##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2007

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number: 1-14601



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Arch Chemicals, Inc.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Virginia                                                       |  | 06-1526315                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|501 Merritt 7 Norwalk, CT                                      |  | 06851                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(203) 229-2900

(Registrants telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)



---

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x    Accelerated filer ̈Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.



|                                     |  |                                  
|------------------------------------ |  | ---------------------------------
|Class                                |  | Outstanding at September 30, 2007
|Common Stock, $1 par value per share |  | 24,769,857 shares                



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##### Table of Contents

IN
DEX



|         |  |                                                                                                             |  |             
|-------- |  | ----------------------------------------------------------------------------------------------------------- |  | ------------
|         |  |                                                                                                             |  | Page Numbers
|PART I.  |  | FINANCIAL INFORMATION                                                                                       |  |             
|         |  |                                                                                                            
|Item 1.  |  | Financial Statements                                                                                        |  | 3           
|         |  |                                                                                                            
|         |  | Condensed Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006                        |  | 3           
|         |  |                                                                                                            
|         |  | Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2007 and 2006 |  | 4           
|         |  |                                                                                                            
|         |  | Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and 2006       |  | 5           
|         |  |                                                                                                            
|         |  | Notes to Condensed Consolidated Financial Statements                                                        |  | 6           
|         |  |                                                                                                            
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                       |  | 19          
|         |  |                                                                                                            
|Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                                                  |  | 31          
|         |  |                                                                                                            
|Item 4.  |  | Controls and Procedures                                                                                     |  | 32          
|         |  |                                                                                                            
|PART II. |  | OTHER INFORMATION                                                                                           |  |             
|         |  |                                                                                                            
|Item 2.  |  | Unregistered Shares of Equity Securities and Use of Proceeds                                                |  | 33          
|         |  |                                                                                                            
|Item 6.  |  | Exhibits                                                                                                    |  | 33          
|         |  |                                                                                                            
|         |  | Signatures                                                                                                  |  | 34          



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

ARCH CHEMICALS, INC.

Condensed Consolidated Balance Sheets

(In millions, except per share amounts)



|                                                        |  |                   |         |   |                  |   |         |  
|------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                        |  | September 30,2007 |         |   | December 31,2006 |  
|                                                        |  | (Unaudited)       |         |   |                  |  
|ASSETS                                                  |  |                   |         |   |                  |   |         |  
|Current Assets:                                         |  |                   |         |   |                  |   |         |  
|Cash and cash equivalents                               |  | $                 | 63.3    |   |                  | $ | 82.4    |  
|Accounts receivable, net                                |  |                   | 171.6   |   |                  |   | 139.8   |  
|Short-term investment                                   |  |                   | 70.8    |   |                  |   | 72.5    |  
|Inventories, net                                        |  |                   | 211.8   |   |                  |   | 174.6   |  
|Other current assets                                    |  |                   | 32.6    |   |                  |   | 27.8    |  
|Assets held for sale                                    |  |                   |        |   |                  |   | 13.9    |  
|                                                        |  |                   |         |   |                  |   |         |  
|Total current assets                                    |  |                   | 550.1   |   |                  |   | 511.0   |  
|Investments and advancesaffiliated companies at equity |  |                   | 1.7     |   |                  |   | 6.8     |  
|Property, plant and equipment, net                      |  |                   | 192.0   |   |                  |   | 193.3   |  
|Goodwill                                                |  |                   | 206.3   |   |                  |   | 202.9   |  
|Other intangibles                                       |  |                   | 152.4   |   |                  |   | 153.6   |  
|Other assets                                            |  |                   | 90.2    |   |                  |   | 82.0    |  
|                                                        |  |                   |         |   |                  |   |         |  
|Total assets                                            |  | $                 | 1,192.7 |   |                  | $ | 1,149.6 |  
|                                                        |  |                   |         |   |                  |   |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY                    |  |                   |         |   |                  |   |         |  
|Current liabilities:                                    |  |                   |         |   |                  |   |         |  
|Short-term borrowings                                   |  | $                 | 19.2    |   |                  | $ | 5.6     |  
|Current portion of long-term debt                       |  |                   | 0.5     |   |                  |   | 149.0   |  
|Accounts payable                                        |  |                   | 206.1   |   |                  |   | 182.1   |  
|Accrued liabilities                                     |  |                   | 94.7    |   |                  |   | 89.4    |  
|Liabilities associated with assets held for sale        |  |                   |        |   |                  |   | 4.5     |  
|                                                        |  |                   |         |   |                  |   |         |  
|Total current liabilities                               |  |                   | 320.5   |   |                  |   | 430.6   |  
|Long-term debt                                          |  |                   | 173.8   |   |                  |   | 62.4    |  
|Other liabilities                                       |  |                   | 269.3   |   |                  |   | 290.4   |  
|                                                        |  |                   |         |   |                  |   |         |  
|Total liabilities                                       |  |                   | 763.6   |   |                  |   | 783.4   |  
|Commitments and contingencies                           |  |                   |         |   |                  |   |         |  
|Shareholders equity:                                   |  |                   |         |   |                  |   |         |  
|Common stock, par value $1 per share,                   |  |                   |         |   |                  |   |         |  
|Authorized 100.0 shares:                                |  |                   |         |   |                  |   |         |  
|24.7 shares issued and outstanding (24.1 in 2006)       |  |                   | 24.7    |   |                  |   | 24.1    |  
|Additional paid-in capital                              |  |                   | 449.2   |   |                  |   | 434.8   |  
|Retained earnings                                       |  |                   | 41.4    |   |                  |   | 31.3    |  
|Accumulated other comprehensive loss                    |  |                   | (86.2   | ) |                  |   | (124.0  | )
|                                                        |  |                   |         |   |                  |   |         |  
|Total shareholders equity                              |  |                   | 429.1   |   |                  |   | 366.2   |  
|                                                        |  |                   |         |   |                  |   |         |  
|Total liabilities and shareholders equity              |  | $                 | 1,192.7 |   |                  | $ | 1,149.6 |  
|                                                        |  |                   |         |   |                  |   |         |  

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the condensed
consolidated financial statements.



3



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##### Table of Contents

ARCH CHEMICALS, INC.

Condensed Consolidated Statements of Income

(Unaudited)

(In millions, except per share
amounts)



|                                                                                              |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|--------------------------------------------------------------------------------------------- |  | -------------------------------- | ----- | - | ------------------------------- | - | ----- | ---- |  | - | ------- | - |  | - | -------
|                                                                                              |  | Three Months Ended September 30, |       |   | Nine Months Ended September 30,
|                                                                                              |  | 2007                             |       |   | 2006                            |   |       | 2007 |  |   | 2006   
|Sales                                                                                         |  | $                                | 376.5 |   |                                 | $ | 348.5 |      |  | $ | 1,143.4 |   |  | $ | 1,095.6
|Cost of goods sold                                                                            |  |                                  | 273.3 |   |                                 |   | 262.2 |      |  |   | 813.2   |   |  |   | 796.0  
|Selling and administration                                                                    |  |                                  | 84.5  |   |                                 |   | 66.7  |      |  |   | 232.6   |   |  |   | 208.4  
|Research and development                                                                      |  |                                  | 5.1   |   |                                 |   | 4.5   |      |  |   | 14.8    |   |  |   | 14.4   
|Other (gains) and losses                                                                      |  |                                  |      |   |                                 |   |      |      |  |   | (12.8   | ) |  |   |       
|Restructuring expense                                                                         |  |                                  | 0.9   |   |                                 |   |      |      |  |   | 7.5     |   |  |   |       
|Impairment charge                                                                             |  |                                  |      |   |                                 |   |      |      |  |   | 8.6     |   |  |   |       
|Interest expense                                                                              |  |                                  | 3.7   |   |                                 |   | 5.3   |      |  |   | 13.0    |   |  |   | 16.5   
|Interest income                                                                               |  |                                  | 0.6   |   |                                 |   | 0.4   |      |  |   | 1.6     |   |  |   | 0.9    
|                                                                                              |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Income from continuing operations before equity in earnings of affiliated companies and taxes |  |                                  | 9.6   |   |                                 |   | 10.2  |      |  |   | 68.1    |   |  |   | 61.2   
|Equity in earnings of affiliated companies                                                    |  |                                  | 0.1   |   |                                 |   | 0.1   |      |  |   | 0.3     |   |  |   | 0.6    
|Income tax expense                                                                            |  |                                  | 7.4   |   |                                 |   | 2.7   |      |  |   | 29.6    |   |  |   | 19.9   
|                                                                                              |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Income from continuing operations                                                             |  |                                  | 2.3   |   |                                 |   | 7.6   |      |  |   | 38.8    |   |  |   | 41.9   
|Income (loss) from discontinued operations, net of tax                                        |  |                                  |      |   |                                 |   | (0.3  | )    |  |   | 0.9     |   |  |   | 0.6    
|Loss on sale of discontinued operations                                                       |  |                                  | (14.9 | ) |                                 |   |      |      |  |   | (14.9   | ) |  |   |       
|                                                                                              |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Net income (loss)                                                                             |  | $                                | (12.6 | ) |                                 | $ | 7.3   |      |  | $ | 24.8    |   |  | $ | 42.5   
|                                                                                              |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Basic income (loss) per common share:                                                         |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Continuing operations                                                                         |  | $                                | 0.09  |   |                                 | $ | 0.31  |      |  | $ | 1.59    |   |  | $ | 1.75   
|Discontinued operations                                                                       |  |                                  |      |   |                                 |   | (0.01 | )    |  |   | 0.03    |   |  |   | 0.02   
|Loss on sale of discontinued operations                                                       |  |                                  | (0.61 | ) |                                 |   |      |      |  |   | (0.61   | ) |  |   |       
|                                                                                              |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Basic income (loss) per common share                                                          |  | $                                | (0.52 | ) |                                 | $ | 0.30  |      |  | $ | 1.01    |   |  | $ | 1.77   
|                                                                                              |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Diluted income (loss) per common share:                                                       |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Continuing operations                                                                         |  | $                                | 0.09  |   |                                 | $ | 0.31  |      |  | $ | 1.58    |   |  | $ | 1.73   
|Discontinued operations                                                                       |  |                                  |      |   |                                 |   | (0.01 | )    |  |   | 0.03    |   |  |   | 0.02   
|Loss on sale of discontinued operations                                                       |  |                                  | (0.60 | ) |                                 |   |      |      |  |   | (0.60   | ) |  |   |       
|                                                                                              |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Diluted income (loss) per common share                                                        |  | $                                | (0.51 | ) |                                 | $ | 0.30  |      |  | $ | 1.01    |   |  | $ | 1.75   
|                                                                                              |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Weighted average common shares outstanding:                                                   |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Basic                                                                                         |  |                                  | 24.6  |   |                                 |   | 24.1  |      |  |   | 24.4    |   |  |   | 24.0   
|                                                                                              |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Diluted                                                                                       |  |                                  | 24.8  |   |                                 |   | 24.3  |      |  |   | 24.6    |   |  |   | 24.2   
|                                                                                              |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Dividends declared per share                                                                  |  | $                                | 0.20  |   |                                 | $ | 0.20  |      |  | $ | 0.60    |   |  | $ | 0.60   
|                                                                                              |  |                                  |       |   |                                 |   |       |      |  |   |         |   |  |   |        

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the condensed
consolidated financial statements.



4



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##### Table of Contents

ARCH CHEMICALS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In millions)



|                                                                                                       |  |                                |        |   |      |   |       |  
|------------------------------------------------------------------------------------------------------ |  | ------------------------------ | ------ | - | ---- | - | ----- | -
|                                                                                                       |  | Nine MonthsEnded September 30, |       
|                                                                                                       |  | 2007                           |        |   | 2006 |  
|Operating activities                                                                                   |  |                                |        |   |      |   |       |  
|Net income                                                                                             |  | $                              | 24.8   |   |      | $ | 42.5  |  
|Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: |  |                                |        |   |      |   |       |  
|Income from discontinued operations                                                                    |  |                                | (0.9   | ) |      |   | (0.6  | )
|Loss on sale of discontinued operations                                                                |  |                                | 14.9   |   |      |   |      |  
|Equity in earnings of affiliated companies                                                             |  |                                | (0.3   | ) |      |   | (0.6  | )
|Depreciation and amortization                                                                          |  |                                | 33.7   |   |      |   | 33.6  |  
|Deferred taxes                                                                                         |  |                                | 10.2   |   |      |   | 14.7  |  
|Other (gains) and losses                                                                               |  |                                | (12.8  | ) |      |   |      |  
|Restructuring expense (payments), net                                                                  |  |                                | 2.6    |   |      |   | (0.3  | )
|Impairment charge                                                                                      |  |                                | 8.6    |   |      |   |      |  
|Changes in assets and liabilities, net of purchase and sale of businesses:                             |  |                                |        |   |      |   |       |  
|Accounts receivable securitization program                                                             |  |                                |       |   |      |   |      |  
|Receivables                                                                                            |  |                                | (1.3   | ) |      |   | (6.6  | )
|Inventories                                                                                            |  |                                | (22.2  | ) |      |   | (15.0 | )
|Other current assets                                                                                   |  |                                | (1.5   | ) |      |   | 1.6   |  
|Accounts payable and accrued liabilities                                                               |  |                                | 7.4    |   |      |   | (28.6 | )
|Noncurrent liabilities                                                                                 |  |                                | (27.0  | ) |      |   | 7.8   |  
|Other operating activities                                                                             |  |                                | 10.5   |   |      |   | 0.4   |  
|                                                                                                       |  |                                |        |   |      |   |       |  
|Net operating activities from continuing operations                                                    |  |                                | 46.7   |   |      |   | 48.9  |  
|Cash flows of discontinued operations                                                                  |  |                                | (1.2   | ) |      |   | 4.3   |  
|                                                                                                       |  |                                |        |   |      |   |       |  
|Net operating activities                                                                               |  |                                | 45.5   |   |      |   | 53.2  |  
|                                                                                                       |  |                                |        |   |      |   |       |  
|Investing activities                                                                                   |  |                                |        |   |      |   |       |  
|Capital expenditures                                                                                   |  |                                | (27.9  | ) |      |   | (16.2 | )
|Businesses acquired in purchase transactions, net of cash acquired and debt assumed                    |  |                                | (14.3  | ) |      |   | (2.9  | )
|Cash proceeds (payments) from the sale of businesses                                                   |  |                                | 9.6    |   |      |   | (0.5  | )
|Cash proceeds from the sale of land and property                                                       |  |                                | 2.8    |   |      |   | 1.2   |  
|Other investing activities                                                                             |  |                                | (1.9   | ) |      |   | (3.3  | )
|Cash flows of discontinued operations                                                                  |  |                                |       |   |      |   |      |  
|                                                                                                       |  |                                |        |   |      |   |       |  
|Net investing activities                                                                               |  |                                | (31.7  | ) |      |   | (21.7 | )
|                                                                                                       |  |                                |        |   |      |   |       |  
|Financing activities                                                                                   |  |                                |        |   |      |   |       |  
|Long-term debt borrowings                                                                              |  |                                | 150.0  |   |      |   | 40.0  |  
|Long-term debt repayments                                                                              |  |                                | (190.1 | ) |      |   | (47.7 | )
|Short-term debt borrowings, net                                                                        |  |                                | 6.1    |   |      |   | 1.7   |  
|Dividends paid                                                                                         |  |                                | (14.7  | ) |      |   | (14.4 | )
|Proceeds from stock options exercised and other financing activities                                   |  |                                | 15.0   |   |      |   | 10.9  |  
|Cash flows of discontinued operations                                                                  |  |                                | (0.8   | ) |      |   | (1.5  | )
|                                                                                                       |  |                                |        |   |      |   |       |  
|Net financing activities                                                                               |  |                                | (34.5  | ) |      |   | (11.0 | )
|                                                                                                       |  |                                |        |   |      |   |       |  
|Effect of exchange rate changes on cash and cash equivalents                                           |  |                                | 1.6    |   |      |   | 2.4   |  
|                                                                                                       |  |                                |        |   |      |   |       |  
|Net (decrease) increase in cash and cash equivalents                                                   |  |                                | (19.1  | ) |      |   | 22.9  |  
|Cash and cash equivalents, beginning of year                                                           |  |                                | 82.4   |   |      |   | 43.1  |  
|                                                                                                       |  |                                |        |   |      |   |       |  
|Cash and cash equivalents, end of period                                                               |  | $                              | 63.3   |   |      | $ | 66.0  |  
|                                                                                                       |  |                                |        |   |      |   |       |  
|Supplemental cash flow information                                                                     |  |                                |        |   |      |   |       |  
|Income taxes, net                                                                                      |  | $                              | 12.1   |   |      | $ | 6.9   |  
|                                                                                                       |  |                                |        |   |      |   |       |  
|Interest paid                                                                                          |  | $                              | 18.4   |   |      | $ | 22.6  |  
|                                                                                                       |  |                                |        |   |      |   |       |  

