Good day and welcome to the Bemis Company Hosted Fourth Quarter 2014 Earnings Conference. Today's conference is being recorded. At this time, I would like to turn the conference over to Erin Winters. Please go ahead, ma'am.

Thank you. Good morning and welcome to our fourth quarter 2014 conference call. Today is January 29, 2015. After today's call, a replay will be available on our website, bemis.com, under the Investor Relations section. Joining me for this call today are: Bemis Company's President and Chief Executive Officer, Bill Austen; our Vice President and Chief Financial Officer, Mike Clauer; and our Vice President and Treasurer, Melanie Miller. Today Bill will begin with comments on strategy and outlook for 2015. Mike will then discuss financial performance. After our comments, we'll answer any questions you have. However, in order to allow everyone an opportunity to participate, we do ask that you limit yourself to one question at a time with a related follow-up and then fall back into the queue for any additional questions. At this time, I'd like to direct you to our website, bemis.com, under the Investor Relations tab, where you'll find our press release, along with supplemental schedules. We'll be referring to these schedules at points throughout today's discussion. On today's call, we'll also discuss non-GAAP financial measures as we talk about Bemis's performance. Reconciliations of these non-GAAP measures to GAAP measures that we consider most comparable can be found in the press release and supplemental schedules. I'd like to remind everyone that statements regarding future performance of the company made during this call are forward-looking and therefore subject to certain risks and uncertainties. Actual results will differ materially -- may differ materially from historical, expected or projected results due to a variety of factors. Please refer to Bemis Company's regular SEC filings, including the most recently filed Form 10-K for the year ended December 31, 2013 to review these factors. Now, I'll turn the call over to Bill Austen.

Thank you, Erin, and good morning everyone. Today we reported earnings from continuing operations of $0.57 per share for the fourth quarter and $2.30 for the full year 2014, near the top end of our most recent guidance. On balance, we made progress toward our performance improvement goals. We divested our noncore paper packaging and Pressure Sensitive Material businesses, we increased earnings per share from continuing operations 10%. We increased sales of our target end markets in the U.S. and around the world, including packaging for dairy and liquid products, as well as medical device and pharmaceutical applications. We increased operating profit margins in our Global Packaging segment by 50 basis points with strong momentum in the second half of the year where margins averaged above 8%, reflecting excellent progress toward our goal of double-digit returns in this segment. We invested $185 million in new capacity to support growth and productivity improvements. And with our leverage in check, we increased our dividend and also repurchased 3.8 million shares. While I am pleased with our progress and the changes we've initiated, there is still much work ahead. During 2015, we will commercialize new business with a keen focus on operational efficiency to reduce waste, maximize throughput and achieve commercial scale at an accelerated pace. We will improve our working capital discipline to generate higher cash flow. And most importantly, as we execute our growth strategy in 2015, we will continue to increase our key performance metrics of return on invested capital, return on sales and earnings per share. We confidently begin 2015 with a positive momentum and strength. We are expanding capacity to support growing demand for liquid and medical device packaging. Our pipeline of innovative products is strong and we are prioritizing the most valuable opportunities. Our focus on our…

Thanks, Bill, and good morning. I had the pleasure of working with some of you in my past roles and I'm looking forward to meeting the rest of you in March. As Bill mentioned, we reported earnings from continuing operations of $0.50 -- $0.57 per share for the fourth quarter and $2.30 for the full year in 2014. This is a 16% increase compared to the prior fourth quarter and a 10% increase for the full year. In the fourth quarter, our business is typically slower than our seasonally stronger second and third quarters. During the quarter, we continued to achieve year-over-year growth in our target end markets, both in the U.S. and globally. I will begin by commenting on each reportable segment followed by overall company performance for the fourth quarter and the full year. As I discuss revenue by reportable segment, refer to Page 5 of the supplemental schedules, which provide detail on the year-over-year changes in net sales by reportable segment. First, U.S. Packaging. Our U.S. business represents approximately 2/3 of total Bemis sales from continuing operations. In the fourth quarter, excluding the impact of the March divestiture of our Paper Packaging Division, our U.S. segment delivered organic growth of approximately 2%, which was driven by, primarily by favorable price mix. Next, I'll cover full year net sales and provide more color on unit volume. For the full year 2014, and again excluding divestitures, our U.S. segment delivered organic growth of 1.1%, which was driven primarily by favorable price mix. Overall unit volumes for the full year were down approximately 2% as compared to 2013. Some insights on that breakdown. Unit volumes increased in our target dairy and liquid end markets by mid-single-digit percentages compared to last year. Unit volumes also increased for industrial application, as --…

