Ball Corp (BALL) 2010 Q4 法說會逐字稿

Ladies and gentlemen, thank you very much for standing by, and welcome to the Ball Corporation fourth quarter 2010 earnings conference call.

During this presentation all participants will be in a listen-only mode.

Afterwards, we will conduct a question-and-answer session and if you should have a question at that time please feel free to press the 1 followed by 4 on your telephone.

(Operator Instructions) As a reminder, this conference is being recorded on Thursday, January 27, 2011.

It's now my pleasure to turn the conference over to Dave Hoover, Chairman at Ball Corporation.

Please go ahead, sir.

Thanks, Tema, and good morning, everyone.

This is Ball Corporation's conference call regarding the Company's fourth quarter and full year 2010 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 the results or outcomes to differ are in the Company's latest 10-Q and in other Company SEC filings as well as Company news releases, and if you don't already have our earnings release it's available on our website at ball.com.

Information regarding the use of non-GAAP financial measures may also be found on our website.

Joining me on the call today is John Hayes, Ball's President and Chief Executive Officer; and Scott Morrison, Senior Vice President and Chief Financial Officer.

Now in a moment Scott is going to discuss the financial results for the quarter and for 2010 and then John is going to follow with details about our operating performance and the outlook for 2011.

Ball reported strong fourth quarter results due largely to strong operating performance across all our various packaging businesses, excellent program performance in aerospace, emerging market growth, and benefits from our strategic actions taken over the past year or so.

In addition to improved results, recent key actions included the successful completion of a new $1.4 billion credit facility, a $500 million bond offering, installing a second line in our Belgrade plant and the announcement just last week that we have successfully closed on the Aerocan acquisition in Europe.

Also in the quarter, Ball Aerospace won additional business increasing our year-end backlog to $989 million.

So 2010 was an excellent year for Ball.

In recognition of the Company's strong performance and the growth opportunities ahead, the Board of Directors yesterday approved a two-for-one stock split, an increase in the dividend by 40% and a new share repurchase authorization of 20 million post-split shares.

And, as I mentioned earlier, John Hayes is here in the role of President and Chief Executive Officer of Ball, something we announced back in November would occur and it did yesterday so congratulations to John.

I will remain Chairman of the Board.

I would digress for a second and our very capable Director of Investor Relations, Ann Scott, did a quick count and as near as we can tell, this call is something like my 70th, that would be 7-0, or maybe 71st earnings call with the investment community, and that's probably enough.

So I'm not going to do this anymore after today.

But I do want to thank all of you in the investment community, sell-side, buy-side, and certainly our investors.

Many of you have actually heard probably most all of those 70 calls and it's been a great relationship that we've had over these many years.

I have a high degree of confidence in this new CEO sitting to my left and, of course, Scott is a recent winner of the best CFO, that you all put him up for, which I thought was deserved recognition.

I think that our more than 14,500 employees around the world right now really are what make our Company better.

We've got an excellent management team that is ready to continue the fine performance.

We spent the last couple of days with our Board reviewing our short- and longer-range business plans and after more than 40 years here, I've never seen the Company in better shape than it is right now.

So it's with a lot of pride and anticipation in what I expect to be a great future that I join you today.

This is a pretty good call to be hosting.

So with that, Scott, I would turn it over to you to talk about the quarter.

Thanks, Dave.

Ball's comparable diluted earnings per share from continuing operations in the quarter were $1.06 versus last year's $0.83.

The following factors contributed to improved results.

A tax benefit of $11.8 million or $0.13 per diluted share related to the refinancing in December of the Company's term loan and revolving bank facilities.

Growth in our majority owned Brazilian JV, with fourth quarter being the strongest in Brazil, volume improvements and excellent operating performance in our Metal Packaging businesses, exceptional program performance in our Aerospace business and a lower share count.

These positive factors were offset somewhat by a $7 million increase quarter-to-quarter in G&A, primarily due to computation costs and higher interest expense.

A lower Euro in the quarter compared to last year decreased diluted earnings per share by $0.02 in the quarter and $0.14 for the year compared to 2009.

Turning to full year free cash flow, Ball generated $506 million when adjusting for the AR securitization coming on the balance sheet, which was on target with our expectations and included an incremental $37 million after-tax pension contribution at year-end.

In 2010, we returned every free cash flow dollar to shareholders via a net share buyback of $507 million.

Net balance sheet debt at the end of 2010 was approximately $2.66 billion despite our acquisitions made during the year and acquiring over $500 million of our stock.

Credit quality and liquidity of the Company remains solid with the 2010 adjusted EBIT to interest coverage at five times and net debt to adjusted EBITDA at 2.6 times.

Committed credit and available liquidity at year-end was in excess of $1 billion.

