Use these links to rapidly review the document



OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______ .

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ý Accelerated filer o Non-accelerated filer o Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of ~~October 24, 2019:~~July 23, 2020:

Class A Common Stock — 2,560,668 shares

Exchangeable shares:

As of ~~October 24, 2019,~~July 23, 2020, the following number of exchangeable shares were outstanding for Molson Coors Canada, Inc.:

Class A Exchangeable shares — ~~2,725,180~~2,725,047 shares

The Class A exchangeable shares and Class B exchangeable shares are shares of the share capital in Molson Coors Canada Inc., a wholly-owned subsidiary of the registrant. They are publicly traded on the Toronto Stock Exchange under the symbols TPX.A and TPX.B,

respectively. These shares are intended to provide substantially the same economic and voting rights as the corresponding class of Molson Coors common stock in which they may be exchanged. In addition to the registered Class A common stock and the Class B common stock, the registrant has also issued and outstanding one share each of a Special Class A voting stock and Special Class B voting stock. The Special Class A voting stock and the Special Class B voting stock provide the mechanism for holders of Class A exchangeable shares and Class B exchangeable shares to be provided instructions to vote with the holders of the Class A common stock and the Class B common stock, respectively. The holders of the Special Class A voting stock and Special Class B voting stock are entitled to one vote for each outstanding Class A exchangeable share and Class B exchangeable share, respectively, excluding shares held by the registrant or its subsidiaries, and generally vote together with the Class A common stock and Class B common stock, respectively, on all matters on which the Class A common stock and Class B common stock are entitled to vote. The Special Class A voting stock and Special Class B voting stock are subject to a voting trust arrangement. The trustee which holds the Special Class A voting stock and the Special Class B voting stock is required to cast a number of votes equal to the number of then-outstanding Class A exchangeable shares and Class B exchangeable shares, respectively, but will only cast a number of votes equal to the number of Class A exchangeable shares and Class B exchangeable shares as to which it has received voting instructions from the owners of record of those Class A exchangeable shares and Class B exchangeable shares, other than the registrant or its subsidiaries, respectively, on the record date, and will cast the votes in accordance with such instructions so received.

MOLSON COORS ~~BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

INDEX


					Page
Glossary of Terms and Abbreviations						3
Cautionary Statement						4

						~~Page~~
~~Glossary of Terms and Abbreviations~~		3
PART I. FINANCIAL INFORMATION
Item 1.			Financial Statements (Unaudited)		5
~~Item 1.~~			~~Financial Statements (Unaudited)~~	5
	Condensed Consolidated Statements of Operations		5
			Condensed Consolidated Statements of Comprehensive Income (Loss)		6
			Condensed Consolidated Balance Sheets		7
			Condensed Consolidated Statements of Cash Flows		8
			Condensed Consolidated Statements of Stockholders' Equity and Noncontrolling Interests		9
			Notes to Unaudited Condensed Consolidated Financial Statements		11
			Note 1, "Basis of Presentation and Summary of Significant Accounting Policies"		11
			Note 2, "New Accounting Pronouncements"		1413
			Note 3, "Segment Reporting"		1513
			Note 4, "Investments"		1715
			Note 5, "Special Items"		1816
			Note 6, "Income Tax"		2017
			Note 7, "Goodwill and Intangible Assets"		2018
			Note 8, "Debt"		2321
			Note 9, "Inventories"		2423
			Note 10, "Accumulated Other Comprehensive Income (Loss)"		2523
			Note 11, "Derivative Instruments and Hedging Activities"		2523
			Note 12, "Commitments and Contingencies"		3229
			Note 13, "Leases"
			Note 14, "Supplemental Guarantor Information"		3432
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations		4341
Item 3.			Quantitative and Qualitative Disclosures About Market Risk		6059
Item 4.			Controls and Procedures		6160
PART II. OTHER INFORMATION
Item 1.			Legal Proceedings		60
Item 1.1A.			~~Legal Proceedings~~Risk Factors		61
Item ~~1A.~~2.			~~Risk Factors~~	62
~~Item 2.~~	Unregistered Sales of Equity Securities and Use of Proceeds		62
Item 3.			Defaults Upon Senior Securities		62
Item 4.			Mine Safety Disclosures		62
Item 5.			Other Information		62
Item 6.			Exhibits		63
Signature						64

Glossary of Terms and Abbreviations



AOCI			Accumulated other comprehensive income (loss)
CAD			Canadian dollar
CZK			Czech Koruna
DBRS			A global credit rating agency in Toronto
EBITDA			Earnings before interest, tax, depreciation and amortization
EPS			Earnings per share
EUR			Euro
FASB			Financial Accounting Standards Board
GBP			British Pound
HRK			Croatian Kuna
JPY			Japanese Yen
Moody’s			Moody’s Investors Service Limited, a nationally recognized statistical rating organization designated by the SEC
OCI			Other comprehensive income (loss)
OPEB			Other postretirement benefit plans
PSUs			Performance share units
RSD			Serbian Dinar
~~SEC~~RSUs			Restricted stock units
SEC			U.S. Securities and Exchange Commission
Standard & Poor’s			Standard and Poor’s Ratings Services, a nationally recognized statistical rating organization designated by the SEC
STRs			Sales-to-retailers
STWs			Sales-to-wholesalers
2017 Tax Act			U.S. Tax Cuts and Jobs Act
U.K.			United Kingdom
U.S.			United States
U.S. GAAP			Accounting principles generally accepted in the U.S.
USD or $			U.S. dollar
VIEs			Variable interest entities

Cautionary Statement Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). From time to time, we may also provide oral or written forward-looking statements in other materials we release to the public. Such forward-looking statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995.

Statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements, and include, but are not limited to, statements under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations," and under the ~~heading~~headings "Executive Summary" and "Outlook" therein, with respect to expectations regarding the impact of the coronavirus pandemic on our operations, liquidity, financial condition and financial results, overall volume trends, consumer preferences, pricing trends, industry forces, cost reduction strategies, including ~~2019~~our revitalization plan announced in 2019 and the estimated range of related ~~restructuring~~ charges and timing of cash charges, anticipated results, expectations for funding future capital expenditures and operations, ~~expectations regarding future dividends,~~ debt service capabilities, timing and amounts of debt and leverage levels, shipment levels and profitability, market share, and the sufficiency of capital resources. In addition, statements that we make in this report that are not statements of historical fact may also be forward-looking statements. Words such as "expects," "intend," "goals," "plans," "believes," "continues," "may," "anticipate," "seek," "estimate," "outlook," "trends," "future benefits," "potential," "projects," "strategies," "desire," and variations of such words and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those indicated (both favorably and unfavorably). These risks and uncertainties include, but are not limited to, those described under the heading "Risk Factors" in this report, ~~if any,~~ and those described from time to time in our past and future reports filed with the SEC, including in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~.2019. Caution should be taken not to place undue reliance on any such forward-looking statements. Forward-looking statements speak only as of the date when made and we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Market and Industry Data

The market and industry data used in this Quarterly Report on Form 10-Q are based on independent industry publications, customers, trade or business organizations, reports by market research firms and other published statistical information from third parties (collectively, the “Third Party Information”), as well as information based on management’s good faith estimates, which we derive from our review of internal information and independent sources. Such Third Party Information generally states that the information contained therein or provided by such sources has been obtained from sources believed to be reliable.

PART I. FINANCIAL INFORMATION

ITEM 1.

MOLSON COORS ~~BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN MILLIONS, EXCEPT PER SHARE DATA)

(UNAUDITED)


	Three Months Ended						Nine Months Ended							Three Months Ended						Six Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018				June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Sales	$	3,498.0		$	3,625.1		$	9,918.1		$	10,313.6		Sales	$	3,029.8	$	3,620.0	$	5,567.6	$	6,420.1
Excise taxes	(656.4		)	(690.9		)	(1,824.9		)	(1,962.7		)	Excise taxes	(526.4)		(671.7)		(961.4)		(1,168.5)
Net sales	2,841.6			2,934.2			8,093.2			8,350.9			Net sales	2,503.4		2,948.3		4,606.2		5,251.6
Cost of goods sold	(1,685.4		)	(1,714.0		)	(4,858.2		)	(4,988.8		)	Cost of goods sold	(1,456.6)		(1,759.8)		(2,935.6)		(3,172.8)
Gross profit	1,156.2			1,220.2			3,235.0			3,362.1			Gross profit	1,046.8		1,188.5		1,670.6		2,078.8
Marketing, general and administrative expenses	(690.2		)	(713.9		)	(2,115.1		)	(2,139.7		)	Marketing, general and administrative expenses	(524.5)		(769.7)		(1,154.2)		(1,424.9)
Special items, net	(703.3		)	(36.6		)	(666.4		)	267.7			Special items, net	(64.3)		49.9		(150.9)		36.9
Operating income (loss)	(237.3		)	469.7			453.5			1,490.1			Operating income (loss)	458.0		468.7		365.5		690.8
Interest income (expense), net	(65.6		)	(67.4		)	(204.5		)	(227.3		)	Interest income (expense), net	(69.7)		(65.6)		(138.6)		(138.9)
Other pension and postretirement benefits (costs), net	8.0			7.6			25.0			27.5			Other pension and postretirement benefits (costs), net	7.6		8.4		15.1		17.0
Other income (expense), net	(13.7		)	0.2			(0.7		)	0.2			Other income (expense), net	5.8		(10.9)		1.0		13.0
Income (loss) before income taxes	(308.6		)	410.1			273.3			1,290.5			Income (loss) before income taxes	401.7		400.6		243.0		581.9
Income tax benefit (expense)	(90.7		)	(64.5		)	(193.3		)	(231.6		)	Income tax benefit (expense)	(204.5)		(70.4)		(161.2)		(102.6)
Net income (loss)	(399.3		)	345.6			80.0			1,058.9			Net income (loss)	197.2		330.2		81.8		479.3
Net (income) loss attributable to noncontrolling interests	(3.5		)	(7.3		)	(2.0		)	(18.4		)	Net (income) loss attributable to noncontrolling interests	(2.2)		(0.8)		(3.8)		1.5
Net income (loss) attributable to Molson Coors Brewing Company	$	(402.8	)	$	338.3		$	78.0		$	1,040.5
Net income (loss) attributable to Molson Coors Beverage Company													Net income (loss) attributable to Molson Coors Beverage Company	$	195.0	$	329.4	$	78.0	$	480.8

Net income (loss) attributable to Molson Coors Brewing Company per share:
Net income (loss) attributable to Molson Coors Beverage Company per share:													Net income (loss) attributable to Molson Coors Beverage Company per share:
Basic	$	(1.86	)	$	1.57		$	0.36		$	4.82		Basic	$	0.90	$	1.52	$	0.36	$	2.22
Diluted	$	(1.86	)	$	1.56		$	0.36		$	4.80		Diluted	$	0.90	$	1.52	$	0.36	$	2.22

Weighted-average shares outstanding:													Weighted-average shares outstanding:
Basic	216.6			216.0			216.6			215.9			Basic	216.9		216.6		216.8		216.6
Dilutive effect of share-based awards	—			0.6			0.3			0.7			Dilutive effect of share-based awards	0.1		0.3		0.2		0.3
Diluted	216.6			216.6			216.9			216.6			Diluted	217.0		216.9		217.0		216.9

Anti-dilutive securities excluded from the computation of diluted EPS	1.6			0.9			1.3			0.9			Anti-dilutive securities excluded from the computation of diluted EPS	2.3		1.3		2.1		1.3

See notes to unaudited condensed consolidated financial statements.

MOLSON COORS ~~BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

See notes to unaudited condensed consolidated financial statements.

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT PAR VALUE)
(UNAUDITED)
As of
September 30, 2019 December 31, 2018
Assets
Current assets:
Cash and cash equivalents $ 410.2
$ 1,057.9
Accounts receivable, net 821.5
744.4
Other receivables, net 129.1
126.6
Inventories, net 642.8
591.8
Other current assets, net 283.3
245.6
Total current assets 2,286.9
2,766.3
Properties, net 4,432.0
4,608.3
Goodwill 7,549.2
8,260.8
Other intangibles, net 13,587.2
13,776.4
Other assets 896.3
698.0
Total assets $ 28,751.6
$ 30,109.8
Liabilities and equity
Current liabilities:
Accounts payable and other current liabilities $ 2,694.8
$ 2,706.4
Current portion of long-term debt and short-term borrowings 1,193.8
1,594.5
Total current liabilities 3,888.6
4,300.9
Long-term debt 8,058.5
8,893.8
Pension and postretirement benefits 715.7
726.6
Deferred tax liabilities 2,214.1
2,128.9
Other liabilities 468.2
323.8
Total liabilities 15,345.1
16,374.0
Commitments and contingencies (Note 12)

Molson Coors Brewing Company stockholders' equity
Capital stock:
Preferred stock, $0.01 par value (authorized: 25.0 shares; none issued) —
—
Class A common stock, $0.01 par value per share (authorized: 500.0 shares; issued and outstanding: 2.6 shares and 2.6 shares, respectively) —
—
Class B common stock, $0.01 par value per share (authorized: 500.0 shares; issued: 205.7 shares and 205.4 shares, respectively) 2.1
2.0
Class A exchangeable shares, no par value (issued and outstanding: 2.7 shares and 2.8 shares, respectively) 102.5
103.2
Class B exchangeable shares, no par value (issued and outstanding: 14.8 shares and 14.8 shares, respectively) 557.8
557.6
Paid-in capital 6,772.9
6,773.1
Retained earnings 7,576.8
7,692.9
Accumulated other comprehensive income (loss) (1,378.3 ) (1,150.0 )
Class B common stock held in treasury at cost (9.5 shares and 9.5 shares, respectively) (471.4 ) (471.4 )
Total Molson Coors Brewing Company stockholders' equity 13,162.4
13,507.4
Noncontrolling interests 244.1
228.4
Total equity 13,406.5
13,735.8
Total liabilities and equity $ 28,751.6
$ 30,109.8

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT PAR VALUE)


	As of
	June 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	780.8	$	523.4
Accounts receivable, net	713.7		714.8
Other receivables, net	129.1		105.5
Inventories, net	639.1		615.9
Other current assets, net	280.0		224.8
Total current assets	2,542.7		2,184.4
Properties, net	4,344.0		4,546.5
Goodwill	7,561.8		7,631.4
Other intangibles, net	13,384.0		13,656.0
Other assets	806.3		841.5
Total assets	$	28,638.8	$	28,859.8
Liabilities and equity
Current liabilities:
Accounts payable and other current liabilities	$	3,192.7	$	2,767.3
Current portion of long-term debt and short-term borrowings	613.0		928.2
Total current liabilities	3,805.7		3,695.5
Long-term debt	8,073.7		8,109.5
Pension and postretirement benefits	694.7		716.6
Deferred tax liabilities	2,218.5		2,258.6
Other liabilities	578.2		406.5
Total liabilities	15,370.8		15,186.7
Commitments and contingencies (Note 12)
Molson Coors Beverage Company stockholders' equity
Capital stock:
Preferred stock, $0.01 par value (authorized: 25.0 shares; NaN issued)	—		—
Class A common stock, $0.01 par value per share (authorized: 500.0 shares; issued and outstanding: 2.6 shares and 2.6 shares, respectively)	—		—
Class B common stock, $0.01 par value per share (authorized: 500.0 shares; issued: 206.0 shares and 205.7 shares, respectively)	2.1		2.1
Class A exchangeable shares, 0 par value (issued and outstanding: 2.7 shares and 2.7 shares, respectively)	102.5		102.5
Class B exchangeable shares, 0 par value (issued and outstanding: 14.8 shares and 14.8 shares, respectively)	557.8		557.8
Paid-in capital	6,786.3		6,773.6
Retained earnings	7,571.2		7,617.0
Accumulated other comprehensive income (loss)	(1,545.6)		(1,162.2)
Class B common stock held in treasury at cost (9.5 shares and 9.5 shares, respectively)	(471.4)		(471.4)
Total Molson Coors Beverage Company stockholders' equity	13,002.9		13,419.4
Noncontrolling interests	265.1		253.7
Total equity	13,268.0		13,673.1
Total liabilities and equity	$	28,638.8	$	28,859.8

See notes to unaudited condensed consolidated financial statements.

