Ladies and gentlemen, thank you for standing by. Welcome to the Ball Corporation Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, February 5, 2015. I would now like to turn the conference over to John Hayes, CEO of Ball Corporation. Please go ahead, sir.

Good morning, everyone, and thank you, Rebecca. This is Ball Corporation's conference call regarding the company's fourth quarter and full year 2014 results. Before I begin and as you've all seen earlier today, we issued a statement confirming that we are in discussions that may lead to an acquisition of Rexam PLC. The announcement was made following a statement made by Rexam consistent with its obligations under the U.K. Takeover Code, which regulates any such transaction. Consistent with our policy and the requirements of the U.K. Takeover Code, we will not be making any further comment or responding to any questions on that topic during this call. I would ask you to please respect the U.K. Takeover panel and its rules. Rest assured for any investment that Ball contemplates, we will do it through the lens of our disciplined capital allocation process. Now 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 are in the company's latest 10-K and in other company SEC filings, as well as the company news releases. If you don't already have our earnings release, it's available in our website at ball.com. Information regarding the use of non-GAAP financial measures may also be found on our website. Joining me on the 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 and then I'll finish up with comments on our Aerospace business and the outlook for 2015. 2014 as a whole was an outstanding year for Ball. Together, we executed well through some adversity early in the year and have been…

Thanks, John. Ball's comparable diluted earnings per share for 2014 were $3.88 versus last year's $3.28, an 18% increase. And in the fourth quarter, comparable diluted earnings per share were $0.84 versus $0.86, including unfavorable currency translation of $0.02. For the full year, the following factors contributed to improved results: Growth in global specialty cans, record earnings in Aerospace, lower interest expense, a lower effective tax rate and a lower share count. Turning to cash flow. Ball generated in excess of $1 billion in cash from operations and generated $622 million in free cash flow in 2014. We also acquired a net $360 million of stock and returned another $73 million to shareholders in the form of dividends. In total, the cash return to shareholders was below our prior guidance, driven by lower than expected share repurchases in the fourth quarter. Some of what will likely be a question during Q&A, sometimes there are limitations as to when you can and cannot buy shares and the fourth quarter fell into the bucket when we couldn't buy shares. Rest assured that our philosophy of returning value to shareholders has not changed. And at this time, barring additional opportunities for capital allocation in 2015, our free cash flow is expected to be returned to shareholders via a combination of share repurchases and dividends. For the full year 2015, as we sit here today, here's our initial take on financial metrics. Free cash flow will be in the range of $600 million, CapEx should be in the range of $400 million, if project dollars are spent on schedule. Interest expense will be roughly $145 million. The effective tax rate is expected to be in the range of 26% and 2015 corporate undistributed will be approximately $80 million. Due to our strong 2014 free…

Great, thanks, Scott. Our Aerospace exceeded business expectations, really an amazing accomplishment considering government budgets in the recent election cycle. During the quarter, solid program execution continued and much work was completed to bid on additional work. Contracted backlog ended the quarter at $765 million, an anticipated reduction year-over-year as we await word on program bids that are in process. Our capabilities and products are well positioned as affordable solutions. We just need some decisions, and the right decisions at that, to be made in Washington. Now looking out across our company today, we are thankful for the team we have, the incredible results we've produced last year and the progress we are making on new capital being put to work. 2015 presents some known headwinds other companies are dealing with as well: FX, pension expense and aluminum premiums to name a couple. We are excited about the many opportunities in front of us to improve our business. Our long-term diluted earnings per share growth goal of 10% to 15% is out of reach for 2015 as we sit here today. We currently expect the earnings run rate to pick up steam in the back half of 2015 as projects ramp up and carry us onto the bridge for building into 2016. In the near term, our businesses are generating significant free cash flow for us to put to work. So let's start the Q&A so Scott and I can get back at it. And with that, Rebecca, we're ready for questions.

[Operator Instructions] Our first question comes from George Staphos with Merrill Lynch.

I guess the first question I had for you, can you give us a little bit more detail in terms of what's happening with Asian pricing, I'm guessing specifically Chinese pricing, what kind of impact it is. Can you also comment as to what FX headwind from an EBIT standpoint or from an earnings per share standpoint is built into your directional guidance, and I had a couple of follow ons.

Sure, George. This is Scott. On the Asian pricing, it continues to be very challenging and we thought last year it might have been a new low, but I think it continues to have pressure on it. I'm not going to quantify it because it's a pretty fluid situation. But it's obviously impactful. I think the other parts of that segment will do well and make more money, and it's a question of can they offset what the -- the pressure that we'll have in China. So on the second front, on the FX side, if the euro -- if you think about it this way from an EPS standpoint, roughly a 1 point move in the euro is about $0.01 a share, roughly.

