Ladies and gentlemen, thank you for standing by. Welcome to the Ball Corporation First Quarter 2013 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, April 25, 2013. I would now like to turn the conference over to Mr. John Hayes, President and COO with Ball Corporation. Please go ahead, sir.

Thank you, Daisy, and good morning, everyone. This is Ball Corporation's conference call regarding the company's first quarter 2013 results. The information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied. Some factors that could cause results or outcomes to differ in the company's latest 10-K and in other company SEC filings, as well as company news releases. If you don't already have our earnings release, it is available on our website at ball.com. Information regarding the use of non-GAAP financial measures may also be found on our website. Joining me on this call today is Scott Morrison, Senior Vice President and Chief Financial Officer. I'll provide a brief overview of our company's performance. Scott will discuss financial and global packaging metrics, then I'll finish up with comments on our aerospace business and the outlook for the remainder of 2013. We've made a lot of progress towards our longer-term objectives in the majority of our businesses, including our ability to overcome the shortfall created from the previously announced 12-ounce customer shift in North America. However, disappointing results in our European beverage container segment overshadowed this good work and led to our first quarter results coming in below our expectations. We will discuss this more when I talk about the outlook later in the prepared remarks, but the overarching business fundamentals at Ball have not changed. And while we have dug ourselves a hole in the first quarter, we do expect the remainder of the year to be largely consistent with our expectations, although the year is probably more back-end weighted as volumes in the second quarter are getting off to a slow start and our cost out plans in Europe will take time. Other events in…

Thanks, John. Ball's comparable diluted earnings per share from continuing operations in the first quarter were $0.58 versus last year's $0.63, an 8% decrease. Also in the quarter, the company recorded after-tax charges totaling approximately $16 million, related mainly to costs associated with plant closures and the European headquarters relocation to Switzerland. Our metal beverage Americas and Asia segment comparable earnings were roughly flat year-over-year due to shifting mix to specialty cans and excellent cost control at the plant level, offsetting double-digit declines in 12-ounce can demand in North America. Brazil volumes were up 40-plus percent in the quarter. China volumes were up mid-teens, but pricing in the region remains difficult. European segment profit declined $0.06 in the quarter due to weaker volumes brought about by challenging economic and weather conditions in Northern and Western Europe, higher costs related to our regional headquarters move and higher input costs. In food and household, year-over-year segment earnings declined slightly due to higher cost inventory carried into the year, and segment volumes declined 5% in the seasonally weak quarter with food cans down a bit more, which we expect to end up flat by year end and steel aerosol up mid-single-digits in the quarter. Extruded aluminum containers continue to grow globally. Also in the quarter, we were notified by a food can customer of their decision to shift buying from Ball to a new supplier beginning no earlier than 2015. While this is a ways away, we do not expect this shift to be material to the company's results in 2015. We have new things in the pipeline to deliver value-added packaging to other customers. And as always, we will actively manage our manufacturing footprint to enhance returns on invested capital. In the first quarter, we had 2 fewer accounting days as a…

Thanks, Scott. Our aerospace business continued to perform well with solid execution on existing programs and contracted backlog running slightly to $1.70 billion. As in the past, being cost competitive has allowed Ball to win our fair share of government contracts. And despite some minor slippage in some of our more tactical products related to sequestration, we remain well positioned. After a long and very successful career at Ball Aerospace, Dave Taylor retired at the end of the first quarter. We thank him for his significant contributions to our company and wish him well in retirement. Dave hands the reins over to Rob Strain, who joined aerospace as Chief Operating Officer in early 2012, and is doing a great job in what has been a very smooth transition. Now looking out across the operations today, a few observations to share. First, we continue to expect the Americas Asia segment earnings to be relatively flat in 2013. Specialty can growth in North America and Brazil is strong, and cost out initiatives are on plan, which are expected to offset anticipated lower volumes for 12-ounce containers in North America and difficult pricing in China. In Europe beverage, given existing challenges and the time required to achieve cost optimization across the region, we are unlikely to fill the first quarter performance hole in 2013. We anticipate seeing the benefits of ongoing cost-out initiatives later in the year end and into 2014. And as such, margins are expected to remain challenging in the second quarter. Going forward, our global food and household segment will benefit from increased demand for aluminum aerosol containers and the typical customer pull-through ahead for a normal seasonal vegetable harvest here in the United States. In our aerospace business, while some uncertainty still exists around future ramifications of sequestrations, Ball's strong performance and track record should keep us well positioned for the long term. With the exception of our European beverage business, remaining segments operating performance are expected and anticipated to be solid and should improve over the back half of the year. However, given our first quarter results and volumes in the second quarter are off to a slow start, it is unlikely we can reach our long-term 10% to 15% diluted earnings per share growth goal in 2013. Our company's cash flow is strong, and we are actively managing our businesses to align assets and cost structures to respond to current market conditions. This is a year where our attention to detail and focus on operational excellence are required to position us well for the long term. And with that, Daisy, we are ready for questions.

