MOLSON COORS BREWING CO, 8-K filed on 9/28/2010
Current report filing
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Millions, except Per Share data
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Sales
$ 1,283 
$ 1,160 
$ 2,230 
$ 1,985 
Excise taxes
(399)
(362)
(685)
(627)
Net sales
883 
799 
1,544 
1,358 
Cost of goods sold
(475)
(433)
(879)
(779)
Gross profit
409 
366 
665 
579 
Marketing, general and administrative expenses
(261)
(230)
(499)
(413)
Special items, net
(16)
(7)
(18)
(17)
Equity income in MillerCoors
164 
134 
255 
231 
Operating income
295 
263 
403 
381 
Interest expense, net
(25)
(20)
(50)
(40)
Other income (expense), net
21 
(8)
13 
(27)
Income from continuing operations before income taxes
291 
235 
366 
314 
Income tax expense
(52)
(47)
(64)
(46)
Income from continuing operations
239 
188 
302 
268 
(Loss) income from discontinued operations, net of tax
(1)
 
42 
(4)
Net income
238 
188 
344 
264 
Less: Net income attributable to noncontrolling interests
(1)
(1)
(2)
(1)
Net income attributable to Molson Coors Brewing Company
237 
187 
342 
263 
Basic income (loss) attributable to Molson Coors Brewing Company per share:
 
 
 
 
From continuing operations (in dollars per share)
1.28 
1.02 
1.61 
1.45 
From discontinued operations (in dollars per share)
 
 
0.23 
(0.02)
Basic net income per share (in dollars per share)
1.28 
1.02 
1.84 
1.43 
Diluted income (loss) attributable to Molson Coors Brewing Company per share:
 
 
 
 
From continuing operations (in dollars per share)
1.27 
1.01 
1.60 
1.44 
From discontinued operations (in dollars per share)
 
 
0.23 
(0.02)
Diluted net income per share (in dollars per share)
1.27 
1.01 
1.83 
1.42 
Weighted average shares - basic (in shares)
186 
184 
186 
184 
Weighted average shares - diluted (in shares)
187 
185 
187 
185 
Amounts attributable to Molson Coors Brewing Company
 
 
 
 
Income from continuing operations, net of tax
238 
187 
300 
267 
(Loss) income from discontinued operations, net of tax
(1)
 
42 
(4)
Net income attributable to Molson Coors Brewing Company
$ 237 
$ 187 
$ 342 
$ 263 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Millions
6 Months Ended
Jun. 26, 2010
Year Ended
Dec. 26, 2009
Current assets:
 
 
Cash and cash equivalents
$ 799 
$ 734 
Accounts receivable, net
610 
567 
Other receivables, net
174 
151 
Inventories:
 
 
Finished, net
120 
111 
In process
17 
18 
Raw materials
35 
44 
Packaging materials, net
61 
63 
Total inventories, net
234 
236 
Other assets, net
105 
65 
Discontinued operations
10 
Total current assets
1,924 
1,763 
Properties, net
1,240 
1,293 
Goodwill
1,443 
1,475 
Other intangibles, net
4,548 
4,535 
Investment in MillerCoors
2,652 
2,614 
Deferred tax assets
149 
178 
Notes receivable, net
42 
49 
Other assets
110 
116 
Total assets
12,107 
12,021 
Current liabilities:
 
 
Accounts payable
178 
210 
Accrued expenses and other liabilities
894 
745 
Deferred tax liabilities
180 
167 
Current portion of long-term debt and short-term borrowings
300 
300 
Discontinued operations
16 
158 
Total current liabilities
1,568 
1,581 
Long-term debt
1,433 
1,413 
Pension and post-retirement benefits
795 
824 
Derivative hedging instruments
376 
374 
Deferred tax liabilities
442 
468 
Unrecognized tax benefits
66 
65 
Other liabilities
88 
185 
Discontinued operations
19 
19 
Total liabilities
4,787 
4,928 
Commitments and contingencies (Note 15)
 
 
Capital stock:
 
 
Preferred stock, non-voting, no par value (authorized: 25.0 shares; none issued)
 
 
Paid-in capital
3,498 
3,442 
Retained earnings
2,979 
2,735 
Accumulated other comprehensive (loss) income
(16)
21 
Total Molson Coors Brewing Company stockholders' equity
7,306 
7,080 
Noncontrolling interests
14 
13 
Total equity
7,320 
7,093 
Total liabilities and equity
12,107 
12,021 
Class A common stock, voting
 
 
Capital stock:
 
 
Common stock
Class B common stock, non-voting
 
 
Capital stock:
 
 
Common stock
Class A exchangeable shares
 
 
Capital stock:
 
 
Exchangeable shares
115 
119 
Class B exchangeable shares
 
 
Capital stock:
 
 
Exchangeable shares
$ 729 
$ 762 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Per Share data
Jun. 26, 2010
Dec. 26, 2009
Preferred stock, non-voting, no par value (in dollars per share)
 
 
Preferred stock, non-voting, authorized shares
25 
25 
Preferred stock, non-voting, issued shares
Class A common stock, voting
 
 
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, authorized shares
500 
500 
Common stock, issued shares
Common stock, outstanding shares
Class B common stock, non-voting
 
 
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, authorized shares
500 
500 
Common stock, issued shares
161 
159 
Common stock, outstanding shares
161 
159 
Class A exchangeable shares
 
 
Exchangeable shares, no par value (in dollars per share)
 
 
Exchangeable shares, issued shares
Exchangeable shares, outstanding shares
Class B exchangeable shares
 
 
Exchangeable shares, no par value (in dollars per share)
 
 
Exchangeable shares, issued shares
19 
20 
Exchangeable shares, outstanding shares
19 
20 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Cash flows from operating activities:
 
 
Net income
$ 344 
$ 264 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
92 
89 
Share-based compensation
16 
11 
Loss on sale and impairment of properties and intangibles
14 
 
Deferred income taxes
22 
62 
Equity income in MillerCoors
(255)
(231)
Distributions from MillerCoors
255 
250 
Equity in net income of other unconsolidated affiliates
(6)
(0)
Distributions from other unconsolidated affiliates
10 
Excess tax benefits from share-based compensation
(1)
(15)
Change in current assets and liabilities and other
(53)
(84)
(Gain) loss from discontinued operations
(42)
Net cash provided by operating activities
396 
353 
Cash flows from investing activities:
 
 
Additions to properties
(51)
(45)
Proceeds from sales of properties and intangible assets
Acquisition of business
 
(20)
Cash placed in escrow for acquisition
(34)
 
Payment on discontinued operations
(96)
 
Investment in MillerCoors
(624)
(212)
Return of capital from MillerCoors
569 
93 
Deconsolidation of Brewers' Retail, Inc.
 
(26)
Investment in and advances to an unconsolidated affiliate
(2)
(5)
Trade loan repayments from customers
10 
Trade loans advanced to customers
(5)
(7)
Net cash used in investing activities
(232)
(210)
Cash flows from financing activities:
 
 
Exercise of stock options under equity compensation plans
13 
Excess tax benefits from share-based compensation
15 
Dividends paid
(98)
(81)
Dividends paid to noncontrolling interests holders
(1)
 
Payments on long-term debt and capital lease obligations
 
(0)
Proceeds from short-term borrowings
10 
Payments on short-term borrowings
(8)
(10)
Change in overdraft balances and other
(3)
(9)
Net cash used in financing activities
(98)
(62)
Cash and cash equivalents:
 
 
Net increase in cash and cash equivalents
65 
80 
Effect of foreign exchange rate changes on cash and cash equivalents
(1)
(0)
Balance at beginning of year
734 
216 
Balance at end of period
$ 799 
$ 296 
BASIS OF PRESENTATION
BASIS OF PRESENTATION

1. BASIS OF PRESENTATION

        Unless otherwise noted in this report, any description of "we", "us" or "our" includes Molson Coors Brewing Company ("MCBC" or the "Company"), principally a holding company, and its operating subsidiaries: MillerCoors LLC ("MillerCoors") which is accounted for by us under the equity method of accounting, Molson Coors Brewing Company (UK) Limited ("MCBC-UK"), Molson Coors Canada ("MCC") and our other operating entities as further described in Note 1 of the Notes to the Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 26, 2009 ("Annual Report").

        Unless otherwise indicated, information in this report is presented in U.S. dollars ("USD" or "$").

        The accompanying unaudited condensed consolidated interim financial statements reflect all adjustments which are necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). Such unaudited interim financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.

        These unaudited condensed consolidated interim financial statements should be read in conjunction with our Annual Report and have been prepared on a consistent basis with the accounting policies described in Note 1 of the Notes to the Audited Consolidated Financial Statements included in the Annual Report. The results of operations for the thirteen and twenty-six week periods ended June 26, 2010, are not necessarily indicative of the results that may be achieved for the full fiscal year. Certain prior period amounts have been reclassified to conform to current period presentation.

        MCBC follows a 52/53 week fiscal reporting calendar. The second fiscal quarters of 2010 and 2009 consisted of thirteen weeks ended on June 26, 2010 and June 28, 2009, respectively. The first half of 2010 and 2009 consisted of twenty-six weeks ended on June 26, 2010 and June 28, 2009, respectively. Fiscal year 2010 consists of 52 weeks ending on December 25, 2010 and fiscal year 2009 consisted of 52 weeks ended December 26, 2009.

        Brewers' Retail, Inc. ("BRI"), a consolidated subsidiary through February 28, 2009, and subsequently accounted for under the equity method of accounting reports results one month in arrears in the accompanying unaudited condensed interim consolidated financial statements.

        MillerCoors follows a monthly reporting calendar. The second quarter and first half of 2010 and 2009 consisted of three and six months ended June 30, 2010 and June 30, 2009, respectively.

NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS

2. NEW ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Pronouncements

Consolidation of Variable Interest Entities

        In June 2009, the Financial Accounting Standards Board ("FASB") issued authoritative guidance related to the consolidation of variable interest entities, which requires an enterprise to determine whether its variable interests give it a controlling financial interest. The primary beneficiary of a variable interest entity is the enterprise that has both (1) the power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance, and (2) the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. This amendment also requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity requiring consolidation. The guidance was effective for our first quarter ended March 27, 2010. The adoption of this guidance did not impact our financial results. See also Note 4, "INVESTMENTS" for further disclosure of our variable interest entities.

SEGMENT REPORTING
SEGMENT REPORTING

3. SEGMENT REPORTING

        Our reportable segments consist of Canada, the United States ("U.S.") and the United Kingdom ("U.K.") and our non-reportable segment and other business activities include Molson Coors International ("MCI") and Corporate.

        The following table sets forth net sales by segment:

 
  Thirteen Weeks Ended   Twenty-Six Weeks Ended  
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
 

Canada

  $ 541.8   $ 471.0   $ 932.0   $ 795.7  

U.K. 

    320.5     309.7     575.5     529.1  

MCI and Corporate

    21.0     18.2     36.8     33.1  
                   
 

Consolidated

  $ 883.3   $ 798.9   $ 1,544.3   $ 1,357.9  
                   

        Across each of our segments, no single customer accounted for more than 10% of our sales. Net sales represent sales to third party external customers and affiliates. Unless otherwise disclosed, intersegment revenues are insignificant and eliminated in consolidation.

        The following table sets forth income (loss) from continuing operations before income taxes by segment:

 
  Thirteen Weeks Ended   Twenty-Six Weeks Ended  
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
 

Canada

  $ 131.9   $ 136.4   $ 186.2   $ 186.4  

U.S. 

    163.6     134.1     254.6     231.2  

U.K. 

    32.0     30.0     33.5     32.6  

MCI and Corporate

    (36.4 )   (65.4 )   (108.7 )   (136.3 )
                   
 

Consolidated

  $ 291.1   $ 235.1   $ 365.6   $ 313.9  
                   

        The following table sets forth total assets by segment:

 
  As of  
 
  June 26,
2010
  December 26,
2009
 
 
  (In millions)
 

Canada

  $ 6,465.0   $ 6,402.0  

U.S. 

    2,652.1     2,613.6  

U.K. 

    2,257.7     2,359.8  

MCI and Corporate

    730.6     635.8  

Discontinued operations

    2.0     9.9  
           
 

Total assets

  $ 12,107.4   $ 12,021.1  
           
INVESTMENTS
INVESTMENTS

4. INVESTMENTS

        The investments included within this Note include both equity method and consolidated investments. Those entities identified as variable interest entities ("VIE's") have been evaluated to determine whether we are the primary beneficiary. The VIE's included under Equity Investments are those for which we have concluded that we are not the primary beneficiary and accordingly account for those investments under the equity method of accounting. The VIE's included under Consolidated Investments are those for which we have concluded that we are the primary beneficiary and accordingly consolidate those entities. We have not provided any financial support to any of our VIE's during the quarter that we were not previously contractually obligated to provide.

        Authoritative guidance related to the consolidation of VIE's requires that we continually reassess whether we are the primary beneficiary of VIE's in which we have an interest. As such, the conclusion regarding the primary beneficiary status is subject to change and we continually evaluate circumstances that could require consolidation or deconsolidation.

Equity Investments

MillerCoors

        Summarized financial information for MillerCoors is as follows:

Condensed balance sheets

 
  As of  
 
  June 30, 2010   December 31, 2009  
 
  (In millions)
 

Current assets

  $ 1,050.4   $ 808.5  

Noncurrent assets

    8,868.0     9,025.0  
           
 

Total assets

  $ 9,918.4   $ 9,833.5  
           

Current liabilities

  $ 903.2   $ 885.4  

Noncurrent liabilities

    1,231.0     1,278.4  
           
 

Total liabilities

    2,134.2     2,163.8  

Noncontrolling interests

    30.7     28.1  

Interest attributable to shareholders'

    7,753.5     7,641.6  
           

Total liabilities and equity

  $ 9,918.4   $ 9,833.5  
           

Results of operations

 
  For the Three Months Ended   For the Six Months Ended  
 
  June 30,
2010
  June 30,
2009
  June 30,
2010
  June 30,
2009
 
 
  (In millions)
 

Net sales

  $ 2,134.1   $ 2,136.7   $ 3,835.0   $ 3,852.6  

Cost of goods sold

    (1,284.8 )   (1,302.3 )   (2,363.4 )   (2,352.2 )
                   

Gross profit

  $ 849.3   $ 834.4   $ 1,471.6   $ 1,500.4  

Operating income

  $ 396.8   $ 313.4   $ 609.3   $ 527.2  

Net income attributable to MillerCoors

  $ 391.2   $ 304.9   $ 599.8   $ 510.9  

        The following represents MCBC's proportional share in net income attributable to MillerCoors reported under the equity method:

 
  Thirteen Weeks Ended   Twenty-Six Weeks Ended  
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions, except percentages)
 

Net income attributable to MillerCoors

  $ 391.2   $ 304.9   $ 599.8   $ 510.9  
 

MCBC economic interest

    42 %   42 %   42 %   42 %
                   
 

MCBC proportionate share of MillerCoors net income

    164.3     128.1     251.9     214.6  
 

MillerCoors accounting policy elections(1)

                7.3  
 

Amortization of the difference between MCBC contributed cost basis and proportional share of the underlying equity in net assets of MillerCoors(2)

    (0.6 )   3.9     1.9     6.9  
 

Share-based compensation adjustment(3)

    (0.1 )   2.1     0.8     2.4  
                   

Equity income in MillerCoors

  $ 163.6   $ 134.1   $ 254.6   $ 231.2  
                   

(1)
MillerCoors made its initial accounting policy elections upon formation, impacting certain asset and liability balances contributed by MCBC. Our investment basis in MillerCoors is based upon the book value of the net assets we contributed. These adjustments reflect the favorable impact to our investment as a result of the differences resulting from accounting policy elections, the most significant of which was MillerCoors' election to value contributed Coors Brewing Company ("CBC") inventories using the first in, first out (FIFO) method, rather than the last in, first out (LIFO) method, which had previously been applied. This adjustment has been phased in over the expected turnover of the related inventories; which was concluded in the first quarter of 2009.

(2)
Our net investment in MillerCoors is based on the carrying values of the net assets we contributed to the joint venture which is less than our proportional share of underlying equity (42%) of MillerCoors (contributed by both CBC and Miller Brewing Company) by approximately $629 million. This difference is being amortized as additional equity income over the remaining useful lives of long-lived assets giving rise to the difference. For non-depreciable assets, such as goodwill, no adjustment is being recorded. This also includes the impact of impairments and other adjustments occurring since formation that change this basis difference.

(3)
The net adjustment is to record all stock-based compensation associated with pre-existing equity awards to be settled in MCBC Class B common stock held by former CBC employees now employed by MillerCoors and to eliminate all stock-based compensation impacts related to pre-existing SABMiller plc equity awards held by former Miller Brewing Company employees now employed by MillerCoors.

        During the thirteen weeks ended June 26, 2010, we had $10.7 million of sales of beer to MillerCoors and $2.2 million of purchases of beer from MillerCoors. During the thirteen weeks ended June 28, 2009, we had $11.2 million of sales of beer to MillerCoors and $1.9 million of purchases of beer from MillerCoors.

        For the twenty-six weeks ended June 26, 2010, we had $19.2 million of sales of beer to MillerCoors and $4.2 million of purchases of beer from MillerCoors. During the twenty-six weeks ended June 28, 2009, we had $21.2 million of sales of beer to MillerCoors and $4.3 million of purchases of beer from MillerCoors.

        During the thirteen weeks ended June 26, 2010, we recorded $1.5 million of service agreement and other charges to MillerCoors and $0.6 million of service agreement costs from MillerCoors. For the thirteen weeks ended June 28, 2009, we recorded $2.7 million of service agreement and other charges to MillerCoors and $0.4 million of service agreement costs from MillerCoors.

        For the twenty-six weeks ended June 26, 2010, we recorded $2.3 million of service agreement and other charges to MillerCoors and $1.0 million of service agreement costs from MillerCoors. For the twenty-six weeks ended June 28, 2009, we recorded $6.3 million of service agreement and other charges to MillerCoors and $0.7 million of service agreement costs from MillerCoors.

        As of June 26, 2010 and December 26, 2009, we had $4.9 million and $5.4 million net receivables due from MillerCoors, included within Accounts receivable, net, related to the activities mentioned above.

Brewers' Retail Inc. and Brewers' Distribution Ltd.

        BRI, a VIE, is the beer distribution and retail network for the Ontario region of Canada, owned by MCC, Labatt and Sleeman brewers. BRI operates on a break-even basis. MCBC had historically consolidated BRI as its primary beneficiary. Acquisition activity by another BRI owner caused our variable interest to decrease to a level indicating that we are no longer the primary beneficiary. As a result, we deconsolidated BRI from our financial statements beginning the first quarter of 2009 and applied the equity method of accounting prospectively.

        Brewers' Distributor Ltd. ("BDL"), our equity method joint venture, is a distribution operation owned by MCC and Labatt and pursuant to an operating agreement acts as an agent for the distribution of their and other brewers' products in western provinces of Canada. The owners share 50%/50% voting control.

        We are exposed to the risk of funding requirements related to the defined benefit plans of BRI and BDL, as a result of potential changes in the fair value of the respective plans' assets and liabilities. Specifically, the fair value of each variable interest entity's plan assets can fluctuate due to changes in the market value of the investments held by the respective plans, and the respective plan liabilities can fluctuate due to changes in discount rates and other actuarial assumptions. These fluctuations would result in a change in the respective plan's funded status and thereby the required contributions of BRI and BDL. Although we are exposed to these changes, we currently expect BRI and BDL to continue to meet the current and future plan funding requirements.

Consolidated Investments

        The following summarizes the assets of our consolidated VIEs (including noncontrolling interests). The amounts below exclude receivables from the Company. None of our consolidated VIEs held debt as of June 26, 2010 or December 26, 2009.

 
  As of  
 
  June 26, 2010   December 26, 2009  
 
  (In millions)
 

Grolsch

  $ 17.7   $ 22.7  

Cobra

  $ 31.2   $ 32.3  

        The following summarizes the results of operations of our consolidated VIEs (including noncontrolling interests).

 
  For the Thirteen Weeks Ended   For the Twenty-Six Weeks Ended  
 
  June 26, 2010   June 28, 2009   June 26, 2010   June 28, 2009  
 
  Revenues   Pre-tax
income
  Revenues   Pre-tax
income
  Revenues   Pre-tax
income
  Revenues   Pre-tax
income
 
 
  (In millions)
 

BRI(1)

  $   $   $   $   $   $   $ 40.4   $  

Grolsch(2)

  $ 9.0   $ 1.3   $ 9.5   $ 1.4   $ 15.7   $ 2.3   $ 17.3   $ 2.8  

Cobra

  $ 8.6   $ 1.9   $ 2.3   $ 0.4   $ 17.9   $ 3.3   $ 2.3   $ 0.4  

(1)
The revenues shown for BRI are for the first two months of 2009 as BRI was deconsolidated as of February 28, 2009.

(2)
Substantially all such sales for Grolsch are made to the Company and as such, are eliminated in consolidation.

        As discussed in the Annual Report, during the fourth quarter of 2009, our subsidiary Creemore Springs entered into an agreement to acquire Granville Island Brewing Company, Ltd. and Mainland Beverage Distribution Ltd (collectively, "Granville Island"). As anticipated, we completed this acquisition and acquired 100% of the outstanding stock during the second quarter of 2010. As a result, Granville Island is no longer classified as a variable interest entity. We continue to consolidate the results and financial position of Granville Island, and it is reported within our Canada operating segment.

SHARE-BASED PAYMENTS
SHARE-BASED PAYMENTS

5. SHARE-BASED PAYMENTS

        During the first two quarters of 2010 and 2009, we recognized share-based compensation related to the following Class B Common Stock awards to certain directors, officers, and other eligible employees, pursuant to the Molson Coors Brewing Company Incentive Compensation Plan ("Incentive Compensation Plan"): restricted stock units ("RSU"), deferred stock units ("DSU"), performance units ("PU"), performance share units ("PSU"), stock options, and stock-only stock appreciation rights ("SOSAR").

        The following table summarizes components of the share-based compensation recorded as expense:

 
  Thirteen Weeks
Ended
  Twenty-Six Weeks
Ended
 
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
  (In millions)
 

Stock options and SOSARs

                         
 

Pre-tax compensation expense

  $ 0.9   $ 3.6   $ 4.7   $ 4.6  
 

Tax benefit

    (0.2 )   (1.2 )   (1.3 )   (1.4 )
                   
 

After-tax compensation expense

  $ 0.7   $ 2.4   $ 3.4   $ 3.2  
                   

RSUs and DSUs

                         
 

Pre-tax compensation expense

  $ 4.3   $ 4.0   $ 8.3   $ 6.9  
 

Tax benefit

    (1.1 )   (1.1 )   (2.2 )   (1.9 )
                   
 

After-tax compensation expense

  $ 3.2   $ 2.9   $ 6.1   $ 5.0  
                   

PUs and PSUs

                         
 

Pre-tax compensation expense

  $ 2.3   $ 0.9   $ 3.7   $ 0.9  
 

Tax benefit

    (0.6 )   (0.2 )   (0.9 )   (0.2 )
                   
 

After-tax compensation expense

  $ 1.7   $ 0.7   $ 2.8   $ 0.7  
                   
 

Total after-tax compensation expense

  $ 5.6   $ 6.0   $ 12.3   $ 8.9  
                   

        During the first half of 2010, we granted 0.7 million stock options, 0.2 million RSUs and 0.7 million PUs, all of which were outstanding as of June 26, 2010.

        The mark-to-market stock-based compensation expense before tax, related to MCBC share-based awards granted to former CBC employees now employed by MillerCoors, recorded during the thirteen and twenty-six weeks ended June 26, 2010, was $0.7 million and $1.1 million, respectively. For the thirteen and twenty-six weeks ended June 28, 2009, the amounts were $1.3 million. These amounts are included in the table above.

        As of June 26, 2010, there was $39.7 million of total unrecognized compensation expense related to non-vested shares from share-based compensation arrangements granted under the plans. This compensation expense is expected to be recognized over a weighted-average period of approximately 1.8 years. During the twenty-six weeks ended June 26, 2010, cash received from stock option exercises was $7.1 million and the total tax benefit to be realized for the tax deductions from these option exercises was $0.6 million.

        As of June 26, 2010, there were 4.6 million shares of our Class B Common Stock available for the issuance of stock options, SOSARs, RSUs, DSUs, PUs and PSUs.

        The following table represents the summary of stock options and SOSARs outstanding as of June 26, 2010, and the activity during the first twenty-six weeks ended June 26, 2010:

 
  Outstanding
options
  Weighted-average
exercise price
per share
  Weighted-average
remaining
contractual life
(years)
  Aggregate
intrinsic value
 
 
  (In millions, except per share amounts and years)
 

Outstanding as of December 26, 2009

    7.4   $ 37.00     4.94   $ 64.0  
 

Granted

    0.7   $ 43.25              
 

Exercised

    (0.2 ) $ 35.25              
 

Forfeited

    (0.1 ) $ 47.43              
                         

Outstanding as of June 26, 2010

    7.8   $ 37.58     5.00   $ 54.2  
                         

Excercisable at June 26, 2010

    6.8   $ 36.02     4.13   $ 56.7  
                         

        The total intrinsic value of options exercised during the twenty-six weeks ended June 26, 2010, and June 28, 2009, was $2.2 million and $5.2 million, respectively.

        The following table represents non-vested RSUs, PUs and DSUs as of June 26, 2010, and the activity during the first twenty-six weeks ended June 26, 2010:

 
  Units   Weighted-average
grant date fair
value per unit
 
 
  (In millions, except
per unit amounts)

 

Non-vested as of December 26, 2009

    3.2   $ 16.60  
 

Granted

    1.0   $ 19.49  
 

Vested

    (0.9 ) $ 13.17  
 

Forfeited

    (0.1 ) $ 22.63  
             

Non-vested as of June 26, 2010

    3.2   $ 18.30  
             

        The fair values of each option granted in the first half of 2010 and 2009, respectively, were determined on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

 
  For the Twenty-Six Weeks
Ended(1)
 
  June 26, 2010   June 28, 2009

Risk-free interest rate

  2.95%   2.46%

Dividend yield

  2.22%   2.28%

Volatility range

  27.2% - 29.5%   28.7% - 28.9%

Weighted-average volatility

  27.86%   28.88%

Expected term (years)

  5.0 - 7.0   5.0 - 7.0

Weighted-average fair market value

  $10.95   $10.33

(1)
Values primarily relate to options granted during the annual grant which occurred in the first quarter of 2010 and the second quarter of 2009.

        The valuation of stock options is a significant accounting estimate which requires us to use judgments and assumptions that are likely to have a material impact on our financial statements. Annually, we make assumptions regarding future stock price volatility, employee exercise behavior, and dividend yield. We estimate our future stock price volatility using the historical volatility over the expected term of the option.

        Our expected term represents the period of time that options granted are expected to be outstanding based on historical option exercise activity and employee post-vesting cancellations within the valuation model. Separate groups of employees with differing historical exercise behavior were segregated for valuation purposes. The weighted-average expected term for all employee groups is presented in the table above. Our valuation model assumes that dividends and our share price increase in line with earnings, resulting in a constant dividend yield. The risk-free interest rate for periods during the expected term of the options is based on the yield on a U.S. Treasury zero-coupon bond of comparable duration.

        To the extent that actual outcomes differ from our assumptions, we are not required to true up grant-date fair- value-based expense to final intrinsic values. However, these differences can impact the classification of cash tax benefits realized upon exercise of stock options. Furthermore, historical data has a significant bearing on our forward-looking assumptions. Significant variances between actual and predicted experience could lead to prospective revisions in our assumptions, which could then significantly impact the year-over-year comparability of stock-based compensation expense.

UNUSUAL OR INFREQUENT ITEMS
UNUSUAL OR INFREQUENT ITEMS

6. UNUSUAL OR INFREQUENT ITEMS

        We have incurred charges or gains that we believe are not indicative of our normal, core operations. As such, we have separately classified these costs as special operating items.