MOLSON COORS ~~BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

See notes to unaudited condensed consolidated financial statements.

MOLSON COORS ~~BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

AND NONCONTROLLING INTERESTS


			Molson Coors Beverage Company Stockholders' Equity
															Accumulated		Common stock
			Common stock						Exchangeable										other		held in	Non
			issued						shares issued						Paid-in-		Retained		comprehensive		treasury	controlling
	Total		Class A		Class B		Class A		Class B		capital		earnings		income (loss)		Class B		interests
As of March 31, 2019	$	13,888.1	$	—	$	2.0	$	103.2	$	557.6	$	6,776.2	$	7,862.4	$	(1,182.7)	$	(471.4)	$	240.8
Exchange of shares	—		—		—		(0.2)		0.3		(0.1)		—		—		—		—
Shares issued under equity compensation plan	0.3		—		0.1		—		—		0.2		—		—		—		—
Amortization of share-based compensation	7.0		—		—		—		—		7.0		—		—		—		—
Acquisition of business	0.7		—		—		—		—		—		—		—		—		0.7
Net income (loss) including noncontrolling interests	330.2		—		—		—		—		—		329.4		—		—		0.8
Other comprehensive income (loss), net of tax	3.8		—		—		—		—		—		—		4.1		—		(0.3)
Contributions from noncontrolling interests	7.0		—		—		—		—		—		—		—		—		7.0
Distributions and dividends to noncontrolling interests	(3.4)		—		—		—		—		—		—		—		—		(3.4)
Dividends declared and paid - $0.41 per share	(88.7)		—		—		—		—		—		(88.7)		—		—		—
As of June 30, 2019	$	14,145.0	$	—	$	2.1	$	103.0	$	557.9	$	6,783.3	$	8,103.1	$	(1,178.6)	$	(471.4)	$	245.6

Molson Coors Brewing Company Stockholders' Equity
Accumulated Common Stock
Common stock Exchangeable other held in Non
issued shares issued Paid-in- Retained comprehensive treasury controlling
Total Class A Class B Class A Class B capital earnings income (loss) Class B interests
As of June 30, 2018 $ 13,548.9
$ —
$ 2.0
$ 107.7
$ 553.2
$ 6,707.0
$ 7,455.8
$ (1,025.4 ) $ (471.4 ) $ 220.0
Exchange of shares —
—
—
(4.3 ) 4.2
0.1
—
—
—
—
Shares issued under equity compensation plan 0.1
—
—
—
—
0.1
—
—
—
—
Amortization of share-based compensation 8.7
—
—
—
—
8.7
—
—
—
—
Purchase of noncontrolling interest (0.1 ) —
—
—
—
—
—
—
—
(0.1 )
Net income (loss) including noncontrolling interests 345.6
—
—
—
—
—
338.3
—
—
7.3
Other comprehensive income (loss), net of tax 28.7
—
—
—
—
—
—
29.0
—
(0.3 )
Contributions from noncontrolling interests 8.0
—
—
—
—
—
—
—
—
8.0
Distributions and dividends to noncontrolling interests (9.0 ) —
—
—
—
—
—
—
—
(9.0 )
Dividends declared and paid - $0.41 per share (88.6 ) —
—
—
—
—
(88.6 ) —
—
—
As of September 30, 2018 $ 13,842.3
$ —
$ 2.0
$ 103.4
$ 557.4
$ 6,715.9

$ 7,705.5

$ (996.4 )
$ (471.4 ) $ 225.9

Molson Coors Brewing Company Stockholders' Equity

Accumulated Common Stock

Common stock
Exchangeable

other held in
Non

issued
shares issued
Paid-in- Retained comprehensive treasury
controlling
Total
Class A
Class B
Class A
Class B
capital earnings income (loss) Class B
interests
As of June 30, 2019 $ 14,145.0

$ —
$ 2.1
$ 103.0
$ 557.9
$ 6,783.3
$ 8,103.1
$ (1,178.6 ) $ (471.4 ) $ 245.6
Exchange of shares —

—
—
(0.5 ) (0.1 ) 0.6
—
—
—
—
Amortization of share-based compensation (11.0 )
—
—
—
—
(11.0 ) —
—
—
—
Purchase of noncontrolling interest (0.1 )
—
—
—
—
—
—
—
—
(0.1 )
Deconsolidation of VIE (1.5 ) —
—
—
—
—
—
—
—
(1.5 )
Net income (loss) including noncontrolling interests (399.3 )
—
—
—
—
—
(402.8 ) —
—
3.5
Other comprehensive income (loss), net of tax (200.7 )
—
—
—
—
—
—
(199.7 ) —
(1.0 )
Contributions from noncontrolling interests 3.9
—
—
—
—
—
—
—
—
3.9
Distributions and dividends to noncontrolling interests (6.3 ) —
—
—
—
—
—
—
—
(6.3 )
Dividends declared and paid - $0.57 per share (123.5 )
—
—
—
—
—
(123.5 ) —
—
—
As of September 30, 2019 $ 13,406.5

$ —

$ 2.1

$ 102.5

$ 557.8

$ 6,772.9
$ 7,576.8
$ (1,378.3 ) $ (471.4 )
$ 244.1


			Molson Coors Beverage Company Stockholders' Equity
															Accumulated		Common stock
			Common stock						Exchangeable										other		held in	Non
			issued						shares issued						Paid-in-		Retained		comprehensive		treasury	controlling
	Total		Class A		Class B		Class A		Class B		capital		earnings		income (loss)		Class B		interests
As of March 31, 2020	$	12,946.0	$	—	$	2.1	$	102.5	$	557.8	$	6,780.7	$	7,376.2	$	(1,661.3)	$	(471.4)	$	259.4

Shares issued under equity compensation plan	(0.3)		—		—		—		—		(0.3)		—		—		—		—
Amortization of share-based compensation	5.9		—		—		—		—		5.9		—		—		—		—


Net income (loss) including noncontrolling interests	197.2		—		—		—		—		—		195.0		—		—		2.2
Other comprehensive income (loss), net of tax	116.8		—		—		—		—		—		—		115.7		—		1.1



Contributions from noncontrolling interests	5.4		—		—		—		—		—		—		—		—		5.4
Distributions and dividends to noncontrolling interests	(3.0)		—		—		—		—		—		—		—		—		(3.0)

As of June 30, 2020	$	13,268.0	$	—	$	2.1	$	102.5	$	557.8	$	6,786.3	$	7,571.2	$	(1,545.6)	$	(471.4)	$	265.1

MOLSON COORS ~~BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

AND NONCONTROLLING INTERESTS



			Molson Coors Beverage Company Stockholders' Equity
															Accumulated		Common stock
			Common stock						Exchangeable										other		held in	Non
			issued						shares issued						Paid-in-		Retained		comprehensive		treasury	controlling
	Total		Class A		Class B		Class A		Class B		capital		earnings		income (loss)		Class B		interests
As of December 31, 2018	$	13,735.8	$	—	$	2.0	$	103.2	$	557.6	$	6,773.1	$	7,692.9	$	(1,150.0)	$	(471.4)	$	228.4
Exchange of shares	—		—		—		(0.2)		0.3		(0.1)		—		—		—		—
Shares issued under equity compensation plan	(7.9)		—		0.1		—		—		(8.0)		—		—		—		—
Amortization of share-based compensation	18.3		—		—		—		—		18.3		—		—		—		—
Acquisition of business	0.7		—		—		—		—		—		—		—		—		0.7
Net income (loss) including noncontrolling interests	479.3		—		—		—		—		—		480.8		—		—		(1.5)
Other comprehensive income (loss), net of tax	46.1		—		—		—		—		—		—		46.2		—		(0.1)
Adoption of lease accounting standard	32.0		—		—		—		—		—		32.0		—		—		—
Reclassification of stranded tax effects	—		—		—		—		—		—		74.8		(74.8)		—		—
Contributions from noncontrolling interests	21.5		—		—		—		—		—		—		—		—		21.5
Distributions and dividends to noncontrolling interests	(3.4)		—		—		—		—		—		—		—		—		(3.4)
Dividends declared and paid - $0.82 per share	(177.4)		—		—		—		—		—		(177.4)		—		—		—
As of June 30, 2019	$	14,145.0	$	—	$	2.1	$	103.0	$	557.9	$	6,783.3	$	8,103.1	$	(1,178.6)	$	(471.4)	$	245.6



			Molson Coors Beverage Company Stockholders' Equity
															Accumulated		Common stock
			Common stock						Exchangeable										other		held in	Non
			issued						shares issued						Paid-in-		Retained		comprehensive		treasury	controlling
	Total		Class A		Class B		Class A		Class B		capital		earnings		income (loss)		Class B		interests
As of December 31, 2019	$	13,673.1	$	—	$	2.1	$	102.5	$	557.8	$	6,773.6	$	7,617.0	$	(1,162.2)	$	(471.4)	$	253.7

Shares issued under equity compensation plan	0.9		—		—		—		—		0.9		—		—		—		—
Amortization of share-based compensation	11.8		—		—		—		—		11.8		—		—		—		—
Purchase of noncontrolling interest	(0.1)		—		—		—		—		—		—		—		—		(0.1)

Net income (loss) including noncontrolling interests	81.8		—		—		—		—		—		78.0		—		—		3.8
Other comprehensive income (loss), net of tax	(385.2)		—		—		—		—		—		—		(383.4)		—		(1.8)

Contributions from noncontrolling interests	14.0		—		—		—		—		—		—		—		—		14.0
Distributions and dividends to noncontrolling interests	(4.5)		—		—		—		—		—		—		—		—		(4.5)
Dividends declared - $0.57 per share	(123.8)		—		—		—		—		—		(123.8)		—		—		—
As of June 30, 2020	$	13,268.0	$	—	$	2.1	$	102.5	$	557.8	$	6,786.3	$	7,571.2	$	(1,545.6)	$	(471.4)	$	265.1

Molson Coors Brewing Company Stockholders' Equity
Accumulated Common Stock
Common stock Exchangeable other held in Non
issued shares issued Paid-in- Retained comprehensive treasury controlling
Total Class A Class B Class A Class B capital earnings income (loss) Class B interests
As of December 31, 2017 $ 13,187.3
$ —
$ 2.0
$ 107.7
$ 553.2
$ 6,688.5
$ 6,958.4
$ (860.0 ) $ (471.4 ) $ 208.9
Exchange of shares —
—
—
(4.3 ) 4.2
0.1
—
—
—
—
Shares issued under equity compensation plan (6.3 ) —
—
—
—
(6.3 ) —
—
—
—
Amortization of share-based compensation 33.6
—
—
—
—
33.6
—
—
—
—
Purchase of noncontrolling interest (0.2 ) —
—
—
—
—
—
—
—
(0.2 )
Net income (loss) including noncontrolling interests 1,058.9
—
—
—
—
—
1,040.5
—
—
18.4
Other comprehensive income (loss), net of tax (137.5 ) —
—
—
—
—
—
(136.4 ) —
(1.1 )
Adoption of new accounting pronouncement (27.8 ) —
—
—
—
—
(27.8 ) —
—
—
Contributions from noncontrolling interests 14.4
—
—
—
—
—
—
—
—
14.4
Distributions and dividends to noncontrolling interests (14.5 ) —
—
—
—
—
—
—
—
(14.5 )
Dividends declared and paid - $1.23 per share (265.6 ) —
—
—
—
—
(265.6 ) —
—
—
As of September 30, 2018 $ 13,842.3
$ —
$ 2.0
$ 103.4
$ 557.4
$ 6,715.9
$ 7,705.5
$ (996.4 ) $ (471.4 ) $ 225.9

Molson Coors Brewing Company Stockholders' Equity
Accumulated Common Stock
Common stock Exchangeable other held in Non
issued shares issued Paid-in- Retained comprehensive treasury controlling
Total Class A Class B Class A Class B capital earnings income (loss) Class B interests
As of December 31, 2018 $ 13,735.8
$ —
$ 2.0
$ 103.2
$ 557.6
$ 6,773.1
$ 7,692.9
$ (1,150.0 ) $ (471.4 ) $ 228.4
Exchange of shares —
—
—
(0.7 ) 0.2
0.5
—
—
—
—
Shares issued under equity compensation plan (7.9 ) —
0.1
—
—
(8.0 ) —
—
—
—
Amortization of share-based compensation 7.3
—
—
—
—
7.3
—
—
—
—
Acquisition of business and purchase of noncontrolling interest 0.6
—
—
—
—
—
—
—
—
0.6
Deconsolidation of VIE (1.5 ) —
—
—
—
—
—
—
—
(1.5 )
Net income (loss) including noncontrolling interests 80.0
—
—
—
—
—
78.0
—
—
2.0
Other comprehensive income (loss), net of tax (154.6 ) —
—
—
—
—
—
(153.5 ) —
(1.1 )
Adoption of lease accounting standard (see Note 2)
32.0
—
—
—
—
—
32.0
—
—
—
Reclassification of stranded tax effects (see Note 2)
—
—
—
—
—
—
74.8
(74.8 ) —
—
Contributions from noncontrolling interests 25.4
—
—
—
—
—
—
—
—
25.4
Distributions and dividends to noncontrolling interests (9.7 ) —
—
—
—
—
—
—
—
(9.7 )
Dividends declared and paid - $1.39 per share (300.9 ) —
—
—
—
—
(300.9 ) —
—
—
As of September 30, 2019 $ 13,406.5
$ —
$ 2.1
$ 102.5
$ 557.8
$ 6,772.9
$ 7,576.8
$ (1,378.3 ) $ (471.4 ) $ 244.1

MOLSON COORS ~~BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation and Summary of Significant Accounting Policies

Unless otherwise noted in this report, any description of "we," "us" or "our" includes Molson Coors ~~Brewing~~Beverage Company ("MCBC" or the "Company") (formerly known as Molson Coors Brewing Company), principally a holding company, and its operating and non-operating subsidiaries included within our reporting segments. As further discussed below, on January 1, 2020, we changed our management structure from a corporate center and 4 segments to 2 segments - North America and ~~Corporate.~~Europe. Our International segment was reconstituted with the Africa and Asia Pacific businesses reporting into the Europe segment and the remaining International business reporting into the North America segment. Accordingly, effective January 1, 2020, our reporting segments include: ~~MillerCoors LLC ("MillerCoors" or U.S.~~North America (North America segment), operating in the U.S.~~; Molson Coors~~, Canada ~~("MCC" or Canada segment), operating~~and various countries in ~~Canada; Molson Coors~~Latin and South America; and Europe (Europe segment), operating in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K. ~~and~~, various other European ~~countries;~~countries, and ~~Molson Coors International ("MCI" or International segment), operating in various other countries.~~certain countries within Africa and Asia Pacific. We have recast the historical presentation of segment information as a result of these reporting segment changes accordingly.

