Good morning everyone and welcome to the Sealed Air Conference Call discussing the company’s Third Quarter 2008 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 Officer. After management’s prepared comments, they will be taking questions. [Operator Instructions]. And now at this time, I would like to turn the call over to Amanda Butler, Director of Investor Relations. Please go ahead, Amanda.

Thank you, Teresa and 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 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 have also posted supplemental financial information, and reconciliation of non US-GAAP measures, that we expect to discuss, on our website at Sealedair.com in the Investor Information section under Quarterly Results. This time, I will now turn it over to Bill Hickey, our CEO. Bill?

Thank you, Amanda and good morning to everyone. I am 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. As an introduction, I will provide a few highlights of our business for the third quarter, and we will discuss our revised guidance. Dave will then review selected financial results. After Dave’s remarks, we will take your questions. As you saw by our performance results released earlier today, we did experience a challenging third quarter. We faced expanding economic slowdowns globally that came largely at the end of the third quarter, and negatively impacted our unit volumes. Additionally, we experienced peak resin costs during the quarter. Combined, these factors place pressure on our results, and offset the increasing benefits of our ongoing price increases, our tight control of expenses and end of the quarter resin price reductions. These factors were the chief contributors to the decline in operating profit and in earnings per share for the quarter. Prior to the call, I did reach out to our business folks around the world, and have an update on what is happening around our business globally, and would be happy to provide that in comments at the end of our session. However during today’s call, I would like to highlight key areas of our business performance for the quarter, both by market and by geography, and to outline key trends and factors that influenced our results, but did not impact our position in the marketplace. I would first like to start with what we did accomplish this quarter. We realized continuing benefits from our ongoing price increases with third quarter price increases in July and September, across many of our businesses and geographies. As I…

Thank you, Bill. As Bill mentioned our sales were $1.219 billion 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 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. As you saw in our financial statements, gross profit decreased $26 million in the third quarter due primarily to resin costs which reached record highs in July before easing slightly in August and September. Overall, resin added $53 million to our cost of goods sold. The combination of favorable price and unfavorable product mix netted $27 million. The $26 million gap between resin costs and price mix recovery explains the year-over-year gross margin erosion. As an aside, with resin prices continuing to decline, we expect the gap between our resin cost and our price mix recovery to close appreciably in the fourth quarter. Marketing, administrative and development expenses were essentially flat in the quarter, when foreign exchange is excluded. Our cost containment efforts were implemented early in first quarter, as we assessed that economic conditions were likely to compare unfavorably to our initial outlook for 2008. We have been benefiting from those efforts throughout the year. Operating profit was $39 million, or 3.2% of revenue. Adding back restructuring and other charges of $61 million, increases operating profit to 8.2% of revenue. The decline of $34 million from the third quarter of 2007 is explained primarily by higher resin costs being only partly offset by price mix. Interest expense decreased $4 million in 2008 as compared to 2007, primarily reflecting the April retirement of our 5.38% [ph] notes. In the third quarter we recorded an additional $4…

Thank you, Dave. Operator, can we now open up the call and take questions from the participants?

Thank you very much. [Operator instructions]. And we’ll go first to George Staphos, Banc of America Securities.

Hi everyone. Good morning.

Hey, George.

Hey, may be a couple of quick questions, first on earnings and --

You are only allowed one, George.

I know you said one and a follow up, I understand that. In terms of price catch up, at one point in and time you said you should be fully caught up on run rate basis by the fourth quarter, it sounds like now with your commentary that well directionally you are move in right way, you might not be fully caught up by the fourth quarter could you help us with a bit more color on that front? And then, in terms of the sequential change 3Q to 4Q we are effectively implying $0.40 or so I guess for the fourth quarter, what actually get better for you sequentially, is it purely spread, and I guess spread within the Food Packaging business? Thanks.