Okay, great. Thank you for that. To the extent that you can comment, could you put a range on what you think your EVA per share might grow by this year or -- no, maybe not, I mean, I shouldn't be too judgmental here, but what's the direction this year on EVA per share. Could you put a bracket in terms of the growth rate? And then, I guess I'll turn it over at that point and come back in queue.

George, this is John. From an EVA perspective, we were up very strong in 2014, up 28%. It's going to be a bit of a challenge. We have a lot of investment going in, it's not generating any return right now because it's in the startup mode, so I would expect our EVA dollars to be roughly flat, maybe down a little bit depending on how the year goes. But -- and that's largely due to this capital we are putting out -- a lot of it doesn't come on until midstream and when it is coming on, we've got some start-up cost associated with it.

I would expect EVA dollars, George, they're going to be up in North American beverage, it's going to be up in Brazil and it's been a be up in Europe. The other businesses will be flat to slightly down.

Our next question comes from Scott Gaffner with Barclays.

Just following up on China for a minute. Scott, I think you also mentioned that volumes were actually muted in the fourth quarter. Can you talk about that, and then can you also talk about, from the pricing front, I thought some of your business there was on a little bit longer term contract. Can you talk about what's more spot versus longer-term contract there?

Yes. Our volumes grew kind of low single digits in the fourth quarter, and I think everything in China seems like it's slowing down a bit. So I don't think that was uncommon. We had been at a better growth rate throughout most of the year. From a pricing perspective, that's why it's kind of a mixed bag. There are some contracts that have longer-term nature to them, but there is a lot of spot business, and that's what I was referring to.

Yes, I think the main dynamic there, Scott, is there -- we continue to see capital going in, and it's just the -- it, the overcapacity remains there, and I think so that means on a spot pricing perspective, that's where it puts the most pressure on it.

Okay. And then taking a step back and looking at the broader beverage can business, can you talk about what you're seeing from your customers as far as global pricing initiative, if you've seen this in your markets, how long you've seen it for, and maybe, sort of what impact do you think it might have on margins on a go-forward basis?

When you talk about global pricing, you're talking about our product to our customer, I presume. There is -- we have a mixed bag around the world, regional, global. We don't -- as Scott said, we expect many of our beverage can segments, with the exception of China, to be up year-over-year. And so we're -- some of that's a function of volume, some of it's a function of net price, some of it's a function of our mix. So I think we feel pretty good right now. The beverage can as an industry is actually doing quite well, relative to other substrates. You've heard me talk in the past about Kansas as a percent of the package mix in the beer category, and I think in every region we operate, it's up. It's over 60% U.S., it's over -- it's around 45% in Brazil. It's north of 20% in whole in Europe, obviously it's a little bit stronger in the U.K., for example, relative to some other places. And then even in China, we've talked about 5%, 6%, 7% as a share of the package, makes it up to 10% now. The fourth quarter was soft, I think the industry was down, we were up a little bit. But putting that aside, as we go into 2014, we continue to believe the beverage can has a bright future.

Great. And just one last one on working capital and the free cash flow guidance. Looks like you've built, or used a significant amount of cash, or sorry, you had a big source of cash in the fourth quarter and in the full year of 2014. What should we be thinking about in 2015 around working capital?

We think it's going to be a source again. We continue to -- our folks both from a treasury perspective and an operations perspective, continue to find ways to get more money out of the working capital, so I think it's going to be another source in 2015 as well.

Our next question comes from Ghansham Panjabi with Baird. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: I guess I'll skip the question on what your acquisition pipeline looks like, but good luck with what you [indiscernible] this morning with Rexam. Maybe we can start on the volume outlook by region for your beverage can business for '15, and maybe you could start off with Brazil, just given the comp set the industry had in the first half of '15 from the World Cup?

Yes. I think obviously, that leads tougher comps for Brazil, definitely. We think there'll be market growth, but we think it's going to be pretty low. The economy there has got some struggles, and we'll have to wait and see how it plays out, but we're not expecting -- we expect it to be positive, but not in the huge way. North America, we kind of return to more normalized trends, I would say, last year and we expect that to continue. The soft drink business continues to be under pressure, but beer continues to hold up pretty well, and a lot of new segments continue to hold up well, and specialty is doing well. So probably somewhere in '15 as it was in '14 for us. Europe, we think the market will grow again. Kind of low to mid-single digits. You know what it's been growing over the last year or so. And China, China's slowed down from where it was before, and I still think it'll grow, but the question is how much.

The other thing I'd add, Ghansham, is this last summer in particular, we had World Cup, we had other things going on. This summer, as we look forward, there's not many of those either European championships or World Cup or Olympics or other things like that. And so, it's an off year relative to those big promotional types of things, and so that's factored into what Scott just says.

