Crown Holdings Inc (CCK) 2004 Q2 法說會逐字稿

Good morning, and welcome to Crown Holdings' second-quarter 2004 earnings conference call. Your lines have been placed on a listen-only mode until the question-and-answer session. Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Alan Rutherford, Executive Vice President and Chief Financial Officer. Mr. Rutherford, you may begin.

Thank you very much, and good morning to everyone. This is Alan Rutherford; I'm Executive Vice President and Chief Financial Officer of Crown Holdings. With me on this call are John Conway, Chairman and Chief Executive Officer, who is joining us from Europe today, and Timothy Donahue, Senior Vice President of Finance.

Let me point out that on this call, as in the news release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in our SEC filings, including comments in the section called Management's Discussion and Analysis of Financial Condition and Results of Operations in Form 10-K for 2003 and in subsequent filings. In view of new Regulation G adopted by the SEC, we do not intend to provide non-GAAP financial measures of performance or liquidity beyond those already contained in the Company's earnings release.

I will briefly comment on two specific issues, and then John Conway will discuss the quarter before we open the call to questions. Second quarter, with a 20 percent improvement in segment income, continued the excellent start we had to the year, and results in the year-to-date segment improvement of 25 percent.

The two issues I would specifically comment on are, firstly, the impact of increasing interest rates on the Company. The Company's floating debt, including fixed/floating swaps, is $1.6 billion, and consequently each 25 basis point movement in interest rates costs approximately $4 million pretax, $3 million net. However, the 25 basis point increase in the discount rate which we used to measure our pension liability would decrease pension expense by 11 million, so over the long term, increasing rates are a benefit to our earnings.

Secondly, I would comment on translation gains and losses. In the quarter, the Company recorded a translation loss net of 9 cents relating mainly to our US dollar exposure in Europe, primarily the 2011-2013 dollar notes. First of all, this is a non-cash item until 2011-13, and is calculated at the spot rate at each quarter end, which at June 30th was EUR1.22 and a pound of 1.82. If, for example, at today's rates of 1.24 and 1.85 we did the same calculation, we would have had the result of a 2 cent gain. When we issued the debt in February 2003, the US dollar rate was 1.07, and it has weakened considerably since that time. Through June 2004, our cumulative gain in currency remeasurement is approximately $185 million before tax. We are currently evaluating strategies to hedge a portion of this currency exposure, in the most cost-efficient manner, to lock in some of this gain in the future. Additionally, our cash flow benefits from paying dollar interest in non-dollar-based jurisdictions. At the end of June 2004, our net debt is substantially lower than both prior year and prior quarter, and our working capital is currently well ahead of plan for the year. At the end of June '04, our liquidity position was good, with 600 million of availability.

I will now hand the call over to John for his comments, and then we'll open the call up to questions. John?

Thank you, Alan. Simply put, we had another good quarter of sharply improved results. Our operations continue to improve factory efficiencies and drive down spoilage throughout the Company. Our world-class performance system is producing good productivity gains. Units sold were solid, and the pricing environment is firm. We continue to exercise discipline in the marketplace to good effect, and we continue to pass along raw material price increases as they occur. The Company's return on invested capital and economic profit trended up again in the second quarter in virtually every business unit in all of our three divisions. This reflects the positive effects of margin improvement and the careful and thoughtful attention to capital and cash usage. All in all, we are very pleased with the results and the direction in which we are headed.

And Alan, with that, I'll turn it back to you.

Thanks, John. Operator, if you could open the call up to questions, please?

(OPERATOR INSTRUCTIONS). Amanda Tepper.

JP Morgan. Let's start about cash. What was your CapEx in the quarter, and what was your outlook for the year?

The outlook for the year is still the same, 145, and the quarter was how much, Tim?

28 million, so year-to-date 66.

And working capital -- you say you were ahead of plan. How did that run in the quarter, and where is that coming from, the upside to plan? Are you just able to squeeze more on your payables and receivables that you thought, or is it one side more than the other?

Well, I think it's everywhere, Amanda. We have been doing better in our working capital, and we had planned and anticipated, which is good. And of course, also, the profitability is improving, as well. So it's all helping to generate more free cash -- more cash flow.

Do you have a net working capital number for the quarter in your cash flow?

Do we have that, Tim?

I don't have it in front of me. I know cash from operations was a little over $100 million in Q2 this year compared to, I think, about 40 million in Q2 last year.

