Molson Coors Reports 2017 Full Year and Fourth Quarter Results

Molson Coors Brewing Company (NYSE: TAP; TSX: TPX) today reported results for the 2017 full year and fourth quarter. Molson Coors president and chief executive officer Mark Hunter said:

"2017 marked the first full year of the bigger, stronger Molson Coors, and our full year results demonstrated balance and progress against both our bottom-line and top-line goals. Integration, synergies and costs savings were all delivered on or ahead of plan by engaged employees around the world who are aligned behind our First Choice for consumer and customer ambition. For the full year 2017 versus pro forma 2016 results, we over-delivered on costs savings and free cash flow and optimized commercial spending, delivering strong net income growth, underlying EBITDA margin expansion of 77 basis points, and underlying EBITDA growth of 3.7 percent. We also strengthened our balance sheet by more than $900 million through debt pay-down and pension contributions as part of our deleverage strategy. This was complemented by an improving top line, with global brand volume growth of 1 percent and net sales per hectoliter growth of 2.6 percent, driven by revenue management and portfolio premiumization. We also grew market share in Canada and Europe for the year and delivered positive underlying EBITDA in our International business."

Mark added, "Across Molson Coors, against a backdrop of integration and challenging market conditions during 2017, we delivered financial and commercial results that demonstrate our balanced priorities for bottom- and top-line growth are working. In 2018, our First Choice focus across regions will continue to strengthen and premiumize our brand portfolio, while deepening our customer relationships. We will also continue to retain flexibility in our P&L, deliver on our cost savings and remain laser-focused on delivering against our cash targets and strengthening our balance sheet."

N/M = Not meaningful

• Net sales: $2.580 billion, increased 4.5 percent, due to positive global pricing, royalty volume and foreign currency, along with cycling a $50 million indirect tax provision from a year ago. These factors were partially offset by lower financial volumes. Net sales in constant currency grew 2.4 percent.
• Net sales per HL: $111.89, increased 5.8 percent, and 3.7 percent in constant currency, driven by positive global pricing, higher royalty revenue, favorable foreign currency movements and cycling an indirect tax provision from a year ago.
• Volume: Worldwide brand volume of 22.4 million hectoliters decreased 1.1 percent due to lower volume in the U.S. and International, partially offset by growth in Europe and Canada. Global priority brand volume decreased 1.9 percent. Financial volume of 23.1 million hectoliters decreased 1.2 percent, driven by lower U.S. volume.
• U.S. GAAP net income from continuing operations attributable to MCBC was $588.1 million, improved from a loss of $607.2 million last year, driven by a discrete tax benefit related to the revaluation of our deferred tax balances, which resulted from the recent U.S. tax reform, along with favorable underlying performance and cycling an impairment charge for the Molson brands in Canada and an indirect tax provision in Europe recorded a year ago.
• Underlying net income (non-GAAP) increased 32.1 percent, driven by positive global pricing, cost savings, MG&A efficiencies and net pension benefit, as well as cycling the indirect tax provision a year ago, partially offset by inflation, impacts of lower volume, investments behind global business capabilities, and a higher underlying tax rate.
• The company looks at value creation from the MillerCoors transaction through the lens of the sum of three numbers. In the fourth quarter, these three numbers were:
  • Underlying net earnings of $133.6 million, plus…
  • $103 million of transaction-related cash tax benefits and…
  • $11 million of transaction-related after-tax book amortization.
  • To calculate this measure on a per-share basis, the company had 216.5 million weighted average diluted shares outstanding in the fourth quarter.
• Underlying EBITDA: Increased 17.0 percent on a reported basis, and increased 14.3 percent on a constant currency basis.
• U.S. GAAP cash from operations: Net cash from operating activities for full year 2017 was $1.866 billion, which represents an increase of $739.4 million from actual prior year results, driven by the addition of the other 58 percent of MillerCoors cash flows, as well as lower cash paid for taxes and working capital efficiencies, which were partially offset by higher cash paid for pension funding and interest.
• Underlying free cash flow: $1.449 billion for full year 2017, a 67.8 percent increase from actual prior year results of $863.7 million, driven by the same factors as cash from operations, partially offset by higher capital expenditures.
• Debt: Total debt at the end of 2017 was $11.314 billion, and cash and cash equivalents totaled $418.6 million, resulting in net debt of $10.895 billion. This net debt is more than $600 million lower than at the beginning of the year, despite $280 million of unfavorable foreign currency. Additionally, we made $310 million of contributions to our defined-benefit pension plans during 2017 as part of our deleveraging goals.

