Crown Holdings Inc (CCK) 2008 Q4 法說會逐字稿

Good morning and welcome to Crown Holdings full-year and fourth-quarter earnings conference call. (Operator Instructions). Please be advised that this conference is being recorded.

I would now like to turn the call over to Mr. Timothy Donahue, Executive Vice President and Chief Financial Officer. Mr. Donahue, you may begin.

Thank you, Shirley. Good morning to everybody, and welcome to Crown Holdings fourth-quarter and full-year 2008 conference call. With me on the call today are John Conway, our Chairman and Chief Executive Officer, and Alan Rutherford, Vice Chairman and Executive Vice President of the Company.

Before we begin, I would like to point out that on this call as in yesterday's earnings 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 the press release and in our SEC filings, including comments in the section titled Management's Discussion and Analysis of Financial Condition and Results of Operations in Form 10-K for 2007 and in subsequent filings.

As you all know, Alan Rutherford has announced his retirement after 34 years of dedicated service to the Company. And while the company has benefited greatly from Alan's service, it has been my personal good fortune to have worked with Alan for over 19 years. So I will briefly hand the call over to Alan.

Thank you, Tim. The Company had an excellent year in 2008, including a strong fourth quarter, generating $826 million of segment income, a 29% improvement over '07, which was in excess of our guidance of $800 million to $820 million.

The strong fourth-quarter sales resulted in a smaller than expected working capital reduction in the fourth quarter, which impacted free cash flow at December 31. However, this does not mean we will not generate the cash. It is simply a timing difference. Once again, we increased EBITDA and reduced debt, continuing a path we have followed and we will continue to be on for some years. We look forward to continuing progress in 2009.

On a personal note, this is my last of many earnings calls over 17 years. I have enjoyed my dialogue with all of you over the years and wish you all well in the future.

Now I will turn the call over to Tim who many of you already know, and he will moderate the call today and in the future. Tim?

Thank you, Alan. I will comment on some of the highlights of the fourth-quarter and full-year performance, provide initial guidance for 2009, after which John will provide his views on our performance in 2008 and 2009 outlook in light of today's economic environment.

Net sales in the fourth quarter, excluding the impact of foreign currency translation, grew 9% and 5% for the full year. Reported sales for the full year improved 7.5% over 2007.

As noted in last night's earnings release, the fourth quarter, which is one of our seasonally smaller quarters, on a comparable currency basis accounted for 43% of our full-year sales growth in 2008, reflecting strong volume increases across our global beverage and food can franchises. The strength of the fourth-quarter sales volumes was beyond our expectations and was evident across almost every product line and in each geography.

Let me provide some color behind the numbers for you. Global beverage can volumes in the quarter were notably stronger, up 5% over the prior year. In the Americas volumes were up 3.5% due to strong demand in Canada and Brazil. As noted in the release, fourth-quarter US volumes were the same as in 2007 despite industry volumes being off 4%.

European beverage cans enjoyed 3% volume growth due to continued strong demand in the growing Middle East and Mediterranean regions. In Asia beverage can volumes soared 15% compared to the fourth quarter of 2007 with gains noted throughout each operation in the division and notably in our new plant in Cambodia, as well as from the second can line in our Ho Chi Minh City, Vietnam plant.

In summary, we are particularly pleased with the 2008 global beverage can volumes in light of the fact that the 5% fourth-quarter growth is on top of 9% growth that we experienced in the fourth quarter of '07.

Our food can businesses around the world were also very strong in the fourth quarter. In North America can volumes grew 5%, and in Europe they rose 4% with growth recorded in all regions.

Operating results in the quarter were extremely high quality with segment income in the fourth quarter improving 31% to $149 million over the same period in 2007, mainly as a result of higher sales volumes and the results of prior cost reduction initiatives offsetting the impact of foreign currency translation. Excluding currency translation, segment income increased 45% in the quarter with all businesses performing well over the prior year.

For the year segment income grew $184 million or 29% to $826 million. This follows a 12% improvement in segment income in 2007. To put this in better context, over the last two years, segment income was up $250 million or 43%. This growth is primarily the result of capacity expansion projects that we have completed throughout our businesses in the developing markets and numerous other capital projects and operating improvements designed to increase efficiency and reduce cost.

Equally important, segment income as a percentage of net sales expanded 160 basis points to 9.9% for the year. On taxes our underlying tax rate from ongoing operations was 21% in the fourth quarter and 25% for the year.

