Ladies and gentlemen, thank you for standing by. Welcome to the Ball Corporation First Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded Thursday, April 26, 2012. I would now like to turn the conference over to John Hayes, President and Chief Executive Officer. You may begin, sir.

Thank you, France, and good morning, everyone. This is Ball Corporation's conference call regarding the company's first quarter 2012 results. The information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied. Some factors that could cause the results or outcomes to differ are in the company's latest 10-K and in other company SEC filings, as well as company news releases. If you don't already have our earnings release, it's available on our website at ball.com. Information regarding the use of non-GAAP financial measures may also be found on our website. Now joining me on the call today are Scott Morrison, Senior Vice President and CFO; and Ray Seabrook, Executive Vice President and COO Global Packaging. In a moment, Scott will discuss our financial results for the quarter. Ray will follow with details about our Packaging operating performance, and I will close with comments on Aerospace and the outlook for the remainder of 2012. Ball reported improved comparable first quarter 2012 results during the seasonally slow first quarter. Recall that we have mentioned in January that our first half of the year will be relatively flat as compared to 2011, and we performed slightly better than we expected. Maximizing the value and performance of our existing businesses is one of the strategic levers of our Drive for 10 strategy, and our people and our business are executing well in this environment. The other levers of Drive for 10 include broadening our geographic reach, expanding in the new products and capabilities, aligning ourselves with the right customers and markets, and leveraging our technology expertise to create a competitive advantage. We're making good progress in all of these. And several highlights include: completing the construction of our previously announced…

Thanks, John. Ball's comparable diluted earnings per share from continuing operations for the first quarter of 2012 were $0.63 versus last year's $0.58, an increase of nearly 9%. For the first quarter, the following factors contributed to these results: higher European and specialty can volumes; solid program performance in our Aerospace business; a lower share count; and a lower tax rate. For a complete summary of the first quarter results on a GAAP and non-GAAP basis, please refer to the notes section of today's earnings release. The key financial metrics for 2012 that I gave you in January are all the same other than the tax rate. Taking into account certain tax benefits achieved in the first quarter and those expected later in the year, the full year effective tax rate will now be approximately 30% for the full year 2012. Other than that one change, everything else looks the same. Interest expense will remain at approximately $175 million. Full year 2012 CapEx is still expected to be in the range of $400 million. And as always, the timing of future projects will impact actual spending, so we'll keep you updated as the year progresses. And we still expect 2012 free cash flow in the range of $450 million. The company's annual funding of our U.S. pension plan was largely completed in the first quarter. And at current exchange rates, year-end net debt is expected to be approximately $3 billion, roughly flat versus 2011 as we will continue to return our free cash flow to shareholders via share repurchases and dividends versus debt paydown. With that, I'll turn it over to Ray to talk more about the Packaging operations.

Thanks, Scott. Comparable operating earnings through the first quarter in the Metal Beverage Americas and Asia segment were below last year's level. For the most part, the first quarter earnings shortfall was in Brazil. First quarter sales volumes in Brazil were lower by mid-single digits compared to a year ago, primarily due to a change in the customer filling location and the temporary loss of another location due to higher freight cost until our new capacity came on stream. The new can plant, Alagoinhas, has successfully started making cans in late March and is now supplying our customers in the Northeast, which will catch up our volumes in the second quarter. With this new capacity coming on stream, we anticipate full year Brazil volumes to be up 15% or more from 2011 levels. In Asia, our new joint venture can plant in Vietnam also started up in March, and we are now selling cans to our customers in that marketplace. The newly constructed plant in Qingdao, China is still in checkout phase and is scheduled to making and selling cans to our customers next month. All in all, it's been a very busy first quarter finishing up these major capital projects. Sales volumes in China were also off to a slow start due to a very cold winter in the north and an earlier-than-normal beginning to the Chinese New Year. First quarter Asia results were a little behind last year's level, but we still expect low double-digit volume growth in Asia for the full year. First quarter sales volumes in North America were up slightly compared to a year ago. And we started to see a more favorable sales mix as we got to the end of the quarter that has carried into the second quarter. Higher archive and freight…