Net Sales

Pretax Income (U.S. GAAP)

N/M = Not meaningful

Underlying EBITDA (Non-GAAP)(2)

United States Business (MillerCoors) (versus Fourth Quarter 2016 Pro Forma Results)

• Volume: U.S. domestic sales-to-retailers volume (STRs) declined 3.0 percent for the quarter, driven by lower volume in the Premium Light segment. Domestic sales-to-wholesalers volume (STWs) decreased 1.5 percent.
• Revenue: Domestic net sales per hectoliter, which excludes contract brewing and company-owned-distributor sales, grew 1.4 percent as a result of higher net pricing, partially offset by negative sales mix.
• Cost of goods sold (COGS) per hectoliter increased 2.2 percent, driven by higher input costs and volume deleverage, partially offset by cost savings.
• Marketing, general and administrative (MG&A) expense decreased 4.1 percent due to spending optimization and efficiencies.
• On a U.S. GAAP basis, United States income from continuing operations before income taxes increased 10.8 percent to $227.5 million, primarily due to higher underlying EBITDA performance and lower special charges.
• United States underlying EBITDA increased 4.9 percent to $346.0 million, driven by higher net pricing, cost savings and lower MG&A expenses, partially offset by COGS inflation and lower STW volumes.

Canada Business

• Volume: Canada brand volume increased 0.8 percent in the fourth quarter, driven by higher sales of import and craft brands, partially offset by lower domestic volumes. Canada financial volume, which includes contract brewing volume, increased 1.0 percent.
• Revenue: Net sales per hectoliter increased 1.0 percent in local currency, primarily due to positive pricing, partially offset by negative sales mix.
• COGS per hectoliter increased 7.5 percent in local currency due to higher inflation, sales mix shift to higher-cost products, increased distribution costs and unfavorable transactional foreign currency impacts, partially offset by cost savings.
• MG&A expense decreased 5.0 percent in local currency, driven primarily by lower brand amortization and bad debt expense, as well as spending reductions.
• On a U.S. GAAP basis, Canada reported income from continuing operations before income taxes of $42.2 million, compared to a loss of $459.6 million in the prior year attributable to non-cash brand impairment charges of $495.2 million.
• Canada underlying EBITDA decreased 4.2 percent to $79.0 million in the quarter, driven by higher cost of goods sold, partially offset by positive pricing, lower MG&A expenses, and favorable foreign currency.

Europe Business

• Volume: Europe brand volume increased 10.4 percent in the fourth quarter versus a year ago, primarily driven by the transfer of royalty and export brand volume across Europe from our International business, along with growth from our above-premium brands. Europe financial volume, which includes contract brewing and factored brands but excludes royalty volume, increased 2.7 percent.
• Revenue: Europe net sales per hectoliter increased 16.3 percent in local currency, due to cycling a $50 million indirect tax provision last year, along with positive mix and the addition of royalty and export brand revenue.
• COGS per hectoliter increased 0.6 percent in local currency, primarily driven by mix shift to higher-cost brands and geographies, partially offset by higher net pension benefit this year.
• MG&A expense decreased 2.8 percent in local currency, due to the partial reversal of a bad-debt provision established earlier in 2017 related to a customer in Croatia, along with higher net pension benefit this year, partially offset by higher brand investments.
• On a U.S. GAAP basis, Europe reported income from continuing operations before income taxes of $54.9 million, up from a loss of $15.6 million last year, which was primarily due to the $50 million indirect tax provision. Pretax income also increased due to higher brand volume, positive sales mix, higher net pension benefit, partial reversal of a bad-debt provision and favorable foreign currency.
• Europe underlying EBITDA was $102.7 million, up from $28.1 million last year, driven by the same factors as U.S. GAAP income.