As can be seen from the cash flow statement, we had higher than anticipated accounts receivable at year end, pushing our free cash flow below our previously guided range. This was due to the unanticipated strength of fourth-quarter sales as it was simply not possible to collect the additional receivables prior to year-end. Consequently receivables consumed cash of $110 million in 2008 as compared to being a source of $68 million in the prior year.

Additionally inventories consumed $23 million due to the necessity of rebuilding inventory levels for a longer summer selling season in Brazil, continued demand growth in the Middle East and Mediterranean regions and an earlier Chinese New Year.

Despite higher working capital at year end 2008, we reduced net debt by $239 million to $2.7 billion at the end of 2008. The reduction in net debt combined with growth and adjusted EBITDA enabled us to reduce net leverage to 2.6 times from 3.4 times at the end of '07. Again, to provide some perspective, this compares to net debt that was 3.9 times at the end of December '06.

So over the last two years, net leverage has been reduced by a full 33%, allowing us to further improve the credit quality and liquidity of the Company. In 2009 we expect to again apply the majority of our free cash flow to increasing liquidity and further deleveraging the balance sheet.

The Company was well inside of all required debt covenant levels at December 31 and remains in full compliance. As noted in the release, we have no significant maturities of long-term debt until 2011, and with no borrowings under our credit facility at December 31, we began 2009 with almost $1.3 billion in liquidity.

As many of you know, we fund our operations through cash on hand, the accounts receivable securitization programs and availability under a committed revolving credit facility. As we look back on 2008, not only was it another successful year for the company, but our results in these challenging economic times underscore the strength of our diverse product lines, customer base and geographies that we serve.

Looking ahead to 2009, at this time and based upon current exchange rates, we expect segment income to grow approximately 3% over 2008 to around $850 million. This 3% growth is after a year-over-year impact from foreign currency translation of $50 million and incremental pension expense of $120 million.

It is worth noting that Crown does not smooth its pension assets. We use actual asset values at each year end to determine pension expense, which is the preferred method. Therefore, our balance sheet at the end of 2008 and our 2009 expense projection do reflect what actually happened to asset values in 2008.

We currently project free cash flow to be at least $400 million after capital expenditures of $150 million. Pension contributions are projected to be $75 million compared to $70 million in 2008, and cash tax payments are projected at $95 million versus $84 million in 2008. At current rates, interest expense is projected to be $40 million lower in 2009 than '08, and our tax rate for 2009 is currently estimated at 25%.

I will now turn the call over to John for his comments.

Thank you, Tim. 2008 was one of our Company's best years. All of the things that we have worked so hard to accomplish over the past number of years came together in 2008 in a quite remarkable way. Demand for our products was strong in virtually every market in which we participate.

Please keep in mind that we are a focused metal packaging company, and the segments in which we operate were carefully selected by us a number of years ago. That is we're not accidentally in these businesses we chose to be, and we are pleased that we are.

Metal packaging for food, beverages, personal care and home and industrial use was favored by our customers and the ultimate consumers in 2008, and we believe that this trend will continue in 2009.

Pricing during 2008 was firm, and we were able to price our products fairly in order to recover increased costs and continue to improve returns on investment for our shareholders.

Our factories continued their sequential improvement in operating performance, helping once again to improve segment income for the year. As we have explained to you in the past, our goal has been to be among the very best operators in our industry, and we think we have achieved this and now must go even further in 2009.

The pricing environment for our primary raw materials, including among other things tinplate, steel and aluminum, was challenging and volatile. Nonetheless, we experienced no supply disruptions, and we were able to work in a fair and coordinated way with our supplier community.

The new capacity investments on which we have been so focused over the past number of years principally in emerging markets such as Colombia, Brazil, North Africa, the Middle East, Southeast Asia and China, all made significant positive contributions in 2008. We have been fortunate that all of the capacity we have installed was fully sold, conserving the geographic markets that we believed would be winners.

As we look into 2009, Tim made clear that we will make further improvements in Crown's performance. Clearly 2009 will be an interesting year. However, we are fortunate that demand for our products is holding up well, supporting the proposition that in difficult economic times our packaging is favored. Our metal packaging is low cost. Our customers can fill our packages at high speeds with very little spoilage and sell to their customers a filled container which transports easily and cheaply and maintains beverage food and other products for long periods of time in pristine condition. The trend for consumers to eat and drink more at home during difficult economic times clearly will benefit Crown's packaging products.