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the condensed
consolidated financial statements.



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##### Table of Contents

ARCH CHEMICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

These condensed consolidated financial statements have been prepared by Arch Chemicals, Inc. (with its consolidated subsidiaries, the
Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and, in the opinion of the Company, reflect all adjustments (consisting of normal accruals) which are necessary to present fairly
the results for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or
omitted pursuant to such rules and regulations; however, the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in
conjunction with the consolidated financial statements, accounting policies and the notes thereto and managements discussion and analysis of financial condition and results of operations included in the Companys Form 10-K for the year
ended December 31, 2006. The Companys Treatment segment is seasonal in nature, in particular its HTH water products business as its products are primarily used in the U.S. residential pool market. Therefore, the results of operations for
the Company and in particular the HTH water products business for the three and nine months ended September 30, 2007, are not necessarily indicative of the results to be expected for the entire fiscal year.

As a result of the sale of the performance urethanes business in Venezuela, the Company has adjusted its prior year financial statements to include the
results of operations of this business and the loss on the disposition as a component of discontinued operations in accordance with the Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS 144).

2. Share-Based Compensation

The Company accounts for its four stock-based compensation plans in accordance with Statement of Financial Accounting Standards (SFAS) 123R,
Share-Based Payment, utilizing the modified prospective method. The following table summarizes stock option activity for the nine months ended September 30, 2007 (number of options in thousands):



|                               |  |               |  |                        |       |                         |   |              
|------------------------------ |  | ------------- |  | ---------------------- | ----- | ----------------------- | - | -------------
|                               |  | Stock Options |  | Weighted Average Price |       | Range of ExercisePrices
|Balance, December 31, 2006     |  | 1,157         |  | $                      | 22.99 |                         | $ | 16.53  31.92
|Options exercised              |  | 610           |  |                        | 24.31 |                         |   | 16.53  31.92
|Options cancelled or forfeited |  | 14            |  |                        | 28.33 |                         |   | 17.38  28.58
|                               |  |               |  |                        |       |                         |   |              
|Balance, September 30, 2007    |  | 533           |  | $                      | 21.34 |                         | $ | 17.38  31.92
|                               |  |               |  |                        |       |                         |   |              

The following table summarizes information about stock options outstanding at September 30,
2007 (number of options in thousands):



|                         |  |                                   |  |                           |  |                                                                  |      
|------------------------ |  | --------------------------------- |  | ------------------------- |  | ---------------------------------------------------------------- | -----
|Range of Exercise Prices |  | Number OutstandingAnd Exercisable |  | RemainingContractual Life |  | Weighted AverageOption Exercise PriceOutstanding and Exercisable
|$17.38  $23.00          |  | 453                               |  | 3 years                   |  | $                                                                | 19.46
|$31.92                   |  | 80                                |  | <1 year                   |  | $                                                                | 31.92
|                         |  |                                   |  |                           |  |                                                                  |      
|                         |  | 533                               |  |                           |  |                                                                  |      
|                         |  |                                   |  |                           |  |                                                                  |      

The total intrinsic value of stock options exercised during the nine months ended
September 30, 2007 and 2006 was $7.8 million and $2.0 million, respectively.

As part of the 1999 Long Term Incentive Plan, the
Company currently grants selected executives and other key employees performance awards whose vesting is contingent upon meeting various performance measures and contains a retention feature. This component of compensation is designed to encourage
the long-term retention of key executives and to tie a major part of executive compensation directly to Company performance and the long-term enhancement of shareholder value. The award of performance units was designed to recognize and reward
targeted return on equity (ROE). The performance awards are earned at the end of the three-year period provided the ROE target is achieved for that third year. There is an opportunity for accelerated payout of the performance awards if
the ROE target is met or exceeded by the end of the second year after the grant. If the ROE target is not



6



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ARCH CHEMICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)



achieved by the end of year three, 50% of the performance awards will be forfeited and 50% of the performance awards will be paid out in cash as soon as
administratively feasible following the end of year six if the executive is still employed at the Company.

The performance awards are
settled in cash, which is based on the market price of the Companys stock at the time of settlement. During the service period, compensation cost is recognized proportionately based on the Companys estimate of achieving the financial
targets. The performance awards are remeasured to reflect the market price of the Companys stock, at each financial statement date until the award is settled. Total compensation expense (income) of $8.3 million and $12.2 million and $(0.9)
million and $3.2 million was recognized for the three and nine months ended September 30, 2007 and 2006, respectively. As of September 30, 2007, there was $16.0 million of total unrecognized compensation cost, based on current stock price,
related to the unearned payment arrangements, which is expected to be recognized over a weighted-average period of two years based on current financial forecasts.

The following table summarizes the performance award activity for the nine months ended September 30, 2007 (number of awards in thousands):



|                            |  |                  
|--------------------------- |  | -----------------
|                            |  | PerformanceAwards
|Balance, December 31, 2006  |  | 659              
|Awarded                     |  | 260              
|Paid out                    |  |                 
|Cancelled or forfeited      |  | 63               
|                            |  |                  
|Balance, September 30, 2007 |  | 856              
|                            |  |                  

As of September 30, 2007 the closing stock price was $46.88. All performance awards vest upon
attainment of the various financial targets. If the targets are not attained, 50% of the awards are forfeited and the balance vest after the retention period. As of September 30, 2007, these outstanding awards have not yet vested.

3. Earnings Per Share

Basic earnings per share
are computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share reflect the dilutive effect of stock options. Stock options of 0.3 million and 0.2 million with exercise prices
greater than the average market price of the Companys common stock are not included in the computation of diluted earnings per share for the three and nine months ended September 30, 2006, respectively.



|                                                                            |  |                                 |  |                                |  |      |  |     
|--------------------------------------------------------------------------- |  | ------------------------------- |  | ------------------------------ |  | ---- |  | ----
|                                                                            |  | Three MonthsEnded September 30, |  | Nine MonthsEnded September 30,
|(in millions)                                                               |  | 2007                            |  | 2006                           |  | 2007 |  | 2006
|Basic                                                                       |  | 24.6                            |  | 24.1                           |  | 24.4 |  | 24.0
|Common equivalent shares from stock options using the treasury stock method |  | 0.2                             |  | 0.2                            |  | 0.2  |  | 0.2 
|                                                                            |  |                                 |  |                                |  |      |  |     
|Diluted                                                                     |  | 24.8                            |  | 24.3                           |  | 24.6 |  | 24.2
|                                                                            |  |                                 |  |                                |  |      |  |     

4. Accounts Receivable/Short-Term Investment

Under the Companys accounts receivable securitization program with Three Pillars Funding LLC (Three Pillars), an affiliate of SunTrust
Bank, and SunTrust Capital Markets, Inc., the Company sells undivided participation interests in certain domestic trade accounts receivable, without recourse, through its wholly-owned subsidiary, Arch Chemicals Receivables Corporation
(ACRC), a special-purpose entity which is consolidated for financial reporting purposes. At September 30, 2007 and December 31, 2006, respectively, the Company, through ACRC, had not sold any participation interests in its
accounts receivable under the program. During the year, any sales have been reflected as a reduction of receivables in the Condensed Consolidated Balance Sheet. The receivables sold under the securitization program have been accounted for as a sale
in accordance with the provisions of SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.



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ARCH CHEMICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)



ACRC retains an interest in the pool of receivables purchased from the Company to the extent the
receivables are not purchased by Three Pillars. To reflect this interest, which is subordinated, the fair value of the retained undivided interest of $70.8 million and $72.5 million at September 30, 2007 and December 31, 2006,
respectively, was classified separately from Accounts receivable, net as a Short-term investment on the accompanying Condensed Consolidated Balance Sheets. Fair value of the retained undivided interest included a reserve for credit losses ($0.9
million at September 30, 2007 and at December 31, 2006) and had not been discounted due to the short-term nature of the underlying financial assets.

The costs of the program for the three and nine months ended September 30, 2007 and 2006 of $0.7 million and $2.0 million and $0.4 million and $1.7 million, respectively, are included in Selling and
administration expense in the accompanying Condensed Consolidated Statements of Income. The Company has not recorded an asset or liability related to the servicing responsibility retained as the fees earned for servicing were estimated to
approximate fair value.

Included in Accounts receivable, net and Other assets at December 31, 2006 was a current and non-current
receivable, in total, of $2.8 million for the remaining outstanding note from the sale of excess land in 2003, which required an interim payment of $1.2 million plus interest to be paid in September 2007 with the final payment to be paid on
September 30, 2008. In February 2007, the Company received full payment of $2.8 million for the outstanding note.

5. Inventories



|                           |  |                   |       |   |                  |   |       |  
|-------------------------- |  | ----------------- | ----- | - | ---------------- | - | ----- | -
|($ in millions)            |  | September 30,2007 |       |   | December 31,2006 |  
|Raw materials and supplies |  | $                 | 71.7  |   |                  | $ | 50.2  |  
|Work in process            |  |                   | 10.9  |   |                  |   | 7.8   |  
|Finished goods             |  |                   | 187.2 |   |                  |   | 174.0 |  
|                           |  |                   |       |   |                  |   |       |  
|Inventories, gross         |  |                   | 269.8 |   |                  |   | 232.0 |  
|LIFO reserve               |  |                   | (58.0 | ) |                  |   | (57.4 | )
|                           |  |                   |       |   |                  |   |       |  
|Inventories, net           |  | $                 | 211.8 |   |                  | $ | 174.6 |  
|                           |  |                   |       |   |                  |   |       |  

Approximately 50 percent of the Companys inventories are valued by the dollar value last-in,
first-out (LIFO) method of inventory accounting. Costs of other inventories are determined principally by the first-in, first-out method. Elements of costs in inventories include raw materials, direct labor and manufacturing overhead.
Inventories under the LIFO method are based on an annual determination of quantities and costs as of the year-end; therefore, the condensed consolidated financial statements at September 30, 2007 reflect certain estimates relating to projected
inventory quantities and costs at December 31, 2007.

6. Assets Held for Sale / Discontinued Operations

On August 31, 2007, the Company completed the sale of its non-strategic performance urethanes business in Venezuela. Total proceeds, net of expenses,
from the sale are expected to be $16.7 million, which includes an estimated post-closing working capital adjustment. As a result of the sale, the Company recorded a non-cash after-tax loss of $14.9 million, which includes $15.1 million of historical
foreign currency translation losses that were recognized at the time of the sale. As of September 30, 2007, the Company has received $9.6 million of the total proceeds with the balance of $7.6 million included in Accounts receivable, net ($4.8
million) and Other assets ($2.8 million) in the Condensed Consolidated Balance Sheet.