For a complete summary of fourth quarter and full year results on a GAAP and non-GAAP basis, please refer to the notes section of today's earnings release.

Turning to some key financial metrics for 2011, due to the acquisition financing and a full year of interest expense from consolidating Brazil's debt, we anticipate full year 2011 interest expense to be approximately $180 million.

The full year effective tax rate should be in the range of 31%.

On the CapEx front, the full year impact of the JFP, Neuman and Aerocan acquisitions, consolidation of Brazil, specialty can investments and other geographic opportunities we are evaluating, full year 2011 CapEx could approach $500 million.

Each of these projects exceeds our after-tax investment hurdle within three years.

The timing of certain projects will impact actual spending and as always, we will keep you updated as the year progresses.

We expect 2011 free cash flow to be at least $400 million with the majority of free cash flow going to share repurchases.

As of today's call, $105 million of our stock has been acquired since the beginning of the year.

At current exchange rates, year-end net debt is expected to be approximately $2.9 billion, up slightly due to the Aerocan acquisition and cash being oriented to share repurchases and dividends versus debt pay down.

Since there was a business divestiture and JV consolidation as well as mid-year acquisitions that occurred in 2010 and so that everyone gets started on the same page for 2011, I wanted to give you a few key modeling data points.

[D&A] will be slightly above $300 million for the full year.

Working capital should be a modest source of cash.

Pension expense will be relatively flat.

Cash pension contributions worldwide will be approximately $55 million, lower than normal due to the incremental $37 million after-tax contribution made at the end of 2010.

Maintenance CapEx now runs approximately $175 million and the December 31, 2010 basic share count was 86,079,000 pre-split, so take that into account when calculating yesterday's dividend increase and adjusting for how shares have been purchased year-to-date.

With that I'll turn it over to John to talk more about the operations.

Thank you, Scott.

As we have said previously, Ball is in a good place and we have momentum as we head into 2011.

We are executing on our strategy to grow our worldwide Beverage can business and Aerospace business, further develop our Metal Food and Household products packaging business and utilize our free cash flow and earnings growth to deliver value to our shareholders.

Now, turning to the operating segments, Metal Beverage Americas and Asia had significantly higher earnings in the quarter and the year, a full year's impact from consolidating our majority owned Brazilian joint venture, double-digit volume growth in China, Brazil in specialty cans and excellent operating performance contributed to our earnings momentum in the quarter.

Also, a full year's contribution from the October 1, 2009 four-plant acquisition added to year-over-year annual improvement for this segment.

We've spent the past couple of years rebalancing our customer portfolio in North America.

Recall that earlier in 2010, we stated that our volumes would take a step back in the year but would recover in 2011 back to our 2008-2009 levels.

We are on track and on plan for this to occur.

In 2011, the Americas/Asia segment will be managing several capital projects to meet growing customer demand in Brazil and China as well as repositioning our North American plant footprint to balance our 12-ounce capacity and respond to growing specialty can demand for beer and non-CSD packages.

Execution is critical and we are very focused on making these projects successful.

Metal Beverage Europe's earnings were down for the quarter and the full year due entirely to the impact of the lower Euro.

Mid-single-digit volume growth in the quarter was offset by certain costs associated with moving the Lublin plant, line, down to our Serbian plant.

The consumption of cans in Germany was up 50% in 2010, a doubling of in-country use to nearly 1 billion cans and we see this favorable trend continuing in 2011.

We are well positioned from a manufacturing footprint perspective to take advantage of this expected growth.

Now going forward the results from the recently acquired Aerocan business will be rolled into this segment and will be supported out of our European headquarters in Germany.

We are excited about the prospects for this well run business and it will allow us to broaden our customer and product portfolio in a growing segment of the metal packaging industry.

We will be investing some additional capital to take advantage of this growth and ensure that we can respond to customer and market demands for extruded aluminum containers.

The management and people of Aerocan fit well with our culture and values and we welcome the Aerocan employees to the Ball team.

Metal Food and Household products earnings in the quarter were up due to better than anticipated volumes, positive impact from the aluminum slug business we acquired in mid-2010 and outstanding plant performance.

While full year segment earnings were flat, it is actually an excellent outcome given the difficult comps due to the inventory holding gains recorded in 2009.

The dedication of all plant staff to controlling costs, relentless attention to detail and efficiencies really made a difference in 2010.

Aerospace and Technologies posted near double-digit EBIT margins in the quarter and full year.

The award of significant work during the third quarter and excellent program performance were the primary reasons earnings increased.

As Dave mentioned, backlog ended the year at $989 million which sets us up nicely going into 2011 and beyond.

Multi-year programs will begin ramping up during 2011 allowing for a more meaningful earnings impact being recorded in 2012.

So the top line will grow in 2011, EBIT will likely be flat relative to 2010.

