Crown Holdings Inc (CCK) 2012 Q3 法說會逐字稿

Good morning and welcome to Crown Holdings' third-quarter and full-year 2012 earnings conference call. Your lines have been placed on 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. Timothy Donahue, Executive Vice President and Chief Financial Officer. Mr. Donahue, you may begin.

Thank you, Shirley, and good morning, everyone. Welcome to Crown Holdings' third-quarter 2012 conference call. With me on the call today are John Conway, our Chairman and Chief Executive Officer; and Tom Kelly, Senior Vice President, Finance.

Before we begin, I would like to point out that on this call, as in the 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 2011, and in subsequent filings.

A reconciliation of generally accepted accounting principles to non-generally accepted accounting principle earnings can be found in our earnings release. And if you do not already have the earnings release, it is available on the Company's website at crowncork.com. You'll also find reconciliations from net income to EBITDA; credit ratio computations; and supplemental cash flow data on the Company's website.

I'll first review the quarter and update guidance for the year. John will have comments, and then we'll open the call for questions.

Diluted earnings per share were up $2.20 compared to $0.84 in last year's third quarter. On a comparable basis, diluted earnings were $1.00 per share compared to $1.01 in the third quarter of 2011. Year-to-date through nine months, comparable diluted earnings per share were $2.30 against $2.32 in 2011.

On a currency-neutral basis, net sales were essentially level to the prior year, as 5% higher global beverage can sales were offset by the pass-through of lower aluminum costs. The strengthening average US dollar relative to many US currencies -- including the Mexican peso, euro, pound sterling and Canadian dollar, among others -- had the effect of reducing net sales by $106 million in the quarter, and $243 million for the nine months.

Our review of revenue by segment will be on a currency neutral basis, and the unfavorable currency impact in the third quarter by segment was as follows -- $4 million in Americas Beverage; $1 million in North American Food; $27 million in European Beverage; $58 million in European Food; $10 million in Specialty Packaging; and $6 million in non-reportable.

The currency impact on segment income, as noted in that release, was $12 million, and by segment was $1 million in Americas Beverage; $3 million in European Beverage; $7 million in European Food; and $1 million in Specialty Packaging. Currency had a negative $0.05 per diluted share impact in the quarter, and $0.07 for the year-to-date.

Globally, beverage can volumes were up 5% in the quarter, as growth in Latin America, Europe and Asia offset a decline in North America, the result of lower-than-expected promotional activity. Across Europe, volumes in our aerosol and food can enclosures businesses were impacted by very poor weather and continuing sluggish economic conditions. Currently, we expect that these sluggish economic conditions will persist through the end of 2012.

While our annual plan anticipated much of this demand weakness across Europe, we will further adjust our production schedules over the balance of the year. In Americas Beverage, revenue decreased 2.7% compared to the prior year as the pass-through of lower aluminum costs offset overall segment volume growth of 2%.

Volume in Brazil continued to be strong, and it was up 19% over the prior-year third quarter, offsetting a 2.5% decline in North America. Promotional activity in North America has been below our expectations for much of the year, and fourth-quarter production will be adjusted to keep inventories at appropriate levels. The overall Brazilian market was up 11% in the third quarter and 5% for the nine months, with our share of the market continuing to benefit from capacity additions made in 2011. We do expect a strong start to the summer selling season in Q4, and our expectation is for overall market growth of 6% in Brazil for the full year of 2012.

Performance in North America Food continue to be strong as productivity and cost containment offset to 2.5% lower volumes. On a currency-neutral basis, sales in European Beverage were up 5% over the prior year, as the unit volume growth in Greece, Saudi Arabia, Slovakia, and Turkey all offset the pass-through of lower aluminum costs. Segment income was up $7 million in the quarter and reflects the volume growth, which offsets $3 million of unfavorable currency translation.

Sales in European Food were down 3% ex-currency in the quarter. Volumes in our largest markets -- that is the UK, France and Italy -- were down 7% in the quarter due to extreme weather patterns; that is, unseasonably cold and wet, including hail at times in the North, and very high heat and drought conditions in Italy. This week the European Union farmers' union described this year's grape harvest in the worst in half a century, owing to poor weather conditions. Our vegetable businesses in the UK and France, and tomato business in Italy, were affected by those same weather conditions.

Currency translation reduced segment income by $7 million in the quarter, with the operating shortfall the result of unfavorable volume mix. As discussed earlier, production activity in the fourth quarter will be reduced to reflect our expectations for lower demand.

Demand continued strong throughout Asia during the third quarter, with beverage can sales volumes up 12% over the prior year, with strong growth in Cambodia, China and Vietnam. Global aerosol can volume was down 2%, reflecting weak demand in Europe, where we will continue to adjust production activity.

While the Chinese economy is slowing, it is important to remind everyone that it is still growing, certainly at much higher rates than the United States and Europe. Our unit volume sales in China were up 10% in the quarter, and we expect -- continue to expect that China will provide long-term growth for Crown.

Turning to capital expansion, we currently have five major beverage can projects underway -- the installation of second production lines to both the Putian, China and Bangi, Malaysia plants; and the construction of three new beverage can plants -- Danang, Vietnam; Sihanoukville, Cambodia; and Bangkok, Thailand. The five projects, all to be completed by mid-2013, will add 3.6 billion units of annualized capacity. And this follows capacity additions of 5.1 billion in 2011 and 3.5 billion units in 2012.

On our last call in July, we noted that we had indefinitely postponed plans for new beverage can plants in Belem, Brazil and Changchun, China. We have also postponed plans to build plants new plants in Nanning and Xinxiang, China. With little committed to those postponed projects, our estimate for 2012 capital spending is now $300 million, net of $50 million in insurance proceeds. Our initial estimate for 2013 capital expenditures is approximately $225 million.

Minority interests were down significantly in the quarter, reflecting the repurchase of several joint venture interests in China, Vietnam and the Middle East throughout the fourth quarter last year. As we provided earlier in the year, we still expect full-year minority interest to be in the range of $80 million to $85 million.

Net debt at the end of September was $3.76 billion, $200 million higher than at the end of June, and reflects the accelerated share repurchase program we initiated in August. The full-year tax rate from ongoing operations is now forecast at 26%, up from last year's 25.5%, and down from our early estimates of 27%.

Through nine months, we are essentially on-plan despite poor weather in many of our markets and weaker-than-forecasted demand in Europe. As noted earlier, we will adjust our fourth-quarter production schedules to minimize excess inventories being carried into 2013, the effect of which will be lower cost absorption in the fourth quarter.

