Second, except where otherwise indicated, Eastman financial measures referenced in this presentation are non-GAAP financial measures, such as earnings per share and operating earnings that exclude Solutia acquisition, financing transaction integration costs and the second quarter 2011 gain from the sale of a previously impaired assets. In addition, Solutia earnings are presented asadjusted EBITDA, which is defined as net income before interest expense, income taxes and depreciation and amortization and certain items that affect comparability and noncash stock compensation expense. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures, including a description of the Solutia acquisition transaction financing integration costs, the gain from the sale of previously impaired asset and Solutia-adjusted EBITDA, are available in our second quarter financial results news release and the tables accompanying the news release available on our website, eastman.com. Lastly, we have posted slides that accompany our remarks for this morning's presentation on our website in the Presentations and Events section. With that, I'll turn the call over to Jim. James P. Rogers Thanks, Greg, and good morning, everyone. I'm told we got a record number of people on the phone this morning, so thanks for joining us. That could be because we're doing it on a Tuesday, but more likely, it's because we have a little bit more to talk about with not only our heritage business, but also the Solutia business. So let me start on Slide 3. As is my normal practice, I'll start by reviewing our key outlook statements. First, when we announced the Solutia acquisition back in January, we indicated we expected to close the transaction midyear 2012. And thanks to a lot of hard work, we were able to meet that timeline closing on July 2, and we're very happy to have Solutia as part of Eastman. Obviously, I'll talk more about Solutia second quarter results in a few minutes, and then Curt will talk about our progress on integration and synergies in his section.
Next, back in April, we indicated we expected our full year EPS to be approximately $5.30 in 2012 and we are still on track for that target. And I'd remind you that this would be 10% earnings growth. And lastly, we indicated we expected to generate $1 billion of free cash over the next 2 years. And again, we're on track to deliver on that commitment. Given all the portfolio work we've done over the last several years, including the acquisition of Solutia, we now have a portfolio of businesses that we expect will generate solid, consistent earnings growth and cash generation for years to come.On Slide 4, I'll cover Eastman corporate results. Sales revenue declined 2%, driven mostly by the Specialty Plastics and Fibers segments. Operating earnings increased with particular strength in the CASPI and PCI segments. Second quarter EPS was $1.40, slightly below second quarter 2011 EPS. And I'd remind you that last year's second quarter EPS was a record for any quarter. And second quarter 2012 is the second highest EPS we've ever reported. We also had a higher tax rate year-over-year, up about 300 basis points, primarily due to the mix of earnings being more domestic. And overall, our heritage Eastman businesses continue to deliver strong results, despite an uncertain global economic environment. Before I give some color on the heritage Eastman segments beginning on Slide 5 with CASPI, I'll remind you that second quarter will be the last time we report on this basis. When we announced the close of the Solutia transaction, we also announced the new organizational structure with 5 segments, and we will report on that basis beginning with the third quarter. With that said, sales revenue for CASPI was pretty stable year-over-year, down 1%. Operating earnings increased to a quarterly record of $114 million, up $10 million year-over-year and $16 million sequentially. They were able to increase spread, primarily in solvents, as the decline in raw material and energy costs was only partially offset by lower selling prices, which were down 1%. And we continue to expect the underlying CASPI business to deliver strong results in 2012, albeit with some seasonal decline in demand. Read the rest of this transcript for free on seekingalpha.com