John Hayes - Chairman of the Board, President, Chief Executive Officer Scott Morrison - Chief Financial Officer, Senior Vice President.

Ghansham Panjabi - Baird Mark Wilde - BMO Capital Markets Scott Gaffner - Barclays Anthony Pettinari - Citi Tyler Langton - JPMorgan Adam Josephson - KeyBanc George Staphos - Bank of America Merrill Lynch Philip Ng - Jefferies Danny Moran - Macquarie Chip Dillon - Vertical Research Partners Rit Liu - Rogge Global Daniel Sherry - Loews Corporation Chris Manuel - Wells Fargo.

Ladies and gentlemen, thank you for standing by. Welcome to the Ball Corporation Fourth Quarter Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct the question-and-answer session.

[Operator Instructions] As a reminder, this conference is being recorded, Thursday, January 28, 2016. I would now like to turn the conference over to John Hayes, CEO. Please go ahead, sir..

Great. Thank you, Tia, and good morning, everyone. This is Ball Corporation's conference call regarding the Company's fourth quarter full year 2015 results. The information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied.

Some factors that could cause results or outcomes to differ are in the Company's latest 10-K and in other company SEC filings, as well as Company news releases. Now, if you do not already have our earnings release, it is available on our website at ball.com. Information regarding the use of non-GAAP financial measures may also be found on our website.

With regard to Ball's proposed offer for Rexam and consistent with the requirements of the U.K. Takeover Code, we will limit our comments regarding the transaction to, number one, what has already been made public via the 2.7 release. Number two, where we are in the regulatory process.

Number three, an update on ongoing economic hedging and debt activities related to the proposed transaction.

Also note that there may be limitations regarding the depth of our business commentary as well as our future outlook, and certain other items we would normally discuss on an earnings conference call, due to the nature of the proposed transaction and restrictions under the U.K. Takeover Code.

Given the nature of our proposed offer, today's issued press release, webcast and conference call are advertisements and should not be considered a prospectus.

Investors should not make any investment decision in relation to the new Ball shares issued in connection with the Rexam transaction except on the basis of information in the prospectus and the scheme documents which are proposed to be published in due course.

This presentation and transcription of comments are not for release in whole or in part in, into or from any jurisdiction, where to do so would constitute a violation of the relevant laws of such jurisdiction. For more information on Ball's proposed acquisition of Rexam, please visit the Offer for Rexam page on ball.com.

Now, joining me on the call today is Scott Morrison, Senior Vice President and our Chief Financial Officer. I will provide a brief overview of our Company's performance, Scott will discuss financial and global packaging metrics, and then I will finish up with comments on our aerospace business and the outlook for 2016.

Our fourth quarter volumes, free cash flow and results from operations were in line with our expectations.

The headwinds we acknowledged throughout 2015 and around earnings translation, project startup costs and tough volume comps in our North American food continued, while others like aluminum premium became a tailwind and a lower effective tax rate aided the quarter.

Overall, however, we are pleased with the performance of our businesses and Scott will go into more detail on the quarter and full year in just a moment.

Since we spoke last October, we have made notable progress to strategically and operationally position Ball for the future, including, successfully beginning the production of beverage can ends in our existing Lublin, Poland facility, which is also slated for additional end modules in 2016.

The successful startup of our Monterrey, Mexico beverage can and end facility, which is serving multiple foreign brewers importing their product into the U.S. The successful startup of a new aluminum impact extruded line in Devizes, U.K.

as well as our recently announced aluminum impact extruded aerosol expansion in Velim, Czech Republic, which is expected to come online in early 2017.

The successful startup of our new aluminum impact extruded aerosol facility in India, various investments to further the growth of our specialty can and new product portfolio, including our new contour bottle line in Conroe, Texas and our new tin plate aerosol technology in Chestnut Hill, Tennessee, and the continued construction of our new beverage can plant in Myanmar now slated to open in April 2016.

We also completed the acquisition of the remaining interest in our Brazilian joint venture and received conditional regulatory approvals for our proposed offer for Rexam from the European Commission and Brazilian CADE. Discussions are ongoing with the FTC.

We have weathered a very busy 2015, in terms of managing the headwinds, investing in our future and making progress with our Rexam acquisition. Everyone at our Company has been extremely busy and I want to thank everyone at Ball who has persevered and risen to the challenge. Thanks.

With that, I will turn it over to Scott for a review of our fourth quarter numbers..

Thanks, John. Ball's comparable diluted earnings per share for fourth quarter 2015 were $0.80 versus last year's $0.84. For the full year 2015 comparable diluted earnings per share were $3.48 versus $3.88 in 2014.

Fourth quarter and full year comparable diluted earnings per share were unfavorably impacted by a net $0.04 and $0.49, respectively, related to foreign currency effects, startup costs and other one-time items.

As John alluded to, the following factors contributed to results in the fourth quarter, $0.06 of unfavorable currency translation effects largely due to a weaker euro, $0.02 of startup costs associated with capital projects and an aluminum premium tailwind of $0.04.

[ph] free cash flow came in at $558 million after $528 million of CapEx and excluding roughly $80 million of cash costs associated with the Rexam transaction.

