Ladies and gentlemen, thank you for standing by. Welcome to the Ball Corporation fourth quarter 2008 Earnings Call. During the presentation, all participants will be in a listen-only-mode. Afterwards we'll conduct a question and answer session. At the time, if you have a question, please press "1", followed by "4" on your telephone. A rebroadcast of today's conference will be available beginning today through February 5, 2009. To access the rebroadcast, please dial 1-800-633-8284 and enter reservation number 214-0-6682. As a reminder, this conference is being recorded Thursday, January 29, 2009. I would now like to turn the conference over to Dave Hoover.

Thanks, Elainea, and good morning, everyone. This is Ball Corporation's conference call regarding the company's fourth quarter and full year 2008 results. The information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those that maybe expressed or implied. Some factors could cause the results or outcomes to differ in the company's latest 10-Q and other company SEC filings, as well as company news releases. If you don't already have our earnings release, it's available on our website at ball.com. Information regarding the use of non-GAAP financial measures may also be found on our website. With me today on the call are Ray Seabrook, Executive Vice President, and Chief Financial Officer and John Hayes, Executive Vice President and Chief Operating Officer. On a comparable basis, our diluted earnings per share were $3.61 in 2008, an increase over our previous record of $3.50 in 2007. This improved performance came during a global downturn that we all realize may be here for some time. In this economic environment, our businesses are performing. The products we make generally have been recession resistant and historically have done well, even during economic downturns. But we're not sitting still. In 2008, we took a number of actions to more efficiently align our supply quickly with market demand. These actions and our continued strong focus on executing our strategy positioned Ball for improved performance in 2009 and beyond. There are accounting related impacts in our numbers that Ray will explain in a moment. John will provide more detail on our operations, but, all things considered, I like where we are as 2009 begins. While I hope the global economic situation improves, I'm optimistic about what we can do this year. Ray?

Thanks, Dave. Comparable diluted earnings per share for the quarter were $0.56, and for the year were $3.61, slightly lower in the quarter compared to last year; but, as Dave said, up for the year compared to last year's record per share earnings. Overall, the fourth quarter numbers came in pretty much as expected, with several notable exceptions. On the positive side, the food and household earnings were improved by the resolution of a claim in the amount of almost $7 million. However, this gain was more than offset by an $11.5 million market-to-market accounting loss on aluminum hedge recorded in undistributed cost. For accounting purposes, the aluminum hedge became ineffective in the fourth quarter, due to large decline in aluminum prices; but from an economic standpoint, there will be no loss, as the aluminum hedge is back-to-back with customer contract and, therefore, will reverse in 2009, resulting in $11.5 million more earnings during 2009. The final item of note was the $4 million increase in taxes due to the impact of the broad market decline on certain non-taxable benefit plan investments. Before getting to the operations, the other item of note is that on October 30, 2008, we announced the closure of two US Beverage Can plants and recorded an after tax charge of $25.2 million in the quarter to reflect these plant closings. A net after tax gain of $5.6 million was also recorded to reflect the recovery of business consolidation costs previously expensed. We also estimate that an additional $3 million after tax charge will be recorded in the first quarter of 2009, pertaining to these plant closings. These closures, combined with the previous announced closure of metal beverage plants in Kent, Washington, are expected to be over $10 million cash positive of the final disposition of…

Thanks, Ray. As you've heard from both Dave and Ray, Ball Corporation continues to perform well. While we certainly are not recession proof, our broad mix of end markets and customers that we serve across all of our businesses should hold up well on a relative basis. Combined with our initiatives of taking a leadership position and all that we do, relentless attention and focus on doing the things right, taking necessary actions to ensure that we're fit to the future and managing all of this through detailed execution, we are faring well. We believe the actions we took 2008 sets us up well going forward. As we enter 2009, overall we're generally on target on our pricing initiatives, our costs optimization programs, delivering value to our renovation efforts, driving our sustainable development, and being proactive around supply chain and risk management. We spent the last year focusing on these activities, which, given the environment, has allowed us to get ahead of the curve in terms of managing through this economic downturn. Now turning to our various businesses, profitability for the quarter in our metal beverage packaging Americas and Asia segment was slightly above our expectations, but down from 2007. This was driven largely by our efforts to run for cash, which included taking a fair amount of downtime in the fourth quarter to manage inventories. Cost containment in this business remains excellent. Our volumes in North America were off approximately 5% in the quarter, versus 4% for the industry. Driving this difference was relatively stronger CSD volumes, offset by lower volumes in the beer segment due to a previously announced decision to walk away from unprofitable business. Volume comparables will become more normalized as we head into 2009. In China, volumes were up in the mid-single digits after adjusting…