The commercial approach we apply globally is to pass through steel and aluminum costs to our customers as changes occur. We recognized perhaps sooner than others that the unknowability and volatility of commodity prices dictated that Crown should not be on one side or the other of bets about future prices. We are all aware of the risks that were taken in financial markets and the disastrous consequences that have ensued. We have been convinced for a number of years that commodity markets posed the same outsized risk profile, and we consciously avoided betting on commodity price movements. We are certainly happy today that we did so. We have no intention of changing, and we continue in 2009 to implement our business model, which we believe is the only prudent way to proceed.

As Alan and Tim both pointed out, we have been able to drive our debt leverage down and improve our credit metrics. Our goal is to generate more free cash year on year and improve our return on invested capital, thereby enhancing shareholder value. By closely coordinating investment and financial discipline with our knowledge of metal packaging and our understanding of the most promising geographic markets, solid organic growth will result in 2009 and beyond. Put simply, our game plan is working.

Lastly, let me simply say that it has been a great pleasure and honor for me to work with Alan Rutherford for all these years. Our team at Crown is made up of many people around the world, and clearly Alan has been a leading member. We are all going to miss him, but we know that he is going to grab hold of his impending retirement with the same enthusiasm, good cheer and determination that he exhibited as Vice Chairman and Chief Financial Officer of Crown Holdings. We wish him all the best.

Operator, with that, I think we're ready to open the call to questions.

(Operator Instructions). Claudia Hueston, JPMorgan.

Congratulations on the quarter, and thanks to Alan for all the help over the years. I just wanted to maybe get a little bit more color on what happened in the Americas bev can business. The volumes were just really strong. I wondered if you might just be able to talk a little bit about specific trends, particularly in the US and maybe where you may have picked up share and sort of what you are seeing that is a little bit different than what the market was showing?

Well, as you said, we did have a strong quarter and a pretty strong year. The growth, as Tim noted, came largely from Canada and Brazil, but also Mexico and Colombia were strong. And for us the United States was flat year on year, and the market, of course, was down. We have a good customer mix now in the United States, and I think that is probably the focus of the question. We have more beer volume than we have had in the past. We continue to increase our specialty can business. We think we are a very low-cost producer of 16 ounce cans and 10 ounce cans, for example, which helps us tremendously. And we have got a nice spread of business in the soft drink side, a fair bit of private-label, but also a group of customers now beyond private-label who had relatively successful years. So unlike four or five years ago when we were overly exposed to one customer who has been struggling recently, I think all of that accounts for the performance during the quarter.

And then just any comments in terms of where volumes -- what your volume outlook is for '09 in the bev can business?

We think beverage volume globally is going to be up 2% to 4% for us, probably flat again in the US, and every place else continuing to grow but obviously at reduced rates.

Chris Manuel, KeyBanc Capital Markets.

Good morning and congratulations on a very strong 2009, and congratulations, Alan, on the retirement and Tim as well.

A couple of questions for you. I'm having a little bit of voice issue today. But, as you look at your capacity and supply issue heading into 2009, it looks like your CapEx is going to be relatively similar '09 versus '08. Are you still -- where are you at with capacity additions, timing and such for 2009?

In the Americas we're going to complete and we are completing our new plant in Brazil. We are just beginning now to make first cans, and we will be in commercial production solidly into commercial production by the end of the quarter, and I think you are aware of that.

In Europe, although we will continue to produce we think more cans in the Middle East as a consequence of simply improving performance as these plants and new capacity becomes more mature, we don't have any capacity that is going to be coming online in '09. So but we do anticipate growth in the European market.

Asia -- well, yes, I'm sorry. Tim reminds me the second line in Seville will be coming on and I guess is coming on as we speak, and so that will add to capacity in Europe.

Asia, we are planning for growth in Asia, but it will be out of the existing capacity that we have, and we don't have any current plans for significant capacity additions, although we are looking at some things that might prove worthwhile.

Okay. And then the second question I had, use of the cash this year, you said the majority for debt reduction. Are you anticipating buying any shares back, or what are you anticipating the balance of your cash for?

You know, the term majority of our cash, we probably should have said, almost all of our cash. It is unclear how we would envision ourselves buying any shares back in the economy today. I think you should view the cash flow being used to delever the balance sheet on a net basis.

Tim Thein, Citigroup.