International Business

• Volume: International brand volume decreased by 15.1 percent in the fourth quarter, driven by the transfer of royalty and export brand volume to Europe and the loss of the Modelo contract in Japan, partially offset by the addition of the Puerto Rico business from MillerCoors and growth across several Latin America markets.
• Revenue: Net sales per hectoliter increased 6.1 percent, driven by sales mix changes and positive pricing.
• COGS per hectoliter increased 9.7 percent, due to sales mix changes and higher integration-related non-core costs.
• MG&A expense increased 40.8 percent, driven by higher organization and integration costs related to the acquisition of the Miller International brands business, along with increased brand investments.
• On a U.S. GAAP basis, International segment reported a loss from continuing operations before income taxes of $7.5 million versus a loss of $1.3 million a year ago, driven by higher integration costs related to the acquisition of the Miller International brands business, along with the loss of the Modelo contract in Japan, partially offset by higher volume and favorable sales mix changes.
• International underlying EBITDA was $0.4 million in the fourth quarter, down from $1.4 million a year ago, driven by the loss of the Modelo contract in Japan, the transfer of royalty and export business to Europe, and higher MG&A from the addition of the Miller International business, partially offset by the addition of Puerto Rico and volume growth across several Latin American markets.

Corporate

• On a U.S. GAAP basis, Corporate loss from continuing operations on a reported basis was $116.2 million in the fourth quarter compared to a loss of $164.4 million in the prior year, primarily due to higher unrealized mark-to-market gains on commodity swaps and lower costs this year related to the Acquisition, partially offset by higher investments in our global growth and efficiency initiatives.
• Corporate underlying EBITDA was a loss of $47.8 million for the fourth quarter versus a $33.6 million loss in the prior year, driven primarily by higher global investments in commercial, supply chain and information technology, as well as unfavorable foreign currency impacts and certain cost transfers from business units.

Cost Savings Update

• The company delivered more than $255 million of synergies and other cost savings in 2017, exceeding its original goal by more than $80 million. Total one-time costs to capture transaction-related synergies totaled $83 million in 2017, with approximately two-thirds of this in non-core operating expense and one-third in capital spending.
• In part based on the increased delivery of cost savings in 2017, the company is increasing its three-year savings target to $600 million of all-in savings to be delivered by 2019. For the two remaining years of the program, the cost savings targets are $210 million in 2018 and $135 million in 2019, which reflects the acceleration of some savings into 2017 and 2018.
• The company is also reducing its anticipated one-time costs to capture synergies to $250 million over the three-year savings program, down from $350 million previously. This new target is expected to be approximately 60 percent non-core operating expense and 40 percent capital spending.

Effective Income Tax Rates (versus fourth quarter 2016 pro forma results)

• Our effective tax rate was negative 195.0 percent in the fourth quarter of 2017, and was driven by the recognition of a net discrete tax benefit related to revaluing our deferred tax liabilities as a result of the reduction of the federal statutory corporate income tax rate to 21 percent as part of U.S. tax reform. A year ago, our effective tax rate was negative due to the impact of a pretax loss driven by a Canada brand impairment charge and change in brand life from indefinite to definite-lived assets.
• Our underlying effective tax rate increased to 28.8 percent from 16.4 percent a year ago, primarily due to valuation allowance releases in the fourth quarter of 2016.

Special and Other Non-Core Items

The following special and other non-core items have been excluded from underlying results. See the Appendix for reconciliations of non-GAAP financial measures.