Unless otherwise indicated, information in this report is presented in USD and comparisons are to comparable prior periods. Our primary operating currencies, other than USD, include the CAD, the GBP, and our Central European operating currencies such as the EUR, CZK, HRK and RSD.

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 U.S. GAAP. Such unaudited interim condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the 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 on Form 10-K for the year ended December 31, ~~2018~~2019 ("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 our Annual Report, except as noted ~~below and~~ in Note 2, "New Accounting ~~Pronouncements.~~Pronouncements" as well as the changes to our reportable segments and reporting units as discussed above and in Note 3, "Segment Reporting" and Note 7, "Goodwill and Intangible Assets," respectively.

The results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 are not necessarily indicative of the results that may be achieved for the full year.

~~Due to~~Coronavirus Global Pandemic

On March 11, 2020, the ~~anti-dilutive effect resulting from~~World Health Organization characterized the ~~reported net loss attributable to MCBC for~~outbreak of the ~~three months ended September 30, 2019,~~novel coronavirus disease, known as COVID-19, as a global pandemic and recommended containment and mitigation measures. We are actively monitoring the impact of ~~potentially dilutive securities~~the coronavirus pandemic, which has had, and we currently expect will continue to have, a material adverse effect on our operations, liquidity, financial condition and financial results for our full year 2020 and, possibly, beyond. The extent to which our operations will be impacted by the pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity and duration of the outbreak and actions by government authorities to contain the pandemic or treat its impact, among other things.

During the three and six months ended June 30, 2020, we recorded charges of $15.5 million within cost of goods sold related to temporary "thank you" pay for certain essential North America brewery employees. Additionally, in order to support and demonstrate our commitment to the continued viability of the many bars and restaurants which have been negatively impacted by the coronavirus pandemic, during the first quarter of 2020, we initiated temporary keg relief programs in many of our markets. As part of these voluntary programs, we committed to provide customers with reimbursements for untapped kegs that meet certain established return requirements. As a result, during the six months ended June 30, 2020, we recognized a reduction to net sales of $31.8 million, substantially all of which was recognized in the first quarter other than immaterial adjustments for changes in estimates during the second quarter of 2020, reflecting estimated sales returns and reimbursements through these keg relief programs. This estimate was derived considering various factors, including but not limited to, the actual amount of previously sold keg product eligible for reimbursement, along with the assumed length of time the product has been ~~excluded from~~at a customer location to estimate the ~~quarterly calculation~~number of ~~weighted-average shares~~kegs that remain untapped. Further, during the six months ended June 30, 2020, we recognized charges of $16.8 million, substantially all of which was recognized in the first quarter other than immaterial adjustments for ~~diluted EPS for~~changes in estimates during the ~~third~~second quarter of ~~2019. The impact~~2020, within cost of ~~these potentially dilutive securities has been included~~goods sold related to obsolete finished goods keg inventories that are not expected to be sold within our freshness specifications, as well as the estimated costs to facilitate the above mentioned keg returns. As of June 30, 2020 and December 31, 2019, our aggregate allowance for

obsolete inventories was approximately $15 million and $11 million, respectively. These estimates are subject to change, and actual results could deviate from our current estimates due to many factors, including, but not limited to, the number of customers ultimately participating in the ~~calculation~~voluntary keg relief programs and the number of ~~weighted-average shares~~untapped kegs in the market relative to our expectations. Further, the actual duration of the coronavirus pandemic, including the length of government-mandated closures or ceased sit-down service limitations at bars and restaurants coupled with the subsequent economic recovery period relative to the assumptions utilized to derive these estimates, could result in further charges due to incremental finished goods keg inventory becoming obsolete in future periods.

Additionally, we continue to monitor the impacts of the coronavirus pandemic on our customers’ liquidity and capital resources and therefore our ability to collect, or the timeliness of collection of our accounts receivable. While these receivables are not concentrated in any specific customer and our allowance on these receivables factors in expected credit loss, continued disruption and declines in the global economy could result in difficulties in our ability to collect and require increases to our allowance for ~~diluted EPS~~doubtful accounts. As of both June 30, 2020 and December 31, 2019, our allowance for trade receivables was approximately $12 million, and allowance activity was immaterial during the ~~nine~~three and six months ended ~~September~~June 30, ~~2019.~~2020.

Further, in response to the coronavirus pandemic, various governmental authorities globally have announced relief programs which among other items, provide temporary deferrals of income and non-income based tax payments, which have positively impacted our operating cash flows in the first half of 2020. These temporary deferrals of over $500 million as of June 30, 2020, are included within accounts payable and other current liabilities on our unaudited condensed consolidated balance sheet.

Finally, we continue to protect and support our liquidity position in response to the global economic uncertainty created by the coronavirus pandemic. During the second quarter, our board of directors suspended our regular quarterly dividends on our Class A and Class B common and exchangeable shares otherwise payable in fiscal year 2020.

For considerations of the effects of the coronavirus pandemic and related potential impairment risks to our goodwill and indefinite-lived intangible assets, see Note 7, "Goodwill and I ntangible Assets."

On October 28, 2019, we initiated a revitalization plan designed to allow us to invest across our portfolio to drive long-term, sustainable success. As part of our revitalization plan, we made the determination to establish Chicago, Illinois as our North American operational headquarters, close our existing office in Denver, Colorado and consolidate certain administrative functions into our other existing office locations. As discussed above, in connection with these consolidation activities, effective January 1, 2020, we changed our management structure to 2 segments - North America and Europe. We began to incur charges related to these restructuring activities during the fourth quarter of 2019 and have continued to incur charges in the first half of 2020.

We also changed our name from Molson Coors Brewing Company to Molson Coors Beverage Company in January 2020 in order to better reflect our strategic intent to expand beyond beer and into other growth adjacencies in the beverage industry. See Note 3, "Segment Reporting,"Note 5, "Special Items" and Note 7, "Goodwill and Intangible Assets" for further discussion of the impacts of this plan.

Non-cash activity includes non-cash issuances of share-based awards, as well as non-cash investing activities related to movements in our guarantee of indebtedness of certain equity method investments. See Note 4, "Investments" for further discussion. We also had non-cash activities related to capital expenditures incurred but not yet paid of ~~$126.3~~$135.4 million and ~~$154.7~~$149.9 million ~~for~~during the ~~nine~~six months ended ~~September~~June 30, 2020 and June 30, 2019, ~~and September 30, 2018,~~ respectively.

Other than the activity mentioned above and the supplemental non-cash activity related to the recognition of leases further discussed ~~below,~~in Note 13, "Leases," there was no other significant non-cash activity during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018.~~2019.

Share-Based Compensation

During the ~~third quarter~~first half of ~~2019, our~~2020, we granted stock options, RSUs and PSUs to certain officers and other eligible employees and recognized share-based compensation expense ~~decreased by approximately $19~~of $5.9 million ~~due to~~and $7.2 million during the ~~reversal of cumulative~~three months ended June 30, 2020 and June 30, 2019, respectively, and $11.8 million and $18.6 million during the six months ended June 30, 2020 and June 30, 2019, respectively. The reduction in share-based compensation expense ~~previously recognized~~in the first half of 2020 was driven primarily by a decline in 2020 in immediate expense recognition for ~~our 2018 and 2017 PSU~~awards granted to certain retirement eligible employees, as well as a reduction in expense relative to performance-based awards as a result of the achievement of ~~the~~certain performance conditions ~~are~~ no longer being deemed ~~probable for the respective performance periods.~~

We account for leases in accordance with Accounting Standards Codification (“ASC”) Topic 842, Leases, which we adopted on January 1, 2019, electing not to adjust comparative periods presented and applying a modified retrospective transition approach as of the effective date of adoption (see ~~Note 2, "New Accounting Pronouncements"~~ ~~for impacts of adoption).~~

We enter into contractual arrangements for the utilization of certain non-owned assets, primarily real estate and equipment, which are evaluated as finance (previously known as capital) or operating leases upon commencement and are

accounted for accordingly. Specifically, under ASC 842, a contract is or contains a lease when, (1) the contract contains an explicitly or implicitly identified asset and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract in exchange for consideration. We assess whether an arrangement is or contains a lease at inception of the contract. For all contractual arrangements deemed to be leases (other than short-term leases), as of the lease commencement date, we recognize on the consolidated balance sheet a liability for our obligation related to the lease and a corresponding asset representing our right to use the underlying asset over the period of use.

For leases that qualify as short-term leases, we have elected, for all classes of underlying assets, to not apply the balance sheet recognition requirements of ASC 842, and instead, we recognize the lease payments in the consolidated statements of operations on a straight-line basis over the lease term. We have also made the election, for our real estate and certain equipment classes of underlying assets, to account for lease and non-lease components as a single lease component.

Our leases have remaining lease terms of up to approximately 18 years. Certain of our lease agreements contain options to extend or early terminate the agreement. The lease term used to calculate the right-of-use asset and lease liability at commencement includes the impacts of options to extend or terminate the lease when it is reasonably certain that we will exercise that option. When determining whether it is reasonably certain that we will exercise an option at commencement, we consider various existing economic factors, including real estate strategies, the nature, length, and terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term. Based on these determinations, we generally conclude that the exercise of renewal options would not be reasonably certain in determining the lease term at commencement. Assumptions made at the commencement date are re-evaluated upon occurrence of certain events requiring a lease modification. Additionally, for certain equipment leases involving groups of similar leased assets with similar lease terms, we apply a portfolio approach to effectively account for the operating lease right-of-use assets and liabilities.

The discount rate used to calculate the present value of the future minimum lease payments is the rate implicit in the lease, when readily determinable. As the rate implicit in the lease is not readily determinable for most of our leases, we use our incremental borrowing rate relative to the leased asset.

Certain of our leases include variable lease payments, including payments that depend on an index or rate, as well as variable payments for items such as property taxes, insurance, maintenance, and other operating expenses associated with leased assets. Payments that vary based on an index or rate are included in the measurement of our lease assets and liabilities at the rate as of the commencement date. All other variable lease payments are excluded from the measurement of our lease assets and liabilities and are recognized in the period in which the obligation for those payments is incurred. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Lease-related expense is recorded within either cost of goods sold or marketing, general and administrative expenses on the consolidated statements of operations, depending on the function of the underlying leased asset, with the exception of interest on finance lease liabilities, which is recorded within interest income (expense), net on the consolidated statements of operations.

~~Montreal Brewery Sale and Leaseback Transaction~~

In June 2019, we completed the sale of our Montreal brewery for $96.2 million (CAD 126.0 million), resulting in a $61.3 million gain, which was recorded as a special item. In conjunction with the sale, we agreed to lease back the existing property to continue operations on an uninterrupted basis for a period up to 5 years with early termination options at our discretion, while our new brewery in Longueuil, Quebec is being constructed. Accordingly, we have recorded operating lease right-of-use assets and liabilities of approximately CAD 6 million assuming a lease term that is coterminous with the construction of our new brewery, which is currently expected to be operational in 2021. However, due to the uncertainty inherent in our estimates, the term of the brewery lease is subject to reassessment. Once the existing property has been entirely redeveloped by the purchaser, we plan to lease a minor portion of the future space for administrative and other purposes. We have evaluated this transaction pursuant to the accounting guidance for sale and leaseback transactions and concluded that the relevant criteria was met for full gain recognition upon completion of the transaction in the second quarter of 2019.

~~Lease Financial Information~~

~~For the three and nine months ended September 30, 2019, lease expense (including immaterial short-term and variable lease costs) was as follows:~~probable.

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
(In millions)
Operating lease expense $ 18.1
$ 54.2
Finance lease expense 2.9
8.7
Total lease expense $ 21.0
$ 62.9

~~Supplemental cash flow information related to leases for the nine months ended September 30, 2019 was as follows:~~

Nine Months Ended September 30, 2019
(In millions)
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from operating leases $ 39.6
Operating cash flows from finance leases $ 2.7
Financing cash flows from finance leases $ 1.8
Supplemental non-cash information on right-of-use assets obtained in exchange for new lease liabilities:
Operating leases $ 36.4
Finance leases $ 2.1

~~Supplemental balance sheet information related to leases as of September 30, 2019 was as follows:~~

As of September 30, 2019
Balance Sheet Classification (In millions)
Operating Leases
Operating lease right-of-use assets Other assets $ 155.0
Current operating lease liabilities Accounts payable and other current liabilities $ 44.4
Non-current operating lease liabilities Other liabilities 120.8
Total operating lease liabilities $ 165.2

Finance Leases
Finance lease right-of-use assets Properties, net $ 64.8
Current finance lease liabilities Current portion of long-term debt and short-term borrowings $ 33.9
Non-current finance lease liabilities Long-term debt 50.9
Total finance lease liabilities $ 84.8

~~The weighted-average remaining lease term and discount rate as of September 30, 2019 are as follows:~~

Weighted-Average Remaining Lease Term (Years) Weighted-Average Discount Rate
Operating leases 5.0 4.2%
Finance leases 9.2 6.3%

~~Based on foreign exchange rates as of September 30, 2019, maturities of lease liabilities are as follows:~~

Operating Leases Finance Leases
(In millions)
2019 - remaining $ 13.6
$ 1.7
2020 48.2
38.0
2021 39.5
5.7
2022 30.4
5.7
2023 21.3
5.7
Thereafter 29.3
62.8
Total lease payments $ 182.3
$ 119.6
Less: interest (17.1 ) (34.8 )
Present value of lease liabilities $ 165.2
$ 84.8

~~Executed leases that have not yet commenced as of September 30, 2019 are immaterial.~~

~~Information as of December 31, 2018, as well as comparative interim period information under historical lease accounting guidance~~

Gross assets recorded under finance leases as of December 31, 2018 were $82.5 million. The associated accumulated amortization on these assets as of December 31, 2018 was $13.2 million. These amounts are recorded within properties, net on the consolidated balance sheet. Current and non-current finance lease liabilities as of December 31, 2018 were $3.2 million and $82.1 million, respectively, and were recorded in accounts payable and other current liabilities and other non-current liabilities, respectively, on the consolidated balance sheet. Separately, during the nine months ended September 30, 2018, non-cash activities related to the recognition of finance leases was $15.0 million.