And last year, I mean, for instance in Europe, the comp in the first quarter was up quite a bit, and we don't expect that again. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: And then, just in terms of what you said in your press release, I'm sorry if I missed it, but the lower exports you said, that's out of Europe, can you just expand on that?

Yes. That's really Middle East and Africa, and I think in part because of some of the geopolitical issues going on there. The export market for us, at least, was down, particularly in the fourth quarter. I think our core European volumes are actually up slightly. It's just the whole segment was down because the export market was down.

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

When you look at the free cash flow guidance for 2016, which is actually quite impressive, because on my numbers, the working capital contributed $171 million last year. Can you help us get there? First of all, on the pension, you said no contribution in '15. What was it in '14?

I would just do it this way, I'll look that up with the -- from an expense standpoint, the expense will be up about $7 million, but the funding for '15 will be less than $30 million.

Okay, less than $30 million?

Yes. We funded a lot in '14.

Okay. How much in '14 did you fund?

Well, Scott's speaking, I think it's fair to say, in the U.S. we don't expect, hardly any, if any, funding. I think a lot of the European, particularly our German pension, is more of a pay-as-you-go, and so that's where that funding would come from.

Got you. And maybe I missed this, but when you look at 2015 volume in the U.S., how would -- and you say some more -- if you look at it on a more normal basis, does that mean that, on a net basis, you see maybe a little bit of growth as the standard cans probably overall decline, but most of that's from soft drink, with some beer offset? And then specialty also will more than offset the soft drink decline, so that you do see a positive can number including specialties in the U.S.? Or is that too strong?

Let me preference this by saying it's the beginning of February, and so tell me what the weather's going to be like, tell me what some other things are going to be, even with the price of gasoline coming down, you really haven't seen a pull through from the average consumer. They've been trade -- they aren't buying more, they're trading up a little bit and they're not buying more. But I think what Scott was talking about, when you look at 2014 and the U.S., the overall beverage can market was down less than a percent, it was down 0.07%. Euro was up, and we see those trends continuing, whether it's the craft beer or whether some of these other segments that are growing has been beneficial with can as the can continues to take share from other packaging substrates. And it's really all past few years, it really has been the softness in the soft drink. It's not as if the can has been losing market share relative to PET and other substrates, it's just overall soft drink volumes are declining and, to date, our customers haven't been able to arrest those declines. So as we look into 2015, we don't see those trends changing materially. Scott did mention that some of these other alternative segments, whether it's energy drinks or sparkling waters or other things like that, that there has been some decent growth in that, and a fair amount of specialty goes into things like that. So I don't think the core trends, we see a fundamental change to as we look forward the next 12 months or so.

Back to your pension question. We funded a little over $140 million in '14, in the pensions.

Very helpful. And that definitely helps us to -- that $600 million makes a lot more sense now. And then, when you look at the food can business, first of all, I think John mentioned some $15 million issue and maybe just to clarify what that was in '14. But if I hear you right, you're saying that with the work you've done to mitigate some of the changes plus the growth, you should -- you would expect to see an up second half and maybe a chance of at least a flat full year on the EBIT line there. So if you could address those 2 points?

Yes, I think a flat EBIT year for the full year is a very tall order. We had -- the $15 million I referred to was manufacturing inefficiencies on the, particularly on the service center side. We've made some decent improvement on that, but that's a longer runway than I think you may be expecting. And then with the -- just the overall market continuing decline, continued with the loss of the ConAgra business. I think a year ago or so, we thought we might have a shot at being flat EBIT in 2015 in that segment. I think it's a bit challenging. And that's on the food side. There's a lot of good things going on, on the impact-extruded side, as well as this new technology on the tin plate aerosol side. So you see a blend of it, but I still think with all those, because of the start up costs on the India project, because of the startup cost related to the G3, I think it's a tall order to think about -- we'd be flat in that segment.

And our next question comes from Tyler Langton with JPMorgan. Tyler J. Langton - JP Morgan Chase & Co, Research Division: Just Europe, the sort of the drop in year-over-year profits. Could you just provide a little color about, I guess, what kind of came from sort of the lower volume premiums, I guess, currency? And then maybe what, I guess, was offset by cost reductions?

Yes. The cost reduction continues to -- they've really done a nice job of getting the cost out. It was really premium. We've got a little bit more headwind, about $7 million in the fourth quarter of euro headwind with the lower volume, and then FX that's kind of a total difference of why it was down. Why have a little bit more premium that will come through in the first half of '15, and then we'll be at more even comps, year-over-year. Tyler J. Langton - JP Morgan Chase & Co, Research Division: When you think of cost reductions, I guess, for Europe, for this year for 2015, I mean, can you kind of match what you did in 2014, or is that going to start getting tougher?