[Operator Instructions] Our first question comes from the line of George Staphos with Bank of America Merrill Lynch.

I wanted to start on Europe. These things happen obviously from time to time, and ultimately, you've had good performance in Europe over the years. It sounds like from listening and also reading through the press release that the issues in Europe, to some degrees, perhaps caught you by surprise. And so I was wondering if you could provide a bit more details in terms of what varied, if anything, from your expectations in the quarter. And then, again, if possible, on a forum like this, can you comment to the degree to which you ultimately see cost outs benefiting results? Obviously, it's not going to happen in second quarter, but in aggregate, say, by 2014.

Yes, George, this is John. There are several things that surprised us a little bit. The greatest of which, candidly, was probably volume. Recall in January, I had said that Europe, we were facing some issues in Europe, but we were coming off a year that we grew mid-single-digits. And in Western and Northern Europe, in particular, not only the economic climate, but they had a very long cold winter and beer was very soft, and we're weighted towards beer. And so we were down in the quarter, and that was a big issue, particularly when you're in a fixed-cost business. Having said that though, no excuses. We've got to be laser focused on improving our cost out. The shortfall was approximately 1/3 of volume and mix, 1/3 of labor efficiencies related to the move as Scott said, and then 1/3 related to higher costs, whether it was metal premiums, higher energy costs. And we are laser focused on getting those costs out of our system.

Okay. The labor I'm assuming was related to what you needed to do once operating trends vary from what you were expecting. But the metal premiums, I'm not sure why that would have been any different than what you would have expected going into the year?

Well, we did. We did expect some higher energy and labor premiums that we're -- excuse me, metal premiums that we're having some challenges trying to push through into the marketplace. The labor efficiencies where we had redundant costs related to several opening up a new headquarters, and we hadn't yet closed the new headquarters, and those things just take some time and we had a little bit higher labor cost than we expected in that business. And so as I said, we're getting after that right now because we have to.

Okay. John, I'd ask the question. I'm not sure you're in a position to answer it, so I respect that, but can you size what the cost outs might look like? If you mentioned already, I apologize for missing it.

No, I -- George, I do think it is premature to review that. Our folks are taking a full scrub, and we're going to be talking with them in the next couple of weeks about that. But we need to get the cost out. And look, this was a short-term blip and it had to do with -- it was the first time in a long time we actually had volumes decline in the quarter over in Europe. And so we need to make sure that our costs are as aggressively controlled and possible because you can't anticipate, given the economies of Europe, that we're going to see mid-double -- or mid-single-digit growth. And so we're planning for the worst, and then the rest is upside, if we can get after it.

Our next question comes from the line of Phil Gresh with JPMorgan. Phil M. Gresh - JP Morgan Chase & Co, Research Division: First question is just the earnings outlook, not going to hit the 10% to 15%, understood. Should we be expecting EPS to be up year-over-year this year at this stage? And that's a question for the year, but also for the second quarter given what you're saying about trends and some of these cost variables, any color would be helpful.

Sure. Moving into the second quarter, it is starting off slower in terms of volumes. So I think the second quarter has got some challenges. Full year though, we're still expecting earnings per share to be up. We just said we're not going to hit our 10% to 15% long-term goal, but we expect it to be up.

Recall, Phil, that at the first quarter, we said we're going to be striving to reach the lower end of that range. And so if we made the $3 plus at the end of '12, you can do the math there. We've dug ourselves a $0.06 hole or so relative to that. And so -- but it's still -- we still are going to be striving to get as much as we can, it's just going to be difficult given the shortfall in the first quarter. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Got it. And then on the free cash flow guidance, it sounds like you're keeping CapEx the same. So if earnings are expected to be lower, Scott, are there other levers you're pulling here to keep that free cash flow? Or did you have cushion in that original guidance? Or how should we be thinking about that?

We're finding some things on the working capital front that we can go after to make up for the shortfall in the earnings side. And right now, the CapEx plans that we have, the growth capital that we're spending on are projects that we like. It's a lot of specialty capacity in both North America and Brazil. And those projects have proven to be well worth investing in, and so we're going to be continue disciplined in deploying capital where we can find growth. It's probably the maintenance side where we can maybe shave a little bit out, but right now, we're keeping the number the same. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Got it, okay. Last question, just on the Europe mix issue, could you just elaborate on what that is? I assume it's specialty cans, but just kind of more detail in what you're seeing? And is that just seasonal or what is going on there?