And that's before -- (multiple speakers).

Before CapEx (ph).

-- (multiple speakers) payments also?

I'm sorry?

Is that before asbestos payments?

That includes the payments for asbestos and contributions to pension.

And what were those in the quarter?

In the quarter, the payments for asbestos were -- well, not in the quarter, in the half-year -- were 7 million.

Wow.

In the quarter it was about 4. However, we still have about 25 million in prior settlements to make, which we will obviously be making as we go through the rest of the year.

And that's well below the 65 million you had talked about before. Is 65 million still your guidance for the year?

On the basis of the current information, Amanda, I now believe we'll probably not be more than 50 million.

Are your claims trending down, or are you just thinking you can pay less this year?

Claims in the first half of the year were approximately -- claims filed were about 6,500, which compares to 28,000 in the same period last year.

Ghansham Panjabi.

Lehman Brothers. Can you give us some color on underlying volume growth across US and Europe -- beverage cans, food cans, aerosol, et cetera?

We can give you a sense of -- we tend to track by division, and we just say Americas, Europe, et cetera. So for the first quarter, our beverage volume was up between 1 and 2 percent versus prior quarter last year in the Americas, Europe was up between 7 and 8 and Asia was over 20 percent gains year on year.

Food we don't pay a lot of attention to. We are slightly lower quarter to quarter, but it's the third quarter, really, that's the big quarter for the food business in North America and Europe.

Okay. And it looks like the Greek peach crop production is much better this year; right? So that should not be --

We are not hearing anything bad about any crops, so exactly. We think the peach crop is going to be okay, and we haven't heard any negatives about any of the major crops.

And what is your free cash flow guidance for '04?

At least 200 million.

But so far, just based on that paydown, it looks like you are going to be well ahead of that, right?

Well, I think, obviously, the thing I just mentioned to Amanda is a positive. I think I should say that on interest costs, we may be a little bit higher, probably 8 to 10 million. The reason for that is that the six-month LIBOR rate, of course, is already drifting up to about 1.80-1.90. So I think we did -- I did project in the past about 335 of interest expense, and I think now it could be nearer to 345.

And just finally, obviously, the pace of operating margin improvement has been solid so far in 2004. Do you feel that there's enough left, in terms of productivity improvement going forward, to suggest that this base is sustainable not only for '04 but '05 as well, assuming reasonable volume growth?

Well, we've made a lot of progress over the last three years, just in terms of operations, improved efficiencies and just running smarter and better. And we have a lot of positive momentum. It's a little hard to project it into next year, but we are pleased with the momentum that we have to date.

Chris Manuel.

KeyBanc Capital Markets. First, could you run me through what the foreign exchange impact was by your different units and operating income on revenue?

I've got it right here. In the quarter, we had an improvement of 28 million of segment income, and 7 million was due to exchange. So 25 percent of the improvement was due to foreign exchange, and 75 percent was due to the raw operations. And there was essentially no impact on segment income as it relates to foreign exchange in the Americas division. The bulk of it was in Europe; almost all of it was in Europe.

And what was the FX impact to revenue?

In the quarter, 73 million.

And do you have that by segment?

Sure. Of the 30 million improvement in the Americas, 3 was currency, 68 of the 71 was currency in Europe and 2 of the 9 in Asia was currency.

Next question I have relates to weather. Are you seeing any impacts this year, either good or bad, from weather? For example, over the past few weeks we've seen several of the big box retailers such as Wal-Mart come out and say that they've pulled back some sales projections due to poor weather.

We really haven't. I guess we could talk ourselves into the proposition, perhaps, that beverage sales might have been somewhat stronger if weather had been better, but I'd be stretching things to say that we've seen that. So we really don't think weather is having a significant effect on our business in any of the segments.

And then last question is tax rate. I think previously you'd given us guidance of about 40 to 50 -- 40 percent for the year, I believe. In the quarter it was significantly lower. Any update or changes there?

I think what we said in the first quarter in response to a question was that typically the second and third quarters are the more profitable periods in the North American and Western European businesses, and we would expect that the rates in the second and third quarter would be much lower than the effective tax rate in the first and fourth quarter. But over the course of the year, we would expect 45 to 50 percent tax rate. I think we are still comfortable with that statement.

George Staphos.