So at this time, we estimate full-year 2012 comparable earnings per diluted share to be in the range of $2.82 to $2.88; and for the fourth quarter, to be between $0.52 to and $0.58. Free cash flow is still projected to be at least $325 million.

And with that, I will turn it over to John.

Thank you, Tim, and good morning. As always, Tim did a thorough job in reviewing for you our performance in the quarter. Generally, I think we had a strong quarter, particularly given the relatively weak economies in Europe and North America, and slowing growth in China.

Our beverage businesses around the world performed very well. Growth was solid and income performance was strong. Our North American Food business performed, we think, well, everything considered, including somewhat poor weather in the upper Midwest.

Our European Food businesses clearly did not have a good quarter. Tim outlined for you the truly terrible weather conditions in our three biggest food can markets. In each of these markets -- the United Kingdom, France and Italy -- we have large, low-cost, high-capacity plants which were adversely affected by volume declines because of the weather.

Our aerosols businesses generally experienced weak demand, particularly so in Europe, and for branded products. This is simply a reflection of the economy, as aerosol cans are a relatively high-cost way to dispense products; and aerosols sales suffer in recessionary economies.

Asia once again had a strong performance, and continues to do exceptionally well for the Company. Tim summarized for you our decision regarding capacity postponements in China. We have indefinitely postponed these projects, and we will only bring them back if and when market conditions warrant. In the meantime, we have obtained business permits and secured land use rights so that we will be in a good position to proceed quickly, if necessary.

Clearly, the weaker-than-forecast demand, particularly in our food and aerosol businesses, has carried on into the fourth quarter. We believe food will bounce back next year. And aerosols should be flat to up, depending on economic growth in Europe and North America.

Asian beverage continues to do exceptionally well. China slowed, but overall the region is growing strongly. So taken together, the Company had a strong quarter, with exceptions that Tim and I both noted. We feel very confident about our decision to significantly reduce production in the fourth quarter to ensure that we are not running product into warehouses, and then adversely affecting next year's performance.

We will generate free cash this year -- significant free cash this year, and even more next year. We remain determined to use available cash for continued significant share buybacks. And Tim outlined for you our CapEx plans for new this year and next, which we think reflect a prudent and rapid response to changing conditions.

We have said all along that we are prepared to be flexible and that we are very fortunate, because the manner and method by which we expend capital enables us to quickly revise our plans, move equipment as required, and minimize expenditure.

And with that, Operator, I think we're ready for questions.

(Operator Instructions). Alton Stump, Longbow Research.

Yes, thank you. Good morning. It's obviously early yet, as you look out to next year, but you did offer CapEx guidance. Any goal or -- is there any range from an actual free cash flow standpoint as to what you think you could do next year?

Yes, I think what we have been telling ourselves internally, and what we have said, is that the goal for 2013 would be at least $500 million. But currently, we have not completed the budgeting process for next year. So that is just a goal at this point. But there are a number of items, as you know, one being CapEx -- lower capital expenditures, lower pension contributions -- that will certainly help us get there; as well as with the cancellation or the postponement of some of the Chinese projects, we'll have lower startup costs and generally higher productivity in the plants and second lines that we've installed over the last couple of years.

So I think that is a goal. We are somewhat confident in that goal right now, but we're not yet complete with the budgeting process.

Okay, thank you. And then for a quick follow-up, if I could ask you to look even further ahead for a moment; with that $225 million CapEx number for next year, is that sustainable into following years? Or is there any certain range that you think it could stay below as you look into 2014 and beyond?

We look went back, and we took a look at this, and we looked at capital expenditures for the years 2005 through 2009. So for that five-year period we averaged about $180 million per year. And there was some spending in the emerging markets.

Now, over the last three years -- 2010, 2011 and 2012 -- we've spent considerably more than that, all of which -- the increase was due to emerging market capacity expansion. And you can see the number coming down next year.

Not only is the number sustainable in 2014 and beyond, absent any new major projects, it could be that the number could come back down towards that historical 2005 to 2009 average.

Okay, great. Thank you, Tim.

You're welcome.

Mark Wilde, Deutsche Bank.

Good morning. John, any thoughts over in Europe in food and aerosol? Any further restructuring moves, rationalization moves over there?

Mark, there are always things that we're looking at. And, I think as we've spoken about in the past, we tend to line up what we think are very good restructuring projects. Be sure we're absolutely confident of them, and then move in a deliberate way. But we don't rush.

And I think we accomplished a lot of really good things with the food/aerosol restructuring in North America. We're doing the same with the food/aerosol restructuring that we had underway in Europe -- more aerosol than food, but it affects food as well.

So there are some things that we may do. And we have some very specific ideas about things, but not anything overly major. Our biggest issue in Europe at the moment is simply -- has been, an extremely soft demand. When Tim described a 7% unit volume decline in our three biggest markets, that's no small thing. Those are very, very important markets for us. We've invested a lot of capital in those markets over the past decade --very low-cost plants; big plants; well-positioned, tend to be very close to the customers. All the food cans, for examples, easy-o ends, many of them printed. So there are a lot of margin dollars in those sales.

So the big story for us with Europe, for me with Europe, is exceedingly soft demand. We don't anticipate, obviously, next year, that we are going to have a repeat of the weather patterns. I think that's a reasonable assumption. I think in July we spoke with you about the food can business. We thought we saw signs that it was coming back in mid-July. But in fact, what happened -- northern Europe, that very cold, wet weather carried right on into mid-August. And then, lo and behold, we had this miserable drought, principally in Italy, but also in southern France.

Tim talked about grapes. The tomato crop in Italy in the south was 40% to 50% of what it was last year. The tomato crop in the north was 20% to 30% off, versus last year. That came as a big surprise -- well, not really a big surprise. If you're in the food can business, you're going to have years like this. It's just the nature of the business. So we think there's going to be a bounce back there. We could do some restructuring in food. It's not going be huge, but we have our eye on some things.

Okay. And then if I could, just as a follow-on, on China. I noticed last week that Alcoa really ratcheted down their current-year assumptions for the bev can market over in China. What is your view of the trend growth over there, over the next three or four years? And where would you have been 6 to 12 months ago?

Well, if you recall, 12 months ago we were saying that very optimistic forecasts, and were slightly over 20%. We were saying, at the time, 18%, and that was our working assumption. And that's what we were using for our models, comparing capacity additions to demand. And we were truing that up with customers' filling plans and filling lines ordered, and beverage plants and brewers and so on and so on.