Great. Thanks, Ray. Aerospace and Technologies posted near double-digit EBIT margin for the quarter. Backlog ended the quarter at $855 million, which is holding in nicely as we await for it on key bids outstanding. Previously awarded fixed-price programs continue to ramp up, and we anticipate another good year in Aerospace despite the uncertainty around funding in this election year. Now during the quarter, Ball's Ozone Mapping and Profiler Suite instrument onboard the NPP satellite began collecting data that will provide information about the global distribution of ozone. And in early April, NASA extended the Kepler mission to 2016. Kepler was designed to search for planets around other stars and has identified so far more than 60 confirmed planets and hundreds of other planet candidates. Ball Aerospace is the mission prime contractor for Kepler. Finally, we also announced the addition of Rob Strain as Chief Operating Officer of Ball Aerospace. Rob comes to us from NASA, where he was the Director of the Goddard Space Flight Center and has a wealth of experience in the civil, defense and commercial aerospace markets. And we're delighted to have him on board as he works closely with Dave Taylor and the rest of our Aerospace team in the pursuit of Our Drive for 10 strategies. So in summary, and as we said in January, we expect our first half of the year to be largely flat as compared to 2011. And with an improved first quarter behind us, we are slightly ahead of where we thought we would be at this point. We continue to see noticeable upside in the back half of the year as new emerging market plants complete their start-up curves and begin selling product and our North America and European beverage businesses move into the busy summer selling season. As Scott mentioned, Ball will continue to generate significant free cash flow, and we remain focused on a disciplined capital deployment strategy to return value to our shareholders and grow our company. Drive for 10 is a mindset around perfection in everything we do, and it will play a key role in achieving our goals and more than doubling the EVA dollars generated over the next 10 years, as well as generating a compound average growth rate of 10% to 15% earnings per share over that time and more specifically in 2012. So with that, France, we are ready for questions.

[Operator Instructions] Our first question, from the line of George Staphos, Bank of America Merrill Lynch.

Ray, I was hoping you could go through the volume percentages or guidance for the first quarter, specifically with the Americas segment for beverage. I couldn't keep up with some of your discussion.

Yes, okay. Sure, George. Brazil, we were down about 6% and the market was up maybe 4.5% to 5%. And I think I explained in our comments that, that's just mainly timing for us. In North America, we were up at pretty much like the market through the quarter. And in China, we were pretty flat, slightly down but pretty flat.

Okay. I mean you mentioned the reasons there. I mean given the growth economically still being higher-single digits, were you disappointed even with the weather, even with the late recovery out of the New Year with that volume growth in China?

Well, I think it surprised us quite frankly. And it wasn't just us. I think it was -- if you were to talk to our competitors in China, they would probably give you the same story. I think the early Chinese New Year probably meant that our sales in the fourth quarter last year were a little stronger than they otherwise might have been because people were taking cans in the fourth quarter. It was terribly cold in the North this year. That's one of the reasons at Qingdao. It should be up and running right by now and it's not. That's one of the reasons. It was hard for us to get some of that concrete forward because it was so cold. But all in all, I talked to our guys just -- I've been talking to our guys constantly. The volume is starting to pick up. As we sit now, the weather's gotten a lot of better. So we are still predicting low double-digit volume increases in China, and we think most of that was just timing.

George, also, this is John, let's not forget that in 2011, we were sold out, so we did not have any additional capacity. And so we're anticipating the ramp up of Qingdao to provide us that flexed capacities going forward. So now that we have it, our salespeople have had discussions with our customers, which is not unimportant as we think about going to the second half of 2012.

Actually, that's a good point, John. We actually, in our plan this year, we felt we'd actually have to buy cans for China. And as we know, because of the little slower start, I'm not sure we're going to have to do that. And, of course, if we buy cans, we don't make any money. So I think really we're looking at that as just primarily timing.

Okay. And related question, not trying to overdo it. Given that there was some one-off factor that created these slower start both in Brazil and China, would this be a reason that perhaps you take a more wait-and-see approach on the next slug of capacity to see how the market digested or not really? You're still, more or less, all guns blazing relative to [indiscernible] we have in place?

Well, remember, George, we just -- we really don't -- we don't build the plant and hope somebody shows up. That's not how we do things.

Understood.

So we really don't do anything unless we have customer contracts in hand. So if we have customer contract in hand that has the right parts to them that says that we're not taking all the risk, then in fact, we put capacity in. So that's the way we operate, and we'll continue to do that. So we're really not building anything we don't have contracts for. So that's how we're going to continue in the future. We have slowed down a little bit because the market slowed down a little bit, but we -- that's always the way we do things.

Fair point. Last question then I'll turn it over. One, have you seen any kind of pickup in promotional activity or interest in North America on the beverage side? Two, what are your plans with the lines that have been idle in Columbus? And three, are you seeing any more competition in the aluminum bottle market vis-à-vis you're Alumi-Tek technology?

Let's see. The first question is we are seeing some promotional activity. We have some lines idled in Columbus. We just had some discussions yesterday. We may have to turn some of those lines on. We are to the walls in every single one of our plants in the U.S., absolutely to the walls, except we bottled [ph] those 2 lines in Columbus. And I'm not sure we're not going to have to lease term one of them on before we get to the end of the year, especially if the market picks up a little bit for sure. We're not seeing any competition for Alumi-Tek. As a matter of fact, in our R&D shop, we continue to look at various things. And I'm pretty excited with some of the R&D things that we're developing that relate to that, not exactly Alumi-Tek but Alumi-Tek type technology. So we're really doing some really good things over there that I think is going to pay dividends for us in the future.