• During the fourth quarter, MCBC recognized a net special charge of $3.7 million, primarily driven by accelerated depreciation expense related to the planned rebuilding of our Montreal and Vancouver breweries in Canada and the planned closure of our Burton South brewery in Europe. These charges were partially offset by a $5.4 million pension settlement gain in the quarter related to the annuitization of more than $900 million of our U.S. plan's projected benefit obligation and a corresponding reduction to the plan assets.
• Additionally during the fourth quarter, we recorded other non-core net gains of $10.6 million, primarily driven by unrealized mark-to-market gains on commodity hedges, partially offset by costs related to the Acquisition.
• Finally, we recognized a $433.9 million discrete tax benefit in the quarter, driven by the revaluation of deferred tax balances and other changes resulting from recently enacted U.S. tax reform.

Pension Accounting Change Applied Retrospectively

During the fourth quarter of 2017, we changed our method of calculating the market-related value of pension plan assets used to determine net periodic pension cost and have accordingly retrospectively applied this change, which only impacted our consolidated, Canada and Europe results. These changes for the fourth quarter and full year 2017 are reflected in the table below. See the Company's 2017 10-K filing for additional detail.

The company has established the following targets for full year 2018 performance:

• Underlying free cash flow: $1.5 billion, plus or minus 10 percent, which excludes a $330 million cash payment received in January 2018 related to resolving a purchase price adjustment to our October 2016 acquisition of the Miller International business.
• Transaction-related cash tax benefits: approximately $200 million (included in free cash flow).
• Transaction-related after-tax book amortization: approximately$55 million.
• Cash pension contributions: approximately $10 million.
• Capital spending: approximately $670 million, plus or minus 10 percent.
• Cost savings: approximately $210 million in 2018, and $600 million (updated) for 2017 to 2019.
• Cost of goods sold per hectoliter:
  • MillerCoors: low-single-digit increase.
  • Canada: low-single-digit increase (local currency).
  • Europe: low-single-digit increase (local currency).
  • International business: mid-single-digit decrease.
• Underlying Corporate MG&A expense: approximately $180 million, plus or minus 10 percent.
• Underlying depreciation and amortization: approximately $850 million, versus $792 million in 2017, primarily due to planned information systems implementations in the U.S.
• Pension income: approximately $60 million.
• Underlying Corporate net interest expense: approximately $330 million, plus or minus 10 percent.
• Underlying effective tax rate in the range of 18 to 22 percent for 2018, following the enactment of U.S. tax reform, which reduced the U.S. federal statutory corporate income tax rate from 35 percent to 21 percent. Subject to additional definitive guidance from the U.S. government regarding the implementation of the recently passed tax reform legislation, the company's preliminary view of its long-term effective tax rate (after 2018) is in the range of 20 to 24 percent.
• In addition, our 2018 results will also be impacted by the adoption of the new revenue recognition standard, as well as guidance changing the presentation of pension and other postretirement benefit (OPEB) costs.
  • The new revenue recognition accounting standard became effective for us at the beginning of 2018, and we have elected the modified retrospective method. Therefore, prior period results will not be restated, but results under the old standard will continue to be disclosed throughout 2018 for comparability, as required by the standard. Along with some timing changes, we currently anticipate that this adoption will change the presentation of our results, including a reduction of net sales revenue and marketing, general and administrative expenses of approximately $70 million to $90 million during 2018, primarily within our Canada segment, with no significant impact to net income.
  • Under the new pension guidance, we will report the service cost component of net periodic pension and OPEB costs or income in our business segment results. Beginning in 2018, however, all other components of net periodic pension and OPEB cost or income will be reported in Corporate within other income (expense), net. Prior period results for Europe, the U.S., Canada, International, Corporate and Consolidated will be restated retrospectively for this change, as required by the guidance, with no impact to consolidated net income. This accounting change will primarily impact the reported results of our Europe segment, where approximately $46 million of 2017 net periodic pension income will move from Europe COGS ($27 million) and MG&A ($19 million) to Corporate other income (expense), net.
  • The impacts of these accounting changes are discussed in further detail within footnote 2 of our 2017 Form 10-K.