Summary of Special Items

        The table below summarizes special items recorded by program:

 
  Thirteen Weeks
Ended
  Twenty-Six Weeks
Ended
 
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
 

Canada

                         
 

Restructuring, exit and other related costs associated with the Edmonton and Montréal breweries(1)

  $ 0.2   $ 0.9   $ 0.9   $ 3.7  
 

Ontario Retiree Pension incentive(1)

    2.0         3.2      
 

Pension curtailment(2)

                5.3  
 

Software abandonment(3)

    12.4           12.4        

U.K.

                         
 

Restructuring charge(4)

    0.3     1.1     1.2     2.0  
 

Costs associated with Cobra Beer partnership(5)

        5.7         5.7  
 

Other(5)

    0.4         0.1      

MCI and Corporate

                         
 

Gain on change in control agreements for Coors executives(6)

        (0.6 )        
 

Costs associated with strategic initiatives(7)

    0.5         0.6     0.6  
                   

Total special items

  $ 15.8   $ 7.1   $ 18.4   $ 17.3  
                   

(1)
During the second quarters of 2010 and 2009, the Canada segment recognized expenses for restructuring costs associated with employee terminations and impairment of assets at the Montréal and Edmonton breweries. The segment also recognized $3.2 million in special termination benefits in the first half of 2010 related to changes to defined benefit pension plans.
(2)
In the first half of 2009, the Canada segment recognized a pension curtailment loss and restructuring costs associated with employee terminations at the Montréal brewery driven by MillerCoors' decision to produce Blue Moon products at its breweries in the U.S.

(3)
During the second quarter of 2010, a capital asset write-off was recorded related to abandonment of sales support software, which had been under development, as a result of a change in strategic direction relative to the use of the software.

(4)
During the second quarters and first halves of 2010 and 2009, the U.K. segment recognized employee termination costs related to supply chain restructuring activity and company-wide efforts to increase efficiency in certain finance, information technology and human resource activities by outsourcing portions of those functions.

(5)
During the first half of 2010, the U.K. segment recognized a gain due to the release of an accrual of $0.3 million related to a potential repayment of a government grant. This was offset during the second quarter of 2010 due to $0.4 million of other charges. During the second quarter and first half of 2009, the segment recognized $2.5 million and $3.2 million of costs associated with the Cobra Beer Partnership, Ltd. acquisition and employee severance costs related to individuals not retained subsequent to the acquisition, respectively.

(6)
Special items for the first half of 2009 include costs associated with adjusting to the floor provided on the exercise price of stock options held by former Adolph Coors Company ("Coors") officers who left the Company under change in control agreements following the merger between Coors and Molson, Inc. ("Molson") in 2005 which expired during the first quarter of 2010.

(7)
During the first half of 2010 and 2009, MCI and Corporate recognized costs associated with other strategic initiatives.

        The table below summarizes the activity in the restructuring accruals:

 
  Severance and
other employee-
related costs
 
 
  Canada   U.K.  
 
  (In millions)
 

Balance at December 26, 2009

  $ 0.6   $ 2.3  
 

Charges incurred

        1.2  
 

Payments made

    (0.2 )   (2.4 )
 

Foreign currency and other adjustments

        (0.1 )
           

Balance at June 26, 2010

  $ 0.4   $ 1.0  
           
OTHER INCOME AND EXPENSE
OTHER INCOME AND EXPENSE

7. OTHER INCOME AND EXPENSE

        The table below summarizes other income and expense:

 
  Thirteen Weeks
Ended
  Twenty-Six Weeks
Ended
 
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
 

Gain (loss) from Foster's swap(1)

  $ 21.9   $ (12.9 ) $ 15.0   $ (34.3 )

(Losses) gains from other foreign exchange and derivative activity

    (0.6 )   6.6     (2.8 )   7.4  

Gains (losses) on non-operating leases, net

    0.1     (0.8 )   (0.1 )   (1.0 )

Environmental litigation provisions

    (0.1 )   (1.0 )   (0.1 )   (1.0 )

Equity in income of unconsolidated affiliates, net

        (3.7 )       (2.1 )

Other, net

    0.1     3.5     0.8     4.2  
                   

Other income (expense), net

  $ 21.4   $ (8.3 ) $ 12.8   $ (26.8 )
                   

(1)
During the third quarter of 2008, we entered into a cash settled total return swap with Deutsche Bank in order to gain an economic exposure to Foster's Group ("Foster's") (ASX:FGL), a major global brewer. See further discussion in Note 13 "DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES". This amount represents the net gain (loss) recognized on the mark-to-market adjustment on the fair value of the swap.
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS

8. DISCONTINUED OPERATIONS

        In 2006, we sold our entire equity interest in our Brazilian unit, Cervejarias Kaiser Brasil S.A. ("Kaiser") to FEMSA Cerveza S.A. de C.V. ("FEMSA"). The terms of the sale agreement require us to indemnify FEMSA for exposures related to certain tax, civil and labor contingencies arising prior to FEMSA's purchase of Kaiser. In the second quarter of 2010 and 2009, we recognized losses from discontinued operations of $0.6 million and zero, respectively. During the first half of 2010 and of 2009, we recognized a gain of $42.0 million and a loss of $3.9 million, respectively. We recognized a gain of $42.6 million related to our settlement of a portion of our indemnity liabilities to FEMSA during the first quarter of 2010. See further discussion in Note 15 "COMMITMENTS AND CONTINGENCIES."

INCOME TAX
INCOME TAX

9. INCOME TAX

        Our effective tax rate for the second quarter of 2010 was approximately 18%. We anticipate that our 2010 full year effective tax rate will be in the range of 14% to 18%. We have lowered our expected range for the full year effective tax rate primarily because of higher expected deductible interest expense and a one-time benefit this year.

        Our tax rate is volatile and may fluctuate with changes in, among other things, the amount and source of income or loss, our ability to utilize foreign tax credits, changes in tax laws, and the movement of liabilities established for uncertain tax positions as statutes of limitations expire or positions are otherwise effectively settled. In addition, any changes to current tax laws in the U.S., U.K. or Canada, may impact our effective tax rate.

        As of December 26, 2009, we had $71.5 million of uncertain tax benefits. Since December 26, 2009, uncertain tax benefits increased by $3.3 million. This addition is net of increases due to additional uncertain tax positions and interest accrued for the current year and decreases primarily due to fluctuation in foreign exchange rates, certain tax positions closing or being effectively settled, and payments made to tax authorities with regard to uncertain tax positions during the second quarter of 2010. This results in a total uncertain tax benefit of $74.8 million as of June 26, 2010. Within the next 12 months, the Company expects to recognize approximately $1 to $4 million of income tax expense related to uncertain tax positions.

        We file income tax returns in most of the federal, state, and provincial jurisdictions in the U.S., U.K., and Canada. Tax years through 2007 are closed or have been effectively settled through examination in the U.S and in the U.K. The 2008 tax year is currently under examination in the U.S. and is expected to conclude in 2011. Tax years through 2004 are closed or have been effectively settled through examination in Canada. Tax year 2005 is currently under examination in Canada.

EARNINGS PER SHARE ("EPS")
EARNINGS PER SHARE ("EPS")

10. EARNINGS PER SHARE ("EPS")

        Basic net income per share was computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income per share includes the additional dilutive effect of our potentially dilutive securities, which include stock options, SOSARs, RSUs, PUs, PSUs and DSUs, calculated using the treasury stock method.

        The following summarizes the effect of dilutive securities on diluted EPS:

 
  Thirteen Weeks
Ended
  Twenty-Six Weeks
Ended
 
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
 

Amounts attributable to MCBC

                         

Income from continuing operations, net of tax

  $ 237.8   $ 187.3   $ 299.8   $ 266.9  

(Loss) income from discontinued operations, net of tax

    (0.6 )       42.0     (3.9 )
                   

Net income attributable to MCBC

  $ 237.2   $ 187.3   $ 341.8   $ 263.0  
                   

Weighted average shares for basic EPS

    185.7     184.2     185.6     184.0  

Effect of dilutive securities:

                         
 

Options and SOSARs

    0.9     0.9     0.9     0.8  
 

RSUs, PUs and DSUs

    0.8     0.3     0.7     0.4  
                   

Weighted average shares for diluted EPS

    187.4     185.4     187.2     185.2  
                   

Basic income (loss) per share:

                         
 

Continuing operations attributable to MCBC

  $ 1.28   $ 1.02   $ 1.61   $ 1.45  
 

Discontinued operations attributable to MCBC

            0.23     (0.02 )
                   

Net income attributable to MCBC

  $ 1.28   $ 1.02   $ 1.84   $ 1.43  
                   

Diluted income (loss) per share:

                         
 

Continuing operations attributable to MCBC

  $ 1.27   $ 1.01   $ 1.60   $ 1.44  
 

Discontinued operations attributable to MCBC

            0.23     (0.02 )
                   

Net income attributable to MCBC

  $ 1.27   $ 1.01   $ 1.83   $ 1.42  
                   

Dividends declared and paid per share

  $ 0.28   $ 0.24   $ 0.52   $ 0.44  
                   

        The following anti-dilutive securities were excluded from the computation of the effect of dilutive securities on earnings per share for the following periods:

 
  Thirteen Weeks
Ended
  Twenty-Six Weeks
Ended
 
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
 

Stock options, SOSARs and RSUs(1)

    1.3     0.8     1.0     0.9  

PUs

        0.2         0.2  

Shares issuable upon assumed conversion of the 2.5% Convertible Senior Notes to issue Class B common shares(2)

    10.5     10.5     10.5     10.5  

Warrants to issue Class B common shares(2)

    10.5     10.5     10.5     10.5  
                   

 

    22.3     22.0     22.0     22.1  
                   

(1)
Exercise prices exceed the average market price of the common shares or are anti-dilutive due to the impact of the unrecognized compensation cost on the calculation of assumed proceeds in the application of the treasury stock method.

(2)
We issued $575 million of senior convertible notes in June 2007. The impact of a net share settlement of the conversion amount at maturity will begin to dilute earnings per share when our stock price reaches $54.76. The impact of stock that could be issued to settle share obligations we could have under the warrants we issued simultaneously with the convertible notes issuance will begin to dilute earnings per share when our stock price reaches $70.09. The potential receipt of MCBC stock from counterparties under our purchased call options when and if our stock price is between $54.76 and $70.09 would be anti-dilutive and excluded from any calculations of earnings per share.

        We have no outstanding equity share awards that contain non-forfeitable rights to dividends on unvested shares.

GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS

11. GOODWILL AND INTANGIBLE ASSETS

        The following summarizes the change in goodwill for the twenty-six weeks ended June 26, 2010 (in millions):

Balance at December 26, 2009

  $ 1,475.0  
 

Foreign currency translation

    (32.1 )
 

Other

    (0.2 )
       

Balance at June 26, 2010

  $ 1,442.7  
       

        Goodwill was attributed to our reportable segments as follows:

 
  As of  
 
  June 26, 2010   December 26, 2009  
 
  (In millions)
 

Canada

  $ 729.1   $ 720.7  

United Kingdom

    713.6     754.3  
           
 

Consolidated

  $ 1,442.7   $ 1,475.0  
           

        The following table presents details of our intangible assets, other than goodwill, as of June 26, 2010:

 
  Useful life   Gross   Accumulated
amortization
  Net  
 
  (Years)
  (In millions)
 

Intangible assets subject to amortization:

                       
 

Brands

  3 - 40   $ 284.7   $ (141.8 ) $ 142.9  
 

Distribution rights

  2 - 23     336.8     (206.6 )   130.2  
 

Patents and technology and distribution channels

  3 - 10     33.7     (23.1 )   10.6  

Intangible assets not subject to amortization:

                       
 

Brands

  Indefinite     3,271.5         3,271.5  
 

Distribution networks

  Indefinite     976.9         976.9  
 

Other

  Indefinite     15.5         15.5  
                   

Total

      $ 4,919.1   $ (371.5 ) $ 4,547.6  
                   

        The following table presents details of our intangible assets, other than goodwill, as of December 26, 2009:

 
  Useful life   Gross   Accumulated
amortization
  Net  
 
  (Years)
  (In millions)
 

Intangible assets subject to amortization:

                       
 

Brands

  3 - 40   $ 293.5   $ (140.1 ) $ 153.4  
 

Distribution rights

  2 - 23     334.4     (194.3 )   140.1  
 

Patents and technology and distribution channels

  3 - 10     35.8     (22.4 )   13.4  

Intangible assets not subject to amortization:

                       
 

Brands

  Indefinite     3,248.8         3,248.8  
 

Distribution networks

  Indefinite     963.5         963.5  
 

Other

  Indefinite     15.5         15.5  
                   

Total

      $ 4,891.5   $ (356.8 ) $ 4,534.7  
                   

        The changes in the gross carrying amounts of intangibles from December 26, 2009, to June 26, 2010, are due to the impact of foreign exchange rates, as a significant amount of intangibles are denominated in foreign currencies.

        Based on foreign exchange rates as of June 26, 2010, the following is our estimated amortization expense related to intangible assets for the next five years:

 
  Amount  
 
  (In millions)
 

2010—remaining

  $ 21.9  

2011

  $ 42.5  

2012

  $ 30.5  

2013

  $ 30.0  

2014

  $ 30.0  

        Amortization expense of intangible assets was $11.0 million and $22.0 million for the thirteen and twenty-six weeks ended June 26, 2010, respectively and $9.7 and $19.0 million for the thirteen and twenty-six weeks ended June 28, 2009, respectively.

        We are required to perform goodwill and indefinite-lived intangible asset impairment tests on at least an annual basis and more frequently in certain circumstances. We perform the required impairment testing during the third quarter annually. No impairment losses were included in the goodwill balances as of June 26, 2010 or December 26, 2009.

DEBT
DEBT

12. DEBT

        The table below summarizes total debt:

 
  As of  
 
  June 26,
2010
  December 26,
2009
 
 
  (In millions)
 

Senior notes:

             
 

U.S. $300 million 4.85% due 2010

  $ 300.0   $ 300.0  
 

U.S. $850 million 6.375% due 2012

    44.6     44.6  
 

CAD $900 million 5.0% due 2015

    869.2     857.2  
 

U.S. $575 million convertible debt 2.5% due 2013(1)

    575.0     575.0  

Less: unamortized debt discounts and other(2)

    (55.5 )   (63.8 )
           

Total long-term debt (including current portion)

    1,733.3     1,713.0  

Less: current portion of long-term debt

    (300.0 )   (300.3 )
           

Total long-term debt

  $ 1,433.3   $ 1,412.7  
           

Total fair value

  $ 1,920.6   $ 1,913.6  
           

(1)
The original conversion price for each $1,000 aggregate principal amount of notes was $54.76 per share of our Class B common stock, which represented a 25% premium above the stock price on the day of issuance of the notes and corresponded to the initial conversion ratio of 18.263 shares per each $1,000 aggregate principal amount of notes. The conversion ratio and conversion price are subject to adjustments for certain events and provisions, as defined in the indenture. As a result of Class B common stock dividends paid, during this quarter we provided notice to the Trustee that the conversion price and conversion ratio associated with the notes would be adjusted to $54.01 and 18.5154 shares, respectively, effective August 26, 2010. Currently, the convertible debt's if-converted value does not exceed the principal.

(2)
During the thirteen weeks ended June 26, 2010, and June 28, 2009, we incurred additional non-cash interest expense of $4.2 million and $4.1 million, respectively. For the twenty-six weeks ended June 26, 2010, and June 28, 2009, the amounts were $8.4 million and $8.1 million, respectively. We also incurred interest expense related to the 2.5% coupon rate on the convertible debt of $3.6 million for both thirteen week periods ended June 26, 2010, and June 28, 2009. For the twenty-six weeks ended June 26, 2010, and June 28, 2009 the amount was $7.2 million for both periods. The combination of non-cash and cash interest resulted in an effective interest rate of 6.00% and 6.09% for the thirteen weeks ended June 26, 2010, and June 28, 2009, respectively. The effective interest rates for the twenty-six weeks ended June 26, 2010, and June 28, 2009 were 6.00% and 5.89%, respectively. As of June 26, 2010, and December 26, 2009, paid in capital in the equity section of our balance sheet includes $103.9 million, ($64.2 million net of tax), representing the equity component of the convertible debt. Further, as of June 26, 2010, and December 26, 2009, $54.9 million and $63.2 million respectively of the unamortized debt discount and other balance relates to our $575 million convertible debt. The unamortized discount will continue to amortize through 2013 resulting in non-cash interest expense of approximately $16 million to $18 million annually, thereby increasing the carrying value of the convertible debt to its $575 million face value at maturity in July 2013. The remaining $0.6 million as of quarter-end and year-end, respectively, relates to unamortized debt premiums, discounts, and other on the additional debt balances.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

13. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

        Our risk management and derivative accounting policies and strategies are presented in our Annual Report and did not significantly change during the first half of 2010.

Derivative Fair Value Measurements

        We utilize market approaches to estimate the fair value of our derivative instruments by discounting anticipated future cash flows derived from the derivative's contractual terms and observable market interest, foreign exchange and commodity rates. The fair values of our derivatives also include credit risk adjustments to account for our counterparties' credit risk, as well as MCBC's own non-performance risk. As of June 26, 2010 and December 26, 2009 these adjustments resulted in deferred net gains in accumulated other comprehensive income ("AOCI") of $4.8 million and $3.3 million, respectively, as the fair value of our derivatives were in net liability positions at both period ends.

        The table below summarizes our derivative assets and liabilities that were measured at fair value as of June 26, 2010 and December 26, 2009.

 
   
  Fair Value Measurements at June 26, 2010 Using  
 
  Total carrying
value at
June 26, 2010
  Quoted prices in
active markets
(Level 1)
  Significant other
observable inputs
(Level 2)
  Significant
unobservable
inputs (Level 3)
 
 
  (In millions)
 

Cross currency swaps

  $ (423.9 ) $   $ (423.9 ) $  

Forward starting interest rate swaps

    (0.3 )       (0.3 )    

Foreign currency forwards

    (8.3 )       (8.3 )    

Commodity swaps

    0.4         0.4      

Total return swaps

    13.0         13.0      
                   
 

Total

  $ (419.1 ) $   $ (419.1 ) $  
                   

 

 
   
  Fair Value Measurements at December 26, 2009 Using  
 
  Total carrying
value at
December 26,
2009
 
 
  Quoted prices in
active markets
(Level 1)
  Significant other
observable inputs
(Level 2)
  Significant
unobservable
inputs (Level 3)
 
 
  (In millions)
 

Cross currency swaps

  $ (413.0 ) $   $ (413.0 ) $  

Forward starting interest rate swaps

    6.3         6.3      

Foreign currency forwards

    (8.5 )       (8.5 )    

Commodity swaps

    (0.9 )       (0.9 )    

Total return swaps

    (1.8 )       (1.8 )    
                   

Total

  $ (417.9 ) $   $ (417.9 ) $  
                   

        During the period we had no significant transfers in or out of Level 1, 2 or 3. New derivative contracts transacted during the quarter are all included in Level 2.

Results of Derivative Activity

        The tables below include the year to date results of our derivative activity in the Condensed Consolidated Balance Sheet as of June 26, 2010, and December 26, 2009, and the Condensed Consolidated Statement of Operations for the thirteen and twenty-six weeks ended June 26, 2010, and June 28, 2009.

Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheet (in millions)

 
  As of June 26, 2010  
 
   
  Asset derivatives    
   
 
 
   
  Liability derivatives  
 
  Notional amount   Balance sheet location   Fair value  
 
  Balance sheet location   Fair value  

Derivatives designated as hedging instruments:

                         

Cross currency swaps

  USD 1,896.7   Other current assets   $   Accrued expenses   $ (52.7 )

 

      Other assets       Long term derivative liability     (371.2 )

Forward starting interest rate swaps

  USD 193.1   Other current assets     0.1   Accrued expenses     (0.4 )

Foreign currency forwards

  USD 367.3   Other current assets     3.0   Accrued expenses     (7.3 )

 

      Other assets     1.1   Long term derivative liability     (5.1 )

Commodity swaps

  Gigajoules 2.0   Other current assets     1.0   Accrued expenses     (0.8 )

 

      Other assets     0.3   Long term derivative liability     (0.1 )
                       

Total derivatives designated as hedging instruments

          $ 5.5       $ (437.6 )
                       

Derivatives not designated as hedging instruments:

                         

Total return swaps

  AUD 496.5   Other current assets   $ 13.6   Accrued expenses   $ (0.6 )
                       

Total derivatives not designated as hedging instruments

          $ 13.6       $ (0.6 )
                       

 

 
  As of December 26, 2009  
 
   
  Asset derivatives    
   
 
 
   
  Liability derivatives  
 
   
  Balance sheet location   Fair value  
 
  Notional amount   Balance sheet location   Fair value  

Derivatives designated as hedging instruments:

                           

Cross currency swaps

    USD 1,992.4  

Other current assets

  $  

Accrued expenses

  $ (46.9 )

 

       

Other assets

     

Long term derivative liability

    (366.1 )

Forward starting interest rate swaps

    USD 190.5  

Other current assets

    6.3  

Accrued expenses

     

Foreign currency forwards

    USD 339.3  

Other current assets

    4.6  

Accrued expenses

    (6.1 )

 

       

Other assets

    1.1  

Long term derivative liability

    (8.1 )

Commodity swaps

    Gigajoules 1.2  

Other current assets

     

Accrued expenses

    (0.9 )
                         

Total derivatives designated as hedging instruments

            $ 12.0       $ (428.1 )
                         

Derivatives not designated as hedging instruments:

                           

Total return swaps

    AUD 496.5  

Other current assets

  $  

Accrued expenses

  $ (1.8 )
                         

Total derivatives not designated as hedging instruments

            $       $ (1.8 )
                         

        MCBC allocates the current and non-current portion of each contract to the corresponding derivative account above.

The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations (in millions)

  • Cash Flow Hedges

For the Thirteen Weeks Ended June 26, 2010  
Derivatives in cash
flow hedge
relationships
  Amount of gain
(loss) recognized
in OCI on
derivative
(effective
portion)
  Location of gain (loss)
reclassified from AOCI into
income (effective portion)
  Amount of gain
(loss) recognized
from AOCI on
derivative
(effective portion)
  Location of gain (loss)
recognized in income on
derivative (ineffective
portion and amount
excluded from
effectiveness testing)
  Amount of gain (loss)
recognized in income
on derivative
(ineffective portion and
amount excluded from
effectiveness testing)
 

Cross currency swaps(1)

  $ 1.9  

Other income (expense), net

  $ 9.9  

Other income (expense), net

  $  

 

       

Interest expense, net

    (3.3 )

Interest expense, net

     

Forward starting interest rate swaps

    (4.5 )

Interest expense, net

     

Interest expense, net

     

Foreign currency forwards

    4.8  

Other income (expense), net

    (1.1 )

Other income (expense), net

     

 

       

Cost of goods sold

    (0.3 )

Cost of goods sold

     

 

       

Marketing, general and administrative expenses

    0.1  

Marketing, general and administrative expenses

     

Commodity swaps

    2.7  

Cost of goods sold

    (0.7 )

Cost of goods sold

     
                       

Total

  $ 4.9       $ 4.6       $  
                       

 

For the Thirteen Weeks Ended June 28, 2009  
Derivatives in cash
flow hedge
relationships
  Amount of gain
(loss) recognized
in OCI on
derivative
(effective
portion)
  Location of gain (loss)
reclassified from AOCI into
income (effective portion)
  Amount of gain
(loss) recognized
from AOCI on
derivative
(effective portion)
  Location of gain (loss)
recognized in income on
derivative (ineffective
portion and amount
excluded from
effectiveness testing)
  Amount of gain (loss)
recognized in income
on derivative
(ineffective portion and
amount excluded from
effectiveness testing)
 

Cross currency swaps(1)

  $ 2.7  

Other income (expense), net

  $ (140.3 )

Other income (expense), net

  $  

 

       

Interest expense, net

    (1.1 )

Interest expense, net

     

Forward starting interest rate swaps

    5.8  

Interest expense, net

     

Interest expense, net

     

Foreign currency forwards

    (29.9 )

Other income (expense), net

    2.5  

Other income (expense), net

     

 

       

Cost of goods sold

    5.2  

Cost of goods sold

     

 

       

Marketing, general and administrative expenses

    (0.1 )

Marketing, general and administrative expenses

     

Commodity swaps

    1.0  

Cost of goods sold

    (1.0 )

Cost of goods sold

     
                       

Total

  $ (20.4 )     $ (134.8 )     $  
                       

 

For the Twenty-Six Weeks Ended June 26, 2010  
Derivatives in cash
flow hedge
relationships
  Amount of gain
(loss) recognized
in OCI on
derivative
(effective
portion)
  Location of gain (loss)
reclassified from AOCI into
income (effective portion)
  Amount of gain
(loss) recognized
from AOCI on
derivative
(effective portion)
  Location of gain (loss)
recognized in income on
derivative (ineffective
portion and amount
excluded from
effectiveness testing)
  Amount of gain (loss)
recognized in income
on derivative
(ineffective portion and
amount excluded from
effectiveness testing)
 

Cross currency swaps(1)

  $ 10.2  

Other income (expense), net

  $ (15.3 )

Other income (expense), net

  $  

 

       

Interest expense, net

    (5.9 )

Interest expense, net

     

Forward starting interest rate swaps

    (6.7 )

Interest expense, net

     

Interest expense, net

     

Foreign currency forwards

    0.3  

Other income (expense), net

    (2.4 )

Other income (expense), net

     

 

       

Cost of goods sold

    (1.0 )

Cost of goods sold

     

 

       

Marketing, general and administrative expenses

    0.1  

Marketing, general and administrative expenses

     

Commodity swaps

    1.3  

Cost of goods sold

    (1.2 )

Cost of goods sold

     
                       

Total

  $ 5.1       $ (25.7 )     $  
                       

 

For the Twenty-Six Weeks Ended June 28, 2009  
Derivatives in cash
flow hedge
relationships
  Amount of gain
(loss) recognized
in OCI on
derivative
(effective
portion)
  Location of gain (loss)
reclassified from AOCI into
income (effective portion)
  Amount of gain
(loss) recognized
from AOCI on
derivative
(effective portion)
  Location of gain (loss)
recognized in income on
derivative (ineffective
portion and amount
excluded from
effectiveness testing)
  Amount of gain (loss)
recognized in income
on derivative
(ineffective portion and
amount excluded from
effectiveness testing)
 

Cross currency swaps(1)

  $ (3.2 )

Other income (expense), net

  $ (121.6 )

Other income (expense), net

  $  

 

       

Interest expense, net

    (1.3 )

Interest expense, net

     

Forward starting interest rate swaps

    5.8  

Interest expense, net

     

Interest expense, net

     

Foreign currency forwards

    (32.1 )

Other income (expense), net

    5.2  

Other income (expense), net

     

 

       

Cost of goods sold

    10.5  

Cost of goods sold

     

 

       

Marketing, general and administrative expenses

    (0.1 )

Marketing, general and administrative expenses

     

Commodity swaps

     

Cost of goods sold

    (1.7 )

Cost of goods sold

     
                       

Total

  $ (29.5 )     $ (109.0 )     $  
                       

Note: Amounts recognized in AOCI are gross of taxes.

(1)
The foreign exchange gain (loss) component of these cross currency swaps is offset by the corresponding gain (loss) on the hedged forecasted transactions in Other income (expense), net and Interest expense, net.

        During the period we recorded no significant ineffectiveness related to these cash flow hedges.

  • Other Derivatives

        During the second quarter of this year, we amended our total return swap agreements with our counterparty to extend the maturity date by nine months. As such, the current swaps are contracted to settle in 2011.

