. And Winchester, it sounds like things are getting significantly better there, especially with the benefits of the centerfire relocations starting to flow through. You talked about doing in the fourth quarter, twice or better than twice the earnings they did in the quarter last year which was only -- which is only only $0.5 million, if I remember correctly. So are you still looking at sort of low single-digit type of profitability in terms of millions of dollars for that business in the fourth quarter?

Less than $5 million, yes.

Yes, yes.

I think the key point we're trying to make is we've crossed over the line to where the plant is up an operating and we're starting to see the savings and that will continue to increase as we move through next year.

Got it. Okay, that's helpful. And then finally, on the chlorine and the sodium hydroxide pricing, you gave us ECU netback, which includes our transportation cost. But if you just look at the caustic price, did it continue to -- can you tell us what your average was for the quarter?

We don't separate it out, but we will tell you, we're forecasting caustic pricing to increase as a part of the ECU movement in the fourth quarter.

By about $40, I think, you mentioned?

The $40 is an estimate of what the market will realize. And there will be some timing lag and discount to that as we work that $40 market price realization through our system.

And our next question will come from Gregg Goodnight of UBS.

Dimitry did a great job in asking all my questions So I appreciate that. only question I have remaining was, with Augusta down, are you going to recapture some of that volume's been moving that demand to other plants? And it seems to me that if you do that, you would actually get some improvement in operating rates overall. I was surprised to hear a mid-70s number for your expected operating rates in 4Q.

Well, the fourth quarter number's influenced by outages, customer demand and just the typical seasonal change that we see. Obviously, as we've taken capacity out of our system, we would expect to see, as we move into the periods, the quarters where we have the peak demands, to have higher utilization rates. We will not, just because we've shut down operations at Augusta, we will still continue to serve customers. We're converting that Augusta operation to a terminal. We will still produce bleach there. And we will, to the extent necessary, bring product in from other manufacturing locations to serve other product requirements in the geography.

Okay. Concerning the 4 shutdowns you mentioned in total, what percentage of your capacity will be unavailable as a result of the shutdowns in the fourth quarter?

Approximately 3%.

Our next question will come from Richard O'Reilly of Revere Associates --

Joe, in your opening comments, you made a statement about generating EBITDA of $400 million or more than $400 million sometime in the future. And it looks like you're going to do about $350 million or so this year. What's your assumptions behind that jump there? K.A. Steel as part of it, but what else are you looking at?

K.A. Steel, the achievement of the lower cost structure at our Winchester operations, which will significantly improve as we go next year, and the benefits of the bleach investments that we have made this year, all 3 of that those plants will be operating, Richard, next year. So we're really confident that this -- -- we're moving in that direction.

Okay, and K.A. Steel is what? Still $30 million a year contribution. ?

Low 30s with EBITDA, and as you close, we've announced with synergies are $7 million to $10 million next year.

Okay, fine. Okay. Plus $7 million to $10 million, okay.

And ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Joe Rupp for his closing comments.

We'd like to thank you for joining us this morning, and we'll look forward to speaking with you in January when we announce the results of 2011. Thank you.

Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.