Our GAAP results for the fourth quarter and full-year 2015 were unfavorably impacted by the economic hedges we put in place to reduce currency exchange rate exposure associated with the British pound-denominated cash portion of the announced acquisition price for Rexam and to mitigate exposure to interest-rate changes associated with anticipated debt issuances also in connection with the cash portion of the proposed transaction.

These economic hedges allow us to lock in transactions purchase price economics, though they will likely continue to cause disruption to quarterly GAAP earnings. Details on these economic hedges are provided in Note 2 of today's earnings release.

Credit quality and liquidity of the Company remains very solid with comparable EBIT to interest coverage at 5.6 times and net debt to comparable EBITDA at 2.5 times, including the non-current restricted cash sitting in escrow from the December U.S. and euro bond placements.

The Company has enough committed credit and available liquidity at year end to consummate the proposed Rexam transaction and provide ongoing liquidity for the Company.

For a complete summary of fourth quarter and full year 2015 results on a GAAP and non-GAAP basis and details regarding the fourth quarter and full year, please refer to the notes section of today's earnings release, which includes a simplified table format summarizing business consolidation activities. Now moving to operations.

Our metal beverage Americas and Asia segment comparable operating earnings for fourth quarter and full year 2015 were down slightly year-over-year, mainly due to unfavorable pricing in China, slightly lower performance in Brazil and project start-up costs in North America.

Segment volumes in the quarter were up approximately 5% and just up over 1% for the full year 2015. Our Monterrey, Mexico can plant just began producing cans and ends earlier this month. Our second can line will come up mid-year in China.

While volumes remain relatively healthy, the overall pricing environment remains extremely challenging and our aggressive cost out programs have not been able to keep up with the price erosion and we expect to be down in profitability again in 2016 in this region.

European beverage comparable earnings were up nicely in the quarter, due to aluminum premium tailwinds of €6 million as well as improved plant utilization for the full year. Comparable earnings were down approximately $20 million to unfavorable foreign earnings translation. On a constant currency basis, they were up year-over-year.

Low single-digit volume growth and low double-digit specialty can growth continue to reflect the ongoing value-added benefits of the can with European consumers. Food and household comparable segment earnings were down in the quarter as segment volumes declined following the customer shift in U.S. food cans as well as manufacturing inefficiencies.

Excluding the customer shift, our food can volumes were down slightly in the fourth quarter due to the earlier conclusion of the pack late in the third quarter, but up for the full year.

For the fourth quarter and full year, the segment was also impacted by unfavorable earnings translation related to the European portion of the extruded aluminum aerosol business and start-up costs related to numerous capital projects across the segment.

Our next-generation lightweight steel aerosol can manufacturing technology is now commercially available on shelves and further growth in our global extruded aluminum businesses, as well as significantly better operating performance in our tinplate businesses will provide good opportunity to improve segment performance in 2016.

In summary, our global packaging businesses are extremely focused on driving EVA dollars from our new capital projects. To employees listening in on today's call, thank you for all the great work during what has been one of the busiest times in our Company's 136-year history.

Now, as we look to 2016 reflecting Ball as a standalone Company today, here is a snapshot of some key financial metrics.

We expect free cash flow to be in a similar range as 2015, excluding cash costs related to the Rexam transaction, with CapEx expected to be in the range of $400 million and working capital expected to be generally flat year-over-year. Interest expense is expected to be roughly $145 million, excluding debt refinancing and other costs.

The full year effective tax rate on comparable earnings is expected to be in the range of 25%. Corporate undistributed is expected to be in the range of $75 million, a year-over-year reduction of $17 million.

Also, recall that due to the acquisition of our JV's partner's interest in Brazil, our outstanding shares at the beginning of this year are higher by 5.7 million shares and we will no longer have any effects from this business in our non-controlling interest line on the income statement.

We expect our dividend to remain unchanged from its current level during the proposed acquisition process. In 2016, we expect all of our segments to be up on a full year basis with the exception of China beverage can business.

While we expect the first quarter to be relatively soft, due to the re-pricing of our contracts in China, challenging comps in our food and household products business and the closeout of startup expenses on our various capital projects, momentum will accelerate as we move through the year. One final heads-up before I turn it over to John.

As we look to the successful closing of the Rexam transaction, we currently plan to incorporate into our future comments a focus on cash earnings per share, due to the large amount of intangible amortization we expect to record for the Rexam transaction. With that, I will turn it back to you, John..

Thanks, Scott. Our aerospace business reported a solid quarter given the difficult comps they were up against. Contracted backlog held steady ending the quarter at $617 million. More exciting, however, is what is in front of us.

Over the past few months, our aerospace business has won a variety of classified and non-classified programs that are worth over $800 million that have not yet been booked into our backlog as the contracts need to be signed and in several cases the funding needs to be approved by the U.S. government.

In addition, we still have a number of additional proposals submitted for award that collectively measure in the billions. A terrific job done by our folks and we continue to be amazed by the creativity, agility and patients that they have shown.

The near-term goals for the aerospace team are to finish strong on existing programs and ramp successfully on the new work throughout the second half of 2016.

Now turning to the future, we continue to make progress on our proposed offer for Rexam and we look forward to reaping the benefits of growth capital deployed in 2015 through improved performance as well as the higher EVA dollar generation that these important investments will provide.