For the Thirteen Weeks Ended June 26, 2010  
Derivatives Not In Hedging
Relationship
  Location of Gain (Loss) Recognized
in Income on Derivative
  Amount of Gain (Loss) Recognized in
Income on Derivative
 

Total return swaps

  Other income (expense), net   $ 21.9  
           

 

      $ 21.9  
           

 

For the Thirteen Weeks Ended June 28, 2009  
Derivatives Not In Hedging
Relationship
  Location of Gain (Loss) Recognized
in Income on Derivative
  Amount of Gain (Loss) Recognized in
Income on Derivative
 

Total return swaps

  Other income (expense), net   $ (12.9 )

Physical commodity contracts

  Cost of goods sold     (0.2 )
           

 

      $ (13.1 )
           

 

For the Twenty-Six Weeks Ended June 26, 2010  
Derivatives Not In Hedging
Relationship
  Location of Gain (Loss) Recognized
in Income on Derivative
  Amount of Gain (Loss) Recognized in
Income on Derivative
 

Total return swaps

  Other income (expense), net   $ 15.0  
           

 

      $ 15.0  
           

For the Twenty-Six Weeks Ended June 28, 2009  
Derivatives Not In Hedging
Relationship
  Location of Gain (Loss) Recognized
in Income on Derivative
  Amount of Gain (Loss) Recognized in
Income on Derivative
 

Total return swaps

  Other income (expense), net   $ (34.3 )

Physical commodity contracts

  Cost of goods sold     (1.0 )
           

 

      $ (35.3 )
           
PENSION AND OTHER POSTRETIREMENT BENEFITS
PENSION AND OTHER POSTRETIREMENT BENEFITS

14. PENSION AND OTHER POSTRETIREMENT BENEFITS

        We sponsor defined benefit retirement plans in Canada, the U.K. and the U.S. Additionally, we offer other postretirement benefits to the majority of our Canadian and U.S. employees. The net periodic pension costs under retirement plans and other postretirement benefits were as follows:

 
  Thirteen Weeks Ended June 26, 2010  
 
  Canada plans   U.S. plans   U.K. plan   Consolidated  
 
  (In millions)
 

Defined Benefit Plans

                         
 

Service cost

  $ 4.4   $   $   $ 4.4  
 

Interest cost

    18.0     0.1     28.0     46.1  
 

Expected return on plan assets

    (17.6 )       (26.5 )   (44.1 )
 

Amortization of prior service cost

    0.2             0.2  
 

Amortization of net actuarial loss

    0.3         3.0     3.3  
 

Less expected participant contributions

    (0.5 )           (0.5 )
 

Special termination benefits

    1.8             1.8  
                   
 

Net periodic pension cost

  $ 6.6   $ 0.1   $ 4.5   $ 11.2  
                   

Other Postretirement Benefits

                         
 

Service cost—benefits earned during the period

  $ 0.6   $   $   $ 0.6  
 

Interest cost on projected benefit obligation

    2.4             2.4  
 

Amortization of prior service benefit

    (0.9 )           (0.9 )
                   
 

Net periodic postretirement benefit cost

  $ 2.1   $   $   $ 2.1  
                   

 

 
  Thirteen Weeks Ended June 28, 2009  
 
  Canada plans   U.S. plans   U.K. plan   Consolidated  
 
  (In millions)
 

Defined Benefit Plans

                         
 

Service cost

  $ 3.3   $   $ 1.1   $ 4.4  
 

Interest cost

    15.8     0.1     26.5     42.4  
 

Expected return on plan assets

    (15.5 )       (30.1 )   (45.6 )
 

Amortization of prior service cost

    0.1             0.1  
 

Amortization of net actuarial loss

        0.2         0.2  
 

Less expected participant contributions

    (0.5 )       (0.1 )   (0.6 )
                   
 

Net periodic pension cost (benefit)

  $ 3.2   $ 0.3   $ (2.6 ) $ 0.9  
                   

Other Postretirement Benefits

                         
 

Service cost—benefits earned during the period

  $ 0.5   $   $   $ 0.5  
 

Interest cost on projected benefit obligation

    2.1             2.1  
 

Amortization of prior service benefit

    (0.6 )           (0.6 )
 

Amortization of net actuarial gain

    (0.2 )           (0.2 )
                   
 

Net periodic postretirement benefit cost

  $ 1.8   $   $   $ 1.8  
                   

 

 
  Twenty-Six Weeks Ended June 26, 2010  
 
  Canada plans   U.S. plans   U.K. plan   Consolidated  
 
  (In millions)
 

Defined Benefit Plans

                         
 

Service cost

  $ 8.7   $   $   $ 8.7  
 

Interest cost

    35.8     0.2     57.4     93.4  
 

Expected return on plan assets

    (35.0 )       (54.3 )   (89.3 )
 

Amortization of prior service cost

    0.4             0.4  
 

Amortization of net actuarial loss

    0.6         6.1     6.7  
 

Less expected participant contributions

    (1.0 )           (1.0 )
 

Special termination benefits

    1.8             1.8  
                   
 

Net periodic pension cost

  $ 11.3   $ 0.2   $ 9.2   $ 20.7  
                   

Other Postretirement Benefits

                         
 

Service cost—benefits earned during the period

  $ 1.2   $   $   $ 1.2  
 

Interest cost on projected benefit obligation

    4.7             4.7  
 

Amortization of prior service benefit

    (1.8 )           (1.8 )
                   
 

Net periodic postretirement benefit cost

  $ 4.1   $   $   $ 4.1  
                   

 

 
  Twenty-Six Weeks Ended June 28, 2009  
 
  Canada plans   U.S. plans   U.K. plan   Consolidated  
 
  (In millions)
 

Defined Benefit Plans

                         
 

Service cost

  $ 7.8   $   $ 2.2   $ 10.0  
 

Interest cost

    35.4     0.2     51.2     86.8  
 

Expected return on plan assets

    (34.6 )       (58.2 )   (92.8 )
 

Amortization of prior service cost

    0.5             0.5  
 

Amortization of net actuarial loss

    0.1     0.4         0.5  
 

Curtailment loss

    5.3                 5.3  
 

Less expected participant contributions

    (0.9 )       (0.2 )   (1.1 )
                   
 

Net periodic pension cost (benefit)

  $ 13.6   $ 0.6   $ (5.0 ) $ 9.2  
                   

Other Postretirement Benefits

                         
 

Service cost—benefits earned during the period

  $ 1.7   $   $   $ 1.7  
 

Interest cost on projected benefit obligation

    4.8     0.1         4.9  
 

Amortization of prior service benefit

    (1.0 )           (1.0 )
 

Amortization of net actuarial gain

    (0.4 )           (0.4 )
                   
 

Net periodic postretirement benefit cost

  $ 5.1   $ 0.1   $   $ 5.2  
                   

        See Note 4 "INVESTMENTS" for a discussion of the deconsolidation of BRI during the first quarter of 2009, which reduced the carrying values of pension and postretirement benefits on the condensed consolidated balance sheet.

        During the second quarter of 2010, employer contributions paid to the defined benefit plans for Canada and the U.K. were $7.7 million and $0.8 million, respectively. For the first half of 2010, the amounts were $19.4 million for Canada and $1.6 million for the U.K. There were no contributions to the U.S. plan in the first half. Expected total fiscal year 2010 employer contributions to Canada, U.S. and U.K. defined benefits plans are approximately $45.6 million.

COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES

15. COMMITMENTS AND CONTINGENCIES

Kaiser and Other Indemnity Obligations

  • Kaiser

        As discussed in Note 8 "DISCONTINUED OPERATIONS," we sold our entire equity interest in Kaiser during 2006 to FEMSA. The terms of the sale agreement require us to indemnify FEMSA for certain exposures related to tax, civil and labor contingencies arising prior to FEMSA's purchase of Kaiser.

        Additionally, we provided an indemnity to FEMSA for losses Kaiser may incur with respect to tax claims associated with certain previously utilized purchased tax credits. We generally classify such purchased tax credits into two categories.

        During 2009, FEMSA entered into a Brazilian tax amnesty program which substantially reduced penalties, interest, and attorney's fees owed by Kaiser to the government for the first category of purchased tax credits. In 2009, we provided consent to FEMSA to enter into the amnesty program but had not agreed to an indemnity amount owed to FEMSA related to the indemnity for these tax credits.

        During the first quarter of 2010, we reached a settlement agreement with FEMSA for the entirety of our indemnity obligations corresponding to the principal, penalties, interest and attorney's fees owed by Kaiser for this first category of purchased credits. This favorable settlement involved a cash payment of $96.0 million, and eliminated $284.5 million of maximum potential tax claims of which $131.2 million of indemnity liabilities were accrued on our balance sheet at December 26, 2009. The payment of the settlement agreement was made in the first week of the second quarter of 2010.

        The maximum potential claims amount remaining for the second category of purchased tax credits (which we believe present less risk than the first category), was $248.7 million as of June 26, 2010.

        As of the end of the second quarter, a portion of our indemnity obligations are considered probable losses, recorded as current liabilities in an amount of $9.0 million at June 26, 2010. Including the portion of the liabilities not deemed to be probable ($13.5 million) our total estimate of the indemnity liability associated with the second category of purchased tax credits as of June 26, 2010, was $22.5 million, $12.6 million of which was classified as a current liability and $9.9 million of which was classified as non-current. Our indemnity obligations decreased by $132.1 million during the first half of 2010, primarily as a result of the aforementioned settlement, slightly offset by the impact of foreign exchange.

        Our estimates consider a number of scenarios for the ultimate resolution of these issues, the probabilities of which are influenced not only by legal developments in Brazil but also by management's intentions with regard to various alternatives that could present themselves leading to the ultimate resolution of these issues. The liabilities are impacted by changes in estimates regarding amounts that could be paid, the timing of such payments, adjustments to the probabilities assigned to various scenarios and foreign exchange.

        Additionally, we provided indemnity related to all other tax, civil, and labor contingencies existing as of the date of sale. In this regard, however, FEMSA assumed their full share of all of these contingent liabilities that had been previously recorded and disclosed by us prior to the sale on January 13, 2006. However, we may have to provide indemnity to FEMSA if those contingencies settle at amounts greater than those amounts previously recorded or disclosed by us. We will be able to offset any indemnity exposures in these circumstances with amounts that settle favorably to amounts previously recorded. Our exposure related to these indemnity claims is capped at the amount of the sales price of the 68% equity interest of Kaiser, which was $68.0 million. As a result of these contract provisions, our estimates include not only probability-weighted potential cash outflows associated with indemnity provisions, but also probability-weighted cash inflows that could result from favorable settlements, which could occur through negotiation or settlement programs that could arise from the federal or any of the various state governments in Brazil. The recorded value of the tax, civil, and labor indemnity liability was $9.5 million as of June 26, 2010, which is classified as non-current.

        Future settlement procedures and related negotiation activities associated with these contingencies are largely outside of our control. The sale agreement requires annual cash settlements relating to the tax, civil, and labor indemnities. Indemnity obligations related to purchased tax credits must be settled upon notification of FEMSA's settlement. Due to the uncertainty involved with the ultimate outcome and timing of these contingencies, significant adjustments to the carrying values of the indemnity obligations have been recorded to date, and additional future adjustments may be required. These liabilities are denominated in Brazilian Reals and have been stated at present value and will, therefore, be subject in the future to foreign exchange gains or losses and to accretion cost, both of which will be recognized in the discontinued operations section of the statement of operations.

        The table below provides a summary of reserves associated with the Kaiser indemnity obligations from December 26, 2009, through June 26, 2010:

 
  Indemnity Obligations  
 
  Purchased tax
credits
indemnity
reserve
  Tax, civil and
labor
indemnity
reserve
  Total
indemnity
reserves
 
 
  (In millions)
 

Balance at December 26, 2009

  $ 154.6   $ 9.5   $ 164.1  
 

Changes in estimates

    (32.3 )       (32.3 )
 

Cash Settlement

    (96.0 )       (96.0 )
 

Foreign exchange transaction impact

    (3.8 )       (3.8 )
               

Balance at June 26, 2010

  $ 22.5   $ 9.5   $ 32.0  
               

Guarantees

        MCBC guarantees indebtedness and other obligations to banks and other third parties for some of its equity investments and consolidated subsidiaries. Other liabilities in the accompanying Condensed Consolidated Balance Sheets include $100.7 million and $99.2 million as of June 26, 2010, and December 26, 2009, respectively, related to such guarantees.

Litigation and Other Disputes

        In 1999, Molson entered into an agreement for the distribution of Molson products in Brazil. In 2000, before commencing the distribution business, Molson terminated the distribution agreement and paid the distributor $150,000 in settlement. The distributor then sued Molson to set aside the settlement and to seek additional compensation. The Appellate Court of the State of Rio de Janeiro ("Appellate Court") set aside the settlement agreement and determined that Molson was liable to the distributor, with the amount of damages to be determined through subsequent proceedings. An appeal of the liability decision is currently pending before the Brazilian Superior Court of Justice, which granted certiorari during the fourth quarter of fiscal year 2009 and agreed to hear the merits of Molson's appeal. With respect to damages, the case was remanded to a Rio de Janeiro trial court to determine the amount of damages. The trial court retained an expert who provided a report adopting the position of the distributor and recommended damages based on a business plan devised at the outset of the arrangement that was never implemented. Molson challenged the irregularity of the expert process, the impartiality of the expert, as well as the report's specific recommendation. The trial court denied Molson's challenges. Molson filed an appeal before the Appellate Court regarding these procedural irregularities, which was denied during the fourth quarter of fiscal year 2009. Following the trial court's procedural ruling during the third quarter of 2009, that court handed down a decision in the distributor's favor granting the full amount of the lost anticipated profits alleged by the distributor, approximately $42 million, plus attorney's fees and interest. Molson appealed the judgment to the Appellate Court. During the fourth quarter of 2009, the Appellate Court directed the court-retained expert to explain the basis for his damages calculation. During the first quarter of 2010, the Appellate Court granted Molson's appeal and vacated the $42 million judgment. The Appellate Court remanded the proceeding to the trial court and ordered that court to select a different expert. The Appellate Court furthermore directed the trial court to use specific criteria in setting damages, the effect of which should be to substantially reduce the award. Molson sought clarification as to the precise criteria to be used. In late April 2010, the Appellate Court denied Molson's motion for clarification, but limited the accrual of interest in this matter. We will continue to defend this case vigorously, and believe that a material adverse result is not probable.

        In March 2009, BRI, which operates The Beer Store retail outlets in the province of Ontario, Canada, received notice that a legal action would be commenced in the Ontario Superior Court of Justice against it, the Ontario government and the Liquor Control Board of Ontario. BRI is owned by MCBC and two other brewers, and is accounted for by MCBC under the equity method. This action alleges the defendants, including BRI, failed to warn the plaintiffs of the dangers of drinking during pregnancy. The action seeks damages in excess of CAD $750 million. Although notice of the lawsuit was provided in March 2010, the lawsuit has not been formally commenced. The same plaintiffs filed a lawsuit asserting similar claims against the Canadian federal government in the Federal Court of Canada in March 2009. They voluntarily withdrew the lawsuit after the federal government filed a motion to dismiss it for failing to state a claim. If a legal action is commenced against BRI as notified, we are advised that BRI will defend the claims vigorously.

        We are involved in other disputes and legal actions arising in the ordinary course of our business. While it is not feasible to predict or determine the outcome of these proceedings, in our opinion, based on a review with legal counsel, none of these disputes and legal actions is expected to have a material impact on our consolidated financial position, results of operations or cash flows. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

Environmental

        When we determine that it is probable that a liability for environmental matters or other legal actions exists and the amount of the loss is reasonably estimable, an estimate of the future costs are recorded as a liability in the financial statements. Costs that extend the life, increase the capacity or improve the safety or efficiency of Company-owned assets or are incurred to mitigate or prevent future environmental contamination may be capitalized. Other environmental costs are expensed when incurred.

        From time to time, we have been notified that we are or may be a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act or similar state laws for the cleanup of sites where hazardous substances have allegedly been released into the environment. We cannot predict with certainty the total costs of cleanup, our share of the total cost, the extent to which contributions will be available from other parties, the amount of time necessary to complete the cleanups or insurance coverage.

Lowry

        We are one of a number of entities named by the Environmental Protection Agency ("EPA") as a PRP at the Lowry Superfund site. This landfill is owned by the City and County of Denver ("Denver") and is managed by Waste Management of Colorado, Inc. ("Waste Management"). In 1990, we recorded a pretax charge of $30 million, a portion of which was put into a trust in 1993 as part of a settlement with Denver and Waste Management regarding the then-outstanding litigation. Our settlement was based on an assumed remediation cost of $120 million (in 1992 adjusted dollars). We are obligated to pay a portion of future costs, if any, in excess of that amount.

        Waste Management provides us with updated annual cost estimates through 2032. We reviewed these cost estimates in the assessment of our accrual related to this issue. We use certain assumptions that differ from Waste Management's estimates to assess our expected liability. Our expected liability (based on the $120 million threshold being met) is based on our best estimates available.

        The assumptions used are as follows:

  • trust management costs are included in projections with regard to the $120 million threshold, but are expensed only as incurred;

    income taxes, which we believe are not an included cost, are excluded from projections with regard to the $120 million threshold;

    a 2.5% inflation rate for future costs; and

    certain operations and maintenance costs were discounted using a 4.60% risk-free rate of return.

        Based on these assumptions, the present value and gross amount of the costs at June 26, 2010, are approximately $3.2 million and $5.3 million, respectively. Accordingly, we believe that the existing liability is adequate as of June 26, 2010. We did not assume any future recoveries from insurance companies in the estimate of our liability, and none are expected.

        Considering the estimates extend through the year 2032 and the related uncertainties at the site, including what additional remedial actions may be required by the EPA, new technologies and what costs are included in the determination of when the $120 million threshold is reached the estimate of our liability may change as further facts develop. We cannot predict the amount of any such change, but additional accruals in the future are possible.

        In April 2009, we received a written notice relating to the Lowry site, that the State of Colorado intends to seek compensation from MCBC and other parties to recover for natural resources damages. The State of Colorado has informally asserted total damages of up to $10 million. However, the Company is potentially liable for only a portion of those damages. The State and the top responsible parties have reached a settlement regarding this matter. The appropriate documents have been filed and we are awaiting court approval.

Other

        In October 2006 we were notified by the EPA that we are a PRP, along with approximately 60 other parties, at the Cooper Drum site in southern California. Certain of Molson's former non-beer business operations, which were discontinued and sold in the mid-1990s prior to the merger with Coors, were involved at this site. We responded to the EPA with information regarding our past involvement with the site. We have accrued $0.2 million, which represents our estimable loss at this time. Potential losses associated with the Cooper Drum site could increase as remediation planning progresses.

        During the third quarter of 2008 we were notified by the EPA that we are a PRP, along with others, at the East Rutherford and Berry's Creek sites in New Jersey. Certain of Molson's former non-beer business operations, which were discontinued and sold in the mid-1990s, were involved at this site. We have accrued $4.5 million, which represents our estimable loss at this time. Potential losses associated with the Berry's Creek site could increase as remediation planning progresses.

        While we cannot predict the eventual aggregate cost for environmental and related matters in which we are currently involved, we believe that any payments, if required, for these matters would be made over a period of time in amounts that would not be material in any one year to our operating results, cash flows or our financial or competitive position. We believe adequate reserves have been provided for losses that are probable and estimable.

        We are aware of groundwater contamination at some of our properties in Colorado resulting from historical, ongoing, or nearby activities. There may also be other contamination of which we are currently unaware.

COMPREHENSIVE INCOME (LOSS)
COMPREHENSIVE INCOME (LOSS)

16. COMPREHENSIVE INCOME (LOSS)

        The following summarizes the components of comprehensive income (loss):

 
  Thirteen Weeks Ended   Twenty-Six Weeks Ended  
 
  June 26, 2010   June 28, 2009   June 26, 2010   June 28, 2009  
 
  (In millions)
 

Net income

  $ 238.3   $ 187.8   $ 343.7   $ 264.0  
                   

Other comprehensive (loss) income, net of tax:

                         
 

Foreign currency translation adjustments, net of tax

    (20.9 )   440.0     (31.7 )   375.3  
 

Amortization of net prior service costs and net actuarial losses, net of tax

    0.8     (0.6 )   2.6     11.9  
 

Unrealized gain (loss) on derivative instruments, net of tax

    1.0     (9.5 )   (0.2 )   (1.3 )
 

Reclassification adjustment on derivative instruments, net of tax

    1.7     (5.4 )   3.1     (19.9 )
 

Ownership share of unconsolidated subsidiaries' other comprehensive (loss) income, net of tax(1)

    (17.7 )   21.7     (10.3 )   17.9  
                   
 

Total other comprehensive (loss) income, net of tax

    (35.1 )   446.2     (36.5 )   383.9  
                   

Comprehensive income

    203.2     634.0     307.2     647.9  
 

Less: Comprehensive income attributable to the noncontrolling interest

    (1.1 )   (0.5 )   (1.9 )   (1.0 )
                   

Comprehensive income attributable to MCBC

  $ 202.1   $ 633.5   $ 305.3   $ 646.9  
                   

(1)
Consisting of unrealized gains and losses on derivative instruments, and changes to pension liabilities related to our proportional share of our unconsolidated subsidiaries, reported net of our effective tax rate.
SUPPLEMENTAL GUARANTOR INFORMATION
SUPPLEMENTAL GUARANTOR INFORMATION

17. SUPPLEMENTAL GUARANTOR INFORMATION

        MCBC ("Parent Guarantor and 2007 Issuer") issued $575.0 million of 2.5% Convertible Senior Notes due July 30, 2013, in a registered offering on June 15, 2007. The convertible notes are guaranteed on a senior unsecured basis by CBC ("2002 Issuer"), Molson Coors International, LP and Molson Coors Capital Finance ULC (together the "2005 Issuers") and certain significant subsidiaries ("Subsidiary Guarantors").

        On May 7, 2002, the 2002 Issuer completed a public offering of $850.0 million principal amount of 6.375% Senior notes due 2012. During the first quarter of 2008, $180.4 million of the Senior notes was extinguished by using existing cash resources. During the third quarter of 2007, $625.0 million of the Senior notes was extinguished by the proceeds received from the 2.5% Convertible Senior Notes issued June 15, 2007 and cash on hand. The remaining outstanding Senior notes are guaranteed on a senior and unsecured basis by the Parent Guarantor and 2007 Issuer, 2005 Issuers and Subsidiary Guarantors. The guarantees are full and unconditional and joint and several.

        On September 22, 2005, the 2005 Issuers completed a public offering of USD $1.1 billion principal amount of Senior notes composed of USD $300 million 4.85% notes due 2010 and CAD $900.0 million 5.00% notes due 2015. The notes were issued with registration rights and are guaranteed on a senior and unsecured basis by Parent Guarantor and 2007 Issuer, 2002 Issuer and Subsidiary Guarantors. The guarantees are full and unconditional and joint and several. Funds necessary to meet the 2005 Issuers' debt service obligations are provided in large part by distributions or advances from MCBC's other subsidiaries. Under certain circumstances, contractual and legal restrictions, as well as our financial condition and operating requirements, could limit the 2005 Issuers' ability to obtain cash for the purpose of meeting its debt service obligation, including the payment of principal and interest on the notes.

        On June 30, 2008, Molson Canada 2005, an indirect wholly owned subsidiary of MCBC, guaranteed the obligations of MCBC under the credit facility dated as of March 2, 2005. As a result of such guarantee, Molson Canada 2005 became a guarantor under the following (i) the indenture related to the Senior notes dated as of May 7, 2002 and as supplemented; (ii) the indenture related to the Senior notes dated September 22, 2005 and as supplemented; and (iii) the indenture related to the Senior convertible notes dated June 15, 2007 and as supplemented. This change was effective for our 2008 third quarter and was reflected accordingly with the appropriate reclassifications to the prior period condensed consolidated financial statements.

        We revised our presentation of the supplemental guarantor information to separately present the impact of intercompany activity for the 2002 Issuer, the 2005 Issuer and the 2007 Issuer, Subsidiary Guarantor and Subsidiary Non-Guarantor categories. As such, our current period consolidating financial statements for all periods reflect the revised presentation, with the most significant change being the gross presentation of our intercompany notes receivable and payable amongst affiliates and the related impacts on the statements of operations and cash flows. Intercompany notes receivable, which were previously included as a component of equity, continue to be presented as a component of equity (contra-equity) based on the nature of the notes, anticipated repayments and the consideration of the inherent control associated with the relationships of the entities, while the intercompany notes payable are now presented as a liability. We believe that the revised presentation provides greater clarity surrounding the activity between the guarantors and non-guarantors of our third party debt. The revised presentation of the supplemental guarantor information does not amend or change the respective priority or status of the above-referenced senior notes and convertible notes.

        The following information sets forth Condensed Consolidating Statements of Operations for the thirteen and twenty-six weeks ended June 26, 2010, and June 28, 2009; Condensed Consolidating Balance Sheets as of June 26, 2010, and December 26, 2009; and Condensed Consolidating Statements of Cash Flows for the twenty-six weeks ended June 26, 2010 and June 28, 2009. Investments in subsidiaries are accounted for on the equity method; accordingly, entries necessary to consolidate the Parent Guarantor, the Issuers and all of our subsidiaries are reflected in the eliminations column. In the opinion of management, separate complete financial statements of the 2002, 2005 and 2007 Issuers and the Subsidiary Guarantors would not provide additional material information that would be useful in assessing their financial composition.


MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THIRTEEN WEEKS ENDED JUNE 26, 2010
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Sales

  $ 2.2   $ 57.6   $   $ 699.1   $ 582.8   $ (59.1 ) $ 1,282.6  

Excise taxes

                (163.5 )   (235.8 )       (399.3 )
                               
   

Net sales

    2.2     57.6         535.6     347.0     (59.1 )   883.3  

Cost of goods sold

        (13.7 )       (264.3 )   (253.6 )   56.8     (474.8 )
                               
   

Gross profit

    2.2     43.9         271.3     93.4     (2.3 )   408.5  

Marketing, general and administrative expenses

    (29.5 )   (7.6 )       (129.0 )   (98.1 )   3.0     (261.2 )

Special items, net

    (0.6 )           (14.5 )   (0.7 )       (15.8 )

Equity income (loss) in subsidiaries

    235.3     105.2     34.4     (81.6 )   129.2     (422.5 )    

Equity income in MillerCoors

        163.6                     163.6  
                               
   

Operating income

    207.4     305.1     34.4     46.2     123.8     (421.8 )   295.1  

Interest (expense) income, net

    (8.5 )   11.8     (31.2 )   93.9     (91.2 )   (0.2 )   (25.4 )

Other income (expense), net

    21.9     (0.1 )       0.6     (1.0 )       21.4  
                               
   

Income from continuing operations before income taxes

    220.8     316.8     3.2     140.7     31.6     (422.0 )   291.1  

Income tax benefit (expense)

    16.4     (81.8 )   46.4     (35.5 )   2.3         (52.2 )
                               
   

Income from continuing operations

    237.2     235.0     49.6     105.2     33.9     (422.0 )   238.9  

Loss from discontinued operations, net of tax

                    (0.6 )       (0.6 )
                               
   

Net income

    237.2     235.0     49.6     105.2     33.3     (422.0 )   238.3  
 

Less: Net income attributable to noncontrolling interests

                    (1.1 )       (1.1 )
                               
   

Net income attributable to MCBC

  $ 237.2   $ 235.0   $ 49.6   $ 105.2   $ 32.2   $ (422.0 ) $ 237.2  
                               

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THIRTEEN WEEKS ENDED JUNE 28, 2009
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002 Issuer   2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Sales

  $ 8.5   $ 52.2   $   $ 614.8   $ 543.6   $ (58.7 ) $ 1,160.4  

Excise taxes

                (143.3 )   (218.2 )       (361.5 )
                               
 

Net sales

    8.5     52.2         471.5     325.4     (58.7 )   798.9  

Cost of goods sold

        (13.0 )       (233.2 )   (236.6 )   50.2     (432.6 )
                               
 

Gross profit

    8.5     39.2         238.3     88.8     (8.5 )   366.3  

Marketing, general and administrative expenses

    (27.1 )   (11.0 )       (108.4 )   (92.3 )   8.8     (230.0 )

Special items, net

    0.6             (0.9 )   (6.8 )         (7.1 )

Equity income (loss) in subsidiaries

    253.3     (153.1 )   74.3     (320.8 )   130.5     15.8      

Equity income in MillerCoors

        134.1                     134.1  
                               
 

Operating income (loss)

    235.3     9.2     74.3     (191.8 )   120.2     16.1     263.3  

Interest (expense) income, net

    (8.1 )   12.3     (35.4 )   47.9     (36.5 )   (0.1 )   (19.9 )

Other (expense) income, net

    (12.1 )   5.7         1.2     (3.1 )       (8.3 )
                               
 

Income (loss) from continuing operations before income taxes

    215.1     27.2     38.9     (142.7 )   80.6     16.0     235.1  

Income tax (expense) benefit

    (27.8 )   157.4     (115.6 )   70.7     (132.0 )       (47.3 )
                               
 

Income (loss) from continuing operations

    187.3     184.6     (76.7 )   (72.0 )   (51.4 )   16.0     187.8  

Loss from discontinued operations, net of tax

                             
                               
 

Net income (loss)

    187.3     184.6     (76.7 )   (72.0 )   (51.4 )   16.0     187.8  

Less: Net income attributable to noncontrolling interests

                    (0.5 )       (0.5 )
                               
 

Net income (loss) attributable to MCBC

  $ 187.3   $ 184.6   $ (76.7 ) $ (72.0 ) $ (51.9 ) $ 16.0   $ 187.3  
                               


MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE TWENTY-SIX WEEKS ENDED JUNE 26, 2010
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Sales

  $ 8.7   $ 97.8   $   $ 1,200.8   $ 1,027.2   $ (104.9 ) $ 2,229.6  

Excise taxes

                (281.6 )   (403.7 )       (685.3 )
                               
 

Net sales

    8.7     97.8         919.2     623.5     (104.9 )   1,544.3  

Cost of goods sold

        (24.7 )       (483.6 )   (466.9 )   96.0     (879.2 )
                               
 

Gross profit

    8.7     73.1         435.6     156.6     (8.9 )   665.1  

Marketing, general and administrative expenses

    (61.5 )   (17.7 )       (240.0 )   (189.5 )   10.0     (498.7 )

Special items, net

    (0.7 )           (3.0 )   (14.7 )       (18.4 )

Equity income (loss) in subsidiaries

    374.9     134.7     42.4     (179.8 )   193.7     (565.9 )    

Equity income in MillerCoors

        254.6                     254.6  
                               
 

Operating income

    321.4     444.7     42.4     12.8     146.1     (564.8 )   402.6  

Interest (expense) income, net

    (16.7 )   24.5     (36.5 )   157.7     (178.7 )   (0.1 )   (49.8 )

Other income (expense), net

    20.0     (1.6 )   (0.1 )   0.6     (6.1 )       12.8  
                               
 

Income (loss) from continuing operations before income taxes

    324.7     467.6     5.8     171.1     (38.7 )   (564.9 )   365.6  

Income tax benefit (expense)

    17.1     (93.8 )   35.7     (32.9 )   10.0         (63.9 )
                               
 

Income (loss) from continuing operations

    341.8     373.8     41.5     138.2     (28.7 )   (564.9 )   301.7  

Income from discontinued operations, net of tax

                    42.0         42.0  
                               
 

Net income

    341.8     373.8     41.5     138.2     13.3     (564.9 )   343.7  

Less: Net income attributable to noncontrolling interests

                    (1.9 )       (1.9 )
                               
 

Net income attributable to MCBC

  $ 341.8   $ 373.8   $ 41.5   $ 138.2   $ 11.4   $ (564.9 ) $ 341.8  
                               


MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE TWENTY-SIX WEEKS ENDED JUNE 28, 2009
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Sales

  $ 13.0   $ 91.8   $   $ 1,036.5   $ 943.0   $ (99.7 ) $ 1,984.6  

Excise taxes

                (240.4 )   (386.3 )       (626.7 )
                               
 

Net sales

    13.0     91.8         796.1     556.7     (99.7 )   1,357.9  

Cost of goods sold

        (25.6 )       (422.5 )   (417.4 )   86.8     (778.7 )
                               
 

Gross profit

    13.0     66.2         373.6     139.3     (12.9 )   579.2  

Marketing, general and administrative expenses

    (42.9 )   (24.2 )       (194.6 )   (164.3 )   13.4     (412.6 )

Special items, net

    (0.6 )           (9.0 )   (7.7 )       (17.3 )

Equity income (loss) in subsidiaries

    351.6     15.8     73.0     (240.2 )   170.6     (370.8 )    

Equity income in MillerCoors

        231.2                     231.2  
                               
 

Operating income (loss)

    321.1     289.0     73.0     (70.2 )   137.9     (370.3 )   380.5  

Interest (expense) income, net

    (16.3 )   24.3     (77.7 )   99.4     (69.3 )   (0.2 )   (39.8 )

Other (expense) income, net

    (30.3 )   8.2         1.0     (5.7 )       (26.8 )
                               
 

Income (loss) from continuing operations before income taxes

    274.5     321.5     (4.7 )   30.2     62.9     (370.5 )   313.9  

Income tax (expense) benefit

    (11.5 )   (14.0 )   (70.7 )   41.3     8.9         (46.0 )
                               
 

Income (loss) from continuing operations

    263.0     307.5     (75.4 )   71.5     71.8     (370.5 )   267.9  

Loss from discontinued operations, net of tax

                    (3.9 )       (3.9 )
                               
 

Net income (loss)

    263.0     307.5     (75.4 )   71.5     67.9     (370.5 )   264.0  

Less: Net income attributable to noncontrolling interests

                    (1.0 )       (1.0 )
                               
 

Net income (loss) attributable to MCBC

  $ 263.0   $ 307.5   $ (75.4 ) $ 71.5   $ 66.9   $ (370.5 ) $ 263.0  
                               

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF JUNE 26, 2010
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Assets

                                           

Current assets:

                                           
 

Cash and cash equivalents

  $ 473.4   $   $ 0.1   $ 134.5   $ 190.6   $   $ 798.6  
 

Accounts receivable, net

        7.2         255.3     347.6         610.1  
 

Other receivables, net

    8.4     31.3     4.0     30.6     100.1         174.4  
 

Total inventories, net

                155.0     78.7         233.7  
 

Other assets, net

    7.1     2.2         36.3     59.1         104.7  
 

Deferred tax assets

                0.4     0.7     (1.1 )    
 

Discontinued operations

                    2.0         2.0  
 

Intercompany receivables

        684.5     166.0     808.6         (1,659.1 )    
                               

Total current assets

    488.9     725.2     170.1     1,420.7     778.8     (1,660.2 )   1,923.5  

Properties, net

    34.4     7.2         759.5     438.9         1,240.0  

Goodwill

        11.4         341.3     1,090.0         1,442.7  

Other intangibles, net

        41.3         4,138.8     367.5         4,547.6  

Investment in MillerCoors

        2,652.0                     2,652.0  

Net investment in subsidiaries

    7,931.5     3,752.5     2,779.8         4,882.8     (19,346.6 )    

Deferred tax assets

    115.7     96.7             40.8     (104.0 )   149.2  

Other assets

    5.8     13.7     3.1     50.4     79.4         152.4  
                               

Total assets

  $ 8,576.3   $ 7,300.0   $ 2,953.0   $ 6,710.7   $ 7,678.2   $ (21,110.8 ) $ 12,107.4  
                               

Liabilities and equity

                                           

Current liabilities:

                                           
 

Accounts payable

  $ 4.3   $ 0.4   $   $ 48.1   $ 125.6   $   $ 178.4  
 

Accrued expenses and other liabilities

    30.5     11.2     62.6     426.9     362.4         893.6  
 

Deferred tax liability

    90.0                 90.6     (1.1 )   179.5  
 

Short-term borrowings and current portion of long-term debt

            300.0                 300.0  
 

Discontinued operations

                            16.3         16.3  
 

Intercompany payables

    651.0     7.6     235.4     224.3     540.8     (1,659.1 )    
                               

Total current liabilities

    775.8     19.2     598.0     699.3     1,135.7     (1,660.2 )   1,567.8  

Long-term debt

    520.1     45.2     868.0                 1,433.3  

Net investment in subsidiaries

                258.3           (258.3 )    

Deferred tax liability

        102.2     1.9     0.4     441.5     (104.0 )   442.0  

Other liabilities

    7.0     37.2     2.8     698.7     579.7         1,325.4  

Discontinued operations

                    18.6         18.6  

Intercompany notes payable

            4,269.2     5,202.1     6,797.7     (16,269.0 )    
                               

Total liabilities

    1,302.9     203.8     5,739.9     6,858.8     8,973.2     (18,291.5 )   4,787.1  

MCBC stockholders' equity

    7,275.3     7,941.9     1,621.4     7,767.6     1,788.2     (19,088.3 )   7,306.1  

Intercompany notes receivable

    (1.9 )   (845.7 )   (4,408.3 )   (7,915.7 )   (3,097.4 )   16,269.0      
                               

Total stockholders' equity

    7,273.4     7,096.2     (2,786.9 )   (148.1 )   (1,309.2 )   (2,819.3 )   7,306.1  

Noncontrolling interests

                    14.2         14.2  
                               

Total equity

    7,273.4     7,096.2     (2,786.9 )   (148.1 )   (1,295.0 )   (2,819.3 )   7,320.3  
                               

Total liabilities and equity

  $ 8,576.3   $ 7,300.0   $ 2,953.0   $ 6,710.7   $ 7,678.2   $ (21,110.8 ) $ 12,107.4  
                               

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 26, 2009
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Assets

                                           

Current assets:

                                           
 

Cash and cash equivalents

  $ 392.8   $   $ 0.1   $ 175.0   $ 166.3   $   $ 734.2  
 

Accounts receivable, net

    3.6     4.1         203.3     355.7         566.7  
 

Other receivables, net

    16.2     27.4         20.9     88.6     (2.6 )   150.5  
 

Total inventories, net

                146.6     89.6         236.2  
 

Other assets, net

    4.0     1.0         35.1     25.2         65.3  
 

Deferred tax assets

                0.4     0.7     (1.1 )    
 

Discontinued operations

                    9.9         9.9  
 

Intercompany receivables

        455.7         538.8     310.0     (1,304.5 )    
                               

Total current assets

    416.6     488.2     0.1     1,120.1     1,046.0     (1,308.2 )   1,762.8  

Properties, net

    35.8     7.3         787.1     462.3         1,292.5  

Goodwill

        11.4         348.9     1,114.7         1,475.0  

Other intangibles, net

        44.5         4,117.7     372.5         4,534.7  

Investment in MillerCoors

        2,613.6                     2,613.6  

Net investment in subsidiaries

    7,561.0     3,620.7     3,251.5     3,079.4     4,624.0     (22,136.6 )    

Deferred tax assets

    144.6     90.1         3.7     43.2     (103.7 )   177.9  

Other assets

    6.4     13.5     4.0     49.8     90.9         164.6  
                               

Total assets

  $ 8,164.4   $ 6,889.3   $ 3,255.6   $ 9,506.7   $ 7,753.6   $ (23,548.5 ) $ 12,021.1  
                               

Liabilities and equity

                                           

Current liabilities:

                                           
 

Accounts payable

  $ 5.7   $ 0.8   $   $ 49.1   $ 154.7   $   $ 210.3  
 

Accrued expenses and other liabilities

    39.6     14.7     54.8     294.7     343.8     (2.6 )   745.0  
 

Deferred tax liability

    90.0                 78.2     (1.1 )   167.1  
 

Short-term borrowings and current portion of long-term debt

        0.3     300.0                 300.3  
 

Discontinued operations

                    158.2         158.2  
 

Intercompany payables

    431.3     4.1     201.0     391.8     276.3     (1,304.5 )    
                               

Total current liabilities

    566.6     19.9     555.8     735.6     1,011.2     (1,308.2 )   1,580.9  

Long-term debt

    511.8     45.0     856.0         (0.1 )       1,412.7  

Deferred tax liability

        102.2     3.3         466.2     (103.7 )   468.0  

Other liabilities

    6.4     82.4     2.8     747.3     609.1         1,448.0  

Discontinued operations

                    18.7         18.7  

Intercompany notes payable

            2,943.3     4,722.7     3,681.3     (11,347.3 )    
                               

Total liabilities

    1,084.8     249.5     4,361.2     6,205.6     5,786.4     (12,759.2 )   4,928.3  

MCBC stockholders' equity

    7,081.2     7,532.3     2,765.8     9,329.2     2,507.7     (22,136.6 )   7,079.6  

Intercompany notes receivable

    (1.6 )   (892.5 )   (3,871.4 )   (6,028.1 )   (553.7 )   11,347.3      
                               

Total stockholders' equity

    7,079.6     6,639.8     (1,105.6 )   3,301.1     1,954.0     (10,789.3 )   7,079.6  

Noncontrolling interests

                    13.2         13.2  
                               

Total equity

    7,079.6     6,639.8     (1,105.6 )   3,301.1     1,967.2     (10,789.3 )   7,092.8  
                               

Total liabilities and equity

  $ 8,164.4   $ 6,889.3   $ 3,255.6   $ 9,506.7   $ 7,753.6   $ (23,548.5 ) $ 12,021.1  
                               

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED JUNE 26, 2010
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Net cash provided by (used in) operating activities

  $ 147.2   $ 45.5   $ (147.1 ) $ 9.0   $ 449.0   $ (108.0 ) $ 395.6  
                               

CASH FLOWS FROM INVESTING ACTIVITIES:

                                           
 

Additions to properties and intangible assets

    (2.4 )           (16.6 )   (32.4 )       (51.4 )
 

Proceeds from sales of properties and

                                         
   

intangible assets, net

                0.3     1.7         2.0  
 

Cash placed in escrow for acquisition

                    (34.2 )       (34.2 )
 

Payment on discontinued operations

                    (96.0 )       (96.0 )
 

Investment in MillerCoors

        (623.7 )                   (623.7 )
 

Return of capital from MillerCoors

        569.3                     569.3  
 

Investment in and advances to unconsolidated affiliates

                    (1.6 )       (1.6 )
 

Trade loan repayments from customers

                    8.3         8.3  
 

Trade loans advanced to customers

                    (5.0 )       (5.0 )
 

Net intercompany investing activity

    (43.5 )   (0.1 )   1,217.5     3,542.1     (1,074.9 )   (3,641.1 )    
                               

Net cash (used in) provided by investing activities

    (45.9 )   (54.5 )   1,217.5     3,525.8     (1,234.1 )   (3,641.1 )   (232.3 )
                               

CASH FLOWS FROM FINANCING ACTIVITIES:

                                           
 

Issuances of stock under equity compensation plans

    7.1                         7.1  
 

Excess tax benefits from share-based compensation

    0.6                         0.6  
 

Dividends paid

    (85.0 )               (12.6 )       (97.6 )
 

Change in overdraft balances and other

                    (8.1 )       (8.1 )
 

Net intercompany financing activity

    56.6     9.0     (1,070.4 )   (3,581.5 )   837.2     3,749.1      
                               

Net cash (used in) provided by financing activities

    (20.7 )   9.0     (1,070.4 )   (3,581.5 )   816.5     3,749.1     (98.0 )
                               

CASH AND CASH EQUIVALENTS:

                                           
 

Net increase (decrease) in cash and cash equivalents

    80.6             (46.7 )   31.4         65.3  
 

Effect of foreign exchange rate changes on cash and cash equivalents

                6.2     (7.1 )       (0.9 )

Balance at beginning of year

    392.8         0.1     175.0     166.3         734.2  
                               

Balance at end of period

  $ 473.4   $   $ 0.1   $ 134.5   $ 190.6   $   $ 798.6  
                               


MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED JUNE 28, 2009
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Net cash provided by (used in) operating activities

  $ 45.6   $ 229.2   $ (28.4 ) $ (53.9 ) $ 106.3   $ 53.7   $ 352.5  
                               

CASH FLOWS FROM INVESTING ACTIVITIES:

                                           
 

Additions to properties and intangible assets

    (5.1 )           (14.8 )   (25.3 )       (45.2 )
 

Proceeds from sales of properties and intangible assets, net

    1.2             0.4     1.0         2.6  
 

Acquisition of business

                    (19.6 )       (19.6 )
 

Investment in MillerCoors

        (212.1 )                   (212.1 )
 

Return of capital from MillerCoors

        92.8                     92.8  
 

Deconsolidation of Brewers' Retail, Inc. 

                (26.1 )           (26.1 )
 

Investment in and advances to unconsolidated affiliates

                    (5.3 )       (5.3 )
 

Trade loan repayments from customers

                    9.6         9.6  
 

Trade loans advanced to customers

                    (7.0 )       (7.0 )
 

Net intercompany investing activity

    (22.3 )   (106.8 )   (21.0 )   (10.5 )   (154.0 )   314.6      
                               

Net cash used in investing activities

    (26.2 )   (226.1 )   (21.0 )   (51.0 )   (200.6 )   314.6     (210.3 )
                               

CASH FLOWS FROM FINANCING ACTIVITIES:

                                           
 

Issuances of stock under equity compensation plans

    13.4                         13.4  
 

Excess tax benefits from share-based compensation

    15.3                         15.3  
 

Dividends paid

    (70.7 )               (10.7 )       (81.4 )
 

Payments on long-term debt and capital lease obligations

                (0.1 )   (0.1 )       (0.2 )
 

Change in overdraft balances and other

                (0.2 )   (8.9 )       (9.1 )
 

Net intercompany financing activity

    118.6     (3.5 )   49.4     131.7     72.1     (368.3 )    
                               

Net cash provided by (used in) financing activities

    76.6     (3.5 )   49.4     131.4     52.4     (368.3 )   (62.0 )
                               

CASH AND CASH EQUIVALENTS:

                                           
 

Net increase (decrease) in cash and cash equivalents

    96.0     (0.4 )       26.5     (41.9 )       80.2  
 

Effect of foreign exchange rate changes on cash and cash equivalents

                (3.4 )   3.2         (0.2 )

Balance at beginning of year

    84.9     0.4     0.1     24.1     106.7         216.2  
                               

Balance at end of period

  $ 180.9   $   $ 0.1   $ 47.2   $ 68.0   $   $ 296.2  
                               
SEGMENT REPORTING (Tables)

 

 
  Thirteen Weeks Ended   Twenty-Six Weeks Ended  
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
 

Canada

  $ 541.8   $ 471.0   $ 932.0   $ 795.7  

U.K. 

    320.5     309.7     575.5     529.1  

MCI and Corporate

    21.0     18.2     36.8     33.1  
                   
 

Consolidated

  $ 883.3   $ 798.9   $ 1,544.3   $ 1,357.9  
 
  Thirteen Weeks Ended   Twenty-Six Weeks Ended  
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
 

Canada

  $ 131.9   $ 136.4   $ 186.2   $ 186.4  

U.S. 

    163.6     134.1     254.6     231.2  

U.K. 

    32.0     30.0     33.5     32.6  

MCI and Corporate

    (36.4 )   (65.4 )   (108.7 )   (136.3 )
                   
 

Consolidated

  $ 291.1   $ 235.1   $ 365.6   $ 313.9  
                   
 
  As of  
 
  June 26,
2010
  December 26,
2009
 
 
  (In millions)
 

Canada

  $ 6,465.0   $ 6,402.0  

U.S. 

    2,652.1     2,613.6  

U.K. 

    2,257.7     2,359.8  

MCI and Corporate

    730.6     635.8  

Discontinued operations

    2.0     9.9  
           
 

Total assets

  $ 12,107.4   $ 12,021.1  
           
INVESTMENTS (Tables)

Condensed balance sheets

 
  As of  
 
  June 30, 2010   December 31, 2009  
 
  (In millions)
 

Current assets

  $ 1,050.4   $ 808.5  

Noncurrent assets

    8,868.0     9,025.0  
           
 

Total assets

  $ 9,918.4   $ 9,833.5  
           

Current liabilities

  $ 903.2   $ 885.4  

Noncurrent liabilities

    1,231.0     1,278.4  
           
 

Total liabilities

    2,134.2     2,163.8  

Noncontrolling interests

    30.7     28.1  

Interest attributable to shareholders'

    7,753.5     7,641.6  
           

Total liabilities and equity

  $ 9,918.4   $ 9,833.5  
           

Results of operations

 
  For the Three Months Ended   For the Six Months Ended  
 
  June 30,
2010
  June 30,
2009
  June 30,
2010
  June 30,
2009
 
 
  (In millions)
 

Net sales

  $ 2,134.1   $ 2,136.7   $ 3,835.0   $ 3,852.6  

Cost of goods sold

    (1,284.8 )   (1,302.3 )   (2,363.4 )   (2,352.2 )
                   

Gross profit

  $ 849.3   $ 834.4   $ 1,471.6   $ 1,500.4  

Operating income

  $ 396.8   $ 313.4   $ 609.3   $ 527.2  

Net income attributable to MillerCoors

  $ 391.2   $ 304.9   $ 599.8   $ 510.9  

 

 
  Thirteen Weeks Ended   Twenty-Six Weeks Ended  
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions, except percentages)
 

Net income attributable to MillerCoors

  $ 391.2   $ 304.9   $ 599.8   $ 510.9  
 

MCBC economic interest

    42 %   42 %   42 %   42 %
                   
 

MCBC proportionate share of MillerCoors net income

    164.3     128.1     251.9     214.6  
 

MillerCoors accounting policy elections(1)

                7.3  
 

Amortization of the difference between MCBC contributed cost basis and proportional share of the underlying equity in net assets of MillerCoors(2)

    (0.6 )   3.9     1.9     6.9  
 

Share-based compensation adjustment(3)

    (0.1 )   2.1     0.8     2.4  
                   

Equity income in MillerCoors

  $ 163.6   $ 134.1   $ 254.6   $ 231.2  
                   

(1)
MillerCoors made its initial accounting policy elections upon formation, impacting certain asset and liability balances contributed by MCBC. Our investment basis in MillerCoors is based upon the book value of the net assets we contributed. These adjustments reflect the favorable impact to our investment as a result of the differences resulting from accounting policy elections, the most significant of which was MillerCoors' election to value contributed Coors Brewing Company ("CBC") inventories using the first in, first out (FIFO) method, rather than the last in, first out (LIFO) method, which had previously been applied. This adjustment has been phased in over the expected turnover of the related inventories; which was concluded in the first quarter of 2009.

(2)
Our net investment in MillerCoors is based on the carrying values of the net assets we contributed to the joint venture which is less than our proportional share of underlying equity (42%) of MillerCoors (contributed by both CBC and Miller Brewing Company) by approximately $629 million. This difference is being amortized as additional equity income over the remaining useful lives of long-lived assets giving rise to the difference. For non-depreciable assets, such as goodwill, no adjustment is being recorded. This also includes the impact of impairments and other adjustments occurring since formation that change this basis difference.

(3)
The net adjustment is to record all stock-based compensation associated with pre-existing equity awards to be settled in MCBC Class B common stock held by former CBC employees now employed by MillerCoors and to eliminate all stock-based compensation impacts related to pre-existing SABMiller plc equity awards held by former Miller Brewing Company employees now employed by MillerCoors.
 
  As of  
 
  June 26, 2010   December 26, 2009  
 
  (In millions)
 

Grolsch

  $ 17.7   $ 22.7  

Cobra

  $ 31.2   $ 32.3  

 
  For the Thirteen Weeks Ended   For the Twenty-Six Weeks Ended  
 
  June 26, 2010   June 28, 2009   June 26, 2010   June 28, 2009  
 
  Revenues   Pre-tax
income
  Revenues   Pre-tax
income
  Revenues   Pre-tax
income
  Revenues   Pre-tax
income
 
 
  (In millions)
 

BRI(1)

  $   $   $   $   $   $   $ 40.4   $  

Grolsch(2)

  $ 9.0   $ 1.3   $ 9.5   $ 1.4   $ 15.7   $ 2.3   $ 17.3   $ 2.8  

Cobra

  $ 8.6   $ 1.9   $ 2.3   $ 0.4   $ 17.9   $ 3.3   $ 2.3   $ 0.4  

(1)
The revenues shown for BRI are for the first two months of 2009 as BRI was deconsolidated as of February 28, 2009.

(2)
Substantially all such sales for Grolsch are made to the Company and as such, are eliminated in consolidation.
SHARE-BASED PAYMENTS (Tables)

 

 
  Thirteen Weeks
Ended
  Twenty-Six Weeks
Ended
 
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
  (In millions)
 

Stock options and SOSARs

                         
 

Pre-tax compensation expense

  $ 0.9   $ 3.6   $ 4.7   $ 4.6  
 

Tax benefit

    (0.2 )   (1.2 )   (1.3 )   (1.4 )
                   
 

After-tax compensation expense

  $ 0.7   $ 2.4   $ 3.4   $ 3.2  
                   

RSUs and DSUs

                         
 

Pre-tax compensation expense

  $ 4.3   $ 4.0   $ 8.3   $ 6.9  
 

Tax benefit

    (1.1 )   (1.1 )   (2.2 )   (1.9 )
                   
 

After-tax compensation expense

  $ 3.2   $ 2.9   $ 6.1   $ 5.0  
                   

PUs and PSUs

                         
 

Pre-tax compensation expense

  $ 2.3   $ 0.9   $ 3.7   $ 0.9  
 

Tax benefit

    (0.6 )   (0.2 )   (0.9 )   (0.2 )
                   
 

After-tax compensation expense

  $ 1.7   $ 0.7   $ 2.8   $ 0.7  
                   
 

Total after-tax compensation expense

  $ 5.6   $ 6.0   $ 12.3   $ 8.9  
                   

 

 
  Outstanding
options
  Weighted-average
exercise price
per share
  Weighted-average
remaining
contractual life
(years)
  Aggregate
intrinsic value
 
 
  (In millions, except per share amounts and years)
 

Outstanding as of December 26, 2009

    7.4   $ 37.00     4.94   $ 64.0  
 

Granted

    0.7   $ 43.25              
 

Exercised

    (0.2 ) $ 35.25              
 

Forfeited

    (0.1 ) $ 47.43              
                         

Outstanding as of June 26, 2010

    7.8   $ 37.58     5.00   $ 54.2  
                         

Excercisable at June 26, 2010

    6.8   $ 36.02     4.13   $ 56.7  
                         

 

 
  Units   Weighted-average
grant date fair
value per unit
 
 
  (In millions, except
per unit amounts)

 

Non-vested as of December 26, 2009

    3.2   $ 16.60  
 

Granted

    1.0   $ 19.49  
 

Vested

    (0.9 ) $ 13.17  
 

Forfeited

    (0.1 ) $ 22.63  
             

Non-vested as of June 26, 2010

    3.2   $ 18.30  
             

 

 
  For the Twenty-Six Weeks
Ended(1)
 
  June 26, 2010   June 28, 2009

Risk-free interest rate

  2.95%   2.46%

Dividend yield

  2.22%   2.28%

Volatility range

  27.2% - 29.5%   28.7% - 28.9%

Weighted-average volatility

  27.86%   28.88%

Expected term (years)

  5.0 - 7.0   5.0 - 7.0

Weighted-average fair market value

  $10.95   $10.33

(1)
Values primarily relate to options granted during the annual grant which occurred in the first quarter of 2010 and the second quarter of 2009.
UNUSUAL OR INFREQUENT ITEMS (Tables)
 
  Thirteen Weeks
Ended
  Twenty-Six Weeks
Ended
 
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
 

Canada

                         
 

Restructuring, exit and other related costs associated with the Edmonton and Montréal breweries(1)

  $ 0.2   $ 0.9   $ 0.9   $ 3.7  
 

Ontario Retiree Pension incentive(1)

    2.0         3.2      
 

Pension curtailment(2)

                5.3  
 

Software abandonment(3)

    12.4           12.4        

U.K.