First, on the CapEx I was just scribbling pretty fast here, but I thought you said 150, and I think Chris said it was flat. Did I hear that wrong?

We did say 150.

Okay, versus that 175. And is the Morocco plant, is that still on hold, or what is the --?

It is on hold. Our view is that with the capacity we have in Spain now and the European markets being a little bit slow for bev cans, we anticipate in 2009 that we will not need the Moroccan plant, and so we have pushed that back.

Okay. Just quickly I know it is not a huge issue in this industry, but do you think any of the growth you saw in the fourth quarter, is any of that reflective of maybe a prebuy ahead of some of the increase in tinplate?

We do not think so. We tried to monitor that very, very carefully. We were very frank and candid with our customers that we were not going to permit prebuys because of all the problems it would cost us. So we think it is just genuinely -- by the way, it was food, beverage -- demand was strong across all of our products. So we think there may have been -- it is always hard to stop everything -- but we don't think it was a big factor.

While food cans were up in the quarter, beverage cans were up even more, and as you know, aluminum has been trending down. So we don't believe there was any [buyout] there. In fact, it is purely demand-related.

Okay. Thanks a lot. Alan, enjoy your retirement.

Alton Stump, Longbow Research.

I think you mentioned, Tim, just to make sure I got the numbers right, that your soup cans in overall volumes were up 5% in the US and then 4% in Europe? Is that right?

I think let me -- is that what I said? Well, it is certainly 4%, North America 5% and 4% Europe, yes.

That is correct.

Okay. And then with the overall topline number, obviously in food cans being down, I'm sure FX was the biggest driver there. But was there anything else going there outside of the FX drag that would have led to that topline?

Yes, not to drag the call a long time with a lot of numbers, obviously I have currency by segment and country. But currency reduced the revenues in European food by about $65 million in the quarter. So if you were looking to add back currency to get to a comparable number, it is 65 in Euro food.

Yes. But specifically answering the question, no, it was currency. There's nothing else.

Okay. Just one other quick follow-up, just with the profit guidance of 850 for next year, that includes the $120 million increase in pension expense?

Yes.

Okay. Great. Thanks, guys.

George Staphos, Bank of America.

Alan, thanks for all the help over the last 20 years, and Tim, congratulations. I know you're glad to get off the conference calls, Alan.

A quick question first off. In terms of European beverage EBIT growth, when I looked at it, it looked like it was down a little bit. Is that purely currency? And since you gave us the Europe food currency, could you give us the Euro bev currency?

Yes, again, it is all currency, and if you add back $40 million of currency, the revenues are up about 8% in the quarter on a comparable basis.

In Euro bev?

In Euro bev. And if you wanted to add back of the $16 million segment income impact from currency, 6 of it was in Euro bev and 7 was in Euro food if you want numbers.

Second question for John. Do you think -- for all of you, do you think we're seeing finally after many, many years of hoping for this that the consumer trading down is, in fact, migrating back to can food? I mean we have seen from some of our research, there's a lot more traffic in the center of the store these days. You are starting to see some of the numbers, but do you think it is one point is not a trend, or are your customers now quite hopeful about the pickup in growth continuing into '09 and 2010?

Yes, we do think it is a trend. I mean we have been seeing it over the course of the year, and by and large, our customers, and it was true 2007, 2008, now going into 2009, our food customers have had some of their best years ever, and they have had price power, and they have been able to reasonably readily pass through the cost increases that they have been realizing. And so demand has been clearly over the past year improving, and we think it is going to carry on into 2009.

A quick sidebar, but necessary. We should assume that you have been able to pass through whatever tinplate inflation you're going to see for 2009 in your selling prices. Would that be fair?

Yes, you should.

Great. In terms of you mentioned return growth in 2009, what would you have us think about -- I mean we can do the math given the EBIT growth and free cash flow guidance -- but would you care to throw out a target on that front?

I'm not sure I understand the question, George. Return growth?

You look forward to it in your press release increasing return on investment. So --

Yes. I mean listen, I think our return on invested capital this year was about 12.5%, and we're looking to improve upon that again in 2009.

Tim, what did you say it was?

12.3%.

Okay. How much of that receivable do you think you will be able to generate cash from in the first quarter, realizing that the first quarter is not a cash generative quarter for you?

Well, George, we think it is all going to be collected in the first quarter. As we said and as Tim said and Alan said, it is just a timing difference. We had a very strong December. So we will collect it all by the end of the first quarter.