Well, as I said, we're -- number one, we're more weighted to beer and beer is more weighted to $0.50 a liter. And so with the softness, overall -- I'll just give you context, overall, beer, industry beer cans in the first quarter in France was down about 8.5%; in Germany down about 7%; and Belgium down about 2.5 %, all largely related to the economy and weather. I mean, even in Germany, they were having snow in April, which is -- they haven't had in a long, long time. And so the mix issue is related to we were selling less beer, which is $0.50 a liter predominantly, and we're selling on a relative base, more $0.33 a liter, which is the standard container in Europe.

Our next question comes from the line of Scott Gaffner with Barclays.

I just wanted to follow up on the metal premium issue in Europe. Is that -- because first I thought the contract's pretty much adjusted for any changes in metal prices. And the second is, is it related to steel versus aluminum?

It's not really related to steel versus aluminum, this is aluminum premium. And every contract is different. There are some contracts where it's a straight pass. There's other contracts that get negotiated on a shorter-term basis where all that has to get negotiated. And I would say we need to do -- we need to push more of getting that premium passed through. That's where we're getting squeezed a bit.

Is there -- are you going back to these customers and trying to get that contractually passed through on a go forward basis?

No, you have to honor the contracts that you have. But obviously going forward, you try to fix anything that's new that's coming up. Or if contracts need to change for whatever reason, that's high on our priority list of things to go after.

Okay. And then just on the -- you made a lot of management changes over the last year. A lot of people retired, so it's not as if the changes were made due to performance. But is there anything in the last quarter where maybe just because of management changes, the data wasn't flowing back as quickly as you would've expected? And so therefore, Europe surprised a little bit just from an information flow perspective?

I don't think it has anything to do with any management changes. I would say, if you're -- the one comment I made on undistributed cost being up a little bit, that has to do with a little bit with retirements, because of the way the deferred comp plans work and certain retiree elections. So it was a little bit higher in the first quarter, but I don't think there's any issue with -- we had a lot of changes last year in terms of going to the principal structure, moving our headquarters to Zurich. And when that -- and when something like that happens, I think you have a tendency potentially to lose focus a little bit. But I don't think it has to do with any personnel changes.

Yes. And the other thing I'd point out is when you looked at our volumes sequentially through the quarter, that actually in January, they were okay. And then it really started to get soft in February and even more so in March, and I think largely, it had to do with the prolonged winter.

Right. And just lastly, it's -- the facility that you're consolidating, is that -- that's just an administrative facility?

That's correct. It was our former regional headquarters and just outside of Düsseldorf.

Our next question comes from the line of Ghansham Panjabi with Robert W. Baird. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: John, just judging by what your customers are also reporting, Heineken was out yesterday saying volumes were down 8% in Western Europe for the quarter. So obviously, they're seeing it and it's flown through the supply chain. Are you seeing any sort of -- are you sensing any sort of, re-think, in terms of promotional activity at their end as they sort of adjust to this new reality of what's happening in Europe?

Not yet, but what I will tell you, as a general rule, in the United States and in Europe, it's not lost on their customers that the volumes have been quite soft. Obviously, for different reasons, we've been focused in Europe on the weather; even here in the United States, not only weather, but the payroll tax. I think it's -- the impact on the consumer, it surprised people a bit more. So as we sit here thinking about promotional activity, it's very high on the minds of trying to get their volumes back. But I do think that we're just coming out of the winter time, and so it's really late in the second quarter is when you'll start to see those promotions. And the cycle of promotions is very different than it was, say, 5 years ago. They happen much more quickly, decisions are made much more quickly. And so I think it's going to be more of a tactical approach to promotions and advertising as well. I think you'll see a lot of marketing and advertising this summer in the beer category as well as the CSD category, both here in the United States and over in Europe. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then just switching to Brazil, your 2 primary competitors down there seem to be focused on adding capacity in Northern Brazil. Can you just remind us on your Northern Brazilian strategy and how that sort of fits in with your plan for the region as a whole?

Well, we have. As you know, we started up a plant in the Northeast in Alagoinhas last year, and everything is going very well. And we, even in January, announced that we would, by later on this year, have a second line installed, and it was tied up under a long-term agreement and we have halfway through the execution there, and we expect probably late third quarter is when will -- that will get up and running. And so when you talk about North, I don't -- I wouldn't describe it as a Northern Brazil strategy, it's our Brazil strategy and a customer focused strategy. Right next to our Alagoinhas plants, 2 of our big customers have built brand-new breweries there.

Our next question comes from the line of Philip Ng with Jefferies. Philip Ng - Jefferies & Company, Inc., Research Division: You guys are mentioning that your office slow start in 2Q. Can you provide a little color which businesses you're seeing a little more weakness from?