Our next question, from the line of Scott Gaffner with Barclays.

Correct me if I'm wrong, but I think you might have mentioned on the last call that you could possibly see Metal Beverage America, Asia operating profit up 15% year-over-year. But 1Q operating profit, it looks like it was down. Do you still think you can get that kind of result? And what has to happen from here on out to potentially get there?

Well, yes. We definitely foresee that segment operating profit up. I just don't have the number in front of me, but it's 15%, but we see it significantly up. The first quarter was pretty much as we thought. Remember, Brazil last year -- if we think about Brazil's comps, last year, Brazil, our volume increased 18% in the first quarter. It was down 18% in the second, and so we're flat halfway during the year. And I think we were up double digits by the time we got to the end of the year. This year, our volume was up. I mean it was off 6%. The market was up, but we expect with our new capacity coming in Brazil that volumes will be up at least 15% year-over-year. So we're expecting volumes up in China. We're expecting them up in Brazil. And so far, the U.S. has started up fairly strong. So we expect that segment profit up certainly more than 10%, somewhere between 10% and 15%, I would tell you.

To reiterate what Ray said. We -- nothing really -- the first quarter came in as we thought, and we see nothing as we go forward that's a deviation from what we thought in January.

Okay. And do you get a little bit of a mix shift there in that it looks like Brazil volumes or top line growth you might have taken that up a little bit, and China is maybe a little bit lower? Do you get a positive mix shift with better volumes out of Brazil and maybe a little bit weaker in China?

Nothing appreciable. I think as we look at the various areas within that segment: Asia, Brazil and North America; you always get little bit shifts here and there, but I wouldn't -- from a profitability point of view, it's nothing appreciable.

Our next question, from the line of Ghansham Panjabi with Robert W. Baird. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: Ray, on the promotional activity commentary, can you differentiate between beer and CSD in North America? Is it sort of equally spread between the 2 or is one stronger than the other?

I think what we're seeing a little stronger. We're hearing it a little stronger in the CSD side.

Yes. And we said that on the beer side, the overall beer market in the first quarter was actually up slightly. And that's after a couple of straight being down in the low-single digits. And what -- our beer customers are making a lot of renewed noise and push around the marketing innovation, which not only is helpful to growing the category, but it's helpful for us because it's key to our strategy. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then switching to Brazil. Obviously, the market slowed. I don't know how it shaped up inter-quarter, but did you have any sort of down time to realign inventories with what you started to see in terms of deterioration there?

Yes, absolutely. We took downtime in our plants. We didn't build inventory. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: Can you sort of quantify that for us?

As I say, a 6% reduction in the quarter is like a 50 million cans. And we took downtime to cover that off. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: Okay, all right. And then just real quick on the extruded aluminum pack in Europe, what's behind the double-digit increase there?

Continued customer demand. Despite some of the economic ills in Europe, we're continuing to see strong demand. And we're, I think, we're aligned with the right customers.

Our next question, from the line of Philip Ng from Jefferies & Company. Philip Ng - Jefferies & Company, Inc., Research Division: Just piggybacking off of Ghansham's question. Margins actually held up pretty well in Europe. Certainly volumes were strong. But price was supposed to be down a little bit. Is the margin strength driven by the Aerosol side?

We did get -- we have had price cost compression in Europe, there's no question about it, mainly in beverage only. Philip Ng - Jefferies & Company, Inc., Research Division: Okay. So it sounds like the lift came from the aluminum Aerosol business, right?

Yes. That and also the volume increase.

And our guys have been doing a good job over in Europe controlling the cost relative to the price compression. Philip Ng - Jefferies & Company, Inc., Research Division: Okay. And then when you're looking at acquisitions going forward, are you looking to stay in your core products that you're in already? Are there opportunities for you to expand in something different, like a few years ago, you guys branched out into aluminum slugs in the Aerosol business?

That acquisition was a very much adjacent to what we were doing. And when you think about selling aluminum containers and the slugs were a key component of it, I would not expect us to go far afield certainly. We have more opportunities in what we do today than we've seen in a while. And so we're going to stick to our knitting, generally speaking. Technology is an important part of what we do. I think the slug business is a good example of that in our announcement of the first quarter about taking our scrap from our beverage can plants and putting it into the slugs was exactly what we had anticipated as we acquired that. And so things like that, I don't think, are too far afield. But as we sit here today, as I mentioned, we have a lot of opportunities within what we know very well. Philip Ng - Jefferies & Company, Inc., Research Division: And just a last question for Scott. It's early in the year. Your free cash flow was a little bit light, and I think you guys guide towards working cap being flat potentially. What's driving the uptick in that working cap?