Banc of America Securities. By the way, congratulations on the additional disclosure; it's very good. In terms of beverage can growth, John, could you drill down a little bit further? I know you said in the Americas your volume was up, I think, 1 to 2 percent in the quarter. What about within North America? Was it different by any appreciable amount, either stronger or weaker?

No; it was about the same in the quarter.

Slightly lower or slightly higher, would you say?

No -- the same range.

Now secondly, in terms of the top line, can you give us a rough idea what impact you had in the quarter from pass-throughs, whether it be resin or metals?

Not a lot in the quarter, George. If you think about it, the pass-through issue is basically a -- metal pass-through issue is basically a food aerosol issue in the US and Canada, and those businesses, in relation to the size of the company, are not terribly large. And of course, the increases were passed through during the course of that quarter, so I would say not a lot on the top line.

Less than 50 million, would you say?

Maybe Tim or Alan could (multiple speakers) because I'm sure it's less than 50.

I would say less than that for sure, George.

Next, in terms of return on capital, realizing that you are making very good progress, both in your geographies and product lines, which areas are you least happy with, if you would, in terms of return versus cost of capital? And at this juncture, John, what are your strategies for improving upon that or improving the results in those areas?

I think all of the businesses are making good progress. It's no secret -- we've said for quite some time that we think that food can pricing in North American needs some improvement in order for everybody to make reasonable returns, and margins need to get better. And aerosols are not too different. And in Europe, of course, we have a general-line business, paint can business, which margins are not where we would like them to be. But all the businesses are making good progress, which we are happy to see.

First of all, I realize it's not that big a business for you anymore -- US food cans. Are you below cost of capital there, would you say?

Alan, maybe you could comment on that.

I think we are still slightly below cost of capital in food cans, but we have made some improvements in this year compared to last.

And in food Europe, John, are you happy, then, with your pricing there and returns?

Yes. We've done quite well in food Europe. In my view, we've made a real turnaround in the business over the last couple of years, and things seem to be going quite well for us.

Last question. Alan, can you just remind us what's in the swing in the minority and equity line year on year? Is it divestitures or anything else like that?

I think, compared to last year, John, I think last year in the quarter we had a write-down of an investment in comp store, which gave rise to that.

Chris Miller.

JP Morgan. Just follow up on the liquidity, the 600 million of availability -- was that including cash? Was that a total liquidity number?

Yes, it includes cash.

Kind of a general industry question, again. Kind of a small segment, but in food cans there seems to be -- there's been a few stories recently about a trend potentially toward plastic food cans. Are you seeing much of that? And just kind of your views on that going out?

No, we are not seeing much of that. I think that's very specialized, because as you know, plastic food cans -- plastic is not very processable. And for the most part, we are selling cans to customers who use them for packaged products that are retorted. So it has not had much of an impact on our business.

And then just lastly, I think you kind of touched on this. But some of the rising costs, potentially, from the steel companies, the tinplate -- kind of what do you see going out the rest of the year there? And any impact positively or negatively on your business out through the end of '04?

Well, the steel industry in North America is determined to improve their pricing and margins, and we have seen the effects of that. We are passing this all through to our customers. We are explaining to all of them, and I think they understand and they are paying the increases, that with our food can business we simply cannot absorb the increases. We don't anticipate that there are going to be more than the increases already announced through the end of '04, but they have been substantial.

Timothy Burns (ph).

Perennial Capital (ph). I know John is over in Europe; I was just curious. Is the behavior better than in past years? I was over there recently; it sounds like people are trying to behave. And what does that mean for overall price for that big unit you've got there?

I think all the participants in Europe today want to earn a reasonable returns on their investment, and some of the private equity participants want to sell their investments at good prices. So we are seeing what we think is pretty rational behavior in the marketplace. We hope and we see no reason why it shouldn't continue.

And then the aluminum price versus, let's say, PET resin -- have you guys seen any material movement to or from metal, based on what's been a volatile price environment for some of these key inputs?

We have not. As you know, Tim, the beverage can pricing in those markets where it's adjusted, based upon -- quickly, based upon LME (ph) moves -- was adjusted April 1, and we don't think we've seen any change in the package mix with our customers as a consequence.

And one business area -- it's multiple units, I guess -- that you guys don't talk about much anymore, probably because it's so small, but I think it's a still well thought of -- is the Obrest (ph) Zeller kind of -- that plastic closure business. Is that a business you guys still like? It's obviously returning its cost of capital. What's the future for that business?