Well, relative to last year, I would say, here in North America, the beverage can volumes are a bit soft. I think if you look at IRI-type data, you can see just, again, the overall market is soft on the soft drink and beer side. I know that some of the soft drink companies over the last couple of weeks have talked about that. And then over in Europe, it's -- the winter was prolonged. I mentioned snow in Germany in mid-April. That's, in some ways, that's unprecedented, and so it's just a bit slow. But as we start to cycle into the summertime, it is weather dependent, but it was really those 2 things that I was referring to. Philip Ng - Jefferies & Company, Inc., Research Division: Got you. And then on the food can business, I'm surprised to see some inventory holding drag from template. I would've thought template prices were pretty flat. Did you see a drop-off? Is that why there was a drag on the quarter?

There was just a little bit of that. It had to do with some higher cost inventory from how we ran from the fourth quarter into the first quarter. So I wouldn't read too much into that.

Yes. Remember, we took a lot of downtime in the food can business in the fourth quarter last year and to manage inventories, and that helped generate some very good cash flows for us. But then -- so you're spreading a fixed-cost nut, if you will, over smaller volume, and that's where the higher cost of inventory flows through, and it's just -- it's a timing issue. Philip Ng - Jefferies & Company, Inc., Research Division: Got you. And then just one last question on China. Demand's still pretty strong. One of your competitors mentioned that some of the regional players are having some execution issues, they're having some setbacks. So perhaps the excess capacity is not as bad as people have feared. Are you seeing that dynamic? And has that opened a door for you to win some new business? And what are your thoughts on pricing, I guess, potentially turning to the positive, going forward?

Well, I think all that you suggest is we would be at the same way. Meaning, volumes are -- continue to go strong. As we said, we're relatively sold out. We haven't added a lot of capacity in the market. And so as we go into the summer, it'll be interesting to see if there are indeed how tight the market gets. And we are going to take a very pragmatic approach to prioritizing our customer demand and how we supply that relative to where the economic returns are. And so we are going to make sure that our customers that want to be with us for the long term and aren't just tactical price buyers, we're going to focus on those relationships over the tactical price buyers. Philip Ng - Jefferies & Company, Inc., Research Division: Got you. So it sounds like there is potentially some opportunity to get a little better pricing if things do firm up into the year, during the peak summer months then?

Yes, there could be. But again, it is a bit early and there are some operational problems. But the local competitors over in China, they're -- they have a capability of getting their act together. And so we'll see how the summer unfolds.

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

I was on a few minutes late, so I apologize if you addressed this. In light of the slightly softer guidance on the EPS line to get to the free cash flow number, are you planning to reduce CapEx a little bit? Or do you think you'll have a little bit better working capital managed? How do you think you will get there?

Well, it's still real early in year. But right now, we think we've got a little more upside in working capital than what we had. We didn't change our CapEx guidance for the year.

Got you. And then secondly on the aerospace division, if there were an impact or is going to be an impact from the sequester, when do you think that would both show up in the backlog and possibly in the actual results?

Well, I think there's 2 ways you got to think about this. The backlog we have is contracted backlog, and that's been increasing, and I think that's relatively solid. And so you wouldn't see anything, and that's a lot of the -- what I have described as the space hardware of what we do there. That's pretty firm, pretty solid, because these are satellites that need to be replenished, and we're not seeing any impact with respect to sequestration, at least right now, on that. On the more tactical products, the antennas for, say, the Joint Strike Fighter and other more tactical programs like that, we have seen a slippage to the right, not cancellations but a slippage to the right. That part of our businesses is certainly a much smaller part of the business than our space hardware. And so I think if you're going to see softness, you'll see it in that area.

Okay, that's very helpful. And then -- and again, I apologize if you addressed this, it seems like your experience in Europe, and I know that segments by company aren't apples-to-apples, but it seems like it's been a little bit tougher in the first part of the year than your other competitors. And could that be because of who your specific customers are or the mix of business with, say, soft drinks versus beer. Can you give us a little help with that?

Yes, I did address that earlier. So I'd ask you to go back when the transcripts comes out. But it really gets into the geographic location. Western Europe, France, Benelux region, Germany, that's a sweet spot for us, and where a lot of our production capacity and customers are. And it's -- we are focused on beer there. Given the weather and given the economic conditions, it was quite soft in those regions relative to some other regions.

And then last -- real quickly, more for Scott, is there any obvious or are there obvious things you're looking at to even further lower your debt cost, given this incredible environment? Or do you feel you've pretty much done all you can do?

No, we're always looking at the debt markets, and they've been very attractive lately. So we're always looking and we'll be opportunistic.

Our next question comes from the line of Adam Josephson with KeyBanc.

On Brazil, what were your like-for-like volumes in the quarter excluding the new plant? And what do you expect the market growth to be in subsequent quarters?

I don't have the like -- I mean, the year-over-year volumes were up 44%. Taking out the new capacity, I don't...