When we think of working cap -- actually, we made significant improvements in the working cap last year. We've got a number of programs in place this year that we think we can actually improve upon where we ended up last year. It's early in the year, but we think we can have a bit of a source of funds from working capital this year as well.

Our next question, from the line of Phil Gresh with JPMorgan. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Just on the guidance for Americas, Asia beverage of up 10% to 15% this year, I just want to kind of peel back a little bit and understand how much of that you think would come from North America versus emerging markets? I'm trying to basically take into account the North America. You have the switch over to specialty. You have the Torrance closure that still have some savings. So is it kind of 50-50 emerging markets versus developed? Or how do you think about that?

I don't have that in front of me, but I think that's reasonable. But I don't think we'd get much. Torrance closed in the fourth quarter of '10, I think. Was it fourth quarter? Yes. So we've taken -- a lot of that has come. We're already in 2012. So a lot of that's come. Some of that Torrance equipment is sitting in Vietnam and other places, so we got some nice benefits from doing that, but I would say it's in the neighborhood of 50-50. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay. And then just in the current quarter, the 10 million decline, was that -- was basically all of that in Brazil [indiscernible].

Not all of it is Brazil. But by far, the majority of it is Brazil. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay. And then just the guidance commentary on the first half being flattish, does that still hold at this stage? Or would you say you're thinking because you've implied 2Q will be down, but it doesn't seem like that should be the case.

Yes, no. I think what I said in my prepared remarks is given that we're slightly above in the first quarter, we expect it -- another way of saying it, we'd expect the second quarter to be roughly flat. Because as we said here in January, January, we said the first half would be flat. We are a little bit above after the first quarter, so you would expect that to carry through. But I wouldn't read into it too much for the second quarter. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Got it, okay. And just one other question, how big is your Specialty Can business. You said it's 20% in North America. How big is it overall and in North America?

Well, in North America, it's about 17% or so. And that -- in Brazil it's probably a little bit higher. In Europe, it's probably about the same. And in Asia, it's a little bit lower. But I think the trends in the emerging markets, we're seeing a shift from 12 ounce or 33 centiliter to more specialty cans accelerating as time goes on.

Our next question, from the line of Alton Stump with Longbow Research.

This is actually Phil Terpolilli calling in for Alton. I just wanted to focus a bit on your outlook in Europe. You mentioned in the press release the pickup in promotional activity there ahead of the summer special events. Any sense of how things are playing out maybe versus your initial expectations? And two, is it safe to say you expect a sequential volume acceleration versus what we saw this quarter?

Yes. We did get off to a strong start in Europe. Let's take a step back and think about all the drivers as we go forward. We've got the European Cup Championships that are in the 2nd half of June. We've got the Olympics that are in London in July. Recall that last summer from a weather perspective in Europe was dismal. And in fact, the third quarter last year, we had said that we had taken some downtime in August, which was unprecedented for us in our European beverage can plants. And so we don't expect that to happen. The can is continuing to take share. On the CSD market across Europe, generally speaking, it's been relatively flat from a total CSD perspective. But the cans are up mid-single digits, which means they're taking share. And the beer was off a little bit in totality. But cans, we're up upper single digits in terms of filling. So I think another example a lot of it is taking share. So as we look to the going through the balance of the summer and into the second half of the year, we feel pretty good about the volume trends in Europe.

Our next question is from the line of Alex Ovshey from Goldman Sachs.

You mentioned some pricing compression that you're seeing in Europe, can you just talk about when you expect to cycle through that pricing compression? And then as you look to the other parts of the world that you participate in, is there any issues with pricing there to note?

Well, when we look to Europe, as John talked about, the volume is increasing, so the capacity demand situation is tightening up. So -- and we had a situation where we had some people passing capacity, and we had a little bit of capacity. We are fundamentally sold out pretty much by the end of this year in Europe. And as that capacity tightens up, we would expect pricing to tighten up in Europe. I think in China, there's a little bit more open capacity than we'd like to see. The market is growing double-digit growth. We don't see that slowing down in the near future, and people have added capacity. So we're probably going to cycle what we got with a little bit more capacity China. We'd like to see some -- pricing is more difficult there. As that market grows, that'll tighten up for us. And in North America, we're pretty stable. It's pretty stable. We get -- so I think pricing is -- North America is pretty, as I said, pretty stable.

Got it. And on the volume trend in North America, it seems like it's coming in positive for you. And not just for you, a number of other companies exposed to beverages end market. And it's better than we are expecting. And part of that is we tend to look at some of the end market data as reported by AC Nielsen in the retail channel, which continues to be pretty soft. Can you talk about whether some of that volumes that you guys are seeing in North America if that's driven maybe by some inventory bill that's happening? Or just the benefit of nice weather, which is driving consumption in other channels outside of the retail channel? Do you have any thoughts on that?