No, it's -- I mean the guys did a really good job in '14. A lot of cost came out in '14. I think there's still -- they have a lot of aggressive plans continuing for '15, but I wouldn't expect it to be at the same level than it was in '14. Tyler J. Langton - JP Morgan Chase & Co, Research Division: And then just, I guess comp question for food can. I mean, the sort of the improvement this quarter, just for the service inefficiencies, I mean, were those largely down this quarter, or were they still having an impact?

Well, it still has an impact. As I said, the runway of it's a bit longer, and I recall last summer we talked more specifically about it. Some of it was self-inflicted, that we weren't running as efficiently as we could or should be, and some of it was outside of our control in terms of quality issues with some of the tin plate. I think the quality's gotten better. I think our manufacturing efficiencies have improved as well. But again, I think you're -- we're going to see steady improvement throughout the year, and so it's not just a big bang theory that it happens, starts and stops in one period.

Our next question comes from Philip Ng of Jefferies.

Can you kind of help frame what the headwind will be on a year-over-year basis for metal premiums in 2015?

We have a little bit more of it, probably in about another $7 million to $10 million in the first half of '15, and then we get to the second half, where we'll get some more even comps.

Okay. That's helpful. And just curious, I know a portion of your business resets every year in Europe. Were you able to pass some of those headwinds, cost headwinds through via pricing this year?

I think the best way to describe it, Scott had mentioned, on a currency-neutral basis, on a euro basis, our segment, we expect to be up year-over-year. Some of it's cost, some of it -- someone mentioned earlier about pricing and it's been a bit difficult, but on the other hand, we've been able to take this time. We're limited to be able to try and recover the premium and other costs as well.

There's been a clear bifurcation in how demand is tracking, at least for beer in North America, bev cans versus glass. How much of that is driven by the push into specialty cans versus the brewers just trying to push volume through the grocery channel, and do you see that dynamic kind of continuing into 2015?

I really don't think it's pushing volume through the grocery channel. When you look at the beer market, it was relatively flat, for example, in the fourth quarter and it was relatively flat for the full year. The only thing that was really growing in a material level was this -- the craft beer industry. And that was predominantly, as you know, 100% bottle business. And now it's over, I think it's 12% plus or minus, don't hold me to it, but it's in that range as the cans as a share. And so cans are getting an inordinate share of that. And that's one of the reasons why, even though the beer market is relatively flat, I think cans are performing quite well.

Got you. One of your competitors on the food can side in North America announced they're going to be adding a plant in the Midwest, it doesn't sound like it's going to be incremental from a capacity standpoint. But just curious, do you anticipate any impact from that move, and can you remind us what percentage of your business in North America, food is locked up from a contractual standpoint, the next few years?

Yes, I don't have that last question first, but the vast majority of it is. I know we have a couple of contracts outstanding, but no, the answer to your question is, we are aware that they announced in their earnings that they're going to be rationalizing and building at the same time, and we don't expect any appreciable change to the market.

Our next question comes from Mark Wilde with BMO Market.

I know you don't want to get in front of your customers here, but I wondered if you could give us just any color, incremental color on that new bottle. Is it a conversion of an existing line, is it a new line, any sense of kind of perspective volume there, incremental volume for you guys?

I will tell you, it's a new line, it's new capacity, and it's -- and we'd rather not go into the specifics about the customer or the segment, but we're excited about this. It's a new, a next-generation bottle shaping technology and it fits right into the sweet spot of our drive for 10 vision around expanding our new product portfolio.

And is it proprietary to this customer for any period of time?

I'd rather not get into that.

Okay, that's fine. Second, on the FX side, does that FX impact that you talked about, does that include this increase we've seen in the Swiss currency, because I know you have your European headquarters in Switzerland?

Yes. Our -- the exposure there is really just on the people that are there, for salaries. So we don't have a lot of cost in Switzerland. So it's not that significant.

Remember, our European business is a euro-denominated business.

Okay. All right. And then the last question I had, John, was just on Aerospace. Last quarter, you talked about perspectively having some news for us on this earnings call about new wins. I noticed that your backlog is down by about $70 million quarter-to-quarter. Can you just talk with us about sort of where some of those bids are right now, and what you think time frame might be?

Gosh, I wish I could tell you, because every time we think something, everything moves to the right. The dysfunction in Washington continues, and that we have -- I will tell you this, we have more bids outstanding than I can ever recall in the history of Ball Aerospace. We do expect some of them to happen first quarter. I think more likely, they're going to happen in the second quarter. We actually won some things, some commercial things in the fourth quarter. The issue there is these commercial entities are in the fund raising mode now. And so they need to raise the financing, but whether it was the 2 things that we announced in the fourth quarter, we feel pretty good about them, but they, they're in the process of raising money. So it's a whole amalgamation of things, and as you know, even though we've won those projects for those commercial entities, we don't count them in backlog until it's funded. And so, those are some of the things that we had referred to, and it's just -- it's taking candidly, a bit longer than we like. But despite that, the long-term prospects of the Aerospace business, we feel good about.