While our biggest challenge is to weather the unsustainable pricing environment in our China beverage can business, overall, we feel good about where we are. Our objectives are consistent with last year.

Successfully execute our capital projects, generate strong free cash flow, grow our specialty businesses, focus on cost optimization and manufacturing performance and cross the finish line on the proposed offer for Rexam. Together, we are working hard to improve Ball in 2016 and beyond, and we look forward to a successful year ahead.

With that, Tia, we are ready for questions..

[Operator Instructions] First question is from the line of Ghansham Panjabi from Baird. Please proceed..

Hey, guys. Good morning..

Good morning..

Good morning..

Since you last reported, one of your competitors announced that they are adding their first new metal beverage can plant in the U.S. since 1993.

How do you view this announcement for the industry first off and does this impact your strategy in any way as it relates to how optimized your production footprint is between standard and specialty cans in the U.S.?.

Obviously, we are aware of that, Ghansham, and I cannot comment of the thought process around that. I can tell you that specialty cans continue to grow strongly and that they are probably just trying to keep up with their own demand. I can tell you from our perspective that our system is in good shape.

We continue to grow specialty containers off a relatively high base already and we are trying to manage the 12-ounce capacity, and what I mean by that is, for example, in the last quarter or so we have actually converted a line from 12 ounce into specialty containers and we have been just following that strategy we have been embarking on for a number of years now..

Okay.

Just I guess my second question related to Rexam, understanding the sensitivity around that, but just given the specific divestiture concessions for both, Europe and Brazil that you have announced, how should we think about the buckets of synergies that you outlined at the outset of the deal? I think you had previously outlined 44% G&A, 22% freight, et cetera.

Should we expect a different weighting going forward based on what you know now?.

This is Scott. I would not change the buckets too much. You know, all that stuff will move around once you get to closing we will be able to give you a lot more clarity about that, but for right now we are not updating what those changes might be..

Yes. Ghansham, this is John. As I mentioned in my prepared remarks, due to U.K. Takeover Code and some of the rules and restrictions around it, we are just not in a position to comment any further than we have..

Okay. Thanks so much, guys..

Yes..

The next question is from the line of Mark Wilde with BMO Capital Markets. Please proceed..

Good morning, John. Good morning, Scott..

Good morning..

Good morning..

John, I wondered, can you provide just any kind of update on the process with the regulators in the U.S.?.

Nothing other than saying that we are in discussions and that we have said in our earnings release we expect to close the transaction in the first half. Most likely it is probably going to be in the second quarter of 2016. That is what we expect as we sit here today..

Okay.

All right, just as a follow on, is it possible to get any color on bev can volumes and mix over in Europe in the fourth quarter and what you are expecting in '16?.

Yes. Well, I am happy to go through that. Remember, fourth quarter is a seasonally slow quarter, so I will start with that. I think overall the market in the fourth quarter was down slightly and we were down a little bit more. Most of our decline had to do with actually exports. I think on a Continental Europe basis, we are right in line with the market.

Some of the exports that we had in Africa as well as in the Middle East which are a little bit slower, but, again, I do not read into that much at all, because it was the fourth quarter which is always seasonally slow.

I will point out and we have talked about this in the past that 2016 is an even numbered year and typically even numbered years, there are many events including the World Cup, including various soccer matches that usually show a little bit better than the odd years, so we are coming off an odd year where the overall market as well as Ball was up about 2%, so kind of in line with what our expectations.

Depending on weather and depending on some other things, I think 2016 we see the same trends continue in Europe with growth in the beverage can at the expense of returnable glass and other substrates. .

Okay.

Can I get you to make kind of some of the same comments just around Latin America? I think with all the difficult economic conditions down in Brazil, but at the same time we have got the Olympics coming up down there, any thoughts about that in the entire region in '16?.

Yes. You know, it is interesting. As you all know, the first half of 2015, we were cycling off some very difficult comps from the World Cup in '14. What we saw, it was relatively soft in the first half. Then second half in Brazil picked up nicely. In the fourth quarter, I know the overall market was up 6%; we were up a bit more than that.

I think a lot of the trends that we have talked about in the past continue, meaning, that the can continues to take share from other substrates in the beer category. I think specialty growth is occurring at a faster rate than standard containers. We are almost at, not quite, but almost at a 50-50 mix between standard and specialty down in Brazil.

As we go into 2016, yes, there is a lot of political uncertainty and economic uncertainty, but the facts have not shown that the beverage can has been hurting.

People are still eating, people are still drinking, and I think while the Olympics in Rio is a help, people have to remember it is only just the Rio region, but that is a very densely populated area, so I think it should be beneficial.

As we sit here today, we are not expecting large growth in Brazil, but the can is holding up very well relative to other substrates and relative to other industries..

Okay. That is great. I will turn it over..

The next question is from the line of Scott Gaffner with Barclays. Please proceed..

Thanks. Good morning..

Good morning..

Good morning..

Just wanted to go back to the guidance for a minute, I think you talked about - if I heard correctly, flattish free cash flow or similar range free cash flow 2016 versus 2015? Was this….

That is correct. .