Well, it's a great business and we like very much. It's growing throughout the world, and we are pushing it into new markets. And we've got, we think, leading-edge new products and new product development capability. So we like it, and we are pleased with it.

Hey, Alan?

Yes?

I missed the early part of the call, but I heard what you said about the floating-rate debt and an impact of 0.25 percent increase in interest rate. Then you followed up and said, but a similar interest rate increase on your pension assets was $11 million?

Yes, that's what I said. 25 basis points, not on the assets but on the discount rate --

Ah, discount.

-- is used to measure our pension liability would be a decrease in the expense by 11. Obviously, this is a long-term increasing rate, say.

So net net, it's a benefit to you?

That's the point, yes.

You know, it's amazing; over the last five years, if you look at the packaging sector, these kooky companies in metal packaging -- Ball, Rexham, Silgan, Crown Cork & Seal -- have been the best-performing segment group. Who would've thunk, huh?

We always believed it, Tim.

Dan Khoshaba.

KSA Capital (ph). Alan, first with you, what are some of the credit ratings/refinancing kind of milestones that equity investors can look forward to in the future -- over the next year, maybe two years, if any?

You mean in terms of debt we're going to be paying off?

In terms of debt you are going to pay off, maybe some refinancing opportunities, perhaps some credit upgrades. When you look at your overall debt level and your cash flow, it's been pretty strong. What are some of the things that you would like to achieve, and how, perhaps, will the credit rating agencies look at some of the deleveraging that's taking place?

Well, obviously, in the short term, in the near future, we're going to pay off the balance of the '04s and the '05s, which remain to be finally paid off. Other than that, we have a note which is out in December '06 which is in the marketplace. But I think, really, Dan, our plan is still the same. And that is that, net debt, which at the end of '03 was 3.5 billion, our plan by at least the end of '06 is to get that number down below 3 billion, into the 2.9 range. And we believe that this is very achievable.

Also, of course, as the bank markets are relatively good at the moment, we are obviously going to be looking at anything we can do on our floating debt to reduce the spread that we have to LIBOR, if that's possible.

This is looking out a little bit in the future, but I guess, where did you have to be to be investment-grade, about? Is that, Tim, maybe 2.5 times leverage?

I'd love to think we are that close to that. I think we're a little way away from that. I think you've got to be looking at 2.5 or high 2.5's, towards 3, before we get back into that area.

That's maybe a good 2 years, 2.5 years away, but something to look forward to?

Yes. And you know the adage; you know, it's easy to come out of investment-grade, not always so easy to get back in.

I've heard that.

Yes.

I guess as a second question -- John, this is for you. Congratulations on a good quarter.

Thank you.

Operationally, when you look at your various businesses that you have, what is still the greatest room for improvement for this Company in terms of improving profitability and margins, efficiencies, that kind of thing?

Well, price helps an awful lot of things. And so our view is we're going to maintain, and our sales organizations and marketing organizations understand we have got to maintain an emphasis on improving margins through price and passing along all costs plus something. We see no reason why that can't be achieved over the next couple of years.

In terms of operations, we just continue to make strides. We've had world-class performance in effect for a number of years now, and it's just a high-performance focus throughout our operations. It's one of the reasons that we're doing so well with working capital, driving down inventories. So we have not seen the end of it yet.

Culturally, I know that you guys fought kind of a big battle a couple of years ago getting your salespeople to realize that pricing was needed, and a necessity to turn the business around, and you've gotten some really good pricing. But culturally, how do the salespeople kind of respond to pricing initiatives? And what's your thoughts on that?

They respond wonderfully. Everybody in the Company is driven by free cash and economic profit. Everyone understands exactly what it means and how it's produced, so I think our sales organization has been delighted to be a part of the solution.

Okay, guys. Good job, and thanks a lot.

Bala Ramakrishnan (ph).

It's Ashman Krishnan (ph) from Morgan Stanley. I know you've talked about this a little bit. Could you just give some more color on the pricing situation in Europe and where you've seen the improvements coming from?

Well, we've talked about this in past calls, and we have continued to improve margins in our food can business, aerosol business. And we are passing along at least cost increases, and in many cases more than cost increases, part of the reason for the widening margins. Beverage cans -- hasn't been a lot of change in pricing year on year, nor has there been much change in 2004 in Europe. The positive thing there, of course, has been volumes, which have been very, very good. Asia is very similar. So it depends on the segment, but we are pleased with what we have done with price where we've needed to do something.

