Good morning everyone, welcome to the Sealed Air Conference Call discussing the company's Second Quarter 2008 Results. Today's 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 Officer. After managements' prepared comments, they will be taking questions. [Operator Instructions]. We ask that you please limit yourself to one question and a brief follow-up question, per caller. So that others will have a chance to ask their question. And now, at this time, I'd like to turn the call over to Amanda Butler, Director of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Before we begin our call today, I'd 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 maybe different due to a number of factors and many of these factors are listed in our most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q. We've also posted supplemental financial information and reconciliation 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. Now, I'll turn it over to Will Hickey, our CEO. Will?

Thank you, Amanda, and good morning to everyone. I'm Will Hickey, President and CEO of Sealed Air Corporation. With me on the call today in addition to Amanda, we have Dave Kelsey, our Chief Financial Officer. As an introduction I will provide a few highlights of our business for the second quarter of 2008 and discuss our outlook and action plans. Dave will then review select financial results. After Dave's remarks we will take your questions. Our second quarter results showed a solid increase in sales both in volume and in price mix despite the challenges of ongoing weak economic conditions. We successfully doubled our product price mix contribution for net sales, sequentially in the second quarter through pricing actions that began in December of 2007. These were reinforced with price increases in April, May and as recently as July 1st. We've also achieved a slight increase in unit volume growth while applying these price increases. We've added new business to our Food Packaging segment and we continue to see growth in our newly launched products and from our previous acquisitions. Geographically, we continue to see solid sales in the developing regions of the world with net sales up 17% in Russia, and 27% in China, in the quarter. Both of these increases exclude the effect of foreign currency translation. I believe these results reflect our experience and ability to balance the short-term response to unprecedented input cost increases with our long-term strategic focus on growth and innovations. Despite these efforts yielding positive results, unprecedented raw material cost increases which we outlined in our press release, negatively affected our operating margin results. As a result, our second quarter diluted earnings per share was $0.38. This excludes the $0.01 charge related to the implementation of our global manufacturing strategy and the…

Thank you, Will. As Will mentioned, our sales were $1.279 million for the quarter. For those 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 foreign currency translation on sales by geographic region and the percentage of sales by geographic region. Gross profit, increased $7 million to $330 million in the second quarter compared, to the second quarter of 2007. As a percent of revenue gross profit declined 2.4% to 25.8% compared to 2007 but was essentially unchanged sequentially. In addition to resin cost increases and foreign currency translation another factor effecting our cost of good sold compared to 2007 was the expense related to the upgrade of our information and technology platform. The July 1st, go live on SAP of our U.S. Food and Shrink Film [ph] businesses bought over 90% of Sealed Air onto a common SAP platform. Cost related to our global manufacturing strategy does not have a meaningful impact on our second quarter gross profit comparison to 2007. Marketing, administrative and development expenses declined as a percent of revenue in the quarter to 15.9% compared, to 16.5% in the second quarter of 2007. Excluding foreign currency translation of $11 million, marketing, administrative and development expenses were essentially flat compared to the second quarter of 2007. Cost containment efforts were implemented early in the first quarter as we assessed that economic conditions were likely to compare unfavorably to our early outlook for 2008. Operating profit declined $8 million from the second quarter of 2007 resulting in total company operating profit as a percent of sales of 9.9%. Food Packaging and Protective Packaging maintained double-digit operating margins experiencing only modest erosion attributable to resin…

Thank you, Dave. Operator, I would now like to open the call up and take questions from the participants. Question And Answer

Thank you very much. [Operator Instructions]. And we'll go first to Ghansham Panjabi with Wachovia.

Hi, guys, good morning.

Good morning Ghansham.

Good morning.

Could you... for your Protective Packaging business, was there any difference in volumes at the beginning of the quarter versus the end of the quarter? It just seems like June was a slower month in general, just trying to get confirmation on that?

No we did not see, I think Ghansham we actually had a price increase on July 1st or June was actually a little bit better than May but I wouldn't attribute that to anything other than some customers borne in the end of the month.