[Operator Instructions] We'll take our first question from Mark Wilde with BMO Capital Markets. [Technical Difficulty] We are experiencing a momentary pause in today's conference. Please remain on the line. [Technical Difficulty] We'll take our next question from Scott Gaffner with Barclays.

Bill, my question was really for you and it was around the guidance. And specifically more around your specific methodology and philosophy around the guidance. Specifically, your new management team -- right, I'm not sure -- I know you're part of the company before, but you're switching from annual guidance, I'm sorry, from annual and quarterly, but more specifically, are you thinking more top down? Are you rolling up from the segment forecast? Are you more conservative? More aggressive? Just trying to get a feel for the way you think about the guidance.

Yes, it's a good question, Scott, and it's one that we've kicked around here quite a bit. In March, we're going to lay out our objectives for the next several years. And the global leadership team, the operating team that's going to be at that meeting, has got specific plans for their regions of the world that are going to be projected over the course of a longer term, okay? Not a 90-day plan but more of a -- where are we on the strategy, where are we on the journey, where are we on improving our ROIC trend moving forward. Where are we on our return on sales trend moving forward. So we're taking an approach that says, we're going to continue to meet quarterly. We're going to continue to have these conference calls quarterly. We're going to continue to tell you where we are on our journey on a quarterly basis, but that journey is going to be where are we in our longer-term journey. Where are we on our goals and objectives that we've set out for the company over the longer-term. And that's going to include product vitality. What kind of new products we'll be bringing to the market? When are they going to hit the market? What do our sales trends look like? What do the macroeconomic trends look like in those regions of the world that are going to project us onto that journey. So to do that on a quarterly basis, it's just doesn't -- not something we're going to do. Going to tell you about the year and we're going to give you, not guidance, but we're going to give you information as to where we stand on our annual journey and where we are in our -- hitting our goals and objectives on the longer term.

Okay. Sounds reasonable to me. Just as a follow-up, then. You've had pretty healthy changes in ROIC the last, I guess 3 years, I mean you're up almost 140 basis points by your numbers, 2011 to 2014. Is -- do you have an ROIC target for 2015 you want to share with us today?

No, we're going to stick to the same knitting we've always had, Scott, in that we're going to continue to improve our ROIC, the trend is going to be up as we go forward. And in March, we'll lay out what we think our goals and objectives are going to be for the next several years, so you'll get to see that in March. But we don't have a target that we're going to tell you for 2015. But we've done good work. I mean, if you look at the teams, what they've been doing, we've been focusing on, just as much as to what we're not going to do, which is just as important as what we are going to do. And when we focus on what we're not going to do, we start to drive that ROIC up.

We'll take our next question from Mark Wilde with BMO Capital Markets.

I wanted to talk briefly about working capital, Mike. Big use of cash in 2014. What might we expect in 2015?

I'm working on plans right now with the organization to make sure that cash, that working capital is not a use of cash in 2015. I'm really not in a position yet, having been here only 2 months, to determine if it's -- could be a source. But clearly, that's going to be one of my goals, is to, #1, cash flow from operations before working capital changes should be flat. There should be no impact to working capital. And I'm going to try to -- determined to find ways to make it a source in 2015.

Okay. If I could take the follow on. Can you just discuss with us, in the Brazilian business, how much of that is consumer-oriented business versus like protein business that might be more affected by exports and might actually see a benefit from the decline in the Brazilian real?

Yes. This is Bill. The business that we have in Latin America, specifically Brazil, along your question, our protein business is now becoming more consumer-focused than it had been before. We have a, we had a very nice business in fresh red meat for export, which is specifically at your point, yes, we should see a little bit of help from the export market in Brazil. But as we talked last time on the call, as packaging formats become more and more sophisticated, which they have been somewhat in Brazil, we start to get more into the consumer segment with our high barrier materials and our high barrier products. So we've got a mix now. we've got a mix of export business and we have a mix of consumer business as it relates to protein.