Okay. And would you say, today, John, that you've got sort of even more pipeline than when you talked with us in the -- at the end of the third quarter?

Yes, I think we do.

Our next question comes from Al Kabili with Macquarie.

Just on the specialty can start-up cost, if you could just help us size what that was in the fourth quarter? And do you anticipate any spillover of those costs early in the year?

Yes. It was around $6 million in the fourth quarter, and then we'll have some of that in the first quarter, too, as we get to production capability near the end of the quarter.

Okay. Okay. Got it. And then, you would expect by 2Q, hopefully, we're sort of at a more normalized operational rate there?

Yes. These start-ups -- our guys do, usually a pretty good job of getting these things going and running well, but there's always a learning curve as you start the line and you start to get into it. But that pressure should reduce as we start producing cans and selling cans.

Okay. Got it. And I think last call you had mentioned perhaps a chance with some cost savings activity that the Americas and Asia segment could be up year-over-year. But with the additional pressure, I guess in China, maybe some of these start-up costs, maybe you could, if you could, update us on your thinking there?

Yes. I think the -- yes, I think we still have a shot at it, of offsetting the decline in pricing with the performance at the other segments or the other areas where we produce. But it's a little too early to call yet. It depends a lot on volumes and how things mature through the year.

Okay. But assuming like similar volume trends in the U.S. and similar trends in the industry that we had last year, you still think that there's a shot at offsetting some of these?

Yes, I think there's a shot at it, I wouldn't say -- I wouldn't call it victory by any stretch yet.

Okay. All right. That's helpful. And then I guess last question's for Scott. It's just on the interest expense guidance, I think you'd mentioned $145 million, and I believe this year, it was $160 million. So are we -- or last year, I'm sorry, in '14. So is there an assumption of debt paydown or some refinancing going on in that interest expense outlook for this year? Thanks.

We have a variety of plans. So that -- I'm just giving you the number that we think we'll end up with at the end of the year.

Our next question comes from Anthony Pettinari with Citigroup.

In American bev, in Brazil you talked about the timing of contractual payments as a headwind, and I was wondering is there a portion of EBIT that gets pushed into 1Q or 2015? And then some packagers are flagging electricity cost in Brazil as a major headwind for '15. I was wondering if you could comment on electricity cost for your business there?

Sure. The contractual payment part of it will spread out further. I wouldn't come at it, early in the year it will spread our further, it was -- it's complicated. But we'll pick that up, but it's over a period of time. On the energy side, it's definitely, with the drought that's been going on, energy costs have been going up, and that will be -- we do have a bit of a headwind from that standpoint in Brazil in '15. But despite those energy headwinds, we still expect the operating performance to be better.

Okay. And then on the Food and Household side, I was wondering if it was possible to size the headwind you had in the quarter from the Danville closure and the lower production at Oakdale?

Yes, I don't have that in front of me. I don't think it was material, is what I'd say. The profitability in that segment, the fourth quarter year-over-year was down very slightly and our volume on the food side was down very slightly. So I don't think it was material.

Those closure costs runs through business consolidation, so it doesn't show up in the segment.

Okay. And then final one, apologies if I missed this earlier, but do you have a tax rate guidance for 2015?

I think we said 26, around 26%.

Our next question comes from Adam Josephson with Keybanc.

You talked about beverage cans doing well in a number of regions. Can you hazard a guess as to what utilization rates are in North America and Europe? And along those lines, do you think there's a need for capacity reductions in the foreseeable future in either region?

Let's go region by region. I think Europe, as Scott had mentioned, it was growing low to mid-single digits. I think it was 3.5% plus or minus in the growth. And so, we're putting a new line in Oss because we are sold out there. And so I think the capacity in the industry is reasonably high there. I think as you go into North America, I don't want to speculate, I can only speak about Oss. We're running relatively full. We actually were up slightly because we were more and more weighted towards the beer segment and the specialty side of the business. And so we feel pretty good about that. I can't comment on what others are thinking. I can just tell you that for us, we have no plans in terms of further plant rationalization as we sit here today in North America.

And just a couple of others. One on EBIT for 2015. Obviously, you've talked about pension expense, FX, aluminum premiums, Chinese pricing pressure, Aerospace backlog being down, the ConAgra contract startup, et cetera. Can you give us some sense as to, assuming you expect your EBIT to be down this year, rough order magnitude?