How much do you think it is, though?

Well, George, why don't we -- we gave you guidance, and I will just give it to you this way. We gave you guidance of 800 to 820. So if you took the midpoint there, that is 810. We came in with 826. That is $16 million additional segment income, and you know our business very well and you know that Q4 is a smaller quarter. So to generate $16 million of extra segment income in one of our smaller quarters in a currency environment that is going the opposite direction, you can generate -- we would need to generate probably close to $200 million additional in revenues to come to a number like that. So it is a very large number.

All right. Thanks for leading me to water. I guess the last thing is, as we look out to 2010, are there any contracts that come up for renewal for you in any of your businesses of import that could help to further improve your return on investment? Thanks, guys. I will turn it over after that.

Well, as to 2010, it is a long way away. I meant we don't have any major contracts that we are concerned about, and we are pretty diversified now in terms of our business mix. So we are not one of those who has put too many eggs in one basket and faces contract terminations with great trepidation. That is really not our situation.

So if anything, we always think there is an opportunity for price improvement in all of our businesses and consequently segment income improvement. Whether we can improve in the same way in 2010 as we have over the past couple of years, I'm not sure, but I did not see why not. But right now we're focused on 2009.

Mark Wilde, Deutsche Bank.

Just to go out on a high note here, I wondered if you guys could give us just a little bit of color on what might be in your '09 assumptions in terms of FX and then maybe remind us to what extent you do any FX hedging?

Well, when we give you the guidance we gave you at 850 segment income is based on a Euro at 130, and importantly, it is based on a Pound Sterling at 140. And I think we based the Canadian at $0.80. So those are three big currencies that we operate outside the United States and obviously all of them -- where we sit right now and our forecasts now are lower than they were on an average basis for '08.

Okay. And hedging?

Well, listen, as we have described to you before, we have a fair amount of debt placed in Euros and in Sterling, and you can see the impact of that when you look at how much interest expense was down in the quarter relative to last year. So we do not do any explicit hedging of the income statement. All of our costs are in local currency with the exception of aluminum, which is a dollar-based commodity, and we will hedge aluminum. But we're not hedging the income statement or the balance sheet.

And just to clarify, we hedge the currency. We don't do any financial hedging as to aluminum.

Okay. And then finally, John, is it possible to give us just a little bit of color on any kind of changes you might have seen in the last month or two in kind of demand trends as you look around the world? There has been some talk that maybe Latin America is starting to slow down. I do not know whether you are seeing anything there.

Well, we talked about food, so food demand was strong pretty much every place in the quarter. Beverage demand for us was also very strong. Virtually every place -- the only place where demand was slowing and continued to slow for us was Western Europe, specifically Spain, France, Benelux. But that was not a surprise. It was just a continuation of a trend.

January was pretty strong as well for us in beverage. So we are anticipating and the numbers that Tim gave with regard to guidance for 2009 anticipate much lower growth in '09 than we experienced in '08, but we have not seen it yet in beverage. So then we think food is going to be up somewhat. So we are still pretty seeing positive trends, and as we have always said, we think we have got a substantial -- we know we have a substantial portion of our business in growing markets, but our forecast is that growth will slow, but it is going to slow from what we're seeing so far.

Peter Ruschmeier, Barclays Capital.

Congratulations on the quarter. A couple of questions. I was curious if you could comment on any expected demand elasticity in food can related to the price increases, how you think about that from a historical context given some pretty aggressive price increases?

Yes, you know we have not gone back, although I know our sales organization does when they talk to our customers and take a look at inflation adjusted real pricing over the past 10 years. But I'm reasonably sure that over the past 10 years food can on the shelf prices in Europe and North America have declined in real terms. So the possibility of a $0.01 or $0.02 a can increase for a can of corn and baked beans or such, we think will have absolutely no impact at all on demand.

Okay. Very good. And just to clarify, I know you expect to maintain your unit profits with the higher tinplate costs and with the higher prices recovering that. But you also expect no timing differences. Is that correct in terms of implementation?

No, we don't. We are out with price increases. They are effective January 1, and we have had a high degree of success in every place in the world. So we don't anticipate any problems.

Okay. Great. Maybe a question for Tim on your net debt. Is it possible to help us with the breakdown, the latest breakdown of your net debt by currency given how much the offshore levels have declined?