Okay, and just in ballpark terms, in Brazil or in Latin America, how much of it should we think about as kind of direct to the consumer packaging and how much is sort of intermediate packaging?

Mostly, what we do in Brazil, in Brazil itself is focused at the consumer. So you're looking at probably, if I had to cut it, 90% is, would be consumer-driven and 10% would be for export.

Next we'll hear from Ghansham Panjabi with Baird. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: First off, just in terms of CapEx. Can you just give us some more color as to where the CapEx dollars are going, maybe by geography and also maybe some of the new product examples. $200 million, that would be a record for the company and the company is smaller, given the divestitures over the last few years. So just curious why that number is so high.

Ghansham, this is Bill. You look at what we have in place, we have a 60-plus plant network in place around the world. And just the fact that there are 60 plants, there's maintenance, and run-the-business kind of capital that's required with 60 plants. We also have an emerging business in Asia Pacific, not just on the food side but in health care and in the electronics arena. And we'll be investing in all 3 of those product, I should say, market segments, in Asia-Pacific as we go forward. And if you look at the plant network in the United States, in beef, U.S. Packaging, you see that we've got productivity gains to be made with some investment that we can put in, and those productivity gains help us expand margins, improve service and quality across the U.S. Packaging network. So we've got good opportunities in U.S. Packaging for both growth in liquid dairy and high barrier, but we also have good opportunities for margin expansion with productivity improvements through capital investment. And in Europe, we continue to have a very nice protein business, a high barrier business in Europe, where we invested last year. And we'll be investing in some more of those same type of assets that we put into Europe for flat film. We'll be investing into that kind of technology in U.S. Packaging. So if you split it out, it's -- there's a good portion of it goes into U.S. Packaging, a portion of it goes into Asia Pacific. We have some of the CapEx budget going into Latin America. But those are basically the 3. Europe, we invested in quite nicely in the last year and now we're going to bring those assets up to speed and fill them in Europe.

Our next question comes from George Staphos with Bank of America Merrill Lynch.

I guess my first question was, again just on working capital. So I seem to remember a lower working capital guidance for the year than what wound up being the case. And there was, I think, round numbers, around a $50 million use in the fourth quarter. So I am assuming that, that's related to some of the new product and new customer awards you've been given. But if -- could you confirm that, and provide a bit more detail? And if that's not what's going on, could you provide what the drivers are there? And then I had a follow-on.

You are correct. I mean the bulk of the use in Q4 was really driven by, I think we just underestimated the, what the impact of inventory we're building for commercialization around the world. It's not just in North America, it was also in China. And #2, and when I really dug into the details, we just had our sales mix in the Q4 was kind of more towards customers that had longer terms. So that's kind of what happened.

Okay. And the 2-part related follow-on. One, if you underestimated the inventory on commercialization, does that give us any pause in terms of what the customer takeaway or interest in these new products, or a retail pull has been on them thus far? I.e., is there kind of an inventory problem or not at all? And then more broadly, cash from operations, recognizing you're still trying to put pen to paper on what working capital will look like for the year. Is there any way to give us a ballpark for cash from operations? I mean, by my math, could it be $400 million to $450 million in '15? Thanks, guys and I'll turn it over.

George, I'm going to answer a piece of that question and Mike's going to answer the rest. Let me answer the question about the commercialization, is there an inventory issue? No, there is not. I feel really good about 2015 and heading into 2015, we came out of 2014 with projects that had already been through the trialing phases that we're scaling up, and are going to be commercialized as we go into Q1 and Q2 and Q3 of 2015. And this is not just in any one region of the world, but it's in every region of the world. In the U.S, we've got great traction with our Evolution product line now, which is fully commercialized and in the market. We've got in Latin America, the conversion of glass bottle for drinkable yogurt to a unique cup and lid structure that was trialed late last year, hit the market in December and now is at full scale-up in retail in Latin America. In Europe, our VSP films have really set ourselves apart from the competition with the type of film we make and those films have created pull through new customers for other products that we have not sold before in Europe. And in Asia Pacific, we qualified several new film structures for the electronics industry, medical and pharma and food in late 2014 that will ramp up through commercialization in Q1 and Q3 -- Q2 of 2015. So I am -- I feel really good about where we are this year versus last year, coming out of 2013. Feel really good, feel very positive about where those new products and where they are in their commercialization, but also where they are in the marketplace. I'll turn the other part of it over to Mike.