It's too early to tell. I mean, this is what I would tell you is, you mentioned a lot of the headwinds, but we also mentioned a lot of the tailwinds that we have. Whether it's this new shaping technology for bottle cans in North America and getting that up and running, whether it's the new tin plate aerosol technology that we're going to be rolling out, whether it's the Oss facility that's going to be starting up in the second quarter, whether it's about the continued cost-out and not only in Europe but the folks in North America that have been doing a wonderful job and that's in part why our working capital's been positive, because they're on their game and being able to reduce inventories and other things like that. So we have a lot of good tailwinds as well. As I said, as we sit here today, given the headwinds you said and given the tailwinds I was mentioning, it's going to be -- I don't think, not only don't think, it's going to be very difficult to make 10% to 15%. But we're -- operationally, we're very strong, we're making investments, we're doing the right things, we're generating tons of cash and at really, your -- at the end of the day, your question, the answer to it depends on volume.

John, thanks. And just one more, on consumer spending. Have you seen any pick up in your business on account of the recent decline in gas prices and do you expect one?

No, we haven't so far. But that doesn't surprise us, because the slowest months of the year, kind of the first couple of months of any year. As we go forward, I think there is a -- we believe that there would be a reverberation and a redistribution to those consumers. Anecdotally, I know that customers are not necessarily buying more at the convenience store when they go in and pay for their gas. They're trading up right now. But speaking to customers and others, I think people expect that to become more of a tailwind as we get to the summer. But that obviously depends on a variety of other factors as well.

Our next question comes from Chris Manuel with Wells Fargo.

A couple of questions for you. First, with the shaped aluminum bottle stuff, I'm presuming, and help me if I'm wrong, if that starts to show up in 2015 and 2016 through revenue and through earnings, et cetera, is this in the metal food side -- the target for this, is this beverage or is this food, personal care or what have you? And so, what segment might it show up in?

Well, we have two. The new bottles, generation 2 bottle shaping technology is in the beverage side. And as we said, we expect that to be up and running by the end of the first quarter. So the way I think about it, I wouldn't expect much in the first half of the year, but in the second half the year, that's when you really start to see it. But we also have this new tin plate aerosol technology. That won't get up and running until mid -- perhaps even late second quarter, so you won't really see much of it this year because by the time it's ramped up, the large season in terms of tinplate aerosol sales is over, and so I think that's more of a '16 opportunity.

Okay. That's helpful. And then, maybe if I could dissect by some of the segments. I think you already earlier said that it's -- and I'm really thinking about these things on an EBIT basis year-over-year, '14 -- I'm sorry, '15 -- '14, '15. I think you said that the metal food, household segment would be difficult to be flat, and may have some headwind. As we think about some of the other regions or some of the other element, Europe in particular, with -- if you quantify it or could you quantify for us how much of a headwind currency is, and is it likely that EBIT may be down in Europe given more metal premium and currency there, and then I'm going to kind of work through some of the other geographies as well.

Well I -- what I said in Europe is on a constant-currency basis, their earnings will be up. Now what happens to currency, I'm not smart enough to know what will happen this year. So it really depends on where that settles out. But on a constant-currency basis, though, we're...

Yes, no, I can appreciate on a constant-currency basis, given some of the work, but at where we sit today, at $1.14 on the euro, and with aluminum premium, is it likely to be still up or flat down?

No. I think if you -- I made this comment earlier. Think about a 1% move in the euro is roughly a $0.01 impact to the company.

The reason why Scott answers it that way, don't forget, we have a bunch of euro-denominated debt.

Sure, pension expense...

Exactly. And so they kind of offset, so we look, we don't necessarily just look at it on an EBIT basis, because that's pure translation. You got to look it on an economic basis, which includes the interest expense and other things like that.

Okay. That's helpful. And then, when I think about -- last person I want to ask is, John, I want to take you back to 2009, when you purchased some of the metal container assets. Given your experience with that, and working through that process, I think you elected, if memory serves, to buy 4 of their facilities and left some of the other piece that's still there. At that point in time, given -- again, as you work through that process, once you learn, do you feel that you would've been able to shepherd through the process, to have acquired the whole piece from a regulatory standpoint? Or do you feel that, that would've been too difficult of a hurdle?

That would be pure speculation, and I'd rather not comment on it.

Our next question comes from Robert Krayn with MidOcean Partners.

I was wondering if you guys could reaffirm some kind of leverage targets, and then maybe comment on, if something either tuck-in or anything were to kind of come up, would those -- will leverage targets be flexible, or if there's any kind of other outer bounce? And then also, if you can just comment on your cap structure. You've got some bonds that are becoming callable in a couple of weeks here, I'm wondering your thoughts on that.