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ARCH CHEMICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)



The loss is reflected in Loss on sale of discontinued operations, as follows:



|                                      |  |                 |       |  
|------------------------------------- |  | --------------- | ----- | -
|                                      |  | ($ in millions) |      
|Net Assets Sold                       |  |                 |       |  
|Net working capital                   |  | $               | 17.1  |  
|Non-current liabilities               |  |                 | (0.9  | )
|                                      |  |                 |       |  
|Net assets sold                       |  | $               | 16.2  |  
|                                      | 
|Loss on Sale:                         |  |                 |       |  
|Total proceeds                        |  | $               | 17.2  |  
|Net assets sold                       |  |                 | (16.2 | )
|Transaction costs incurred            |  |                 | (0.5  | )
|                                      |  |                 |       |  
|Subtotal                              |  |                 | 0.5   |  
|Foreign currency translation realized |  |                 | (15.1 | )
|                                      |  |                 |       |  
|Pre-tax loss                          |  |                 | (14.6 | )
|Tax expense                           |  |                 | (0.3  | )
|                                      |  |                 |       |  
|Net loss                              |  | $               | (14.9 | )
|                                      |  |                 |       |  

Balance Sheet

Assets and liabilities at December 31, 2006 are principally related to the performance urethanes business in Venezuela and consist of:



|                                                       |  |                 |     
|------------------------------------------------------ |  | --------------- | ----
|                                                       |  | ($ in millions)
|Accounts receivable, net                               |  | $               | 4.4 
|Inventories, net                                       |  |                 | 7.8 
|Other current assets                                   |  |                 | 1.7 
|                                                       |  |                 |     
|Total assets held for sale                             |  |                 | 13.9
|                                                       | 
|Short-term borrowings                                  |  |                 | 0.9 
|Accounts payable and accrued liabilities               |  |                 | 3.6 
|                                                       |  |                 |     
|Total liabilities associated with assets held for sale |  |                 | 4.5 
|                                                       |  |                 |     
|Net assets held for sale                               |  | $               | 9.4 
|                                                       |  |                 |     

Income (Loss) From Discontinued Operations

Income (Loss) from discontinued operations for the three and nine months ended September 30, 2007 and 2006 include the following:



|                                                                         |  |                                  |     |      |                                 |      |      |  |      |      |  |   |      |  
|------------------------------------------------------------------------ |  | -------------------------------- | --- | ---- | ------------------------------- | ---- | ---- |  | ---- | ---- |  | - | ---- | -
|                                                                         |  | Three Months Ended September 30, |     |      | Nine Months Ended September 30, |     
|($ in millions)                                                          |  | 2007                             |     | 2006 |                                 |      | 2007 |  | 2006 |     
|Sales  performance urethanes Venezuelan business                        |  | $                                | 6.4 |      | $                               | 6.4  |      |  | $    | 23.8 |  | $ | 23.2 |  
|Sales  chemical management services (CMS)                             |  |                                  |    |      |                                 |     |      |  |      |     |  |   | 1.4  |  
|                                                                         |  |                                  |     |      |                                 |      |      |  |      |      |  |   |      |  
|Total Sales                                                              |  | $                                | 6.4 |      | $                               | 6.4  |      |  | $    | 23.8 |  | $ | 24.6 |  
|                                                                         |  |                                  |     |      |                                 |      |      |  |      |      |  |   |      |  
|Earnings (Loss) before taxes  performance urethanes Venezuelan business |  | $                                |    |      | $                               | (0.1 | )    |  | $    | 1.3  |  | $ | 1.7  |  
|Earnings (Loss) before taxes CMS                                        |  |                                  |    |      |                                 |     |      |  |      |     |  |   | (0.8 | )
|Tax expense                                                              |  |                                  |    |      |                                 | 0.2  |      |  |      | 0.4  |  |   | 0.3  |  
|                                                                         |  |                                  |     |      |                                 |      |      |  |      |      |  |   |      |  
|Income (Loss) from discontinued operations                               |  | $                                |    |      | $                               | (0.3 | )    |  | $    | 0.9  |  | $ | 0.6  |  
|                                                                         |  |                                  |     |      |                                 |      |      |  |      |      |  |   |      |  



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ARCH CHEMICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)



7. Goodwill and Other Intangibles

The changes in the carrying amount of goodwill for the nine months ended September 30, 2007 are as follows:



|                            |  |                  |      |   |                                    |   |                                      |  |   |                |   |  |                      |       |       |  |   |     |  |   |       |  
|--------------------------- |  | ---------------- | ---- | - | ---------------------------------- | - | ------------------------------------ |  | - | -------------- | - |  | -------------------- | ----- | ----- |  | - | --- |  | - | ----- | -
|($ in millions)             |  | HTHWaterProducts |      |   | PersonalCare andIndustrialBiocides |   | WoodProtectionand IndustrialCoatings |  |   | TotalTreatment |   |  | PerformanceUrethanes |       | Total | 
|Balance, December 31, 2006  |  | $                | 38.8 |   |                                    | $ | 85.0                                 |  | $ | 74.7           |   |  | $                    | 198.5 |       |  | $ | 4.4 |  | $ | 202.9 |  
|Post acquisition adjustment |  |                  | (0.3 | ) |                                    |   |                                     |  |   |               |   |  |                      | (0.3  | )     |  |   |    |  |   | (0.3  | )
|Acquisitions                |  |                  |     |   |                                    |   |                                     |  |   | 13.3           |   |  |                      | 13.3  |       |  |   |    |  |   | 13.3  |  
|Foreign exchange and other  |  |                  | 0.3  |   |                                    |   | 1.3                                  |  |   | (11.2          | ) |  |                      | (9.6  | )     |  |   |    |  |   | (9.6  | )
|                            |  |                  |      |   |                                    |   |                                      |  |   |                |   |  |                      |       |       |  |   |     |  |   |       |  
|Balance September 30, 2007  |  | $                | 38.8 |   |                                    | $ | 86.3                                 |  | $ | 76.8           |   |  | $                    | 201.9 |       |  | $ | 4.4 |  | $ | 206.3 |  
|                            |  |                  |      |   |                                    |   |                                      |  |   |                |   |  |                      |       |       |  |   |     |  |   |       |  

Included in foreign exchange and other is a decrease in goodwill of $12.7 million related to the
recognition of a tax benefit due to the finalization of a tax examination.

On July 5, 2007, the Company completed the acquisition of
the remaining 51 percent share of its Australian joint venture, Koppers Arch Wood Protection (Aust) Pty Ltd. (KAWP) and preliminarily allocated the excess purchase price of $13.3 million to goodwill. See Note 18 for further
discussion.

The gross carrying amount and accumulated amortization for other intangible assets as of September 30, 2007 and
December 31, 2006 are as follows:



|                                                     |  |                     |       |                         |   |                   |  |                     |       |                         |   |                   |  |   |      |  |   |      
|---------------------------------------------------- |  | ------------------- | ----- | ----------------------- | - | ----------------- |  | ------------------- | ----- | ----------------------- | - | ----------------- |  | - | ---- |  | - | -----
|                                                     |  | September 30, 2007  |       | December 31, 2006      
|($ in millions)                                      |  | GrossCarryingAmount |       | AccumulatedAmortization |   | NetCarryingAmount |  | GrossCarryingAmount |       | AccumulatedAmortization |   | NetCarryingAmount
|Patents                                              |  | $                   | 0.2   |                         | $ | 0.2               |  | $                   |      |                         | $ | 0.2               |  | $ | 0.2  |  | $ |     
|Customer lists                                       |  |                     | 86.2  |                         |   | 25.6              |  |                     | 60.6  |                         |   | 81.7              |  |   | 20.1 |  |   | 61.6 
|Toxicology database                                  |  |                     | 18.3  |                         |   | 4.4               |  |                     | 13.9  |                         |   | 17.8              |  |   | 3.4  |  |   | 14.4 
|Developed technology                                 |  |                     | 15.9  |                         |   | 3.3               |  |                     | 12.6  |                         |   | 15.4              |  |   | 2.3  |  |   | 13.1 
|Other                                                |  |                     | 8.8   |                         |   | 4.6               |  |                     | 4.2   |                         |   | 9.9               |  |   | 4.5  |  |   | 5.4  
|                                                     |  |                     |       |                         |   |                   |  |                     |       |                         |   |                   |  |   |      |  |   |      
|Total amortizable other intangibles                  |  |                     | 129.4 |                         |   | 38.1              |  |                     | 91.3  |                         |   | 125.0             |  |   | 30.5 |  |   | 94.5 
|Total non-amortizable other intangibles  trademarks |  |                     | 61.5  |                         |   | 0.4               |  |                     | 61.1  |                         |   | 59.5              |  |   | 0.4  |  |   | 59.1 
|                                                     |  |                     |       |                         |   |                   |  |                     |       |                         |   |                   |  |   |      |  |   |      
|Total other intangibles                              |  | $                   | 190.9 |                         | $ | 38.5              |  | $                   | 152.4 |                         | $ | 184.5             |  | $ | 30.9 |  | $ | 153.6
|                                                     |  |                     |       |                         |   |                   |  |                     |       |                         |   |                   |  |   |      |  |   |      

Amortization expense for the three and nine months ended September 30, 2007 and 2006 was
$2.6 million and $7.6 million and $2.2 million and $6.5 million, respectively. Estimated amortization expense is $10.2 million for the year ended December 31, 2007, $10.7 million for the year ended December 31, 2008, $9.7
million for the year ended December 31, 2009, $9.6 million for the year ended December 31, 2010, and $9.4 million for the year ended December 31, 2011.

In accordance with FASB Statement No. 142, Goodwill and Other Intangibles, the Company has elected to perform its annual goodwill and other intangibles impairment procedures for all reporting units as
of January 1 of each year, or after, if events or circumstances change that could reduce the fair value of a reporting unit below its carrying value. During the first quarter of 2007, the Company completed these procedures and concluded that no
impairment existed as of January 1, 2007.

8. Debt

On June 15, 2006, the Company entered into an unsecured $350.0 million senior revolving credit facility (credit facility), which expires in June 2011. The Companys credit facility contains a
quarterly leverage ratio covenant not to exceed 3.5 and an interest coverage ratio (EBITDA/total interest expense) covenant not to be less than 3.0. Additionally, the credit facility restricts the



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ARCH CHEMICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)



payment of dividends and repurchase of stock to $65.0 million plus 50% of cumulative net income (loss) subject to certain limitations beginning
June 15, 2006. This limitation was $69.4 million at September 30, 2007. The facility fees can range from 0.1% to 0.225% depending on the Companys quarterly leverage ratios (facility fees were 0.10% at September 30, 2007). The
Company may select various floating rate borrowing options, including, but not limited to, LIBOR plus a spread that can range from 0.4% to 0.9% depending on the Companys quarterly leverage ratios. There was $110.0 million outstanding under the
credit facility at September 30, 2007 and no outstanding borrowings at December 31, 2006.

In March 2002, the Company issued
$211.0 million of unsecured senior notes to certain institutional investors in two series. The Series A notes of $149.0 million came due in March 2007 and the Series B notes of $62.0 million are due in March 2009. The Company used the credit
facility to pay off the Series A notes in March 2007. The Companys remaining senior notes contain a quarterly leverage ratio covenant not to exceed 3.5 and a debt to total capitalization ratio covenant of 55%. In addition, the notes contain a
fixed charge coverage ratio covenant not to be less than 2.25 and a covenant that restricts the payment of dividends and repurchases of stock to $65.0 million less cumulative dividends and repurchases of stock plus 50% of cumulative net income
(loss) under certain circumstances beginning January 1, 2002. This limitation was $43.5 million at September 30, 2007.

At
September 30, 2007, the Company had $38.9 million of outstanding letters of credit and $2.2 million of outstanding letters of guarantee.

9.
Derivative Instruments and Hedging

Foreign Currency

The Company uses foreign currency forward contracts as a means of hedging exposure to foreign currency risk. It is the Companys policy to hedge up to 80% of its anticipated purchase and sales commitments
denominated or expected to be denominated in a foreign currency. Accordingly, the Company has purchased forward contracts to hedge its exposure to the variability of future foreign currency cash flows through December 2007. During the three and
nine months ended September 30, 2007 and 2006, the majority of the Companys foreign currency forward contracts qualified as effective cash flow hedges; the remainder of the foreign currency contracts did not meet the criteria of
SFAS 133 to qualify for effective hedge accounting.

At September 30, 2007 the Company had forward contracts to sell foreign
currencies with a U.S. dollar equivalent value of $1.3 million and forward contracts to buy foreign currencies with a U.S. dollar equivalent value of $4.9 million. The fair value of these forward contracts is included in Other current
assets and Accrued liabilities, respectively, on the accompanying Condensed Consolidated Balance Sheets.

Debt and Interest

In May 2003, the Company entered into interest rate swap agreements under which the Company swapped the 7.94% fixed interest rate on
$80.0 million principal amount of unsecured senior notes for floating rate interest based on six-month LIBOR plus 5.4539%. The counterparties to these agreements were major financial institutions. The agreements expired in March 2007.



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ARCH CHEMICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)



10. Employee Retirement Plans

Arch U.S. Pension and Postretirement Plans

As of September 30, 2007 and 2006 the components of
net periodic benefit costs for the Arch U.S. Pension and Postretirement Plans were as follows:



|                                                  |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   |       |  
|------------------------------------------------- |  | ------------------------------- | ---- | - | ------------------------------ | - | ---- | ---- |  | - | ----- | - |  | - | ----- | -
|($ in millions)                                   |  | Three MonthsEnded September 30, |      |   | Nine MonthsEnded September 30, |  
|Arch U.S. Pension Plans                           |  | 2007                            |      |   | 2006                           |   |      | 2007 |  |   | 2006  |  
|Net Periodic Benefit Expense:                     |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   |       |  
|Service cost (benefits earned during the period)  |  | $                               | 1.9  |   |                                | $ | 2.0  |      |  | $ | 5.7   |   |  | $ | 5.8   |  
|Interest cost on the projected benefit obligation |  |                                 | 4.0  |   |                                |   | 3.8  |      |  |   | 12.2  |   |  |   | 11.2  |  
|Expected return on plan assets                    |  |                                 | (3.7 | ) |                                |   | (3.6 | )    |  |   | (11.2 | ) |  |   | (10.8 | )
|Curtailment                                       |  |                                 |     |   |                                |   |     |      |  |   | 0.3   |   |  |   |      |  
|Recognized actuarial loss                         |  |                                 | 1.2  |   |                                |   | 1.6  |      |  |   | 3.8   |   |  |   | 4.1   |  
|                                                  |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   |       |  
|Net periodic benefit cost                         |  | $                               | 3.4  |   |                                | $ | 3.8  |      |  | $ | 10.8  |   |  | $ | 10.3  |  
|                                                  |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   |       |  
|                                                  |  |                                
|($ in millions)                                   |  | Three MonthsEnded September 30, |      |   | Nine MonthsEnded September 30, |  
|Arch U.S. Postretirement Plan                     |  | 2007                            |      |   | 2006                           |   |      | 2007 |  |   | 2006  |  
|Net Periodic Benefit Expense:                     |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   |       |  
|Service cost (benefits earned during the period)  |  | $                               | 0.1  |   |                                | $ | 0.1  |      |  | $ | 0.4   |   |  | $ | 0.4   |  
|Interest cost on the projected benefit obligation |  |                                 | 0.2  |   |                                |   | 0.2  |      |  |   | 0.6   |   |  |   | 0.6   |  
|Amortization of prior service cost                |  |                                 |     |   |                                |   |     |      |  |   | (0.1  | ) |  |   | (0.1  | )
|Recognized actuarial loss                         |  |                                 | 0.1  |   |                                |   | 0.1  |      |  |   | 0.3   |   |  |   | 0.3   |  
|                                                  |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   |       |  
|Net periodic benefit cost                         |  | $                               | 0.4  |   |                                | $ | 0.4  |      |  | $ | 1.2   |   |  | $ | 1.2   |  
|                                                  |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   |       |  

In conjunction with the strategic review of the Companys U.S. benefit plans and after a
final assessment of its funding options under the new U.S. pension legislation, the Company concluded that it would accelerate the funding of its U.S. pension plan. During the third quarter of 2007, the Company made pension contributions of $43.5
million, which included a voluntary contribution of $36.4 million. The Companys U.S. plan is expected to meet the full funding phase-in threshold for 2008 under the new legislation. It is the Companys current intention to make
contributions in the future in order to continue to meet the full funding phase-in thresholds. Expected contributions for the U.S. plans through 2010 are expected to be in the annual range of $5 million to $10 million. Pension expense is expected to
be approximately $1 million lower in 2007.