I really think there's 3 issues ongoing. Number one, the economy in America, while it's not great, it's certainly getting better from a year-over-year perspective. So that's point one. Number two, the weather has been quite favorable in this winter and spring season across the United States. And I think that is helping. And then number three, as we've talked about over the past couple of years, there's been a fair amount of price-taking by our customers at the expense of volume. And as Ray had mentioned earlier, we're seeing and hearing about more increased summer promotional activities. So that bodes well for the can as we move into the summer.

Our next question, from the line of James Armstrong with Vertical Research Partners.

The first one is on the Aerospace division. Could you update us on your aerospace expansion project? And have you started looking at doing any geosynchronous or telecommunication projects?

Well, we are building out and adding capacity, if you will, to our satellite manufacturing facility, and that's well underway. In fact, it should be commissioned probably at the end of this year. It does provide us capability to do some things in addition to what we've historically done on some of the larger buses, which you're referring to in terms of geosynchronous activity. That's an area that we can certainly explore. But I think as we sit here today, we don't really have anything to comment on other than it does provide us the capability to expand into additional markets that, from a manufacturing perspective, we are unable to pursue prior to doing this.

Okay, that helps. Switching gears a bit. Your tax rate was especially low. Can you give us some context around it? And is there any chance we could expect something similar going forward?

Sure, this is Scott. But we have reserves for a variety of uncertain tax positions. And when we get to the point in an audit process that are positioned with regard to those issues as determined, we can then release those reserves. So that's what occurred in the first quarter. We see a little bit more of that more happening potentially late this year, that's why I said our tax rate for the full year will probably be around 30%.

Okay, that's helpful. And lastly, as you look out beyond -- looking out beyond 2013 or so, what are the top 2 or 3 markets that you think that you could expand into organically? And by that point, do you think the Brazilian market will be saturated, North and South?

Well, we're not going to go into great detail here obviously given the competitive nature of it. But as Ray and we talked about in our prior calls, we think Asia, generally speaking China, in particularly, but Southeast Asia as well, bodes well just because the overall demographics. The retail chain in China is one of the largest in the world right now. It's supposed to double in the top 50 cities of China over the next 10 years. And there's just a lot of built-in improvement from a can share perspective. We've talked about the can as a share of the package mix. And beer for example is only about 6%, yet it's the biggest and fastest-growing beer market in the world. So we continue to see that going well. We've also talked about in Brazil that we have been experiencing strong growth driven by the improved economy and driven by a rise in middle class, driven by the improved overall beverage volumes and can share penetration gains. We're in the upper 30s right now in Brazil. We're also benefiting and we will for the next couple of years because of the infrastructure builds related to the World Cup and the Olympics. But at some point in time, that will moderate out. And so we have been building some capacity in there because we see in the next couple of years some good trends. But that is going to start the level out over time, and that hasn't been lost on us. And then we continue to look at other areas that's probably premature to talk about. But the beverage can, over the past few years, has really taken hold in some of these more emerging markets. And it's actually solidifying in some of the stable markets. I mentioned that the can share penetration growth in Europe, which Ray talked about, the solid performance, at least in the first quarter, which is not a trend necessarily, but we feel pretty constructive about what's happening in North America. So we have solid underpinnings in the mature markets, and we think we have some growth opportunities in some of the places that we already play in.

Our next question, from the line of Chris Manuel with Wells Fargo Securities.

Just a couple follow-up questions if I may. Is there a way to somehow quantify maybe the price compression you're seeing in Europe? Maybe a different way of coming at this is I think earlier in the year, you guys have talked about thinking that volumes might be up only flat to up a couple of points. But you've been in better shape mid-single digits here this quarter. And it sounds like now you're more in line that things might be mid-single digits. And then we're seeing that other business, the Aerosol business over there are doing well, too. So how should we think about total profitability there for the year? And is there a way to somehow help us quantify how much price compression we've been seeing?

Well, I think -- Chris, this is Ray. I think what I would do is look at the margins in our European business. You'll probably find rough 100, 150 basis points, so that volume's up, the margin's off, and that's the way to quantify it.

Okay, that's helpful. I'll think about contribution into pieces [ph]. The second question I had was with respect to also staying over there in Europe. If by the end of the year you're in a position again where you're sold out, can you maybe talk a little bit about how you would feel regarding adding additional capacity during '13 or specific markets where you think might be reasonable targets that would best support further capacity?

A couple of thoughts on the way we think about this. Recall back in January, Ray, I believe, had said that we had actually thought about sometime in 2012 we might need to add capacity, and we put that on hold. And it is going to remain on hold because we're trying to get the profitability where we think it ought to be. We would much rather run full out because this is a fixed cost business and you need to do that. So that's one observation. The other observation, as Ray also talked about, was we don't add capacity unless we have it effectively sold out with customer contracts. And so as our customers are continuing to look at growth with large in Europe because the can share penetration and other things, we're in very close contact with them. But we just don't want to add capacity because the market in the short term has been a little bit higher than our expectations. Now that's not to say we won't, but we'd much rather really focus on what we can control right now, which is the cost side of our business and the volume production side of our business, and then let the demand side dictate what we will do.