                         
 

Restructuring charge(4)

    0.3     1.1     1.2     2.0  
 

Costs associated with Cobra Beer partnership(5)

        5.7         5.7  
 

Other(5)

    0.4         0.1      

MCI and Corporate

                         
 

Gain on change in control agreements for Coors executives(6)

        (0.6 )        
 

Costs associated with strategic initiatives(7)

    0.5         0.6     0.6  
                   

Total special items

  $ 15.8   $ 7.1   $ 18.4   $ 17.3  
                   

(1)
During the second quarters of 2010 and 2009, the Canada segment recognized expenses for restructuring costs associated with employee terminations and impairment of assets at the Montréal and Edmonton breweries. The segment also recognized $3.2 million in special termination benefits in the first half of 2010 related to changes to defined benefit pension plans.
(2)
In the first half of 2009, the Canada segment recognized a pension curtailment loss and restructuring costs associated with employee terminations at the Montréal brewery driven by MillerCoors' decision to produce Blue Moon products at its breweries in the U.S.

(3)
During the second quarter of 2010, a capital asset write-off was recorded related to abandonment of sales support software, which had been under development, as a result of a change in strategic direction relative to the use of the software.

(4)
During the second quarters and first halves of 2010 and 2009, the U.K. segment recognized employee termination costs related to supply chain restructuring activity and company-wide efforts to increase efficiency in certain finance, information technology and human resource activities by outsourcing portions of those functions.

(5)
During the first half of 2010, the U.K. segment recognized a gain due to the release of an accrual of $0.3 million related to a potential repayment of a government grant. This was offset during the second quarter of 2010 due to $0.4 million of other charges. During the second quarter and first half of 2009, the segment recognized $2.5 million and $3.2 million of costs associated with the Cobra Beer Partnership, Ltd. acquisition and employee severance costs related to individuals not retained subsequent to the acquisition, respectively.

(6)
Special items for the first half of 2009 include costs associated with adjusting to the floor provided on the exercise price of stock options held by former Adolph Coors Company ("Coors") officers who left the Company under change in control agreements following the merger between Coors and Molson, Inc. ("Molson") in 2005 which expired during the first quarter of 2010.

(7)
During the first half of 2010 and 2009, MCI and Corporate recognized costs associated with other strategic initiatives.
 
  Severance and
other employee-
related costs
 
 
  Canada   U.K.  
 
  (In millions)
 

Balance at December 26, 2009

  $ 0.6   $ 2.3  
 

Charges incurred

        1.2  
 

Payments made

    (0.2 )   (2.4 )
 

Foreign currency and other adjustments

        (0.1 )
           

Balance at June 26, 2010

  $ 0.4   $ 1.0  
           
OTHER INCOME AND EXPENSE (Tables)
Summarization of other income and expenses
 
  Thirteen Weeks
Ended
  Twenty-Six Weeks
Ended
 
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
 

Gain (loss) from Foster's swap(1)

  $ 21.9   $ (12.9 ) $ 15.0   $ (34.3 )

(Losses) gains from other foreign exchange and derivative activity

    (0.6 )   6.6     (2.8 )   7.4  

Gains (losses) on non-operating leases, net

    0.1     (0.8 )   (0.1 )   (1.0 )

Environmental litigation provisions

    (0.1 )   (1.0 )   (0.1 )   (1.0 )

Equity in income of unconsolidated affiliates, net

        (3.7 )       (2.1 )

Other, net

    0.1     3.5     0.8     4.2  
                   

Other income (expense), net

  $ 21.4   $ (8.3 ) $ 12.8   $ (26.8 )
                   

(1)
During the third quarter of 2008, we entered into a cash settled total return swap with Deutsche Bank in order to gain an economic exposure to Foster's Group ("Foster's") (ASX:FGL), a major global brewer. See further discussion in Note 13 "DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES". This amount represents the net gain (loss) recognized on the mark-to-market adjustment on the fair value of the swap.
EARNINGS PER SHARE ("EPS") (Tables)
 
  Thirteen Weeks
Ended
  Twenty-Six Weeks
Ended
 
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
 

Amounts attributable to MCBC

                         

Income from continuing operations, net of tax

  $ 237.8   $ 187.3   $ 299.8   $ 266.9  

(Loss) income from discontinued operations, net of tax

    (0.6 )       42.0     (3.9 )
                   

Net income attributable to MCBC

  $ 237.2   $ 187.3   $ 341.8   $ 263.0  
                   

Weighted average shares for basic EPS

    185.7     184.2     185.6     184.0  

Effect of dilutive securities:

                         
 

Options and SOSARs

    0.9     0.9     0.9     0.8  
 

RSUs, PUs and DSUs

    0.8     0.3     0.7     0.4  
                   

Weighted average shares for diluted EPS

    187.4     185.4     187.2     185.2  
                   

Basic income (loss) per share:

                         
 

Continuing operations attributable to MCBC

  $ 1.28   $ 1.02   $ 1.61   $ 1.45  
 

Discontinued operations attributable to MCBC

            0.23     (0.02 )
                   

Net income attributable to MCBC

  $ 1.28   $ 1.02   $ 1.84   $ 1.43  
                   

Diluted income (loss) per share:

                         
 

Continuing operations attributable to MCBC

  $ 1.27   $ 1.01   $ 1.60   $ 1.44  
 

Discontinued operations attributable to MCBC

            0.23     (0.02 )
                   

Net income attributable to MCBC

  $ 1.27   $ 1.01   $ 1.83   $ 1.42  
                   

Dividends declared and paid per share

  $ 0.28   $ 0.24   $ 0.52   $ 0.44  
                   
 
  Thirteen Weeks
Ended
  Twenty-Six Weeks
Ended
 
 
  June 26,
2010
  June 28,
2009
  June 26,
2010
  June 28,
2009
 
 
  (In millions)
 

Stock options, SOSARs and RSUs(1)

    1.3     0.8     1.0     0.9  

PUs

        0.2         0.2  

Shares issuable upon assumed conversion of the 2.5% Convertible Senior Notes to issue Class B common shares(2)

    10.5     10.5     10.5     10.5  

Warrants to issue Class B common shares(2)

    10.5     10.5     10.5     10.5  
                   

 

    22.3     22.0     22.0     22.1  
                   

(1)
Exercise prices exceed the average market price of the common shares or are anti-dilutive due to the impact of the unrecognized compensation cost on the calculation of assumed proceeds in the application of the treasury stock method.

(2)
We issued $575 million of senior convertible notes in June 2007. The impact of a net share settlement of the conversion amount at maturity will begin to dilute earnings per share when our stock price reaches $54.76. The impact of stock that could be issued to settle share obligations we could have under the warrants we issued simultaneously with the convertible notes issuance will begin to dilute earnings per share when our stock price reaches $70.09. The potential receipt of MCBC stock from counterparties under our purchased call options when and if our stock price is between $54.76 and $70.09 would be anti-dilutive and excluded from any calculations of earnings per share.
GOODWILL AND INTANGIBLE ASSETS (Tables)

Balance at December 26, 2009

  $ 1,475.0  
 

Foreign currency translation

    (32.1 )
 

Other

    (0.2 )
       

Balance at June 26, 2010

  $ 1,442.7  
       
 
  As of  
 
  June 26, 2010   December 26, 2009  
 
  (In millions)
 

Canada

  $ 729.1   $ 720.7  

United Kingdom

    713.6     754.3  
           
 

Consolidated

  $ 1,442.7   $ 1,475.0  
           

        The following table presents details of our intangible assets, other than goodwill, as of June 26, 2010:

 
  Useful life   Gross   Accumulated
amortization
  Net  
 
  (Years)
  (In millions)
 

Intangible assets subject to amortization:

                       
 

Brands

  3 - 40   $ 284.7   $ (141.8 ) $ 142.9  
 

Distribution rights

  2 - 23     336.8     (206.6 )   130.2  
 

Patents and technology and distribution channels

  3 - 10     33.7     (23.1 )   10.6  

Intangible assets not subject to amortization:

                       
 

Brands

  Indefinite     3,271.5         3,271.5  
 

Distribution networks

  Indefinite     976.9         976.9  
 

Other

  Indefinite     15.5         15.5  
                   

Total

      $ 4,919.1   $ (371.5 ) $ 4,547.6  
                   

        The following table presents details of our intangible assets, other than goodwill, as of December 26, 2009:

 
  Useful life   Gross   Accumulated
amortization
  Net  
 
  (Years)
  (In millions)
 

Intangible assets subject to amortization:

                       
 

Brands

  3 - 40   $ 293.5   $ (140.1 ) $ 153.4  
 

Distribution rights

  2 - 23     334.4     (194.3 )   140.1  
 

Patents and technology and distribution channels

  3 - 10     35.8     (22.4 )   13.4  

Intangible assets not subject to amortization:

                       
 

Brands

  Indefinite     3,248.8         3,248.8  
 

Distribution networks

  Indefinite     963.5         963.5  
 

Other

  Indefinite     15.5         15.5  
                   

Total

      $ 4,891.5   $ (356.8 ) $ 4,534.7  
                   

        Based on foreign exchange rates as of June 26, 2010, the following is our estimated amortization expense related to intangible assets for the next five years:

 
  Amount  
 
  (In millions)
 

2010—remaining

  $ 21.9  

2011

  $ 42.5  

2012

  $ 30.5  

2013

  $ 30.0  

2014

  $ 30.0  
DEBT (Tables)
Debt
 
  As of  
 
  June 26,
2010
  December 26,
2009
 
 
  (In millions)
 

Senior notes:

             
 

U.S. $300 million 4.85% due 2010

  $ 300.0   $ 300.0  
 

U.S. $850 million 6.375% due 2012

    44.6     44.6  
 

CAD $900 million 5.0% due 2015

    869.2     857.2  
 

U.S. $575 million convertible debt 2.5% due 2013(1)

    575.0     575.0  

Less: unamortized debt discounts and other(2)

    (55.5 )   (63.8 )
           

Total long-term debt (including current portion)

    1,733.3     1,713.0  

Less: current portion of long-term debt

    (300.0 )   (300.3 )
           

Total long-term debt

  $ 1,433.3   $ 1,412.7  
           

Total fair value

  $ 1,920.6   $ 1,913.6  
           

(1)
The original conversion price for each $1,000 aggregate principal amount of notes was $54.76 per share of our Class B common stock, which represented a 25% premium above the stock price on the day of issuance of the notes and corresponded to the initial conversion ratio of 18.263 shares per each $1,000 aggregate principal amount of notes. The conversion ratio and conversion price are subject to adjustments for certain events and provisions, as defined in the indenture. As a result of Class B common stock dividends paid, during this quarter we provided notice to the Trustee that the conversion price and conversion ratio associated with the notes would be adjusted to $54.01 and 18.5154 shares, respectively, effective August 26, 2010. Currently, the convertible debt's if-converted value does not exceed the principal.

(2)
During the thirteen weeks ended June 26, 2010, and June 28, 2009, we incurred additional non-cash interest expense of $4.2 million and $4.1 million, respectively. For the twenty-six weeks ended June 26, 2010, and June 28, 2009, the amounts were $8.4 million and $8.1 million, respectively. We also incurred interest expense related to the 2.5% coupon rate on the convertible debt of $3.6 million for both thirteen week periods ended June 26, 2010, and June 28, 2009. For the twenty-six weeks ended June 26, 2010, and June 28, 2009 the amount was $7.2 million for both periods. The combination of non-cash and cash interest resulted in an effective interest rate of 6.00% and 6.09% for the thirteen weeks ended June 26, 2010, and June 28, 2009, respectively. The effective interest rates for the twenty-six weeks ended June 26, 2010, and June 28, 2009 were 6.00% and 5.89%, respectively. As of June 26, 2010, and December 26, 2009, paid in capital in the equity section of our balance sheet includes $103.9 million, ($64.2 million net of tax), representing the equity component of the convertible debt. Further, as of June 26, 2010, and December 26, 2009, $54.9 million and $63.2 million respectively of the unamortized debt discount and other balance relates to our $575 million convertible debt. The unamortized discount will continue to amortize through 2013 resulting in non-cash interest expense of approximately $16 million to $18 million annually, thereby increasing the carrying value of the convertible debt to its $575 million face value at maturity in July 2013. The remaining $0.6 million as of quarter-end and year-end, respectively, relates to unamortized debt premiums, discounts, and other on the additional debt balances.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)
 
   
  Fair Value Measurements at June 26, 2010 Using  
 
  Total carrying
value at
June 26, 2010
  Quoted prices in
active markets
(Level 1)
  Significant other
observable inputs
(Level 2)
  Significant
unobservable
inputs (Level 3)
 
 
  (In millions)
 

Cross currency swaps

  $ (423.9 ) $   $ (423.9 ) $  

Forward starting interest rate swaps

    (0.3 )       (0.3 )    

Foreign currency forwards

    (8.3 )       (8.3 )    

Commodity swaps

    0.4         0.4      

Total return swaps

    13.0         13.0      
                   
 

Total

  $ (419.1 ) $   $ (419.1 ) $  
                   

 

 
   
  Fair Value Measurements at December 26, 2009 Using  
 
  Total carrying
value at
December 26,
2009
 
 
  Quoted prices in
active markets
(Level 1)
  Significant other
observable inputs
(Level 2)
  Significant
unobservable
inputs (Level 3)
 
 
  (In millions)
 

Cross currency swaps

  $ (413.0 ) $   $ (413.0 ) $  

Forward starting interest rate swaps

    6.3         6.3      

Foreign currency forwards

    (8.5 )       (8.5 )    

Commodity swaps

    (0.9 )       (0.9 )    

Total return swaps

    (1.8 )       (1.8 )    
                   

Total

  $ (417.9 ) $   $ (417.9 ) $  
                   

Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheet (in millions)

 
  As of June 26, 2010  
 
   
  Asset derivatives    
   
 
 
   
  Liability derivatives  
 
  Notional amount   Balance sheet location   Fair value  
 
  Balance sheet location   Fair value  

Derivatives designated as hedging instruments:

                         

Cross currency swaps

  USD 1,896.7   Other current assets   $   Accrued expenses   $ (52.7 )

 

      Other assets       Long term derivative liability     (371.2 )

Forward starting interest rate swaps

  USD 193.1   Other current assets     0.1   Accrued expenses     (0.4 )

Foreign currency forwards

  USD 367.3   Other current assets     3.0   Accrued expenses     (7.3 )

 

      Other assets     1.1   Long term derivative liability     (5.1 )

Commodity swaps

  Gigajoules 2.0   Other current assets     1.0   Accrued expenses     (0.8 )

 

      Other assets     0.3   Long term derivative liability     (0.1 )
                       

Total derivatives designated as hedging instruments

          $ 5.5       $ (437.6 )
                       

Derivatives not designated as hedging instruments:

                         

Total return swaps

  AUD 496.5   Other current assets   $ 13.6   Accrued expenses   $ (0.6 )
                       

Total derivatives not designated as hedging instruments

          $ 13.6       $ (0.6 )
                       

 

 
  As of December 26, 2009  
 
   
  Asset derivatives    
   
 
 
   
  Liability derivatives  
 
   
  Balance sheet location   Fair value  
 
  Notional amount   Balance sheet location   Fair value  

Derivatives designated as hedging instruments:

                           

Cross currency swaps

    USD 1,992.4  

Other current assets

  $  

Accrued expenses

  $ (46.9 )

 

       

Other assets

     

Long term derivative liability

    (366.1 )

Forward starting interest rate swaps

    USD 190.5  

Other current assets

    6.3  

Accrued expenses

     

Foreign currency forwards

    USD 339.3  

Other current assets

    4.6  

Accrued expenses

    (6.1 )

 

       

Other assets

    1.1  

Long term derivative liability

    (8.1 )

Commodity swaps

    Gigajoules 1.2  

Other current assets

     

Accrued expenses

    (0.9 )
                         

Total derivatives designated as hedging instruments

            $ 12.0       $ (428.1 )
                         

Derivatives not designated as hedging instruments:

                           

Total return swaps

    AUD 496.5  

Other current assets

  $  

Accrued expenses

  $ (1.8 )
                         

Total derivatives not designated as hedging instruments

            $       $ (1.8 )
                         

The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations (in millions)

  • Cash Flow Hedges

For the Thirteen Weeks Ended June 26, 2010  
Derivatives in cash
flow hedge
relationships
  Amount of gain
(loss) recognized
in OCI on
derivative
(effective
portion)
  Location of gain (loss)
reclassified from AOCI into
income (effective portion)
  Amount of gain
(loss) recognized
from AOCI on
derivative
(effective portion)
  Location of gain (loss)
recognized in income on
derivative (ineffective
portion and amount
excluded from
effectiveness testing)
  Amount of gain (loss)
recognized in income
on derivative
(ineffective portion and
amount excluded from
effectiveness testing)
 

Cross currency swaps(1)

  $ 1.9  

Other income (expense), net

  $ 9.9  

Other income (expense), net

  $  

 

       

Interest expense, net

    (3.3 )

Interest expense, net

     

Forward starting interest rate swaps

    (4.5 )

Interest expense, net

     

Interest expense, net

     

Foreign currency forwards

    4.8  

Other income (expense), net

    (1.1 )

Other income (expense), net

     

 

       

Cost of goods sold

    (0.3 )

Cost of goods sold

     

 

       

Marketing, general and administrative expenses

    0.1  

Marketing, general and administrative expenses

     

Commodity swaps

    2.7  

Cost of goods sold

    (0.7 )

Cost of goods sold

     
                       

Total

  $ 4.9       $ 4.6       $  
                       

 

For the Thirteen Weeks Ended June 28, 2009  
Derivatives in cash
flow hedge
relationships
  Amount of gain
(loss) recognized
in OCI on
derivative
(effective
portion)
  Location of gain (loss)
reclassified from AOCI into
income (effective portion)
  Amount of gain
(loss) recognized
from AOCI on
derivative
(effective portion)
  Location of gain (loss)
recognized in income on
derivative (ineffective
portion and amount
excluded from
effectiveness testing)
  Amount of gain (loss)
recognized in income
on derivative
(ineffective portion and
amount excluded from
effectiveness testing)
 

Cross currency swaps(1)

  $ 2.7  

Other income (expense), net

  $ (140.3 )

Other income (expense), net

  $  

 

       

Interest expense, net

    (1.1 )

Interest expense, net

     

Forward starting interest rate swaps

    5.8  

Interest expense, net

     

Interest expense, net

     

Foreign currency forwards

    (29.9 )

Other income (expense), net

    2.5  

Other income (expense), net

     

 

       

Cost of goods sold

    5.2  

Cost of goods sold

     

 

       

Marketing, general and administrative expenses

    (0.1 )

Marketing, general and administrative expenses

     

Commodity swaps

    1.0  

Cost of goods sold

    (1.0 )

Cost of goods sold

     
                       

Total

  $ (20.4 )     $ (134.8 )     $  
                       

 

For the Twenty-Six Weeks Ended June 26, 2010  
Derivatives in cash
flow hedge
relationships
  Amount of gain
(loss) recognized
in OCI on
derivative
(effective
portion)
  Location of gain (loss)
reclassified from AOCI into
income (effective portion)
  Amount of gain
(loss) recognized
from AOCI on
derivative
(effective portion)
  Location of gain (loss)
recognized in income on
derivative (ineffective
portion and amount
excluded from
effectiveness testing)
  Amount of gain (loss)
recognized in income
on derivative
(ineffective portion and
amount excluded from
effectiveness testing)
 

Cross currency swaps(1)

  $ 10.2  

Other income (expense), net

  $ (15.3 )

Other income (expense), net

  $  

 

       

Interest expense, net

    (5.9 )

Interest expense, net

     

Forward starting interest rate swaps

    (6.7 )

Interest expense, net

     

Interest expense, net

     

Foreign currency forwards

    0.3  

Other income (expense), net

    (2.4 )

Other income (expense), net

     

 

       

Cost of goods sold

    (1.0 )

Cost of goods sold

     

 

       

Marketing, general and administrative expenses

    0.1  

Marketing, general and administrative expenses

     

Commodity swaps

    1.3  

Cost of goods sold

    (1.2 )

Cost of goods sold

     
                       

Total

  $ 5.1       $ (25.7 )     $  
                       

 

For the Twenty-Six Weeks Ended June 28, 2009  
Derivatives in cash
flow hedge
relationships
  Amount of gain
(loss) recognized
in OCI on
derivative
(effective
portion)
  Location of gain (loss)
reclassified from AOCI into
income (effective portion)
  Amount of gain
(loss) recognized
from AOCI on
derivative
(effective portion)
  Location of gain (loss)
recognized in income on
derivative (ineffective
portion and amount
excluded from
effectiveness testing)
  Amount of gain (loss)
recognized in income
on derivative
(ineffective portion and
amount excluded from
effectiveness testing)
 

Cross currency swaps(1)

  $ (3.2 )

Other income (expense), net

  $ (121.6 )

Other income (expense), net

  $  

 

       

Interest expense, net

    (1.3 )

Interest expense, net

     

Forward starting interest rate swaps

    5.8  

Interest expense, net

     

Interest expense, net

     

Foreign currency forwards

    (32.1 )

Other income (expense), net

    5.2  

Other income (expense), net

     

 

       

Cost of goods sold

    10.5  

Cost of goods sold

     

 

       

Marketing, general and administrative expenses

    (0.1 )

Marketing, general and administrative expenses

     

Commodity swaps

     

Cost of goods sold

    (1.7 )

Cost of goods sold

     
                       

Total

  $ (29.5 )     $ (109.0 )     $  
                       

Note: Amounts recognized in AOCI are gross of taxes.

(1)
The foreign exchange gain (loss) component of these cross currency swaps is offset by the corresponding gain (loss) on the hedged forecasted transactions in Other income (expense), net and Interest expense, net.
For the Thirteen Weeks Ended June 26, 2010  
Derivatives Not In Hedging
Relationship
  Location of Gain (Loss) Recognized
in Income on Derivative
  Amount of Gain (Loss) Recognized in
Income on Derivative
 

Total return swaps

  Other income (expense), net   $ 21.9  
           

 

      $ 21.9  
           

 

For the Thirteen Weeks Ended June 28, 2009  
Derivatives Not In Hedging
Relationship
  Location of Gain (Loss) Recognized
in Income on Derivative
  Amount of Gain (Loss) Recognized in
Income on Derivative
 

Total return swaps

  Other income (expense), net   $ (12.9 )

Physical commodity contracts

  Cost of goods sold     (0.2 )
           

 

      $ (13.1 )
           

 

For the Twenty-Six Weeks Ended June 26, 2010  
Derivatives Not In Hedging
Relationship
  Location of Gain (Loss) Recognized
in Income on Derivative
  Amount of Gain (Loss) Recognized in
Income on Derivative
 

Total return swaps

  Other income (expense), net   $ 15.0  
           

 

      $ 15.0  
           

For the Twenty-Six Weeks Ended June 28, 2009  
Derivatives Not In Hedging
Relationship
  Location of Gain (Loss) Recognized
in Income on Derivative
  Amount of Gain (Loss) Recognized in
Income on Derivative
 

Total return swaps

  Other income (expense), net   $ (34.3 )

Physical commodity contracts

  Cost of goods sold     (1.0 )
           

 

      $ (35.3 )
           
PENSION AND OTHER POSTRETIREMENT BENEFITS (Tables)
Net periodic pension costs under retirement plans and other post-retirement benefits
 
  Thirteen Weeks Ended June 26, 2010  
 
  Canada plans   U.S. plans   U.K. plan   Consolidated  
 
  (In millions)
 

Defined Benefit Plans

                         
 

Service cost

  $ 4.4   $   $   $ 4.4  
 

Interest cost

    18.0     0.1     28.0     46.1  
 

Expected return on plan assets

    (17.6 )       (26.5 )   (44.1 )
 

Amortization of prior service cost

    0.2             0.2  
 

Amortization of net actuarial loss

    0.3         3.0     3.3  
 

Less expected participant contributions

    (0.5 )           (0.5 )
 

Special termination benefits

    1.8             1.8  
                   
 

Net periodic pension cost

  $ 6.6   $ 0.1   $ 4.5   $ 11.2  
                   

Other Postretirement Benefits

                         
 

Service cost—benefits earned during the period

  $ 0.6   $   $   $ 0.6  
 

Interest cost on projected benefit obligation

    2.4             2.4  
 

Amortization of prior service benefit

    (0.9 )           (0.9 )
                   
 

Net periodic postretirement benefit cost

  $ 2.1   $   $   $ 2.1  
                   

 

 
  Thirteen Weeks Ended June 28, 2009  
 
  Canada plans   U.S. plans   U.K. plan   Consolidated  
 
  (In millions)
 

Defined Benefit Plans

                         
 

Service cost

  $ 3.3   $   $ 1.1   $ 4.4  
 

Interest cost

    15.8     0.1     26.5     42.4  
 

Expected return on plan assets

    (15.5 )       (30.1 )   (45.6 )
 

Amortization of prior service cost

    0.1             0.1  
 

Amortization of net actuarial loss

        0.2         0.2  
 

Less expected participant contributions

    (0.5 )       (0.1 )   (0.6 )
                   
 

Net periodic pension cost (benefit)

  $ 3.2   $ 0.3   $ (2.6 ) $ 0.9  
                   

Other Postretirement Benefits

                         
 

Service cost—benefits earned during the period

  $ 0.5   $   $   $ 0.5  
 

Interest cost on projected benefit obligation

    2.1             2.1  
 

Amortization of prior service benefit

    (0.6 )           (0.6 )
 

Amortization of net actuarial gain

    (0.2 )           (0.2 )
                   
 

Net periodic postretirement benefit cost

  $ 1.8   $   $   $ 1.8  
                   

 

 
  Twenty-Six Weeks Ended June 26, 2010  
 
  Canada plans   U.S. plans   U.K. plan   Consolidated  
 
  (In millions)
 

Defined Benefit Plans

                         
 

Service cost

  $ 8.7   $   $   $ 8.7  
 

Interest cost

    35.8     0.2     57.4     93.4  
 

Expected return on plan assets

    (35.0 )       (54.3 )   (89.3 )
 

Amortization of prior service cost

    0.4             0.4  
 

Amortization of net actuarial loss

    0.6         6.1     6.7  
 

Less expected participant contributions

    (1.0 )           (1.0 )
 

Special termination benefits

    1.8             1.8  
                   
 

Net periodic pension cost

  $ 11.3   $ 0.2   $ 9.2   $ 20.7  
                   

Other Postretirement Benefits

                         
 

Service cost—benefits earned during the period

  $ 1.2   $   $   $ 1.2  
 

Interest cost on projected benefit obligation

    4.7             4.7  
 

Amortization of prior service benefit

    (1.8 )           (1.8 )
                   
 

Net periodic postretirement benefit cost

  $ 4.1   $   $   $ 4.1  
                   

 

 
  Twenty-Six Weeks Ended June 28, 2009  
 
  Canada plans   U.S. plans   U.K. plan   Consolidated  
 
  (In millions)
 

Defined Benefit Plans

                         
 

Service cost

  $ 7.8   $   $ 2.2   $ 10.0  
 

Interest cost

    35.4     0.2     51.2     86.8  
 

Expected return on plan assets

    (34.6 )       (58.2 )   (92.8 )
 

Amortization of prior service cost

    0.5             0.5  
 

Amortization of net actuarial loss

    0.1     0.4         0.5  
 

Curtailment loss

    5.3                 5.3  
 

Less expected participant contributions

    (0.9 )       (0.2 )   (1.1 )
                   
 

Net periodic pension cost (benefit)