We lowered about mid-year to 13%, I think we've said, in July. We thought the market had come down. Our view, now, is the year will finish -- beverage can growth throughout China at 10%. Looking ahead, Mark, I just don't know. I would think 10% would be kind of on the low side compared to the last two or three years.

But growth has slowed. And, therefore, we've decided, obviously, to reduce our capacity additions. It just seemed to us that overall capacity in China was running ahead of the new, revised downward demand trend.

So, frankly, it's hard for me to say at this point. It could be a little bit below 10%. I think it's going to be high-single-digits in any event. One of the things that happened this year that was adverse, that we had not expected but we've talked about, some of these Asian drinks going from three-piece steel cans to two-piece aluminum. And that slowed more than we had thought because of some legal issues with one of the major companies over there, over their trademarks and so on. That's going to get straightened out.

I think the growth is still going to be good, on a global comparison basis, but clearly not 18%.

Okay. All right, that's helpful. And finally, John, any thoughts on repurchase versus dividend? You've highlighted continuing to focus on repurchase, but any thoughts on potentially putting in a dividend?

Well, we continue to look at it. And we discuss it at every Board meeting. And we constantly weigh dividend, share buyback, both. We're certainly, though, going to wait certainly to the end of this year. We'd like to have a lot better feel about what's going to happen with dividend taxes than we now do.

But I have to say, we really do like the flexibility associated with ramping up share buybacks, and yet having the flexibility to grow if we need to. We're looking at it; but we don't have any new news to report on it.

Okay, very good. Good luck in the fourth quarter.

Thank you.

Al Kabili, Credit Suisse.

Hi, good morning. Thanks, guys. On Europe, food -- could you help us? I know you talked about -- it's down 7% for volumes for your largest markets. But overall, could you just help us with what the volumes were down in Europe?

Overall, we were roughly flat; so down 7% in the big markets, as John mentioned. And as John mentioned, very large, low-cost plants where we get the benefits of volume as they run through the plants; and I'll let John go from there.

Yes, Al, you need to keep in mind, we have a large food can business, relatively large food can business, not nearly as large as Italy, Spain and Germany; but we have a fairly large food can business in Poland, Eastern Europe, Slovakia, Hungary; and then Iberian Peninsula; Morocco. And then we're in sub-Saharan Africa -- Ivory Coast, Ghana, South Africa, Madagascar. A lot of those cans tend to be smaller cans. A lot of the cans are fish cans.

Although Tim said units were essentially flat, mix was extremely poor. That's the story. Fish did okay in a lot of these countries, but it could not offset the margin falloff as a consequence of the three big European countries.

I see. All right. With the decline in earnings year-over-year on flat volumes, is this all just mix? I know the volumes in the big markets were down 7%, but your overall volumes were still flat. Is this earnings decline, then, all currency and then mix related to the volume declines in your large markets?

I also know there is some pricing pressure going on here and there. So I'm just wondering if you can help us split that out a bit.

Tim will try to split it out, or maybe (multiple speakers) talk about splitting it out in a moment. But let me just, generally -- with a 7% price decline, particularly the way the -- the nature of the European market, a lot of food processors; there's a lot, in a fairly -- it's somewhat consolidated. You've got three big guys have got something like 75% of the market here, but you've got a lot of small guys.

You can't have a 7% decline in Europe of the type that we described without some price pressure. It simply happened. When that starts to happen, you have some competitors that decide they want to do something about seasonal pricing. They want to try to claw something back. The customers sense that there's an opportunity. So, you're absolutely right. We had currency, no question. The falloff in volume was severe, but we also had some pricing that resulted from it.

And, Tim, you might want to quantify that a little bit.

Well, as I said, the currency was $7 million, which I think we said in the prepared remarks. As it relates to volume and price, I don't have a bridge in front of me. But I would say of the remaining $16 million -- I'm guessing here. I'm putting numbers together in my head as I'm looking at a piece of paper. I'd say of the remaining $16 million, it's probably two-thirds weighted to mix; and one-third, price.

Okay. Okay, that's very helpful. And I know some of this started at the beginning of the year, but is this incremental, that you saw; beginning in the third quarter? Or was this nothing new, from what you saw at the beginning of the year?

No, we had seen a little in the first part of the year, but it was incremental.

Okay.

It was incremental.

All right. So what is your expectation for next year, assuming -- with the food packs still being kind of sluggish the fourth quarter, what's the opportunity for next year? Assuming all stays the same here, it does seem like that could be a little bit of a headwind next year, as well.

Al, it's too soon to say. I mean, you're right, it could be. We think the volumes are going to come back. And, obviously, we have tended to be, and we are, the price leader in food cans in Europe. So we plan to restore the margins, and do what we've done in the past with regard to price. But it's really too soon to say.

The whole raw material situation is uncertain. You're reading about the steel industry, and we are. We don't know what the steel people are going to do. We got all the specialty inks and chemicals; energy, to the extent that we can control it, that is to say, it's not regulated; trucking, freight, and so on. So it's just -- it's too soon to say.

But what we do feel good about it the volume returning. And, obviously, we're going to have to work now on cost/price. There was a question a little earlier about -- might there be a restructuring opportunity or two? There might be, which would help us. So we're looking at all of that. But it's too soon. We can't speculate yet.

Okay, got it. And then just two quickies -- any comments on the BPA noise coming out of France, if you see any near-term impact from that? And then, free cash flow; your free cash flow, maintaining it assumes a pretty good, sizable benefit from working capital in the fourth quarter.

Yes. As to BPA, we feel confident that we're going to be able to keep up with all of our customers' requirements, French or otherwise, on wishing to have BPA -- non-BPA-intent inside coatings. So we feel good about that. We're taking steps in a couple of places; we needed to make some hardware equipment changes to accommodate new lacquers, and we're doing that. We'll have it all done in a timely fashion.

We think that we're going to be ready for the customers as they change to non-BPA-intent products.

And Tim might want to talk about the other. The cash?

Yes, free cash.

Working capital in the fourth-quarter. Well, I think it does require a large effort in the fourth quarter, although it's a smaller effort than we had in last year's fourth quarter.

Okay. I'll turn it over. Thanks again. Good luck.

Thank you.

Chip Dillon, Vertical Research Partners.

Yes, good morning. When you look at the European segment -- and maybe I'm reading too much into this -- looking at the minority, or the noncontrolling interest. But could you break down for us the volume trends, both in Europe itself and in the Middle East?

In beverage?

In beverage can, yes.