Okay. And then last question I had was regarding the extruded aluminum technology. Is that something that was developed out of the JV in Europe? Or is that something that you guys did on your own on the slug side, I'm guessing? And then how does -- or is that transferable here to North America? I think I read in the press release that it was intended to start over there in Europe? And is that something that as you save the metal that you can effectively retain in your own profits? Or how does that work?

Well, we first developed it on our own here in North America. And using the technology of beverage can as I mentioned, beverage cans as well as the slug. Because we produce the aluminum bottles and aerosol cans over in Europe, we're going to start manufacturing them then. This is as much about an environmental sustainability play as it is an economic sustainability play. And we think that we've created a real breakthrough. And so we expect to get to be able to keep a fair amount of those savings, while at the same time providing an incentive to our customers to really push this product.

Our next question, from the line of Albert Kabili with Credit Suisse. Albert T. Kabili - Crédit Suisse AG, Research Division: I guess the question on 2013 in North America the contract renegotiations and if you had any sort of early thoughts along those lines, how you...

Well, this is Ray. We only have one contract to do, and we are in the process of doing it. So everything else is under contract. Albert T. Kabili - Crédit Suisse AG, Research Division: Right, but I guess it's a large contract and so...

Well, it's not that large. I mean there's 2 parts to it. So it's not as large as you might think. Albert T. Kabili - Crédit Suisse AG, Research Division: Okay. All right, that's helpful. Second question, along the lines of aerosol, if you could -- I may have missed it what your aerosol can volumes did. I was a bit surprised looking at the industry data how weak Aerosol was and what you're hearing along that front.

Well, tinplate aerosol was down, you're right about that. Our aerosol volumes in North America were down, a little soft in the first quarter. However, they seem to pop back up at least at the start of the second quarter. Food was just down a little bit. When I look at the aerosol volumes in Europe, we talked about it, it was up low-single digits. Albert T. Kabili - Crédit Suisse AG, Research Division: Okay. And then North America, should we be concerned or are you seeing any shift to aluminum away from tinplate? I mean that would obviously benefit you in Europe. But as we look about North America on aerosol, is there anything headwind on a package mix shift to aluminum away from aerosol that noticeably have impacted you thus far?

Nothing appreciably. You have to -- tinplate has its home in terms of insecticides and household products. And the aluminum has captured a fair amount of the growth because that's in the beauty and personal care. So everything from suntan lotions that are now going into aluminum and have extruded when they used to be in plastic tubes and other things like that. But there really hasn't been a shift because each -- both tinplate on one hand and aluminum on the other hand have natural submarkets relative to the overall Aerosol category. Albert T. Kabili - Crédit Suisse AG, Research Division: Okay, understood. And then final question on the Aerospace. The backlog was down a little sequentially. How do you see that playing out the rest of the year here? What are some of the next big projects, if there's any, on the radar screen that we should be looking out for?

We have a number of bids outstanding right now. And probably, candidly, more bids than I recall in the recent past. And that's the good news. One of the problem is we have a government right now that's in an election year. And so the ability to make decisions is quite -- is a bit uncertain. We have a lot of the economic issues about sequestration happening at the end of the year and tax cuts expiration, as well as debt ceiling. And so I think their focus is more on that, what to do with it. I will say this, in terms of some of the things we've been bidding on, it's -- we expect those things to continue as we go forward because as all of you know that what we do in the Aerospace side, those things are of national importance to what we do as a nation. And so we feel pretty good. We always talk about it being a little bit lumpy, and backlog is no different. We're down $40 million or $50 million from the year end. It's too early to predict exactly what it will be like in each quarter as we go forward, but as I said we have an awful lot of bids outstanding. Albert T. Kabili - Crédit Suisse AG, Research Division: Okay. And along those lines, John, is there any way to maybe help us quantify, like in aggregate how big that bidding activity is in total size, like if it were 100%, which I know it never is? But is there a way for us to gauge just how big that is? You mentioned that it's healthy.

Yes. Let's put it this way. When we talk about backlog, it's funded backlog. And so that is what has already been funded by the U.S. government. We have a lot of unfunded backlog. And rough order of magnitude, it's usually twice the funded backlog is that is out there. And then on top of that, we have bids outstanding, and it's usually much greater than the funded backlog. So at any given time, we have well in excess of what our funded backlog is, well in excess in terms of things that we've won but have not booked or things -- bids that we have outstanding. And the trajectory of those types of things that I'm talking about, as I said, has gotten a little better for us, not worse.