Yes. As far as 2015, the way I think about this at this point, your numbers are in the zip code. If you take EBITDA at the midpoint of our guidance, our range, and then you subtract cash taxes and cash interest, I come up with a number of $410 million, before any changes in working capital. And as I mentioned earlier, I'm committed to make sure that working capital is not a use of cash in 2015.

Our next question comes from Philip Ng with Jefferies.

It doesn't sound like you're assuming much tailwind from resin in your guidance, so what are the key drivers you're including? And what are you assuming for volumes in your base business versus like the commercialization of new business?

Phil, this is Bill. Your question about volume, what we looked at, what we're looking at for volumes into 2015, and I'm not going to talk about base business or new business. But overall, 2% unit volume growth in U.S. Packaging is what we're looking at, and in global, it's 4%. And that's -- includes the, what I would say is the base business, as well as the commercialization efforts that we've gone through in late 2014 into 2015 that will bring new business, new customers to Bemis Company. That's -- those are the numbers we're looking at.

Okay, that's helpful. And just looking at price mix, particularly in U.S. Packaging, it does appear like it accelerated a touch, based on what you provided color for the full year. One, is that correct? And when you think about 2015, parsing out between mix and price, how are you thinking about it? Are you seeing any pushback from your customers on -- with lower raw material prices at this point?

Well, we get push back from our customers even when raw material prices go up. It's not just when they go down. But yes, as I said in my prepared statement, our model is built around trying to decrease the volatility in earnings when raw materials go up and when they go down. So if they go up, they go down, we got about a 90-day window and then it's our pass-through, our contracts with customers would pass through those up-and-down movements to the customer base. So of course, we get push back all the time. There's always conversation about whether raw materials are going up or are they going down, but it's no louder than it normally would be.

Our next question comes from Chip Dillon with Vertical Research Partners.

First question is on the volume front. I think you mentioned that internationally, of the 4% organic growth, about 1% was volume. And I guess 3% would've been price and mix. I want to clarify that. And then as we look at the 7 -- I'm sorry, at the 1.1% in the U.S. for the full year, how would you split that between volume on one hand and price and mix in the other?

In global, you'd see that price mix is up, okay? And unit volume was down, primarily due to a slow first half of consumption driven in Latin America. As we went through 2014 in the second half, we actually gain some volume and gain some share in Latin America to offset the down first half of the year. So price mix is good. We continue to push very hard on price, being a leader in Latin America and that would include Mexico, Brazil and Argentina. And we did see volumes increase in the second half of 2014 based on some share gain and some new products that we delivered to the market.

Right. I'm sorry, I meant it was down 1%. And how about in the U.S, when you look at the overall organic of 1.1%. How is that split between volume on one hand and price mix on the other?

Again, sort of -- somewhat the same, very strong price mix of about 3% and unit volume down about 2%.

Got you. And on the same basis, as we look at 2015, and I appreciate the guidance before of 2% in the U.S. and 4% global, will there be any drag, I guess is the way to look at it, from the divestiture effect or is that all behind us now as we look at 2015?

That's gone. That's behind us.

Our next question comes from Alex Ovshey with Goldman Sachs.

I wanted to ask a couple of questions on the resin side. So I know you guys have said a number of times that you really have set up the business in a way where you pass it through pretty quickly regardless which way it's moving. But I'm curious, because my understanding is that 40% of the business is not contractual. If I'm understanding sort of some of the commentary from the past correctly. Can you just talk about the transmission mechanism of lower resin prices to customers that are not on contract?

Yes. About 2/3 of the business, let's say, is contract. The other third is not. So you're close. It's very close, it's ballpark. But on the customers that are noncontract customers, obviously, we try to hang on to those price deltas as long as possible. We are not out there knocking on their doors letting them know that, "Oh, resin just went down, here's your $0.05." We try to hang on to those as long as possible. We create new structures. We create new features, so that we can try to keep those gains in-house. But we are not out there proactively lowering price to noncontract customers.