Well, we don't look at our business segmented by Europe and the Middle East. But, by country --

And, by the way, one of the reasons is, we're now moving cans all over the region. So we have a cans going from Greece and Turkey into the Middle Eastern region. We have cans from the Middle East coming up into the Mediterranean. So were getting pretty intermixed -- up into the Balkans. So that's part of our issue, and so it's a little hard. But, go ahead, Tim.

Yes, so we've got a variety of countries, not only in the Middle East, but in Europe. And we had very strong performances -- Slovakia, Turkey, Greece. If I had to guess, what you would call Europe or Western Europe, I might say was up 6%, 7%.

And if I look at the real strong performances we had in Tunisia and Saudi -- what you would call the Middle East or the Gulf states -- perhaps I'd say that was up around 3%.

Well, I think, characterizing European division, I think what's well to remember is we have not added any capacity in the Middle East in quite some time. We're basically running full, last year and this. So a lot of improvement, frankly, is the capacity we've added in Eastern Europe and in Turkey. Our Eastern European plant has run exceptionally well; it's made a great contribution. The other plants in Europe, they've improved their performance. And the new Turkish plants come on very, very strongly.

The European -- if you will, not Middle East -- performance was very strong in the quarter.

But, Chip, I think you are probably trying to get to why minority was down so much in that quarter. And, as I said in the prepared remarks, it has to do with the number of repurchases we made in the fourth quarter of last year, whereby we bought out the remaining local shareholder interests in Beijing, Shanghai. We increased our holdings in Vietnam. We increased our holdings throughout the Middle East. And, in fact, we own 100% of Dubai now; so there were a number of activities we underwent last year that -- where we just don't have as much minority interest any longer as we used to have.

And you see that more pronounced in the third quarter, because it is not a large quarter for Brazil. One of the big markets where we still have a big minority interest position is Brazil. So you will have a larger minority interest expense in Qs 1 and 4, and lower in Q2 and Q3 coming out of Brazil.

Exactly. Got you on that. And then, as you think about -- you had mentioned you are really doing well in Europe, at least in terms of utilization. Given that you have -- I don't want to say taking a breather, but you are slowing down the pace a little bit so that -- and you are used to, now, sprinting and doing a great job at it, in terms of adding plants. Would it make sense to -- maybe because you're not doing quite as much in China, to maybe look at doing something more in Eastern Europe to help, as that market grows in the Middle East and Europe?

Well, we look at it all the time. And the great thing about the European beverage can market is it's been growing year on year on year, notwithstanding recessions. The growth moves around a little bit. There's still an awful lot of beer and returnable glass in Europe. And so it's a good opportunity, not just for us, but for the entire beverage can industry.

So we are looking at it all the time. But we do not see anything imminent. We have -- we're just running what we have more effectively; better; perhaps small capacity additions to existing plants we think should suffice to handle volume requirements, our volume requirements, over the next number of years. So we don't have any -- but we're looking at it all the time.

And then -- that's great. And then a last one, quickly. I know it's very preliminary, and I first want to just thank you for being candid about the direction that you see free cash flow, with the lower CapEx next year and how it's going. And so not to nail you down, but let's just say, in the context of -- if it is at or above $500 million or in that range -- what do you think minority interest would be in a year like 2013, given all the changes you mentioned earlier, plus the expansions? Could it be, for example, about $100 million? Would that be a good guess?

No, I think we are -- this year we are between $80 million and $85 million; $85 million to $90 million next year.

That's very helpful. Thank you.

You're welcome.

Philip Ng, Jefferies.

Morning, guys. I know acquisitions in the past really haven't been a priority for you guys, just because you had so many growth opportunities in the emerging markets. Now that those opportunities are not as readily available, have your priorities shifted a little bit?

Well, we have looked regularly at acquisitions over the past several years. We've been in position where we can be quite demanding in the standards we're setting, because we had so many new emerging market capacity growth opportunities. As you know, we're in the process of acquiring a food general line business, a metal business headquartered in Singapore, but it has activity throughout Asia.

We hope to have that completed by the end of the year. So, yes, you are right, Phil, we're looking more systematically at acquisitions than we have. We think there is a great, still, consolidation opportunity in Europe in metal packaging. We're looking very actively at that. We continue to be interested in other metal packaging opportunities in Asia, where we think there are going to be more opportunities for consolidation there, as well. So, yes, I think it's fair to say we're a little more focused on it than we have been.

The opportunities you're talking about in metal packaging in Asia, would that be more on the food can side? Or would it still be in bev can?

It's always on bev can. And I think you're aware that, at least in Southeast Asia, we've done a pretty good job of picking up some plants from self manufacturers or some independents that haven't done very well. We continue to look at that, and we think there are more opportunities there.

In China, we know there's going to be a consolidation opportunity in time. But as we've talked about in the past, you can't buy until you've got a seller, a willing seller. So we need to wait a little while. But it is true, we'd like to expand the portfolio. And that's why we're acquiring this company in Singapore. And we think there is some food, general line, aerosol opportunities in Asia. But we're going to be careful. We think the way to go, with regard to that, is probably acquisition.

Okay, that's helpful. And when I'm looking at your margins in general, America's bev was up nicely; Europe as well, on the bev can side; as well as nonreportable. How much of that is just better productivity? Or was that a function of some of these startup costs rolling off to a certain degree, and as your new plants just running on more optimal levels now?

It's both. The plants are running better. New plants and new lines are coming up the learning curve; and, as we get unit volume growth, just better overhead absorption. And, frankly, most of our plants, the more demand you put on them, the better they run, even at the variable cost side. So it's all of those things.

And how should I be thinking about China now, since you are throttling back on some of these projects? First thought is, startup costs are going to be a little bit lighter. So that's a positive on the margins side, but at the same time I would imagine you would have to shift bev can potentially from a further distance. Would that be a drag, or how should I be thinking about that?

No, I don't think you should, because if you think of where we are -- and you can, in your mind, think about the map of China. We tend to be along the eastern coast and into -- with the exception of Beijing -- but we're on the eastern coast and into China as far as Hangzhou, really. So we're in the, typically, in the provinces that have higher per-capita incomes, a lot of population density. What we were attempting to do was get a little bit bigger in the area around Beijing, north and south of --

Okay.

-- like Changchun and Xinxiang. And then Changchun, really, was for those three northern provinces that are pretty far out. Nanning is pretty far to the southwest. So those are areas where we don't -- we have not participated; it's too much freight, anyway. And so, no, we're not going to be incurring more freight costs. We're just going to be running the capacity we've installed more effectively in the markets. Because these are regional markets in our view, so you ought to just think there are a couple of regional markets where we won't be participating, because other people have been shipping into those markets and it just doesn't make sense, given the amount of capacity that's been installed.