Unless otherwise indicated in this release, all $ amounts are in U.S. Dollars, and all quarterly comparative results are for the Company’s fourth quarter or full year ended December 31, 2017, compared to the fourth quarter or full year ended December 31, 2016 (pro forma 2016 results used for consolidated and U.S. comparisons). All per-hectoliter calculations include contract brewing and non-owned factored beverage volume in the denominator, as well as the financial impact of these sales in the numerator, unless otherwise indicated. Some numbers may not sum due to rounding.

As used in this release, the term “Acquisition” refers to the Company’s acquisition from Anheuser-Busch InBev SA/NV on October 11, 2016, of SABMiller plc’s 58 percent economic interest and 50 percent voting interest in MillerCoors LLC and all trademarks, contracts and other assets primarily related to the Miller International business outside of the U.S. and Puerto Rico.

Molson Coors Brewing Company will conduct an earnings conference call with financial analysts and investors at 11:00 a.m. Eastern Time today to discuss the Company’s 2017 fourth quarter results. The live webcast will be accessible via the Company’s website, www.molsoncoors.com. An online replay of the webcast will be available until 11:59 p.m. Eastern Time on February 14, 2019. The Company will post this release and related financial statements on its website today.

With a story that starts in 1774, Molson Coors has spent centuries defining brewing greatness. As one of the largest global brewers, Molson Coors works to deliver extraordinary brands that delight the world’s beer drinkers. From Coors Light, Coors Banquet, Miller Lite, Molson Canadian, Carling, Staropramen and Sharp’s Doom Bar to Leinenkugel’s Summer Shandy, Blue Moon Belgian White, Hop Valley, Creemore Springs and Crispin Cider, Molson Coors offers a beer for every beer lover.

Molson Coors operates through Molson Coors Canada, MillerCoors in the U.S., Molson Coors Europe and Molson Coors International. The company is not only committed to brewing extraordinary beers, but also running a business focused on respect for its employees, communities and drinkers, which means corporate responsibility and accountability right from the start. It has been listed on the Dow Jones Sustainability Index for the past seven years. To learn more about Molson Coors Brewing Company, visit molsoncoors.com, ourbeerprint.com or on Twitter through @MolsonCoors.

Molson Coors Canada Inc. (MCCI) is a subsidiary of Molson Coors Brewing Company. MCCI Class A and Class B exchangeable shares offer substantially the same economic and voting rights as the respective classes of common shares of MCBC, as described in MCBC’s annual proxy statement and Form 10-K filings with the U.S. Securities and Exchange Commission. The trustee holder of the special Class A voting stock and the special Class B voting stock has the right to cast a number of votes equal to the number of then outstanding Class A exchangeable shares and Class B exchangeable shares, respectively.

This press release includes “forward-looking statements” within the meaning of the U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “anticipate,” “project,” “will,” “outlook,” and similar expressions identify forward-looking statements, which generally are not historic in nature. Although the Company believes that the assumptions upon which its forward-looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be correct. Important factors that could cause actual results to differ materially from the Company’s historical experience, and present projections and expectations are disclosed in the Company’s filings with the Securities and Exchange Commission (“SEC”). These factors include, among others, our ability to successfully integrate the Acquisition of MillerCoors; our ability to achieve expected tax benefits, accretion and cost savings and synergies; impact of increased competition resulting from further consolidation of brewers, competitive pricing and product pressures; health of the beer industry and our brands in our markets; economic conditions in our markets; additional impairment charges; our ability to maintain manufacturer/distribution agreements; changes in our supply chain system; availability or increase in the cost of packaging materials; success of our joint ventures; risks relating to operations in developing and emerging markets; changes in legal and regulatory requirements, including the regulation of distribution systems; fluctuations in foreign currency exchange rates; increase in the cost of commodities used in the business; the impact of climate change and the availability and quality of water; loss or closure of a major brewery or other key facility; our ability to implement our strategic initiatives, including executing and realizing cost savings; our ability to successfully integrate newly acquired businesses; pension plan and other post-retirement benefit costs; failure to comply with debt covenants or deterioration in our credit rating; our ability to maintain good labor relations; our ability to maintain brand image, reputation and product quality; and other risks discussed in our filings with the SEC, including our most recent Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. All forward-looking statements in this press release are expressly qualified by such cautionary statements and by reference to the underlying assumptions. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update forward-looking statements, whether as a result of new information, future events or otherwise.