And the second question I had was, is there any update you can give us on the asbestos legislation situation or the court resolution? Any new news just coming out of that?

Alan, why don't you handle that one?

Yes. Well, obviously you know about Mississippi, where there was a change in the law. In Ohio, there's also been a change in the tort law, where you have got to in fact be sick now to sue. And then, of course, with Washington, as you know, it's an ongoing process. We are probably not more up-to-date then you are. We are very supportive of it, and we still believe and still hope that in the end, sometime this year there will be a resolution to this. And we all know there's been back and forwards between various parties in this, and it's an ongoing process, as far as we are concerned.

So you still believe that it's going to be more an '04 event than an '05?

Well, as far as we've heard, we hope it's possible. But we know elections are coming up, so we've heard the alternative approach, which it may not be. But at the moment, we know actions are still being taken and it's possible.

Andrew Feinman.

Iridian (ph). How much is the restricted cash at the end of the quarter? It was 20 million at the end of the first quarter.

We didn't have any restricted cash. We shouldn't have had any restricted cash at the end of the first quarter, either, Andy. But the cash balance that you are seeing has no restricted cash in it.

Well, at the end of the first quarter, you had 243 million of cash and equivalents, and you had restricted cash of 20. That's out of the 10-Q, but -- so, you know, I just want to --

(multiple speakers), but it wasn't included in the 243.

No, I know that. But I like to include it in my net debt number, so that's why I'm asking for it, because it is real cash that you can use to pay down debt. So I like to give you the benefit of it. So you are saying it's zero now?

No. What I'm saying is that the cash that we're showing you on the balance sheet is not restricted.

No, I know that.

The restricted cash you are pointing to is in a different line item on the balance sheet. We still do have some restricted cash as it relates to one of our subsidiaries, but it's not reflected as cash.

I understand, and I knew that, but I was just trying to get the number, because from my (multiple speakers).

(multiple speakers) similar amount to the number you saw in the 10-Q in the first quarter.

Bruce Klein.

Credit Suisse First Boston. It's actually Kevin Cohen (ph) for Bruce. If we could just turn to the aerosol segment, if you could give us a little color, just in terms of volume in the quarter as well as any pricing changes?

Aerosols?

Yes.

Are you referring to the Americas, for example?

The Americas as well as Europe, please.

Aerosols on the quarter were just about flat for us. Let me see -- oh no, off a couple percent in the Americas, up about 6 percent in Europe, and Asia is negligible. Across the Company, quarter-to-quarter aerosol sales were up about 1 percent in units.

Pricing activity -- not a lot to say. I mean, there's not a lot of activity going on in aerosols at the moment, other than we are passing through all of the steel price increases that we have been subjected to by the steel companies.

So for the tinplate surcharges, those are being passed on to contract as well as spot customers, fully?

Yes, they are.

Andrew Gundlach.

Artemis Advisors. Could you help me understand a little bit where your cash flow is going to go to pay down debt? Obviously, you are going to do the maturities first. But did you have any flexibility in your secured debt, in your bank debt, to pay off the higher interest rates?

As I said a moment ago, to the other question, we're obviously going to pay off the notes that I mentioned. And as I said, perhaps look at the December '06s, which are out there, which we eventually have to pay off. Other than that, really, at the moment we have no possibility, in fact, at the moment, to buy back the '011s for instance, say. So in the short term, we're going to be using the cash to pay off the notes, the '01s, the '04s, the '05s, and possibly the '06s as well.

How much of the '11s, and I suppose you are talking about the 9.5's --

Yes.

How much of the '11s have you swapped from fixed into floating?

900 million of the billion 85.

900 million of the billion 85. And what is the floating rate that you pay?

(multiple speakers). We have got several contracts. The initial positive carry when we did the transaction was just under 300 basis points. Now, that has moved down a bit, as Alan has talked about. The six-month LIBOR rates are up about 60 basis points this year, so we are still almost 2.5 full points ahead of the fixed-rate.

So the effect -- while your K or Q will say 9.5 fixed, your actual cost of borrowing when you did the deal was 6.5, and that has come up 60 basis points as LIBOR has moved up? Is that correct?

They are approximate numbers, but you are very close, yes.

And how does that gain, if you will, get reflected in your accounting statements?

Well, it just comes through as --

Interest expense?

Yes.

So it's a cash interest -- okay.

It's cash and income, yes.