That's helpful. Just thinking about China as a regional market, it's a big country, obviously. But you, as well as a lot of your multinational competitors, have done a pretty good job throttling back on growth in China, just to be disciplined. But it seems like a lot of the larger regional can makers are still adding quite a bit of capacity. And based on my understanding, some of them are actually looking to raise more capital right now for growth. So, one, is that a fair assessment? And two, what's the big disconnect there?

I would generally say that the companies that are interested in adding capacity at this point are pretty much confined to state-owned companies, either fully owned or largely, wholly owned. And to the extent that there might be some privately-owned companies talking about the expanding and talking about needing capital to do that, I've got a feeling that today they wouldn't be able to say that with very much of a straight face. These may be older plants that are stale now.

Okay. All right, thanks, guys.

George Staphos, Bank of America Merrill Lynch.

Hi, guys. Good morning. I guess I had one housekeeping question first. Did you provide a single beverage can unit volume figure for Europe? You told us what the revenue growth was, ex-currency. You gave us some color by region. But what was the average for the whole segment for that (multiple speakers)?

We said it in the prepared remarks. I think we said 5%, George.

Did you? Okay, I apologize, I missed that, then.

(multiple speakers) what it is.

You mean the entire (multiple speakers)

I'm sorry, 6% for Europe. Tom's reminding me.

Thank you very much, Tom. The second question I had, if we look at the volume -- or, excuse me, the capacity that is going to come online between now and middle of 2013, the 3.6 billion units, what do you think you'll actually produce from that capacity in 2013? And how would you, if you were in our seats, try to estimate what the incremental margin from that new capacity and production would be?

Well, I think of the 3.6 billion units going in next year -- and it all goes in and Qs 1 through early Q3 -- I would say that the reasonable expectation, as we come up learning curve, would be that we probably produce about half of that annualized number next year.

But keep in mind, we put 3.5 billion units into production this year. So we're going to produce the spread over the learning curve, versus the annualized number next year. So I would say in total, think about next year being an additional 3.5 billion.

Make sense. Appreciate that. If we look back, maybe a little bit bigger picture, going back to 2009, 2010. While the Company's performance has been relatively good, John, returns have actually dropped several hundred basis points. Now, the Company has been -- going through a major capacity expansion, for what you believe are the right reasons.

What do you -- when you have looked at the data. and as your plans have evolved, what do you think the biggest driver of the reduction returns has been, in aggregate, for the Company? Has it been that some of the growth markets haven't grown necessarily, as much as you'd like? Or has it been -- maybe there's been a little bit more price erosion in certain markets? Or would you say it's not associated with any of those things; and if so, what would they be?

I think, George, largely, it has been additions to the capital base, and then the time it takes to get a plant to a highly productive state. We have a classic learning curve, as others do, about, for example, two-piece beverage can plants. And you'll start in the first month of the production at about 20%, 25% of capacity, or even less than that. And it will take you about a year and a half to get to a plant which we like to see, where efficiencies are 90% or better and spoilage is 3% or lower.

That takes, frankly, a highly skilled workforce. The equipment is capable; but, frankly, the people are not capable. So it takes a while to get to the state of production efficiencies that you see in mature plants in North America; Brazil, for that matter, and so on. I think that, more than anything. But Tim would -- I don't know. Tim? We're all looking at each other; but we say, yes, that to me would be it.

Which is to say, as we run all of the physical plant much more effectively and fuller. And then don't forget something else that we've talked about. We have a lot of one-line can plants spread throughout Asia. And we're going to have less now, as we're adding second lines. And that has a tremendous positive impact on return on invested capital. And we've talked about that before.

For us, a one-line beverage can plant in China, for example, is $50 million to $55 million. Add the second line for $20 million to $25 million; add the third line for $20 million to $25 million, and you can see the results.

Right. That sets it up, then, in terms of my ultimate question. As we look out to the next couple of years, capital spending is declining. Do you anticipate free cash flow should be increasing? I know you haven't tied this number down 100%, but roughly about $0.5 billion next year. And your plants are coming up the learning curve and you're not ramping as quickly as perhaps in past years, in terms of new capacity.

So would you, as you sit here today, feel that it is quite probable that you'll get back to your peak returns on capital, as we saw several years ago? Would there be a reason why you wouldn't?

I can't think of a reason why we wouldn't. I think, yes, I agree. It's quite probable.

Okay. Thanks, John. Last one, and I'll turn it over. The promotional environment in North America for beverage can has been the question that we and everyone else has asked -- a number of times about, over the last several years. Is there in any sign of hope from the end market and your customer base, about perhaps seeing more promotion, maybe more creative marketing around CSDs in particular, that might in fact drive growth into 2013 or 2014? Thanks, guys.

Yes. We know our customers are very, very concerned about the volume characteristics of some of their businesses. We have all been reading, and when we talk to them, they say the same thing -- they're addressing the issue in various ways. So, yes, I think there's hope. And I think it's, to me, the distribution business is so heavily dependent on volume to be cost effective; and, frankly, at the end of the day, profit effective, I think.

I think there's a lot of reason to believe that things are going to turn around here. But I have to say, as you were pointing out, it has been very disappointing this year.

Okay. Thank you very much.

Thank you, George.

Ghansham Panjabi, Robert W. Baird.

Hey, guys. Good morning. John, back to your comment on European Food and the restructuring comments that you alluded to. European Food volumes have been relatively mixed for the last few years now. So I guess the question is, why not something more expansive now? And what are your estimates in terms of what the ultimate volume profile looks like for this business and for the industry as a whole?

When you say expansive, you mean more expansive restructurings?

Yes.

Well, George, we look -- I tend to have too long a memory, I suppose -- but I look at test this over, say, 10 or 15 years. We've done a lot of restructuring with the European Food businesses. And we've taken a lot of cost out, and -- so that's been done.

There are some more things that we can do. We know what they are; a couple of them are very promising. On the other hand, I look at restructuring to a degree. It's a cost reduction, but it's an investment in the business. And so we want to make investments in the business via restructuring; do it in a measured way; do it where we're sure we're going to get as quickly as possible a good return. Your point is well taken. Your point is well taken, Ghansham, that maybe we do a little more but we're not there yet.

Okay. And so the $65 million of cash restructuring that I think you called out earlier this year for 2012, is that a number of that is part of a multiyear restructuring plan that we should expect on a go-forward basis? Should it be lower in 2013? How should we think about that?