Okay. And just as it related question Bill, could you just comment on what your, just a general view as on the macro environment, I mean you guys are a global company and you operate in many different geographies. Just trying to get a sense as to what your customers are thinking for the back half of the year? Thanks.

Just an overall global commentary. The industrial economy is soft, lot of volumes on Protective were down but clearly a lot better than some of the indices that both Dave and I referred to whether its box shipments, corrugated, overnight deliveries, express mail, our volumes held up a lot better. We are seeing some of that slow down spill over into Europe. Have not seen it in other parts of the world on a kind of scale. Australia, New Zealand is going to low because of drought, you still have the export problem with beef in Brazil. But fundamentally I'd say, slow low single-digit type of activity that sort of around my observation... but I think I am not sure whether people are but I think it's going to last for a while.

Okay, thanks, Bill.

We will take our question from George Staphos with Banc of America Securities.

Thanks. Hi, everyone, good morning.

Good morning, George.

I really appreciate the new format as well.

One question, George.

Yes, I know. One and a follow-on. In terms of the restructuring program, Bill, can you tell us what the genesis of this was and how long you've been working on it and how integrated is with global manufacturing? And the second question is, when do you anticipate most of the cash associated with the program. In other words, the severance payments and the like will be dispensed is it an '08 or '09 phenomena? Thanks.

Yes, I guess George we started looking at... really a set map [ph] on the global manufacturing, as manufacturing footprint which is putting the facilities where the customers are, where the customers will be.

Understand.

This is more a look at our core business as business has shifted to other parts of the world. We really need to right size the structure in a more developed and more mature parts of the world to be more nimble, be more responsive and manage. I would say that's one of the key reasons and as far as the cash flow due to the fact that most of that 60 to 70 million are severance payments and we would expect that the cash flow will run through anywhere from the... as early as some in the third quarter of '08, probably in through the third quarter into the fourth quarter of '09 depending on the various severance packages. Particularly in countries outside the U.S. where you tend to have rather long severance arrangements. But it should essentially all be watched in terms of... through the P&L in '08 and from a cash flow standpoint, through '09.

Okay. Thanks, Bill.

We'll take our next question from Claudia Hueston with JPMorgan.

Thanks, good morning.

Good morning.

You mentioned in the early some new business in the Food Packaging business, I just wondered if you could elaborate on that and then maybe more broadly just look across the Food Packaging business and comment just on the geographic trends you're seeing on a global basis? Thank you.

Sure, yes, we don't talk about particular customers but I think to say that we've got some new business in the U.S. and there is also been a general pick-up in the U.S. business as processors have brought more meat to market because of the high price of feed. They are essentially not recovering additional feedcost. So we expect probably at the end of the second quarter through the third quarter and perhaps into the fourth, a pick-up in meat processing, which should help this year and I think you can appreciate herd size will shrink as result and probably result in some smaller increase in processing in '09. As far as around the world, Australia in terms of the business, particularly the Food Packaging side of the business, went from essentially slightly negative in the first quarter to positive in the second quarter as we indicated in the first quarter there are some issues there in New Zealand there has been a drought, so animal weight has been down and that's been a factor. In Brazil, actually the southern part of Latin America has been quite good and Mexico was up single-digits. The market in Brazil has continued to be affected on the Food Packaging side by the export issues in Europe. And I think you heard me comment in my opening remarks that our business in Russia was up quite dramatically in the quarter and also in China and they are driving a lot of that business is Food Packaging. We are seeing some recovery in the hog herd [ph] and hog production in China after thereabout of disease in the fourth quarter and first quarter so some recovery there and very positive growth in Eastern Europe and Russia.

Thank you very much.

Yes.

We will take our next question from a Rosemarie Morbelli from Ingalls & Snyder.

Hi, good morning all.

Good morning.

Bill, the Food Solution is the business that is expected to be the growth engine which is why you are reporting it separately and yet we are not seeing, I mean the volume side is growing very slowly and you are not showing sequential progress, could you gives us a feel as to what is happening there in the different areas?