Hickson U.K. Pension Plans

As of September 30, 2007 and 2006, the components of net periodic benefit costs for the Hickson U.K. and the Hickson U.K. Senior Executive retirement plans were as follows:



|                                                  |  |                                  |      |   |                                 |   |      |      |  |   |       |   |  |   |       |  
|------------------------------------------------- |  | -------------------------------- | ---- | - | ------------------------------- | - | ---- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                  |  | Three Months Ended September 30, |      |   | Nine Months Ended September 30, |  
|($ in millions)                                   |  | 2007                             |      |   | 2006                            |   |      | 2007 |  |   | 2006  |  
|Net Periodic Benefit Expense:                     |  |                                  |      |   |                                 |   |      |      |  |   |       |   |  |   |       |  
|Service cost (benefits earned during the period)  |  | $                                | 0.6  |   |                                 | $ | 0.3  |      |  | $ | 1.8   |   |  | $ | 0.7   |  
|Interest cost on the projected benefit obligation |  |                                  | 5.7  |   |                                 |   | 6.0  |      |  |   | 16.9  |   |  |   | 15.2  |  
|Expected return on plan assets                    |  |                                  | (4.9 | ) |                                 |   | (4.3 | )    |  |   | (14.6 | ) |  |   | (12.6 | )
|Recognized actuarial loss                         |  |                                  | 1.3  |   |                                 |   | 1.6  |      |  |   | 3.8   |   |  |   | 4.5   |  
|                                                  |  |                                  |      |   |                                 |   |      |      |  |   |       |   |  |   |       |  
|Net periodic benefit cost                         |  | $                                | 2.7  |   |                                 | $ | 3.6  |      |  | $ | 7.9   |   |  | $ | 7.8   |  
|                                                  |  |                                  |      |   |                                 |   |      |      |  |   |       |   |  |   |       |  

The Company has minimum funding requirements for its U.K. pension plans of approximately $20
million, which is approximately $6 million higher than 2006, and pension expense is expected to be approximately $1 million lower in 2007. As of September 30, 2007, there has been $14.1 million contributed to the U.K. pension plans.



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ARCH CHEMICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)



Deferred Compensation Plans

In 2004, the Company established rabbi trusts (collectively, the Rabbi Trust) for its three deferred compensation plans, namely, the 1999 Stock Plan for Non-employee Directors, the Supplemental
Contributing Employee Ownership Plan and the Employee Deferral Plan. At September 30, 2007, the Company had $9.2 million in Other assets and a deferred compensation liability of $14.3 million in Other liabilities in the Condensed Consolidated
Balance Sheets. At December 31, 2006, the Company had $7.2 million in Other assets and a deferred compensation liability of $10.3 million in Other liabilities in the Condensed Consolidated Balance Sheets. In addition, at September 30, 2007
and December 31, 2006, respectively, the Company had $2.4 million recorded as a reduction of equity for the Companys stock held in the Rabbi Trust.

11. Comprehensive Income

Comprehensive income includes the change in the cumulative translation adjustment, pension
liability adjustments and the change in the fair value of derivative financial instruments, which qualify for hedge accounting. Comprehensive income for the three and nine months ended September 30, 2007 and 2006 was as follows:



|                                                     |  |                                 |       |                                |      |   |      |  |   |      |   |  |   |     
|---------------------------------------------------- |  | ------------------------------- | ----- | ------------------------------ | ---- | - | ---- |  | - | ---- | - |  | - | ----
|                                                     |  | Three MonthsEnded September 30, |       | Nine MonthsEnded September 30,
|($ in millions)                                      |  | 2007                            |       |                                | 2006 |   | 2007 |  |   | 2006
|Net income (loss)                                    |  | $                               | (12.6 | )                              |      | $ | 7.3  |  | $ | 24.8 |   |  | $ | 42.5
|                                                     |  |                                 |       |                               
|Foreign currency translation adjustments             |  |                                 | 24.4  |                                |      |   | 7.5  |  |   | 33.2 |   |  |   | 22.5
|Pension liability adjustment                         |  |                                 | 1.7   |                                |      |   |     |  |   | 5.1  |   |  |   |    
|Net unrealized gain (loss) on derivative instruments |  |                                 | 0.4   |                                |      |   | 0.8  |  |   | (0.5 | ) |  |   | 0.5 
|                                                     |  |                                 |       |                                |      |   |      |  |   |      |   |  |   |     
|Total other comprehensive income                     |  |                                 | 26.5  |                                |      |   | 8.3  |  |   | 37.8 |   |  |   | 23.0
|                                                     |  |                                 |       |                                |      |   |      |  |   |      |   |  |   |     
|Comprehensive income                                 |  | $                               | 13.9  |                                |      | $ | 15.6 |  | $ | 62.6 |   |  | $ | 65.5
|                                                     |  |                                 |       |                                |      |   |      |  |   |      |   |  |   |     

The Company does not provide for U.S. income taxes on foreign currency translation adjustments
since it does not provide for such taxes on undistributed earnings of foreign subsidiaries, except for affiliated companies at equity, since the Company intends to continue to reinvest these earnings.

12. Accumulated Net Unrealized Gain (Loss) on Derivative Instruments

Changes in the Accumulated net unrealized gain (loss) on derivative instruments for the three and nine months ended September 30, 2007 and 2006 are as follows:



|                                                                                      |  |                                 |      |   |                                |   |      |      |  |   |      |   |  |   |      |  
|------------------------------------------------------------------------------------- |  | ------------------------------- | ---- | - | ------------------------------ | - | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                                                                      |  | Three MonthsEnded September 30, |      |   | Nine MonthsEnded September 30, |  
|($ in millions)                                                                       |  | 2007                            |      |   | 2006                           |   |      | 2007 |  |   | 2006 |  
|Beginning balance of accumulated net unrealized gain (loss) on derivative instruments |  | $                               | (0.1 | ) |                                | $ | (0.5 | )    |  | $ | 0.8  |   |  | $ | (0.2 | )
|Net gain (loss) on cash flow hedges                                                   |  |                                 | 0.1  |   |                                |   | 0.3  |      |  |   | (0.5 | ) |  |   |     |  
|Reclassification into earnings                                                        |  |                                 | 0.3  |   |                                |   | 0.5  |      |  |   |     |   |  |   | 0.5  |  
|                                                                                      |  |                                 |      |   |                                |   |      |      |  |   |      |   |  |   |      |  
|Ending balance of accumulated net unrealized gain on derivative instruments           |  | $                               | 0.3  |   |                                | $ | 0.3  |      |  | $ | 0.3  |   |  | $ | 0.3  |  
|                                                                                      |  |                                 |      |   |                                |   |      |      |  |   |      |   |  |   |      |  

The unrealized losses on derivative instruments included in Accumulated other comprehensive loss
are expected to be reclassified into earnings within the next 12 months.

13. Segment Reporting

The Company has organized its business portfolio into two operating segments to reflect the Companys business strategy. The two segments are
treatment products and performance products. The treatment products segment includes three reportable business units: the HTH water products business, the personal care and industrial biocides business, and the wood protection and industrial
coatings business.



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ARCH CHEMICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)



As a result of the sale of the performance urethanes business in Venezuela, the Company has adjusted
its prior year financial statements to include the results of operations of this business and the loss on the disposition as a component of discontinued operations in accordance with the Statement of Financial Accounting Standard No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). The operations of the performance urethanes business in Venezuela are not included in the table below.



|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------------------------- |  | ------------------------------- | ----- | - | ------------------------------- | - | ----- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                                    |  | Three MonthsEnded September 30, |       |   | Nine Months Ended September 30, |  
|($ in millions)                                                                                     |  | 2007                            |       |   | 2006                            |   |       | 2007 |  |   | 2006    |  
|Sales:                                                                                              |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Treatment Products:                                                                                 |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|HTH Water Products                                                                                  |  | $                               | 108.6 |   |                                 | $ | 118.5 |      |  | $ | 395.1   |   |  | $ | 415.7   |  
|Personal Care and Industrial Biocides                                                               |  |                                 | 84.2  |   |                                 |   | 71.8  |      |  |   | 243.8   |   |  |   | 213.7   |  
|Wood Protection and Industrial Coatings                                                             |  |                                 | 124.5 |   |                                 |   | 97.4  |      |  |   | 331.5   |   |  |   | 287.2   |  
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Total Treatment Products                                                                            |  |                                 | 317.3 |   |                                 |   | 287.7 |      |  |   | 970.4   |   |  |   | 916.6   |  
|Performance Products:                                                                               |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Performance Urethanes                                                                               |  |                                 | 55.2  |   |                                 |   | 55.9  |      |  |   | 159.5   |   |  |   | 164.4   |  
|Hydrazine                                                                                           |  |                                 | 4.0   |   |                                 |   | 4.9   |      |  |   | 13.5    |   |  |   | 14.6    |  
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Total Performance Products                                                                          |  |                                 | 59.2  |   |                                 |   | 60.8  |      |  |   | 173.0   |   |  |   | 179.0   |  
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Total Sales                                                                                         |  | $                               | 376.5 |   |                                 | $ | 348.5 |      |  | $ | 1,143.4 |   |  | $ | 1,095.6 |  
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Segment Operating Income (Loss), including Equity in Earnings of Affiliated Companies:              |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Treatment Products:                                                                                 |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|HTH Water Products                                                                                  |  | $                               | 6.4   |   |                                 | $ | 5.9   |      |  | $ | 52.9    |   |  | $ | 52.1    |  
|Personal Care and Industrial Biocides                                                               |  |                                 | 15.1  |   |                                 |   | 10.5  |      |  |   | 41.8    |   |  |   | 33.4    |  
|Wood Protection and Industrial Coatings                                                             |  |                                 | 4.6   |   |                                 |   | 1.2   |      |  |   | 12.9    |   |  |   | 3.6     |  
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Total Treatment Products                                                                            |  |                                 | 26.1  |   |                                 |   | 17.6  |      |  |   | 107.6   |   |  |   | 89.1    |  
|Performance Products:                                                                               |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Performance Urethanes                                                                               |  |                                 | 3.3   |   |                                 |   | 5.4   |      |  |   | 10.0    |   |  |   | 12.9    |  
|Hydrazine                                                                                           |  |                                 |      |   |                                 |   | (0.5  | )    |  |   | 13.2    |   |  |   | (0.6    | )
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Total Performance Products                                                                          |  |                                 | 3.3   |   |                                 |   | 4.9   |      |  |   | 23.2    |   |  |   | 12.3    |  
|Corporate Unallocated                                                                               |  |                                 | (15.7 | ) |                                 |   | (7.3  | )    |  |   | (34.5   | ) |  |   | (24.0   | )
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Total Segment Operating Income, including Equity in Earnings of Affiliated Companies                |  |                                 | 13.7  |   |                                 |   | 15.2  |      |  |   | 96.3    |   |  |   | 77.4    |  
|Equity in Earnings of Affiliated Companies                                                          |  |                                 | (0.1  | ) |                                 |   | (0.1  | )    |  |   | (0.3    | ) |  |   | (0.6    | )
|Restructuring and Impairment                                                                        |  |                                 | (0.9  | ) |                                 |   |      |      |  |   | (16.5   | ) |  |   |        |  
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Total Operating Income                                                                              |  |                                 | 12.7  |   |                                 |   | 15.1  |      |  |   | 79.5    |   |  |   | 76.8    |  
|Interest expense, net                                                                               |  |                                 | (3.1  | ) |                                 |   | (4.9  | )    |  |   | (11.4   | ) |  |   | (15.6   | )
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Total Income from Continuing Operations before Taxes and Equity in Earnings of Affiliated Companies |  | $                               | 9.6   |   |                                 | $ | 10.2  |      |  | $ | 68.1    |   |  | $ | 61.2    |  
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Capital Spending:                                                                                   |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Treatment Products:                                                                                 |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|HTH Water Products                                                                                  |  | $                               | 2.6   |   |                                 | $ | 2.8   |      |  | $ | 5.9     |   |  | $ | 5.7     |  
|Personal Care and Industrial Biocides                                                               |  |                                 | 5.4   |   |                                 |   | 1.7   |      |  |   | 13.9    |   |  |   | 4.9     |  
|Wood Protection and Industrial Coatings                                                             |  |                                 | 1.7   |   |                                 |   | 1.4   |      |  |   | 5.7     |   |  |   | 3.2     |  
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Total Treatment Products                                                                            |  |                                 | 9.7   |   |                                 |   | 5.9   |      |  |   | 25.5    |   |  |   | 13.8    |  
|Performance Products:                                                                               |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Performance Urethanes                                                                               |  |                                 | 0.6   |   |                                 |   | 0.5   |      |  |   | 2.2     |   |  |   | 1.9     |  
|Hydrazine                                                                                           |  |                                 |      |   |                                 |   | 0.5   |      |  |   | 0.2     |   |  |   | 0.5     |  
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Total Performance Products                                                                          |  |                                 | 0.6   |   |                                 |   | 1.0   |      |  |   | 2.4     |   |  |   | 2.4     |  
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  
|Total Capital Spending                                                                              |  | $                               | 10.3  |   |                                 | $ | 6.9   |      |  | $ | 27.9    |   |  | $ | 16.2    |  
|                                                                                                    |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |         |  



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ARCH CHEMICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)



Segment operating income includes the equity in earnings of affiliated companies and excludes
restructuring (income) expense and impairment expense. The Company includes the equity income (loss) of affiliates in its segment operating results as it believes it to be relevant and useful information for investors as these affiliates are the
means by which certain segments participate in certain geographic regions. Furthermore, the Company includes equity income (loss) as a component of segment operating results because the Company includes it to measure the performance of the segment.
Other gains and (losses) that are directly related to the segments are included in segment operating results. Included in the hydrazine operating results for the nine months ended September 30, 2007 is a gain of $12.8 million related to the
completion of a U.S. Government contract. The Company believes the exclusion of restructuring (income) expense and impairment expense from segment operating income provides additional perspective on the Companys underlying business trends and
provides useful information to investors by excluding amounts from the Companys results that the Company believes are not indicative of ongoing operating results.