Yes, I'm probably not going to comment on any of that, actually. I mean, we're full on a lot of cash, our balance sheet's in very good shape. I think we have a lot of flexibility, and I'll probably leave it at that.

[Operator Instructions] We do have a question from Debbie Jones with Deutsche Bank.

One of your competitors had a pricing reduction for specialty cans in the U.S., rolling through in 2015, and I realized sizes and contracts differ, but can you comment as to how this might relate to your capacity, and could this have an impact when you're making decisions about additional conversions going forward?

What I'd tell you is from our portfolio perspective, our pricing is stable in that part of the world. And so, as you know, any investment we make, we look at what the terms of the contract are and make our decision there. So that's probably all I should say.

Okay. And then my last question, just on China. Again, a lot of people have talked about volume and price, but I think incremental supply is sometimes hard to pin down in this region. I'm just curious with pricing and volume being a bit of an issue, are you seeing the influx of capacity slow down?

I think it's slowing down, but there's still a lot of excess capacity.

Yes. There's net capacity additions, but it's not at the rate it was. In part, we think because the can market slowed down a little bit. But again, let's put it in context. For the full year, I don't have the number it front of me, but I think it was up, it was up double digits as an industry. As the fourth quarter, it was down. So it's been strong and there's many small, individually owned plants, that they're have been adding capacity on that, and I think they're -- we're starting to see a slowdown there. But we started to see a slow down before, too, and it still had net increases.

Yes, I think full year, it's still up 13%, roughly.

Can you remind us what the penetration rate is for cans right now in China, and how that differed a year ago?

Yes. It's -- on the beer side, and that's what really we track because the information's better, but it's about 10%, cans as a percent of the package mix and that's, gosh, I don't know exactly what it was last year. I want to say 8%, but it's been growing, which is helpful, because as we all know, China is the largest beer market in the world.

Our next question is a follow-up from George Staphos with Merrill Lynch.

Recognize that you may not be able to cover too much detail here. I just wanted to try to follow on. One, the new shape and size aluminum aerosol -- or excuse me, the aluminum bottle line. Does that technology allow you to, on the fly, adjust shaping? Obviously you probably have to change tools and dies and that sort of thing, or basically it produces one type of bottle?

It's a new technology, George, and once we get it up and running, we'd be delighted to have you -- to show it to you.

We'll pass along that suggestion to our manufacturing guys. I'm sure they'd love it.

I had a similar question, and therefore I'm guessing it's going to be a similar answer on the tinplate technology line. But can you share any more color in terms of what makes it new there?

It is -- same answer, George. I would just tell you, it's a new technology on the way to make tinplate aerosol containers that we think have significant opportunity for metal savings.

I guess, the last question I have, I'm just going through my list here. Taking a step back, you mentioned that the can is doing very well in most markets, and I'm paraphrasing there, correct it how you'd like. As you think about the next 2, 3, 4 years, whatever the right longer-term interval is from your vantage point, what do you think the biggest challenge or two, is to the beverage can? Is it global procurement, is it some potential supply threat on aluminum sheet, because everything now is going to go into automobile. What do you think the biggest threats are, and how in turn do you manage your business against those threats?

Yes, thank you, George. It's -- I hesitate to answer that question, because I don't want to run afoul of anything that we're very respectful of, relative to announcements as far -- so I'd rather not answer it. But I would tell you this, the -- not the beverage can, but the industry, writ large, there is continued -- there's relatively anemic growth, and where there is growth, there's a lot of competitors. And I say that whether it's in the automotive market or whether it's in the metals market or other things like that. I do think we have done a very good job at Ball Corporation, really focusing on the supply chain, and like you said, on the working capital side. And as we go forward, we're going to continue to do what we've been always doing.

Our next question is a follow-up from Scott Gaffner with Barclays.

Just one quick follow-up on the North American beverage business. As we go down the aisles in the grocery store these days, it seems like there's a proliferation of maybe trim cans coming into the market. Can you talk a little bit about, if you're seeing that as well in your business and maybe what the outlook is there?

Yes, we're, yes. The trim, the slim, the smaller sized cans in the soft drink. There's been a big emphasis on that over the past couple of years, and we played our part in that. It -- not only on the soft drink side, but also even on the beer side. When you think about some of the new products that have been coming out by brewers, both large and small, the standard 12-ounce container, while still very important, they're trying to add incremental growth, kind of like what I said before about creating new products with different types of packaging, different size of packaging, and that's where the specialty growth has been coming from, and we've been playing our part in it.

And our next question is a follow-up from Chip Dillon with Vertical Research Partners.