Yes, we were -- absent the new facility, we were sold out. And so we've been getting some productivity improvements there. But when you don't have anything else to sell, it's tough to sell more. And so -- hopefully, that addresses the first question. On the second question, we continue to see, I think, in the first quarter, industry volumes were up around 9% in Brazil. We're starting to enter their "winter" months. But I think all the prospects based on conversations with our customers and based upon the economic activity related to infrastructure builds for the World Cup next year, I think as we go through the back half of 2013 and into 2014, we're going to continue to see a nice volume improvements in Brazil.

And just one more on the food can contract, can you go into any more detail about what happened with that contract? Obviously, you said you're not going to lose it before 2015, but any additional insight into that situation?

Other than we're talking a couple of years out into the future, when you have something like that, usually it comes under price, is my guess. So price plays a big part of it. But nothing more to offer. We -- I think we know how to -- we've got other things in the pipeline from a new product perspective, and we'll manage our footprint as necessary. And we've done this before in other businesses, so we know how to do it. So we're just letting people know.

Our next question comes from the line of Mark Wilde with Deutsche Bank.

Can you talk a little bit about how much of that double-digit drop in 12-ounce North American bev you've been able to offset with specialty cans?

Quite a bit. I mean, if you look at the profitability, you can't see the profitability [ph] of North America, but they've done a heck of a job of both -- of taking out costs, growing specialty can. I mean, even some of the business, some of the same customers that we reduced 12-ounce volume with, we're growing specialty business. So it's been a great offset to that business to offset the declines in 12-ounce.

Yes. I would just add that from a volume perspective, we grew mid-teens in the specialty size. It's all obviously off a smaller base, but then -- so our overall volumes are down. But the double-digit improvement of specialty, it now represents 22%, 23% of our overall mix. Now part of it has to do with lower 12-ounce, obviously, but the other part has to do with increasing specialty. And it's -- we've been very focused on that. There's a variety of new products coming out this year related to that, and we continue to focus on that segment.

I think that and managing the cost base aggressively, has really done a great job.

Yes. And am I correct that the kind of the throughput, just the unit throughput, on specialty cans tends to be a bit lower than on the 12-ounce?

That is correct.

Okay. And are you likely, given this growth in specialty, are you likely to have to make any more capacity changes over the next 12 months as you see it right now?

Well, I think in the growth capital that Scott has mentioned and anticipated in that is some of these changes. And it's not adding new capacity, it's converting 12-ounce capacity to other sizes and capabilities.

Okay, all right. And then could you also just address kind of the timing on pure repurchase activity? The stock's down about 4.5% today. I wondered whether you're likely to do kind of more at a point like this, or whether you'll wait till the second half of the year when your cash flow tends to be stronger?

No. I think it sounds like it's on sale today. So it sounds probably a good day to buy. We've got to get out of a blackout period. But we're still on track to use most of our free cash flow to buy back our stock, and we'll anticipate we'll get there.

Our next question comes from the line of Al Kabili with Macquarie Group.

Just a question on Europe on the higher labor cost you cited. Is that a big sequential step-up that you saw fourth quarter to one quarter that helped catch you by surprise?

I think the costs were -- kind of came into the business in the second half of last year. This move to Zurich is more than just a move of headquarters. So we went to what's called a principle structure, where the plants essentially instead of become -- being kind of their own of profit and loss center, become a tolling manufacturing operation and a distributing operation. And I think we've got some added people cost because of that. So it added complexity to the business. And I think we added people because of that, and now we're going through a process. I've been over to Europe twice in the past couple of weeks as we look into how do we streamline some of those processes and make it more efficient.

Okay, all right. And along those lines, I know you mentioned higher metal premiums in Europe. But I think I understand there was some opportunity in some contracts for higher prices. So can you just talk about -- are you saying that you didn't get enough pricing to offset all of the increase in metal premiums? Or was there any extra pricing in this year in Europe has [ph] ?

No, I think that's fair. I mean, we didn't get enough price to offset some of the cost structures. There's also -- energy costs are up dramatically in Europe. Tax, they're raising energy taxes dramatically in places like Germany and France, and so those kinds of things are impacting you, too.

Okay. Now on the energy, it's a little bit surprising to me on the energy front, just given historically, there's not a lot of energy usage for a can plant. And traditionally, we haven't seen a big sensitivity to energy prices in terms of your earnings. So is there anything unusual going on this year in terms of that? And is there opportunity on your contract structures, is that a year lag? Or what's the structural like to pass some of that through?

Well, I mean, there's a fair amount of energy use -- electricity used in making -- in a can plant, if you walk through a can plant. Typically, the energy prices don't change as dramatically, but energy prices in Germany, for instance, they've raised. They're moving away from all their nuclear plants, they're going to renewable energy, which is a good green thing to do, but it's going to drive the costs much higher. And so we're seeing the impact of that. In terms of -- I'm trying to remember the second part of your question...