Okay. So it's really a function of supply and demand fundamentals for that?

Correct.

And can you maybe talk to those? I mean, how does the marketplace feel now for that noncontract business? Is there maybe potential for you to be able to hang on to some of the benefits for longer than in past periods? Is it any different at all in terms of the competitive landscape for the noncontract business?

No, it's the same as it always has been. It's a competitive environment. We do create unique differentiated structures in a lot of those parts of the world that run well on equipment, that maintain certain features and functions that, that customer is desiring. So in some cases, it's hard for them to move it, in other cases it's not. It just -- it is -- there is a competitive dynamic that exists. And we try to differentiate ourselves to maintain that competitive dynamic in our favor.

Next we'll hear from Chris Manuel with Wells Fargo Securities.

I wanted to come back to, really, maybe go into a little more detail with regards to the earning lock [ph] going from the $2.30 to [Audio gap] the $2.60 at the midpoint of your guidance range. But one of the areas I wanted to center in on was kind of the raw material component. And if you buy about 2 billion pounds of resin a year, if resin only fell $0.10, and we're looking at some decreases that are bigger than that, that might be $200 million on an annual basis. Even if you held that for a quarter and only for a portion, you could be talking about still something, could be $25 million to $50 million of a benefit for you on the earnings side. And maybe something, $25 million to $30 million on the working capital side. So -- maybe help me understand how that's factored into your guidance or is it? It sounds like it's not, and maybe what I'm missing with my math.

Chris, this is Mike. I've got industry experience and where I came from, I think your statement is probably correct that companies that really pass through quicker are going to get a lot of short-term benefit. The one thing I will say as I've come to Bemis and started really understanding their structure here, they've done a really good job of taking the volatility out of earnings because of resin and when it goes up. The flip side of that is when it's coming down, we're not going to benefit. I mean, I think the actions this company took to take that volatility out is great. I mean, they're beyond -- they really aren't in the business to make money on commodity price movements. They're in the business of differentiating themselves and creating superior products. But to your comment, you would get some benefit in working capital if resin starts coming down, I don't see those type of numbers in the P&L.

Our next question comes from Anthony Pettinari with Citi.

I just had a quick follow-up on CapEx. You ran $135 million, $140 million in CapEx for a number of years. And I was just wondering what you consider maintenance CapEx without the PSM business to be. And Bill, as you look at the 60-plus plants in the Bemis system, as you took over as CEO, are there any assets that you feel so [ph] were undercapitalized, or can you give any thoughts there?

Yes. If you look back over the last couple of years, we -- what we spent, actual physical cash spent on capital, it was basically a 50-50 blend between maintenance, environmental health and safety, run-the-business kind of capital and capital for growth. So your $130 million number, about $65 million was spent on maintenance and run the business, and $65 million was spent for growth. As we go forward, that dynamic is going to shift, and we're going to be -- so rather than 50-50, it will be more like 65/35. 65% spent on growth, 35% spent on run the business, environmental health and safety, maintenance kinds of items. So that's the shift that's taking place in 2014. 65%-plus of our capital went toward growth initiatives and growth projects, because we haven't -- we hadn't put the money toward the growth lever on capital, now we're doing that. And that, again, that is growth for volume growth, new products, new assets to run new materials, as well as productivity improvements to enhance margins.

Okay, okay, that's helpful. And then just shifting to the cost side, can you talk a little bit about the cost inflation you're expecting outside of resin in 2015? And if there are big moving pieces there, like labor, that you expect to go up maybe higher than in previous years?

I'll take that one. This is Mike. When I looked through the, kind of the budget assumptions, sat down with the HR department and the purchasing group and looked at the various cost areas. I would say a good number to use is, 2% to 3%, so call it 2.5% for your non-raw material cost.

Next we'll hear from Adam Josephson with KeyBanc Capital Markets.