In summary, our various businesses finished the year very strong in 2010 and we expect to do even better in 2011.

Our key focus areas in the coming year will be on integrating the Aerocan acquisition, executing on capital spending projects, staying close to our customers, and monitoring global opportunities to further strengthen our customer and product portfolio in both Metal Packaging and Aerospace.

We fully expect to generate 2011 results in excess of those in 2010 and the Company's sound balance sheet allows us flexibility to build on our performance and provides us competitive advantage for years to come.

Finally, as this is Dave Hoover's last earnings conference call, I would be remiss if we didn't properly and publicly thank Dave for his service to Ball Corporation.

Dave has dedicated over 40 years to insuring that the Company remain humble, honest, energetic and opportunistic.

Many words come to mind but first class business in a first class way stand out among them in describing what Dave has brought to Ball.

We as employee owners are better off because of his leadership and his dedication and we will forever be indebted to him.

The financial performance and stock price development speaks for themselves and while it is indeed a team effort here at Ball, Dave was the guiding force for the past decade.

The last decade has created a high bar for us and as we move forward, but I can assure you that speaking on behalf of all Ball employees, we are laser focused on having that happen.

So, Dave, thank you.

With that, Tema, we're ready for questions.

Thank you, sir.

Ladies and gentlemen, we'll now proceed to the question-and-answer session.(Operator Instructions) Our first question comes from the line of George Staphos from Bank of America Merrill Lynch.

Please proceed with your question.

Thanks, hi, everyone, good morning.

And, again, I would applaud everybody on their achievements and their roles but Dave in particular, congratulations on everything you've done at Ball over the years.

I don't think there's another person who has a track record as yours.

I think you've outperformed the market 20% over those years that you've been CEO, so congratulations to you on a compound basis, I should say.

I guess the first question I have is on the outlook within Europe and the trend that you're seeing there, do you think that you have enough volume and/or pricing momentum, if you will, to offset what could be a fairly significant currency headwind?

Yes, we expect, George, some decent growth in Europe.

I'd mentioned what's happening in Germany.

That's going very strong.

Western Europe generally speaking has been strong.

We've seen a little bit of come back in the East and in the South it's a bit soft but as we sit here going into 2011, we feel pretty good about the volume outlook.

There's been a lot of inflation as well on the raw material side of the business, but we think we've been able to adequately manage that as well.

So we feel pretty constructive as we sit here right now.

As you think about some of the potential new geographic opportunities that you suggested in your commentary, John, could you give us, to the extent it's not proprietary, maybe it is, but could you give us a bit more color in terms of what you're thinking about either regionally or product lines?

Well, I think what we're talking, George, is more regional and in many of the places in which we operate that are in emerging or developing markets we continue to see strong growth.

So it's probably a touch premature to be specific about that but you know where we operate and we want to take our relative share of that growth as it continues.

Okay.

The last question and I'll turn it over to start, could you give us a bit more color in terms of the decision around Torrance, which I guess was an old Reynolds facility.

Why don't you need that capacity from a 12-ounce standpoint?

Why do you need it from a specialty standpoint in terms of what kind of growth are you seeing in that category right now, or what types of specialty cans are you seeing most of the growth in?

Thank you.

Yes, George, this part of our overall rebalancing of our portfolio, and as we look as to where our volumes are moving forward, we just think it was an opportunity to rebalance it and put a little bit more in our Whitby, Ontario facility from a 12-ounce perspective.

The Torrance plant, the people are an excellent group there but it's just a very high cost place to do business in Southern California there, so that's the rationale around Torrance.

In terms of the growth in our specialty, we're seeing it in some of the larger sizes, the 24-ounce, the 16-ounce.

Torrance did make some of those larger sizes, the 16-ounce, so we had the opportunity to kill two birds with one stone, so to speak, and we're putting new capacity in Fort Worth, Texas that should help us out overall.

If I would, just the last one and I'll turn it over, trim cans are you seeing much growth there or did that come and go so to speak in 2010?

No, we're still seeing some modest growth.

During the 2008-2009 we did have softness there but it's been coming back but it's not growing as fast as the 24 or 16.

Thank you, I'll turn it over.

And thank you.

We're going to continue on with our next question, this comes from the line of Ghansham Panjabi from Robert W.

Baird.

Please proceed with your question.

Hi guys, good morning.

Good morning.

And, Dave, I just want to echo George's comments and congratulate you on what you accomplished and, John, you have obviously big shoes to fill there, so good luck with that.

First question, you made some decent-sized acquisitions to support your growth strategy in the bottle can market.

Is it time to sort of formalize the growth opportunities in this business longer term for Ball, and if you could answer whether some of this growth is going to cannibalize your existing portfolio or is it incremental to what you already have?

Thanks.