…but you also said all the segments ex-China you are expected to see some improvement, so is it predominantly FX or some pension headwinds or what is causing that the variance between those two?.

Well, both of those statements are correct. I mean, if you think about '15, it was a year of a lot of headwinds. We expect most of those headwinds to dissipate as we go into '16.

Currency will have less of an impact, we will have less start-up costs, we will have a little bit in the first quarter, but then that should dissipate and some of the one-time things we experienced in '15, we do not expect to experience again in '16, so….

I think the only other thing from a cash flow perspective is we kind of pointed out that we expect working capital will be relatively flat, so it is not a net inflow of cash, but we are going to have a lower CapEx as well..

Yes..

…and we will probably have some pension funding and other things year-over-year that maybe helps address the bridge you are trying to create..

Okay.

How much is pension funding 2016 versus 2015?.

Yes. '15 we had a little less than $20 million globally of pension funding. In '16, we expect that number to be closer to $50 million of funding and expense will be down about $7 million year-over-year..

Okay. When I look at the North American metal, food and household business, I mean the margins have been up fairly nicely this year from an EBIT perspective.

I assume that part of that was because you got rid of some lower margin business with the customer transition, but is there a possibility for more margin improvement within metal, food and household as we move into 2016, just as you do not have to take a lot of that capacity out of the system in 2016 and you have got plants and end making facilities in the right locations at this point in time?.

Yes. Let me kind of give a little different perspective, because I think about absolute EBIT in that business. You know, the loss of the announced customer contract obviously hurt, and Scott mentioned continued manufacturing inefficiencies and a little bit of start-up hurt as well.

As we go into 2016, we continue to look at rightsizing our fixed costs and we are going to be accelerating those efforts in 2016, because while our margins were up, you are correct, the overall profitability was not where we hoped or expected, so we have a lot of programs in place to drive those earnings back to where we think should be normalized..

Okay. Thanks..

Yes..

The next question is from Anthony Pettinari with Citi. Please proceed..

Good morning. In Americas and Asia bev, I think you indicated segment volumes were up 5%. I am wondering is it possible to parse that out between U.S., Latin America and Asia. Then just on Monterey, if you could give us a little more color? It sounds like the first-line is fully contracted out and running.

I am just wondering can you confirm the second-line is contracted out as well..

Let me hit that first. Yes. We can, and it is going to be up and running, as we said, kind of a little bit later on this year, kind of three months to five months after the startup of the first-line, so call it late second quarter, early third quarter is a good way to think about it.

Getting back to your volume question, in North America, we were actually up a little bit in the fourth quarter. Some of it driven by continued directly back filling some of the Monterey, Mexico volume that you had just referred to as well as continued decent growth on the beer side of the category.

In Brazil, we were up nicely in the fourth quarter and even in Asia, even though we put no new capital in there, our folks have been able to squeeze out a fair amount of new capacity with our existing asset base and we were up about 10% or so in China as well. Overall, it was good volume growth in that segment..

Okay. That is helpful. Then just following up on Scott's questions on food and household, I guess segment earnings were down $45 million roughly from 2014 to 2015.

Given the new capital projects you put in place, is it possible to frame how much of that you may be able to make up in 2016? I mean, is it half of it or most of it or could you even potentially exceed 2014 earnings levels in a really good year or just how should we think about kind of the earnings recovery potential in food and household in '16?.

This is John. Why do not I take it? I think, as we said earlier 2015, there is no short-term solution to some of the issues here, but we expect it to be up meaningfully. Can we get back to the height of that profitability? Over time we expect to, yes, but it is not going to be happening in one year.

It is probably a two-year to three-year to four-year program depending on how the end markets shake out. Recall, let me give you a couple of drivers of some of that stuff. On the aerosol side of tin plate, we have the new G3 technology that is out that Scott mentioned is on the shelf right now.

Number two, in terms of overall aluminum aerosol growth, that continues to grow well.

Just to give you a sense, in 2015, we were up on a global basis in aluminum aerosol about 5%, 6%, so that is good news and we are going to continue to drive that and our business is performing there and then we have got to get these manufacturing inefficiencies in our food can business in line..

Okay. That is very helpful. I will turn it over..

Thanks..

The next question is from Tyler Langton with JPMorgan. Please proceed..

Yes. Good morning. Thanks. I think, Scott, you mentioned that performance was lower in Brazil, but I think I guess you mentioned volumes were up more than sort of for you, more than the 6% for the industry.

What exactly was driving that lower performance?.

I mean I think there was a little price pressure, but nothing material but a little bit of price pressure..

When you said lower performance, did you mean results were down year-over-year or just a little bit weaker than you would have thought?.

They were a little weaker than we expected..

Okay. Then just for Europe, I think you mentioned the premium benefit was €6 million and FX was a $20 million hit.

Could you just bridge the gap a little bit more on profits? I think you mentioned plant utilization was a benefit this quarter and if there is any other factors driving the year-over-year increase?.

Yes. A good chunk of it was the utilization, but they are also doing a very good job on the cost outside. They have been taking cost out throughout the year, so you are seeing the benefits of that as well..

Yes.