Well I think, I think where Rosemarie, I am not sure I made any comments earlier but what we have been doing is, we have been working off a change in case ready format at one of the large retailers in the U.S. and that had been a significant piece of the Food Solutions business. And if you really take that out the numbers are several percent higher the... I'm looking for my notes here on the Food Solutions, I mean the areas that we want to grow vertical pouches up 23% and case ready outside of North America is up 10% Rosemarie. So what you really have is the loss of one component of case ready business in North America as one retailer is changed to a different format and we are trying to overcome that shortfall so.

Now you're going to anniversary event?

When will we anniversary that? Q1 and it's the numbers we're talking about is in excess of $50 million per year. And it's interesting that most other customers around the world continue to move towards the pre-packaged case ready format. So, we are still trying to work with all of our customers, even though it's kind of switched out to introduce some of the new formats that result in lower carbon footprints, lower material usage and look a lot more like the traditional store-packed. So, we're hopeful, we'll get some of that business back, Rosemarie.

Okay and if I may ask my second question. You said that you expected the economy downturn to last for a while. Do you think that the new actions that you have taken are enough if '09, is a duplicate of '08 or will you have to do more?

I think Rosemarie if you look at the benefits from global manufacturing strategy, you'll look at what we have got in this cost reduction program and all I know once you asked a question yet if you look at our pricing actions and the expected recovery of that by the end of the year. Absent a further downturn as opposed to a continuation I think we should be well positioned, very well positioned.

Okay. Thank you.

We will take our next question from Mark Wilde with Deutsche Bank.

Good morning, Bill.

Good morning.

I wondered can you just help us understand sort of the impact of what seems to be going on in the livestock business and you mentioned kind of more volume coming through this year probably herd size being down next year and volume being down that and with presumably higher meat prices how does that play out for Sealed Air?

I guess Mark there are ups and downs and depending on where in the supply chain you are in the global meat industry there is different impacts of where it hits you but the fundamental issue is that feed cost have gone up okay. It's less attractive to hold the animals and less food prices go up. But food prices have not increased enough to cover feed cost, so that in sense the channel to bring those animals to market. As those animals, go to market at some point you get a supply demand at the consumer level and you reach a training platform or what's there's a term used for that. Our business is more driven by kind of the volume of animals that go to market as opposed to the price. Obviously, our customers are very sensitive to the price but our business is kind of more impact on our business is the volume that go to market and as more go to market this year, in reaction to higher feed cost, it means that there will be fewer animals in the feed lots on the plains in '09 to go to market at that time. So what you may see is a higher animals to market, this year and then slowdown next year and the next year would probably try to rebuild the herd and as a result they'll keep more animals off the market to rebuild the herd going '10. It's a complicated equation, I don't pretend to understand all of it but that's at a very high level.

Okay do you have any sense, Bill of sort of what the magnitude. I mean, if we have kind of accelerated slaughter this year and then fewer going next year. What the magnitude of that swing might be and then financially what the impact might be on your business from that kind of volume swing?

The magnitudes we're talking about are not dramatic. Its 1.82% up or down, I think the second quarter ended up 1.8% up versus last year, but you are talking in terms of millions of animal. So at the margin, probably talking plus or minuses, single digit range but it's any how at the margin it helps or detracts some our volumes depending on whether that number is up or down. But its not, as I say, it's at the margin Mark.

Okay, thanks Bill.

[Operator Instructions]. We'll next go to Richard Skidmore with Goldman Sachs.

Thank you, good morning. Can you just help us understand a little bit better with regards to the price initiatives that you have about there in the market place, which segments they are in and then in your guidance, what sort of assumed for resin prices for the rest of the year?