Well, the overall, the aerosol market has been growing and in particular on the aluminum side a lot of it has to do with changing consumer preferences.

We're seeing more deodorants in aluminum impact extruded bottles and other things like that, hair sprays, et cetera.

So we see some growth, not only in Europe but also in other parts of the world, and we have been very much focused over the last year to 18 months to try and develop a strategy on that.

I think the Neuman Aluminum was an important step in it and then the Aerocan acquisition was yet something else.

So you should expect as we go forward that we're continuing to look.

We're only going to do it if it's profitable growth for us.

You also asked about the conversions.

We are seeing a little bit of conversions from steel to aluminum, but fundamentally they are different markets that they attack.

On the tin plate side, it really is more of a household product and paint and general line type of business, and on the aluminum impact extruded it's more about the personal care and beauty.

Okay, and then your commentary on free cash flow being allocated towards share buyback, is that a signal that M&A may not be the highest priority in 2011 or am I reading too much into it?

I don't think you should read that into it.

We're just going to use, right now we look to use most of our free cash flow to buyback our stock and if other opportunities come up, we may adjust that but right now that's the plan.

Okay, great.

Thank you so much.

Thank you for your question.

Continuing on, our next question comes from the line of Chris Manuel from KeyBanc.

Please proceed.

Good morning, gentlemen, and congratulations for not having to take all of our calls anymore, David, and condolences to you, John, for having to do so.

I'm going to miss you, Chris.

Anyway, in all seriousness, I wanted to expand a little bit on the Aerocan side piece, if I could, and maybe come at it from the direction of CapEx potentially being as much as $500 million is a very, very big step up.

As you look at the incremental CapEx that you're spending, could you maybe give us a sense as whether it be product areas or regions or things of that nature that most of that is going towards?

Well, we're seeing great opportunities.

I mean Aerocan, there will be some CapEx associated with that, but much of the CapEx is going to growth opportunities, whether it's specialty cans here or beverage cans and aluminum aerosol in other places.

So we don't see this as necessarily a change.

It's just chasing the best opportunities that show good returns.

Let's also not forget that sitting here a year ago, we had not consolidated our Brazil operations.

We did not have Neuman Aluminum nor did we have Aerocan, so just the consolidation of even maintenance capital for each of those increases our overall CapEx.

And then we have announced whether the Alumatech Bottle here in North America, our Torrance restructuring and the addition of 16- and 24-ounce.

We've talked about the Lublin line being moved to Serbia, and then we have other things on the plate.

So we think our 2011 cash flow adjusted for this growth capital is actually going to be better than it was in 2010, and so when it's better than 2010 and we have some opportunities to invest in our business prudently, where the returns absolutely are there, and then use every incremental dollar to buyback our stock, we think that's a prudent thing to do for our shareholders.

That's fair.

Is there any contemplation within that number of expanding some of the Aerocan assets either towards North America where you already have the slug market or potentially South America where you've got some of the steel aerosol today?

Not right now, that's not in our plans.

Okay, thank you, and the last question I had is if you could maybe just give us a best-guess effort as you look out -- you've already given some commentary towards Europe, I think, with volumes continuing to be good -- but what your outlook might be for North America, South America, Asia, et cetera, for potential for volume for 2011?

Well as you know let's talk about Asia and let's talk about Brazil where the volumes have been unimpaired.

In both those regions they've been approaching 20% growth year-over-year and we see, we don't think that's going to continue to happen over the long term.

But as we sit here today, we see those trends still occurring.

And in Brazil, as you know, they have the World Cup coming up, they have the Olympics coming up.

They have a lot of infrastructure projects coming up to help support that.

That's going to create more middle class growth and middle class rise of incomes which is certainly helpful to our product.

And then in Asia, you have different effects going on but those trends that we've talked about in the past continue to go strong.

Here in North America as you all know, the year ended up actually on a strong note.

The fourth quarter was up slightly and we don't see any big deviations from an industry perspective of the change of that.

There's certainly some growth in specialty.

There's some growth in craft beer.

The soft drink has had a lot of promotion going on and off and we continue to see some spot promotions here and there, so we expect that to occur in 2011.

So overall from an industry perspective, we're assuming relatively flat growth in North America.

Okay, that's helpful.

Thank you, gentlemen.

Good luck.

Thank you.

Thank you for your question.

Continuing on, our next question comes from Chip Dillon from Credit Suisse.

Please proceed with your question.

Yes, and thanks to, thank you very much, David, and congratulations, John.

A question on the CapEx number for this year, and two things.

One, can you give us a little bit more detail of sort of how proportionately that roughly 325 that's above maintenance will be spent among the various regions and projects and their start-up dates?

And then quickly, how do you think CapEx will go next year?

Do you think it will probably die down a little bit and assuming no acquisitions or could it stay at this level?