Yes, I think including that, we do have two hedges in place where we hedged dollars to Euros. So including the hedges of the 2.7 net debt, I don't have it in front of me. So off the top of my head, I'm guessing it is about EUR1.1 billion, EUR1.2 billion.

Okay. I'm sorry, you have some in pounds as well?

A very small mount. Less then 100 million.

Okay. And then coming back, also just big picture, maybe for John. I'm curious if you are concerned at all about any of your customers, how you think about managing risk in the current credit environment. If so, are you doing anything different to manage your exposure relationships with some of your customers?

No, we're not doing anything different. We think as we look across our customers, all of them are in relatively good shape. Now we stay very close to some of the customers who are having some difficulties. But as we look at our customers, the underlying demand for all of their products and the demand for the role that each of them plays in their industry we think is quite strong. We are paying close attention to this issue of aluminum hedging, for example, but we have always been prudent in the procedures that we apply, and so we make allowances for demand alterations, if you will, and we're not getting caught out with that subject. So we are pretty confident.

Okay. Thank you. Last question if I could and I will turn it over. Tim, could you help us out, you mentioned the pension expense items. Could you help us out with the plan asset performance and mix, some of your discount rate assumptions on the benefit obligations that you are using?

Yes, I think the discount rate we are using at the end of -- you know, we have plans in different jurisdictions, so I will just give you the discount rate that I can remember for the US -- largely unchanged from the end of last year in the US. I think we are using 6.7% at the end of '08. Our asset return rate is 8.75, and plan performance -- again, I will tell you in total -- we have -- we began the year with about $4.9 billion in global pension assets, and I think globally our pension assets were down a little bit less than $500 million. So in a market, a global market where you saw the S&P and the Dow off 35% to 45%, on average our plans were off just around 10%, which goes to the fact that our assets are certainly invested a little bit more cautiously than just in equities.

Excellent. Very helpful. Thanks, guys.

Richard Skidmore, Goldman Sachs.

Just a couple of clarifying questions about the guidance, Tim, if you will. Just on the free cash flow of $400 million, does that assume you get back approximately that $100 million of the A/R swing?

Yes.

And so what is the difference between your free cash flow guidance in '08 of I think it was 350-ish to what would be excluding that A/R of 300 for 2009, what might be the big swing?

Well, I think the big swings are obviously working capital. We are, as you know, global tinplate prices are up anywhere from 30% to 50%. So that translates into on a unit basis higher costs when you put the price inflation in whether it sits in receivables or inventory, and we will certainly do our best to minimize that. But, as we said, we did not say 400 million, we said at least 400 million.

And then maybe just to clarify the guidance of 850, I think a previous question was, did it include the pension? I think you also mentioned $50 million of foreign exchange. If that would suggest that excluding those items, you would be at something like $970 million?

Yes, I think excluding those numbers, we would probably be a bit over right around $1 billion I think or or a little bit over $1 billion, yes.

I guess the core of the question would be, what would drive that sort of 20% year-over-year improvement in segment operating income? Could you just maybe help us -- help me understand what the big buckets are there.

Yes. Well, we think beverage volumes are going to be up mid single digits. We think food volumes -- food markets are going to be up 1% to 2%, and we're going to improve operating performance year on year as we have the last number of years. Our factories are going to run much more efficiently as we always demand of them, and we are -- we have no major projects underway, restructuring projects, etc. that would disrupt operations. That is always a factor. People always tend to underestimate what is going to happen as a consequence of that, and we have been successful in pricing. So really we had I think from an operating perspective, one of the highest quality years in 2008 in the Company's history. I mean every single business was up. As Tim told you, put back currency and it's almost astounding, frankly, even to us. And so we look into '09 and we have got tremendous momentum, and we think it is going to carry on.

And so yes, as Tim said, absent pension expense, absent currency, it would be another blockbuster year. Unfortunately on a reported basis, it is only somewhat better. If we get lucky on the currencies, lucky on the pension performance, okay, it will not help us in '09, but it certainly will in 2010.

Joseph Naya, UBS.

I just wanted to go back to the pricing issue that was brought up a little bit earlier. I realize you do not have any big contracts to point to, but do you have any sort of -- I guess can you give us any kind of feel as to what you might expect to see in pricing going through '09 and into 2010? It sounds like lots of singles, no big single items, but just curious if you have any more color there?

Not really. 9 is done, and as I said earlier, we do not have any excessive exposure to any single customer anyplace, and so we don't see any big issues in 2010 either.