Sure George. Let me start to get to your first question. I think what we said is we were 75% -- or 70% or 75% recovered on resin by the end of the year and that a run rate in the fourth quarter that essentially got it all back. We’re probably down a little bit from that but I will tell you it’s a moving target even where we are today on resin that numbers probably more 65% for the year with a run rate that’s probably slightly less than a 100% by the fourth quarter kind of 90%. But, on the other hand, I think we’ve mentioned you earlier this year, that we are looking it somewhere around $190 million of higher resin cost in ‘08 than in ‘07. We’re backing after those numbers almost weekly George and it’s been kind of a moving target. So, that right now based on what we see carrying the numbers through where we are now to the end of the year and I will let experts more qualified and me project what is going to happen the resin for the of the year, but are 190s down by 165 million in 2008 over 2007. So, we’ve recovered a fair amount based on changes have occurred in the marketplace since the end of September. The number could be less but at this point we are sort of honing in on the 165 number which would give us about a 65% recovery this year and about a 90% run rate by the end of the year. Okay. And now I went on so long, what was the second part of your question?

Well, fourth quarter is it basically spread within the food business, thanks?

Yeah, well the food business, I think we had a couple of things, one is I think that the third quarter -- I try to give a little bit of color there is one we did have a -- I believe a shift of about a weak source of business between second and third quarter. Our SAP go live had all the traditional startup issues that companies have and that probably adversely effected our service levels during the quarter. We also as you know, lost a -- or I shouldn’t say -- I should say loss the right word, but one of our major retail customer shifted part of their case ready business to a different format and that lapses in the fourth quarter, George. So, your comparables become better. And then, third is we are going to see more price in the fourth quarter and food business in particular you should see widening of margins.

Thanks Bill.

Okay.

We’ll go next to Ghansham Panjabi, Wachovia.

Yes, good morning.

Ghansham, I was thinking of you when I said experts on resin.

Bill, could you talk about the volume trajectory comment? Give us a little more color there. Where exactly did you see a tail off in the third quarter? Which businesses and also which geographies? Thanks.

Well the principal business where volume slipped during the quarter was on the Protective side, as you know, which primarily serves the industrial markets. We do have relatively good sized percentage of the Protective business growing in the retail sector, and that actually was off a bit for the first time in a long time. And August is traditionally a slow month in our business. It just happens the way things are. July tends to reasonably busy in the food business, with summer barbecues, and September begins to pick up, with some of customers beginning to buy in for the holiday season. September’s roughly a 21 day shipping month for us, and the way the calendar worked is actually two more days than last, year. So, we were expecting September to come in quite well, and particularly on the Protective side September slipped, and slipped probably more in Europe on the Protective side than it did in North America. The Food business, as I say, if I take the SAP numbers out, you are reasonably flat, and on the Food Solutions business, you have got the issue with a customer shift comparable to prior year.

Just as a follow-up question on the cost savings goal of $150 million plus in ‘09, is that a net number, and is that also a number to be realized in 2009 versus a run rate?

Okay. If I do my math and I will let Dave answer it here. Got to add the GMS, the recent cost savings, plus our current look at resin savings. So, Dave, do you want to fill in the numbers for Ghansham?

Yes, Ghansham, did you say $115 million?

Yeah.

Okay, that is 35 that I don’t have to come up with. The cost reduction program we are expecting to have $60 million in savings next year. The incremental benefit from the global manufacturing strategy is another $20 million, that will get you to $80 million, and the balance then would be from resin.

Okay. Great, thanks so much.

And the resin number, Ghansham, as you know, they think it is still a moving target.

We will go next to Ross Gilardi of Merrill Lynch.

Good morning, guys. Just had a couple of questions too. Could you just talk, generally about your confidence, your ability to sustain pricing power as your volumes are quite weak right now?

Well, let me say, Ross, we basically have announced all of the price increases we are going to announce, and the job we face is to maintain those, and we have traditionally done reasonably well at being sticky, as raw materials start to come down, and as much as they were slow on the way up, they are equally slow on the other side of the cycle, Ross, and even though demand is down, those customers that sort of need the products, the product protection that we provide, continue to buy it.

Are you seeing any customers push for concessions already, yet?

Actually it is interesting. We actually have customers saying can you find a way to bring our costs down, and the one thing that I keep trying to reinforce to our organization, and actually to you folks too, is that our price is not the same as a customer’s costs. That our price should result in a lower cost to the customer and that is essentially how we go to market, and the main tool we use to hold onto pricing.

Got you. And then, just quickly on your voluntary termination program. I am just curious what kind of people are taking the package, and specifically are you seeing any significant departures in your sales force?

No, actually the number of salespeople has been relatively low. It has tended to be people who are probably within a couple of years of retirement, were the most logical ones, and they seem to come out, and then the other part were just some people who thought they would like to try something new. And just to give you a little bit of flavor on the mix.