Sure.

Well, the big projects this year that are driving it are in North America, we mentioned the Whitby line, the growth in Fort Worth with 16- to 24-ounce, and the Alumatech line.

When you look to other markets, the line that's moving from Lublin down to Belgrade, that's a big chunk of Europe's CapEx for this year.

And then we're evaluating other opportunities in other geographies that we just haven't talked about yet.

This year is really kind of a big chunk and then we see CapEx longer term in 2012 and 2013 going back down to more normalized levels to depreciation or below.

Okay, and is it fair to say of the $500 million that you've identified for this year, maybe $100 million of it could go in that bucket that you just haven't identified yet?

That's correct.

That's why we haven't given specifics, but it's things that we continue to evaluate and just aren't ready to talk about yet.

Got you.

And then looking at the Aerocan opportunity, I mean, from what I understand from that business, it was actually, floundered a bit and now it's really hit its time, I guess, over there.

And, I guess, one, how did you find it and do you think there are other sort of Aerocans out there, sort of emerging aluminum-based or other metal-based container businesses that might be available that could be like that out there?

Well this is John.

We've been exploring that market as I've mentioned actually for a number of years now and as it started to mature and really accelerate some of the growth that we saw happening, it was just a good opportunity.

You're absolutely right, the Aerocan business five years ago was part of a larger conglomerate and was taken private by the management who have done an absolutely wonderful job of repositioning that business, getting its costs in order, getting its revenue in order and help stimulating demand.

And so we think it's one of the best run businesses in that part of the metal packaging segment and we're delighted to have them aboard, and it's going to give us more opportunities to continue to look.

There are other companies out there.

We also have opportunities to go greenfield.

We're still exploring a bunch of different things and when it's the right time to talk about something that makes good value for our shareholders, we'll certainly do that.

Thank you.

Thank you Mr.

Dillon for your question.

Continuing on, our next question comes from the line of Mark Wilde from Deutsche Bank.

Please proceed with your question.

Good morning.

Good morning.

I wonder if it's possible, just one more time on Aerocan.

Is it possible to get a sense of what you think the potential market is or what you think the potential growth rate in that market might be?

Well it varies by region, but just to give you a sense, we would say here in North America, it's growing mid-single-digits.

Down in South America it's growing faster than that, even approaching double-digits, and then in Europe it's high-single-digits.

So it's certainly has a growth profile that's a little bit better than some of the businesses we're currently in, but it's certainly not as big either.

So we have, as I said, opportunities to look in all those different places and the European one made a lot of sense for us at this time.

Okay, and I wondered just as a follow-on, can you talk a little bit about Aerospace?

It just seems like this business is stepping up to a whole new level of activity, and so I wondered if you could talk about that, and whether you could also talk about what the sensitivity to that business might be to these budget cuts that we're hearing about in Defense and elsewhere across the government?

Yes, those are good questions.

You're absolutely right.

We are stepping up into some things that we're very excited about.

We've been working on some of these programs for a very long time.

They've been delayed because of all sorts of government budget issues, and as we sit here today, we feel pretty constructive about them.

But there is of those big four projects that we won back in the third quarter, a couple of them haven't been funded yet and we fully expect them to be funded.

But as you probably know our government's operating under a continuing resolution and so it just takes more time to get those funded.

But we're ramping up.

We do have some of the money funded towards those things and we're going full steam ahead and, as we said, those projects are big, they are in the hardware side and that's typically a lumpy part of our business, as we've talked about previously.

But it fits directly into the sweet spot of what we do and these are long-term projects that we're very excited about.

So, John, as that business flexes to expand with the growth in backlogs that we've seen, is that a lot of extra capital dollars there or not?

Is that mostly kind of people?

Yes, it's mostly people.

Okay, fair enough.

Good luck, guys.

Thank you.

Thank you.

Thank you, sir.

Continuing on, our next question comes from the line of Richard Skidmore from Goldman Sachs.

Please proceed with your question.

Good morning.

Thank you.

Just to maybe follow-up on the North American restructuring, can you talk about how you see the cost savings and what the magnitude of those cost savings could be and how they might flow through, either in 2011 and 2012?

There won't be that much that we get a benefit from in 2011.

The plant won't close until sometime mid-year or so, so more of the benefit will come later in the back half of the year than in 2012.

And in terms of magnitude of the savings, have you identified that or can you share that with us?

I think we haven't identified anything yet but we said in the past, when we close a facility of that size we typically get in the range of $25 million of savings.

Okay.

Appreciate that.

And then just lastly, as you look at that North American footprint and given the outlook for kind of flattish growth in North America, with this move do you see any additional restructuring that might need to take place over the next year or two or do you feel like the footprint is appropriately sized?

I think the footprint is appropriately sized.