Well thank you, John, and thanks to you, Ray, for your comments. These are challenging times, but we're managing our businesses prudently through this environment. We took disciplined actions where needed in 2008. Our products and services provide value to our customers and have historically been defensive in economic downturns, and our balance sheet is strong, with no significant debt repayment obligations until the fourth quarter of 2011. We have confidence in our strategy and our competitive position. We're managing Ball for long-term growth to continue to deliver value to our customers and to create value for our shareholders. And with that, Elainea, we're ready for questions.

Thank you. (Operator Instructions.) Our first question comes from the line of Ghansham Panjabi from Wachovia.

Hey, guys. Good morning.

Good morning.

Hoping you can give us more color, John, on the volume outlook for Europe in the low single digits for '09. What gives us comfort on that and how does that compare on a reasonable basis, Western Europe versus Eastern Europe? Thanks.

Your last part of the question is, I think, the most important part. We have seen a significant slowdown in the east generally, whether you're talking about Poland, Russia, Ukraine, all the region in there, and so that's one of the main reason why we slowed down our Lublin project. In the west, whether it's in the UK or France, and even to an extent in Germany, we are seeing volumes hold up on a relative basis. Given the continued trends we see going from two-way packaging to one-way packaging, that does favor the can, and while we don't expect a significant amount of growth, nor are we anticipating it. Currently, we think, in some of those western countries, we will see modest growth.

Okay. And just as a measure of clarification, the $23.2 million of operating profit in metal household, that includes the $6.8 million claim? Right?

Correct.

Okay. Thank you.

Our next question comes from the line of Chris Manuel with KeyBanc Capital Markets. Please proceed with your question.

Good morning, gentlemen.

Good morning.

A couple of questions for you. First, Ray, a question on your free cash assumptions for 2009. Help me with some of the buckets here. If you're starting, let's say, I think at 321 base from '08, looking forward to '09, you're not going to have, I think, a mill payment recurring. You talked about pension possibly being up a little bit, but it sounds like your CapEx down by greater than that amount. It sounds to me as though that could be a bit conservative. Are there some other pieces, potentially working capital or restructuring cash that we may be missing to help us with the rest of the puzzle?

Yes. Remember, the pension expense and the cash contributions are different numbers, so what I said was the expense running through our P&L is only up slightly. That will be up a couple million dollars probably in the neighborhood. We had expenses this year, probably our P&L and pension expense in 2008 probably around $69 or $70 million. I'm looking for probably in the neighborhood of $72 million next year. And that's a noncash item. Then you go over to the cash side, and because of the broad decline in the stock markets, we're going to have to put more cash in our pension plans and mainly in the US, because the general plans are unfunded. That amount that we sort of -- as I see here today, I expect that number to be in the neighborhood of $40 million. Call it $25 million after tax. So, we put in around the same as we expensed last year. We put in $72, $73 million; we'll probably put in the neighborhood of $108 million next year into our pension plans, which will get us close to being 80% funded in the US.

Okay, thanks.

And you probably got an edge build in working capital as well. So, if you take those things into account and a little conservatism, you'll get through 375.

Okay, thank you.

Our next question comes from the line of Mark Master from JPMorgan. Please proceed with your question.

Hi, good morning.

Good morning.

I wonder if you could just elaborate a little bit more on the price mix in Europe. It was down for the quarter. I think last quarter it was maybe some specialty can there. I was just wondering if you could give a little more color.

Yes. Unlike the US, Europe has a much broader mix of can sizes, anything from 33 centiliter to 50 centiliter. The specialty ones you are referring to are 250 ml and everything in between. We saw more of a gravitation towards more of the commodity smaller sizes towards 33 cl, which effectively was the mix that I was talking about.

Okay. Is that something that's happening in North America, as well, in terms of specialty cans? How are those holding up in North America?

Those are holding up relatively well, because when you look at end markets and you look at energy drinks, for example. Energy drink, I think is the only drink category in the US that is up in 2008. It was up based on the information we have about 7%. All the other various end markets were in decline and, as you know, the specialty market really is driven by the energy drink side.