Okay, I'll try as best as I can. One. Let me start off with the first point is in terms of our outlook for the year very different than it was this time last year, I think this time last year conventional wisdom was resin would be essentially flat perhaps down in the second half of '08. And I think most of Wall Street just kind of subscribed to that view it's actually turned to go the other way as evidenced by the two announcement by Dow Chemical is one of our suppliers. But we're essentially looking at resin input increases approaching the $200 million increment over 2007 through the year that includes price increases which are on the table from the suppliers whether they get implemented or not at this point but they are on the table for the third quarter and beyond we have factored that into our new guidance. We also are responding where the series of price increases across all our business. If you look at our numbers in the first half we had about $75 million of higher input cost between the first and second quarter, we recovered about half of that about 37 million of it in the first quarter and second quarter is a biggest piece of it in the second quarter. As price increase continue be both be implemented and follow on from earlier in the year. That number will pick up to the 200... around the 200 million run-rate by the end of the year. I think we said in our announcement that by the fourth quarter we will have caught up. Part of the thing you should consider as probably not as significant number but we are in LIFO accounting so we probably get a little more of the input cost through our P&L and perhaps other people who maybe on FIFO accounting. And so what we feel is that by the end of the year between our announced and implemented price increases as well as the current view of input cost increases. We should end the year at a run-rate which covers all of the cost and in reality the reason why our guidance is changed is that as a result of these increases in the process of getting them through, we'll only have recovered somewhere in the 80 to 85% of the total input cost this year and that shortfall accounts for basically the different or substantially the majority of the difference in our change in outlook. Hopefully that... perhaps is a longer explanation than you need it but I just wanted to give you a little flavor.

That's helpful and with regards to the pricing I guess the pricing specifically, and given the levels of inflation, is there the ability to actually push prices perhaps a little higher than what your inflation might be suggesting?

We always try to.

We always try to.

Thank you.

And we will take a follow-up question from George Staphos with Banc of America.

Thanks Bill. Two questions, one following on Rich's question and the other one on Mark's previous question. As far as resin and price go, realizing that you'll catch up by the end of the year, would that mean that in the fourth quarter given what you know right now that you are at zero price cost versus fourth quarter '07 or would it be negative and it will be as you exit the quarter that you will have caught up? Secondly, as far as, protein consumption goes, obviously if the production is down, it's going to be replaced probably by some other proteins and do you expect that, that would help to offset most of the volume loss in '09, if you see it. And some of these animals tend to need a somewhat more abuse resistant package. Could you actually see your margins, flat up next year even with volumes down in beef? Thanks.

Well, that's a long follow-up question, George. I'll go back to the first one, I think if I understood your question right, we should be neutral in the fourth quarter. We should have a run-rate on price that's probably 50 million on a run-rate.

Okay.

Second question, yes, protein does shift around and there's absolutely no doubt that the trade offs between beef, pork, poultry happens depending on price and availability. But as you heard us comment numerous occasions before is that because of the shorter shelf life of poultry that tends to be a less robust packing and so its not as technically advanced and hence not as profitable. But you're right, we will... well we loose on the roundabouts, we'll pick up on the straight away.

Okay, thanks Bill.

[Operator Instructions]. We'll go next to Rosemarie Morbelli with Ingalls & Snyder.

Hi, Bill.

Hello, Rosemarie.

I guess I am still a little confused on that food material cost versus price. So if you don't mind giving me the exact proof kind of translation here. You said that your cost was going to be 200 million for the year. In the first half, you only got 37 million of the 75 million higher cost. So you have to somehow regroup another 125 million of higher costs in the... that you are expecting for the second half, I understood properly? And then if I listen... if I go to another one of your comment your guidance has changed because you will recover only 80 to 85% of your higher cost. So if I take 80% of 200 million, let's say, then you will still... you'll recover only 160 million and still be out 40 million by the end of the year. Can you some how make this simpler?

Yes, I think that's what I said Rosemarie, I think that's what I said is that we won't get it all this year but by the end of the year will be at run-rate to get it. I mean it's...

I am trying to translate run-rate to get it.

Okay in the second quarter our run-rate on price was around $26 million.

Okay.