N/M = Not meaningful

We have presented consolidated and U.S. segment pro forma information in this release to enhance comparability of financial information between periods. Canada, Europe, International and Corporate results are not presented on a pro forma basis. The pro forma financial information is based on the historical consolidated financial statements of MCBC and MillerCoors, both prepared in accordance with U.S. GAAP, and gives effect to the Acquisition of the remaining 58 percent interest of MillerCoors and the completed financing as if they were completed on January 1, 2016. Our consolidated pro forma financial statements have been restated retrospectively to reflect our change in the method of calculating the market-related value of pension plan assets used to determine net periodic pension cost, as described above. Our U.S. segment pro forma information has been updated from the version previously provided on February 14, 2017, to reflect the removal of the Puerto Rico business effective as of January 1, 2017, from the results of the MillerCoors business, which were previously reported as part of the U.S. segment, and are now reported within the International segment. Pro forma adjustments are based on items that are factually supportable, are directly attributable to the Acquisition or the related completed financing, and are expected to have a continuing impact on MCBC's results of operations and/or financial position. Any nonrecurring items directly attributable to the Acquisition or the related completed financing are excluded in the pro forma statements of operations. Pro forma information does not include adjustments for costs related to integration activities following the completion of the Acquisition, synergies or other cost savings that have been or may be achieved by the combined businesses. The pro forma information is unaudited, based on significant estimates. The pro forma information is presented for illustrative purposes only and does not necessarily reflect the results of operations of MCBC that actually would have resulted, had the Acquisition and the related financing occurred at the date indicated, nor does this information project the results of operations of MCBC for any future dates or periods.

As a result of the Acquisition, we aligned our volume reporting policies resulting in adjustments to our historically reported volumes. Specifically, financial volume for all consolidated segments has been recast to include contract brewing and wholesaler non-owned brand volumes (including factored brands in Europe and non-owned brands distributed in the U.S.), as the corresponding sales are reported within our gross sales amounts. Additionally, financial volumes continue to include our owned brands sold to unrelated external customers within our geographic markets, net of returns and allowances.

Worldwide brand volume reflects only owned brands sold to unrelated external customers within our geographic markets, net of returns and allowances, royalty volume and our proportionate share of equity investment worldwide brand volume calculated consistently with MCBC owned volume. Actual 2017 and 2016 pro forma worldwide brand volumes include 100 percent of MillerCoors brand volume. Contract brewing and wholesaler volume is included within financial volume as noted above, but is removed from worldwide brand volume as this is non-owned volume for which we do not directly control performance. We also modified our worldwide brand volume definition to include an adjustment from Sales-to-Wholesaler (STW) volume to Sales-to-Retailer (STR) volume. We believe the STR metric is important because, unlike STWs, it provides the closest indication of the performance of our brands in relation to market and competitor sales trends. Prior periods presented have been revised to reflect these changes. We believe this definition of worldwide brand volume more closely aligns with how we measure the performance of our owned brands within the markets in which they are sold. Effective January 1, 2017, European markets, including Sweden, Spain, Germany, Ukraine and Russia, which were previously reported under our International segment, are now presented within our Europe segment. Additionally, effective January 1, 2017, the results of the MillerCoors Puerto Rico business, which were previously reported as part of the U.S. segment, are now reported within the International segment.