Based on foreign exchange rates as of December 31, 2018, future minimum lease payments under operating leases that have initial or remaining non-cancelable terms in excess of one year, as well as finance leases, are as follows:

Operating Leases Finance Leases
Year (In millions)
2019 $ 49.4
$ 6.1
2020 40.2
36.2
2021 32.6
5.9
2022 24.6
5.9
2023 17.0
5.8
Thereafter 21.0
64.2
Total future minimum lease payments $ 184.8
$ 124.1
Less: interest on finance leases (38.8 )
Present value of future minimum finance lease payments $ 85.3

2. New Accounting Pronouncements

New Accounting Pronouncements Recently Adopted

~~Leases~~

In ~~February~~June 2016, the FASB issued ~~authoritative~~ guidance ~~intended~~that changes the impairment model used to ~~increase transparency~~measure credit losses for most financial instruments. The new guidance replaces the existing incurred credit loss model, and ~~comparability among organizations by requiring~~requires the application of a forward-looking expected credit loss model, which will generally result in earlier recognition of ~~lease assets and liabilities on~~allowances for credit losses for financial instruments that are in scope of the ~~balance sheet and disclosure of key information about leasing arrangements.~~new guidance, including trade receivables. We adopted this guidance and all related amendments applying the modified retrospective transition approach to all lease arrangements as of the effective date of adoption, January 1, 2019. As permitted under the guidance, financial statements for reporting periods beginning after January 1, 2019 are presented under the new guidance, while prior period amounts have not been adjusted and continue to be reported and disclosed in accordance with historical accounting guidance. Additionally, for existing leases as of the effective date, we have elected the package of practical expedients available at transition to not reassess the historical lease determination, lease classification and initial direct costs.

~~For operating leases, the adoption of the new guidance resulted~~ in the ~~recognition~~first quarter of right-of-use assets of approximately $154 million and aggregate current and non-current lease liabilities of approximately $164 million as of January 1, 2019, including immaterial reclassifications of prepaid and deferred rent balances into right-of-use assets. Separately, as2020, which did not have a ~~result of the cumulative~~material impact of adopting the new guidance, we recorded a net increase to opening retained earnings of approximately $32 million as of January 1, 2019 with the offsetting impact within other assets, related to our share of the accelerated recognition of deferred gains on non-qualifying and other sale-leaseback transactions by an equity method investment within our Canada segment. Additionally, while our accounting for finance leases remains unchanged at adoption, we have prospectively changed the presentation of finance lease liabilities within the consolidated balance sheets to be presented within current portion of long-term debt and short-term borrowings, and long-term debt, as appropriate. As of January 1, 2019, we reclassified approximately $3 million and $82 million of short-term and long-term finance lease liabilities from accounts payable and other current liabilities and other non-current liabilities to current portion of long-term debt and short-term borrowings and long-term debt, respectively. The adoption of this guidance had no impact to our cash flows from operating, investing, or financing activities. See ~~Note 1, “Basis of Presentation and Summary of Significant Accounting Policies”~~ ~~for additional discussion~~ on our ~~leasing arrangements.~~

~~Accumulated Other Comprehensive Income (Loss)~~financial statements.

In ~~February~~August 2018, the FASB issued authoritative guidance intended to ~~improve~~address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This guidance aligns the ~~usefulness~~requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance also requires presentation of the capitalized implementation costs in the statement of financial ~~information~~position and in the statement of cash flows in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented, and the expense related to the ~~enactment~~capitalized implementation costs to be presented in the same line item in the statement of operations as the fees associated with the hosting element (service) of the 2017 Tax Act. This guidance provides an option to reclassify from AOCI to retained earnings the stranded tax effects resulting from the change in the U.S. federal corporate income tax rate as a result of the 2017 Tax Act.arrangement. We adopted this guidance asprospectively in the first quarter of ~~January 1, 2019 and elected to reclassify stranded tax effects~~2020, which did not have a material impact on our financial statements. However, the adoption of this guidance resulted in the change in presentation of capitalized implementation costs related to hosting arrangements from properties to other assets on the ~~2017 Tax Act, resulting in an approximate $75 million increase~~consolidated balance sheet, as well as the expense related to ~~retained earnings~~such costs no longer being classified as depreciation expense and cash flows related to those costs no longer being presented as investing activities beginning in the ~~period~~first quarter of ~~adoption. Our policy is to release stranded tax effects from AOCI using either a specific identification approach or portfolio approach based on the nature of the underlying item.~~2020.

New Accounting Pronouncements Not Yet Adopted

In ~~August 2018,~~March 2020, the FASB issued authoritative guidance which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and are effective for all entities upon issuance, March 12, 2020, through December 31, 2022, which is a full year after the current expected discontinuation date of LIBOR. We are currently evaluating the potential impact of this guidance on our financial statements.

In December 2019, the FASB issued authoritative guidance intended to ~~address a customer’s~~simplify the accounting for ~~implementation costs incurred in a cloud computing arrangement that is a service contract.~~income taxes. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance also requires presentation of the capitalized implementation costs in the statement of financial position and in the statement of cash flows in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented, and the expense relatedeliminates certain exceptions to the ~~capitalized implementation costs~~general approach to ~~be presented~~the income tax accounting model, and adds new guidance to reduce the complexity in ~~the same line item in the statement of operations as the fees associated with the hosting element (service) of the arrangement.~~accounting for income taxes. This guidance is effective for annual periods beginning after December 15, ~~2019,~~2020, including interim periods within those annual ~~periods, with early adoption permitted.~~periods. We are currently evaluating the potential impact of this guidance and do not expect it will have a material impact on our financial position, results of operations and statement of cash flows upon adoption of this guidance, which will result in the change in presentation of capitalized implementation costs related to hosting arrangements from properties to other assets on the consolidated balance sheet, as well as the expense related to such costs no longer being classified as depreciation expense and cash flows related to those costs no longer being presented as investing activities.statements.

Other than the items noted above, there have been no new accounting pronouncements not yet effective or adopted in the current year that we believe have a significant impact, or potential significant impact, to our unaudited condensed consolidated interim financial statements.

3. Segment Reporting

Our reporting segments are based on the key geographic regions in which we operate, and previously included the U.S. segment, Canada segment, Europe segment and International segment. As part of our revitalization plan announced in the fourth quarter of 2019, we made the determination to establish Chicago, Illinois as our North American operational headquarters, close our existing office in Denver, Colorado and consolidate certain administrative functions into our other existing office locations. In connection with these consolidation activities, effective January 1, 2020, we changed our management structure from a corporate center and 4 segments to 2 segments - North America and Europe. The North America segment consolidates the United States, Canada and corporate center, with a centralized North American leadership team, integrated North American supply chain network and centralized marketing and support functions, enabling us to move more quickly with an integrated portfolio strategy. The Europe segment allows for standalone operations, developed and supported by a European-based team, including local leadership, commercial, supply chain and support functions. The previous International segment was reconstituted to more effectively grow our global brands with the Africa and Asia Pacific businesses reporting into the Europe segment and the remaining International business reporting into the North America segment. As a result of these structural changes, the review of discrete financial information by our chief operating decision maker, our President and Chief Executive Officer, is now performed only at the consolidated North America and Europe geographic segment level, which ~~are~~is the basis on which our chief operating decision maker evaluates the performance of the ~~business. Our reporting segments consist of the U.S., Canada, Europe~~business and ~~International. Corporate~~allocates resources accordingly.

We also have certain activity that is ~~not a reportable segment and primarily includes interest and certain other general and administrative costs that are~~ not allocated to ~~any of the operating~~our segments, which has been reflected as ~~well~~“Unallocated” below. Specifically, "Unallocated" activity primarily includes financing related costs such as ~~the results of our water resources~~interest expense and ~~energy operations in Colorado~~income, foreign

exchange gains and losses on intercompany balances related to financing and other treasury-related activities, and the unrealized changes in fair value on our commodity swaps not designated in hedging relationships recorded within cost of goods sold, which are later reclassified when realized to the segment in which the underlying exposure resides. Additionally, only the service cost component of net periodic pension and OPEB cost is reported within each operating segment, and all other components ~~are reported within the Corporate segment.~~remain unallocated.

~~On October 28, 2019, as part of our revitalization plan, we made the determination~~Historical results have been recast to ~~establish Chicago, Illinois as our North American operational headquarters, close our existing office~~retrospectively reflect these changes in Denver, Colorado and consolidate certain administrative functions into our other existing office locations. In connection with these consolidation activities, effective January 1, 2020, we will change our management structure to two business units, our North America and Europe businesses. Accordingly, the segment ~~financial reporting implications, if any, will not be reflected until the first quarter of 2020.~~reporting.

Summarized Financial Information

No single customer accounted for more than 10% of our consolidated sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 or ~~September~~June 30, ~~2018.~~2019. Consolidated net sales represent sales to third-party external customers less excise taxes. Inter-segment transactions impacting net sales revenues and income (loss) before income taxes eliminate upon consolidation and are primarily related to ~~U.S.~~North America segment sales to the ~~other segments.~~Europe segment.

The following tables present net sales and income (loss) before income taxes by segment:

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
(In millions)
U.S. $ 1,890.5
$ 1,935.8
$ 5,561.4
$ 5,656.1
Canada 366.3
388.9
1,000.3
1,070.1
Europe 558.0
577.9
1,459.4
1,538.3
International 56.5
67.0
163.3
192.4
Corporate 0.1
0.2
0.6
0.7
Inter-segment net sales eliminations (29.8 ) (35.6 ) (91.8 ) (106.7 )
Consolidated net sales $ 2,841.6
$ 2,934.2
$ 8,093.2
$ 8,350.9


	Three Months Ended						Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(In millions)
North America	$	2,200.2	$	2,400.6	$	3,989.9	$	4,333.2
Europe	307.1		554.1		624.7		929.8
Inter-segment net sales eliminations	(3.9)		(6.4)		(8.4)		(11.4)
Consolidated net sales	$	2,503.4	$	2,948.3	$	4,606.2	$	5,251.6


	Three Months Ended						Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(In millions)
North America⁽¹⁾⁽²⁾	$	411.5	$	448.5	$	487.7	$	694.4
Europe⁽³⁾	(11.0)		43.4		(87.8)		5.0
Unallocated⁽⁴⁾	1.2		(91.3)		(156.9)		(117.5)
Consolidated income (loss) before income taxes	$	401.7	$	400.6	$	243.0	$	581.9

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
(In millions)
U.S. $ 348.3
$ 374.2
$ 1,018.7
$ 1,081.4
Canada⁽¹⁾
(615.5 ) 77.5
(513.3 ) 147.9
Europe⁽²⁾
77.5
96.0
105.8
152.9
International⁽³⁾
(7.7 ) (1.0 ) (5.5 ) 4.0
Corporate⁽⁴⁾
(111.2 ) (136.6 ) (332.4 ) (95.7 )
Consolidated income (loss) before income taxes $ (308.6 ) $ 410.1
$ 273.3
$ 1,290.5
(1) The decrease during the three and six months ended June 30, 2020 was driven primarily by the impacts of the coronavirus pandemic including gross profit decline due to the closure of the on-premise channel, the estimated keg sales returns and finished good obsolescence reserves recognized primarily during the first quarter of 2020 and increased special charges.

(2) During the three months ended June 30, 2019, we completed the sale of our Montreal brewery for $96.2 million (CAD 126.0 million), resulting in a $61.3 million gain. Also, during the first quarter of 2019, we received payment and recorded a gain of $1.5 million resulting from a purchase price adjustment related to the historical sale of Molson Inc.’s ownership interest in the Montreal Canadiens, which is considered an affiliate of MCBC.

~~(1)~~

~~During the three months ended September 30, 2019, we recorded a goodwill impairment loss to our Canada reporting unit of $668.3 million, which was recorded as a special item. See~~ ~~Note 7, "Goodwill and Intangible Assets"~~ for further discussion. During the three months ended June 30, 2019, we completed the sale of our existing Montreal brewery for $96.2 million (CAD 126.0 million), resulting in a $61.3 million gain, which was recorded as a special item. Also, during the three and nine months ended September 30, 2019, we recorded unrealized mark-to-market losses of approximately $11 million and approximately $4 million, respectively, on the HEXO Corp. ("HEXO") warrants received in connection with the formation of the Truss LP ("Truss") joint venture. Additionally, during the first quarter of 2019, we received payment and recorded a gain of $1.5 million resulting from a purchase price adjustment related to the historical sale of Molson Inc.’s ownership interest in the Montreal Canadiens, which is considered an affiliate of MCBC.

(3) The decrease during the three and six months ended June 30, 2020 was driven primarily by the impacts of the coronavirus pandemic including lower volume and unfavorable channel and geographic mix due to the closure of the on-premise channel, particularly in the higher margin U.K. business, which has a more significant exposure to the on-premise channel, as well as the estimated keg sales returns and finished goods obsolescence reserves recognized primarily in the first quarter of 2020.

(4) Includes unrealized mark-to-market changes on our commodity hedge positions. We recorded an unrealized gain of $59.4 million and an unrealized loss of $39.7 million during the three and six months ended June 30, 2020, respectively, compared to an unrealized loss of $31.2 million and an unrealized gain of $2.9 million during the three and six months ended June 30, 2019, respectively.


~~(2)~~	During the third quarter of 2019, we recorded special charges of $12.4 million resulting from the deconsolidation of the Grolsch joint venture, which were comprised primarily of impairment losses of the associated definite-lived intangible assets. See ~~Note 4, "Investments"~~ ~~and~~ ~~Note 7, "Goodwill and Intangible Assets"~~ ~~for further information.~~


~~(3)~~	During the three months ended September 30, 2019, we recorded an aggregate goodwill and definite-lived intangible asset impairment loss related to our India reporting unit of $12.2 million, which was recorded as a special item. See ~~Note 7, "Goodwill and Intangible Assets"~~ ~~for further discussion.~~

~~(4)~~

~~During the three months ended March 31, 2018, we recorded a gain of $328.0 million related to the Adjustment Amount as defined and further discussed in~~ ~~Note 5, "Special Items."~~ Additionally, related to the unrealized mark-to-market valuation on our commodity hedge positions, we recorded unrealized losses of $14.9 million and $12.0 million during the three and nine months ended September 30, 2019, respectively, and unrealized losses of $23.2 million and $62.8 million during the three and nine months ended September 30, 2018, respectively.

Income (loss) before income taxes includes the impact of special items. Refer to Note 5, "Special Items" for further discussion.

The following table presents total assets by segment:


	As of
	June 30, 2020		December 31, 2019
	(In millions)
North America	$	23,316.8	$	23,360.2
Europe	5,322.0		5,499.6
Consolidated total assets	$	28,638.8	$	28,859.8

As of
September 30, 2019 December 31, 2018
(In millions)
U.S. $ 18,903.1
$ 19,057.1
Canada 4,119.1

4,640.5
Europe 5,268.5

5,430.0
International 261.9

274.1
Corporate 199.0

708.1
Consolidated total assets $ 28,751.6

$ 30,109.8

Our investments include both equity method and consolidated investments. Those entities identified as VIEs have been evaluated to determine whether we are the primary beneficiary. The VIEs included under "Consolidated VIEs" below are those for which we have concluded that we are the primary beneficiary and accordingly, we have consolidated these entities. None of our consolidated VIEs held debt as of ~~September~~June 30, ~~2019~~2020 or December 31, ~~2018.~~2019. We have not provided any financial support to any of our VIEs during the year that we were not previously contractually obligated to provide. Amounts due to and due from our equity method investments are recorded as affiliate accounts payable and affiliate accounts receivable.

Authoritative guidance related to the consolidation of VIEs requires that we continually reassess whether we are the primary beneficiary of VIEs 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. Our consolidated VIEs are Cobra Beer Partnership, Ltd. ("Cobra U.K."), Rocky Mountain Metal Container ("RMMC"), Rocky Mountain Bottle Company ("RMBC") and ~~Truss.~~Truss LP ("Truss"), as well as other immaterial entities. Our unconsolidated VIEs are Brewers Retail Inc. ("BRI") and Brewers' Distributor Ltd. ("BDL")., as well as other immaterial investments.