As you know, over the past couple of years we have closed several facilities, I think, this is our fourth one in the last three years in this part of the business.

So we think our costs are in good line, our footprints are in good shape, so we don't see anything as we sit here today going forward.

Okay, thank you.

Thanks.

Thank you for your question.

Continuing on, our next question comes from the line of Andrew Fineman from Meridian Asset Management.

Please proceed with your question.

Thanks.

Congratulations, John.

And, Dave, I guess, I think that the fact that you've always delegated authority to the young people that work for you.

You've always had a lot of faith in them, and I think that what you're doing now further demonstrates that and demonstrates the fact that you've been a great manager.

So I'm sad to see you go but I wish you the best.

And I still have confidence in the future.

Scott, I think you said that each one of the capital projects will exceed the required return within three years.

What's the required return that you're talking about?

Is it your weighted average cost of capital or is it?

Because these days if the required return is what you're earning on your cash, then you know what I mean.

It's a bit higher than that.

Our targeted return is different by geography.

So in North America, we use a 9% after-tax return and in other geographies that have a little bit more volatility, it gets in the 11% to 12% type of return required.

Okay, and you also, Scott, gave the numbers here as [$86.79] million at the end of the year.

Is that primary or diluted?

That's diluted.

I'm sorry, that's basic.

That's what I meant, sorry, basic or diluted.

And then you said that the pension expense would be flat in 2011.

Can you tell me what it was in 2010?

It was around $80 million in 2010.

Okay, and then you wouldn't by any chance have to, I know you added $37 million to the pension funding in the fourth quarter but you have a full year number?

Full year pension funding was around $140 million worldwide.

So if you look at all of our plants in Europe and the US, it was about $140 million.

Great, so that's $140 million going to $55 million because you put money in ahead of time.

And then I was just wondering how many shares of DigitalGlobe you still have and what's the stock price?

I was trying to find it on Bloomberg and I couldn't.

Andy, this is John.

I don't have it off the top of my head but it's a de minimis amount.

We don't have that much left.

So that's not a significant amount of cash that you could realize at some future date?

I don't think so.

And then I think that might be it, but yes, that's all the questions I had.

Thank you.

Okay, thanks.

Appreciate it.

Thank you, sir.

Continuing on, our next question comes from the line of Al Kibili from Macquarie.

Please proceed with your question.

Hi, thanks, and, again, congratulations, Dave and John.

I guess first question on, switching, I guess, to Metal Food and Household with tin plate inflation, can you give us a sense where that's finally shaking out at?

You feel you've got that priced in for this year and did you see any pre-buy in the fourth quarter ahead of this?

Yes, well as you know, we're seeing signs of inflation in the economy whether it's oil, food, staples, metal.

The input costs for our steel suppliers have gone up and as a result they've been negotiating higher prices.

Obviously, we don't go into the detail of that or the context of our conversations but we've been working hard on behalf of our customers, and we fully expect to pass that through to our customers, the increases that we've been receiving.

In terms of your question about fourth quarter buy ahead, every year it seems like there's a little bit here and there but there's nothing of note this year.

Okay, and I may have missed it but did you give out what the volume was in that segment in the fourth quarter?

No, I don't think I did.

It was roughly flat year-on-year.

The overall market was roughly flat and we were roughly flat as well.

Okay, great.

And then as we look at aerosol cans, what's the outlook for 2011?

Do we see a continued rebound there in terms of volumes with increased consumer spending?

How have some of the new contracts come along there in terms of volumes?

We're expecting and we're planning for relatively flat volume in that business as well.

There's always little puts and takes here.

On the paint and general line side, we saw some good rebound back in 2011 relative to, excuse me, 2010 relative to 2009.

I don't think we'll expect that to happen again because it has come back, but overall relatively flat.

Okay, and in your comments, I know North America Beverage you're looking for flat for the market and I know you guys have a step-up in terms of volumes.

Can you give out what your volume outlook might be looking like for North America Beverage?

Well, what we said, if you go back probably nine months ago or so when we were talking about this we said we would be stepping back a couple billion units of volume in 2010 and then gaining that back a bit more going back to 2008 and 2009 levels, and that's where we are.

Recall that in 2008 and 2009 we declined then as well going into 2010.

We took a further step back in 2010 and now we're just getting it back.

Okay, so you see it close to 2008 levels if I heard you right?

2008 to 2009 levels, yes.

Okay, all right, and then last question, I guess, for Scott on the corporate cost line item.

What number should we be using as a sustainable number for that?

Well, this year what drove it up a bit higher was the run up in the stock price.

So we had a 32% increase in our stock price so that affects the mark-to-market on our deferred compensation plans that runs through that line.

So on a more normalized level, which it dropped back down to levels that were probably more in the 60s, low 60s.

Hopefully, not drop down too much.