Okay. Good, thank you.

(Operator Instructions.) And our next question comes from the line of Alton Stump from Longbow Research. Please proceed with your question.

Thank you. Good morning. Just a quick question, I think you mentioned in your presentation about pricing in Europe maybe not being as favorable as you might like in the first half with the weak market demand. But, with the overall supply and demand situation being pretty solid still, I guess the question is what would be driving that lack of better pricing power?

Well, it's not as if we haven't been trying to get price in the marketplace and it isn't as if we haven't been successful. We have been successful. It's just as we started into our pricing discussions last fall, remember the deflation had not occurred and, so, as we are going through those negotiations, and the additional capacity that has been brought on stream, it did create a little bit of issue in terms of trying to get pricing as we move through the balance of 2008. And so it's not a big issue, but it is certainly an issue that we didn't get as much as our expectations. Now, the other thing going on in Europe, as you know, we have both aluminum and steel. We all know what's going on in the steel, so we have a high amount of high-cost inventory, if you will, sitting in steel in the first half of this year. And that's what I was referring to, that the first half maybe lower than this time last year, largely due to price cost issues. But, as we work that through and we expect that some of these commodity prices will continue to come down as the year goes on, we expect we will be able to make that up.

Okay. Thanks. Then one quick follow-up, Ray, or just to clarify anyway if you mentioned this already, sorry if I missed it, but with the inventory at $11.5 million that you took with the hedging on -- I think you said that was going to show up in '09. Could you give us an idea of what the actual timing is, whether that will be in the first quarter mostly or over the course of the year?

Well, yes. Unfortunately, there are derivatives products that now we're going to have market-to-market. Those products you all have watched yourself through our system that will be totally out by the third quarter. So, by the end the third quarter we will through undistributed cost have picked up $11.5 million of additional earnings. I can't tell you by quarter. It depends on the price of aluminum, but, fundamentally, there can be no economic loss to this thing. It's an accounting item, it's not really economics. We will pick up 11.5 somewhere between the first and the third quarter of next year.

Okay, thank you.

Our next question comes from the line of Dan Khoshaba from KSA Capital. Please proceed with your question.

Good morning, guys.

Good morning.

Hi, Dan.

Hi, I joined just a little bit late, so I'm going to ask a couple of very quick questions. I apologize if they've already been asked or if you've talked about these items. First of all, in the food can and aerosol can business, which you showed a very nice improvement year-over-year in, how much of the pricing initiative in Q1 was actually in place for the full quarter? And also, I know you've been restructuring that business to take cost out. Where are you in that process as well?

Yeah, I think if I understood your question on the pricing, Dan. In the fourth quarter, none of our 2009 pricing initiatives were in the fourth quarter 2008.

Okay, all right. So did you, you did put some pricing in for Q1 though, correct?

Yes, absolutely. As I mentioned, we've had unprecedented steel price increases and we've had no choice but to pass those on.

Okay, good. And how do you feel about the success of that initiative? You feel like you've gotten the pricing improved?

Yes. I think in my comments, I said we're on track and on target.

Okay, good. On the second item, just real quick, is the restructuring structuring activity that you began, I guess it was over a year ago now, in the food can -- aerosol food can business after the purchase of US Can. Are there still activities taking place there?

That is, we're on track with that as well, and so as we move into 2009, we expect to get approximately $15 million of cost savings in that business and we have other initiatives that we're taking, going to the next step in terms of continuing to try and improve that business. The management team of that business is doing a very good job.

The improvement, Dan, not all priced. A lot of it is related to taking out costs and running better.

Right. Okay, great. So, that's going to be an area that's going to do well in 2009. You are certainly counting on it to do reasonably well in '09 for you?

Yes, that's our expectation.

Last question, if I – well, two more real quick ones, if I could? The plastics business was break even. I don't know if you addressed this in your commentary. Resin prices have fallen. Are you expecting better performance in that business, or is it just too tough of an outlook for that business?

We said we expect profitability to be up, but the pain problem is related to demand being soft right now. But we're adjusting as we go forward and we'll continue to do that.

Okay. Free cash flow, pay down debt, I guess. You're not going to buy back stock?

Yeah, initially, these capital markets are really a scary thing right now. We don't have any refinancing until October 2011, and so we just really want to flow some cash and we'll see how the markets are. If the markets come back, then we'll feel more comfortable and we may start buying our stock. If we get a great price, so we may start buying it, but right now, our number one priority is to deliver and flow some cash, and then we will see how the capital market looks.