Both BRI and BDL have outstanding third party debt which is guaranteed by their respective shareholders. As a result, we have a guarantee liability of ~~$59.7~~$57.3 million and ~~$35.9~~$37.7 million recorded as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, which is presented within accounts payable and other current liabilities on the unaudited condensed consolidated balance sheets and represents our proportionate share of the outstanding balance of these debt instruments. The carrying value of the guarantee liability equals fair value, which considers an adjustment for our own non-performance risk and is considered a Level 2 measurement. The offset to the guarantee liability was recorded as an adjustment to our respective equity method investment within the unaudited condensed consolidated balance sheets. The resulting change in our equity method investments during the year due to movements in the guarantee represents a non-cash investing activity.

The following summarizes the assets and liabilities of our consolidated VIEs (including noncontrolling interests):


	As of
	June 30, 2020						December 31, 2019
	Total Assets		Total Liabilities		Total Assets		Total Liabilities
	(In millions)
RMMC/RMBC	$	201.5	$	17.7	$	207.4	$	17.9
Other	$	87.1	$	15.4	$	65.3	$	20.8

As of
September 30, 2019 December 31, 2018
Total Assets Total Liabilities Total Assets Total Liabilities
(In millions)
RMMC/RMBC $ 201.4
$ 14.4
$ 189.8
$ 35.0
Other $ 34.0
$ 7.8
$ 31.0
$ 5.1

~~Grolsch Deconsolidation~~

~~In September 2019, we received termination notices of our Grolsch U.K. Ltd. ("Grolsch") joint venture arrangement, as well as the related brewing and distribution agreements for the~~ ~~Grolsch~~ brands in the U.K. and Ireland. While we are in the process of assessing the validity of the termination notices and the Company's legal options in response thereto, the Grolsch joint venture is no longer operating as of September 30, 2019 and our production, marketing and sale of the ~~Grolsch~~ brands in these markets has ceased. We have reassessed our status as the primary beneficiary of the joint venture and concluded that we are no longer able to exert control over the operations or direction of the joint venture or otherwise influence the activities that most significantly impact the economics of the entity. Therefore, we have deconsolidated the joint venture and recorded an immaterial loss on deconsolidation as a special item during the third quarter of 2019. Our determination of the fair value of our retained noncontrolling investment in the joint venture, which represents a Level 3 measurement, was derived based on the fair

~~value of the net assets of the joint venture, consisting primarily of cash. Additionally, as all operations have ceased, including our distribution of the~~ ~~Grolsch~~ brands in these markets, we have recorded impairment losses related to the respective distribution agreement and brand definite-lived intangible assets. Aggregate charges recorded as special items related to the above activity totaled $12.4 million in the third quarter of 2019, and relate primarily to the above mentioned definite-lived intangible asset impairment losses.

5. Special Items

We have incurred charges or realized benefits that either we do not believe to be indicative of our core operations, or we believe are significant to our current operating results warranting separate classification. As such, we have separately classified these charges (benefits) as special items.


	Three Months Ended						Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(In millions)
Employee-related charges
Restructuring	$	20.8	$	2.6	$	52.9	$	6.3
Impairments or asset abandonment charges
North America - Asset abandonment⁽¹⁾	35.7		8.5		89.9		16.9
North America - Impairment losses	7.6		—		7.6		—
Europe - Asset abandonment	0.2		—		0.5		0.6

Termination fees and other (gains) losses
North America⁽²⁾	—		(61.0)		—		(60.8)
Europe	—		—		—		0.1
Total Special items, net	$	64.3	$	(49.9)	$	150.9	$	(36.9)

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
(In millions)
Employee-related charges
Restructuring $ 4.4
$ 28.7
$ 10.7
$ 33.6
Impairments or asset abandonment charges
U.S. - Asset abandonment (0.1 ) 1.4
1.1
4.2
Canada - Goodwill impairment⁽¹⁾
668.3
—
668.3
—
Canada - Asset abandonment⁽²⁾
3.9
5.9
19.6
18.0
Europe - Asset abandonment 0.3
0.5
0.9
3.2
International - Goodwill and intangible asset impairment⁽¹⁾
12.2
—
12.2
—
Corporate 1.3
—
1.3
—
Termination fees and other (gains) losses
Canada - Gain on sale of brewery⁽³⁾
—
—
(61.3 ) —
Europe - Deconsolidation of VIE and other⁽⁴⁾
12.9
—
12.9
—
International 0.1
0.1
0.7
1.3
Purchase price adjustment settlement gain⁽⁵⁾
—
—
—
(328.0 )
Total Special items, net $ 703.3
$ 36.6
$ 666.4
$ (267.7 )
(1) Following management approval in December 2019, in January 2020, we announced plans to cease production at our Irwindale, California brewery and entered into an option agreement with Pabst Brewing Company, LLC ("Pabst"), granting Pabst an option to purchase our Irwindale, California brewery, including plant equipment and machinery and the underlying land for $150 million, subject to adjustment as further specified in the option agreement. Pursuant to the option agreement, on May 4, 2020, Pabst exercised its option to purchase the Irwindale brewery, and such purchase is expected to be completed in the fourth quarter of 2020, subject to the satisfaction of certain customary closing conditions.

Charges associated with the planned brewery closure for the three and six months ended June 30, 2020 totaled $40.3 million and $98.3 million, respectively, and consist primarily of accelerated depreciation in excess of normal depreciation of $33.5 million and $83.0 million, respectively. Charges also include employee related costs of $7.5 million and $14.8 million, recognized during the three and six months ended June 30, 2020, respectively, which are included within the restructuring line above. We will continue to incur special charges during each reporting period through the expected sale of the brewery in the fourth quarter of 2020. Remaining net special charges associated with the planned closure are expected to be approximately $10 million to $15 million, consisting primarily of accelerated depreciation charges. However, this estimated range contains significant uncertainty, and actual results could differ materially from these estimates due to uncertainty regarding the ultimate net cost associated with the disposition of assets and restructuring charges.


~~(1)~~	During the third quarter of 2019, we recorded goodwill impairment losses within our Canada and India reporting units of $668.3 million and $6.1 million, respectively. We also recorded impairment losses related to definite-lived intangible assets in India of $6.1 million. See ~~Note 7, "Goodwill and Intangible Assets"~~ ~~for further discussion.~~

~~(2)~~

~~Charges for the three and nine months ended September 30, 2019 and September 30, 2018~~

Separately, during the three and six months ended June 30, 2020 and June 30, 2019 we incurred asset abandonment charges, consisting primarily ~~consist~~ of accelerated depreciation in excess of normal depreciation related to the closure of the Vancouver brewery, which occurred in the third quarter of 2019, and the planned closure of the Montreal brewery, which is currently expected to occur in 2021. We currently expect to incur additional charges, including estimated accelerated depreciation charges in excess of normal depreciation of approximately CAD 32 million, through final closure of the Montreal brewery. However, due to the uncertainty inherent in our estimates, these estimated future accelerated depreciation charges as well as the timing of the brewery closure are subject to change.


~~(3)~~	~~During the second quarter of 2019, we completed the sale of the existing Montreal brewery property for $96.2 million (CAD 126.0 million) and recognized a gain of $61.3 million. See~~ ~~Note 1, "Basis of Presentation and Summary of Significant Accounting Policies"~~ ~~for further discussion.~~


~~(4)~~	During the third quarter of 2019, we recorded special charges of $12.4 million resulting from the deconsolidation of the Grolsch joint venture, which were comprised primarily of impairment losses of the associated definite-lived intangible assets. See ~~Note 4, "Investments"~~ ~~and~~ ~~Note 7, "Goodwill and Intangible Assets"~~ ~~for further information.~~


~~(5)~~	During the first quarter of 2018, we received $330.0 million from ABI, of which $328.0 million constituted a purchase price adjustment (the "Adjustment Amount"), related to the Miller International Business which was acquired in our acquisition of the remaining portion of MillerCoors which occurred on October 11, 2016. As this settlement occurred

~~following the finalization of purchase accounting, we recorded the settlement proceeds~~ related to the ~~Adjustment Amount~~closure of the Vancouver brewery, which occurred in the third quarter of 2019, and the planned closure of the Montreal brewery, which is currently expected to occur in 2021. We currently expect to incur additional charges, including estimated accelerated depreciation charges in excess of normal depreciation of approximately CAD 21 million, through final closure of the Montreal brewery. However, due to the uncertainty inherent in our estimates, these estimated future accelerated depreciation charges as well as the timing of the brewery closure are subject to change.

(2) During the second quarter of 2019, we completed the sale of the existing Montreal brewery property for $96.2 million (CAD 126.0 million) and recognized a gain ~~within special items, net in our unaudited condensed consolidated statement~~ of ~~operations in our Corporate segment and within cash provided by operating activities in our unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2018.~~$61.3 million.

Restructuring Activities

On October 28, 2019, as part of our revitalization plan, we made the determination to establish Chicago, Illinois as our North American operational headquarters, close our existing office in Denver, Colorado and consolidate certain administrative functions into our other existing office locations. In connection with these consolidation activities, certain impacted employees ~~will be~~have been extended an opportunity to continue their employment with ~~the company~~MCBC in the new organization and locations and, for those not continuing with ~~the company,~~MCBC, certain of such employees ~~will be~~have been asked to provide transition assistance and offered severance and retention packages in connection with their termination of ~~service~~service. We expect the costs associated with the ~~company. As a result, we expect to reduce employment levels by approximately 400 to 500 employees as part of this~~ restructuring ~~primarily in our existing United States, Canada and International reporting segments, as well as Corporate. The consolidation activities are expected~~ to be substantially ~~completed~~recognized by the end of fiscal year 2021. After taking into account all changes in each of the

business units, including Europe, the revitalization plan is expected to reduce employment levels, in aggregate, by approximately 600 employees globally.

In connection with these consolidation activities and related organizational and personnel changes, we currently expect to incur certain cash and non-cash restructuring charges related to ~~employee relocation,~~ severance, retention and transition costs, employee relocation, non-cash asset related costs, lease exit costs in connection with our office ~~leases~~lease in Denver, Colorado, and other transition activities currently estimated in the range of approximately ~~$120~~$90 million to ~~$180~~$120 million in the aggregate, the majority of which will be cash charges that we began recognizing in the fourth quarter of 2019, and will be ~~spread~~further recognized through the balance of ~~this fiscal year and~~ fiscal years 2020 and 2021. ~~Costs~~During the three and six months ended June 30, 2020, we recognized severance and retention charges of $8.4 million and $31.1 million, respectively, and our remaining accrued restructuring balance related to ~~these~~the revitalization plan as of June 30, 2020 was approximately $33 million. Actual severance and retention costs related to this restructuring, which are primarily being recognized ratably over the employees' required future service period, may differ from original estimates based on actual employee turnover levels prior to achieving severance and retention eligibility requirements. Employee relocation charges are recognized in the period incurred and totaled $4.4 million and $6.4 million for the three and six months ended June 30, 2020, respectively. Additionally, during the second quarter of 2020, we recognized an aggregate impairment loss of $7.6 million related to the closure of the office facility in Denver, Colorado, including our lease right-of use asset, in light of the sublease market outlook as a result of the coronavirus pandemic. Should our ability to obtain future subtenant occupancy for the office location significantly differ from the estimates and assumptions used to determine its fair value, which represent Level 3 measurements, additional impairment losses may be recognized in the future.

Other than those noted above, there were no material changes to our restructuring activities ~~are expected to be recorded~~since December 31, 2019, as ~~special items within~~reported in Part II - Item 8. Financial Statements and Supplementary Data, Note 7, "Special Items" in our ~~unaudited condensed consolidated statements of operations beginning in the fourth quarter of 2019. As we~~Annual Report. We continually evaluate our cost structure and seek opportunities for further efficiencies and cost savings as part of ~~these initiatives,~~ongoing and new initiatives. As such, we may incur additional restructuring related charges or adjustments to previously recorded charges in the ~~future;~~future, however, we are unable to estimate the amount of charges at this time.

During the third quarter of 2018, we initiated restructuring activities in the U.S. in order to align our cost base with our scale of business. As a result, we reduced U.S. employment levels by approximately 300 employees in the fourth quarter of 2018. Severance costs related to these restructuring activities were recorded as special items within our unaudited condensed consolidated statements of operations in the third quarter of 2018.

The accrued restructuring balances as of ~~September~~June 30, ~~2019 below, which do not include the impacts of the above-mentioned revitalization plan,~~2020 represent expected future cash payments required to satisfy ~~the~~our remaining ~~severance~~ obligations to terminated employees, the majority of which we expect to be paid in the next 12 months.


	North America		Europe		Total
	(In millions)
As of December 31, 2019	$	42.6	$	4.5	$	47.1
Charges incurred	47.8		8.0		55.8
Payments made	(39.5)		(9.2)		(48.7)
Changes in estimates	(2.1)		(0.8)		(2.9)
Foreign currency and other adjustments	(0.5)		(0.1)		(0.6)
As of June 30, 2020	$	48.3	$	2.4	$	50.7


	U.S.			Canada			Europe			International			Corporate			Total				North America		Europe		Total
	(In millions)																			(In millions)
As of December 31, 2018	$	21.6		$	1.5		$	0.6		$	0.6		$	1.3		$	25.6		As of December 31, 2018	$	24.5	$	1.1	$	25.6
Charges incurred and changes in estimates	5.7			(0.2		)	4.8			0.2			0.2			10.7			Charges incurred and changes in estimates	1.9		4.4		6.3
Payments made	(21.2		)	(0.4		)	(2.9		)	(0.8		)	(1.0		)	(26.3		)	Payments made	(18.7)		(3.0)		(21.7)
Foreign currency and other adjustments	—			0.1			(0.1		)	—			—			—			Foreign currency and other adjustments	0.1		—		0.1
As of September 30, 2019	$	6.1		$	1.0		$	2.4		$	—		$	0.5		$	10.0
As of June 30, 2019																			As of June 30, 2019	$	7.8	$	2.5	$	10.3

U.S. Canada Europe International Corporate Total
(In millions)
As of December 31, 2017 $ 0.6
$ 4.3
$ 1.8
$ 0.2
$ —
$ 6.9
Charges incurred and changes in estimates 30.3
(0.8 ) 2.2
1.9
—
33.6
Payments made (1.2 ) (1.8 ) (2.6 ) (0.8 ) —
(6.4 )
Foreign currency and other adjustments —
(0.1 ) (0.1 ) —
—
(0.2 )
As of September 30, 2018 $ 29.7

$ 1.6
$ 1.3
$ 1.3
$ —
$ 33.9

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Effective tax rate (29 )% 16 % 71 % 18 %


	Three Months Ended						Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Effective tax rate	51	%	18	%	66	%	18	%

The ~~negative~~increase in the effective tax rate for the three and six months ended June 30, 2020 was primarily driven by approximately $135 million of discrete tax expense recognized in the second quarter of 2020 related to the hybrid regulations enacted in the second quarter of 2020, as further discussed below. The increase in the effective tax rate during the ~~third quarter of 2019 and increase in effective tax rate~~six months ended June 30, 2020 was further driven by lower pretax income during the first ~~three quarters~~half of 2020.