  $ 13.6   $ 0.6   $ (5.0 ) $ 9.2  
                   

Other Postretirement Benefits

                         
 

Service cost—benefits earned during the period

  $ 1.7   $   $   $ 1.7  
 

Interest cost on projected benefit obligation

    4.8     0.1         4.9  
 

Amortization of prior service benefit

    (1.0 )           (1.0 )
 

Amortization of net actuarial gain

    (0.4 )           (0.4 )
                   
 

Net periodic postretirement benefit cost

  $ 5.1   $ 0.1   $   $ 5.2  
                   
COMMITMENTS AND CONTINGENCIES (Tables)
Summary of reserves associated with indemnity obligations
 
  Indemnity Obligations  
 
  Purchased tax
credits
indemnity
reserve
  Tax, civil and
labor
indemnity
reserve
  Total
indemnity
reserves
 
 
  (In millions)
 

Balance at December 26, 2009

  $ 154.6   $ 9.5   $ 164.1  
 

Changes in estimates

    (32.3 )       (32.3 )
 

Cash Settlement

    (96.0 )       (96.0 )
 

Foreign exchange transaction impact

    (3.8 )       (3.8 )
               

Balance at June 26, 2010

  $ 22.5   $ 9.5   $ 32.0  
               
COMPREHENSIVE INCOME (LOSS) (Tables)
Summary of the components of comprehensive income
 
  Thirteen Weeks Ended   Twenty-Six Weeks Ended  
 
  June 26, 2010   June 28, 2009   June 26, 2010   June 28, 2009  
 
  (In millions)
 

Net income

  $ 238.3   $ 187.8   $ 343.7   $ 264.0  
                   

Other comprehensive (loss) income, net of tax:

                         
 

Foreign currency translation adjustments, net of tax

    (20.9 )   440.0     (31.7 )   375.3  
 

Amortization of net prior service costs and net actuarial losses, net of tax

    0.8     (0.6 )   2.6     11.9  
 

Unrealized gain (loss) on derivative instruments, net of tax

    1.0     (9.5 )   (0.2 )   (1.3 )
 

Reclassification adjustment on derivative instruments, net of tax

    1.7     (5.4 )   3.1     (19.9 )
 

Ownership share of unconsolidated subsidiaries' other comprehensive (loss) income, net of tax(1)

    (17.7 )   21.7     (10.3 )   17.9  
                   
 

Total other comprehensive (loss) income, net of tax

    (35.1 )   446.2     (36.5 )   383.9  
                   

Comprehensive income

    203.2     634.0     307.2     647.9  
 

Less: Comprehensive income attributable to the noncontrolling interest

    (1.1 )   (0.5 )   (1.9 )   (1.0 )
                   

Comprehensive income attributable to MCBC

  $ 202.1   $ 633.5   $ 305.3   $ 646.9  
                   

(1)
Consisting of unrealized gains and losses on derivative instruments, and changes to pension liabilities related to our proportional share of our unconsolidated subsidiaries, reported net of our effective tax rate.
SUPPLEMENTAL GUARANTOR INFORMATION (Tables)
Schedule of Supplemental Guarantor Information

 


MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THIRTEEN WEEKS ENDED JUNE 26, 2010
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Sales

  $ 2.2   $ 57.6   $   $ 699.1   $ 582.8   $ (59.1 ) $ 1,282.6  

Excise taxes

                (163.5 )   (235.8 )       (399.3 )
                               
   

Net sales

    2.2     57.6         535.6     347.0     (59.1 )   883.3  

Cost of goods sold

        (13.7 )       (264.3 )   (253.6 )   56.8     (474.8 )
                               
   

Gross profit

    2.2     43.9         271.3     93.4     (2.3 )   408.5  

Marketing, general and administrative expenses

    (29.5 )   (7.6 )       (129.0 )   (98.1 )   3.0     (261.2 )

Special items, net

    (0.6 )           (14.5 )   (0.7 )       (15.8 )

Equity income (loss) in subsidiaries

    235.3     105.2     34.4     (81.6 )   129.2     (422.5 )    

Equity income in MillerCoors

        163.6                     163.6  
                               
   

Operating income

    207.4     305.1     34.4     46.2     123.8     (421.8 )   295.1  

Interest (expense) income, net

    (8.5 )   11.8     (31.2 )   93.9     (91.2 )   (0.2 )   (25.4 )

Other income (expense), net

    21.9     (0.1 )       0.6     (1.0 )       21.4  
                               
   

Income from continuing operations before income taxes

    220.8     316.8     3.2     140.7     31.6     (422.0 )   291.1  

Income tax benefit (expense)

    16.4     (81.8 )   46.4     (35.5 )   2.3         (52.2 )
                               
   

Income from continuing operations

    237.2     235.0     49.6     105.2     33.9     (422.0 )   238.9  

Loss from discontinued operations, net of tax

                    (0.6 )       (0.6 )
                               
   

Net income

    237.2     235.0     49.6     105.2     33.3     (422.0 )   238.3  
 

Less: Net income attributable to noncontrolling interests

                    (1.1 )       (1.1 )
                               
   

Net income attributable to MCBC

  $ 237.2   $ 235.0   $ 49.6   $ 105.2   $ 32.2   $ (422.0 ) $ 237.2  
                               

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THIRTEEN WEEKS ENDED JUNE 28, 2009
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002 Issuer   2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Sales

  $ 8.5   $ 52.2   $   $ 614.8   $ 543.6   $ (58.7 ) $ 1,160.4  

Excise taxes

                (143.3 )   (218.2 )       (361.5 )
                               
 

Net sales

    8.5     52.2         471.5     325.4     (58.7 )   798.9  

Cost of goods sold

        (13.0 )       (233.2 )   (236.6 )   50.2     (432.6 )
                               
 

Gross profit

    8.5     39.2         238.3     88.8     (8.5 )   366.3  

Marketing, general and administrative expenses

    (27.1 )   (11.0 )       (108.4 )   (92.3 )   8.8     (230.0 )

Special items, net

    0.6             (0.9 )   (6.8 )         (7.1 )

Equity income (loss) in subsidiaries

    253.3     (153.1 )   74.3     (320.8 )   130.5     15.8      

Equity income in MillerCoors

        134.1                     134.1  
                               
 

Operating income (loss)

    235.3     9.2     74.3     (191.8 )   120.2     16.1     263.3  

Interest (expense) income, net

    (8.1 )   12.3     (35.4 )   47.9     (36.5 )   (0.1 )   (19.9 )

Other (expense) income, net

    (12.1 )   5.7         1.2     (3.1 )       (8.3 )
                               
 

Income (loss) from continuing operations before income taxes

    215.1     27.2     38.9     (142.7 )   80.6     16.0     235.1  

Income tax (expense) benefit

    (27.8 )   157.4     (115.6 )   70.7     (132.0 )       (47.3 )
                               
 

Income (loss) from continuing operations

    187.3     184.6     (76.7 )   (72.0 )   (51.4 )   16.0     187.8  

Loss from discontinued operations, net of tax

                             
                               
 

Net income (loss)

    187.3     184.6     (76.7 )   (72.0 )   (51.4 )   16.0     187.8  

Less: Net income attributable to noncontrolling interests

                    (0.5 )       (0.5 )
                               
 

Net income (loss) attributable to MCBC

  $ 187.3   $ 184.6   $ (76.7 ) $ (72.0 ) $ (51.9 ) $ 16.0   $ 187.3  
                               


MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE TWENTY-SIX WEEKS ENDED JUNE 26, 2010
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Sales

  $ 8.7   $ 97.8   $   $ 1,200.8   $ 1,027.2   $ (104.9 ) $ 2,229.6  

Excise taxes

                (281.6 )   (403.7 )       (685.3 )
                               
 

Net sales

    8.7     97.8         919.2     623.5     (104.9 )   1,544.3  

Cost of goods sold

        (24.7 )       (483.6 )   (466.9 )   96.0     (879.2 )
                               
 

Gross profit

    8.7     73.1         435.6     156.6     (8.9 )   665.1  

Marketing, general and administrative expenses

    (61.5 )   (17.7 )       (240.0 )   (189.5 )   10.0     (498.7 )

Special items, net

    (0.7 )           (3.0 )   (14.7 )       (18.4 )

Equity income (loss) in subsidiaries

    374.9     134.7     42.4     (179.8 )   193.7     (565.9 )    

Equity income in MillerCoors

        254.6                     254.6  
                               
 

Operating income

    321.4     444.7     42.4     12.8     146.1     (564.8 )   402.6  

Interest (expense) income, net

    (16.7 )   24.5     (36.5 )   157.7     (178.7 )   (0.1 )   (49.8 )

Other income (expense), net

    20.0     (1.6 )   (0.1 )   0.6     (6.1 )       12.8  
                               
 

Income (loss) from continuing operations before income taxes

    324.7     467.6     5.8     171.1     (38.7 )   (564.9 )   365.6  

Income tax benefit (expense)

    17.1     (93.8 )   35.7     (32.9 )   10.0         (63.9 )
                               
 

Income (loss) from continuing operations

    341.8     373.8     41.5     138.2     (28.7 )   (564.9 )   301.7  

Income from discontinued operations, net of tax

                    42.0         42.0  
                               
 

Net income

    341.8     373.8     41.5     138.2     13.3     (564.9 )   343.7  

Less: Net income attributable to noncontrolling interests

                    (1.9 )       (1.9 )
                               
 

Net income attributable to MCBC

  $ 341.8   $ 373.8   $ 41.5   $ 138.2   $ 11.4   $ (564.9 ) $ 341.8  
                               


MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE TWENTY-SIX WEEKS ENDED JUNE 28, 2009
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Sales

  $ 13.0   $ 91.8   $   $ 1,036.5   $ 943.0   $ (99.7 ) $ 1,984.6  

Excise taxes

                (240.4 )   (386.3 )       (626.7 )
                               
 

Net sales

    13.0     91.8         796.1     556.7     (99.7 )   1,357.9  

Cost of goods sold

        (25.6 )       (422.5 )   (417.4 )   86.8     (778.7 )
                               
 

Gross profit

    13.0     66.2         373.6     139.3     (12.9 )   579.2  

Marketing, general and administrative expenses

    (42.9 )   (24.2 )       (194.6 )   (164.3 )   13.4     (412.6 )

Special items, net

    (0.6 )           (9.0 )   (7.7 )       (17.3 )

Equity income (loss) in subsidiaries

    351.6     15.8     73.0     (240.2 )   170.6     (370.8 )    

Equity income in MillerCoors

        231.2                     231.2  
                               
 

Operating income (loss)

    321.1     289.0     73.0     (70.2 )   137.9     (370.3 )   380.5  

Interest (expense) income, net

    (16.3 )   24.3     (77.7 )   99.4     (69.3 )   (0.2 )   (39.8 )

Other (expense) income, net

    (30.3 )   8.2         1.0     (5.7 )       (26.8 )
                               
 

Income (loss) from continuing operations before income taxes

    274.5     321.5     (4.7 )   30.2     62.9     (370.5 )   313.9  

Income tax (expense) benefit

    (11.5 )   (14.0 )   (70.7 )   41.3     8.9         (46.0 )
                               
 

Income (loss) from continuing operations

    263.0     307.5     (75.4 )   71.5     71.8     (370.5 )   267.9  

Loss from discontinued operations, net of tax

                    (3.9 )       (3.9 )
                               
 

Net income (loss)

    263.0     307.5     (75.4 )   71.5     67.9     (370.5 )   264.0  

Less: Net income attributable to noncontrolling interests

                    (1.0 )       (1.0 )
                               
 

Net income (loss) attributable to MCBC

  $ 263.0   $ 307.5   $ (75.4 ) $ 71.5   $ 66.9   $ (370.5 ) $ 263.0  
                               

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF JUNE 26, 2010
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Assets

                                           

Current assets:

                                           
 

Cash and cash equivalents

  $ 473.4   $   $ 0.1   $ 134.5   $ 190.6   $   $ 798.6  
 

Accounts receivable, net

        7.2         255.3     347.6         610.1  
 

Other receivables, net

    8.4     31.3     4.0     30.6     100.1         174.4  
 

Total inventories, net

                155.0     78.7         233.7  
 

Other assets, net

    7.1     2.2         36.3     59.1         104.7  
 

Deferred tax assets

                0.4     0.7     (1.1 )    
 

Discontinued operations

                    2.0         2.0  
 

Intercompany receivables

        684.5     166.0     808.6         (1,659.1 )    
                               

Total current assets

    488.9     725.2     170.1     1,420.7     778.8     (1,660.2 )   1,923.5  

Properties, net

    34.4     7.2         759.5     438.9         1,240.0  

Goodwill

        11.4         341.3     1,090.0         1,442.7  

Other intangibles, net

        41.3         4,138.8     367.5         4,547.6  

Investment in MillerCoors

        2,652.0                     2,652.0  

Net investment in subsidiaries

    7,931.5     3,752.5     2,779.8         4,882.8     (19,346.6 )    

Deferred tax assets

    115.7     96.7             40.8     (104.0 )   149.2  

Other assets

    5.8     13.7     3.1     50.4     79.4         152.4  
                               

Total assets

  $ 8,576.3   $ 7,300.0   $ 2,953.0   $ 6,710.7   $ 7,678.2   $ (21,110.8 ) $ 12,107.4  
                               

Liabilities and equity

                                           

Current liabilities:

                                           
 

Accounts payable

  $ 4.3   $ 0.4   $   $ 48.1   $ 125.6   $   $ 178.4  
 

Accrued expenses and other liabilities

    30.5     11.2     62.6     426.9     362.4         893.6  
 

Deferred tax liability

    90.0                 90.6     (1.1 )   179.5  
 

Short-term borrowings and current portion of long-term debt

            300.0                 300.0  
 

Discontinued operations

                            16.3         16.3  
 

Intercompany payables

    651.0     7.6     235.4     224.3     540.8     (1,659.1 )    
                               

Total current liabilities

    775.8     19.2     598.0     699.3     1,135.7     (1,660.2 )   1,567.8  

Long-term debt

    520.1     45.2     868.0                 1,433.3  

Net investment in subsidiaries

                258.3           (258.3 )    

Deferred tax liability

        102.2     1.9     0.4     441.5     (104.0 )   442.0  

Other liabilities

    7.0     37.2     2.8     698.7     579.7         1,325.4  

Discontinued operations

                    18.6         18.6  

Intercompany notes payable

            4,269.2     5,202.1     6,797.7     (16,269.0 )    
                               

Total liabilities

    1,302.9     203.8     5,739.9     6,858.8     8,973.2     (18,291.5 )   4,787.1  

MCBC stockholders' equity

    7,275.3     7,941.9     1,621.4     7,767.6     1,788.2     (19,088.3 )   7,306.1  

Intercompany notes receivable

    (1.9 )   (845.7 )   (4,408.3 )   (7,915.7 )   (3,097.4 )   16,269.0      
                               

Total stockholders' equity

    7,273.4     7,096.2     (2,786.9 )   (148.1 )   (1,309.2 )   (2,819.3 )   7,306.1  

Noncontrolling interests

                    14.2         14.2  
                               

Total equity

    7,273.4     7,096.2     (2,786.9 )   (148.1 )   (1,295.0 )   (2,819.3 )   7,320.3  
                               

Total liabilities and equity

  $ 8,576.3   $ 7,300.0   $ 2,953.0   $ 6,710.7   $ 7,678.2   $ (21,110.8 ) $ 12,107.4  
                               

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 26, 2009
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Assets

                                           

Current assets:

                                           
 

Cash and cash equivalents

  $ 392.8   $   $ 0.1   $ 175.0   $ 166.3   $   $ 734.2  
 

Accounts receivable, net

    3.6     4.1         203.3     355.7         566.7  
 

Other receivables, net

    16.2     27.4         20.9     88.6     (2.6 )   150.5  
 

Total inventories, net

                146.6     89.6         236.2  
 

Other assets, net

    4.0     1.0         35.1     25.2         65.3  
 

Deferred tax assets

                0.4     0.7     (1.1 )    
 

Discontinued operations

                    9.9         9.9  
 

Intercompany receivables

        455.7         538.8     310.0     (1,304.5 )    
                               

Total current assets

    416.6     488.2     0.1     1,120.1     1,046.0     (1,308.2 )   1,762.8  

Properties, net

    35.8     7.3         787.1     462.3         1,292.5  

Goodwill

        11.4         348.9     1,114.7         1,475.0  

Other intangibles, net

        44.5         4,117.7     372.5         4,534.7  

Investment in MillerCoors

        2,613.6                     2,613.6  

Net investment in subsidiaries

    7,561.0     3,620.7     3,251.5     3,079.4     4,624.0     (22,136.6 )    

Deferred tax assets

    144.6     90.1         3.7     43.2     (103.7 )   177.9  

Other assets

    6.4     13.5     4.0     49.8     90.9         164.6  
                               

Total assets

  $ 8,164.4   $ 6,889.3   $ 3,255.6   $ 9,506.7   $ 7,753.6   $ (23,548.5 ) $ 12,021.1  
                               

Liabilities and equity

                                           

Current liabilities:

                                           
 

Accounts payable

  $ 5.7   $ 0.8   $   $ 49.1   $ 154.7   $   $ 210.3  
 

Accrued expenses and other liabilities

    39.6     14.7     54.8     294.7     343.8     (2.6 )   745.0  
 

Deferred tax liability

    90.0                 78.2     (1.1 )   167.1  
 

Short-term borrowings and current portion of long-term debt

        0.3     300.0                 300.3  
 

Discontinued operations

                    158.2         158.2  
 

Intercompany payables

    431.3     4.1     201.0     391.8     276.3     (1,304.5 )    
                               

Total current liabilities

    566.6     19.9     555.8     735.6     1,011.2     (1,308.2 )   1,580.9  

Long-term debt

    511.8     45.0     856.0         (0.1 )       1,412.7  

Deferred tax liability

        102.2     3.3         466.2     (103.7 )   468.0  

Other liabilities

    6.4     82.4     2.8     747.3     609.1         1,448.0  

Discontinued operations

                    18.7         18.7  

Intercompany notes payable

            2,943.3     4,722.7     3,681.3     (11,347.3 )    
                               

Total liabilities

    1,084.8     249.5     4,361.2     6,205.6     5,786.4     (12,759.2 )   4,928.3  

MCBC stockholders' equity

    7,081.2     7,532.3     2,765.8     9,329.2     2,507.7     (22,136.6 )   7,079.6  

Intercompany notes receivable

    (1.6 )   (892.5 )   (3,871.4 )   (6,028.1 )   (553.7 )   11,347.3      
                               

Total stockholders' equity

    7,079.6     6,639.8     (1,105.6 )   3,301.1     1,954.0     (10,789.3 )   7,079.6  

Noncontrolling interests

                    13.2         13.2  
                               

Total equity

    7,079.6     6,639.8     (1,105.6 )   3,301.1     1,967.2     (10,789.3 )   7,092.8  
                               

Total liabilities and equity

  $ 8,164.4   $ 6,889.3   $ 3,255.6   $ 9,506.7   $ 7,753.6   $ (23,548.5 ) $ 12,021.1  
                               

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED JUNE 26, 2010
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Net cash provided by (used in) operating activities

  $ 147.2   $ 45.5   $ (147.1 ) $ 9.0   $ 449.0   $ (108.0 ) $ 395.6  
                               

CASH FLOWS FROM INVESTING ACTIVITIES:

                                           
 

Additions to properties and intangible assets

    (2.4 )           (16.6 )   (32.4 )       (51.4 )
 

Proceeds from sales of properties and

                                         
   

intangible assets, net

                0.3     1.7         2.0  
 

Cash placed in escrow for acquisition

                    (34.2 )       (34.2 )
 

Payment on discontinued operations

                    (96.0 )       (96.0 )
 

Investment in MillerCoors

        (623.7 )                   (623.7 )
 

Return of capital from MillerCoors

        569.3                     569.3  
 

Investment in and advances to unconsolidated affiliates

                    (1.6 )       (1.6 )
 

Trade loan repayments from customers

                    8.3         8.3  
 

Trade loans advanced to customers

                    (5.0 )       (5.0 )
 

Net intercompany investing activity

    (43.5 )   (0.1 )   1,217.5     3,542.1     (1,074.9 )   (3,641.1 )    
                               

Net cash (used in) provided by investing activities

    (45.9 )   (54.5 )   1,217.5     3,525.8     (1,234.1 )   (3,641.1 )   (232.3 )
                               

CASH FLOWS FROM FINANCING ACTIVITIES:

                                           
 

Issuances of stock under equity compensation plans

    7.1                         7.1  
 

Excess tax benefits from share-based compensation

    0.6                         0.6  
 

Dividends paid

    (85.0 )               (12.6 )       (97.6 )
 

Change in overdraft balances and other

                    (8.1 )       (8.1 )
 

Net intercompany financing activity

    56.6     9.0     (1,070.4 )   (3,581.5 )   837.2     3,749.1      
                               

Net cash (used in) provided by financing activities

    (20.7 )   9.0     (1,070.4 )   (3,581.5 )   816.5     3,749.1     (98.0 )
                               

CASH AND CASH EQUIVALENTS:

                                           
 

Net increase (decrease) in cash and cash equivalents

    80.6             (46.7 )   31.4         65.3  
 

Effect of foreign exchange rate changes on cash and cash equivalents

                6.2     (7.1 )       (0.9 )

Balance at beginning of year

    392.8         0.1     175.0     166.3         734.2  
                               

Balance at end of period

  $ 473.4   $   $ 0.1   $ 134.5   $ 190.6   $   $ 798.6  
                               


MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED JUNE 28, 2009
(IN MILLIONS)
(UNAUDITED)

 
  Parent
Guarantor
and 2007
Issuer
  2002
Issuer
  2005
Issuers
  Subsidiary
Guarantors
  Subsidiary
Non
Guarantors
  Eliminations   Consolidated  

Net cash provided by (used in) operating activities

  $ 45.6   $ 229.2   $ (28.4 ) $ (53.9 ) $ 106.3   $ 53.7   $ 352.5  
                               

CASH FLOWS FROM INVESTING ACTIVITIES:

                                           
 

Additions to properties and intangible assets

    (5.1 )           (14.8 )   (25.3 )       (45.2 )
 

Proceeds from sales of properties and intangible assets, net

    1.2             0.4     1.0         2.6  
 

Acquisition of business

                    (19.6 )       (19.6 )
 

Investment in MillerCoors

        (212.1 )                   (212.1 )
 

Return of capital from MillerCoors

        92.8                     92.8  
 

Deconsolidation of Brewers' Retail, Inc. 

                (26.1 )           (26.1 )
 

Investment in and advances to unconsolidated affiliates

                    (5.3 )       (5.3 )
 

Trade loan repayments from customers

                    9.6         9.6  
 

Trade loans advanced to customers

                    (7.0 )       (7.0 )
 

Net intercompany investing activity

    (22.3 )   (106.8 )   (21.0 )   (10.5 )   (154.0 )   314.6      
                               

Net cash used in investing activities

    (26.2 )   (226.1 )   (21.0 )   (51.0 )   (200.6 )   314.6     (210.3 )
                               

CASH FLOWS FROM FINANCING ACTIVITIES:

                                           
 

Issuances of stock under equity compensation plans

    13.4                         13.4  
 

Excess tax benefits from share-based compensation

    15.3                         15.3  
 

Dividends paid

    (70.7 )               (10.7 )       (81.4 )
 

Payments on long-term debt and capital lease obligations

                (0.1 )   (0.1 )       (0.2 )
 

Change in overdraft balances and other

                (0.2 )   (8.9 )       (9.1 )
 

Net intercompany financing activity

    118.6     (3.5 )   49.4     131.7     72.1     (368.3 )    
                               

Net cash provided by (used in) financing activities

    76.6     (3.5 )   49.4     131.4     52.4     (368.3 )   (62.0 )
                               

CASH AND CASH EQUIVALENTS:

                                           
 

Net increase (decrease) in cash and cash equivalents

    96.0     (0.4 )       26.5     (41.9 )       80.2  
 

Effect of foreign exchange rate changes on cash and cash equivalents

                (3.4 )   3.2         (0.2 )

Balance at beginning of year

    84.9     0.4     0.1     24.1     106.7         216.2  
                               

Balance at end of period

  $ 180.9   $   $ 0.1   $ 47.2   $ 68.0   $   $ 296.2  
                               
SEGMENT REPORTING (Detail) (USD $)
In Millions
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Segment Reporting
 
 
 
 
Net sales
$ 883 
$ 799 
$ 1,544 
$ 1,358 
Income from continuing operations before income taxes
291 
235 
366 
314 
Canada
 
 
 
 
Segment Reporting
 
 
 
 
Net sales
542 
471 
932 
796 
Income from continuing operations before income taxes
132 
136 
186 
186 
U.S.
 
 
 
 
Segment Reporting
 
 
 
 
Income from continuing operations before income taxes
164 
134 
255 
231 
U.K.
 
 
 
 
Segment Reporting
 
 
 
 
Net sales
321 
310 
576 
529 
Income from continuing operations before income taxes
32 
30 
34 
33 
MCI and Corporate
 
 
 
 
Segment Reporting
 
 
 
 
Net sales
21 
18 
37 
33 
Income from continuing operations before income taxes
$ (36)
$ (65)
$ (109)
$ (136)
SEGMENT REPORTING (Details 1)
6 Months Ended
Jun. 26, 2010
SEGMENT REPORTING:
 
Maximum percentage of sales accounted for by a single customer, (in hundredths)
0.10 
SEGMENT REPORTING (Details 2) (USD $)
In Millions
Jun. 26, 2010
Dec. 26, 2009
Segment Reporting
 
 
Total assets
$ 12,107 
$ 12,021 
Canada
 
 
Segment Reporting
 
 
Total assets
6,465 
6,402 
U.S.
 
 
Segment Reporting
 
 
Total assets
2,652 
2,614 
U.K.
 