The structure for pass-through right now -- yes, because some of them have pass-throughs for that kind of stuff. I think it might be a year lag, but...

Yes, there are lags, and it would depend on the contract again. But there is a lag, so you know you're going to feel the pain for a period of time until you get to reopen those contracts.

Okay, all right. And then follow-up just on aerospace, I mean, I know it's lumpy quarter-to-quarter. So in this quarter, you were, I think, $18 million or so of EBIT, and I know it's lumpy. So is that just kind of unusual versus the recent sort of experience we saw last year? Or how should we be thinking about the run rate of the aerospace business?

Remember, last year, we had a number of close out of contracts, and the lumpiness has to do with when you're starting up new contracts, usually the profitability is a bit lower on the front end of it relative to back end, just because the risk's higher. And as you execute on those contracts and reduce the risk, the profitability goes up. And so we had a number of close outs in 2012, and we have a number of ramp ups, which is good for the long term in 2013. That's the vast majority, if not all of, exactly what we are talking about.

Okay, so we should -- so should we expect then as we get to the back half of this year that, that starts to tick back up as these projects move forward in time? Or is this kind of a good run rate for the rest of the year?

It's probably closer to a good run rate for the rest of the year. And remember, these contracts often are 3, 4, 5 year contracts. And so when you're sitting, we -- as I said, we had a -- you look at our margins last year, they were record high margins. And they were -- because there are so many close outs, and I think we're having so many startups here. And so the fundamentals of that business are quite good. But really, where that profitability will really, assuming we're executing, really starts to fall in 2014 and '15.

Our next question comes from the line of Chris Manuel with Wells Fargo.

Just a couple of housekeeping or miscellaneous questions. But first, let me start with aerospace. If I heard earlier, and to follow-up on Al's question, if I heard earlier, I thought you said for the balance for the year with the exception of Europe, that would be down on a year-over-year basis in North America or Americas bev where you intended to be flat, but you'd indicate all the businesses would likely be up for the year. So kind of marry that with your previous comments as we think of the run rate for the balance of the year, should we still be thinking about aerospace year-over-year being up or being flat or being modestly lower?

No, I don't think it's up. Remember, in January what I said is, there's not upside relative to aerospace. And so if we miscommunicated that, apologies there. I think -- I'm sorry?

No problem. That was in earlier comments, I might have picked it up incorrectly. Second question I had was with respect to, as we look at some of the specialty can and trying to delineate between what we're seeing in sort of your 12-ounce business versus your specialty business, were all pieces up or down in Europe? In North America, obviously, we knew you lost a lot of regular business. But when we're looking around different regions, how should we think about which pieces are doing well, which pieces aren't, specifically trying to weigh [ph] some of that?

Well, in Europe, as I said, with -- we had mix issues related to -- we had lower specialty sales relative to standard sales. And a lot of it had to do with we're selling less beer, which is $0.50 a liter and selling relatively more CSD, which is $0.33 a liter. I think that's the biggest change in Europe.

Okay. And then one other question with respect to Europe is, what's your mix as it sits today, steel versus aluminum?

Well, as this is public knowledge, but we're in the process of converting one of our German plants from steel to aluminum. And that's in some of the CapEx that Scott had mentioned, and that should be largely completed within the next month or so. And so pro forma that after we go through that, it's less than 1/3 steel and then the balance of it, aluminum.

Okay, that's helpful. Last question was, was the -- your anticipation as the year rolls on with some of the beer customers in Europe, is it that -- I know you talked about some of the promotional activity that could help buoy things a bit, but is it your anticipation that, that business will get a little bit better absent many cost-cutting pieces, number one. And then number two, do you worry about other capacity adjustments over there? I recognize you are going to do some work, structurally, more on back-office headquarters that, type of stuff, but do you feel you would want any other capacity realignment or adjustments over there as well?

No, we don't see any capacity realignments in Europe at this time. The market fundamentally is still growing. We're just coming off of one quarter, a seasonally slow quarter that had bad weather and was soft. And so as we go into the year, you have to assume that weather will be normalized in there, and we expect volumes to come back. And we have said this in the prior couple of conference calls that we don't have any plans on adding capacity until we get our cost structure right there.

Our next question comes from the line of Alex Ovshey with Goldman Sachs.

On the food can contract that is going to be lost in 2015. Is that going to go to -- is that a new entrant in the marketplace or another player that's not the other 2 big players that we know in the market?

It's a -- we're not 100% sure. So anything we'd say is speculating, so it could be either one of what you're saying. And we believe it could be a new entrant, but we're not 100% sure.

Okay, John. And then on the specialty can side here in the U.S., you talked about your mix being 22% to 23% of your can production in the U.S. is specialty. Do you have an estimate of what that number is for the market?