Department of Treasury enacted final hybrid regulations with full retroactive application to January 1, 2018, with a few exceptions. We have reviewed the final regulations and their impact on our tax positions and financial statements. The final regulations, associated with the taxability of certain interest, impact tax positions we took in 2018 and 2019 ~~versus 2018,~~and have resulted in additional income tax expense of approximately $135 million, which was ~~primarily driven by~~recognized upon enactment in the ~~$668.3 million impairment loss~~second quarter of 2020. The impact of the finalized regulations could result in cash tax outflows up to ~~nondeductible goodwill~~this amount in 2021. We continue to analyze the potential cash impacts of ~~our Canada reporting unit, as well as other discrete~~the final regulations to minimize any cash outflows.

In July 2020, the U.K. government enacted legislation to repeal the previously enacted reduction to the corporate income tax ~~items recognized during~~rate that was due to take effect April 1, 2020, which will change the previously anticipated corporate income tax rate from 17% to 19%. We anticipate the impact to estimated income tax expense in the third quarter of ~~2019.~~2020 will be immaterial.

Our tax rate is volatile and may increase or decrease with changes in, among other things, the amount and source of income or loss, our ability to utilize foreign tax credits, excess tax benefits or deficiencies from share-based compensation, changes in tax laws, and the movement of liabilities established pursuant to accounting guidance for uncertain tax positions as statutes of limitations expire, positions are effectively settled, or when additional information becomes available. There are proposed or pending tax law changes in various jurisdictions and other changes to regulatory environments in countries in which we do business that, if enacted, may have an impact on our effective tax rate.

Since 2018, the United States Internal Revenue Service has continued to issue proposed, temporary and final regulations to implement provisions of the 2017 Tax Act. We have continued to monitor these and while temporary and final regulations have not yet resulted in material adverse impacts to us, there are certain proposed regulations, which are not yet considered law, that if finalized as proposed, could result in a material adverse impact on our consolidated financial statements. Specifically, if certain of the proposed regulations are finalized as proposed with full retroactive application to December 31, 2017, then we would be required to recognize income tax expense related to the proposed retroactive period through September 30, 2019, for fiscal years 2018 and 2019.

7. Goodwill and Intangible Assets

U.S. Canada Europe International Consolidated
Changes in Goodwill: (In millions)
As of December 31, 2018 $ 5,928.5
$ 856.6
$ 1,469.4
$ 6.3
$ 8,260.8
Impairments —
(668.3 ) —
(6.1 ) (674.4 )
Foreign currency translation —
25.6
(62.6 ) (0.2 ) (37.2 )
As of September 30, 2019 $ 5,928.5

$ 213.9
$ 1,406.8
$ —
$ 7,549.2


	North America⁽¹⁾		Europe		Consolidated
Changes in Goodwill:	(In millions)
Balance as of December 31, 2019	$	6,146.6	$	1,484.8	$	7,631.4

Foreign currency translation	(9.4)		(60.2)		(69.6)
Balance as of June 30, 2020	$	6,137.2	$	1,424.6	$	7,561.8

(1) As a result of the structural changes resulting from the revitalization plan, we re-evaluated our reporting units and have combined our historical U.S. and Canada reporting units into a single North America reporting unit. There were no related changes to our Europe reporting unit. See further discussion below.

The gross amount of goodwill totaled approximately $8.2 billion and $8.3 billion as of June 30, 2020 and December 31, 2019, respectively. Accumulated impairment losses as of June 30, 2020 and December 31, 2019 totaled $651.9 million and $681.3 million, respectively, all of which was related to our ~~reporting units with remaining goodwill balances as of September 30, 2019 totals $668.3 million.~~North America segment.

The following table presents details of our intangible assets, other than goodwill, as of ~~September~~June 30, ~~2019:~~2020:


	Useful life	Gross		Accumulated amortization		Net
	(Years)	(In millions)
Intangible assets subject to amortization:
Brands	10 - 50	$	4,928.7	$	(945.8)	$	3,982.9
License agreements and distribution rights	15 - 20	199.2		(90.7)		108.5
Other	3 - 40	124.0		(46.2)		77.8
Intangible assets not subject to amortization:
Brands	Indefinite	8,132.0		—		8,132.0
Distribution networks	Indefinite	745.2		—		745.2
Other	Indefinite	337.6		—		337.6
Total		$	14,466.7	$	(1,082.7)	$	13,384.0

Useful life Gross
Accumulated
amortization
Net
(Years) (In millions)
Intangible assets subject to amortization:
Brands 10 - 50 $ 4,958.1
$ (801.7 ) $ 4,156.4
License agreements and distribution rights 15 - 20 198.2
(86.9 ) 111.3
Other 3 - 40 124.3
(36.1 ) 88.2
Intangible assets not subject to amortization:
Brands Indefinite 8,129.7
—
8,129.7
Distribution networks Indefinite 764.0
—
764.0
Other Indefinite 337.6
—
337.6
Total $ 14,511.9
$ (924.7 ) $ 13,587.2

The following table presents details of our intangible assets, other than goodwill, as of December 31, ~~2018:~~2019:

Useful life Gross
Accumulated
amortization
Net
(Years) (In millions)
Intangible assets subject to amortization:
Brands 10 - 50 $ 4,988.0
$ (682.4 ) $ 4,305.6
License agreements and distribution rights 15 - 28 220.2
(95.7 ) 124.5
Other 2 - 40 129.2
(32.2 ) 97.0
Intangible assets not subject to amortization:
Brands Indefinite 8,169.9
—
8,169.9
Distribution networks Indefinite 741.8
—
741.8
Other Indefinite 337.6
—
337.6
Total $ 14,586.7
$ (810.3 ) $ 13,776.4


	Useful life	Gross		Accumulated amortization		Net
	(Years)	(In millions)
Intangible assets subject to amortization:
Brands	10 - 50	$	5,036.3	$	(865.1)	$	4,171.2
License agreements and distribution rights	15 - 20	202.0		(90.6)		111.4
Other	3 - 40	124.0		(39.4)		84.6
Intangible assets not subject to amortization:
Brands	Indefinite	8,172.4		—		8,172.4
Distribution networks	Indefinite	778.8		—		778.8
Other	Indefinite	337.6		—		337.6
Total		$	14,651.1	$	(995.1)	$	13,656.0

The changes in the gross carrying amounts of ~~intangibles~~intangible assets from December 31, ~~2018~~2019 to ~~September~~June 30, ~~2019~~2020 are primarily driven ~~in part,~~ by ~~the impairment losses recognized during the quarter related to the~~ ~~Grolsch~~ ~~brand and distribution agreement definite-lived intangible assets discussed in~~ ~~Note 4, "Investments"~~ ~~and the brand intangible asset related to our India business discussed below, along with~~ the impact of foreign exchange rates, as a significant amount of ~~intangibles~~intangible assets are denominated in foreign currencies.

Based on foreign exchange rates as of ~~September~~June 30, ~~2019,~~2020, the estimated future amortization expense of intangible assets is as follows:

Fiscal year Amount
(In millions)
2019 - remaining $ 55.0
2020 $ 218.9
2021 $ 212.6
2022 $ 207.9
2023 $ 206.7


Fiscal year	Amount
	(In millions)
2020 - remaining	$	108.3
2021	$	213.2
2022	$	207.8
2023	$	206.7
2024	$	206.6

Amortization expense of intangible assets was ~~$55.4~~$54.6 million and ~~$55.8~~$55.2 million for the three months ended ~~September~~June 30, 2020 and June 30, 2019, ~~and September 30, 2018,~~ respectively, and ~~$166.0~~$109.5 million and ~~$168.6~~$110.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, respectively. This expense is primarily presented within marketing, general and administrative expenses on the unaudited condensed consolidated statements of operations.

Reporting Unit Changes and Interim Impairment ~~Assessment~~Testing

~~We identified a triggering event requiring an interim impairment assessment~~As of the ~~goodwill~~date of completion of our 2019 impairment testing discussed above, the operations in each of the specific regions within our historical U.S., Canada, Europe and International segments were considered components based on the availability of discrete financial information and the regular review by segment management. We had further concluded that the components within the U.S., Canada and Europe segments each met the criteria of having similar economic characteristics and therefore we previously aggregated these components into the U.S., Canada and Europe reporting units, respectively. Additionally, we previously determined that the components within our International segment did not meet the criteria for aggregation, and therefore, the operations of our India business constituted a separate reporting unit at the ~~end of~~component level, however, the associated goodwill balance was fully impaired in the third quarter of ~~2019, which resulted~~2019.

As discussed in Note 3, "Segment Reporting," effective January 1, 2020, we changed our management structure from a ~~goodwill impairment loss~~corporate center and 4 segments to 2 segments - North America and Europe. These structural changes included leadership re-alignment with a centralized North America leadership team, an integrated North American supply chain network, and centralized marketing and innovations functions including movement to a single brand manager and North America marketing strategy for our major brands. Additionally, as part of ~~$668.3 million. The goodwill impairment trigger was~~our leadership re-alignment, we moved from two separate U.S. and Canada segment managers, to a single North America segment manager, our President and Chief Executive Officer, who reviews discrete financial information only at the result of continued challenges and steepening declines within the Canadian beer industry reflected in the prolonged weakened performance of the Canada reporting unit through the third quarter of 2019. These performance headwinds have been countered, in part, by the benefit of the recent interest rate environment, which resulted in a decrease in the risk-free rate included in our current year discount rate calculations. Specifically, the discount rate used in developing our interim fair value estimate for the Canada reporting unit was 8.50%, as compared to 9.25% used as of the October 1, 2018 annual testing date. However, the performance declines and increased challenges within the beer industry in Canada, coupled with significant increases in cost inflation, volume deleverage, and resulting margin erosion, has had a material adverse impact on the expected future cash flows utilized in the valuation approaches for the Canada reporting unit, such that it was determined that the fair value of the reporting unit was more likely than not reduced below its carrying amount during the quarter.consolidated North America segment level. As a result of ~~this triggering event,~~these changes, we ~~performed an interim quantitative analysis, using a combination of discounted cash flow analyses~~re-evaluated our historical reporting unit conclusions and ~~market-based approaches, consistent with~~have consolidated our ~~annual impairment testing, in which it was determined that the carrying value of the~~previously separate U.S. and Canada reporting ~~unit exceeded its fair value by $668.3 million.~~

~~We also evaluated the indefinite-lived and definite-lived intangible assets within our Canada~~units into a single North America reporting unit ~~prior~~effective January 1, 2020. There were no changes to ~~recording the goodwill impairment, and concluded that no impairments were required; however, the~~ ~~Coors Light~~ ~~distribution agreement indefinite-lived intangible asset is~~our existing Europe reporting unit, which was considered to be at risk of future ~~impairment.~~impairment following the completion of our October 1, 2019 annual impairment testing.

~~Separately, during the third quarter of 2019 we also identified~~We completed an interim ~~triggering event related~~impairment assessment for our U.S. and Canada reporting units as of January 1, 2020 immediately prior to ~~goodwill within our India~~the reporting unit ~~resulting from significant declines in performance~~change, as well as an impairment assessment of the combined North America reporting unit immediately after the change, and determined that no impairments existed. Additionally, as the changes resulted in the ~~current year, coupled with the continuation~~combination of ~~challenging business conditions, which required us to perform an interim quantitative impairment analysis at the end~~our historical U.S. and Canada reporting units into a single North America reporting unit, no further reallocation of ~~the third quarter of 2019. As~~goodwill was required.

Additionally, as a result of ~~this~~the structural changes discussed above, including the centralization of the brand management and strategy for our Coors brands across North America, we have aggregated our Coors brand indefinite-lived intangible asset in the U.S. and Coors Light distribution agreement indefinite-lived intangible asset in Canada into a single unit of accounting for the purpose of testing for impairment, effective January 1, 2020. We completed an interim ~~analysis, we~~impairment assessment for each individual indefinite-lived intangible asset immediately prior to aggregation, and determined that no impairments existed.

We have further evaluated whether the ~~carrying value~~effects of the ~~India reporting unit exceeded its fair value, resulting in an aggregate impairment loss of $12.2 million~~coronavirus pandemic, and related impacts to the ~~goodwill of our India reporting unit and a definite-lived brand intangible asset.~~

~~Annual Goodwill and Indefinite-Lived Intangible Impairment Testing~~

~~We previously completed our~~interest rate environment as well as market multiples, required ~~annual goodwill and indefinite-lived intangible~~an additional interim impairment ~~testing~~assessment as of ~~October 1, 2018,~~June 30, 2020. While factors are present that indicate that triggering events may exist, such as the ~~first day~~decline in our market capitalization since the pandemic began in March 2020 combined with recent weakened financial performance, current circumstances do not indicate that it is more likely than not that the fair values of ~~our fourth quarter and concluded there were no impairments of goodwill within~~ our reporting units or indefinite-lived intangible assets have fallen below their carrying values. Therefore, an interim impairment assessment was not performed as of June 30, 2020. However, we believe that the effects of the coronavirus pandemic may, depending on severity and duration, place our North America and Europe reporting units and certain of our indefinite-lived intangible assets. The fair value of the U.S., Europe and Canada reporting units were estimated at approximately 19%, 11% and 6% in excess of carrying value, respectively, as of the October 1, 2018 testing date. As a result, our Europe and Canada reporting units were consideredassets at risk of future impairment. We will continue to monitor the length and severity of the impacts of the pandemic to our business, and if the duration is prolonged and the severity of its impacts continues or worsens, this may indicate the need to perform future interim impairment ~~following the 2018 assessment. Ultimately, the risk associated with the Canada business culminated~~analyses that could result in a triggering event related to goodwill within our Canada reporting unit in the third quarter of 2019, as discussed above. Our Europe reporting unit, which remains at risk of impairment, did not have a triggering event identified during the third quarter and, along with our U.S. reporting unit and other indefinite-lived intangible assets, will be tested for impairment as of October 1, 2019, the first day of our fourth quarter.material impairments.

Key Assumptions

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. The key assumptions used to derive the estimated fair values of our reporting units and indefinite-lived ~~intangibles~~intangible assets are discussed ~~above as well as~~ in Part II—Item 8 Financial Statements, Note 10, "Goodwill and Intangible Assets" in our Annual Report, and represent ~~level~~Level 3 measurements.

Based on known facts and circumstances, we evaluate and consider recent events and uncertain items, as well as related potential implications, as part of our annual and interim assessments and incorporate into the analyses as appropriate. These facts and circumstances are subject to change and may impact future analyses. For example, we continue to monitor the challenges within the beer industry for further weakening or additional systemic structural ~~declines.~~ declines, as well as for adverse changes in macroeconomic conditions such as the coronavirus pandemic that could significantly impact our immediate and long-range results. Specifically, subsequent to the January 1, 2020 interim impairment assessments, the World Health Organization characterized the outbreak of the coronavirus disease as a global pandemic as further discussed in Note 1, “Basis of Presentation and Summary of Significant Accounting Policies.” Our business has been, and could continue to be, materially and adversely impacted by the coronavirus pandemic. The related weakening of economic conditions during a prolonged pandemic could lead to a material impairment as the duration and severity of the pandemic and resulting impacts to our financial projections are further understood. Additionally, we are monitoring the impacts the coronavirus pandemic has on the market inputs used in calculating our discount rates, including risk-free rates, equity premiums and our cost of debt, which could result in a meaningful change to our weighted-average cost of capital calculation, as well as the market multiples used in our impairment assessment. Furthermore, increased volatility in the equity and debt markets or other country specific factors, including, but not limited to, extended or future government intervention in response to the pandemic, could also result in a meaningful change to our weighted-average cost of capital calculation and other inputs used in our impairment assessment.