A couple of questions. One is, as we think about the beverage can, you've talked a lot about penetration. But I think of any beverage that you pour into a glass from a tap, like water, what would basically be in a single or serve container. And if you think about it in that context globally, or even by region, whatever -- how big actually is the beverage can, and is that a fair way to look at the market? And I guess secondly, are you finding that your -- I know another competitor had mentioned that some of their bigger customers in beer, I think, in particular, but maybe other areas, are trying to push you guys to negotiate can contracts, at least in a globally coordinated fashion. And is that a trend that is relatively new, and something that you feel is going to change your approach to negotiations?

With respect to the second question, because I can't remember the first question. We'd rather not comment on that. I think the world is globalizing, but that's all I'll say about that.

On the first question, we think there's all kinds of beverages that should go into cans, and you throw out water, but I think water and sparkling -- what I'm drinking is sparkling water right, out of a can. So I think there's a lot of products that can go in cans. And that's helping the growth in finding some of these new categories.

But would you say, like the can is less than 20% of all beverage containers, when you throw in plastics and glass?

Yes. When you think about it that way, yes. I don't -- we don't -- we'd be guessing if you gave a specific number right now. But yes, it's because when you think about still and sparkling, there's a whole plethora of packaged beverages out there.

And our next question is another follow-up from Al Kabili with Macquarie.

Scott, just on the pension. If you could help us clarify, if you have any sizable benefit this year from the Highway Funding Bill, in terms of pension funding? And if so, how you expect your required U.S. pension funding to ramp up as this benefit kind of abates?

Well, what I mentioned was, in '14, we funded up a little over $140 million into the pension plans, globally, and in '15, we'll fund less than $30 million and our pensions are in pretty good shape, from a funding standpoint. So I don't think it's -- it moves around from year to year, and frankly a lot of our funding is dependent upon timing and how strong our cash flow is, so our cash flow's quite strong. Last year we put a lot into the plan, so. We're just commenting on '15, what that looks like.

Okay. And I don't know if you have it handy, but what's the funded statuses at year end?

We have a number of different plans, but I think around 80% for the funded plans. We have a large German unfunded, kind of pay-as-you-go plan, so I kind of look at just the funded plans. The Americas and the U.K. were roughly around 80%.

Our next question is from Alex Ovshey with Goldman Sachs.

You talked about cost take out as being an offset of some of the headwinds. Would you be able to frame that for us a little bit, maybe perhaps talk about what that number was, and what you accomplished in '14, and maybe talk about a range for cost take out for the company in '15?

Well, I mean in '14, you saw a lot of improvement year-over-year in terms of the European earnings, so that's despite some metal headwinds that we faced, even in '14, and '15, I think the cost take out will continue. We still have metal headwind in the first part of the year, first half of the year. But they continue to do a good job of reducing costs and so what I commented was that, on a constant-currency basis, we expect that business, the operating profit, to be up, despite the metal premium headwind.

Okay. Got it, Scott. And then, I believe there's a can sheet facility in Fort, one that was off-line here in the beginning part of the year or it may have started the end of last year. Can you just talk about, sort of supply of can sheet, and how that's looking right now, whether that may create some issues for the business in North America this year?

Yes. It's all back up and running. The -- both that can sheet supplier and our whole supply chain, including all of our sourcing folks, did a really good job of managing through that, so it wasn't impactful.

And then, just last one, so I think you said $7 million of higher pension expense. So just for modeling perspective, that would just be allocated across the segments. Is that fair?

That's -- yes, generally. I mean, it's probably more North American-centric, but that's -- you'd be okay...

And Rebecca, we'll take 1 more question, if there are any more.

Our final question is a follow-up from Chris Manuel with Wells Fargo.

It relates to kind of business conditions and things within China. Last quarter, and maybe this is just my perception, but it seems as though you sounded much more opportunistic, with respect to deploying or potentially deploying more capital into China, in particular. The change in pricing that you talked about earlier in the call, has that, a, maybe changed the appetite for doing so? I guess really what I'm trying to get at is, you had some longer-term contracts in China and -- that were seemingly priced maybe a little above where the market was. So as stuff now has -- the pricing has changed for you, has your thinking changed with respect to what you would want to do, or potentially allocate capital in China?

Yes. I think, I mean given the challenging pricing environment, we'll put capital to work where we're getting decent returns. We've got some things to do in our own operations, where we think we can improve our cost structure meaningfully. And so we're focused on the things we can control, because we can't control the pricing. And so we're going to do things in our own operations to get incremental volume out of our existing operations, and then we're going to be really prudent with additional capital in China. So it probably is a little different tone than it was a quarter ago.

Okay, thank you. With that, Rebecca, I think we're finished. And as you can tell, we're quite excited about our prospects as we go forward. We have some headwinds in 2015, but we think we have our handle on them, but we also have a fair amount of tailwind. And as we go into the second half of '15, we feel real good about the long-term prospects for our company. So we appreciate your support, and look forward to a solid 2015.

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