(laughter)

Right.

We're being conservative on the stock price, but hopefully we're wrong and it goes up again like that.

Okay, so low 60s for the year.

For the year.

Okay.

Great, thank you very much.

Thank you.

Thank you for your question.

Continuing on our next question comes from the line of Peter Ruschmeier from Barclays Capital.

Please proceed with your question.

Thank you.

Good morning, and, Dave, congratulations on an impressive 17 years and, John, hopefully we will hear you after 70 calls in 2028.

(laughter) I was hoping maybe, Scott, you could update us on the under funded pension balance at the end of the year?

If you take out the German plan, which is a pay-as-you-go type of plan, in the US and really all of the other, and the UK plans are a little above 80% funded, so the under funding in the US is around $200 million.

Okay, and I'm curious, if we exclude out the pending growth initiatives that you have, how much slack do you have in your system to respond to market demand?

How much can you flex and crank up your volumes net of your investments in your new projects?

Well, obviously, it varies by business or by geography.

Historically, we've been very good at rising to the challenge when we need to do that.

In Europe, one of the reasons why we are moving the line from Lublin into Serbia because it gives us a very good footprint, anticipating the comeback of the can into Germany continues, which we fully expect it will.

Here in North America, we think our footprint is right and we don't anticipate any big spikes in that and if we do have big spikes we'll have to scramble a bit, but we think we would be able to deal with that.

And then in Brazil and China, just keeping up with this 20% plus or minus growth we've been experiencing, and it's a wonderful high class problem to have.

And some of the things Scott was talking about in terms of capital, while we haven't talked about them, are targeted in those general areas.

And, John, you've got a diversified footprint as it is.

Do you see enough growth opportunities in these markets or do you think that over time, kind of strategically we would see Ball branch out even further from a geographic footprint standpoint?

Well, we're always looking, but when you think about the success we've had over the last decade, a lot of it has to do with capital allocation.

And so, as we're very agnostic when we look at these types of things and if there's a great opportunity that we can generate sustainable long-term returns in excess, not only of our cost of capital, but what we think a fair value for our stock is, we'll certainly consider those.

We've been, as Scott has mentioned, we used all of our free cash flow last year to buy back our stock but we did have some growth capital, and that's the same methodology we're going through this year.

We see some good growth in certain areas.

We're not going crazy on that, and we're using all of the incremental or most of the incremental free cash flow to buy back our stock and if an acquisition pops up that we think is very attractive we'll go after that as well.

That's how we've created value over the last decade and that's exactly the same methodology we are using as we look forward.

Okay, that's helpful, and maybe just lastly, if I could.

You highlighted some of the capacity projects this year.

I'm curious if you can elaborate further on the timing of those and also I'm just trying to understand as you start up these projects.

I would imagine that you have a certain amount of start-up expense.

Is there an aggregate amount of start-up expense that you're going to incur in 2011, and how quickly do you get to the full contribution margin of those projects?

Well, some of the projects we have not, the timing is unclear because we haven't announced them because we're still evaluating them.

Scott was just giving the heads up that we expect them to occur but they may not, so the timing on the things we haven't announced is a bit unclear.

Some of the other known projects, yes, we do have some start-up expense.

I don't think we've quantified it on a quarter or even for the year right here right now.

It's a little bit but I wouldn't worry too much about that.

And we think most of the capital that we've talked about whether it's the Serbia line, whether it's the Alumatech, whether it's the Torrance closure and the Whitby and Fort Worth capital, all those things will be largely completed in 2011.

Very good.

Congratulations on an excellent year.

Thanks.

Thank you.

Thank you for your question, sir.

Continuing on our next question comes from the line of Alton Stump from Longbow Research.

Please proceed with your question.

Yes, thank you, good morning.

Good morning.

I just have one question actually, and that's on the beer side of things, here domestically looks like we're finally seeing beer volumes come back and that we are finally seeing some increased vendor support.

And just want to get an idea off of pretty easy comps if there might be some opportunity for growth in the course of 2011 if we do see that vendor support continue from the beer players?

Well, the beer market in North America, I presume you're talking about that segment, has been softer for the last couple years.

I think the brewers generally speaking have been going after value as opposed to volume and as a result, the overall market there has been down a couple of percent every year.

There has been some positive signs relative to promotional activity and other things around that.

But one of the big impediments is a lot of the unemployment here in the United States is in that 21- to 29-year-old category and that's a big beer segment, and I think until we see some improvement on the unemployment in that segment, we're going to still see some muted growth on the beer segment.

Okay, great.

That's helpful, thank you.

Thank you.

Thank you for your question.

Gentlemen, we now have a follow-up question from the line of George Staphos, Bank of America Merrill Lynch.

Please proceed with your question.

Thanks, hi, guys.