14. Commitments and Contingencies

There are no CCA-related putative class action lawsuits pending
against the Company or its subsidiaries, and there are fewer than ten other CCA-related personal injury lawsuits in which the Company and/or one or more of the Companys subsidiaries is named. Individuals in these lawsuits allege injury
occurred as a result of exposure to CCA-treated wood. The Company and its subsidiaries deny the material allegations of all the various CCA-related claims and have vigorously defended and will continue to vigorously defend them. As a result, legal
defense and related costs associated with these cases may be significant in the future. Based on the information currently available to the Company, the Company does not believe the resolution of these cases is likely to have a material adverse
effect on its consolidated financial condition, cash flow or results of operations.

In Brazil, the Company uses a third-party agent to
process and pay certain state import duties. The Company was notified of claims for unpaid state import duties, including interest and potential penalties. Some of the claims have been settled. The Company has $1.6 million accrued for the remaining
open tax year. As of September 30, 2007, the Company had estimated contingent liabilities related to the claims of approximately $0.3 million.

In May 2004, the U.S. Department of Commerce (DOC) and the U.S. International Trade Commission (ITC) initiated antidumping duty investigations of Chinese and Spanish suppliers of chlorinated isocyanurates and related
chemicals as a result of petitions filed by domestic producers who asserted that these products were being imported and sold in the U.S.A. at prices below normal value. One of the suppliers being investigated is a major supplier of chlorinated
isocyanurates to the Company. In May 2005, the DOC issued its final determinations and found margins ranging from approximately 76% to 286% for Chinese producers and approximately 25% for Spanish producers, with a margin of approximately 76%
applicable to the Companys primary Chinese supplier. In June 2005, the ITC found that the imports caused injury to the domestic industry following which the DOC issued antidumping orders incorporating the ITCs findings. As a result of
the orders, the Company started to make cash deposits of the estimated antidumping duties at the rate of 76% of the value of the product imported. As permitted annually under the law, upon request of the domestic producers and the Companys
supplier, the DOC commenced a review to determine the final antidumping duty rate for the period of December 16, 2004 through May 31, 2006 (the review period). On July 17, 2007, the DOC published its preliminary
determination that the final duties assessed against the Companys supplier for the review period should be reduced to 6.75%. The Company estimates the net impact of this duty reduction would result in a pre-tax benefit of approximately $15
million. The Company expects to recognize a benefit of a reduced duty rate in the fourth quarter of 2007 as the final determination is expected to be published in the fourth quarter, but no later than January 2008. Upon publication of the final
determination, the Company will begin paying cash deposits for future imports at the final published rate (preliminarily determined to be 6.75%) and will represent the new estimated rate for such future periods.

At the request of our supplier and others, the DOC has initiated an administrative review to determine the final rate for the period of June 1, 2006
through May 31, 2007 during which the 76% estimated rate applied.

In April 2005 and following a governmental investigation, when the
Company indirectly owned a 49% interest in Koppers Arch Wood Protection (NZ) Limited (KANZ), a New Zealand company, KANZ was named as a defendant in a civil suit filed by the New Zealand Commerce Commission (NZCC) regarding
industry competitive practices. A number of other companies and individuals, including Koppers Arch Investments Pty Limited (KAIP), and certain unrelated entities were also named as defendants.



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ARCH CHEMICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)



KANZ manufactures and markets wood preservative products throughout New Zealand and KAIP is a holding company for related joint venture companies. In 2006,
the suit was settled with the NZCC for the payment of NZ $3.7 million ($2.2 million).

Similarly, when the Company indirectly owned a 49%
interest in Koppers Arch Wood Protection (Aust) Pty Ltd (KAWP), an Australian company, KAWP made an application for leniency under the Australian Competition and Consumer Commissions (ACCC) policy for cartel
conduct. The ACCC granted immunity to KAWP, subject to fulfillment of certain conditions. If conditions are not fulfilled, the ACCC may penalize KAWP for any violations of the competition laws of Australia. Such penalties, if assessed against KAWP,
could have a material adverse effect on KAWPs business, financial condition, cash flows and results of operations.

In January 2007,
a competitor company in New Zealand filed a complaint in the High Court of New Zealand against KANZ, KAIP, and several other companies and individuals unrelated to the Company. The complaint alleges, among other things, that the plaintiff
suffered damages as a result of the defendants violations of New Zealands anti-competition laws. It seeks NZ$4.9 million (approximately $3.6 million) in damages plus unspecified punitive damages. These claims, if successful, could have a
material adverse effect on KANZs and KAIPs business, financial condition, cash flows and results of operations. Additionally, other companies may bring claims similar to these against KANZ and KAIP in the future.

On July 5, 2007, KANZ, KAIP and KAWP became the Companys wholly-owned indirect subsidiaries as a result of the acquisition of the
Companys joint venture partners ownership interests. In connection with that acquisition, our joint venture partner agreed to indemnify the Company up to $19 million for 51 percent of any losses arising out of the competitors
claims and any third party claims instituted within the two years following the closing that are based on substantially the same facts that are the subject of the NZCC and ACCC investigations.

As a result of the Companys ownership in such Australian and New Zealand entities, an unfavorable resolution and any additional litigation relating
to this matter could have a material adverse effect on the Companys results of operations and cash flow.

In 2003, the exclusive
licensee of a (now expired) French patent relating to certain pool cleaning devices brought a patent infringement lawsuit in France against a pool cleaning device manufacturer. Arch Water Products France (AWP), the Companys French
subsidiary which sold some of the manufacturers devices, was also named in the lawsuit. In 2005, the French court found that certain devices sold by AWP and the manufacturer infringed the licensees patent, awarded 250,000
(approximately $0.3 million) as a preliminary amount of damages against AWP and the manufacturer, jointly and severally, and appointed an expert to investigate and report as to the extent of the actual damages. AWP paid the 250,000
(approximately $0.3 million) award plus interest, and was reimbursed by the manufacturer.

AWP and the manufacturer are appealing the case.
The damage experts investigation continues, with plaintiff claiming its damages to be approximately 7.8 million (approximately $11.0 million) and with AWP asserting that if there is patent infringement, its share of any damages
should be less than 1.0 million (approximately $1.4 million). AWP intends to vigorously defend itself against the plaintiff and, if necessary, may bring claims against the manufacturer.

In 1999, Olin and the Company entered into an agreement, which specifies that the Company is only responsible for certain environmental liabilities at
the Companys current operating plant sites and certain offsite locations. Olin retained the liability for all former Olin plant sites and former waste disposal sites. In connection with the acquisition of Hickson, the Company acquired certain
environmental exposures and potential liabilities of current and past operating sites all of which have been accrued for in the accompanying condensed consolidated financial statements.

Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from
investigatory studies and remedial activities, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and
financial capability of other potentially responsible parties and the Companys ability to obtain contributions from other parties and the length of time over which site remediation occurs. It is possible that some of these matters (the
outcomes of which are subject to various uncertainties) may be resolved unfavorably against the Company.



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ARCH CHEMICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)



There are a variety of non-environmental legal proceedings pending or threatened against the Company.
There have been no significant changes in status of such items, other than those described above, during the three and nine months ended September 30, 2007.

15. Other (Gains) and Losses

The Companys previous supply contract included a storage and distribution services
agreement with the U.S. Government. At the completion of the contract, there was a final payment due of $13.4 million from the U.S. Government upon non-renewal. In the first quarter of 2007, the Company began the shutdown of the site and the
necessary decommission, demolition and severance and recorded an estimated liability for these costs of $0.6 million. As a result, the Company has recorded the gain, net of expenses, of $12.8 million as a component of Other (gains) and losses in the
Condensed Consolidated Statements of Income.

16. Income Taxes

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the
accounting for uncertainty in tax positions and requires that a company recognize in its financial statements the impact of a tax position, only if that position is more likely than not of being sustained on audit, based on the technical merits of
the position. The Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized no material adjustment in the liability for unrecognized income tax benefits.

The total amount of unrecognized tax benefits at September 30, 2007 of $10.4 million changed by $0.1 million as compared to the amount at
June 30, 2007 of $10.3 million. The principal reason for the change was the recognition of $0.1 million of interest expense associated with the Companys uncertain tax positions. The remaining $10.4 million of unrecognized tax benefits
will impact the Companys annual effective tax rate if recognized. The Company expects to recognize $0.4 million of the remaining $10.4 million of unrecognized tax benefits prior to September 30, 2008 upon the expiration of the period to
assess tax in various state and foreign taxing jurisdictions.

The Companys policy regarding the classification of interest and
penalties recognized in accordance with FIN 48 is to classify them as income tax expense in its financial statements. During the nine months ended September 30, 2007, the total amount of interest and penalties recognized in accordance with FIN
48 as a component of income tax expense is $0.3 million.

The Company is subject to U.S. federal income tax as well as income tax of
multiple foreign and state jurisdictions. The tax years 1999-2006 remain subject to examination in the U.S. which is the major taxing jurisdiction where the Company is subject to tax. The period of IRS assessment from the 1999 through 2002 tax
years, which would have normally expired under the statute of limitations, remains open to examination and adjustment by the IRS only to the extent of the carryforwards generated in those years. The tax years 2004 through 2006 and 2002 through 2006
remain open to examination in the U.K. and Italy, respectively, which are major taxing jurisdictions where the Company is subject to foreign taxes.

In the third quarter, legislation was finalized in the U.K. which reduced the corporate tax rate from 30% to 28%. The Company has significant U.K. deferred tax assets principally related to the Companys U.K. pension plans. As a result
of the tax rate change, the Companys deferred tax assets were reduced, with a corresponding increase in tax expense. Included in the three and nine months ended September 30, 2007, is $3.0 million of tax expense that represents the
reduction of a tax benefit previously recorded directly through equity, related to the U.K. pension liabilities. The original tax benefit was not recorded in the income statement. This charge is non-cash and is not expected to reverse in the
foreseeable future.

17. Restructuring

On April 30, 2007, the Company decided to discontinue the manufacturing of its BIT molecule and begin sourcing from third-party suppliers in an effort to reduce the overall cost of certain of its products in the industrial
biocides business. The Company will



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ARCH CHEMICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)



continue to produce formulations containing BIT in both the United States and England for global end-market uses. As a result of this
decision, the Company has closed its Seal Sands, England manufacturing location and has downsized manufacturing at its Huddersfield, England location. This resulted in the termination of approximately 40 employees as well as
termination of several service agreements. During the three and nine months ended September 30, 2007, the Company recorded pre-tax charges of $0.9 million and $16.5 million, respectively. $0.4 million of the pre-tax charge during the nine
months ended September 30, 2007 relates to inventory disposal costs and is included in Cost of Goods Sold in the accompanying Condensed Consolidated Statements of Income. The charge during the nine months ended September 30, 2007 includes
a non-cash portion which is associated with the impairment of the manufacturing assets. The Company expects the remainder of the charges to be incurred by the end of 2007, estimated to be less than $1.0 million. The Company expects to realize
projected annual pre-tax cost savings of approximately $6 million beginning in 2008 from these actions. Also included in restructuring in the nine months is a pre-tax cash charge of approximately $0.9 million related to executive severance. The
Company expects to incur an additional $2.0 million pre-tax charge related to pension settlement in the first quarter of 2008 related to this severance.

The following table summarizes the activity related to the restructuring costs:



|                              |  |                 |      |   |                   |   |      |             |  |   |       |   |  |   |      |  
|----------------------------- |  | --------------- | ---- | - | ----------------- | - | ---- | ----------- |  | - | ----- | - |  | - | ---- | -
|($ in millions)               |  | Severance Costs |      |   | Asset Write-downs |   |      | Other costs |  |   | Total |  
|Provision                     |  | $               | 4.3  |   |                   | $ | 8.6  |             |  | $ | 3.6   |   |  | $ | 16.5 |  
|Payments                      |  |                 | (3.8 | ) |                   |   |     |             |  |   | (1.0  | ) |  |   | (4.8 | )
|Utilized                      |  |                 |     |   |                   |   | (8.6 | )           |  |   | (0.4  | ) |  |   | (9.0 | )
|                              |  |                 |      |   |                   |   |      |             |  |   |       |   |  |   |      |  
|Balance at September 30, 2007 |  | $               | 0.5  |   |                   | $ |     |             |  | $ | 2.2   |   |  | $ | 2.7  |  
|                              |  |                 |      |   |                   |   |      |             |  |   |       |   |  |   |      |  

18. Acquisition

On July 5, 2007, the Company completed the acquisition of the remaining 51 percent share of its Australian joint venture, KAWP. KAWP produces and markets a full line of wood preservative products tailored for the
wood processing and forestry industries in Australia, New Zealand, South Africa, Asia and the Pacific Islands.

The purchase price was
$19.0 million, consisting of a cash payment of $15.5 million and the assumption of 51 percent of the joint venture net debt of $6.8 million. Additionally, the purchase agreement included a working capital adjustment. The purchase price, net of the
working capital adjustment, was paid during the three months ended September 30, 2007. The acquisition was financed from available cash. The Company is in the process of obtaining third-party valuations of certain intangible assets; thus, the
allocation of the purchase price is preliminary and subject to refinement.