Run-rate in the first quarter was $11 [ph] million when you take price out of the mixed component, okay. The third quarter is going to be a higher number than 25 okay. And the fourth quarter even a higher number than that because you have the first quarter price increases adding to the second quarter price increases adding to the third quarter price increases adding to the fourth quarter. Now the resin curve upward has a slope in the third quarter with what's announced. So that's how the first half is less than half of the full year number but the way our prices are the second half is more than the first half in terms of the price effect.

So you will still have a GAAP by the end of the fourth quarter.

No, it was second.

Well when I heard you say that you will be caught up by Q4 it meant to me that you have recouped all of the raw material cost increases that you want.

We will be caught up on prices in effect at that time.

Okay. All right. Now I get it, I apologize for my forgetness.

That's okay. Thank you.

And if you could elaborate a little bit on the very little growth in Europe and Latin America once you exclude FX, is it mostly the deterioration of the economy in Western Europe and the problems in Brazil on the food side or is there another side to the picture?

You are talking of... in part of the world?

Europe and Latin America if you look at your supplemental information, if you exclude FX, here it's very little growth?

Well Latin America is primarily, it's Brazil, its primarily the beef business in Brazil the numbers in Brazil are down mid single-digits and that's effectively offset positive growth of in Mexico about 8% and positive growth in Argentina around 9 to 11% and Colombia which is in the high teens are essentially are offset by negative results in Brazil primarily in the beef sector which has been a very big business and of course the exports of beef to Europe out of Brazil have been dramatically curtailed because of the import issues with the Europeans.

Do you see that ending at one particular time, I mean do you have a timeframe?

Rosemarie you're on your third question, I'm trying to be disciplined here but the answer is we continue to watch it we are not sure. We've set on the first quarter of that... we don't know when we'll it end as between the Europeans and the Brazilians and their active dialogue. Thank you.

Thanks.

We'll take our next question from Robert Charles [ph] with Goldman Sachs.

Hi, good morning guys, I think Bill in your remarks you mentioned that, you had walked away from some, some what unprofitable business in Europe on the Food Solutions side on, I was just wondering. What type of margin were you making on that?

I really don't want to suggest what margins we take versus what some one else in the industry may take. But we have a thresh hold that we feel is important for the service and value we deliver and if customers aren't prepared to step up to that, specially with the round of price increases that we had, we have essentially walked away.

Okay so, was any of that, within your balance [ph] businesses have negatively impacted your margins in that second fiscal quarter? I think you're like 7.1% or something like that?

Yes, let me say, when I say we walked away the margins are positive margins, they are just not acceptably... it is not as acceptable levels, and I really I wouldn't say that really had it factored probably improved the margin.

Okay, that's helpful. And then I just have a follow-up to Rich's question on resins. If you've seen oil kind of come off a bit in the last couple of weeks. Are you guys in your dealings with your resin suppliers. Are you at all... any more optimistic that perhaps some of these resin increases won't go through if oil were to stay at a $1.25 or do you think this supply demand dynamics are tight enough where they are probably going to through anyway?

I would rather not speculate on whether they go through or not. We have essentially factored them into our guidance.

Okay. So they go through and then they just stay in place for the rest of the year that's the expectation?

That's what we have guided to.

Okay, okay. All right thanks very much.

[Operator Instructions].

Just before operator, we have usually had questions come over the internet from people who would listen to the webcast and unfortunately there are technical difficulties and I show no questions up on our website... on our Q&A website. So I apologize for anyone who is trying to get a question asked on the website, for some reason it is not working but please feel free to call Amanda Butler after the call and she will try to address those questions. We will take one more question.

We will take our final question from George Staphos with Banc of America.

Hi, Bill. When we think about the restructuring and global manufacturing in concert, what kind of improvement in capital intensity within the business do you think this will have for us, obviously you can't give us dollar by dollar but can you give us a way of thinking about it? And the follow-on question, global [ph] manufacturing was designed to put more of a footprint in markets where your customers were going internationally and was recognized the fact your metro markets were maturing. And you have the restructuring you announced today, if furthering that with the restructuring charge and the head count reductions, I guess I'm asking why weren't they both announced at the same time since they seem to be somewhat related. Thanks, good luck in the quarter.