Got you, okay. Thank you.

Our next question is from Claudia Hueston, JP Morgan.

Thanks very much. Good morning.

Good morning.

Just had a follow-up question to the answer you gave on the cost reduction program. As we think about the savings associated with the headcount reduction specifically, should we expect that sort of $60 million, those savings to come in pretty immediately in the first quarter of next year?

Yes, Claudia, they should. Everyone who has been affected by the program has been informed, or just about everyone has been informed, and we will wrap it up by the end of the year, and the costs should begin to flow through in the first quarter. Yes.

Okay. That’s helpful. And then, obviously you have got the cost savings coming through, and I know you talked at your Investor Day, about 15% to 20% earnings growth. Obviously the markets have changed a lot in a couple of weeks, but are you still pretty comfortable with that sort of earnings growth next year?

Claudia, my crystal ball isn’t as good as I would like it to be. But we were looking at 15% off of a higher number. And, Dave and I chatted before the call, and we opted to go with the savings of 115, as you can do the math on the EPS effect. Unless there is a dramatic further downturn in the economy, I would say that number is reasonable, if there is an upturn in the economy we should probably do better.

Okay. Thank you, very much.

We will go next to Richard Skidmore, Goldman Sachs

I would like to follow-up on the pricing question, and just to clarify, you mentioned the resin would be 65% recovered for the year, and slightly less than 100% in the fourth quarter, and prior you had thought it would be 75, and sort of full. With resin coming down does that imply that your pricing efforts hadn’t materialized as you had anticipated, or that you have seen less pricing?

I think you’ve got a little bit -- you got two factors going into that. The first is that with the shortfall in volume there is less price to get back, okay. I mean that is just the way the math works is that you are selling fewer products. So, that your contribution on that incremental higher selling price goes away. And, the second is in mix is, as I mentioned during some comments earlier is that you are seeing somewhat of a shift to the discount side of the marketplace. So that for example, one customer who packages products that they usually don’t want to leak, are actually looking at a lower cost bag, that could result in some leaky product. Because they feel they have got to find a way to bring their own costs down. So, it is a combination of the effect of the volume, as well as effect of the mix.

Okay. And then just to follow-up on the pricing, you would expect on your announced prices to see the full benefit in the fourth quarter, or in the first part of 2009?

I am not sure I understand. I think we said that by the fourth quarter, our run rate would be somewhat less than 100% we had expected back in July. There are still price increments to roll through, so I would estimate and I haven’t done the numbers yet, is that the rest of the pickup would probably come in the first quarter.

Okay. Thank you.

We will go next to Robert Trout, Goldman Sachs

Hey. Good morning, guys. I am wondering if you could help us think about sort of worst case scenario for volumes on the Food Packaging side, because if I look at the 2% decline in this quarter, that looks to be as bad as it has ever been, at least in the last decade or so, and without the whole SAP issue if you take that out, volumes probably would have been flat year-over-year. I am wondering if there is a good corollary that we can look at what, historically the worst this business has been from a volume standpoint?

I am not sure I have all of that readily at hand, but if you saw, had done some work and see in the 3% number, I don’t have a good surrogate, because the business covers all forms of protein. It covers all parts of the world. So I am not sure there is one surrogate that works, but if you really look at the 2001 to 2006 period, your 3% is probably as weak as it has gotten. And that is for a quarter. I am looking at whole years. If you look at full years, if you look at full years, from 2001 on the lowest it has essentially gone is 0.7%, on an annual basis.

Okay. Okay, thank you. Then, just a quick follow-up on the resin outlook for next year. I know you mentioned it is a moving target, but if you take at 100 and you back off the $60 million for cost reduction, and the $20 million for incremental global manufacturing savings, the balance is about 35, and if I understand your cost picture correctly, if resin is about 40 to 45% of your total cost of goods sold, and you think will be about $35 million lower year-over-year, that is probably only, it seems like the underlying expectation for resin pricing next year is that it is only down about a couple of percent, is that right?

Well, as I said earlier, we are using at this point, rather than try to speculate on your part what resin is, is we are looking at our fourth quarter resin numbers as a reasonable basis to project 2009. I don’t feel qualified to tell you what I think it could go to, but we are basing our numbers on fourth quarter.