Annual sales for KAWP for the years ended December 31,
2006, 2005 and 2004 were $54.1 million, $54.7 million and $50.8 million, respectively. Net income (loss) for the years ended December 31, 2006, 2005 and 2004 was $1.2 million, $(0.9) million and $3.3 million, respectively. Prior to the
acquisition, the Company recorded its proportionate share of the results of operations of this joint venture as a component of Equity in Earnings of Affiliated Companies in the Condensed Consolidated Income Statement.



18



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##### Table of Contents

Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations

Overview

In analyzing the results of operations for the Company and its segments, the following matters should be considered. The
Companys Treatment segment is seasonal in nature, in particular the HTH water products business. Historically, approximately 40  50% of the sales in the HTH water products business occur in the second quarter of the fiscal year, as
retail sales in the U.S. residential pool market are concentrated between Memorial Day and the Fourth of July. Accordingly, results of operations for the periods presented are not necessarily indicative of the results to be expected for an entire
fiscal year. Segment operating income includes the equity in earnings of affiliated companies and excludes restructuring (income) expense and impairment expense. The Company includes the equity earnings of affiliated companies in its segment
operating results as it believes it to be relevant and useful information for investors as these affiliates are the means by which certain segments participate in certain geographic regions. Furthermore, equity in earnings are included as a
component of segment operating results because the Company includes it to measure the performance of the segment. Other gains and (losses) that are directly related to the segments are included in segment operating results.

As a result of the sale of the performance urethanes business in Venezuela, the Company has adjusted its prior year financial statements to include the
results of operations of this business and the loss on the disposition as a component of discontinued operations in accordance with the Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS 144).

The term Company as used in Item 2 of this Report means Arch Chemicals,
Inc. and its consolidated subsidiaries unless the context indicates otherwise.

Results of Operations

Consolidated



|                                                        |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|------------------------------------------------------- |  | ------------------------------- | ----- | - | ------------------------------- | - | ----- | ---- |  | - | ------- | - |  | - | -------
|                                                        |  | Three MonthsEnded September 30, |       |   | Nine Months Ended September 30,
|(In millions, except per share amounts)                 |  | 2007                            |       |   | 2006                            |   |       | 2007 |  |   | 2006   
|Sales                                                   |  | $                               | 376.5 |   |                                 | $ | 348.5 |      |  | $ | 1,143.4 |   |  | $ | 1,095.6
|                                                        |  |                                 |       |  
|Gross margin                                            |  | $                               | 103.2 |   |                                 | $ | 86.3  |      |  | $ | 330.2   |   |  | $ | 299.6  
|Selling and administration                              |  |                                 | 84.5  |   |                                 |   | 66.7  |      |  |   | 232.6   |   |  |   | 208.4  
|Research and development                                |  |                                 | 5.1   |   |                                 |   | 4.5   |      |  |   | 14.8    |   |  |   | 14.4   
|Other (gains) and losses                                |  |                                 |      |   |                                 |   |      |      |  |   | (12.8   | ) |  |   |       
|Restructuring                                           |  |                                 | 0.9   |   |                                 |   |      |      |  |   | 7.5     |   |  |   |       
|Impairment                                              |  |                                 |      |   |                                 |   |      |      |  |   | 8.6     |   |  |   |       
|Interest expense, net                                   |  |                                 | 3.1   |   |                                 |   | 4.9   |      |  |   | 11.4    |   |  |   | 15.6   
|Equity in earnings of affiliated companies              |  |                                 | 0.1   |   |                                 |   | 0.1   |      |  |   | 0.3     |   |  |   | 0.6    
|Income tax expense                                      |  |                                 | 7.4   |   |                                 |   | 2.7   |      |  |   | 29.6    |   |  |   | 19.9   
|                                                        |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Income from continuing operations                       |  |                                 | 2.3   |   |                                 |   | 7.6   |      |  |   | 38.8    |   |  |   | 41.9   
|Income (loss) from discontinued operations, net of tax  |  |                                 |      |   |                                 |   | (0.3  | )    |  |   | 0.9     |   |  |   | 0.6    
|Loss on sale of discontinued operations, net of tax     |  |                                 | (14.9 | ) |                                 |   |      |      |  |   | (14.9   | ) |  |   |       
|                                                        |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Net income (loss)                                       |  | $                               | (12.6 | ) |                                 | $ | 7.3   |      |  | $ | 24.8    |   |  | $ | 42.5   
|                                                        |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |        
|Diluted income per common share  continuing operations |  | $                               | 0.09  |   |                                 | $ | 0.31  |      |  | $ | 1.58    |   |  | $ | 1.73   
|                                                        |  |                                 |       |   |                                 |   |       |      |  |   |         |   |  |   |        



19



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations - Continued



Three Months Ended September 30, 2007 Compared to 2006

Sales increased $28.0 million, primarily due to the acquisition of the remaining 51 percent share of the Companys Australian joint venture
Koppers Arch Wood Protection (Aust) Pty Ltd. (KAWP) ($16.5 million). Excluding the acquisition, sales increased by $11.5 million, or approximately three percent, principally due to favorable foreign exchange (approximately
three percent) and favorable pricing (approximately one percent), partially offset by a decrease in volume (approximately one percent). The higher pricing was driven by the HTH water products and wood protection businesses, partially
offset by lower pricing in the industrial biocides and performance products businesses. Volume decreased as higher demand in the personal care, industrial biocides, and industrial coatings businesses was more than offset by lower volume in HTH water
products.

Gross margin percentage was 27.4% and 24.8% for 2007 and 2006, respectively. The improvement in margins was principally driven
by higher volumes in the industrial biocides business and to a lesser extent the improved sales prices for the wood protection and HTH water products businesses, partially offset by higher raw materials costs for the industrial coatings business.

Selling and administration expenses increased as a percentage of sales to 22.4% in 2007 from 19.1% in 2006. The $17.8 million
increase is primarily due to an $8.3 million increase in compensation-related expense as a result of the mark-to-market impact of the higher stock price associated with the Companys performance-based stock awards and deferred compensation
plans. The increase in selling and administration expenses is also due to the KAWP acquisition and unfavorable foreign exchange.

Restructuring expense of $0.9 million relates to severance costs related to additional headcount reductions in the industrial biocides business resulting from the Companys decision to discontinue the manufacturing of its BIT molecule
(BIT restructuring) at two UK manufacturing locations and begin sourcing from third-party suppliers.

Interest expense, net,
decreased $1.8 million as a result of repayment of maturing notes with lower cost borrowings and lower net debt.

The tax rate on Income
from continuing operations for the three months ended September 30, 2007 and 2006 was 76.3% and 26.2%, respectively. In the third quarter of 2007, legislation was finalized in the United Kingdom (U.K.) which reduced the corporate
tax rate from 30 percent to 28 percent. The Company has significant U.K. deferred tax assets principally related to the Companys U.K. pension plans. As a result of the tax rate change, the Companys deferred tax assets were reduced, with
a corresponding increase in tax expense. Included in the three months ended September 30, 2007, is $3.0 million of non-cash tax expense that represents the reduction of a tax benefit related to the U.K. pension liabilities, previously recorded
directly through equity. The original tax benefit was not recorded in the income statement. Excluding the effect of the legislation, the effective tax rate is comparable to the estimated full year effective tax rate of 34.0% for 2007.

The Loss from discontinued operations, net, during the three months ended September 30, 2007 relates to the sale of the non-strategic performance
urethanes business in Venezuela. The Company recorded a non-cash, after-tax loss of $14.9 million on this transaction principally due to the recognition of historical foreign currency translation losses.

Nine Months Ended September 30, 2007 Compared to 2006

Sales increased $47.8 million, partially due to the acquisition of the remaining 51 percent share of the Companys Australian joint venture KAWP ($16.5 million). Excluding the acquisition, sales increased
$31.3 million, or approximately three percent, due to favorable foreign exchange (approximately two percent) and favorable pricing (approximately one percent). The higher pricing was driven by the wood protection and HTH water products
businesses, partially offset by lower pricing in the personal care, industrial biocides and performance products businesses.



20



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations - Continued



Gross margin percentage was 28.9% and 27.3% for 2007 and 2006, respectively. The improvement in
margins was principally driven by the improved sales prices for the wood protection and HTH water products businesses, offset by increased manufacturing costs in the industrial coatings business. Included in Cost of goods sold is approximately $0.4
million of costs related to the BIT restructuring.

Selling and administration expenses increased as a percentage of sales to 20.3% in 2007
from 19.0% in 2006. These expenses increased in amount by $24.2 million. The increase is primarily due to an $8.3 million increase in compensation-related expense related to the mark-to-market impact of the higher stock price associated with
the Companys performance-based stock awards and deferred compensation plans. In addition, the higher selling and administration expenses is the result of unfavorable foreign exchange and the KAWP acquisition.

Other (gains) and losses represents a gain for the completion of a contract with the U.S. Government of $13.4 million, offset by estimated shutdown costs
of $0.6 million.

Restructuring expense of $7.5 million includes $4.3 million for severance costs principally related to headcount
reductions in the industrial biocides business resulting from the Companys decision to discontinue the manufacturing of its BIT molecule at two UK manufacturing locations and begin sourcing from third-party suppliers. In addition,
restructuring expense includes $3.2 million primarily for service agreements at the two UK sites from which the Company will no longer receive any economic benefit. Also included in restructuring is $0.9 million related to executive severance. The
Company expects to incur an additional $2.0 million pre-tax charge related to pension settlement in the first quarter of 2008 related to this severance.

The impairment charge of $8.6 million is related to the manufacturing assets in the Seal Sands, England and Huddersfield, England manufacturing locations that were impacted by the Companys decision to
discontinue the manufacturing of its BIT molecule and to source the material from third-party suppliers.

Interest expense, net, decreased
$4.2 million as a result of repayment of maturing notes with lower cost borrowings.

The tax rate on Income from continuing operations for
the nine months ended September 30, 2007 and 2006 was 43.3% and 32.2%, respectively. In the third quarter of 2007, legislation was finalized in the U.K. which reduced the corporate tax rate from 30% to 28%. The Company has significant U.K.
deferred tax assets principally related to the Companys U.K. pension plans. As a result of the tax rate change, the Companys deferred tax assets were reduced, with a corresponding increase in tax expense. Included in the nine months
ended September 30, 2007, is $3.0 million of non-cash tax expense that represents the reduction of a tax benefit related to the U.K. pension liabilities previously recorded directly through equity. The original tax benefit was not recorded in
the income statement. Additionally, the net impact of Other (gains) and losses and the restructuring and impairment charges was to increase the effective tax rate by approximately three percent for the nine months ended September 30, 2007.
Excluding the effect of the U.K. tax legislation, other (gains) and losses, and the restructuring and impairment charges, the effective tax rate is comparable to the estimated full year effective tax rate of 34.0% for 2007.

Income (loss) from discontinued operations, net, during the nine months ended September 30, 2007 represents the results of operations for the
non-strategic performance urethanes business in Venezuela, until its sale in September 2007.

The Loss on sale of discontinued operations
during the nine months ended September 30, 2007 relates to the divestiture of the non-strategic performance urethanes business in Venezuela. The Company recorded a non-cash, after-tax loss of $14.9 million on this transaction due to the
recognition of historical foreign currency translation losses.



21



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations - Continued



Full Year Outlook

In an effort to reduce the overall cost of certain of its products in the industrial biocides business, the Company has made a decision
to discontinue the manufacturing of its BIT molecule and begin sourcing from third-party suppliers. The Company will continue to produce formulations containing BIT in both the United States and England for global end-market
uses. As a result of this decision, the Company has closed its Seal Sands, England manufacturing location and has downsized manufacturing at its Huddersfield, England location. This resulted in the termination of
approximately 40 employees as well as several service agreements. In the nine months ended September 30, 2007, the Company recorded a pre-tax charge of $16.5 million and expects the remainder of the charge to be incurred in the three
months ended December 31, 2007. The remainder of the charge is expected to be less than $1.0 million. The Company expects to realize projected annual pre-tax cost savings of approximately $6 million beginning in 2008 from
these actions.

The Companys imports of chlorinated isocyanurates (isos) have been subject to antidumping duties since
December 2004. In June 2005, the U.S. Department of Commerce (DOC) issued its estimated duty rate applicable to the Companys major Chinese supplier. Since such date, the Company has been making cash deposits of the estimated
antidumping duties at the rate of 76% of the value imported. At the request of certain producers and our supplier, the DOC conducted an administrative review of this antidumping duty order on isos imported from China from December 16, 2004
through May 31, 2006 to determine the final antidumping duty rate. On July 17, 2007, the DOC published its preliminarily determination that the final duty assessed against our supplier for the period under review should be reduced
from 76% to 6.75%. The Company estimates the net impact of this duty reduction would result in a pre-tax benefit of approximately $15 million. The Company expects to recognize a benefit of a reduced duty rate in the fourth quarter of 2007
as the final determination is expected to be published in the fourth quarter, but no later than January 2008. In addition, once the final determination is published, the Company will begin paying cash deposits for future imports at the final
published rate. Based upon the current level of purchases and assuming a duty reduction to 6.75%, the Company estimates a pre-tax benefit of approximately $5 to $8 million in 2008. Additionally, at the request of our supplier and others, the
DOC has initiated an administrative review to determine the final rate for the period June 1, 2006 through May 31, 2007 during which the 76% estimated rate applied.

The Company anticipates earnings from continuing operations before special items in the fourth quarter 2007 to be in the $0.17 to $0.27 per share range, which includes the impact of the lower antidumping duty rate
(preliminarily determined to be 6.75 percent). The improvement is expected from the Companys HTH water products business, principally related to the estimated benefit from the duty reduction and to a lesser extent the benefit from our European
margin improvement plan, offset by lower results in the personal care, industrial biocides and performance products businesses.

For full
year 2007, sales are expected to increase approximately four to six percent. Earnings per share from continuing operations before special items are forecast to be in the $2.07 to $2.17 range, which includes the impact of the lower antidumping duty
rate (preliminarily determined to be 6.75 percent). The revision to the Companys previous guidance is due to the $0.20 per share impact of higher compensation expense as a result of the increase in the Companys stock price and to reflect
the reclassification of $0.03 of income from the performance urethanes business in Venezuela in discontinued operations. Depreciation and amortization is estimated to be approximately $45 million. Capital spending is anticipated to be in the $40 to
$45 million range. Upon recognition of the antidumping benefit, the Company expects the full year effective tax rate to increase from 34 percent to 35 percent.