Much less, much less. We'd lead the market relative to specialty container. So I don't know the number off the top of my head, but I'm going to guess it's probably half that.

Okay, that's very helpful. And then how much more room do you see on your end to continue to improve the mix towards specialty? I mean, is there an upper bound that you see?

Well, yes, there is always an upper bound and one of the reasons why we improved is because we had less 12-ounce, as you know. We've been over the past number of years spending a lot of time on looking at new customers and new markets. The craft beer market is a good one with -- that I mentioned in my prepared remarks. Yes, it's a 12-ounce container, but it's a non-standard 12-ounce container that we'll be rolling out with that one customer. So there's a variety of opportunities there. You think about even on the CSD side and several years ago, there were none of these 7.5-ounce cans. And now they have really started to taken off, and even some of our big customers have publicly talked about double-digit growth there and their focus on it. So I think there's just a lot of opportunity in mainstream and in some of the more-unique categories where, historically, cans did not play a part of.

Interesting. My last question is on Brazil. Can you talk about how your customer base down there is beginning to prepare for the World Cup next year? And whether there's any preliminary implications of what that would mean for demand of the metal can relative to the glass bottle?

Yes, what I can tell you is there is a variety of beer customers. Virtually every beer company down there, a major one that we're aware of, are putting significant capital dollars towards canned filling. And we pay a very close attention to that. and I'm sure other people in the industry do. And so there's a good sense that there's going to be a focus on cans as we go into the World Cup.

Our next question comes from the line of Anthony Pettinari with Citibank.

Just a follow-up on specialties. Granted volumes have been strong. When you look at the supply-demand balance in North America, given some of your competitors are adding specialty capacity as well and experiencing some of the same pressures in 12-ounce, is the margin premium or the return premium you get from specialties over commodity cans, has it been a fairly stable over the last year or is it, in some cases, expanding or contracting? Or is there any way that you can help us think about that?

No, it's reasonably stable. And it's important to point out though, when we talk about specialty, it's not just one specialty size. We make everything from 5.8-ounce all the way up to 32-ounce, and we make approximately 20 different sizes. And so when you think about from a manufacturing perspective, when someone's putting in new specialty capacity, they may be putting in one particular size, and that has no effect on other sizes. So you just need to be conscious of that fact. But as, I think, we go forward, we are seeing a proliferation of sizes which creates complexity. And I think as a result of that, the supply and demand balance of that is relatively healthy right now.

Okay, that's helpful. And then just going back to North American beverage, is there any way that you can quantify the impact of the Gainesville shutdown? Or to -- what percentage of that capacity is going to be filled out of other existing facilities? Or is there any kind of way that you can quantify that?

Well, we moved some of that equipment into existing end facilities in North America. So we still needed to produce a decent number of those adds. So some of it is being redeployed in North America, and some of it is available to be deployed in other places.

The majority of that capacity will be redeployed elsewhere?

Majority? About half.

Yes.

Yes, about half will be redeployed into existing facilities here in the U.S. which is actually already done. Remember, Gainesville is winding down right now. It's a very small staff and crew right now because the equipment has already been moved out and moved into other places here in North America. And the remaining equipment, as what Scott was saying, can be redeployed into other growth areas outside the United States.

Our next question is a follow-up question from the line of George Staphos with Bank of America Merrill Lynch.

I want to come back to the food can issue. And I think I know a little bit of what's behind it. But still food can contracts moving from one supplier to another on price in a market where there is no growth, smacks of the 1990s, and not in a good way. And so I recognize every year, there's probably a little bit of movement here and there, but do you sense that the food can market is taking a different turn in terms of competition from price standpoint than what we've seen here the last 10 years? And then the related question, I know it's early, could we assume that when that volume moves, that you'll be able to utilize the facilities to produce any number of products that you're making these days, that you weren't maybe making, say, 10, 15 years ago?

Yes. George, the first answer is no. We believe this to be an isolated event. Secondly, with our facilities, many of our facilities' tin plate, we have co-manufactured aerosol containers as well as food containers there. And Scott mentioned, we have some opportunities. We have some new technologies and new products that are coming down the pipe that we're going -- we are exploring. We haven't made any decision on that. And certainly in a fixed-cost business, a great way of leveraging your fixed cost is putting it into existing facilities.

Okay. And the last question, to the extent that you can comment, this new contract that you have in craft beer, is it a shaped can in any way? And is there any way to size the volume that's fully running?

Yes, it is. The can is a 12-ounce. It has a unique size on the end, which is different, and it will be in market shortly. I know there's pictures out there on the Internet. In terms of the growth opportunity, candidly, it's too early to tell. This is a new product that's getting out to the market. As you know, we have seen a lot of strong growth in the craft beer market. And when you go with a company the size of this one, starts to put their weight behind it, we just don't know what the opportunity is, but we think it's real important. If nothing else, because it's yet another further validation of the can has a place to play in a different market than it historically had.