Separately, the Ontario government adopted a bill that, if enacted, could adversely impact the existing terms of the beer distribution and retail systems in the province, as further described in Note 12, "Commitments and Contingencies."

This alone or in combination with the potential realization of further weakened performance within the Canada reporting unit, beyond that considered in our assessments, could have a material adverse impact on the underlying cash flow assumptions used in developing our Canada reporting unit fair value estimates for the purpose of goodwill and indefinite-lived intangible asset impairment testing, which could result in a further goodwill impairment, or an impairment of our ~~Coors Light~~ ~~distribution agreement indefinite-lived intangible asset in Canada.~~

While historical performance and current expectations have resulted in fair values of our ~~U.S. and Europe~~ reporting units and ~~our~~ indefinite-lived intangible assets equal to or in excess of carrying values, if our assumptions are not realized, it is possible that an impairment loss may need to be recorded in the future.

Definite-Lived ~~Intangibles~~Intangible Assets

Regarding definite-lived ~~intangibles,~~intangible assets, we continuously monitor the performance of the underlying assets for potential triggering events suggesting an impairment review should be performed. ~~With the exception of the impairment losses related to the~~ ~~Grolsch~~ ~~brand and distribution agreement definite-lived intangible assets discussed in~~ ~~Note 4, "Investments"~~ ~~and the brand intangible asset related to our India business discussed above, no~~No such triggering events were identified in the first ~~three quarters~~half of ~~2019~~2020 that resulted in an ~~impairment.~~impairment loss.

8. Debt

Debt obligations


	As of
	June 30, 2020		December 31, 2019
	(In millions)
Long-term debt:
CAD 500 million 2.75% notes due September 2020	$	368.3	$	384.9
CAD 500 million 2.84% notes due July 2023	368.3		384.9
CAD 500 million 3.44% notes due July 2026	368.3		384.9
$500 million 2.25% notes due March 2020⁽¹⁾⁽²⁾	—		499.8
$1.0 billion 2.1% notes due July 2021⁽²⁾	1,000.0		1,000.0
$500 million 3.5% notes due May 2022⁽¹⁾	505.1		506.5
$2.0 billion 3.0% notes due July 2026	2,000.0		2,000.0
$1.1 billion 5.0% notes due May 2042	1,100.0		1,100.0
$1.8 billion 4.2% notes due July 2046	1,800.0		1,800.0
EUR 800 million 1.25% notes due July 2024	898.7		897.0
Finance leases and other	121.5		129.5
Less: unamortized debt discounts and debt issuance costs	(53.1)		(56.7)
Total long-term debt (including current portion)	8,477.1		9,030.8
Less: current portion of long-term debt	(403.4)		(921.3)
Total long-term debt	$	8,073.7	$	8,109.5

Short-term borrowings:

Commercial paper programs⁽³⁾⁽⁴⁾	$	199.9	$	—
Other short-term borrowings⁽⁵⁾	9.7		6.9
Current portion of long-term debt	403.4		921.3
Current portion of long-term debt and short-term borrowings	$	613.0	$	928.2

As of
September 30, 2019 December 31, 2018
(In millions)
Long-term debt:
CAD 500 million 2.75% notes due September 2020 $ 377.6
$ 366.6
CAD 500 million 2.84% notes due July 2023 377.6
366.6
CAD 500 million 3.44% notes due July 2026 377.6
366.6
$500 million 1.45% notes due July 2019 —
500.0
$500 million 1.9% notes due March 2019 —
499.8
$500 million 2.25% notes due March 2020⁽¹⁾⁽²⁾
499.6
499.0
$1.0 billion 2.1% notes due July 2021⁽²⁾
1,000.0
1,000.0
$500 million 3.5% notes due May 2022⁽¹⁾
507.2
509.3
$2.0 billion 3.0% notes due July 2026 2,000.0
2,000.0
$1.1 billion 5.0% notes due May 2042 1,100.0
1,100.0
$1.8 billion 4.2% notes due July 2046 1,800.0
1,800.0
EUR 500 million notes due March 2019 —
573.4
EUR 800 million 1.25% notes due July 2024 871.9
917.4
Finance leases and other⁽³⁾
127.1
43.0
Less: unamortized debt discounts and debt issuance costs (58.4 ) (64.8 )
Total long-term debt (including current portion) 8,980.2
10,476.9
Less: current portion of long-term debt (921.7 ) (1,583.1 )
Total long-term debt $ 8,058.5
$ 8,893.8

Short-term borrowings:
Commercial paper program⁽⁴⁾
$ 264.9
$ —
Other short-term borrowings⁽⁵⁾
7.2
11.4
Current portion of long-term debt 921.7
1,583.1
Current portion of long-term debt and short-term borrowings $ 1,193.8
$ 1,594.5
(1)The fair value hedges related to these notes have been settled and are being amortized over the life of the respective note.

(2)We repaid our $500 million 2.25% notes upon maturity in March 2020, at which time we also settled the associated cross currency swaps resulting in cash receipts of $3.2 million, which were classified as financing and investing activities in our unaudited condensed consolidated statement of cash flows. As of June 30, 2020, we have cross currency swaps associated with our $1.0 billion 2.1% senior notes due 2021 in order to hedge a portion of the foreign currency translational impacts of our European investment. As a result of the swaps, we have economically converted a portion of these notes and associated interest to EUR denominated, which results in a EUR interest rate to be received of 0.71%.

(3)We maintain a $1.5 billion revolving credit facility with a maturity date of July 7, 2024, that allows us to issue a maximum aggregate amount of $1.5 billion in commercial paper or other borrowings at any time at variable interest rates. We use this financing from time to time to leverage cash needs including debt repayments. During the first half of 2020, we utilized borrowings from this facility in order to fund the repayment of our $500 million 2.25% notes upon maturity in March 2020, for working capital and general purposes, as well as a precautionary measure in order to provide enhanced financial flexibility due to uncertain market conditions arising from the impact of the coronavirus pandemic, as further discussed in Note 1, "Basis of Presentation and Summary of Significant Accounting Policies."These borrowings were subsequently repaid during the second quarter of 2020.

As of June 30, 2020, we had $1.3 billion available to draw on the $1.5 billion revolving credit facility, as the borrowing capacity is also reduced by borrowings under our commercial paper program. The outstanding borrowings under our commercial paper program had a weighted-average effective interest rate and tenor of 1.05% and 31 days, respectively, as of June 30, 2020. We had 0 borrowings drawn on this revolving credit facility and 0 commercial paper borrowings as of December 31, 2019.


~~(1)~~	~~The fair value hedges related to these notes have been settled and are being amortized over the life of the respective note.~~

~~(2)~~

As of September 30, 2019, we have cross currency swaps in order to hedge a portion of the foreign currency translational impacts of our European investment. As a result of the swaps, we have economically converted our $500 million 2.25% notes due 2020 and a portion of our $1.0 billion 2.1% senior notes due 2021 and associated interest to EUR denominated, which result in EUR interest rates to be received of 0.68% and 0.71%, respectively. See ~~Note 11, "Derivative Instruments and Hedging Activities"~~ ~~for further details.~~

Subsequent to June 30, 2020, we had net commercial paper payments of approximately $25 million, for a total amount outstanding of approximately $175 million as of July 30, 2020. As such, as of July 30, 2020, we have approximately $1.3 billion available to draw on our total $1.5 billion revolving credit facility. Additionally, we expect to use commercial paper issuances and cash on hand to fund the upcoming repayment of our CAD 500 million 2.75% notes due September 2020, which we began purchasing CAD in anticipation of this upcoming maturity during July 2020.

(4)OnMay 26, 2020, Molson Coors Brewing Company (UK) Limited (“MCBC U.K.”), a subsidiary of MCBC that operates and manages the Company’s business in the U.K., established a commercial paper facility for the purpose of issuing short-term, unsecured Sterling-denominated notes that are eligible for purchase under the Joint HM Treasury and Bank of England’s COVID Corporate Financing Facility commercial paper program (the “CCFF Program”) in an aggregate principal amount up to GBP 300 million, which may be increased from time to time as provided in the Dealer Agreement (as defined below). Commercial paper issuances under the CCFF Program do not impact the borrowing capacity under our revolving credit facility.

In connection with the CCFF Program, MCBC U.K. and MCBC entered into a Dealer Agreement (the “Dealer Agreement”) with Lloyds Bank Corporate Markets PLC (“Lloyds”), as both the arranger and dealer, pursuant to which notes may be issued to Lloyds at such prices and upon such terms as MCBC U.K. and Lloyds may agree. The maturities of the notes vary but will not be less than seven days nor greater than 364 days. The Dealer Agreement contains customary representations, warranties, covenants and indemnification provisions typical for the issuance of commercial paper of this type. In addition, MCBC entered into a Deed of Guarantee to guarantee the payment of all sums payable from time to time by MCBC U.K. in respect of the notes to the holders of any notes.

As of both June 30, 2020 and July 30, 2020, we had 0 borrowings outstanding under the CCFF Program.

(5)As of June 30, 2020, we had $6.9 million in bank overdrafts and $39.3 million in bank cash related to our cross-border, cross-currency cash pool, for a net positive position of $32.4 million. As of December 31, 2019, we had $1.1 million in bank overdrafts and $55.0 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $53.9 million. We had total outstanding borrowings of $2.8 million under our 2 JPY overdraft facilities as of both June 30, 2020 and December 31, 2019. In addition, we have USD, CAD and GBP lines of credit under which we had no borrowings as of June 30, 2020 or December 31, 2019.

~~(3)~~

As of January 1, 2019, we reclassified approximately $3 million and $82 million of short-term and long-term finance lease liabilities from accounts payable and other current liabilities and other non-current liabilities to current portion of long-term debt and short-term borrowings and long-term debt, respectively, in connection with our adoption of the new lease accounting standard. See ~~Note 2, "New Accounting Pronouncements"~~ ~~for further details.~~


~~(4)~~	During the first three quarters of 2019, we used proceeds from the issuance of commercial paper to partially fund the repayment of our notes upon maturity. As of September 30, 2019, the outstanding borrowings under our commercial paper program had a weighted-average effective interest rate and tenor of 2.37% and 9 days, respectively.

~~(5)~~

As of September 30, 2019, we had $1.6 million in bank overdrafts and $92.3 million in bank cash related to our cross-border, cross-currency cash pool, for a net positive position of $90.7 million. As of December 31, 2018, we had $1.1 million in bank overdrafts and $88.9 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $87.8 million. We had total outstanding borrowings of $5.6 million and $7.3 million under our two JPY overdraft facilities as of September 30, 2019 and December 31, 2018, respectively. In addition, we have USD, CAD and GBP lines of credit under which we had no borrowings as of September 30, 2019 or December 31, 2018.

Debt Fair Value Measurements

We utilize market approaches to estimate the fair value of certain outstanding borrowings by discounting anticipated future cash flows derived from the contractual terms of the obligations and observable market interest and foreign exchange rates. As of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the fair value of our outstanding long-term debt (including the current portion of long-term debt) was approximately ~~$9.2~~$8.7 billion and ~~$9.9~~$9.2 billion, respectively. All senior notes are valued based on significant observable inputs and classified as Level 2 in the fair value hierarchy. The carrying values of all other outstanding long-term borrowings and our short-term borrowings approximate their fair values and are also classified as Level 2 in the fair value hierarchy.

~~Revolving Credit Facility and Commercial Paper Program~~Debt Covenants

~~As of September 30, 2019,~~On June 19, 2020, we ~~had $1.2 billion available~~entered into to ~~draw on~~an amendment to our ~~$1.5 billion~~existing revolving credit facility asagreement, which among other things, revised the ~~borrowing capacity is reduced by borrowings~~leverage ratios under ~~our commercial paper program. During~~ the ~~third~~financial maintenance covenant for each fiscal quarter ~~of 2019, we extended~~ending on or after June 30, 2020 through the maturity ~~date~~ of ~~our revolving~~the credit ~~facility by one year to July 7, 2024. We had no borrowings drawn on this revolving credit facility as of December 31, 2018.~~

facility. The maximum leverage ratio, as defined by the amended revolving credit facility agreement as of June 30, 2020 is 4.75x net debt to EBITDA, with an increase to 5.25x net debt to EBITDA as of the last day of the fiscal quarter ending September 30, 2020 through March 31, 2021, followed by a ~~decline~~0.50x reduction to 4.75x net debt to EBITDA for the fiscal quarter ending June 30, 2021. The leverage ratio requirement as of the last day of the fiscal quarter ending September 30, 2021 is reduced by 0.25x to 4.50x net debt to EBITDA, with a further 0.50x reduction to 4.00x net debt to EBITDA as of the last day of the fiscal quarter ending December 31, ~~2020.~~2021 through maturity of the credit facility.

Under the terms of each of our debt facilities, we must comply with certain restrictions. These include customary events of default and specified representations, warranties and covenants, as well as covenants that restrict our ability to incur certain additional priority indebtedness (certain thresholds of secured consolidated net tangible assets), certain leverage threshold percentages, create or permit liens on assets, and restrictions on mergers, acquisitions, and certain types of sale lease-back transactions. As of ~~September~~June 30, ~~2019,~~2020, we were in compliance with all of these restrictions and have met all debt payment obligations. All of our outstanding senior notes as of ~~September~~June 30, ~~2019~~2020 rank pari-passu.

9. Inventories


	As of
	June 30, 2020		December 31, 2019
	(In millions)
Finished goods	$	244.9	$	236.7
Work in process	93.1		84.0
Raw materials	223.2		227.1
Packaging materials	77.9		68.1
Inventories, net	$	639.1	$	615.9

As of
September 30, 2019 December 31, 2018
(In millions)
Finished goods $ 262.6
$ 229.8
Work in process 92.7
83.4
Raw materials 222.2
224.3
Packaging materials 65.3
54.3
Inventories, net $ 642.8
$ 591.8

10. Accumulated Other Comprehensive Income (Loss)


																	MCBC stockholders' equity
	MCBC stockholders' equity																Foreign currency translation adjustments		Gain (loss) on derivative instruments		Pension and postretirement benefit adjustments		Equity method investments		Accumulated other comprehensive income (loss)
	Foreign currency translation adjustments			Gain (loss) on derivative instruments			Pension and postretirement benefit adjustments			Equity method investments			Accumulated other comprehensive income (loss)				(In millions)
	(In millions)
As of December 31, 2018⁽¹⁾	$	(758.7	)	$	(0.3	)	$	(330.7	)	$	(60.3	)	$	(1,150.0	)
As of December 31, 2019																As of December 31, 2019	$	(652.5)	$	(87.8)	$	(351.0)	$	(70.9)	$	(1,162.2)
Foreign currency translation adjustments	(112.3		)	—			—			—			(112.3		)	Foreign currency translation adjustments	(242.9)		—		—		—		(242.9)
Gain (loss) on net investment hedges	99.8			—			—			—			99.8			Gain (loss) on net investment hedges	3.5		—		—		—		3.5
Unrealized gain (loss) on derivative instruments	—			(164.4		)	—			—			(164.4		)	Unrealized gain (loss) on derivative instruments	—		(171.0)		—		—		(171.0)
Reclassification of derivative (gain) loss to income																Reclassification of derivative (gain) loss to income	—		(1.4)		—		—		(1.4)

Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income	—			—			(2.7		)	—			(2.7		)	Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income	—		—		(4.2)		—		(4.2)
Ownership share of unconsolidated subsidiaries' other comprehensive income (loss)	—			—			—			3.3			3.3			Ownership share of unconsolidated subsidiaries' other comprehensive income (loss)	—		—		—		2.0		2.0
Tax benefit (expense)	(17.6		)	40.6			0.8			(1.0		)	22.8			Tax benefit (expense)	(12.6)		42.7		1.0		(0.5)		30.6
Net current-period other comprehensive income (loss)	(30.1		)	(123.8		)	(1.9		)	2.3			(153.5		)
Reclassification of stranded tax effects (see Note 2)	(73.3		)	(3.8		)	2.3			—			(74.8		)
As of September 30, 2019	$	(862.1	)	$	(127.9	)	$	(330.3	)	$	(58.0	)	$	(1,378.3	)

As of June 30, 2020																As of June 30, 2020	$	(904.5)	$	(217.5)	$	(354.2)	$	(69.4)	$	(1,545.6)

Reclassifications from AOCI to net income (loss) were immaterial for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018.~~2019.

