Winchester achieved its highest second quarter segment earnings and its history and the second best quarterly earnings ever, reflecting the continuation of the stronger than normal demand that began in the fourth quarter of 2008. In the second quarter of 2010, Winchester benefited from strong sales to commercial, military, and law enforcement customers. Winchester's second quarter 2010 segment earnings were $21.1 million, compared to $19.1 million in the second quarter of 2009.Chlor alkali second quarter 2010 segment earnings of $26.1 million more than doubled, compared to the first quarter of 2010, and represented the third consecutive quarter of sequential earnings improvement. Both ECU netbacks and product volumes improved during from the first quarter of 2010. Second quarter 2010 chlor alkali segment earnings include approximately $6 million of costs associated with our second quarter planned maintenance outages at five manufacturing locations. The second quarter 2010 chlor alkali operating rate was 83%, which was higher than both the first quarter of 2010 rate of 75% and the second quarter 2009 rate of 70%. Second quarter 2010 earnings include $2.8 million of pretax recoveries from third parties of environmental costs incurred and expensed in prior periods. However, our second quarter 2010 earnings did not include the $2 million of favorable tax adjustments that were forecast as a part of our second quarter earnings guidance. Third quarter 2010 net income is forecast to be in the $0.35 to $0.40 per diluted share range. The third quarter 2010 chlor alkali segment earnings are expected to improve, compared to the second quarter of 2010, reflecting continued improvement and pricing. Earnings in the Winchester segment are expected to decline from the record third quarter 2009 levels. They are forecast to reflect strong seasonal demand. Charges to income for environmental and remedial activities are expected to be comparable in the third quarter with the second quarter after giving consideration to the second quarter recoveries. Third quarter 2010 results are also forecast to include approximately $6 million of favorable adjustments to income tax expense.
Now, let me discuss both segments beginning first with chlor alkali. In the second quarter of 2010, our chlor alkali business continued to experience improved demand for both chlorine and caustic. As I mentioned earlier, the operating rate during the second quarter of 2010 of 83% represents an increase from the first quarter of 2010 rate of 75%.The second quarter 2010 operating rate includes the negative impact of five planned maintenance outages, including a 19-day outage at our Henderson, Nevada facility; and a 10-day outage at our Niagara Falls, New York facility. There are also planned outages during the quarter in Augusta, Georgia; Charleston, Tennessee; and, in our McIntosh, Alabama facilities. As I mentioned earlier, second quarter chlor alkali segment earnings included approximately $6 million of maintenance expenses associated with these shutdowns. Giving consideration to the manufacturing capacity was unavailable during the prior capacity reduction actions – due to the prior capacity reduction actions during the month of June, the chlor alkali business operated at a 94% rate. Our third quarter planned outages are limited. And last week, we completed the five-day outage at the St. Gabriel, Louisiana location. However, chlorine customer outages during the third quarter may cause our third quarter operating rate to remain in the mid-80% range. The higher operating range reflects improved demand for not only chlorine and caustic soda during the quarter, but also bleach. Second quarter 2010 chlorine and caustic soda volumes improved 7%, compared to the first quarter of 2010, but 23% when compared to the second quarter of 2009. I should point out that even though we have experienced a significant improvement in chlorine and caustic soda shipments this year, demand remains well below historic levels. Bleach volumes increased 37% in the second quarter of 2010, compared to the first quarter of 2010, and 19% when compared to the second quarter of 2009. This represents the tenth consecutive quarter we have experienced year-over-year increases in bleach shipments. We believe we are in pace to increase bleach shipments by 20% to 25% in 2010, compared to 2009. Read the rest of this transcript for free on seekingalpha.com