Our next question is a follow-up question from the line of Chip Dillon with Vertical Research Partners.

Last time I seem to recall that you -- not last quarter, but just in the past, that when you buttoned-up some of your joint ventures in China that your share there was north of 30%. And we've been hearing about very strong growth in China. My question is, how much do you think the supply still exceeds the demand in the marketplace? In other words, what are operating rates? And if we continue to see recent growth rates, when do you think we get to a tighter condition there?

Yes. We talked about this on the first quarter call, I remember. And we said overcapacity and our estimation is in the range of 20% to 25%, and the overall market has been growing 10% to 15%. So it's probably about 2 years or so, maybe a little bit less, maybe a little bit more, depending on the growth of the market. We just had another quarter of reasonably strong growth in the industry, and which is generally consistent with what I talked about there. And so I don't think anything that we talked about on the first quarter has fundamentally changed.

Now, how about in terms of some of the smaller players? And maybe you can't be terribly specific, but do you sense that there is more a consolidation opportunity? Or do you think these guys are just going to wait it out?

I probably can't comment on that. But what I would tell you is, anytime there's overcapacity in a strong growth market, people -- the reason why there's overcapacity is people are investing ahead and then they realize that wasn't such a good idea. And if you're financially strong, you can probably weather it. If you're not financially strong, you probably have to think about alternatives.

Our next question comes from the line of Phil Gresh with JPMorgan. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Just a follow-up on the CapEx for the $400 million this year, how much of that is spoken for? Because I believe maintenance is like $200 million to $220 million, and then you have some carryover from last year. So -- I mean, how much wiggle room do you really have on that number?

Well, things can always slide to the right. I mean, if you recall last year, where we started CapEx estimation and then it came down through the year because a lot of things kind of slid to the right. And that's -- there's usually not much that gets canceled, it's probably more that gets shifted. And so it just slows -- we slow down the pace of it.

Yes, I would say, all things equal, relative to last year though, a little bit more of it is committed because it was the carryover from last year.

Yes, so we had a lot of things that -- we've announced the Alagoinhas line in January. So much of that capital will get spent this year as it comes up and running in hopefully by the end of the third quarter. Like some of the specialty things that we've done in the U.S., those things are going to happen. So it's probably less potential to have huge shifts in that capital, I would agree with that. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay. So as we think about the number last year around $300 million, as we look forward beyond this year and kind of ignore the carryover impacts, is that realistically kind of the real floor for how low CapEx would go?

No, it really is dependent on the opportunities. I mean, every one is a discrete decision that is determined by the customer contract . We talked about Europe, we need to do some things in Europe on the cost side before we commit to expanding capacity there. We're still seeing decent growth in markets like Brazil, and North American specialty, and even China continues to grow well while we're not adding any capacity, we get pricing better there. So we're still seeing growth opportunities, but I wouldn't say it's necessarily a floor or a ceiling, because it depends on the opportunities that are there. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay. And then my other question on free cash flow is, this is the third straight year we're seeing guidance for significant working capital benefits. So is this -- at what point do we reach saturation on those opportunities versus -- is this still like a multiyear opportunity for you?

Well, we're not done yet. So I would say we're still expecting some benefits in '13, and then we'll see -- a lot of the guys kind of across the businesses and treasury and a lot of different sourcing, and then the businesses have been very creative as to how we go after this. And we're -- it's kind of like an ongoing treadmill, you're never really done.

Yes. As you know, we're evangelical on EVA dollars. And historically, we have focused on EBIT and CapEx. And what Scott is really talking about is we see opportunities on the working capital line, and we're going after them.

We do have a follow-up question from the line of George Staphos with Bank of America Merrill Lynch.

One last one, and piggybacking on Chip's question earlier and your comments as well early in the presentation. Perhaps you mentioned it, but how do we reconcile you using an ability perhaps to optimize your customer mix? That's my phrasing, not yours, but paraphrasing, in China with an intent towards perhaps repricing when you still have, from your vantage point, excess capacity in the market?

Well, it's -- I'm talking only on behalf of Ball, and we're sold out. And so if things get tight and customers need more cans, we're going to be looking at where it makes sense for Ball to be selling those cans that are scarce to us.

Mr. Hayes, there are no further questions at the time.

Okay, great. Well, thank you very much, Daisy, and thank you, everyone. I just have one reminder that we're going to be hosting an Investor Day and a management briefing in Midtown Manhattan on October 2 and 3. Analysts and institutional investors should contact Ann Scott for an invitation. And thank you for participating on today's call, and we look forward to talking to you in 3 months time.

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.