The other thing I might add is recall on the October call, we talked about we had some of our pattern freight in the third quarter, because our Oss, Netherlands facility had come on stream, but not on stream in time to really have the high summer season, so as we went to a more slower season, we were able to balance out the footprint a bit better and get rid of some of that out of pattern freight and cost..

Got it. Okay. Then just last question. I think you mentioned CapEx of $400 million this year.

Is that a fairly good number for you guys going forward sort of big investment years for CapEx?.

I think that is a good number for '16, but we will see what kind of opportunities. We have been fortunate that we have found a lot of good opportunities Monterrey, Mexico would be a good example of that.

Some of the things we are doing on the aluminum aerosol side, so we are finding good opportunities to put money to work and get the returns that we expect. Right now, as far as I can see forward in 2016, that is the number..

Got it. Okay. Thanks so much..

The next question is from Adam Josephson with KeyBanc. Please proceed..

Thanks. Good morning everyone. Scott, you talked about the first quarter being soft on account of China startup, food and household, the basket.

Can you talk about what that implies in terms of any year-over-year change in earnings?.

No. I think what I have said in my prepared comments I would stick by that. Performance is expected to be up in all the segments. China is the only one that will be softer..

Okay. One question….

Unfortunately, we are real limited as to what we can say….

Sure. .

….in terms of outlook, so I apologize for being not as transparent as we would like to be..

Totally understood, one more question you might be able to answer it, perhaps not, but in terms of the Rexam deal, what exactly where you required to update in terms of your divestiture and synergy estimates if either when you issued the press release a couple of weeks ago regarding the divestitures in Europe and Brazil? What will you would be required to update along those lines when you provide the market with information regarding the FTC outcome?.

Well, we updated in December when we sold bonds, so that is why we had to update until we get further along in the process and get definitive agreements in all these regions..

Okay. A couple of more, you talked about cash EPS.

Are you planning to report both cash EPS and adjusted EPS once the deal closes or strictly cash EPS?.

No. We will talk about both. Our focus is always on file to cash and so I just want to give people a heads up. With this transaction, there will be a fair amount of amortization.

We will talk about both, but we will, our focus is on generating cash flow and so some of the accounting loses some of the context of the cash and to me the cash is the important part. We will give you both numbers..

Thanks. Just two more, pension expense I think you mentioned would be down $7 million in '16.

Is that related to an accounting and did you make an accounting change similar to what other companies have been doing?.

Got it No. We did not. That is just some things we did last year in terms of some buyouts of buyouts of closed plants and some of the changes in the interest rate assumptions both on the discount rate and then the return on asset assumptions, so the combination of all those factors led to that $7 million decrease.

We did not change anything else fundamentally..

Got it. Just one more, in terms of the cash flow statement, you had that other line there was a $145 million benefit in '15.

Can you just explain what exactly that was, Scott? Was it expense in excess of cash contributions or what drove that?.

Most of that difference is the non-cash business consolidation cost that gets added back and the pension funding difference, I am sorry, in the other line. Yes, the pension funding difference would be the big part of it, expense versus funding. I mentioned our….

Right..

Our funding was only about $20 million, our expense last year was about $95 million..

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

Yes..

The next question is from George Staphos with Bank of America Merrill Lynch. Please proceed..

Hi, guys. Good morning. Thanks for taking my question..

Good morning, George..

Good luck with all of your processes here. I guess the first thing I had, I wanted to go back to aerospace and the significant jump that you saw in the well, not the backlog yet but totally in terms of contracts that you have won. I also recognize that you have got a lot of projects in the black that you cannot really talk about.

To the extent that you can comment, what trends are you seeing in the contracts where you have been winning and what does it mean for the future of that business?.

Well, George, I think from an, I will call, an end market perspective, a good amount of it is DOD.

I think we have talked about this in the past, but NASA has been flat to down over a number of years but I think, as we talked about last quarter, with this new budget in place, the sequestration unless it goes away, sequestration is off of the table and there is a multi-year ability to fund programs that have been can lingering to the side.

That is the vast majority of it. When you think about what we do for the DOD, it is everything from satellites to sensors, but whether it is optical or antenna type sensors. It is a whole mix of those various things. We are quite pleased and proud of our folks quite candidly, because it is not in any one place.

It is not in only satellites or only tactical gear. It is not only in cost plus, it is not only in fixed price, it is kind of a blend of everything, so I think the portfolio effects of what has been won, but not booked right now we feel good about. As I mentioned, we have a whole bunch of other stuff we are chasing down as well..

Okay.

John, I mean, I take from your comments that given it is a blend of everything, but you did not really highlight one or the other, you would prefer not to get into that but if you did not mind, do you have kind of a view that you could share with us on, again, fixed price versus cost plus or antennas versus satellites et, cetera?.

Yes. A lot of it is classified, George, so I cannot but what....

Understood..

I would tell you is from a big picture perspective you have a sense of what the percentage is of cost-plus versus fixed price. You have a sense of what is our satellite business versus our tactical business versus our services business. It really isn't that different than what has been historical..

Okay. Thank you for the color on that. Next question I had for you, in terms of CapEx for 2016 and the figure that you cited. From a real world or practical standpoint, how challenging is it right now or is it, to plan on projects, fund projects when frankly you do not know quite how your portfolio will evolve over time for obvious reasons.