Mike, one question on the cash flow. As you mentioned in response to a previous question that you expect Op cash, excluding working capital of about $410 million. Based on the CapEx guidance, you're talking about $220-ish million for the year. Is that, do you consider that a normalized number for the company? And what about the $50 million onetime drag that you referenced earlier, from $20 million [indiscernible]

Well first of all, [indiscernible] I think the $400 million, $410 million is the right number at the 2015 midpoint EBITDA. Clearly, as this company grows, that cash flow will be improving. But no, I -- I mean, when I look at the facts that -- based on this year, if you take cash taxes and cash interest, that's the starting point.

Okay, okay. So there are no one -- you had the $50 million onetime drag in '14, that obviously won't recur, and that's reflected in that.

No. At this point, there really is no meaningful onetime items that we can see.

Okay, okay. And just two others. One on -- in terms of the inventory buildup, and do you expect that to result in a meaningful boost to sales growth this year? And just more generally, what are your sales growth expectations this year on a constant currency basis?

What we said earlier was 2% in U.S. Packaging and 4% in global, and that inventory, some of that inventory build that occurred in late 2014 is focused right at that target, being able to hit those targets through trial, scale-up, commercialization of new products.

And to further answer, if there is no new products developed throughout '15, yes, you would expect that inventory to come down. But I -- we've got a lot of meaningful projects in process that quite honestly, could potentially, we could have the same situation as we look at the end of 2015. But I will tell you, the one thing we're going to look at differently is how, we #1, build commercialization, inventory for commercialization. And #2, if we're doing it, it's going to, we're going to clearly have more transparency with you to let you know what we're outlooking as we go out throughout the year.

Next we'll hear from Al Kabili with Macquarie.

I guess the first question, I wanted to just clarify, Bill, on the volume outlook. The 2% in the U.S. is quite a bit greater than what Bemis has been able to deliver in quite a while. And I was wondering what gives you the kind of increased confidence this year? Is it more of a call on just the underlying end markets improving after several sluggish years? Or do you also see the new product pipeline that you've got out there also kind of at a greater level than what you've seen in the past, or a combination of both? And in the context of also some of the leakage from the less differentiated products, the same, sort of what stops that trend from continuing into '15?

It's a good question, Al. And where we -- what we look at is really, where did we come through 2014 as we got toward the end of the year? We had -- we didn't have a lot of trials, we had a lot of startup of new types of structures for new products and some of them are now commercial, they're in the marketplace and they're ramping up. So if you look back over time, maybe we weren't that robust with some of the real live, on the deck plates products that are going to be in the market that customers have accepted. And looking at the end of '14 into '15, there's real tangible products in U.S. Packaging that are entering the market now. And customers, they're feeling a little bit better with the lower gasoline prices that are out there and they're -- customers like the large CPGs in the United States are looking at, okay, how do I re-energize some of my brands? What can I do to get brands into different formats? And for some of these large customers, we're one of their very go-to type packaging companies to help them come up with new designs and new features. So I look at that and say, gosh, we're in a great position versus years gone by, where brands weren't trying to be re-energized or reinvigorated. So some of our large customers are bringing out some new formats for -- so they can drive their brands and get some growth in the market that they haven't had until the past few years, and we're in a good position to help them. And we've gotten products in their hands throughout the second half of 2014 that will become commercialized in 2015. So I feel good about that. The team in U.S. Packaging feels really good about that, both on -- in dairy, liquid, meat, cheese, protein snacking, on-the-go, all these types of smaller formats are entering the market. And we're in a great position to support them. We have products, we have awards and we've got new things entering the market. So going out of '14, I feel very confident about '15's volume.

Okay. That's helpful. And along those lines, going into '15, and maybe this also relates to, maybe the inventory situation at year-end that surprised you. Are you seeing any destocking on the part of customers, in anticipation of lower resin prices, maybe creating some volume headwinds in the near term in destocking? Is that -- was that a factor in some of the inventory situation at the end of the year that you mentioned, with working capital and kind of what you're seeing as early days of 15?

No. We did not see that. At least I did not see that, I don't think any of our business team saw that either. What we're seeing is good orders flow, good orders rates going into the year, which is nice. It's comforting.

Next we'll hear from Debbie Jones with Deutsche Bank.

So my first question is for Bill. Obviously, there's been a lot of leadership changes at Bemis over the last year. And I'm just wondering with the addition of Mike now, do you feel you have the management team in place to kind of put your strategic vision, going forward, on your transformational changes to Bemis?