It will be lower in 2013.

Yes. There is a little carryover into 2013 from that number, just because of the nature of how long it takes to rid it yourself of liabilities associated with reducing headcount in Europe.

Okay. And then, switching to China, some of the soft drink guys reported this week; very, very differing views on what's actually happening on the CSD side in China. Can you give us your thoughts on -- maybe by end market. I know you touched on capacity in the market as a whole, but just in terms of the end market specifically -- beer versus soft drinks, versus teas, et cetera.

I think the still drinks -- Asian drinks, juices, teas, herbal drinks, and so forth -- the still drinks are still doing very well, in terms of growth. Beer is still doing quite well in terms of growth. Carbonated soft drink has been -- from a beverage can standpoint -- has obviously been the worst. And you saw that some of the soft drink guys had overall disappointing quarters in the third quarter.

That's compounded a little bit for the can industry, because they have tended to push their growth in PET containers. The can is the premium container; they price it way up on a per-ounce basis versus PET. For us, the soft drink industry has been very light. But it hasn't been a central part of our plans. We've always had our focus on still drinks, Asian drinks, beers, as the source of growth. So that's pretty positive for us.

And just one final one on Brazil, if I could. 3Q, obviously very, very nice quarter in terms of volumes. But as you pointed out, seasonally slower as well. As we go into 4Q and 1Q, any reason for optimism there, in terms of maintaining that run rate? Or is it too early to tell?

Now, for Asia?

Brazil.

Brazil, I'm sorry.

Ghansham, I think we do believe we're going to have a really good summer season, Q4, Q1, in Brazil. Keep in mind, the volume percentage increase that we've had this year in each quarter, Qs 1, 2 and 3 versus 2011, somewhat relates to the fact that we put a lot of capacity -- we doubled our capacity in Brazil in 2011 versus what it was previously.

Now, some of that will start to annualize, but we do expect to perform at least as well, if not a little bit better, than the market growth over the next several quarters; given that where we put capacity in the north and the south, that those markets are growing faster than the Rio, Sao Paulo area.

Yes, Ghansham, as you know, our people in Brazil have been pretty steadfast in their view that the overall beverage can market this year in Brazil will grow about 7%. We were quite dubious, as you know, earlier in the year. But in fact, the third quarter was quite strong. And it looks like the fourth quarter is going to be very good as well.

As Tim said, it can carry on into the next quarter. The other thing that is of some significance, as you know, the Brazilian economy grew at well under 2% -- 1.6%, 1.7%, something like that, this year, it would appear. And there seems to be a pretty strong consensus -- among economists and people who think they're expert in the area-- that they should return to something like 4% GDP growth next year. So, generally speaking, the Brazilian market looks real good to us still.

Okay. Great, thanks so much.

Alex Ovshey, Goldman Sachs.

Thank you. Good morning. Can you give us an update on the current restructuring plan that you're doing in Europe? What's the targeted cost save there? And are you going to see any of it in the fourth quarter? And then, how do you see that layering in through 2013?

The program that we outlined at the end of 2011, and that we've executed this year, is complete. That is the very large aerosol food can plant in Belgium and a food can plant in southern France, among a couple other small activities, is now complete.

We are obviously making savings. Hard for you to see those savings, given the volume weakness that we've described on the call. But we are confident that we are saving, not only this year; we'll save a little bit more in Q4, and obviously much more next year.

I think we targeted total savings of around $30 million. And most of that savings is labor. As John said, with the people gone, we know we have the savings. But we do need -- in having taken out the cost, we do need volume.

I understand. Thanks, Tim. In the nonreportable segment, would you be open to break up the change in the profitability for Asia beverage versus aerosol?

Well, I can tell you that I know that segment income in Asia in the quarter was up about 12.5% over last year. Just looking at it, the entire shortfall -- more than the entire shortfall, obviously, was in North America; and, specifically, in European aerosols where we were probably down about one-third to 40% segment income, this year versus last year.

Okay, got it. And last question, any initial read on how to think about pensions for next year?

I think on the contribution side, this year we're going to have about $110 million. Next year we'll have about $90 million. I think it's too early to talk about the expense side. Although, as most investors, we've had a very good year this year. Although 10-year rates are down, we'll have to wait. As you know, we're mark-to-market -- we don't smooth. We'll wait till the end of the year. But right now, it doesn't look like it would be any different on the expense side than this year.

Great. Thanks very much, Tim, I appreciate it.

You're welcome.

Phil Gresh, JPMC.

Good morning. Just wanted to follow up on the guidance for the fourth quarter and the revision for the year. You basically revised down at the midpoint for the year by $0.10. And if I look at the quarter, you actually were at the midpoint of your guidance. Maybe some of that was non-fundamental, tax-related, et cetera. So should I read into that that the underproduction in the fourth quarter is somewhere around, close to the full $0.10 number? Or how would you break that out?

Well, I think the -- I wouldn't call it underproduction. I would call it the appropriate production levels to mirror what we believe is the demand in Q4, such that we don't carry more than we need to carry in the next year. It would be a combination of lower cost absorption; and, obviously, if you're not selling the product, you're not making the profit dollars or the margin dollars in the sales -- but a combination of both of those.

Okay.

I think, Phil, if you think about our European business, the specialty business for us, as I think you know, it's a combination of what we would call promotional metal packaging -- liquor, cookies, candy, all the rest of that. That's doing quite well.

We've got a portion which is residential decorative -- paints, principally; furniture lacquers, et cetera. That's doing very poorly. And we've got a portion which is industrial chemicals -- paint for industrial uses, but all various types of industrial chemicals for industrial uses. That's doing very poorly.

You flip over into aerosols, as we said earlier, we've got two issues in aerosols -- overall aerosol demand is down in Europe. Not unusual in a recession. It's a wonderful package, it dispenses tremendously, people love it; but it's relatively expensive. And we've seen this over the years. Every time you go into recession, your aerosol can sales get hit.

Our situation is a little bit even worse, because we're very strong with big brands. And the big brands are being hit even worse because of the private-label. So there is that. And then we talked about food. If you want to call it our old-fashioned, traditional steel and metal packaging businesses are going to be soft in the fourth quarter in Europe.

Okay. And then one follow-up on Al's question around the pricing in European Food. You talked about the fact that it was incremental impact in the third quarter. In terms of how that works with the customers that you contacted the lower pricing with, is that something we need to think about as -- it carries over for the next four quarters, similar to what happened in European Beverage last year? Or is that something that could be -- if you do see some better volumes in the early part of next year, because some of this was seasonal, that you would be able to get that back?