[Operator Instructions] Our next question, from the line of Debbie Jones from Deutsche Bank.

I was just wondering. Can you guys talk about your trends in Germany for the quarter?

Yes. Well, the overall German market was up about 17%. We were up a little bit more than that just because we're quite large in that area. The good news is the beer is actually stronger. The beer was up 24%, 25% beer cans. And that is really a sweet spot we think over the long term for the German market. So obviously, it was -- first quarter is a seasonally slow quarter, but the trends that we have seen in Germany really haven't changed. We're still hoping and waiting that some of the 2 largest chains, retail chains in Germany start to lift. They haven't done that yet, but there's a variety of discussions going on with them. But where the can has been listed, the penetration rates have been equal to or a little bit better than what we had been hoping.

Okay. And also in Europe, I was just wondering are you guys seeing a bifurcation in pricing trends versus specialty versus standard cans. I assume that standard can is under a little bit more pricing pressure, but I just wanted to get your thoughts on that.

Well, actually, what we have seen is actually a little bit more of our customers' gravitation towards more of the standard sizes. As we talked about earlier, the European economy is tough, and so there's a lot of -- not only for us, but a lot of just industry generally are focused on value and are focused on cost and those things. And so we see the slight trending down from some of the higher-end specialty packages to more commodity packages. But to answer the question about pressured trends from a pricing relative to commodity versus standard containers, we don't think, see any appreciable difference there.

Okay. I was also curious in China. There's a lot of capacity coming on. And I'm wondering, is there a risk in the near term that some of this new capacity does what happens [ph] you guys done in Brazil where you lost a bit of volume given your location or approximately to your customers. And the other thing that I've been finding surprising is just some announcements about the self manufacturing. For some of these players, I would think that, that would be something that we wouldn't be moving towards at this point in the market.

Yes, this is Ray. As I said, we're sold out in 2012 in China. So I've said that on the one hand. The other hand I can tell you that we've lost business. We've had some business with some customers, and we have lost on price. And so we're trying to do -- we're trying to weight the equation such that we have to be competitive, obviously. We're trying to weight the equation such that we pick the business and we look at the long-term potential of this business. But we certainly are getting competition in China, and we have lost business. However, we still remain sold out. So obviously, we continue to grow. The market continues to grow. So that's an equation that we spend a lot of time thinking about and working on. And we try to get it right.

I might add also that you talked about self manufacturers. There's some independent can manufacturers, is the way I'd describe it. And one of the things that we've been spending an awful lot of time is bringing the experience and expertise that we have in the North American markets that we have in the European markets from a cost, from a technology, from an efficiency, from a know-how perspective and making sure that we are leveraging it as much as possible in Asia and China in particular. Because at the end of the day in our business, low cost always wins. And we do think we have competitive advantages. We believe our cost structure is better than most, if not all, the competition over in Asia. And we're putting a renewed focus to make sure we're as efficient as possible there because that's the way you win in a game like that.

Okay. And then just last question in China. What is your mix between beer, CSD? And do you see that mix changing going forward?

The Chinese palate is different. So obviously, they like the teas. Our mix is much more heavily weighted towards beer and tea than it is to soft drink. It's probably reversed to the U.S.

Our next question is from the line of Adam Josephson from KeyBanc.

Of the long-term growth you're expecting in China and Brazil, how much do you expect to come from beer market growth and how much do you expect to come from a shift from bottles to cans?

Well, I think it's a combination of both. And it varies by market. As I said, in Brazil, from a can penetration perspective on the beer side, we're in the upper 30s. And we think there's a little bit more runway there, but not a tremendous amount of runway. But the overall beer category has been growing 4%, 5%. So over the past few years, we've been getting a double whammy relative to the growth there. That's going to start to moderate out. I think in China, it's a bit different. We come from a very low level of can share penetration. As we said before, it's about 6%. China is the fastest-growing beer market in the world from an overall literage [ph] perspective. And I think those 2 issues alone create an algorithmic trajectory. Just to give you another data point that helps support that, I know in Vietnam, 3, 4 years ago, the can had a share of the beer market of around 16%, 17%. And now it's in the mid-20s, 24%, 25%, so that's just another proof point of some of the things that we are seeing over there.

What would you say is the biggest risk to the long-term growth and profit expectations you have for those 2 markets other than just GDP growth slowing?

Well, I think in Brazil, as we talked about, they're benefiting as an economy right now in the rise of the middle class. And I think to answer your question, that's it, the rise of the middle class. In Brazil, because the infrastructure around the Olympics, around the World Cup, I think for the next couple of years, we can clearly see and have good visibility into the continued rise of the incomes of the middle class. In China, I think it's a foregoing conclusion as well. They have spent the last 3 years or so really putting emphasis on the consumer side of the business and going from an export market on the industrial side to an internal consumption. And so when you have all those people move, migrating from the rural areas to the urban areas, I think it just continues to bode well. But it is an element that when there is a rise in the middle class, our products always do well. And candidly, I think over the last 3, 4 years in North America, the reason why we're seeing softness in the overall categories of beverages as well as the can is because the middle class hasn't been increasing. It's been decreasing.