Dave, or John, looking back over time, the mid-2000s the Company ramped its capital spending program.

And during that period there were a couple of hiccups that occurred at that point in time, project [met] took a little bit of time to get off the ground.

Everything, obviously, worked out for the best looking back in time.

Here the Company is once again ratcheting up the level of spending.

I realize you don't expect to stay at this level for more than a couple years, perhaps, but how do you guard against perhaps taking on too much when looking back, if you agree with the analogy, looking back in the mid-2000s and some of the hiccups that occurred then?

Well, yes, I'm going to start.

I wasn't going to answer any questions but you're talking about things that were really my responsibility, so I want to take the blame for those delays in capital.

I think, I'll grant you this quickly, George, but these projects are across our business and the business is bigger.

Brazil is now part of all of our numbers.

It's a large, fast growing market and some of this capital will happen there.

In China, we bought JFP, big plant, some of the capital we're talking about is there.

And it's largely things that we know how to do, so we don't see a lot of risk but you did hear John say our focus this year is going to be on execution.

Absolutely.

We're laser focused.

We spent a lot of time talking about that, making sure we have the right resources applied in the right way to ensure the success of these projects, and as Dave just pointed out there's a diversity of these projects.

This is not new technology.

This is what we do and as a result, we are confident that we're going to be able to execute successfully on those.

Okay.

On the execution front, you have the volume coming back in North America from the rebalancing work you did over the last couple years.

Realizing it's January 27, how is that business being integrated thus far, any issues that you see?

My guess is probably not given your outlook, but wanted to get that confirmation.

It's going seamlessly.

Okay, I guess that's about as good as it can go.

I guess the last question I had for you, John, what message have you been emphasizing with the team and with employees as you assumed the CEO role and how do you think, if at all, the message or the strategy might change relative to Dave's tenure?

Well, we're not even talking 24 hours here, so, but as I said earlier, Ball has been successful because we have been very prudent users of our capital.

We've been strategically opportunistic and we have a very good set of people that have their DNA wired for a good set of values and it's all about continuous improvement.

And when you do that and combine it with our close to the customer strategy and focus on our customer, that model works.

When I've been talking to people when they ask this question, I say don't fix what isn't broke.

We are in a wonderful place right now and it's up to the 14,000-plus people at Ball led by Scott and myself, and Ray and others, to make sure that we're focusing as much on replicating what we've done over the past ten years into the next ten years.

Okay, appreciate that.

Good luck, guys, in the quarter and good luck, Dave, again.

Thank you, George.

Thank you, Mr.

Staphos, and, gentlemen, our next question is once again a follow-up from Andy Fineman from Meridian Asset Management.

Please proceed with your question.

Welcome back, Dave.

(laughter)

I couldn't help it, Andy.

I have enormous faith in John and Scott and so I'm not too worried about you guys spending the money.

But I have to say that I also take some not insignificant comfort from the fact that Ray is going to be signing the checks, and so I hope that continues for a long time.

But I wanted to ask -- your margin in Metal Food and Household was supposed to be down this year, I thought, because you had the metal gain last year and instead it was the same.

So I'm not quite sure how you did that and what that means for the future.

It was 9.4% and I never expected it to be that high.

Andy, it's a great tip of the cap to the folks that are working in that business.

A lot of the improvement came on the cost side of the business.

As you know, several years ago, we were struggling in that business and we're not anymore.

As we go forward, I think a lot of the low hanging fruit is past us and so I would not expect an ability to improve margins at all in that business, but we have been doing a wonderful job of wringing costs out of that business.

Well, you think you could maintain them because if you maintained them I think that would be a home run.

Yes, I think we can maintain them.

Obviously, you have to adjust for metal and all those things but the profitability in that business is where we think we can hold it.

Thank you.

Thanks.

Thank you.

Gentlemen, that was our final question from our audience.

I'll turn it back to Mr.

Hoover for his concluding remarks.

Thank you.

Well, Tema, thank you.

I think you're probably the best hostess that we've had on our conference calls, so thank you very much for that.

Well, I think that I just would, again, thank all of you for your interest in Ball Corporation.

We feel very good about the future of this Company.

I look out over the next few years and it looks like we're going to have improvements, and I don't know, John, if you want to get a little bit more specific on what we may be expecting for next year?

Well, I'll quote David Hoover.

It is January 27 right now and the weather, we have to see what happens with the weather, but as Dave said we feel very constructive as we head into not only 2011 but equally importantly beyond.

And so we want to thank you for participating, thank you, again, Dave, and we look forward to talking to everyone at the April conference call.

Thanks again.

Thank you, gentlemen.

Ladies and gentlemen, that does conclude the conference call for today.

We thank you all for your participation and ask that you please disconnect.

Thank you, once again, and have a great day.