In addition to financial measures presented on the basis of accounting principles generally accepted in the U.S. ("U.S. GAAP"), we also present "underlying pretax and net income," "underlying income per diluted share," "underlying effective tax rate," and "underlying free cash flow," which are non-GAAP measures and should be viewed as supplements to (not substitutes for) our results of operations presented under U.S. GAAP. We also present underlying earnings before interest, taxes, depreciation, and amortization ("underlying EBITDA") as a non-GAAP measure, as well as underlying EBITDA margin, which is calculated by dividing underlying EBITDA by U.S. GAAP net sales. Our management uses underlying income, underlying income per diluted share, underlying EBITDA (and margin), and underlying effective tax rate as measures of operating performance, as well as underlying free cash flow in the measure of cash generated from core operations, to assist in comparing performance from period to period on a consistent basis; as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; in communications with the board of directors, stockholders, analysts and investors concerning our financial performance; as useful comparisons to the performance of our competitors; and as metrics of certain management incentive compensation calculations. We believe that underlying income, underlying income per diluted share, underlying EBITDA (and margin), and underlying effective tax rate performance are used by, and are useful to, investors and other users of our financial statements in evaluating our operating performance, as well as underlying free cash flow in evaluating our generation of cash from core operations, because they provide an additional tool to evaluate our performance without regard to special and non-core items, which can vary substantially from company to company depending upon accounting methods and book value of assets and capital structure. In addition to the reasons discussed above, we consider underlying free cash flow an important measure of our ability to generate cash, grow our business and enhance shareholder value, driven by core operations and after adjusting for non-core items. For discussion and analysis of our liquidity, see the consolidated statements of cash flows and the Liquidity and Capital Resources section of our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our latest Form 10-K and 10-Q filings with the SEC.

We have provided reconciliations of all historical non-GAAP measures to their nearest U.S. GAAP measure and have consistently applied the adjustments within our reconciliations in arriving at each non-GAAP measure. These adjustments consist of special items from our U.S. GAAP financial statements as well as other non-core items, such as acquisition and integration related costs, unrealized mark-to-market gains and losses, and gains and losses on sales of non-operating assets, included in our U.S. GAAP results that warrant adjustment to arrive at non-GAAP results. We consider these items to be necessary adjustments for purposes of evaluating our ongoing business performance and are often considered non-recurring. Such adjustments are subjective and involve significant management judgment.

Our guidance for underlying Corporate MG&A, underlying depreciation and amortization, underlying free cash flow, underlying effective tax rate, and underlying Corporate net interest expense are also non-GAAP financial measures that exclude or otherwise have been adjusted for special items from our U.S. GAAP financial statements as well as other non-core items, such as acquisition and integration related costs, unrealized mark-to-market gains and losses, and gains and losses on sales of non-operating assets, included in our U.S. GAAP results that warrant adjustment to arrive at non-GAAP results. We consider these items to be necessary adjustments for purposes of evaluating our ongoing business performance and are often considered non-recurring. Such adjustments are subjective and involve significant management judgment. We are unable to reconcile the above described guidance measures to their nearest U.S. GAAP measures without unreasonable efforts because we are unable to predict with a reasonable degree of certainty the actual impact of the special and other non-core items. By their very nature, special and other non-core items are difficult to anticipate with precision because they are generally associated with unexpected and unplanned events that impact our company and its financial results. Therefore, we are unable to provide a reconciliation of these measures.

Underlying Actual and Pro Forma EBITDA

N/M = Not meaningful

Underlying Free Cash Flow

Actual and Pro Forma Condensed Consolidated Statements of Operations

Molson Coors Brewing Company and Subsidiaries
U.S. Actual and Pro Forma Results of Operations

Molson Coors Brewing Company and Subsidiaries
Underlying Equity Income in MillerCoors

Molson Coors Brewing Company and Subsidiaries
Canada Results of Operations

Molson Coors Brewing Company and Subsidiaries
Europe Results of Operations

Molson Coors Brewing Company and Subsidiaries
International Results of Operations

Molson Coors Brewing Company and Subsidiaries
Corporate Results of Operations