 
Segment Reporting
 
 
Total assets
2,258 
2,360 
MCI and Corporate
 
 
Segment Reporting
 
 
Total assets
731 
636 
Discontinued operations
 
 
Segment Reporting
 
 
Total assets
$ 2 
$ 10 
INVESTMENTS (Detail)
In Millions
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Dec. 26, 2009
3 Months Ended
Jun. 30, 2010
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 30, 2009
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 30, 2010
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 30, 2009
6 Months Ended
Jun. 28, 2009
Dec. 31, 2009
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
1,050 
 
 
 
1,050 
 
 
 
809 
Noncurrent assets
 
 
 
 
 
8,868 
 
 
 
8,868 
 
 
 
9,025 
Total assets
 
 
 
 
 
9,918 
 
 
 
9,918 
 
 
 
9,834 
Current liabilities
 
 
 
 
 
903 
 
 
 
903 
 
 
 
885 
Noncurrent liabilities
 
 
 
 
 
1,231 
 
 
 
1,231 
 
 
 
1,278 
Total liabilities
 
 
 
 
 
2,134 
 
 
 
2,134 
 
 
 
2,164 
Noncontrolling interests
 
 
 
 
 
31 
 
 
 
31 
 
 
 
28 
Interest attributable to shareholders'
 
 
 
 
 
7,754 
 
 
 
7,754 
 
 
 
7,642 
Total liabilities and equity
 
 
 
 
 
9,918 
 
 
 
9,918 
 
 
 
9,834 
Results of operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
2,134 
 
2,137 
 
3,835 
 
3,853 
 
 
Cost of goods sold
 
 
 
 
 
(1,285)
 
(1,302)
 
(2,363)
 
(2,352)
 
 
Gross profit
 
 
 
 
 
849 
 
834 
 
1,472 
 
1,500 
 
 
Operating income
 
 
 
 
 
397 
 
313 
 
609 
 
527 
 
 
Net income attributable to MillerCoors
 
 
 
 
 
391 
391 
305 
305 
600 
600 
511 
511 
 
MCBC's proportional share in net income attributable to MillerCoors
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to MillerCoors
 
 
 
 
 
391 
391 
305 
305 
600 
600 
511 
511 
 
MCBC economic interest, percent (in hundredths)
 
 
 
 
 
 
0.42 
 
0.42 
 
0.42 
 
0.42 
 
MCBC proportionate share of MillerCoors net income
 
 
 
 
 
 
164 
 
128 
 
252 
 
215 
 
MillerCoors accounting policy elections
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of the difference between MCBC contributed cost basis and proportional share of the underlying equity in net assets of MillerCoors
 
 
 
 
 
 
(1)
 
 
 
 
Share-based compensation adjustment
 
 
 
 
 
 
(0)
 
 
 
 
Equity income in MillerCoors
164 
134 
255 
231 
 
 
164 
 
134 
 
255 
 
231 
 
Equity Method Investment, Difference Between Carrying Amount and Underlying Equity
629 
 
629 
 
 
 
 
 
 
 
 
 
 
 
Equity Method Investments, Intercompany Transactions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales of beer to MillerCoors
11 
11 
19 
21 
 
 
 
 
 
 
 
 
 
 
Purchases of beer from MillerCoors
 
 
 
 
 
 
 
 
 
 
Service agreement and other charges to MillerCoors
 
 
 
 
 
 
 
 
 
 
Service agreement costs from MillerCoors
 
 
 
 
 
 
 
 
 
 
Net receivables due from MillerCoors
 
 
 
 
 
 
 
 
 
 
 
INVESTMENTS (Detail 3)
In Millions
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Dec. 26, 2009
Variable Interest Entity
 
 
 
 
 
Total assets
12,107 
 
12,107 
 
12,021 
Revenues
883 
799 
1,544 
1,358 
 
Pre-tax income
291 
235 
366 
314 
 
BRI
 
 
 
 
 
Variable Interest Entity
 
 
 
 
 
Revenues
 
 
 
40 
 
Grolsch
 
 
 
 
 
Variable Interest Entity
 
 
 
 
 
Total assets
18 
 
18 
 
23 
Revenues
10 
16 
17 
 
Pre-tax income
 
Cobra
 
 
 
 
 
Variable Interest Entity
 
 
 
 
 
Total assets
31 
 
31 
 
32 
Revenues
18 
 
Pre-tax income
 
INVESTMENTS (Detail 4)
Jun. 26, 2010
Granville Island
 
Subsidiary or Equity Method Investee
 
Business acquisition, outstanding stock acquired (in hundredths)
BDL
 
Subsidiary or Equity Method Investee
 
Voting control percentage in equity method joint venture (in hundredths)
0.50 
SHARE-BASED PAYMENTS (Detail)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Year Ended
Dec. 26, 2009
6 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax compensation expense
 
 
 
 
 
 
Tax benefit
 
 
 
 
(0)
(1)
(1)
(1)
 
 
(1)
(1)
(2)
(2)
(1)
(0)
(1)
(0)
After-tax compensation expense
12 
 
 
Mark-to-market stock-based compensation expense, before tax
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total unrecognized compensation expense related to non-vested shares from share-based compensation arrangements
40 
 
40 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average period over which compensation expense is expected to be recognized (in years)
 
 
1.8 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash received from stock option exercises
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax benefit to be realized from stock option exercises
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock approved by Board of Directors and available for issuance
4,600,000 
 
4,600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Activity of stock options and SOSARs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding, in shares
 
 
 
 
 
 
7,400,000 
 
 
 
 
 
 
 
 
 
 
 
Granted
 
 
 
 
 
 
700,000 
 
 
 
 
 
 
 
 
 
 
 
Exercised
 
 
 
 
 
 
(200,000)
 
 
 
 
 
 
 
 
 
 
 
Forfeited
 
 
 
 
 
 
(100,000)
 
 
 
 
 
 
 
 
 
 
 
Outstanding, in shares
 
 
 
 
7,800,000 
 
7,800,000 
 
7,400,000 
 
 
 
 
 
 
 
 
 
Exercisable
 
 
 
 
6,800,000 
 
6,800,000 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average exercise price of shares outstanding (in dollars per share)
 
 
 
 
 
 
37 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average exercise price of shares granted (in dollars per share)
 
 
 
 
43.25 
 
43.25 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average exercise price of shares exercised (in dollars per share)
 
 
 
 
35.25 
 
35.25 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average exercise price of shares forfeited (in dollars per share)
 
 
 
 
 
 
47.43 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average exercise price of shares outstanding (in dollars per share)
 
 
 
 
37.58 
 
37.58 
 
37 
 
 
 
 
 
 
 
 
 
Weighted-average exercise price of shares exercisable (in dollars per share)
 
 
 
 
36.02 
 
36.02 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average remaining contractual life, outstanding (in years)
 
 
 
 
 
 
 
4.94 
 
 
 
 
 
 
 
 
 
Weighted-average remaining contractual life, exercisable (in years)
 
 
 
 
 
 
4.13 
 
 
 
 
 
 
 
 
 
 
 
Aggregate intrinsic value of shares outstanding
 
 
 
 
54 
 
54 
 
64 
 
 
 
 
 
 
 
 
 
Aggregate intrinsic value of shares exercisable
 
 
 
 
 
 
57 
 
 
 
 
 
 
 
 
 
 
 
Aggregate intrinsic value of options exercised
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Activity of RSUs and DSUs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-vested awards outstanding (number of awards), beginning balance
 
 
 
 
 
 
 
 
 
3,200,000 
 
 
 
 
 
 
 
 
Grants in period (number of awards)
 
 
 
 
 
 
700,000 
 
 
1,000,000 
 
 
200,000 
 
 
 
700,000 
 
Vested, shares
 
 
 
 
 
 
 
 
 
(900,000)
 
 
 
 
 
 
 
 
Forfeited, shares
 
 
 
 
 
 
 
 
 
(100,000)
 
 
 
 
 
 
 
 
Non-vested awards outstanding (number of awards), ending balance
 
 
 
 
 
 
 
 
 
3,200,000 
 
 
 
 
 
 
 
 
Non-vested, weighted-average grant date fair value per share, beginning balance
 
 
 
 
 
 
 
 
 
16.60 
 
 
 
 
 
 
 
 
Granted, weighted-average grant date fair value per share
 
 
 
 
 
 
 
 
 
19.49 
 
 
 
 
 
 
 
 
Vested, weighted-average grant date fair value per share
 
 
 
 
 
 
 
 
 
13.17 
 
 
 
 
 
 
 
 
Forfeited, weighted-average grant date fair value per share
 
 
 
 
 
 
 
 
 
22.63 
 
 
 
 
 
 
 
 
Non-vested, weighted-average grant date fair value per share, ending balance
 
 
 
 
 
 
 
 
 
18.30 
 
 
 
 
 
 
 
 
Fair value assumptions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk-free interest rate (percent in hundredths)
 
 
0.0295 
0.0246 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividend yield (percent in hundredths)
 
 
0.0222 
0.0228 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Volatility range (percent in hundredths)
 
 
0.272-0.295 
0.287-0.289 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average volatility (percent in hundredths)
 
 
0.2786 
0.2888 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected term, lower range (years)
 
 
5y 
5y 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected term, upper range (years)
 
 
7y 
7y 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average fair market value
 
 
10.95 
10.33 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UNUSUAL OR INFREQUENT ITEMS (Details) (USD $)
In Millions
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Summary of special operating items:
 
 
 
 
Special item
$ 16 
$ 7 
$ 18 
$ 17 
Employee termination costs after acquisition
 
 
 
Canada | Restructuring, exit and other related costs associated with the Edmonton and Montreal breweries
 
 
 
 
Summary of special operating items:
 
 
 
 
Special item
Montreal and Edmonton hourly defined benefit pension plan including special termination benefit
 
 
 
Canada | Ontario Retiree Pension incentive
 
 
 
 
Summary of special operating items:
 
 
 
 
Special item
 
 
Canada | Pension curtailment
 
 
 
 
Summary of special operating items:
 
 
 
 
Special item
 
 
 
Canada | Software abandonment
 
 
 
 
Summary of special operating items:
 
 
 
 
Special item
12 
 
12 
 
U.K. | Restructuring charge
 
 
 
 
Summary of special operating items:
 
 
 
 
Special item
U.K. | Costs associated with Cobra Beer partnership
 
 
 
 
Summary of special operating items:
 
 
 
 
Special item
 
 
Employee termination costs after acquisition
 
 
U.K. | Other
 
 
 
 
Summary of special operating items:
 
 
 
 
Special item
 
 
Gain from repayment of government grant
 
 
 
MCI and Corporate | Gain on change in control agreements for Coors executives
 
 
 
 
Summary of special operating items:
 
 
 
 
Special item
 
(1)
 
 
MCI and Corporate | Costs associated with strategic initiatives
 
 
 
 
Summary of special operating items:
 
 
 
 
Special item
 
UNUSUAL OR INFREQUENT ITEMS (Details1) (USD $)
In Millions
6 Months Ended
Jun. 26, 2010
Canada
 
Changes in restructuring accruals
 
Beginning balance of restructuring accruals
$ 1 
Payments made
(0)
Ending balance of restructuring accruals
U.K.
 
Changes in restructuring accruals
 
Beginning balance of restructuring accruals
Changes incurred
Payments made
(2)
Foreign currency and other adjustments
(0)
Ending balance of restructuring accruals
$ 1 
OTHER INCOME AND EXPENSE (Details) (USD $)
In Millions
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Other income and expense:
 
 
 
 
Other income (expense), net
$ 21 
$ (8)
$ 13 
$ (27)
Gain (loss) from Foster's swap
 
 
 
 
Other income and expense:
 
 
 
 
Other income (expense), net
22 
(13)
15 
(34)
(Losses) gains from other foreign exchange and derivative activity
 
 
 
 
Other income and expense:
 
 
 
 
Other income (expense), net
(1)
(3)
Gains (losses) on non-operating leases, net
 
 
 
 
Other income and expense:
 
 
 
 
Other income (expense), net
(1)
(0)
(1)
Environmental litigation provisions
 
 
 
 
Other income and expense:
 
 
 
 
Other income (expense), net
(0)
(1)
(0)
(1)
Equity in income of unconsolidated affiliates, net
 
 
 
 
Other income and expense:
 
 
 
 
Other income (expense), net
 
(4)
 
(2)
Other, net
 
 
 
 
Other income and expense:
 
 
 
 
Other income (expense), net
$ 0 
$ 4 
$ 1 
$ 4 
DISCONTINUED OPERATIONS (Details)
In Millions
3 Months Ended
Jun. 26, 2010
3 Months Ended
Mar. 27, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
DISCONTINUED OPERATIONS:
 
 
 
 
 
Gain on settlement of a portion of indemnity liabilities
 
43 
 
 
 
Recognized gain (loss) from discontinued operations
(1)
 
42 
(4)
INCOME TAX (Details) (USD $)
In Millions
3 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 26, 2010
Dec. 26, 2009
Income tax disclosure details
 
 
 
Effective tax rate (in hundredths)
0.18 
 
 
Effective tax rate, estimated low range (in hundredths)
 
0.14 
 
Effective tax rate, estimated high range (in hundredths)
 
0.18 
 
Uncertain tax benefits
$ 75 
$ 75 
$ 72 
Uncertain tax benefits, change in period
 
 
Expected significant change in unrecognized tax benefit, low range
 
Expected significant change in unrecognized tax benefit, high range
 
EARNINGS PER SHARE ("EPS") (Details) (USD $)
In Millions, except Per Share data
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Amounts attributable to Molson Coors Brewing Company
 
 
 
 
Income from continuing operations, net of tax
$ 238 
$ 187 
$ 300 
$ 267 
(Loss) income from discontinued operations, net of tax
(1)
 
42 
(4)
Net income attributable to Molson Coors Brewing Company
237 
187 
342 
263 
Weighted average shares for basic EPS (in shares)
186 
184 
186 
184 
Effect of dilutive securities:
 
 
 
 
Options and SOSARs (in shares)
RSUs, PSUs and DSUs (in shares)
Weighted average shares for diluted EPS (in shares)
187 
185 
187 
185 
Basic income (loss) attributable to Molson Coors Brewing Company per share:
 
 
 
 
Continuing operations attributable to MCBC (in dollars per share)
1.28 
1.02 
1.61 
1.45 
Discontinued operations attributable to MCBC (in dollars per share)
 
 
0.23 
(0.02)
Basic net income per share (in dollars per share)
1.28 
1.02 
1.84 
1.43 
Diluted income (loss) attributable to Molson Coors Brewing Company per share:
 
 
 
 
Continuing operations attributable to MCBC (in dollars per share)
1.27 
1.01 
1.60 
1.44 
Discontinued operations attributable to MCBC (in dollars per share)
 
 
0.23 
(0.02)
Diluted net income per share (in dollars per share)
1.27 
1.01 
1.83 
1.42 
Dividends declared per share (in dollars per share)
0.28 
0.24 
0.52 
0.44 
Dividends paid per share (in dollars per share)
$ 0.28 
$ 0.24 
$ 0.52 
$ 0.44 
EARNINGS PER SHARE ("EPS") (Details2)
In Millions, except Per Share data
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 28, 2009
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Anti-dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Anti-dilutive security (in shares)
22 
22 
22 
22 
11 
11 
11 
11 
11 
11 
11 
11 
Stock price at which impact of net share settlement at conversion will begin to dilute EPS (in dollars per share)
 
 
 
 
 
 
 
 
 
 
54.76 
 
54.76 
 
 
 
 
 
Stock price at which impact of net share settlement under warrants will begin to diluted (in dollars per share)
 
 
 
 
 
 
 
 
 
 
70.09 
 
70.09 
 
 
 
 
 
Stock price at which receipt of MCBC stock under purchased call options would be anti-dilutive, low end of range
 
 
 
 
 
 
 
 
 
 
54.76 
 
54.76 
 
 
 
 
 
Stock price at which receipt of MCBC stock under purchased call options would be anti-dilutive, high end of range
 
 
 
 
 
 
 
 
 
 
70.09 
 
70.09 
 
 
 
 
 
GOODWILL AND INTANGIBLE ASSETS (Details) (USD $)
In Millions
6 Months Ended
Jun. 26, 2010
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Following is a summary of changes in goodwill during the period:
 
 
 
 
 
Balance at start of period
$ 1,475 
$ 729 
$ 721 
$ 714 
$ 754 
Foreign currency translation
(32)
 
 
 
 
Other
(0)
 
 
 
 
Balance at end of period
$ 1,443 
$ 729 
$ 721 
$ 714 
$ 754 
GOODWILL AND INTANGIBLE ASSETS (Details1) (USD $)
In Millions, unless otherwise specified
Jun. 26, 2010
Dec. 26, 2009
Details of intangible assets, other than goodwill:
 
 
Total Gross
$ 4,919 
$ 4,892 
Total Net
4,548 
4,535 
Intangible assets subject to amortization:
 
 
Accumulated amortization
(372)
(357)
Brands
 
 
Intangible assets subject to amortization:
 
 
Useful life - minimum (in years)
Useful life - maximum (in years)
40 
40 
Gross
285 
294 
Accumulated amortization
(142)
(140)
Net
143 
153 
Intangible assets not subject to amortization:
 
 
Indefinite-lived intangible assets
3,272 
3,249 
Distribution rights
 
 
Intangible assets subject to amortization:
 
 
Useful life - minimum (in years)
Useful life - maximum (in years)
23 
23 
Gross
337 
334 
Accumulated amortization
(207)
(194)
Net
130 
140 
Patents and technology and distribution channels
 
 
Intangible assets subject to amortization:
 
 
Useful life - minimum (in years)
Useful life - maximum (in years)
10 
10 
Gross
34 
36 
Accumulated amortization
(23)
(22)
Net
11 
13 
Distribution networks
 
 
Intangible assets not subject to amortization:
 
 
Indefinite-lived intangible assets
977 
964 
Other, intangible
 
 
Intangible assets not subject to amortization:
 
 
Indefinite-lived intangible assets
$ 16 
$ 16 
GOODWILL AND INTANGIBLE ASSETS (Details2) (USD $)
In Millions
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Estimated amortization expense of finite-lived intangible assets
 
 
 
 
2010 - remaining
 
 
22 
 
2011
 
 
43 
 
2012
 
 
31 
 
2013
 
 
30 
 
2014
 
 
30 
 
Amortization expense of intangible assets
$ 11 
$ 10 
$ 22 
$ 19 
DEBT (Details)
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Dec. 26, 2009
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Dec. 26, 2009
Senior notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: unamortized debt discounts and other (2)
(55,500,000)
 
(55,500,000)
 
(63,800,000)
 
 
 
 
 
 
 
 
 
 
 
 
Total long-term debt (including current portion)
1,733,300,000 
 
1,733,300,000 
 
1,713,000,000 
54,900,000 
 
54,900,000 
 
63,200,000 
 
 
 
 
 
 
 
Total long-term debt (including current portion)
 
 
 
 
 
575,000,000 
 
575,000,000 
 
575,000,000 
44,600,000 
44,600,000 
300,000,000 
300,000,000 
869,200,000 
900,000,000 
857,200,000 
Less: current portion of long-term debt
(300,000,000)
 
(300,000,000)
 
(300,300,000)
 
 
 
 
 
 
 
 
 
 
 
 
Total long-term debt
1,433,300,000 
 
1,433,300,000 
 
1,412,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
Total fair value
1,920,600,000 
 
1,920,600,000 
 
1,913,600,000 
 
 
 
 
 
 
 
 
 
 
 
 
Debt face amount
 
 
 
 
 
575,000,000 
 
575,000,000 
 
 
850,000,000 
 
300,000,000 
 
900,000,000 
 
 
Note stated interest rate (in hundredths)
 
 
 
 
 
0.025 
 
0.025 
 
 
0.06375 
 
0.0485 
 
0.05 
 
 
Principal amount used for debt instrument conversion ratio
 
 
 
 
 
1,000 
 
1,000 
 
 
 
 
 
 
 
 
 
Percentage of premium over stock price of debt (in hundredths)
 
 
 
 
 
0.25 
 
0.25 
 
 
 
 
 
 
 
 
 
Debt instrument conversion price (in dollars per share)
 
 
 
 
 
54.01 
 
54.01 
 
54.76 
 
 
 
 
 
 
 
Debt instrument conversion ratio (per each $1,000 aggregate principal amount of notes)
 
 
 
 
 
 
 
18.5154 
18.263 
 
 
 
 
 
 
 
 
Additional non-cash interest expense
4,200,000 
4,100,000 
8,400,000 
8,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, debt
 
 
 
 
 
3,600,000 
3,600,000 
7,200,000 
7,200,000 
 
 
 
 
 
 
 
 
Debt, effective interest rate, percent (in hundredths)
0.06 
0.0609 
0.06 
0.0589 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity component of the convertible debt
 
 
 
 
 
103,900,000 
 
103,900,000 
 
103,900,000 
 
 
 
 
 
 
 
Equity component of debt, net of tax
 
 
 
 
 
64,200,000 
 
64,200,000 
 
64,200,000 
 
 
 
 
 
 
 
Non-cash interest expense due to amortization of unamortized debt discount, estimated range low
 
 
 
 
 
16,000,000 
 
16,000,000 
 
 
 
 
 
 
 
 
 
Non-cash interest expense due to amortization of unamortized debt discount, estimated range high
 
 
 
 
 
18,000,000 
 
18,000,000 
 
 
 
 
 
 
 
 
 
Unamortized debt discount, other
 
600,000 
 
600,000 
600,000 
 
 
 
 
 
 
 
 
 
 
 
 
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) (USD $)
In Millions
Jun. 26, 2010
Dec. 26, 2009
Derivative instruments and hedging activities
 
 
Credit risk adjustment, accumulated net increase (decrease) to other comprehensive income
$ 5 
$ 3 
Cross currency swaps | Significant other observable inputs (Level 2)
 
 
Schedule of Trading Securities and Other Trading Assets
 
 
Derivative fair value, liability
(424)
(413)
Cross currency swaps | Total carrying value at reporting period end
 
 
Schedule of Trading Securities and Other Trading Assets
 
 
Derivative fair value, liability
(424)
(413)
Forward starting interest rate swaps | Significant other observable inputs (Level 2)
 
 
Schedule of Trading Securities and Other Trading Assets
 
 
Derivative fair value, assets
 
Derivative fair value, liability
(0)
 
Forward starting interest rate swaps | Total carrying value at reporting period end
 
 
Schedule of Trading Securities and Other Trading Assets
 
 
Derivative fair value, assets
 
Derivative fair value, liability
(0)
 
Foreign currency forwards | Significant other observable inputs (Level 2)
 
 
Schedule of Trading Securities and Other Trading Assets
 
 
Derivative fair value, liability
(8)
(9)
Foreign currency forwards | Total carrying value at reporting period end
 
 
Schedule of Trading Securities and Other Trading Assets
 
 
Derivative fair value, liability
(8)
(9)
Commodity swaps | Significant other observable inputs (Level 2)
 
 
Schedule of Trading Securities and Other Trading Assets
 
 
Derivative fair value, assets
 
Derivative fair value, liability
 
(1)
Commodity swaps | Total carrying value at reporting period end
 
 
Schedule of Trading Securities and Other Trading Assets
 
 
Derivative fair value, assets
 
Derivative fair value, liability
 
(1)
Total return swaps | Significant other observable inputs (Level 2)
 
 
Schedule of Trading Securities and Other Trading Assets
 
 
Derivative fair value, assets
13 
 
Derivative fair value, liability
 
(2)
Total return swaps | Total carrying value at reporting period end
 
 
Schedule of Trading Securities and Other Trading Assets
 
 
Derivative fair value, assets
13 
 
Derivative fair value, liability
 
(2)
Significant other observable inputs (Level 2)
 
 
Schedule of Trading Securities and Other Trading Assets
 
 
Derivative fair value
(419)
(418)
Total carrying value at reporting period end
 
 
Schedule of Trading Securities and Other Trading Assets
 
 
Derivative fair value
$ (419)
$ (418)
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details1)
In Millions
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Jun. 26, 2010
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
Jun. 26, 2010
Dec. 26, 2009
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notional Amount of Cash Flow Hedge Instruments
 
 
1,897 
1,992 
 
 
 
 
193 
191 
 
 
 
367 
339 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notional amount of derivative, designated as hedging instrument, in Gigajoules
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,000 
1,200 
 
 
 
 
 
 
 
 
 
 
Derivative asset, fair value, designated as hedging instrument
12 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative liability, fair value, designated as hedging instrument
(438)
(428)
 
 
(53)
(47)
(371)
(366)
 
 
 
 
(0)
 
 
 
 
 
 
(7)
(6)
(5)
(8)
 
 
 
 
(1)
(1)
(0)
 
 
 
 
 
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notional amount of derivative, not designated as hedging instrument
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
497 
497 
 
 
 
Derivative asset, fair value, not designated as hedging instrument
14 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14 
 
 
Derivative liability, fair value, not designated as hedging instrument
(1)
(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
(2)
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details2) (USD $)
In Millions
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Gain (Loss) on Derivative Instruments:
 
 
 
 
Amount of gain (loss) recognized in OCI on derivative (effective portion)
$ 5 
$ (20)
$ 5 
$ (30)
Amount of gain (loss) reclassified from AOCI on derivative (effective portion)
(135)
(26)
(109)
Amount of gain (loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)
22 
(13)
15 
(35)
Cross currency swaps
 
 
 
 
Gain (Loss) on Derivative Instruments:
 
 
 
 
Amount of gain (loss) recognized in OCI on derivative (effective portion)
10 
(3)
Cross currency swaps | Other income (expense)
 
 
 
 
Gain (Loss) on Derivative Instruments:
 
 
 
 
Amount of gain (loss) reclassified from AOCI on derivative (effective portion)
10 
(140)
(15)
(122)
Cross currency swaps | Interest expense, net
 
 
 
 
Gain (Loss) on Derivative Instruments:
 
 
 
 
Amount of gain (loss) reclassified from AOCI on derivative (effective portion)
(3)
(1)
(6)
(1)
Forward starting interest rate swaps
 
 
 
 
Gain (Loss) on Derivative Instruments:
 
 
 
 
Amount of gain (loss) recognized in OCI on derivative (effective portion)
(5)
(7)
Foreign currency forwards
 
 
 
 
Gain (Loss) on Derivative Instruments:
 
 
 
 
Amount of gain (loss) recognized in OCI on derivative (effective portion)
(30)
(32)
Foreign currency forwards | Other income (expense)
 
 
 
 
Gain (Loss) on Derivative Instruments:
 
 
 
 
Amount of gain (loss) reclassified from AOCI on derivative (effective portion)
(1)
(2)
Foreign currency forwards | Cost of goods sold
 
 
 
 
Gain (Loss) on Derivative Instruments:
 
 
 
 
Amount of gain (loss) reclassified from AOCI on derivative (effective portion)
(0)
(1)
11 
Foreign currency forwards | Marketing, general and administrative expenses
 
 
 
 
Gain (Loss) on Derivative Instruments:
 
 
 
 
Amount of gain (loss) reclassified from AOCI on derivative (effective portion)
(0)
(0)
Commodity swaps
 
 
 
 
Gain (Loss) on Derivative Instruments:
 
 
 
 
Amount of gain (loss) recognized in OCI on derivative (effective portion)
 
Commodity swaps | Cost of goods sold
 
 
 
 
Gain (Loss) on Derivative Instruments:
 
 
 
 
Amount of gain (loss) reclassified from AOCI on derivative (effective portion)
(1)
(1)
(1)
(2)
Total return swaps | Other income (expense)
 
 
 
 
Gain (Loss) on Derivative Instruments:
 
 
 
 
Amount of gain (loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)
22 
(13)
15 
(34)
Physical commodity contracts | Cost of goods sold
 
 
 
 
Gain (Loss) on Derivative Instruments:
 
 
 
 
Amount of gain (loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)
 
(0)
 
(1)
PENSION AND OTHER POSTRETIREMENT BENEFITS (Details) (USD $)
In Millions
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Defined Benefit Plans
 
 
 
 
Net periodic pension costs under retirement plans and other postretirement benefits:
 
 
 
 
Service cost
$ 4 
$ 4 
$ 9 
$ 10 
Interest cost
46 
42 
93 
87 
Expected return on plan assets
(44)
(46)
(89)
(93)
Amortization of prior service cost (benefit)
Amortization of net actuarial loss (gain)
Curtailment loss
 
 
 
Less expected participant contributions
(1)
(1)
(1)
(1)
Special termination benefits
 
 
Net periodic pension and post-retirement benefit cost
11 
21 
Pension and other post-retirement plan additional details:
 
 
 
 
Expected total defined benefit plan employer contributions for fiscal year 2010
46 
 
46 
 
Canada Defined Benefit Plans
 
 
 
 
Net periodic pension costs under retirement plans and other postretirement benefits:
 
 
 
 
Service cost
Interest cost
18 
16 
36 
35 
Expected return on plan assets
(18)
(16)
(35)
(35)
Amortization of prior service cost (benefit)
Amortization of net actuarial loss (gain)
 
Curtailment loss
 
 
 
Less expected participant contributions
(1)
(1)
(1)
(1)
Special termination benefits
 
 
Net periodic pension and post-retirement benefit cost
11 
14 
Pension and other post-retirement plan additional details:
 
 
 
 
Contributions paid to defined benefit plans
 
19 
 
U.S. Benefit Plans
 
 
 
 
Net periodic pension costs under retirement plans and other postretirement benefits:
 
 
 
 
Interest cost
Amortization of net actuarial loss (gain)
 
 
Net periodic pension and post-retirement benefit cost
U.K. Defined Benefit Plans
 
 
 
 
Net periodic pension costs under retirement plans and other postretirement benefits:
 
 
 
 
Service cost
 
 
Interest cost
28 
27 
57 
51 
Expected return on plan assets
(27)
(30)
(54)
(58)
Amortization of net actuarial loss (gain)
 