Yes, no, we think we can get it back, Phil. And the European Food can -- food fillers are far -- there are hundreds and hundreds and hundreds of them; nothing like the North American market. And the market is in Spain, Italy, France, et cetera; the UK; they are all somewhat different. It's not a consolidated industry, generally speaking.

A lot of the business with the smaller guys is done on a quarterly basis, a monthly basis. And so pricing that erodes, if you will, in a quarter with this whole customer segment -- and there are a lot of them -- doesn't endure. It changes almost on a quarterly basis. Just a fact of life in Europe; we're aware of it. Our plan is to get the prices back to where they need to be in relation to cost. And that's what we hope to do.

Okay, great. Thanks, that's helpful.

Scott Gaffner, Barclays.

Morning. Just looking back at North America, obviously you've had -- your customers have had some issues, mostly around the carbonated soft drinks. If I look at your mix, I think you're about 80% nonalcoholic versus 20% versus the market, which is close to one-third or two-thirds. Has there been any discussions about trying to re-weight your portfolio so you are more exposed to alcoholic beverages versus nonalcoholic?

I wouldn't say that we're 80%/20%. I would say that we are probably somewhere between 30% and 33% alcoholic.

Yes, but over to your other point -- yes, beer has been steadier than soft drinks, obviously. Although the carbonated soft drink guys are doing an awful lot to try to offset the carbonated side full, with still beverages of various types. And they're doing a pretty good job -- energy drinks, juices and so forth.

We look at it all the time. We think there are opportunities. We've done a lot of work with craft brewers, and we've had a lot of success there. And so we constantly work on it.

Okay. Switching over to North America Food. You mentioned it earlier, around steel prices seem to have been relatively volatile lately. Do you have any sort of an early read on tinplate prices moving as we move to the end of the year?

No, we don't. We are obviously talking with our suppliers about what needs to be done for next year, but it's way too soon to say.

On the food pack, is there a reason why you don't make up any of that in the fourth quarter? And then, just as a follow-on to that, have you seen any shift in market share, as some fruit packagers out West shift some of their production facilities around?

Yes, no, we don't see any reason to where -- on the fresh produce side, the fresh crops, it's not coming back. It's not going to be filled, we don't think, for us in the fourth quarter. We are very, very light. We're on the West Coast, so we don't have much insight into the California market, for example -- tomatoes and light fruit.

Okay. Thanks for the color.

Adam Josephson, KeyBank.

Thanks. Good morning, everyone. One question -- what accounts for the step change upwards in your margins in the North America Food over the past couple of years? And do you consider these margins sustainable?

I think the answer is simply that we have run on, an annual basis, our factories far, far, far better than we have in the past. That's the first thing. Just a progression of improvement and excellence of operations. That's the first thing. The next thing is the major restructuring that we did in Canada and North America approximately 3 years ago, 4 years ago. We began -- it took us about two years --

We began it in 2008.

It took us about two years to accomplish. It was quite complicated. It involved food; it involved metal vacuum closures; it involved a aerosols. And all the things associated with it, of course. It was a big undertaking; quite complex. Our guys did a wonderful job with it.

And when you do that, of course, then you've got to improve productivity post the reorganization, which takes you some time. So that's really all it's been. We've got a great low-cost cost base. We run the plants exceptionally well. We're very, very attentive. And then, of course, you're always doing things -- particularly with steel packaging and metal packaging, aluminum packaging -- to make the packaged more sustainable; which as, we all know, to a large degree, means take things out. Take things out but still produce an outstanding container. So we've been able to do that as well.

Great. Thanks for that, John. Related to George's question earlier, he was asking on the cash flow side. I'm wondering on the earnings side, how much of an earnings benefit do you think is reasonable to expect next year and in 2014, given the lower project startup costs and the benefits from having these new plants running full out?

Well, over a two-year period, we think there's going to be a benefit. We're looking at it now, too. But we are kind of into the budget process. And we'll know more when we get back to you and talk about the fourth quarter.

And lastly, on China, how much of the slowdown there is related to consumption growing more slowly, versus a lower mix shift in the two-piece cans than you were experiencing a few quarters ago?

I really couldn't proportionalize it for you. It's both things. It's both things -- the economy is going; it's slowing a little bit; consumers have clearly become more careful. The brewers have slowed a little bit on the rate of transition from glass to cans. We talked about the Asian drink move from three-piece welded to two-piece aluminum. And all of those things have contributed to the slowdown. But I couldn't divide it up among them all. Big country. Big -- as you know -- and a lot of brewers, a lot of soft drinks. This is like a big opportunity but a complex one, so I really couldn't do that; or can't do that.

Got it. Thanks a lot, John. Appreciate it.

Chris Manuel, Wells Fargo.

Good morning, gentlemen. Just a couple quick follow-ups here. First, if I could ask a few questions around the nonreportable segment -- you gave some color there that a few of the businesses were struggling a good bit. If we could just go a little deeper there. Your revenue was up mid-single-digits, ex-currency, but yet profit was down.

It sounded like the Asia bev piece did well. The other elements in there, I think you've got aerosol; I think you've got -- there are metal vacuum closures in there as well. Could you give us --

No, no, no. Hold on, Chris. Metal vacuum closures is in North American Food and European Food. That is a food can enclosures business.

We can help you out here, Chris, just very quickly. It's the Asian operations; you're right. It's the aerosol businesses on both sides of the Atlantic. And it's our equipment business, Shipley.

Equipment business.

Shipley was about flat. Asia was up, as Tim mentioned. And aerosol was down.

Aerosol was down.

Okay, so the whole differential was aerosol. I know you did, as you mentioned earlier, some restructuring there a few years back. Could you maybe give us a sense of what volumes were like in the aerosol business -- and it's steel.

Hang on. We've got the number.

And also, then, a sense of -- is there anything structural that might necessitate further change in those units?

No, I'll answer that now. No. We restructured the North American business. We're satisfied with that. It was part of the big restructuring that I talked about a moment ago. We're in great shape. The European restructuring that we have basically underway -- but it's largely finished from a physical plant standpoint, but not from some of the employee issues. In Europe, is -- we don't have anything planned beyond that.

So the cost structure, the cost base is right. The capacity is lined up properly, we think, with the markets; so that isn't an issue.

Tim has got the volume numbers for the quarter.

Yes, so in America's aerosol, we were actually up almost 5% in the quarter. European aerosol was down about 10%.

And yet, I think you indicated profits in those units were off between one-third and 40%? Is that right?