Absolutely. I feel really good about the leadership team that's in place at Bemis. And not just here in the United States, but all around the world. We've got a great leadership team, everybody's on the same page. We're all aligned. They know what not to do, which is very important, and they're focused on what we should be doing and how we're working closer and closer with customers to be their packaging company of choice, and that's our vision. Our vision is to really get wrapped around customers and be passionate about our customers' success and in turn, we will succeed. And the whole team, the whole global team is on that page.

And my second question is for Mike. It's really I -- my line got cut off, I'm not sure if I could have [ph] these issues, but when you were talking about trends in meat and cheese, specifically the lower cheese prices and the potential impact there, can you just repeat and clarify what you had said earlier?

Yes. What I said earlier was our volumes in 2014 decreased mixed single digits in the cheese category and that was really kind of driven by higher cheese prices. And what we're seeing now as we come into '15 is cheese pricing is declining, coming down, so we would anticipate we'd see kind of a pickup back in our packaging for cheese.

Our next question comes from Scott Gaffner with Barclays.

Just 2 follow ups here. First on resin. Can you talk about any unrecovered cost increases you might have had in 2015 (sic) [ 2014 ] around resin increasing and prices not keeping up with resin inflation?

No, Scott, we didn't see that.

I think your comment was in 2014 and as I had mentioned that, the company's done a really good job of minimizing the volatility of price moves.

Right. No, I was just asking, a lot of curiosity on the subject, and so I figured a look back would be more telling of the strategy than a look forward on resin and your ability to pass that through, so that's why I was asking the question. Then Bill, just -- the last question is on compensation. You noted the change to ROIC and ROS, and I just was hoping you could maybe frame that a little bit for us, versus compensation structure before?

You bet. 2015, the global leadership team is, their incentive compensation package is 50% based on return on invested capital, 50% based on return on sales. And in the past, it was a couple of items, one of which was earnings per share and operating profit, safety, those kinds of things. But we're getting the leadership teams around the world focused on return on invested capital, making decisions based on return on invested capital and return on sales. We've marched down this road, this is the road we're on, we changed the compensation plans to align with where we need to go and what we want to push on, and everybody's behind it.

Next we'll take a follow-up question from Mark Wilde with BMO Capital Markets.

Yes. I wanted to touch base on 2 things briefly. One is the share repurchase activity in 2014 was much more active than we've seen in recent years from Bemis, and I wonder whether we should take that as a kind of change in direction in terms of use of cash going forward? And then also, I wondered if you could talk about the timeframe to getting the global business to those double-digit margins.

I'll take the first part of that question. I think if you really look at our share repurchases and then considering we had some cash from disposing of 2 businesses during the year, it was really just driven by keeping in line with our 2x leverage. And we will continue the same kind of strategy at 2x levered. And if we have excess cash and we don't have a strategic acquisition to make, we would clearly repurchase shares.

OK, and then the global margins?

[indiscernible] Right, the other part of your question was global margins. What we've said in the journey that the global team is on, is that 10%-plus in 3 to 5 years. And they worked very hard this past year and a half to put themselves in the position to do that. And we're really excited about what they've got going on as we go through 2015 and beyond. So 3 to 5 years, 10%-plus, and they're well on their way to do that.

Next we'll hear from George Staphos with Bank of America Merrill Lynch.

First question of 2 is around investment. So if we look at your guidance on capital spending, what would be the factors if you could call them out, that would drive CapEx to the higher end of your range? Is it really more product and market growth-driven, or is there any swag factor that you've built in, just for FX? And then you mentioned that you're investing relative to confectionery snack and dry. And it sounded like it was to combat what is a more competitive market there. I just wanted to confirm that, and if so, hear what you're doing there, and then I had a follow-on.