Guidance for the full year 2007 excludes the contract termination gain in the hydrazine business, restructuring and impairment charges in the industrial biocides business and the impact of the income tax rate change
in the United Kingdom.

Segment Information

The Company has organized its business portfolio into two operating segments to reflect the Companys business strategy. The two segments are
treatment products and performance products. The treatment products segment includes three reportable business units: the HTH water products business, the personal care and industrial biocides business, and the wood protection and industrial
coatings business. Segment operating income includes the equity in earnings of affiliated companies and excludes restructuring (income) expense and impairment expense. The Company believes the exclusion of restructuring and impairment expenses from
segment operating income provides additional perspective on the Companys underlying business trends and provides useful information to investors by excluding amounts from the Companys results that the Company believes are not indicative
of ongoing operating results.



22



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations - Continued



The Company includes the equity income (loss) of affiliates in its segment operating results as it
believes it to be relevant and useful information for investors as these affiliates are the means by which certain segments participate in certain geographic regions. Furthermore, the Company includes it to measure the performance of the segment.
Other gains and (losses) that are directly related to the segments are included in segment operating results.

Treatment Products



|                                      |  |                                 |       |                                |   |       |  |      |       |  |   |      
|------------------------------------- |  | ------------------------------- | ----- | ------------------------------ | - | ----- |  | ---- | ----- |  | - | -----
|                                      |  | Three MonthsEnded September 30, |       | Nine MonthsEnded September 30,
|                                      |  | 2007                            |       | 2006                           |   | 2007  |  | 2006
|                                      |  | ($ in millions)                
|Results of Operations:                |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Sales                                 |  |                                 |       |                                |   |       |  |      |       |  |   |      
|HTH Water Products                    |  | $                               | 108.6 |                                | $ | 118.5 |  | $    | 395.1 |  | $ | 415.7
|Personal Care & Industrial Biocides   |  |                                 | 84.2  |                                |   | 71.8  |  |      | 243.8 |  |   | 213.7
|Wood Protection & Industrial Coatings |  |                                 | 124.5 |                                |   | 97.4  |  |      | 331.5 |  |   | 287.2
|                                      |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Total Treatment Products              |  | $                               | 317.3 |                                | $ | 287.7 |  | $    | 970.4 |  | $ | 916.6
|                                      |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Operating Income                      |  |                                 |       |                                |   |       |  |      |       |  |   |      
|HTH Water Products                    |  | $                               | 6.4   |                                | $ | 5.9   |  | $    | 52.9  |  | $ | 52.1 
|Personal Care & Industrial Biocides   |  |                                 | 15.1  |                                |   | 10.5  |  |      | 41.8  |  |   | 33.4 
|Wood Protection & Industrial Coatings |  |                                 | 4.6   |                                |   | 1.2   |  |      | 12.9  |  |   | 3.6  
|                                      |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Total Treatment Products              |  | $                               | 26.1  |                                | $ | 17.6  |  | $    | 107.6 |  | $ | 89.1 
|                                      |  |                                 |       |                                |   |       |  |      |       |  |   |      

Three Months Ended September 30, 2007 Compared to 2006

Sales increased $29.6 million, primarily due to the acquisition of the remaining 51 percent share of the Companys Australian joint venture KAWP
($16.5 million). Excluding the acquisition, the increase in sales of $13.1 million, or approximately five percent, is principally due to favorable foreign exchange (approximately three percent), and favorable pricing (approximately
three percent), partially offset by a decrease in volume (approximately one percent). The higher pricing was driven by HTH water products and wood protection, partially offset by lower pricing in the industrial biocides business. The decrease
in volume is principally in the HTH water products business.

The increase in operating income is primarily due to improved operating
results of the personal care, industrial biocides and wood protection businesses.

HTH Water Products

Sales decreased $9.9 million, or approximately eight percent, due to lower volumes (approximately 15 percent), partially offset by
favorable pricing (approximately five percent) and favorable foreign exchange (approximately two percent). The lower volumes were principally due to the shedding of unprofitable business in Europe and lower demand for non-branded and, to a lesser
extent, branded products in North America due principally to unfavorable weather patterns. The increased pricing was primarily in North America and Europe.

Operating income increased $0.5 million over the prior period as higher pricing more than offset the impact of the lower volumes.



23



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations - Continued



Personal Care and Industrial Biocides

Sales increased $12.4 million, or approximately 17 percent, due to higher volumes (approximately 19 percent) driven by increased demand for biocides
used in personal care applications and biocides used in industrial applications, including building products and marine antifouling paints. Lower pricing (approximately four percent) was partially offset by favorable foreign exchange (approximately
two percent). The pricing impact was principally related to the industrial biocides business due to competitive pressures.

Operating
income increased $4.6 million as the higher sales volumes were partially offset by lower pricing and higher manufacturing costs.

Wood Protection and Industrial Coatings

Sales increased $27.1 million, or approximately 28 percent,
primarily due to the acquisition of the remaining 51 percent share of the Companys Australian joint venture ($16.5 million or 17 percent). Excluding the acquisition, sales increased by $10.6 million or approximately 11 percent. The increase is
due to favorable foreign exchange (approximately five percent), pricing (approximately four percent), and volumes (approximately two percent). The improved pricing was principally in the wood protection business to offset the higher raw material
costs experienced over the last several years for products used in residential and industrial applications. The higher volumes were a result of increased demand for industrial coatings, principally in the Eastern European market, partially offset by
lower demand for wood protection products as a result of weakness in the U.S. construction market.

Operating income increased by $3.4
million as improved pricing for the wood protection business and higher volumes in the industrial coatings business more than offset continued increases in raw material costs. In addition, operating income benefited from the positive contribution of
the acquisition.

Nine Months Ended September 30, 2007 Compared to 2006

Sales increased $53.8 million, or approximately six percent, and operating income increased $18.5 million. The increase in sales was partially due to
the acquisition of the remaining 51 percent share of the Companys Australian joint venture KAWP ($16.5 million). Excluding the acquisition, the increase in sales of $37.3 million, or approximately four percent, is principally due to favorable
foreign exchange (approximately three percent) and improved pricing (approximately two percent), partially offset by lower volume (approximately one percent).

The increase in operating income is primarily due to the improved operating results of the wood protection, personal care and industrial biocides businesses.

HTH Water Products

Sales decreased $20.6 million, or approximately five percent, due to lower volumes (approximately nine percent), partially offset by improved pricing (approximately three percent) and favorable foreign exchange (approximately one percent).
The lower volumes were principally due to the shedding of unprofitable business in Europe, and lower demand for branded products in North America due to unfavorable weather patterns in several large regions served by the Company. The increased
pricing was primarily in North America and Europe.

Operating results were comparable to the prior year as higher pricing and lower legal
expenses were offset by the lower North America residential sales volumes. Included in the 2007 operating results are severance costs related to the reorganization of the European operations, which are comparable to costs in 2006 associated with
exiting the Spanish market and certain reorganization costs at the Companys Charleston, Tennessee manufacturing location.



24



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations - Continued



Personal Care and Industrial Biocides

Sales increased $30.1 million, or approximately 14 percent, due to higher volumes (approximately 16 percent) driven by increased demand for biocides
used in industrial applications, including building products and health and hygiene, and increased demand for biocides used in personal care products. Lower pricing (approximately four percent) was partially offset by favorable foreign exchange
(approximately two percent). The pricing impact was principally related to a renewed contract with a significant customer as well as competitive pressures in the industrial biocides business.

Operating income increased $8.4 million as higher sales volumes, and improved product mix, were partially offset by increased manufacturing costs, lower
pricing and increased selling and administrative costs to support various growth initiatives.

Wood Protection and Industrial
Coatings

Sales increased $44.3 million, or approximately 15 percent, partially due to the acquisition of the remaining 51
percent share of the Companys Australian joint venture KAWP ($16.5 million or six percent). Excluding the impact of the acquisition, sales increased $27.8 million, or approximately ten percent. The increase is due to improved pricing
(approximately six percent) and favorable foreign exchange (approximately six percent), offset by lower volumes (approximately two percent). The improved pricing was principally in the wood protection business. Price increases were implemented for
wood protection products used in residential and industrial applications in North America to offset the higher raw material costs experienced over the last several years. The lower volumes were a result of reduced demand for wood protection
products, primarily as a result of the slowdown in the U.S. construction market, partially offset by increased demand for industrial coatings, principally in the Eastern European market.

Operating income increased by $9.3 million due to the improved pricing for the wood protection business and higher volumes in the industrial coatings
business, partially offset by higher raw material costs. In addition, operating income benefited from the positive contribution of the acquisition.

Performance Products



|                                           |  |                                 |      |      |                                |      |      |  |   |       |   |  |   |       |  
|------------------------------------------ |  | ------------------------------- | ---- | ---- | ------------------------------ | ---- | ---- |  | - | ----- | - |  | - | ----- | -
|                                           |  | Three MonthsEnded September 30, |      |      | Nine MonthsEnded September 30, |     
|                                           |  | 2007                            |      | 2006 |                                |      | 2007 |  |   | 2006  |  
|                                           |  | ($ in millions)                 |      |      | ($ in millions)                |     
|Results of Operations:                     |  |                                 |      |      |                                |      |      |  |   |       |   |  |   |       |  
|Sales                                      |  |                                 |      |      |                                |      |      |  |   |       |   |  |   |       |  
|Performance Urethanes                      |  | $                               | 55.2 |      | $                              | 55.9 |      |  | $ | 159.5 |   |  | $ | 164.4 |  
|Hydrazine                                  |  |                                 | 4.0  |      |                                | 4.9  |      |  |   | 13.5  |   |  |   | 14.6  |  
|                                           |  |                                 |      |      |                                |      |      |  |   |       |   |  |   |       |  
|Total Performance Products                 |  | $                               | 59.2 |      | $                              | 60.8 |      |  | $ | 173.0 |   |  | $ | 179.0 |  
|                                           |  |                                 |      |      |                                |      |      |  |   |       |   |  |   |       |  
|Operating income (loss)                    |  |                                 |      |      |                                |      |      |  |   |       |   |  |   |       |  
|Performance Urethanes                      |  | $                               | 3.3  |      | $                              | 5.4  |      |  | $ | 10.0  |   |  | $ | 12.9  |  
|Hydrazine                                  |  |                                 |     |      |                                | (0.5 | )    |  |   | 13.2  |   |  |   | (0.6  | )
|                                           |  |                                 |      |      |                                |      |      |  |   |       |   |  |   |       |  
|Total Performance Products                 |  |                                 | 3.3  |      |                                | 4.9  |      |  |   | 23.2  |   |  |   | 12.3  |  
|Less: contract completion gain             |  |                                 |     |      |                                |     |      |  |   | (12.8 | ) |  |   |      |  
|                                           |  |                                 |      |      |                                |      |      |  |   |       |   |  |   |       |  
|Total Performance Products, excluding gain |  | $                               | 3.3  |      | $                              | 4.9  |      |  | $ | 10.4  |   |  | $ | 12.3  |  
|                                           |  |                                 |      |      |                                |      |      |  |   |       |   |  |   |       |  

Three Months Ended September 30, 2007 Compared to 2006

Sales decreased $1.6 million, or approximately three percent, and operating income decreased $1.6 million from prior year. The decrease in sales
and operating income is due principally to lower pricing.



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations - Continued



Performance Urethanes

Performance urethanes sales decreased $0.7 million, or approximately one percent, due to lower pricing (approximately four percent), partially offset by
higher volumes (approximately three percent) for specialty polyols. The lower pricing was principally due to competitive pressures in the propylene glycol and polyol markets. Operating income decreased $2.1 million as a result of the decrease in
pricing.

Hydrazine

Hydrazine sales decreased by $0.9 million and operating results were slightly higher than the prior year. The lower sales, which were a result of decreased hydrazine hydrates volumes, were offset by lower
manufacturing costs.

Nine Months Ended September 30, 2007 Compared to 2006

Sales decreased $6.0 million, or approximately three percent, and operating income decreased $1.9 million from prior year, excluding the gain
from the completion of a contract with the U.S. Government ($12.8 million). The decrease in sales is due to lower pricing (approximately four percent), partially offset by higher volumes (approximately one percent). The decrease in operating income
is primarily due to the lower pricing.

Performance Urethanes

Performance urethanes sales decreased $4.9 million, or approximately three percent, due to lower pricing (approximately four percent) partially offset by
higher volumes (approximately one percent). The lower pricing was principally due to increased competition in the propylene glycol market as well as competitive pressure in the polyol market. Operating income decreased $2.9 million as a result of
the decrease in pricing, partially offset by reduced manufacturing costs and a favorable raw material contract pricing adjustment.

Hydrazine

Hydrazine sales decreased by $1.1 million (approximately eight percent), due to lower volume
(approximately six percent) and pricing (approximately two percent). The decrease was primarily due to a decrease in demand and lower pricing for hydrazine hydrates. After excluding the gain from the completion of a contract with the U.S. government
($12.8 million), operating results improved by approximately $1.0 million, due to lower plant operating costs.

Corporate Expenses (Unallocated)



|                               |  |                                 |       |   |                                |   |      |      |  |   |       |   |  |   |       |  
|------------------------------ |  | ------------------------------- | ----- | - | ------------------------------ | - | ---- | ---- |  | - | ----- | - |  | - | ----- | -
|                               |  | Three MonthsEnded September 30, |       |   | Nine MonthsEnded September 30, |  
|                               |  | 2007                            |       |   | 2006                           |   |      | 2007 |  |   | 2006  |  
|                               |  | ($ in millions)                 |      
|Results of Operations          |  |                                 |       |   |                                |   |      |      |  |   |       |   |  |   |       |  
|Unallocated Corporate Expenses |  | $                               | (15.7 | ) |                                | $ | (7.3 | )    |  | $ | (34.5 | ) |  | $ | (24.0 | )

Three Months Ended September 30, 2007 Compared to 2006

The increase in unallocated corporate expenses increased principally due to an increase in compensation-related expense as a result of
the mark-to-market impact of the increased stock price in the quarter associated with the Companys performance-based stock awards and deferred compensation plans.



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations - Continued



Nine Months Ended September 30, 2007 Compared to 2006

The increase in unallocated corporate expenses is principally due to an increase in compensation-related expense as a result of the mark-to-market impact
of the increased stock price associated with the Companys performance-based stock awards and deferred compensation plans and higher environmental remediation costs.