Okay, thank you.

[Operator Instructions]. And we will go to a follow-up from George Staphos, Banc of America Securities.

Thanks Quick question, Bill, back to liquidity, if we look to next year, is the fair analysis that basically your cash from operations, and your existing revolver, I think you said is $600, million, should allow you to deal with both the one maturity you have coming up, as ,well as potentially the Grace settlement. Would that be fair?

George, when the two of those together would be in the $950 million. And, since we do like to have a cash cushion on hand, to keep the wheels greased globally, we would anticipate going out, either to our existing bank group, which is still standing and increase the size of that facility or to do a smallish facility with a medium term tenure with a different funding source. So, right now, I would say we would expect to cover two-thirds to three-quarters within our existing cash balances, and liquidity or borrowing capability, and then look to raise $250 million to through other vehicles.

As far as timing on that would go, do you have any sense, or I am not sure that you could be in a position?

I have a perfect answer on the notes. That $227 million will be in May of next year. I guarantee that. On the Grace settlement, you have been with us for a while we have always said it is a year or more away. I think at this point I can say it is within a year. I don’t think things are likely to move so quickly it is going to be a first quarter event, but second quarter is certainly a possibility, and we will be prepared in the second quarter.

Okay thanks, I will turn it over.

Okay, George, operator, let me just take a couple of questions from the Internet here quickly, and a lot of them revolve around what Dave just said, so I will let Dave address it. The comments, the questions from three different people, are one, given you have got a maturity in May of 2009 the fund and requirement for Grace, do we expect any changes in our plan to return value to shareholders? The other is how much do we have left under our Board authorization to buy shares? And can we comment given the current credit crunch on liquidity, to finance the asbestos shares. I think Dave addressed a lot of that, but if you just want to tie that all together, Dave?

Yes, see if I can pull those down. In terms of share repurchases, first of all, we don’t announce ahead of time our intention to repurchase shares. Right now, we have a fairly significant amount still available under Board authorization, something on the order of 16 million shares that we can repurchase. In terms of the liquidity questions, I think in my comments to George those were addressed, in terms of the sources of funds, the timing of payment, we are very confident in our ability to be able to fund those when the time arises. In terms, I guess there has been a question about the tax, the timing of the tax attributes associated with the settlement payment. On the assumption that the settlement does get funded in 2009, we would take that into consideration in making our estimated tax payments in 2009. So that would help us avoid something on the order of $40 to $50 million of cash tax payments. When we filed the return, we would expect to recover an additional amount probably in the order of $100 million in mid 2010. And then on a going forward basis, we would have built up, technically an NOL, but it works that way that would offset future taxes in the US on the order of $40 to $50 million a year and that would run out into most likely 2014. That would be governed in part by the taxable income that we generate in the US over that period. So, it’s a fairly significant amount that we would ultimately avoid in cash tax payments. A chunk coming in the 2010, period, and then a tail on it out 3 or 4 years into the future.

Okay, thanks, Dave. I have got just two more internet questions, before I go back to the telephone operator. One was, it was on the same basis of the 15% to 20% EPS growth in 2009, I think I covered that in my earlier comments, and as you heard the discussion in one or two questions ago, is if you take the $115 million, in excess of $115 million savings next year, with 60 and 20 with the GMS and cost savings, it leaves you 35 plus on resin, and as I say, absent changes, in the dramatic changes either up or down, that number still seems reasonable. Other question was, is there a way to print the slides before the conference call. I believe the person is referring to the charts on the internet, and I really don’t know, but if you want to check with Amanda, she might be able to help you. Operator, can we go back to next call on the telephone?

Yes, we will go next to Tim Thein, Citigroup.

Thank you. First question Bill, on the last question, on the 15% to 20% EPS growth. Would that imply, I know there’s a ton moving parts here, but would you need any, run rate in terms of economic growth globally that you are seeing now. Would you need to see any improvement from what you see now, in terms of getting to that number, or could you hit that based on what where we are at now?

I think I will go back to my 115 plus number as savings. Again absent things getting dramatically worse or dramatically better.

Okay. And a lot of talk on your liquidity. What about, are you seeing any impact, there is pretty stretch liquidity. I think they are your customers; some of the big fresh protein manufacturers have hit some difficult straits. Have you seen any difference in terms of ordering patterns or payment terms, from some of the more of the stretched food companies out there?