So, just to be clear, the benefit of that shows up every quarter on your income (indiscernible) line.

Yes.

Second thing, just to follow up with the gentleman's question on pricing, I guess one way to look at this industry is that the bad boys of pricing have so much debt and liabilities on them that they can't afford to not price correctly anymore. Would you agree with that statement? And does, therefore, pricing visibility improve in this industry in a way which we haven't seen in the '90s?

I wouldn't really agree with the statement. I think what's happened is that the metal packaging industry globally is very consolidated, and I think alternative strategies have been tried in a slow growth market, and there has been a general realization that market share gains in markets that are growing 1 to 3 percent a year in non-differentiated products is not a very sensible strategy. So it's not just the can business; you see it in the steel industry and all the rest. I think everybody is realizing that we ought to take the benefits of the highly consolidated business.

Is your sales force paid on price and free cash flow?

The people making the pricing decisions are all paid on free cash flow and economic profit.

Amanda Tepper.

JP Morgan. I just had one follow-up, which is, John, if you could give a little bit of color on what's happening these days with your new products, both pipeline and also how mix might be contributing to this positive margin performance that we are seeing here in the quarter?

Well, we're continuing to expand new product development. We talked an awful lot about SuperEnd, which is our new, improved lightweight beverage end, and we continue to increase it as a percentage of all ends sold globally.

Where is that today, by the way?

It's rolled out pretty much throughout North America, with a couple of exceptions. We've introduced it now in the UK; we will be introducing it in Europe shortly, in much larger numbers next year. We're taking a look in Asia, and as you know, our licensees have rolled it out in Australia, New Zealand, South Africa, sub-Saharan Africa. We're still making a lot of progress with the IDEAL closure, which is our metal vacuum plastic composite closure. It continues to gain share of our mix, and extremely well received, and we're taking a look at introducing that in Europe also. So we've done a lot with Peel Seam, which is a new technology for food can ends, an extremely easy-opening retortable closure. It's had a lot of success in the European market. We're taking a look at bringing it here to the United States. So we're going to continue the effort. We think we've got a great research and development group of people, engineers, scientists. And they are going to continue to develop new products and processes for us.

Larry Teck (ph).

I just wanted to get a clarification on Amanda's question in the beginning about asbestos. You're talking about the payments, right? Not the provision numbers?

I talking about how much cash did we pay out.

And the 50 million is the cash payout -- not, we anticipate, for provision?

Correct.

Do you have any guidance for a provision number for the year?

To be honest, Larry, no, because we go through a formal process of re-measuring in about November/December of every year. And as you know, we do it outside the Company, and we'll be doing the same process. And so it's hard for me to say how much it will be, if anything.

And just a last question on that. Do you have the number of claims received and resolved in the quarter?

I think year to date, you said we'd received 6,500 new filings.

Yes. We received 6,500, and obviously, with the amount of money that I told you we paid, I think we resolved a relatively small amount. If you will bear with me one minute, I can -- claims settled year to date, about 3,500.

Year to date?

Yes.

George Staphos.

BofA Securities. One last question. Just trying to reconcile the revenue line in total, then -- if FX was roughly about $70 million and both volume and pricing were positive, would it be fair to say that both volume and pricing were up 1 to 2 percent, or was one larger than the other?

I think, excluding currency, if you work out the numbers, we are up about 2.1 percent in the quarter, organically. And I would say that your statement is correct -- equal parts.

But in total, your volumes were up in the quarter versus year ago, Tim, from what you can see?

I'm sorry?

But in total your volumes were up --?

Oh, absolutely. I think John has already gone through that.

Operator, if there's another question, we'll take it and we'll make it the last one, I think.

Patrick Retzer (ph).

Retzer Capital (ph). Say, just to make sure we beat the asbestos issue to death, you know, the last I've heard was that the two sites in Washington were 10 billion apart on their agreement for the asbestos fund. If you take either the high or the low amount of that fund size, what would the implications be to the Company?

You know, I think the high or the low -- our feeling is, as far as we know at the moment, if it went ahead the way it is at the moment, we'd probably have a payment of around 23 to 25 million a year cash. That's our current understanding.

For how many decades?

Well, I think it could easily be 40 years, isn't it, John? I think, 40.

Well, yes, I --

Could be less.

You know, that's so speculative. But I would say at least 20, it would appear.

So, thank you, that concludes the second-quarter call from Crown Holdings. We thank you for participating. Thank you.