Our next question, from the line of Andy Feinman with Iridian Asset Management.

Can you tell me -- I know the press release has the weighted average number of shares during the quarter, but can you give me the numbers you have at the end of the quarter?

Yes, it was 156,497,000, Andy, basic.

Okay. And you said you made your annual pension contribution during the first quarter. So can you say how much it was?

Yes, I think it was like $85 million -- $95 million in the first quarter, which was the vast majority of what we have to fund this year. And the incremental increase was almost all in the first quarter.

So for some reason I thought it was going to be $135 million. Does $95 million include the pace you go through stuff also or does that just include catch up?

No, the incremental. So right, the full year is still $135 million. But usually, a chunk of that is spread throughout the year. The big piece of it was done in the first quarter. So $95 million of the $135 million is done.

Okay. And then the last question that I had was last year, your corporate overhead was I think $71.5 million.

Correct.

I expected that they would be down this year, I don't know why. But in the first quarter, it was up a little. So the question is whether that number is likely to be lower this year or the same or up?

We're still having the same range that -- the first quarter, we had a huge run up in the stock price. And although we're hedging a good chunk of the stock price impact from various benefit plan, we're still a little bit -- it's not hedged, and so that cost us a few million dollars more in the first quarter than what we are expecting. So it's a little bit higher than what we thought in the first quarter. So around that range last year is still the number that we are expecting for full year.

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

I have 2 last questions. Back to the question of Aerospace, John, could you maybe articulate what few projects -- let me say it differently. If things go as you expect, how many products do you expect to be awarded by the end of this year? Is it possible to predict that at all? And then the second question, totally unrelated. In aluminum bottle, I thought one of your competitors was perhaps adding some capacity. Do you not view that as a competitive threat down the road in terms of specialty cans and special aluminum packaging?

Yes, George, this is John. As you know, it's difficult to answer your question, but I'll try the best I can. At any given time, we have over 300 bids from very big to very small, and it varies by business. Some of the bigger ones that we have outstanding, we really can't talk about because they're in a classified world, but they do fit in the sweet spot of what was the progress we've been making over the past number of years in that. We have a variety of other things candidly that have been slipping to the right a little bit because of these funding issues. They are usually more on the smaller side and more on the tactical side, whether it's antennas for the joint strike fighter or other things as that. Ramp up of that new program doesn't go as quickly because of funding and because of other issues. But I think overall, as was mentioned before, the overall amount of bids we see stronger today than it's been in the past. And the only question mark in our mind is how quickly can the U.S. government and how quickly does the U.S. government need to move on some of these things when you have a bifurcated Congress, you have an election of not only the Senate, the Congress, as well as the presidency. And it's just I don't want to predict when people will make decisions in an uncertain environment like that.

Okay. And on beer cans? Beer bottles?

The person that's putting that capacity has not had access to our technology, so it's a self-make proposition for them. So I'm not really worried about it.

And you feel fairly comfortable about Alumi-Tek's cost position versus other technologies at this juncture? And if so, why?

Well, because we've been doing it for a while, and it's not easy to do. And if we've learned a lot of stuff, we've been doing that for 2 or 3 years, you'd be surprised what you can learn in 2 or 3 years. And we've a lot of learned a lot of things, George. And we make it at a lot lower cost now than we did when we first started making it. We've improved the technology. I'd said before, we got some stuff in the R&D -- in our R&D pipeline that looks really, really encouraging to us. So we're just -- we just have a big lead. Eventually they'll figure it out, probably but it's taken us a while.

Do you see Alumi-Tek taking share from mainstream glass in beer markets? Or really is the price gap such that it's still going to be more of an event or a specialty package?

I think it's a combination of both. What you are seeing, you certainly see it in the venue, event venues. So that is quite a positive. But you're also seeing an awful lot in the convenience stores. And that is quite honestly targeted towards some of the more premium and that really is glass. And you're able to buy 9 packs now and some other things like that. Our customer who's using it is promoting it an awful lot, not only marketing but also advertisement, television advertisement, radio advertisement, billboard, and so they're quite bullish on it, and we're here to support them.

Mr. Hayes, I'll return the call back to you, sir. There are no further questions at this time.

Okay. Well, we appreciate the participation of you all, and let's look forward to a good second quarter and the balance of the year. And we'll talk to you in July. So thanks, everyone.

Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation and kindly ask that you please disconnect your lines. Have a great day, everyone.