Sure. The -- if you look at our dairy and liquid categories, there's a lot of growth in the conversion of, from rigid formats, glass can to flexibles. There are some unique assets, some unique materials that we use to do that, to drive that and differentiate ourselves. That kind of asset, we're going to be investing in that type of asset, we'll be investing in, so. And they're not like, just off-the-shelf. There's some unique things that we build into that equipment that causes the price to be a little bit higher. If you look -- the other part of that question, George, was around dry food, snack, confection, those things. We've got some aging equipment that we've had and we're going to be reinvesting in some of that aging equipment. It's not just focused on dry snacks and other, and dry snacks and confection and candy. And it can be used for other kinds of operations as well. But it allows us to drive nice gains in productivity and margin enhancements when we do that. So I'm going to go back to our -- to what our hurdle rate is for when we look at investments. And what we've always, what we've been looking at for the past 18 months or so is a 5-year average, 15% return on invested capital. So if the business teams come in with a project that has a 5-year average of 8%, well, they don't bother coming in with those, because the hurdle rate is 15% return on invested capital, 5 years. So if we have that kind of project to invest in, we're going to invest in that to drive our ROIC up.

Okay, that's helpful. Appreciate the color there. And then my other question is a little bit bigger picture. Covering Bemis over the years, it's never been a company that hasn't been lacking new products. There'd be stick packs, there were ice films, there were 7-layer films. But the marketing of those products, at least from my vantage point, tend to be very one-off. It wasn't done perhaps as comprehensively, maybe not done as much from an end market standpoint as should have been the case. Now that's my opinion, you may disagree with that. And if you do, please lay that out. If you agree somewhat with the premise, what are you doing differently, going forward, to market the suite of products that Bemis has to offer more effectively? What incentives are you putting around that? And what are the risks in trying to do that?

George, it's Bill. I'll take that one. If you look at what we've done with U.S. Packaging, and the way that we're structured now in U.S. Packaging, we're structured around what you just described. Those end market categories. And in the past, we may not have been structured that way. So it was more of a one-off sell to a, to customer X. And customer Y never found out about it because it was just a one-off sale. But if you look at the way we're structured now, around market categories, meat, dairy, liquid, meat, cheese, dairy, liquid, grocery. It gives us, it gives that business team the opportunity to do just what you described. How do I take it across -- how do I take this structure, call it stick pack, across the market category versus just to one end customer? So we're trying to get that leverage, not just in U.S. Packaging but now, with the global leadership team we have in place, we try to take those opportunities for structures like a stick pack, like liquid, like a canned glass conversion into flexibles to the other global team in Europe, in South America and in Asia Pacific, so we've got a much better connected organization that is trying to do what you're describing, George, in leveraging the scale, the technology and the scope of Bemis's advantage and differentiation, to not just one customer but to the category, with which the customers reside. And that's where we're headed.

We'll take a follow-up question from Adam Josephson with KeyBanc Capital Markets.

Mike, one just clarification question on cash flow, sorry to ask another question about cash flow. But the company went into 2014 expecting Op cash of at least $500 million. It's going into this year expecting Op cash of a little over $400 million. Obviously, you divested pressure sensitive, but I don't think that accounted for anything close to $100 million. So can you just help me bridge kind of where the company was going into last year and where it's going into this year, in terms of -- on the Op cash flow side?

Well, I'm asking myself the same question, because I can't bridge it from last year. Pressure sensitive was about $50 million of cash flow. I think there was some assumptions made that there was going to be some working capital that was going to be a use and it just didn't get there. When I look at my simple way, when I -- I've said it before, if I just take EBITDA less cash taxes and cash interest, that's where I get to.

Next we'll hear from Alex Ovshey with Goldman Sachs.

Just a quick follow-up for you. Can you talk about what you think you can do in that productivity in 2015? So productivity that would actually impact at the bottom line of the company? You talked about some issues with, just not being as efficient with equipment, given new product launches. And so maybe taking that into account as well, what do you think you can do in productivity in 2015?

Yes, Alex, while I don't have it summed for the entire company, each region has got very specific targets and goals for waste scrap productivity improvements, whether it's speed increases on equipment, whether it's throughput increases on equipment. Every region of the world has got aggressive targets for reductions in waste scrap, improvements in quality and increases in speed and throughputs. So it rolls up into their numbers and I'm -- I just don't have that summed for the company. We have very specific plans in each of the regions, though.

Understand, Bill.

We have no further questions at this time. I would like to turn the conference back over to our speakers today for any additional or closing comments.

Thank you, operator. Thank you all for joining us today. This concludes our conference call.

That does conclude today's conference. Thank you for your participation.