Can you talk a little bit to that, again to the extent that you can comment?.

Well, yes. Let me take a first stab at it. George, you raised a fair point, but where we are putting this capital is what we think is long-term good for Ball Corporation going forward so you talk about Mexico and putting a second line in a little bit later on. You talk about end capacity in Lublin, Poland and increasing the end capacity there.

You talk about impact extruded of what we are doing, whether it has been in India historically, whether it is in the Czech Republic that we talked about. It is those types of things. I think if I understand where you are going is, pro forma any potential direction does that have any impact and all the things I just laid out do not..

That is great, John. That is where I was going with the very clever question. Next question I had for you just on food. This business has evolved, food and household, significantly, from the early 1990s. There have been good years and the bad years. Certainly, you have been cycling through some more challenging years.

I am guessing because of the growth especially you are seeing in aerosol and household the answer is going to be no to this but I guess the question I still have is, has the business gotten, at least some elements of it, to subscale where you do not know that you necessarily have quite the same competitive standing that you might have had or would you say, where, Ball Corporation is pretty much as competitive as it has always been in the food business.

If so, why would that be the case?.

No. That is just the start. But its recall that everyone of our tinplate facilities makes both, food can and aerosol and so if it was just isolated in the food can you would start to think about scale, but it is not.

We view this and we run this business as it come from manufacturing footprint perspective as a combined and we are able to leverage the manufacturing expertise because what we are talking about effectively is three-piece tin plate containers..

Okay. Last one and I will turn it over. You mentioned at least the implication is Brazil should be Brazil has been holding up better than expected. I forget what you said about the volume outlook for Brazil; I think you set up modestly or moderately for 2016.

We have read some reports where some of the Carnival celebrations had been canceled because of all of the economic challenges. My guess is, again, you have not seen much effect of that in terms of your volume outlook, but to extent you have color one way or another, we would be interested in it. Thanks..

I think I would just give you a comment. The timing on Carnival will be different. My guess is that Brazilians have started celebrate Carnival. The timing is going to be a little bit earlier, so that will make the first quarter year-over-year a little bit challenging..

Yes, I think what we are planning for and expecting is post Carnival, which happens in, what, a week-and-a-half starts; We will start to see a seasonal slowdown, because that is their autumn and it will slowdown and as it starts to get into the second quarter. I think that is what Scott is referring to..

Okay.

First quarter, you do not see that much of a challenge or you do? I guess, I was not clear on the answer there?.

No. I think let me rephrase it another way. I think it is only four weeks into the year, but I think in January we are seeing exactly what we expected.

We just know that Carnival is a bit earlier and much like when you have the Chinese New Year in China, when it is earlier or later it affects before versus after, so we did not see a huge run up prior to Carnival, but what we saw was certainly in line with what our expectations were. The question is what happens after Carnival..

Okay. We will leave it there. Thanks, John. Thanks, Scott..

Okay. Thank you, George..

The next question is from Philip Ng with Jefferies. Please proceed..

Good morning, guys.

Not sure if you started the asset sale process, but I am just curious if you are expecting much tax leakage and when do you expect to get your leverage back to your previous targets?.

Scott Morrison:.

We have pretty active plans in place as to how to minimize the tax leakage. There will be some, where we have I think pretty good plans to make it as small as we possibly can.

Then in terms of leverage, we will have to wait and see until we are done, but our initial guidance was within 18 months to 24 months, we did leverage back down to a pretty comfortable level and I do not see a big change in that..

Well, I would have figured that might come a little quicker, because the investors are shaking out a little higher, right?.

They might. .

Yes. Time will tell. We are restricted by what we can say. So again, I apologize for that. We cannot comment any further..

Okay. That is fair enough. Then I understand one of your customers that you are serving in Monterrey just announced another large area on the West Coast of Mexico.

Is that an opening for you guys and will you need to add some capacity to meet that demand?.

Yes. It is premature to say, but we have got a great relationship with that customer. It is the fastest growing beer company right now. You know, stay tuned. That is all I should say..

Okay. Then on the aluminum premium, you gave some color on the quarter.

Can you give us how we should be thinking about the potential tailwind going into '16? It seems like it was a little higher than we initially expected at least?.

All I will say. I cannot just comment. I will give you a quarter. In the first quarter last year in '15 we had a €7 million headwind and that should essentially reverse in the first quarter of '16..

Okay. All right, thanks a lot. Good luck to your Broncos in a few weeks..

Yes. Amen. There we go..

The next question is from Danny Moran with Macquarie. Please proceed..

Hey, guys. Thanks for taking my questions. I think you mentioned that startup costs are around $20 million in '15.

Can you just help us with how much lapping of startup cost should benefit 2016 and maybe quantify the impact from Monterrey in 1Q '16?.

I think, we should still have a little bit of a drag in the first quarter and then those startup costs should diminish quite materially, so our goal in '16 is not to talk about headwinds or tailwinds on too many other things.

Hopefully, it is a more normal year, so I think we will get a little bit more cost in the first quarter then after that we probably won't be talking about it very much..

Okay. Great. That is helpful. Then just on the pricing environment and European bev, there has been some commentary of some country-specific pricing pressure there.