 
Less expected participant contributions
 
(0)
 
(0)
Net periodic pension and post-retirement benefit cost
(3)
(5)
Pension and other post-retirement plan additional details:
 
 
 
 
Contributions paid to defined benefit plans
 
 
Other Postretirement Benefits
 
 
 
 
Net periodic pension costs under retirement plans and other postretirement benefits:
 
 
 
 
Service cost
Interest cost
Amortization of prior service cost (benefit)
(1)
(1)
(2)
(1)
Amortization of net actuarial loss (gain)
 
(0)
 
(0)
Net periodic pension and post-retirement benefit cost
Canada Other Postretirement Benefits
 
 
 
 
Net periodic pension costs under retirement plans and other postretirement benefits:
 
 
 
 
Service cost
Interest cost
Amortization of prior service cost (benefit)
(1)
(1)
(2)
(1)
Amortization of net actuarial loss (gain)
 
(0)
 
(0)
Net periodic pension and post-retirement benefit cost
U.S. Other Postretirement Benefits
 
 
 
 
Net periodic pension costs under retirement plans and other postretirement benefits:
 
 
 
 
Interest cost
 
 
 
Net periodic pension and post-retirement benefit cost
 
 
 
COMMITMENTS AND CONTINGENCIES (Details)
In Millions
6 Months Ended
Jun. 26,
Year Ended
Dec. 31,
Jun. 26, 2010
Dec. 26, 2009
2010
2010
Jun. 26, 2010
Dec. 26, 2009
Jun. 26, 2010
6 Months Ended
Jun. 26, 2010
3 Months Ended
Sep. 26, 2009
2000
1990
Jun. 26, 2010
Jun. 28, 2009
Jun. 26, 2010
Dec. 31, 2006
Jun. 26, 2010
Dec. 26, 2009
Loss contingencies:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss contingency, number of categories
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum potential claims
 
 
 
 
285 
 
249 
68 
 
 
 
 
 
 
 
 
 
Indemnity liability, current
 
 
 
 
131 
13 
 
 
 
 
 
 
 
 
 
 
Loss contingency not deemed to be probable
 
 
14 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total estimate of indemnity liability
 
 
 
 
 
 
23 
 
 
 
 
 
 
 
 
 
 
Indemnity liabilty, noncurrent
 
 
 
 
 
10 
10 
 
 
 
 
 
 
 
 
 
Decrease in indemnity obligation
 
 
 
132 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity interest, percent (in hundredths)
 
 
 
 
 
 
 
0.68 
 
 
 
 
 
 
 
 
 
Summary of reserves associated with the Kaiser indemnity obligations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, at start of period
 
 
164 
155 
 
 
10 
 
 
 
 
 
 
 
 
 
Changes in estimates
 
 
(32)
(32)
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash Settlement
 
 
(96)
(96)
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange impact
 
 
(4)
(4)
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, at end of period
 
 
32 
23 
 
 
10 
 
 
 
 
 
 
 
 
 
Guarantees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantees related to banks and other third parties
101 
99 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Settlement agreement, payment for termination of distribution agreement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Litigation, court judgment
 
 
 
 
 
 
 
 
42 
 
 
 
 
 
 
 
 
Minimum damages sought (in CAD)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
750 
Environmental remediation expense, pretax charge
 
 
 
 
 
 
 
 
 
 
30 
 
 
 
 
 
 
Environmental remediation threshold, assumed remediation cost
 
 
 
 
 
 
 
 
 
 
 
120 
 
 
 
 
 
Inflation rate assumption, future costs, percent (in hundredths)
 
 
 
 
 
 
 
 
 
 
 
0.025 
 
 
 
 
 
Risk free rate of return assumption, percent (in hundredths)
 
 
 
 
 
 
 
 
 
 
 
0.046 
 
 
 
 
 
Site contingency, accrual, present value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site contingency, accrual, undiscounted amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Damages sought, natural resources
 
 
 
 
 
 
 
 
 
 
 
 
10 
 
 
 
 
Number of PRP parties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60 
 
 
Accrued estimated liabilities, environmental
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COMPREHENSIVE INCOME (LOSS) (Details) (USD $)
In Millions
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Summary of the components of comprehensive income (loss):
 
 
 
 
Net income
$ 238 
$ 188 
$ 344 
$ 264 
Other comprehensive (loss) income, net of tax:
 
 
 
 
Foreign currency translation adjustments, net of tax
(21)
440 
(32)
375 
Amortization of net prior service cost and net actuarial losses, net of tax
(1)
12 
Unrealized gain (loss) on derivative instruments, net of tax
(10)
(0)
(1)
Reclassification adjustment on derivative instruments, net of tax
(5)
(20)
Ownership share of unconsolidated subsidiaries' other comprehensive (loss) income, net of tax
(18)
22 
(10)
18 
Total other comprehensive (loss) income, net of tax
(35)
446 
(37)
384 
Comprehensive income
203 
634 
307 
648 
Less: Comprehensive income attributable to the noncontrolling interest
(1)
(1)
(2)
(1)
Comprehensive income attributable to MCBC
$ 202 
$ 634 
$ 305 
$ 647 
SUPPLEMENTAL GUARANTOR INFORMATION (Details)
In Millions
Jun. 26, 2010
Dec. 31, 2007
Jun. 29, 2007
Jun. 26, 2010
Jun. 26, 2010
Jun. 26, 2010
Dec. 31, 2002
Dec. 30, 2005
Dec. 30, 2005
Dec. 30, 2005
Senior notes:
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Face Amount
$ 575 
$ 575 
$ 575 
$ 850 
$ 300 
$ 900 
$ 850 
$ 300 
$ 900 
$ 1,100 
Note stated interest rate (in hundredths)
0.025 
0.025 
0.025 
0.06375 
0.0485 
0.05 
0.06375 
0.0485 
0.05 
 
SUPPLEMENTAL GUARANTOR INFORMATION (Details 1) (2002 Issuer, USD $850.0 million 6.375% Senior Notes due 2012, USD $)
In Millions
3 Months Ended
Mar. 28, 2008
3 Months Ended
Sep. 28, 2007
2002 Issuer | USD $850.0 million 6.375% Senior Notes due 2012
 
 
Senior notes:
 
 
Extinguished debt amount
$ 180 
$ 625 
SUPPLEMENTAL GUARANTOR INFORMATION (Income statement Detail) (USD $)
In Millions
3 Months Ended
Jun. 26, 2010
3 Months Ended
Jun. 28, 2009
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Condensed Consolidating Statement of Operations
 
 
 
 
Sales
$ 1,283 
$ 1,160 
$ 2,230 
$ 1,985 
Excise taxes
(399)
(362)
(685)
(627)
Net sales
883 
799 
1,544 
1,358 
Cost of goods sold
(475)
(433)
(879)
(779)
Gross profit
409 
366 
665 
579 
Marketing, general and administrative expenses
(261)
(230)
(499)
(413)
Special items, net
(16)
(7)
(18)
(17)
Equity income in MillerCoors
164 
134 
255 
231 
Operating income (loss)
295 
263 
403 
381 
Interest expense, net
(25)
(20)
(50)
(40)
Other income (expense), net
21 
(8)
13 
(27)
Income from continuing operations before income taxes
291 
235 
366 
314 
Income tax expense
(52)
(47)
(64)
(46)
Income (loss) from continuing operations
239 
188 
302 
268 
Income (loss) from discontinued operations, net of tax
(1)
 
42 
(4)
Net income (loss)
238 
188 
344 
264 
Less: Net income attributable to noncontrolling interests
(1)
(1)
(2)
(1)
Net income attributable to Molson Coors Brewing Company
237 
187 
342 
263 
Parent Guarantor and 2007 Issuer
 
 
 
 
Condensed Consolidating Statement of Operations
 
 
 
 
Sales
13 
Net sales
13 
Gross profit
13 
Marketing, general and administrative expenses
(30)
(27)
(62)
(43)
Special items, net
(1)
(1)
(1)
Equity income (loss) in subsidiaries
235 
253 
375 
352 
Operating income (loss)
207 
235 
321 
321 
Interest expense, net
(9)
(8)
(17)
(16)
Other income (expense), net
22 
(12)
20 
(30)
Income from continuing operations before income taxes
221 
215 
325 
275 
Income tax expense
16 
(28)
17 
(12)
Income (loss) from continuing operations
237 
187 
342 
263 
Net income (loss)
237 
187 
342 
263 
Net income attributable to Molson Coors Brewing Company
237 
187 
342 
263 
2002 Issuer
 
 
 
 
Condensed Consolidating Statement of Operations
 
 
 
 
Sales
58 
52 
98 
92 
Net sales
58 
52 
98 
92 
Cost of goods sold
(14)
(13)
(25)
(26)
Gross profit
44 
39 
73 
66 
Marketing, general and administrative expenses
(8)
(11)
(18)
(24)
Equity income (loss) in subsidiaries
105 
(153)
135 
16 
Equity income in MillerCoors
164 
134 
255 
231 
Operating income (loss)
305 
445 
289 
Interest expense, net
12 
12 
25 
24 
Other income (expense), net
(0)
(2)
Income from continuing operations before income taxes
317 
27 
468 
322 
Income tax expense
(82)
157 
(94)
(14)
Income (loss) from continuing operations
235 
185 
374 
308 
Net income (loss)
235 
185 
374 
308 
Net income attributable to Molson Coors Brewing Company
235 
185 
374 
308 
2005 Issuers
 
 
 
 
Condensed Consolidating Statement of Operations
 
 
 
 
Equity income (loss) in subsidiaries
34 
74 
42 
73 
Operating income (loss)
34 
74 
42 
73 
Interest expense, net
(31)
(35)
(37)
(78)
Other income (expense), net
 
 
(0)
 
Income from continuing operations before income taxes
39 
(5)
Income tax expense
46 
(116)
36 
(71)
Income (loss) from continuing operations
50 
(77)
42 
(75)
Net income (loss)
50 
(77)
42 
(75)
Net income attributable to Molson Coors Brewing Company
50 
(77)
42 
(75)
Subsidiary Guarantors
 
 
 
 
Condensed Consolidating Statement of Operations
 
 
 
 
Sales
699 
615 
1,201 
1,037 
Excise taxes
(164)
(143)
(282)
(240)
Net sales
536 
472 
919 
796 
Cost of goods sold
(264)
(233)
(484)
(423)
Gross profit
271 
238 
436 
374 
Marketing, general and administrative expenses
(129)
(108)
(240)
(195)
Special items, net
(15)
(1)
(3)
(9)
Equity income (loss) in subsidiaries
(82)
(321)
(180)
(240)
Operating income (loss)
46 
(192)
13 
(70)
Interest expense, net
94 
48 
158 
99 
Other income (expense), net
Income from continuing operations before income taxes
141 
(143)
171 
30 
Income tax expense
(36)
71 
(33)
41 
Income (loss) from continuing operations
105 
(72)
138 
72 
Net income (loss)
105 
(72)
138 
72 
Net income attributable to Molson Coors Brewing Company
105 
(72)
138 
72 
Subsidiary Non-Guarantors
 
 
 
 
Condensed Consolidating Statement of Operations
 
 
 
 
Sales
583 
544 
1,027 
943 
Excise taxes
(236)
(218)
(404)
(386)
Net sales
347 
325 
624 
557 
Cost of goods sold
(254)
(237)
(467)
(417)
Gross profit
93 
89 
157 
139 
Marketing, general and administrative expenses
(98)
(92)
(190)
(164)
Special items, net
(1)
(7)
(15)
(8)
Equity income (loss) in subsidiaries
129 
131 
194 
171 
Operating income (loss)
124 
120 
146 
138 
Interest expense, net
(91)
(37)
(179)
(69)
Other income (expense), net
(1)
(3)
(6)
(6)
Income from continuing operations before income taxes
32 
81 
(39)
63 
Income tax expense
(132)
10 
Income (loss) from continuing operations
34 
(51)
(29)
72 
Income (loss) from discontinued operations, net of tax
(1)
 
42 
(4)
Net income (loss)
33 
(51)
13 
68 
Less: Net income attributable to noncontrolling interests
(1)
(1)
(2)
(1)
Net income attributable to Molson Coors Brewing Company
32 
(52)
11 
67 
Eliminations
 
 
 
 
Condensed Consolidating Statement of Operations
 
 
 
 
Sales
(59)
(59)
(105)
(100)
Net sales
(59)
(59)
(105)
(100)
Cost of goods sold
57 
50 
96 
87 
Gross profit
(2)
(9)
(9)
(13)
Marketing, general and administrative expenses
10 
13 
Equity income (loss) in subsidiaries
(423)
16 
(566)
(371)
Operating income (loss)
(422)
16 
(565)
(370)
Interest expense, net
(0)
(0)
(0)
(0)
Income from continuing operations before income taxes
(422)
16 
(565)
(371)
Income (loss) from continuing operations
(422)
16 
(565)
(371)
Net income (loss)
(422)
16 
(565)
(371)
Net income attributable to Molson Coors Brewing Company
$ (422)
$ 16 
$ (565)
$ (371)
SUPPLEMENTAL GUARANTOR INFORMATION (Balance Sheet Detail) (USD $)
In Millions
Jun. 26, 2010
Dec. 26, 2009
Current assets:
 
 
Cash and cash equivalents
$ 799 
$ 734 
Accounts receivable, net
610 
567 
Other receivables, net
174 
151 
Total inventories, net
234 
236 
Other assets, net
105 
65 
Discontinued operations
10 
Total current assets
1,924 
1,763 
Properties, net
1,240 
1,293 
Goodwill
1,443 
1,475 
Other intangibles, net
4,548 
4,535 
Investment in MillerCoors
2,652 
2,614 
Deferred tax assets
149 
178 
Other assets
152 
165 
Total assets
12,107 
12,021 
Current liabilities:
 
 
Accounts payable
178 
210 
Accrued expenses and other liabilities
894 
745 
Deferred tax liabilities
180 
167 
Short-term borrowings and current portion of long-term debt
300 
300 
Discontinued operations
16 
158 
Total current liabilities
1,568 
1,581 
Long-term debt
1,433 
1,413 
Deferred tax liability
442 
468 
Other liabilities
1,325 
1,448 
Discontinued operations
19 
19 
Total liabilities
4,787 
4,928 
MCBC stockholders' equity
7,306 
7,080 
Total stockholders' equity
7,306 
7,080 
Noncontrolling interests
14 
13 
Total equity
7,320 
7,093 
Total liabilities and equity
12,107 
12,021 
Parent Guarantor and 2007 Issuer
 
 
Current assets:
 
 
Cash and cash equivalents
473 
393 
Accounts receivable, net
 
Other receivables, net
16 
Other assets, net
Total current assets
489 
417 
Properties, net
34 
36 
Net investment in subsidiaries
7,932 
7,561 
Deferred tax assets
116 
145 
Other assets
Total assets
8,576 
8,164 
Current liabilities:
 
 
Accounts payable
Accrued expenses and other liabilities
31 
40 
Deferred tax liabilities
90 
90 
Intercompany payables
651 
431 
Total current liabilities
776 
567 
Long-term debt
520 
512 
Other liabilities
Total liabilities
1,303 
1,085 
MCBC stockholders' equity
7,275 
7,081 
Intercompany notes receivable
(2)
(2)
Total stockholders' equity
7,273 
7,080 
Total equity
7,273 
7,080 
Total liabilities and equity
8,576 
8,164 
2002 Issuer
 
 
Current assets:
 
 
Accounts receivable, net
Other receivables, net
31 
27 
Other assets, net
Intercompany receivables
685 
456 
Total current assets
725 
488 
Properties, net
Goodwill
11 
11 
Other intangibles, net
41 
45 
Investment in MillerCoors
2,652 
2,614 
Net investment in subsidiaries
3,753 
3,621 
Deferred tax assets
97 
90 
Other assets
14 
14 
Total assets
7,300 
6,889 
Current liabilities:
 
 
Accounts payable
Accrued expenses and other liabilities
11 
15 
Short-term borrowings and current portion of long-term debt
 
Intercompany payables
Total current liabilities
19 
20 
Long-term debt
45 
45 
Deferred tax liability
102 
102 
Other liabilities
37 
82 
Total liabilities
204 
250 
MCBC stockholders' equity
7,942 
7,532 
Intercompany notes receivable
(846)
(893)
Total stockholders' equity
7,096 
6,640 
Total equity
7,096 
6,640 
Total liabilities and equity
7,300 
6,889 
2005 Issuers
 
 
Current assets:
 
 
Cash and cash equivalents
Other receivables, net
 
Intercompany receivables
166 
 
Total current assets
170 
Net investment in subsidiaries
2,780 
3,252 
Other assets
Total assets
2,953 
3,256 
Current liabilities:
 
 
Accrued expenses and other liabilities
63 
55 
Short-term borrowings and current portion of long-term debt
300 
300 
Intercompany payables
235 
201 
Total current liabilities
598 
556 
Long-term debt
868 
856 
Deferred tax liability
Other liabilities
Intercompany notes payables
4,269 
2,943 
Total liabilities
5,740 
4,361 
MCBC stockholders' equity
1,621 
2,766 
Intercompany notes receivable
(4,408)
(3,871)
Total stockholders' equity
(2,787)
(1,106)
Total equity
(2,787)
(1,106)
Total liabilities and equity
2,953 
3,256 
Subsidiary Guarantors
 
 
Current assets:
 
 
Cash and cash equivalents
135 
175 
Accounts receivable, net
255 
203 
Other receivables, net
31 
21 
Total inventories, net
155 
147 
Other assets, net
36 
35 
Deferred tax assets
Intercompany receivables
809 
539 
Total current assets
1,421 
1,120 
Properties, net
760 
787 
Goodwill
341 
349 
Other intangibles, net
4,139 
4,118 
Net investment in subsidiaries
 
3,079 
Deferred tax assets
 
Other assets
50 
50 
Total assets
6,711 
9,507 
Current liabilities:
 
 
Accounts payable
48 
49 
Accrued expenses and other liabilities
427 
295 
Intercompany payables
224 
392 
Total current liabilities
699 
736 
Net investment in subsidiaries
258 
 
Deferred tax liability
 
Other liabilities
699 
747 
Intercompany notes payables
5,202 
4,723 
Total liabilities
6,859 
6,206 
MCBC stockholders' equity
7,768 
9,329 
Intercompany notes receivable
(7,916)
(6,028)
Total stockholders' equity
(148)
3,301 
Total equity
(148)
3,301 
Total liabilities and equity
6,711 
9,507 
Subsidiary Non-Guarantors
 
 
Current assets:
 
 
Cash and cash equivalents
191 
166 
Accounts receivable, net
348 
356 
Other receivables, net
100 
89 
Total inventories, net
79 
90 
Other assets, net
59 
25 
Deferred tax assets
Discontinued operations
10 
Intercompany receivables
 
310 
Total current assets
779 
1,046 
Properties, net
439 
462 
Goodwill
1,090 
1,115 
Other intangibles, net
368 
373 
Net investment in subsidiaries
4,883 
4,624 
Deferred tax assets
41 
43 
Other assets
79 
91 
Total assets
7,678 
7,754 
Current liabilities:
 
 
Accounts payable
126 
155 
Accrued expenses and other liabilities
362 
344 
Deferred tax liabilities
91 
78 
Discontinued operations
16 
158 
Intercompany payables
541 
276 
Total current liabilities
1,136 
1,011 
Long-term debt
 
(0)
Deferred tax liability
442 
466 
Other liabilities
580 
609 
Discontinued operations
19 
19 
Intercompany notes payables
6,798 
3,681 
Total liabilities
8,973 
5,786 
MCBC stockholders' equity
1,788 
2,508 
Intercompany notes receivable
(3,097)
(554)
Total stockholders' equity
(1,309)
1,954 
Noncontrolling interests
14 
13 
Total equity
(1,295)
1,967 
Total liabilities and equity
7,678 
7,754 
Eliminations
 
 
Current assets:
 
 
Other receivables, net
 
(3)
Deferred tax assets
(1)
(1)
Intercompany receivables
(1,659)
(1,305)
Total current assets
(1,660)
(1,308)
Net investment in subsidiaries
(19,347)
(22,137)
Deferred tax assets
(104)
(104)
Total assets
(21,111)
(23,549)
Current liabilities:
 
 
Accrued expenses and other liabilities
 
(3)
Deferred tax liabilities
(1)
(1)
Intercompany payables
(1,659)
(1,305)
Total current liabilities
(1,660)
(1,308)
Net investment in subsidiaries
(258)
 
Deferred tax liability
(104)
(104)
Intercompany notes payables
(16,269)
(11,347)
Total liabilities
(18,292)
(12,759)
MCBC stockholders' equity
(19,088)
(22,137)
Intercompany notes receivable
16,269 
11,347 
Total stockholders' equity
(2,819)
(10,789)
Total equity
(2,819)
(10,789)
Total liabilities and equity
$ (21,111)
$ (23,549)
SUPPLEMENTAL GUARANTOR INFORMATION (Cash Flows Detail) (USD $)
In Millions
6 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 28, 2009
Condensed Consolidating Statement of Cash Flows
 
 
Net cash provided by (used in) operating activities
$ 396 
$ 353 
CashFlows From Investing Activities:
 
 
Additions to properties
(51)
(45)
Proceeds from sales of properties and intangible assets, net
Cash placed in escrow for acquisition
(34)
 
Payment on discontinued operations
(96)
 
Acquisition of business
 
(20)
Investment in MillerCoors
(624)
(212)
Return of capital from MillerCoors
569 
93 
Deconsolidation of Brewers' Retail, Inc.
 
(26)
Investment in and advances to an unconsolidated affiliate
(2)
(5)
Trade loan repayments from customers
10 
Trade loans advanced to customers
(5)
(7)
Net cash (used in) provided by investing activities
(232)
(210)
Cash Flows From Financing Activities:
 
 
Issuance of stock under equity compensation plans
13 
Excess tax benefits from share-based compensation
15 
Dividends paid
(98)
(81)
Payments on long-term debt and capital lease obligations
 
(0)
Change in overdraft balances and other
(8)
(9)
Net cash (used in) provided by financing activities
(98)
(62)
Cash and Cash Equivalents:
 
 
Net increase (decrease) in cash and cash equivalents
65 
80 
Effect of foreign exchange rate changes on cash and cash equivalents
(1)
(0)
Balance at beginning of year
734 
216 
Balance at end of period
799 
296 
Parent Guarantor and 2007 Issuer
 
 
Condensed Consolidating Statement of Cash Flows
 
 
Net cash provided by (used in) operating activities
147 
46 
CashFlows From Investing Activities:
 
 
Additions to properties
(2)
(5)
Proceeds from sales of properties and intangible assets, net
 
Net intercompany investing activity
(44)
(22)
Net cash (used in) provided by investing activities
(46)
(26)
Cash Flows From Financing Activities:
 
 
Issuance of stock under equity compensation plans
13 
Excess tax benefits from share-based compensation
15 
Dividends paid
(85)
(71)
Net intercompany financing activity
57 
119 
Net cash (used in) provided by financing activities
(21)
77 
Cash and Cash Equivalents:
 
 
Net increase (decrease) in cash and cash equivalents
81 
96 
Balance at beginning of year
393 
85 
Balance at end of period
473 
181 
2002 Issuer
 
 
Condensed Consolidating Statement of Cash Flows
 
 
Net cash provided by (used in) operating activities
46 
229 
CashFlows From Investing Activities:
 
 
Investment in MillerCoors
(624)
(212)
Return of capital from MillerCoors
569 
93 
Net intercompany investing activity
(0)
(107)
Net cash (used in) provided by investing activities
(55)
(226)
Cash Flows From Financing Activities:
 
 
Net intercompany financing activity
(4)
Net cash (used in) provided by financing activities
(4)
Cash and Cash Equivalents:
 
 
Net increase (decrease) in cash and cash equivalents
 
(0)
Balance at beginning of year
 
2005 Issuers
 
 
Condensed Consolidating Statement of Cash Flows
 
 
Net cash provided by (used in) operating activities
(147)
(28)
CashFlows From Investing Activities:
 
 
Net intercompany investing activity
1,218 
(21)
Net cash (used in) provided by investing activities
1,218 
(21)
Cash Flows From Financing Activities:
 
 
Net intercompany financing activity
(1,070)
49 
Net cash (used in) provided by financing activities
(1,070)
49 
Cash and Cash Equivalents:
 
 
Balance at beginning of year
Balance at end of period
Subsidiary Guarantors
 
 
Condensed Consolidating Statement of Cash Flows
 
 
Net cash provided by (used in) operating activities
(54)
CashFlows From Investing Activities:
 
 
Additions to properties
(17)
(15)
Proceeds from sales of properties and intangible assets, net
Deconsolidation of Brewers' Retail, Inc.
 
(26)
Net intercompany investing activity
3,542 
(11)
Net cash (used in) provided by investing activities
3,526 
(51)
Cash Flows From Financing Activities:
 
 
Payments on long-term debt and capital lease obligations
 
(0)
Change in overdraft balances and other
 
(0)
Net intercompany financing activity
(3,582)
132 
Net cash (used in) provided by financing activities
(3,582)
131 
Cash and Cash Equivalents:
 
 
Net increase (decrease) in cash and cash equivalents
(47)
27 
Effect of foreign exchange rate changes on cash and cash equivalents
(3)
Balance at beginning of year
175 
24 
Balance at end of period
135 
47 
Subsidiary Non-Guarantors
 
 
Condensed Consolidating Statement of Cash Flows
 
 
Net cash provided by (used in) operating activities
449 
106 
CashFlows From Investing Activities:
 
 
Additions to properties
(32)
(25)
Proceeds from sales of properties and intangible assets, net
Cash placed in escrow for acquisition
(34)
 
Payment on discontinued operations
(96)
 
Acquisition of business
 
(20)
Investment in and advances to an unconsolidated affiliate
(2)
(5)
Trade loan repayments from customers
10 
Trade loans advanced to customers
(5)
(7)
Net intercompany investing activity
(1,075)
(154)
Net cash (used in) provided by investing activities
(1,234)
(201)
Cash Flows From Financing Activities:
 
 
Dividends paid
(13)
(11)
Payments on long-term debt and capital lease obligations
 
(0)
Change in overdraft balances and other
(8)
(9)
Net intercompany financing activity
837 
72 
Net cash (used in) provided by financing activities
817 
52 
Cash and Cash Equivalents:
 
 
Net increase (decrease) in cash and cash equivalents
31 
(42)
Effect of foreign exchange rate changes on cash and cash equivalents
(7)
Balance at beginning of year
166 
107 
Balance at end of period
191 
68 
Eliminations
 
 
Condensed Consolidating Statement of Cash Flows
 
 
Net cash provided by (used in) operating activities
(108)
54 
CashFlows From Investing Activities:
 
 
Net intercompany investing activity
(3,641)
315 
Net cash (used in) provided by investing activities
(3,641)
315 
Cash Flows From Financing Activities:
 
 
Net intercompany financing activity
3,749 
(368)
Net cash (used in) provided by financing activities
$ 3,749 
$ (368)
Document and Entity Information
6 Months Ended
Jun. 26, 2010
Jul. 29, 2010
Jul. 29, 2010
Jul. 29, 2010
Jul. 29, 2010
Entity Registrant Name
MOLSON COORS BREWING CO 
 
 
 
 
Entity Central Index Key
0000024545 
 
 
 
 
Document Type
8-K 
 
 
 
 
Document Period End Date
2010-06-26 
 
 
 
 
Amendment Flag
FALSE 
 
 
 
 
Current Fiscal Year End Date
12/25 
 
 
 
 
Entity Current Reporting Status
Yes 
 
 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
 
 
Entity Common Stock, Shares Outstanding
 
2,594,664 
160,908,352 
 
 
Entity Exchangeable, Shares Outstanding
 
 
 
3,056,873 
19,366,303 
Document Fiscal Year Focus
2010 
 
 
 
 
Document Fiscal Period Focus
Q2