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations - Continued



Liquidity, Investment Activity, Capital Resources and Other Financial Data



|                                                     |  |                                |       |   |      |   |       |  
|---------------------------------------------------- |  | ------------------------------ | ----- | - | ---- | - | ----- | -
|                                                     |  | Nine MonthsEnded September 30, |      
|Cash Flow Data                                       |  | 2007                           |       |   | 2006 |  
|                                                     |  | ($ in millions)                |      
|Provided By (Used For)                               |  |                                |       |   |      |   |       |  
|Accounts receivable securitization program           |  | $                              |      |   |      | $ |      |  
|Change in working capital                            |  |                                | (17.6 | ) |      |   | (48.6 | )
|Net operating activities from continuing operations  |  |                                | 46.7  |   |      |   | 48.9  |  
|Capital expenditures                                 |  |                                | (27.9 | ) |      |   | (16.2 | )
|Businesses acquired in purchase transactions         |  |                                | (14.3 | ) |      |   | (2.9  | )
|Cash proceeds (payments) from the sale of businesses |  |                                | 9.6   |   |      |   | (0.5  | )
|Cash proceeds from the sale of land and property     |  |                                | 2.8   |   |      |   | 1.2   |  
|Net investing activities                             |  |                                | (31.7 | ) |      |   | (21.7 | )
|Debt borrowings (repayments)                         |  |                                | (34.0 | ) |      |   | (6.0  | )
|Net financing activities                             |  |                                | (34.5 | ) |      |   | (11.0 | )

Nine Months Ended September 30, 2007 Compared to 2006

For the nine months ended September 30, 2007, $46.7 million was provided by operating activities from continuing operations, compared to
$48.9 million provided by operating activities from continuing operations for the nine months ended September 30, 2006. The decrease was principally due to a voluntary contribution to the Companys U.S. pension plan of $36.4 million,
partially offset by reduced working capital requirements.

Capital expenditures for the nine months ended September 30, 2007 were
$11.7 million higher than 2006, principally due to increased spending for the personal care and industrial biocides business as a result of construction in China, as well as expanding the U.S. manufacturing capacity. Capital expenditures for 2007
are expected to be in the $40 to $45 million range.

Businesses acquired in purchase transactions principally relates to the
Companys purchase of the remaining 51 percent share of its Australian joint venture, KAWP, from its joint venture partner on July 5, 2007. The purchase price was $19.0 million, consisting of a cash payment of $15.5 million and the assumption
of 51 percent of the joint venture net debt of $6.8 million. Additionally, the purchase price is subject to a working capital adjustment. The purchase price, net of the working capital adjustment, was paid during the nine months ended
September 30, 2007. The acquisition was financed from available cash.

Cash proceeds from the sale of a business during the nine
months ended September 30, 2007 relate to the sale of the non-strategic performance urethanes business in Venezuela. The Company recorded a non-cash, after-tax loss of $14.9 million on this transaction, principally due to the recognition of
historical foreign currency translation losses. Proceeds from the sale are expected to be approximately $16.7 million, net of expenses, and are subject to a working capital adjustment. In addition, the sale agreement provides for a contingent
earn-out based upon future performance of one of the products of the divested business. As of September 30, 2007, the Company has received $9.6 million of the total proceeds with the balance of $7.6 million included in Accounts
receivable, net ($4.8 million) and Other assets ($2.8 million) in the Condensed Consolidated Balance Sheet. The current receivable is expected to be collected as working capital is liquidated and the majority of the non-current receivable is
expected to be collected by February 2009.

Cash proceeds from the sale of land and property represent repayments of an outstanding note
from the sale of land in 2003. The note was entirely repaid as of September 30, 2007.

In March 2007, the Series A notes of $149.0
million came due. The Company used its credit facility to pay off the Series A notes at their maturity.

Cash outflows from financing
activities during the nine months ended September 30, 2007 were $34.5 million, compared to $11.0 million for the nine months ended September 30, 2006. The increase was due to the repayment of long-term debt.



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations - Continued



Total dividends paid to shareholders were $14.7 million in 2007, compared to $14.4 million in
2006.

On June 15, 2006, the Company entered into an unsecured $350.0 million senior revolving credit facility, which expires in June
2011. The Companys credit facility contains a quarterly leverage ratio (debt/EBITDA) covenant not to exceed 3.50 and an interest coverage ratio (EBITDA/total interest expense) covenant not to be less than 3.0. Additionally, the credit facility
restricts the payment of dividends and repurchase of stock to $65.0 million plus 50% of cumulative net income (loss) subject to certain limitations beginning June 15, 2006. This limitation was $69.4 million at September 30, 2007.
The facility fees can range from 0.1% to 0.225% depending on the Companys quarterly leverage ratios. The Company may select various floating rate borrowing options, including, but not limited to, LIBOR plus a spread that can range from 0.4% to
0.9% depending on the Companys quarterly leverage ratios. At September 30, 2007, the Company had $240.0 million of available borrowings under the credit facility.

The Companys remaining Series B notes contain a quarterly leverage ratio covenant not to exceed 3.5 and a debt to total capitalization ratio not to
exceed 55%. In addition, the notes contain a fixed charge covenant not to be less than 2.25 and a covenant that restricts the payment of dividends and repurchases of stock to $65.0 million less cumulative dividends and repurchases of stock,
plus 50% of cumulative net income (loss) under certain circumstances beginning January 1, 2002. This limitation was $43.5 million at September 30, 2007.

Under the Companys accounts receivable securitization program, certain accounts receivable are sold, without recourse, through its wholly-owned subsidiary, Arch Chemicals Receivables Corp., a special-purpose
corporation. The Company had also not sold any participation interests in such accounts receivable at September 30, 2007 and December 31, 2006 (see Note 4 of Notes to Condensed Consolidated Financial Statements).

At September 30, 2007 the Company had $38.9 million of outstanding letters of credit and $2.2 million of outstanding letters of guarantee.

The Company believes that the credit facility and cash provided by operations are adequate to satisfy its liquidity needs for the near
future. However, if Company earnings were to fall significantly below current expectations, a risk exists that the Company would not meet its quarterly leverage, interest coverage, fixed charge coverage or debt to total capitalization ratio
covenants, which could trigger a default condition under its debt agreements.

In conjunction with the strategic review of the
Companys U.S. benefit plans and a final assessment of its funding options under the new U.S. pension legislation, the Company concluded that it would accelerate the funding of its U.S. pension plan. During the third quarter, the Company made
pension contributions of $43.5 million, which included a voluntary contribution of $36.4 million. The Companys U.S. plan is expected to meet the full funding phase-in threshold for 2008 under the new legislation. It is the Companys
current intention to make contributions in the future in order to continue to meet the full funding phase-in thresholds. Expected contributions for the U.S. plans through 2010 are expected to be in the annual range of $5 million to $10 million. The
voluntary contribution, made in 2007, is expected to benefit the Companys 2008 pre-tax income by approximately $1 million, as the assumed returns on the higher pension assets exceed the Companys borrowing cost.

The minimum funding requirements for the Companys U.K. pension plans are currently expected to be approximately $20 million per year.

On October 26, 2007, the Company declared a quarterly dividend of $0.20 on each share of the Companys common stock. The dividend will be
payable on December 14, 2007 to shareholders of record at the close of business on November 15, 2007.



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations - Continued



New Accounting Standards

In September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, which establishes a framework for reporting fair value and
expands disclosures about fair value measurements. SFAS No. 157 becomes effective for the Company beginning January 1, 2008. The Company does not believe that this standard will have a material impact on its consolidated financial
statements.

Cautionary Statement under Federal Securities Laws

Except for historical information contained herein, the information set forth in this Form 10-Q contains forward-looking statements that are based on managements beliefs, certain assumptions made by management
and managements current expectations, outlook, estimates and projections about the markets and economy in which the Company and its various businesses operate. Words such as anticipates, believes, estimates,
expects, forecasts, intends, opines, plans, predicts, projects, should, targets and variations of such words and similar expressions are
intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (Future Factors), which are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expected or forecasted in such forward-looking statements. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of future events, new
information or otherwise. Future Factors which could cause actual results to differ materially from those discussed include but are not limited to: general economic and business and market conditions; lack of moderate growth in U.S. and European
economies; increases in interest rates; economic conditions in Asia; worsening economic and political conditions in Venezuela; changes in foreign currencies against the U.S. dollar; customer acceptance of new products; efficacy of new technology;
changes in U.S. laws and regulations; increased competitive and/or customer pressure; the Companys ability to maintain chemical price increases; higher-than-expected raw material costs and availability for certain chemical product lines; a
change in the anti-dumping duties ruling on certain products; price increases due to changes in Chinese taxes related to exports from China; increased foreign competition in the calcium hypochlorite markets; unfavorable court, arbitration or jury
decisions or tax matters; the supply/demand balance for the Companys products, including the impact of excess industry capacity; failure to achieve targeted cost-reduction programs; capital expenditures in excess of those scheduled, such as
the China plant; environmental costs in excess of those projected; the occurrence of unexpected manufacturing interruptions/outages at customer or company plants; reduction in expected government contract orders; a decision by the Company not to
start up the hydrates manufacturing facility; unfavorable weather conditions for swimming pool use; inability to expand sales in the professional pool dealer market; changes in the Companys stock price; and gains or losses on derivative
instruments.



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##### Table of Contents

|Item 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------

Interest Rate Risk

The Company is exposed to interest rate risk on approximately 70 percent of its outstanding
borrowings that are subject to floating rates. Based on the Companys expected 2007 borrowing levels, an increase in interest rates of 100 basis points would decrease the Companys annual results of operations and cash flows by
approximately $0.7 million.

Foreign Currency Risk

At September 30, 2007, the Company had forward contracts to sell foreign currencies with a U.S. dollar equivalent value of $1.3 million and forward contracts to buy foreign currencies with a U.S. dollar
equivalent value of $4.9 million. The fair value of these forward contracts is included in Other Current Assets and Accrued Liabilities, respectively.

Holding all other variables constant, if there were a 10 percent change in foreign currency exchange rates, the net effect on the Companys annual cash flows would be an increase (decrease) of between
$1.0 million to $2.0 million related to the unhedged portion, as any increase (decrease) in cash flows resulting from the Companys hedge forward contracts would be offset by an equal (decrease) increase in cash flows on the
underlying transaction being hedged. The application of SFAS 133 may cause increased volatility in the Companys results of operations for interim periods in the future, if the Company changes its policies, or if some of the derivative
instruments do not meet the requirements for hedge accounting.

Commodity Price Risk

The Company is exposed to commodity price risk related to the price volatility of natural gas utilized at certain manufacturing sites. Depending on market
conditions, the Company may purchase derivative commodity instruments to minimize the risk of price fluctuations. It is the Companys policy to hedge up to 80 percent of its natural gas purchases during a calendar year. At
September 30, 2007, the Company had purchase commitments but had no forward contracts to purchase natural gas. In addition, the Company is exposed to price risk related to the price volatility of certain other raw materials including the
ongoing purchase of propylene, copper metal, chromic acid, monoethanolamine (MEA) and resins. Holding other variables constant, a 10 percent adverse change in the price of propylene or copper metal would decrease the Companys
results of operations and cash flows by approximately $3 million. Holding other variables constant, a 10 percent adverse change in the price of chromic acid, MEA, resins or natural gas would decrease the Companys results of
operations and cash flows between $1 million to $2 million.

See the Companys Form 10-K for the year ended
December 31, 2006 for additional information on the above items.



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##### Table of Contents

|Item 4. | Controls and Procedures
|------- | -----------------------

As of the end of the
period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of the Companys chief executive officer and chief financial officer, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act). Based on this evaluation, the Companys chief executive officer and
chief financial officer concluded that as of the end of such period such disclosure controls and procedures were effective to provide reasonable assurance that they were reasonably designed to ensure that information required to be disclosed by the
Company in reports it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission and (ii) is accumulated and
communicated to its management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in the Companys internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) promulgated under the
Exchange Act) during the third quarter of 2007 that materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



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##### Table of Contents

PART II. OTHER INFORMATION



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

In
August 2007, a former employee delivered to the Company 3,000 shares of the Companys Common Stock as payment for the exercise price of an outstanding employee stock option under the 1999 Long Term Incentive Plan as indicated in the table
below.



|                                             |  |                                                 |  |                                                  |        |                                                                                                 |     |                                                                                                                             |    
|-------------------------------------------- |  | ----------------------------------------------- |  | ------------------------------------------------ | ------ | ----------------------------------------------------------------------------------------------- | --- | --------------------------------------------------------------------------------------------------------------------------- | ---
|Period                                       |  | (a) Total Number of Shares (or Units) Purchased |  | (b)Weighted AveragePrice Paid perShare (or Unit) |        | (c) Total Number of Shares (or units) Purchased as Part of Publicly Announced Plans or Programs |     | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
|July 1, 2007 through July 31, 2007           |  | 0                                               |  |                                                  | N/A    |                                                                                                 | N/A |                                                                                                                             | N/A
|August 1, 2007 through August 31, 2007       |  | 3,000                                           |  | $                                                | 39.535 |                                                                                                 | N/A |                                                                                                                             | N/A
|September 1, 2007 through September 30, 2007 |  | 0                                               |  |                                                  | N/A    |                                                                                                 | N/A |                                                                                                                             | N/A
|Total                                        |  | 3,000                                           |  | $                                                | 39.535 |                                                                                                 | N/A |                                                                                                                             | N/A



|Item 6. | Exhibits
|------- | --------



|            |  |                                                                                                 
|----------- |  | ------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                     
|31.1        |  | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a).         
|            | 
|31.2        |  | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a).         
|            | 
|32.         |  | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350.



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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                 |  |  |  |                                   |  |                                           
|---------------- |  |  |  | --------------------------------- |  | ------------------------------------------
|                 |  |  |  | ARCH CHEMICALS, INC. (Registrant)
|                 |  |  | 
|November 2, 2007 |  |  |  | By:                               |  | /s/ Steven C. Giuliano                    
|                 |  |  |  |                                   |  | Steven C. Giuliano                        
|                 |  |  |  |                                   |  | Vice President and Chief Financial Officer



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EXHIBIT INDEX



|            |  |                                                                                                 
|----------- |  | ------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                     
|31.1        |  | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a).         
|            | 
|31.2        |  | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a).         
|            | 
|32.         |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350.