Yes, now George, I wouldn't, yes, Dave you want to address that one as--

Sure, George maybe I can ask you a question, first. What exactly are you trying to get out with the capital intensity question. Is that capital spending levels going forward?

Well, yes but I guess some more your level of invested capital. So over time, how can... how would you be able to grow revenues relative to your existing investment base. I've asked you and the question behind that is your investment capital has gone up quite bit over the last couple of years with acquisitions unlike, we would like to see that flat over [ph] decline for obvious reasons.

Let me break that into two pieces then the working capital component and the capital spending component. We certainly do expect as we move into 2009 and have completed the three major greenfield projects that were the corner stone of our global manufacturing strategy, that our base line capital spending should return to the levels that we were spending at prior to introducing GMS in 2006. In terms of working capital there are lot of moving parts there. The start-up of these new facilities entails building more inventory in those local markets, but we are also expecting increased revenues related to those new facilities. So it's in conjunction with business growth. At the same time, we're going to eliminate a lot of in-transit inventory. Net, we should see [indiscernible] inventory related to these new [indiscernible]. Yes that's

Can you repeat that? You broke up there. I apologize.

Yes, on the inventory side, we'll be building inventory related to these three new facilities,

All right.

But we'll be avoiding inventory in transit from shipments in to these countries. So net, net we would hope we have a slight gain in terms of lower inventory balances related to the start-up of these facilities. On the receivable side, as we grow in these markets, a lot then depends on foreign exchange. On a constant dollar basis we would expect receivables to grow more or less in line with revenue growth, but acknowledge that in North America, we tend to collect in 30 days or less from many of our customers where as in some emerging markets, 60 days is more the norm, in those economies and to be competitive, we need to offer 60 day terms. So there will be some increase in receivables related to that mixture, but the... we don't see any dramatic change in working capital on a going forward basis, out of line with recurring top line growth we see. Hopes that answers, that capital intensity question George?

Right.

Moving on to the, two programs the global manufacturing strategy was announced in January 2006 and it was formulated in 2005 as we took a long term view of where our business growth was occurring and was likely to occur, Latin America and Central and Eastern Europe and in China. And that program was primarily focused on the three greenfield facilities to serve those regions. The restructuring program... in a way it could be linked in a trailing fashion to GMS, because with those new plants coming on line, there is less demand for exported product from Western Europe into Eastern Europe and Western Europe also shipped to Latin America. Likewise the U.S. plants that shipped to Latin America and Asia are going to see that demand replaced by local production. When you combine that implication with the softer economies that we now see in Western Europe and in North America, the compounding effect of those two actions is causing us to revisit our staff levels and in the background there is also been significant ongoing investment in new technologies. SAP certainly on the software side, but also a new technologies on the factory floor. So you add those three of those together the current cost reduction program that we are just announcing today, I think is sort of an unfortunate but necessary next step in insuring that we have an efficient operating base going forward.

Thanks very much, Dave. That was great.

Okay.

Thank you, George

That's all the time that we have for questions today. Gentleman, I would like to turn the conference back to you for any additional or closing remark.

[Audio Gap] Call today despite being a challenging quarter, our business continued to grow while aggressively taking steps to manage our business through a combination of increased pricing action, operating efficiencies and improvements in our cost structure. These actions are not only helping us manage through a short term period of unprecedented rise in raw material cost and challenging economic conditions but we are also advancing our long term goals initiatives that require more flexible and better operational platform to better serve our customers Looking ahead, we remain committed to our goals and innovation strategies and we will continue in invest in our strong global equipment and in a diverse and differentiated product portfolio. Our efforts will position Sealed Air favorably as economic conditions improve and will yield value for our shareholders, customers and partners in 2009 and 2010. As for these and many more reasons that I continue to be glad and proud to be a Sealed Air shareholder and remain excited about our future prospects. Thank you all for taking time to looking it through it today.

And that does conclude today's teleconference. We would like to thank everyone for their participation and wish you have a great day.