On payment terms, we have had for some time, a very effective global organization that tracks our agings and payment terms, gets involved early on with our sales force when issues arise. So, they are clearly very alert right now, but we have not seen market erosion in performance. And there is a recent comment by one large producer, that they have a significant cash balance, that they are looking to spend on consolidation. So, there are clearly firms out there, that are going to be more impacted than others, but in general, I think we are comfortable with our exposure. We did actually though increase our reserve for receivables in quarter, just to be sure that we were covered on the particular issue which you have raised. So, we have booked an additional provision in the third quarter numbers, in the range of $2 to $4 million.

Okay, thanks a lot.

There is a question on the internet, asking if we were intending to sell our auction rate securities prior to year-end? The answer, the short answer is no. We think that it is in our best interest to hold those, until a more formal market reopens. There is no pressing need for us to liquefy those positions. Meantime, they all are paying interest currently, and we will continue to look at the mark-to-market requirements a quarterly basis.

The other comment the individual on the internet said, is there are some companies, or say some of the brokerage firms have announced settlements where they are buying auction rate securities, but those are really for individuals and for companies with, I think less than 10, or less than $100 million in sales. We really don’t qualify under those settlement agreements, but we do follow them. I ask our Treasurer about how we are doing with the major bankers.

We have time for one more question and operator, I think we have one on the telephone.

George Staphos, please go ahead

Thanks, guys. Very quickly what gives you confidence, I realize there are lots of moving parts in terms of the outlook, but what gives you confidence that food volume should recover, if I heard you right, by the second of half of next year? Obviously you have got herd liquidations occurring this year, which has helped the production, but could hurt demand next year. And then, the question always comes up, can you if you need to, Dave, bring in that CapEx number to a lower level, would it risk the ongoing activity you have with any of your initiatives and your programs for next year? Thanks. Good luck in the quarter.

Let me comment on the food number for next year. I have got a degree of confidence, and I am comfortable because the confidence is in a variety of pockets. One is, as you said herd sizes shrinking, will come back around mid next year. So you have got the sort of herd-size demographics going in our favor. Second, I do think the Brazilian beef export issue will finally resolve itself, I really do. The third is that the Chinese hog issue is getting better, and the Chinese food numbers. We didn’t talk a lot about it but one of the weak spots, despite the growth we are seeing in China in all parts of our business, is the fresh pork is really very slow right now, and is actually down from last year, because you have heard us refer to the hog disease that China has been having, and then the US exports will get better. The Korean market is opening, and will pick up. The combination of Brazil, US, Asia give me a good feeling that the Food business will have a better 2009 than 2008. As far as CapEx, Dave gave you the 125 to 150, I think that has been our kind of normal number, but we have talked internally, that if we don’t see growth in the markets given the build out we have done. Remember, we put in three plants this year, and we have incurred the cost of those three plants, and George, you mentioned that a number of times on your own questions. And, we are clearly running at less than capacity in our new plant startups, so yes, we could wind that number back further.

Just to put some history on that, George, I think in the past half dozen years, we have gone as low as $100 million, and that was not based on any top down decision that Bill or I made, to constrain capital investment. It is simply in a period of time when we have ample capacity in place, repair and maintenance tends to run at that level, and maybe below that level.

And in a period where volumes were probably biased to the downside and not the upside, from a macro standpoint that is talking about Sealed Air, and given everything that you have done with global manufacturing, it would seem that perhaps there is probably room to take the CapEx down below trend line over time, but we will watch.

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I hope they find it.

Okay. I want to thank everyone for participating in the call. Certainly this was a difficult quarter, but I do think we still have the things going in our favor. We have implemented our plans and our initiatives are in place, and I hope we have been able to convey that we do remain confident that the actions we are taking and the plans we have, will better position Sealed Air for the future. We still have a solid financial profile. We do have the leading brand and product portfolios and we have an unparalleled geographic footprint around the world. So, I think that positions us to leverage market opportunities, drive value for our customers, value for our shareholders, and value for our employees. So, I look out to the future excited about our prospects, comfortable and confident with our competitive position, and feel really good about the underlying growth drivers that offer tremendous opportunity. And, for these and all of the reasons I say every quarter, I am still happy and proud to be a Sealed Air shareholder. So, thank you, very much.

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