We are not in that category of somebody who has got 30% to 80% of their business with a single customer, and thank god, we're not. And we used to be, and we experienced the joys of that, and we're not going back there.

Okay. Then just going back to the tinplate issue, I was just wondering if you could give us any sort of color or feel for kind of where the price increase ended up shaking out there?

You mean our increases or (multiple speakers)

Yes.

Well, we have announced increases that are quite substantial. Tim could maybe give you a little color, although we are, frankly, a little reluctant to talk about it, and our customers don't particularly like us to talk about it.

Yes, I think what we would say -- (multiple speakers). Joe, what we would say is that we are realizing the price increases that we put into the market that were necessary to recover higher tinplate. As John said, we are reluctant to talk about those elements of our business.

Okay. In terms of I guess your cost on tinplate, is it correct to assume that they are kind of in line with what we have heard from some other folks out there?

Yes.

Andrew Feinman, Iridian.

Tim, I just hope you realize that at the beginning of the call when Alan said that we will grow EBITDA and reduce debt for some years, he was giving you your marching orders?

Well, I --

I assume sound from his seat on the board, he will be there (multiple speakers) keeping an eye on you.

I will be watching.

Yes, exactly. Thanks for reminding me.

No problem. I wish you the best, Alan. Pension expense, when you said $120 million, I think you said that that is the increase year-over-year?

That is right. So we had an expense of $20 million in 2008, and the increment is $120 million. That is right.

Okay. And you would not by any chance have the balance sheet minority interest handy, would you?

Balance sheet -- no, I don't. I don't have it.

I will get it later. That is it. Thank you.

Tim Burns, Cranial Capital.

You have got to feel good?

Yes.

I had a question for you, John, in terms of investing in the overseas market. I don't know if this is stupid or not, but is the scale of your investment per country per productline the same as it is here? I mean does $1 million over there go a lot further than it does here?

Yes. The answer is yes. Equipment is obviously equipment, but everything other than equipment, installation, the buildings, everything depending on the country, of course, but by and large, the countries that we have been in, we get much more effective use of capital than we would in Western Europe, North America.

Got you. So the plants are sized to the market?

Yes, they are.

Okay. The second question I had -- so, in other words, $100 million spent overseas is a lot more than $100 million spent in Europe or the United States obviously?

That has been our experience, but others I don't think have shared that experience. But that has certainly been our experience. But we have been at this for a long time now. We have been present in merging markets, well, if you go back to bottle caps, 100 years. But certainly with beverage cans and food cans for 30 to 40 years. So we have got a pretty good idea about how we think we can stretch dollars further in emerging markets.

Got you. One follow-up here. I guess the value-added features, I mean if can growth is 1% to 2% for food, 2% to 4% for beverage cans, we did not really mention aerosol or caps, but there was a period where like in food easy open ends became very, very popular all of a sudden. And in Europe you guys have done a lot of things with shaping and decoration. You say your food companies are doing well. I don't know about personal care or household. But are they still exploring those value-added features that could add incremental growth and profitability to your business?

Yes. We have got a couple of tremendous new developments. I will mention one since you are kind of giving me an opportunity to do a little editorial here.

We have a new easy open end for food cans, and it improves dramatically access to the tab for a full pullout end. We rolled it out in Europe. It is extremely popular, and we're now doing the same in Europe. So absolutely.

We have got, as you know, we think the most robust and productive R&D activity in the industry in metal packaging. We've got the accomplishments to show for it, and we continue to focus on improving food cans.

Got you. Yes, I think that is very important. International growth and then adding value to your more mature markets.

Now I have one last question for you. You know, Tom Daschle has received a lot of money from constituencies in his retirement. I'm just wondering if Alan would be willing to sign a consulting agreement with Cranial Capital.

I'm not sure if you could afford it.

Alan, listen, I wish you the very best. It has been a long and pleasant time.

Tim, he is prepared to accept the use of a limousine and driver for the next five years (multiple speakers) if you would like, and he's going to put it on his tax return.

I just hope it is not one of those crappy Philly taxis.

Yeah, well, you are right about that.

Operator, are there anymore questions?

At this time there are no further questions.

Okay. Well, thank you very much. That concludes our call today. We want to thank all of you for listening, and we look forward to speaking with you again after the conclusion of the first quarter in April. Bye now.

Thank you. This does conclude today's call. We thank you for your participation. At this time you may disconnect your lines.