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Reconciliation to the most directly comparable GAAP financial measure and other associated disclosures, including a description of the restructuring-related items, are available in our second quarter 2010 financial results news release and in the tables accompanying our news release.Lastly, we’ve posted the slides that accompany our remarks for this morning’s call on our Web site, at www.investors.eastman.com, and you’ll find them in the Presentations and Events section. With that, I’ll turn the call over to Jim. Jim Rogers Thanks, Greg, and good morning, everyone. As usual, I’ll begin on Slide number 3. Now, as I normally do, I’ll begin with an update on some of the outlook statements we made on the call back in April. For second quarter EPS, we told you we expected to be between $1.50 and $1.60. I updated this guidance at an Investors Conference in early June saying we expected to be above $1.60. Of course, we did report EPS well above $1.60 last night, and I’ll talk more about that in a minute. Next, we told you that we projected our full year 2010 EPS would be between $5 and $5.25. This was updated in early June to range of $5.25 to $5.50. I’ll talk more about our expectations for 2010 EPS when I get to outlook, but given our strong first half, we now expect to be well above this projection. We also told you that we expect to generate between $200 million and $300 million of free cash flow in 2010, and given our strong earnings, we are on track to be at the top of this range. Curt will walk you through this in more detail in his section. We told you we would be disciplined on capital allocation and we have been. In April, we completed the acquisition of Genovique Specialties Chemicals. We expect the acquisition will be accretive to earnings in 2010 despite transaction cost and will be accretive above the cost of capital in 2011.
We bought back more than $50 million of stock in the first half to offset dilution and we’ve held our capital expenditures this year to record lows, only now loosening the purse strings to meet increasing demand.Moving next to Slide number 4 and a review of our financial results for second quarter 2010, our EPS of $2.05 was a quarterly record, with our next best quarter coming 15 years ago. Revenue increased 38% year-over-year. The main driver was volume, up 21% year-over-year and 9% sequentially. We benefited from our growth initiatives and the actions we have taken over the years to improve our portfolio of businesses and reduce our cost structure. Sequentially, volume increased as demand continued to improve. We benefited from competitor outages in Asia, particularly for Oxos and PCI, and there were some limited inventory restocking, particularly in the more specialty product lines CASPI. Of course, the year-over-year increase was helped by the comparison to the recessionary levels of second quarter 2009. Operating earnings more than doubled year-over-year and our operating margin increased to over 15% in the second quarter, up almost 500 basis points year-over-year and 350 basis points sequentially. The increased earnings reflected higher volumes, improved capacity utilization and resulting lower unit costs and higher selling prices. In addition, we recognized residual cost in the second quarter from the outage at our Longview facility that occurred in February. These costs were mostly offset by a partial insurance recovery in the quarter. Overall, we are very pleased with these results. But we aren’t standing still, and I’ll talk more about that in a few minutes. Turning to the segments now, starting with Fibers on Slide number 5, I’ve said it before and I’ll continue to say it – what a great business. Fibers operating earnings in the quarter were another quarterly record, and over the past six quarters they have set records in four of them. Higher revenue reflected higher volume and the higher volume was due to continued solid acetate tow volume and an increase in acetate yarn volume. Read the rest of this transcript for free on seekingalpha.com