Okay. Well, good job, guys. Thanks.

Thanks, Dan.

Hi, guys, good morning. Could you just help me understand the pass through steel? How much of a pass through do you need, pricing wise, to recover your steel inflation for the year?

Well, to be honest, we don't talk about those things publicly, but, as I said, the pricing increase in steel has been significant. So we are passing that through, but--

If I think about steel content as a percent of cost of a can, maybe that's the best way for me to look at it. Can you just help me understand how much steel content, as far as cost of goods sold, is contained in a can?

Again, it depends upon the size of the can. A big can has more steel on a relative basis than a small can.

But, generally, it's more than half.

Okay. Great, thank you very much.

Our next question comes from the line of Kian Martin from Singer. Please proceed with your question.

Morning, gentlemen. I wonder if you could provide just a bit more background on your comments on Russia. I think obviously the growth in the market started to slow during the third quarter. I was just wondering whether you could provide some figures for what the market has delivered you in the fourth quarter.

Well, as you probably know, we currently are not in Russia. We have a very small amount of export, but I use that as an example just to say in Russia, in all of the east, including Russia, that in the fourth quarter there are actually declines in volume in the fourth quarter in Russia and other parts of the east.

Okay. And then, just moving onto your comments on specialty cans. Would it be possible for you to breakout the high single digit growth that you saw in European volumes between the standard 12 ounce cans and specialty?

I don't have that in front of me, but the majority of the growth, I believe, came from the 33 centiliter can.

Okay. Is it true to say that the specialty can is still growing, or has that slipped into year-on-year negative?

No. I know it certainly does continue to grow.

Okay. That's great, thank you very much for your time.

You bet.

(Operator Instructions.) We have a follow-up question from Chris Manuel from KeyBanc Capital Markets. Please proceed with your question.

Yes, this is Chris Manuel from KeyBanc. Two quick follow-ups for you. One is, when you think about your position versus the competitive landscape both in North America and Europe -- you talked a little bit about taking some down time, so that your inventories were in the correct position. As you look across or to the extent you can see what competitors are doing or what you think they're doing, I should say, is your anticipation that the supply/demand is reasonably in balance, and that there's not a large inventory overhang that needs to be worked through?

Well, we can't really comment on what our competitors do or don't do, but if you've been watching plant closures across the industries and so on, my impression is that your assumption is probably right. I know it isn't in our case, but we better not talk about what our competitors do.

I think in North America, clearly we've seen that, but in Europe it's tougher to get a sense there. I want to see what opinion you've got as to whether you think that inventory levels are reasonable there or not.

Again, as Dave said, we can only look at our business. Our inventory levels are reasonable going into 2009, and there's also structural impediments that don't allow a lot of inventory hangover, because you have to produce cans with the appropriate labels and, given the promotional activities using labels in Europe, it's not as if you can build a large stock of what I would call standard labels.

That's helpful, actually. Second question I had was with respect to how you would – Ray, as you pointed out, the capital markets are in a bit of turmoil here, particularly on the debt side, but how you would think about acquisition market at this point in time? Your balance sheet's in pretty good shape and there is potential for some consolidation opportunities. I just -- a sense as to whether that's something you would be willing to consider or whether it's more of a batten down the hatches type of approach right now?

Well, I think, Chris, its Dave. I think the circumstances around this could well present opportunity for people like ourselves, as we look forward. Part of the reason to have a strong balance sheet and to strengthen a little bit more is just for that very thing when nothing in particular in mind, but I do believe that guys that were running around stapling eight times or ten times EBITDA financings suddenly have no money. Our debt that has a ratio, I think, of under 7% or 7%, its due in 2018 traded above 9%, is now below 8%, again, on a market basis, indicating that that's what the market thinks. So if the cost of debt is higher, then you've got to look real hard if you're financing it with debt at any transaction that you do, but we wouldn't rule that out. And I think maybe prices for acquisitions, as we get through this period, are going to be a little more rational, but that's all I can say. It's all speculation.

Thank you very much.

And there are no further questions at this time.

Okay well, Elainea, thank you very much. You've done a great job with this call. Thank you, all of you, for listening to our conference call. We'll look forward to speaking with you again in April.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.