In Europe it was way, way down. You've got to remember, a lot of our customers -- first of all, most of the cans there are printed. And in addition, we've got the big -- we've got a number of the big, branded, high-margin customers, who are very demanding from a quality of service standpoint, and so on, and so on, and so on, and their volumes were down dramatically.

Okay. So there is some mix. So it's beyond volume. It's mix as well. And would it be safe to assume there is some pricing impact as well?

Not a lot of pricing. It's really mix volume.

Okay.

10% is a big number, Chris.

Okay. And then the last question I had was -- you had executed the most of the ASR thus far. Is there still any further repurchase you would anticipate this year? Or then, as we look to 2013, and we think about phasing, knowing that you're not going to be investing as much. CapEx will be down. Would there be any reason you wouldn't potentially, if you want to execute a repurchase, get after it maybe earlier next year as opposed to later?

We're looking at it, Chris.

Yes, the current ASR may run through the end of November; it may terminate earlier. But that gives us some time before the end of the year to do a little more this year. And as John said, we will continue to look at it, what point in the year we want to step into the market.

Okay. Just, last thought is -- tinplate, 2013 -- any early indications as to what you might anticipate?

No. We are in early discussions. You can imagine, we have our ideas; but our suppliers have theirs. But it's really too soon.

Okay. Thank you. Good luck.

Thank you.

Anthony Pettinari, Citi.

Good morning. Just a couple very quick follow-ups. You referenced the weak promotional spending environment in North America. And I'm wondering to what extent that's impacting specialty demand versus the commodity 12-ounce sizes? As you do planning into 2013, are you anticipating, or are you expecting any kind of deceleration of specialty can demand?

Yes, it impacts specialty less, of course. Because a lot of the specialty is focused on -- in the case of CSD -- on carbonated, on diets; but it's also energy drinks, craft beers, and so forth. So I think specialty is less -- frankly, is less affected; some effect, but far less. To me, anyway, the biggest effect of the promotional is on the traditional, sweet, carbonated soft drink.

Okay. So you're not anticipating any real deceleration of demand for specialty?

No, no. In fact, specialty looks like it's going to continue to be strong.

Great. And then just one final question. Your fruit can business, obviously, in Europe, cost some margin compression; but also in the US as well. Just generally, is that margin compression that you saw in the US, is that largely the result of a weaker seasonal pack around Midwestern droughts?

Yes.

That explains pretty much all of it, in your view?

Yes, yes. North America is exactly what you said -- fewer units running through the factories; consequently costs a little bit higher, and income a little bit less.

Okay. Great. Thank you.

Tim Burns, Cranial Capital.

Good afternoon, everybody. Or good morning, sorry. We've talked a lot about new, high-tech beverage can capacity. And one question I had is, in terms of your manufacturing kit -- and I assume this would be mainly an issue for bev can -- is there a certain number of years that it is competitive? And if so, do you have a cycle of these can lines coming due? In glass, obviously, every 9 to 13 years the furnace falls through. How is that with some of the metal bending equipment?

Well, Tim, we've talked about this over the years. First of all, we have, we think, an excellent, excellent maintenance overhaul program -- where parts are replaced, motors are replaced, equipment gets periodically rebuilt. So you could go into a factory -- just thinking of one right now -- our Brazilian factory in the middle of the country, Cabreuva, in the state of Sao Paulo, which we built in about 1995.

Okay, so it's what, 16 years old? And if I took you there, you would think you were in an absolutely brand-new factory that had been completed the week before. And we could go back further than that. It's a wonderful thing about the can industry -- if you maintain your equipment, if you know what you're doing, if you do regular maintenance, and you stay on top of things. And then there are going to be some things -- ovens and things of that sort, that are going to need to be replaced, but over long periods of time, then you do it. So it's a wonderful business. And it's one of the principal reasons the cash flow can be so strong.

Got it, yes. So the maintenance; the partial rebuilds; the addition of new equipment up and down the line periodically -- that's in your numbers, as far as CapEx goes?

No, it's in our numbers as far as cost of sales go.

We are scrupulous. We expense maintenance, and we put CapEx where CapEx is. And we're not sure the industry does that across the board. You ought to pay attention to it. So, no, no; it's in the cost of sales.

I will do that. And last question I had is, you guys are on either a half-marathon or a marathon in terms of this growth surge. And it's very impressive. Every time I talk to people, I talk about the really stone-cold focus you have. We've got three big players now. Almost all of them are monolithic metal people. What happens when the Malaysias, the Tunisias, grow and mature? How do you see Crown positioning itself, longer-term?

Yes. Well, you know -- you know this, Tim, better than I. When you look at the per capita incomes and then onto consumption numbers -- per capita consumption numbers in the emerging markets; and let's talk -- let's say, East -- Eastern Europe, the Middle East, for example. South America, but Brazil in particular for us. China, Southeast Asia.

They are still miniscule compared to North America and Western Europe. And all of those people, particularly in Asia, have an aspiration to have a standard of living equivalent to ours. I can remember 25 years ago, I had a man visit me from Singapore. He worked for the Singapore government. And he wanted to know if we were happy with our investment in Singapore. So I said, I'm very happy. What do you do? And he was talking about it. So we started talking about Singapore and what his aspirations were. He said Singapore's aspiration was to move to a standard of living equivalent to Switzerland. They had set their -- they were going to be equal to Switzerland. Well, guess what? They're now at a standard of living equivalent to Switzerland. It took them about 25 years; remarkable growth. And that's true right through Asia. And you know this, I'm just telling you something you know.

Honestly, I can't see Crown, anytime soon, getting to the point where we've got to worry about what are we going to do now, that the emerging markets are mature. It's going to take a long, long time for that to happen. It's going to be great -- it's great news for Crown. It's going to mean we are going to be far, far bigger in the emerging markets than we are today.

And strategically, it's why we have been so focused on the emerging markets; why we have devoted so much capital and effort; why we've built up what we think are first-rate management teams and group employees throughout these regions. It's critically important to us, and it's going to continue to be.

Thanks, John, it's great reinforcement to what I had hoped to hear. Thanks.

You're welcome.

Thank you. And at this time, I'll turn the call back over to the speakers.

Okay. Thank you very much, Shirley. That will conclude the call today. Please note that the Company's year-end 2012 earnings call will be scheduled for Thursday, January 31, at 9 o'clock Eastern Time, in the morning. We want to thank all of you for listening, and look forward to speaking with you again after the New Year. 'Bye now.

Thank you. That does conclude today's conference. We thank you for your participation. At this time, you may disconnect your line.