Can you give us your thoughts on whether you are seeing this as well and if you think it is an issue going forward?.

Nothing out of the ordinary, we operate in a competitive world, so you always in today's world where the growth is anemic, I think every industry is having pricing pressures, but nothing of note..

Okay. Last question for me, is there any way you could break out the metal bev packaging Americas and Asia segment in 4Q? I guess what I am asking is, were segment operating profits up year-over-year in U.S.

and Brazil?.

We typically do not get into that level of granularity. That is a segment that we report and that is how we talk about it..

Okay. Good luck in the year, guys..

Great. Thank you..

Thanks..

The next question is from Chip Dillon with Vertical Research Partners. Please proceed..

Yes. Hi. Good morning, and I do apologize, being originally from North Carolina, I cannot really share those same sentiments regarding the Broncos, but hopefully you will answer my questions.

Anyway, I guess the first question has to do with just to make sure I have the share count right, should we more or less take the diluted count that you averaged in the fourth quarter and just add that 5.7? I do not know exactly what the pace of buybacks were in the fourth quarter..

Yes. I would just add that 5.7 back for the beginning of the year. That is probably the best measure. The basic is 142,289 at the end of the year, including the 5.7 that we issued..

Got you. Okay. That is helpful.

By the way, is there any reason you cannot continue buying back stock as we approach the closing of the Rexam deal?.

No. We are not precluded from buying back stock..

Okay.

You mentioned a decline in the corporate expense, and I think in '15 you had some retirements that might have impacted that number, but as we think about the future, to the extent you can tell us, as you envision the Company post-close, would the corporate expense line tend to change a whole lot? Maybe will there be more need for that number to be higher or would pretty much all the incremental costs not be in that line?.

Now, I would not expect material changes and we would update you when we get to the closing and tell you what it is going to look like going forward..

Okay. Then on the CapEx, you mentioned 400 this year and is it fair to say that pretty much all of the first line plus I guess the original infrastructure and the new Monterey plant would be in the '15 number or is there a lot of carryover into '16.

I would assume most of the second line would be in '16, is that at all fair?.

There is a big chunk that obviously was in '15 that drove the numbers and then there is still a fair amount of carryover, John talked about a second line coming up here a few months from now. It is when you spend the money, right? Even though the capital, we may have gotten the plant up and running.

It is when you are paying for all those invoices that it shows up. There is still a decent amount of carryover '16, we got some other projects in '16 that we are looking at on as well..

Okay. Then last question is, I know in the past you all have from time-to-time talked about penetration let us say in beer for example. My guess is in the U.S. it is somewhere in north of 50% and I am guessing Brazil is probably approaching 40%. If you could update us on that.

Then John, you mentioned that Brazil is now a 50-50 market, specialty versus standard and I know there may be differences, say soft drinks, but where do you see the U.S.

ultimately settling out in terms of specialty versus standard?.

Yes. There is a lot of lot of questions in there. Let me just clarify. Our portfolio in Brazil is closer to 50-50. I do not necessarily think the overall market is, but to answer your question about where we think specialty can ultimately end up.

Specialty continues to grow and 12 ounce continues to decline in all categories in the United States where it will ultimately get to. I cannot tell you.

I can tell you we are in it about 30% of specialty in North America relative to the whole and that continues to grow, so we will look at the 50% I think it is premature to look out that way, but certainly the trends are saying it is going to get bigger, not smaller.

Even on the beer side of the business, the can penetration, to answer your question there, I do not have the numbers in front of me, but I can tell you that both, in the United States and Brazil, as well as most other countries, the can continues to take share relative to other substrates.

For example, in North America, the overall beer market was up about 1%, cans were up about 2.5%, down in Brazil, the beer market I think was down slightly, but the can industry was up and that was largely driven by beer, so the implication of all that is it continues to take share..

I see. Thank you..

Yes..

The next question is from Rit Liu with Rogge Global. Please proceed..

Hi. Good morning guys.

Can you tell me what the operating earnings were in China for the last quarter?.

We do not. That is part of our Americas and Asia segment. We do not break that out beyond what is publicly released..

Okay.

Can you give us any idea of the magnitude of the slowdown you are expecting in China next year?.

Just qualitatively as we said, the volume continues to grow. I know the overall can market in China grew about 5 billion cans in 2015 and the growth continues. Again, similar themes is what I just talked about in North America as well as Brazil, but the can continues to take share from other substrates in the beer segment.

The problem is the pricing continues to deteriorate as well and there has been material deterioration in the pricing over the last six months, over the last 18 months. As Scott mentioned in his prepared remarks, that we expect all of our segment results to be up save for our China business.

The other thing he said was our cost out programs have been unable to keep up with the pricing declines, so we are battening down the hatches, we are focusing as much as we can on cost, but we do expect the results there to be down..

Okay.

Then you mentioned the tax rate of 25% for 2016, can you give me that what you think your cash taxes will be in '16?.

No. Not at this point in time..

Okay. Thank you..

Thanks..

The next question is from Daniel Sherry with Loews Corporation. Please proceed..

All my questions have been answered. Thank you..

All right, we have a follow-up from Adam Josephson with KeyBanc. Please proceed..

Thanks for taking my follow-ups. Just one on Brazil, Scott or John, you talked about a little price pressure there in the quarter, even though the can market continues to grow robustly.

Do you expect that pressure to continue this year just in light of your volume outlook?.

I like any market. It is a competitive market, so nothing out of the ordinary..

So really just a continuation of whatever trends you likely experienced in the fourth quarter?.

, there is some lapping of that, but it was a little bit of price pressure. I would not read into it too much..

Yes. I agree I would not read into it too much…..

Okay. Just one on the tax rate, Scott, I think you guided to 25% for '16. Obviously historically, forget about '14 and '15, but before 2014 the tax rate had been quite a bit north of 25%.

Can you give us what you consider a normalized tax rate for the company long-term if that is possible?.

Yes. I think I mean right now it is that 25%. When we did a restructuring in Europe a few years ago our tax rate had run historically closer to 28% to 29%, and with the things that we did it moved down to about that 25% is a decent run rate..

Terrific. Thank you..

Our next question is from Chris Manuel with Wells Fargo. Please proceed..

Good morning or good afternoon gentlemen, depending where you are. A couple of quick questions, first, I want to come back to what you just talked about. I mean, I did hear you earlier in commentary talk about some price compression or price pressure in Brazil.

To my knowledge, this is the first time you have ever raised this flag, so I respect what you just said that it is nothing unusual, but it is the first time I think you have ever mentioned it.

Are you experiencing or do you feel you are experiencing some price pressure in Brazil today or how would we think about that?.

I would think anywhere around the world that it is a competitive market. Like I said, I would not read too much into that comment. It is just anytime you are negotiating something, customers are trying to get what they want to get. We are trying to get what we want to get, so I would not read too much into that..

All right, fair enough, I am just noting this is the first time, I mean, you have been asked about it before, but it is the first time you have come out and raised that flag. Second question I had….

I wish there was [ph] a flag..

Second question I had was you did quite a few projects in 2015, adding bev can plants, aerosol, all kinds of stuff. How should we think about the phasing as we work through '16 or how would we think about quantifying, if it is possible.

What the impact will be as you start to get results from that all your hard work?.

Yes. That is a good question. I will as best try and answer that. When you think about the projects we have talked about even on this call.

Let us start with Monterrey, Mexico, it started up this month and so there is always a learning curve there and Scott said we would have a little bit of startup costs but so I would expect kind of the typical learning curve on something like this is three months to six months and so I think as we get to certainly the second half of the year, maybe even a little second quarter, we will start to see the benefit of that and then we are going to get additional leverage as we put the second-line on that is going to be starting up kind of late second, early third quarter, so you can hopefully see a trajectory there.

In the fourth quarter last year, we started the new line in Devizes in the U.K. on the impact extruder line. We started up the India, plant. Any time you start up a new plant, the learning curve is a little bit longer than just adding existing line or new lines into existing facilities.

I think that Devizes we feel pretty good about in terms of getting results out of that sooner rather than later. I think the India one is going to be a little bit longer.

The Lublin, Poland we talked about that as we continue to ramp up the end production there we should see some benefit as time goes on, but it is a ramp up starting in early '16 as we go forward with that. We talked about the contour. In fact I know the last couple quarters we talked about the contour bottle as well as the G3.

It is on the show, we are making commercially, commercial product right now that is on the shelves right now, so we have high expectations as we go into 2016 that you are going to see some momentum there.

All of that leads to exactly what Scott was saying that in the first quarter we still have some startup costs and we are really not getting a lot of the benefits, but as we are gaining momentum each month we go by in the year 2016..

Hey, Chris. Let me give you a little bit more color on the Brazil comment, because I do not want anybody to leave with the wrong impression. What I probably should have said is price cost.

If you think about what is going on with energy, metal and currency as it relates to Brazil that is really more of kind of the combination of all those things, so do not walk away thinking there is something different on price..

Okay. Actually that is helpful. Thank you. Last question, when these two new lines that are starting up in Monterrey, are they primarily geared to one size? Are those swing lines that are capable of producing different styles, types of cans or what type of capacity we added there? How should we....

We have added capacity with multiple size capability..

Okay.

Can you tell us what the rated capacity for those is roughly?.

There are state-of-the-art high-speed lines, so when you think about that, I think in the past we said once this all is up and running, we expect a couple of billion cans, so if you would divide by two that is 1 billion on line or so..

That is helpful. Thank you, guys. Good luck..

Okay. Thanks..

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

Thanks. I just had a quick question. The deferred tax provision in the cash flow statement, you had minus 61 in 2015.

Is there a way as a benefit, is there a way to think about that as we go into 2016?.

I would factor any changes into my comment on free cash flow. It is just kind of there is a bunch of puts and takes in the free cash flow statement for 2016, so I would just kind of incorporate that into what I expected free cash flow to be in total..

Okay. All right, I appreciate it. Thanks..

Okay. Thanks.

Tia, why do not we take one more question?.

There are actually no further questions, so I will turn the call back to you..

Okay. Great. Well, thank you, everyone. Thank you for your patience around our inability to talk about certain things and we look forward to speaking to with you in a few months..

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