11. Derivative Instruments and Hedging Activities

Our risk management and derivative accounting policies are presented within Part II—Item 8 Financial Statements, Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" and Note 16, "Derivative Instruments and Hedging Activities" in our Annual Report and did not significantly change during the first ~~three quarters~~half of ~~2019.~~2020. As noted in Note 16 of the Notes included in our Annual Report, due to the nature of our counterparty agreements, and the fact that we are not subject to master netting arrangements, we are not able to net positions with the same counterparty and, therefore, present our derivative positions on a gross basis in our unaudited condensed consolidated balance sheets. ~~Except as noted below, our~~Our significant derivative positions have not changed considerably since year-end.

~~Cross Currency Swaps~~

Effective March 20, 2019, we entered into cross currency swap agreements having a total notional value of approximately EUR 353 million ($400 million upon execution) in order to hedge a portion of the foreign currency translational impacts of our European investment. As a result of the swaps, we economically converted a portion of our $1.0 billion 2.1% senior notes due 2021 and associated interest to EUR denominated, which resulted in a EUR interest rate to be received at 0.71%.

Separately, effective April 3, 2019, we voluntarily early terminated our $500 million cross currency swaps due in 2020 under which we were receiving EUR interest payments at a rate of 0.85%, and concurrently entered into new cross currency swap agreements having a total notional of approximately EUR 445 million ($500 million upon execution) in order to hedge a portion of the foreign currency translation impacts of our European investment. As a result of the swaps, we economically converted our $500 million 2.25% senior notes due 2020 and associated interest to EUR denominated, which will result in a EUR interest rate to be received of 0.68%. The termination of the original $500 million cross currency swaps resulted in cash receipts of approximately $47 million which were classified as investing activities in our unaudited condensed consolidated statement of cash flows during the second quarter of 2019.

We have designated each of these cross currency swaps as net investment hedges and accordingly, record changes in fair value due to fluctuations in the spot rate to AOCI. The changes in fair value of the swaps attributable to changes other than those due to fluctuations in the spot rate are excluded from the assessment of hedge effectiveness and recorded to interest expense over the life of the hedge.

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 our own non-performance risk, as appropriate. The fair value of our warrants to acquire common shares of HEXO at a strike price of CAD 6.00 per share are estimated using the Black-Scholes option-pricing model. ~~As of September 30, 2019 and December 31, 2018, respectively, the assumptions used to estimate the fair value of the HEXO warrants are as follows:~~

As of September 30, 2019 As of December 31, 2018
Expected term (years) 2.0
2.8
Estimated volatility 74.39 % 88.71 %
Risk-free interest rate 1.56 % 2.04 %
Expected dividend yield — % — %

The expected term is based on the contractual maturity date of the warrants. Estimated volatility is based on a blend of implied volatility and historical volatility of HEXO's stock. The risk-free rate utilized is based on a zero-coupon Canadian Treasury security yield with a remaining term equal to the expected term of the warrants. The expected dividend yield is determined by historical dividend levels.

The table below summarizes our derivative assets and liabilities that were measured at fair value as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018.~~2019.


				Fair value measurements as of September 30, 2019										Fair value measurements as of June 30, 2020
	As of September 30, 2019			Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)			As of June 30, 2020		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(In millions)											(In millions)
Cross currency swaps	$	34.4		$	—	$	34.4		$	—	Cross currency swaps	$	12.0	$	—	$	12.0	$	—
Interest rate swaps	(168.8		)	—		(168.8		)	—		Interest rate swaps	(291.3)		—		(291.3)		—
Foreign currency forwards	6.6			—		6.6			—		Foreign currency forwards	8.1		—		8.1		—
Commodity swaps	(52.4		)	—		(52.4		)	—
Commodity swaps and options											Commodity swaps and options	(81.3)		—		(81.3)		—
Warrants	16.8			—		16.8			—		Warrants	1.1		—		1.1		—
Total	$	(163.4	)	$	—	$	(163.4	)	$	—	Total	$	(351.4)	$	—	$	(351.4)	$	—


				Fair value measurements as of December 31, 2018										Fair value measurements as of December 31, 2019
	As of December 31, 2018			Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)			As of December 31, 2019		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(In millions)											(In millions)
Cross currency swaps	$	36.5		$	—	$	36.5		$	—	Cross currency swaps	$	10.0	$	—	$	10.0	$	—
Interest rate swaps	(12.3		)	—		(12.3		)	—		Interest rate swaps	(111.5)		—		(111.5)		—
Foreign currency forwards	16.3			—		16.3			—		Foreign currency forwards	2.1		—		2.1		—
Commodity swaps and options	(42.0		)	—		(42.0		)	—		Commodity swaps and options	(41.2)		—		(41.2)		—
Warrants	19.6			—		19.6			—		Warrants	2.7		—		2.7		—
Total	$	18.1		$	—	$	18.1		$	—	Total	$	(137.9)	$	—	$	(137.9)	$	—

As of ~~September~~June 30, 2020 and December 31, 2019,, we had no significant transfers between Level 1 and Level 2. New derivative contracts transacted during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 were all included in Level 2.

Results of Period Derivative Activity

The tables below include the results of our derivative activity in ~~the~~our unaudited condensed consolidated balance sheets as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~,2019, and ~~the~~our unaudited condensed consolidated statements of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018~~2019.

Fair Value of Derivative Instruments in the Unaudited Condensed Consolidated Balance Sheets (in millions):

Commodity swaps⁽¹⁾

Commodity options⁽¹⁾

Commodity swaps⁽¹⁾

Commodity options⁽¹⁾

(1)Notional includes offsetting buy and sell positions, shown in terms of absolute value. Buy and sell positions are shown gross in the asset and/or liability position, as appropriate.

As of December 31, 2018
Derivative Assets Derivative Liabilities
Notional amount Balance sheet location Fair value Balance sheet location Fair value
Derivatives designated as hedging instruments:
Cross currency swaps $ 500.0
Other non-current assets $ 36.5
Other liabilities $ —
Interest rate swaps $ 1,500.0
Other non-current assets —
Other liabilities (12.3 )
Foreign currency forwards $ 338.6
Other current assets 7.3
Accounts payable and other current liabilities (0.1 )
Other non-current assets 9.2
Other liabilities (0.1 )
Total derivatives designated as hedging instruments $ 53.0
$ (12.5 )
Derivatives not designated as hedging instruments:
Commodity swaps⁽¹⁾
$ 868.4
Other current assets $ 12.1
Accounts payable and other current liabilities $ (37.9 )
Other non-current assets 6.1
Other liabilities (22.3 )
Commodity options⁽¹⁾
$ 46.6
Other current assets 0.1
Accounts payable and other current liabilities (0.1 )
Warrants $ 50.6
Other non-current assets 19.6

Total derivatives not designated as hedging instruments $ 37.9
$ (60.3 )

Items Designated and Qualifying as Hedged Items in Fair Value Hedging Relationships in the Unaudited Condensed Consolidated Balance Sheets (in millions):

Line item in the balance sheet in which the hedged item is included Carrying amount of the hedged assets/liabilities
Cumulative amount of fair value hedging adjustment(s) in the hedged assets/liabilities⁽¹⁾
Increase/(Decrease)
As of September 30, 2019 As of December 31, 2018 As of September 30, 2019 As of December 31, 2018
(In millions)
Current portion of long-term debt and short-term borrowings $ —
$ —
$ (0.4 ) $ (0.2 )
Long-term debt $ —
$ —
$ 7.2
$ 8.3


Line item in the balance sheet in which the hedged item is included	Carrying amount of the hedged assets/liabilities									Cumulative amount of fair value hedging adjustment(s) in the hedged assets/liabilities⁽¹⁾ Increase/(Decrease)
			As of June 30, 2020			As of December 31, 2019			As of June 30, 2020			As of December 31, 2019
	(In millions)
Current portion of long-term debt and short-term borrowings	$	—		$	—		$	—		$	(0.2)
Long-term debt	$	—		$	—		$	5.1		$	6.5

(1) Entire balances relate to hedging adjustments on discontinued hedging relationships.

The Pretax Effect of Cash Flow Hedge and Net Investment Hedge Accounting on Accumulated Other Comprehensive Income (Loss) (in millions):


Three Months Ended September 30, 2019
Three Months Ended June 30, 2020								Three Months Ended June 30, 2020
Derivatives in cash flow hedge relationships	Amount of gain (loss) recognized in OCI on derivative			Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative			Derivatives in cash flow hedge relationships	Amount of gain (loss) recognized in OCI on derivative		Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative
Forward starting interest rate swaps	$	(77.8	)	Interest expense, net	$	(0.7	)	Forward starting interest rate swaps	$	6.1	Interest income (expense), net	$	(0.7)
Foreign currency forwards	3.6			Cost of goods sold	0.5			Foreign currency forwards	(7.0)		Cost of goods sold	2.6
				Other income (expense), net	(0.1		)				Other income (expense), net	(0.5)
Total	$	(74.2	)		$	(0.3	)	Total	$	(0.9)		$	1.4

Three Months Ended September 30, 2019
Derivatives in net investment hedge relationships Amount of gain (loss) recognized in OCI on derivative Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized from AOCI on derivative Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)⁽¹⁾
Cross currency swaps $ 37.6
Interest income (expense), net $ —
Interest income (expense), net $ 6.6
Total $ 37.6
$ —
$ 6.6

Three Months Ended September 30, 2019
Non-derivative financial instruments in net investment hedge relationships
Amount of gain (loss) recognized in OCI on derivative
Location of gain (loss) reclassified from AOCI into income
Amount of gain (loss) recognized from AOCI on derivative
Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
EUR 800 million notes due 2024
$ 37.9

Other income (expense), net
$ —

Other income (expense), net
$ —
Total
$ 37.9

$ —

$ —

Three Months Ended September 30, 2018
Derivatives in cash flow hedge relationships Amount of gain (loss) recognized in OCI on derivative Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized from AOCI on derivative
Forward starting interest rate swaps $ 17.9
Interest expense, net $ (0.8 )
Foreign currency forwards (5.2 ) Cost of goods sold 0.4

Other income (expense), net 0.1
Total $ 12.7
$ (0.3 )

Three Months Ended September 30, 2018
Derivatives in net investment hedge relationships Amount of gain (loss) recognized in OCI on derivative Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized from AOCI on derivative Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)⁽¹⁾
Cross currency swaps $ 1.8
Interest income (expense), net $ —
Interest income (expense), net $ 4.4
Total $ 1.8
$ —
$ 4.4

Three Months Ended September 30, 2018
Non-derivative financial instruments in net investment hedge relationships
Amount of gain (loss) recognized in OCI on derivative
Location of gain (loss) reclassified from AOCI into income
Amount of gain (loss) recognized from AOCI on derivative
Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
EUR 800 million notes due 2024
$ 6.4

Other income (expense), net
$ —

Other income (expense), net
$ —
EUR 500 million notes due 2019 4.0
Other income (expense), net —
Other income (expense), net —
Total
$ 10.4

$ —

$ —

Nine Months Ended September 30, 2019
Non-derivative financial instruments in net investment hedge relationships Amount of gain (loss) recognized in OCI on derivative Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized from AOCI on derivative Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
EUR 800 million notes due 2024 $ 45.5
Other income (expense), net $ —
Other income (expense), net $ —
EUR 500 million notes due 2019 10.1
Other income (expense), net —
Other income (expense), net —
Total $ 55.6
$ —
$ —

Nine Months Ended September 30, 2018
Derivatives in cash flow hedge relationships Amount of gain (loss) recognized in OCI on derivative Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized from AOCI on derivative
Forward starting interest rate swaps $ 17.9
Interest expense, net $ (2.3 )
Foreign currency forwards 8.8
Cost of goods sold (0.5 )

Other income (expense), net 0.1
Total $ 26.7
$ (2.7 )

Nine Months Ended September 30, 2018
Non-derivative financial instruments in net investment hedge relationships Amount of gain (loss) recognized in OCI on derivative Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized from AOCI on derivative Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
EUR 800 million notes due 2024 $ 32.1
Other income (expense), net $ —
Other income (expense), net $ —
EUR 500 million notes due 2019 20.1
Other income (expense), net —
Other income (expense), net —
Total $ 52.2
$ —
$ —


Three Months Ended June 30, 2019
Derivatives in cash flow hedge relationships	Amount of gain (loss) recognized in OCI on derivative		Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative
Forward starting interest rate swaps	$	(46.3)	Interest income (expense), net	$	(0.8)
Foreign currency forwards	(4.5)		Cost of goods sold	1.5
			Other income (expense), net	(0.3)
Total	$	(50.8)		$	0.4


Three Months Ended June 30, 2019
Derivatives in net investment hedge relationships	Amount of gain (loss) recognized in OCI on derivative		Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative		Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)	Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)⁽¹⁾
Cross currency swaps	$	(9.5)	Interest income (expense), net	$	—	Interest income (expense), net	$	6.4
Total	$	(9.5)		$	—		$	6.4


Three Months Ended June 30, 2019
Non-derivative financial instruments in net investment hedge relationships	Amount of gain (loss) recognized in OCI on derivative		Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative		Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)	Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
EUR 800 million notes due 2024	$	(12.4)	Other income (expense), net	$	—	Other income (expense), net	$	—

Total	$	(12.4)		$	—		$	—


Six Months Ended June 30, 2020
Derivatives in cash flow hedge relationships	Amount of gain (loss) recognized in OCI on derivative		Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative
Forward starting interest rate swaps	$	(179.8)	Interest income (expense), net	$	(1.4)
Foreign currency forwards	8.8		Cost of goods sold	3.6
			Other income (expense), net	(0.8)
Total	$	(171.0)		$	1.4


Six Months Ended June 30, 2020
Derivatives in net investment hedge relationships	Amount of gain (loss) recognized in OCI on derivative		Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative		Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)	Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)⁽¹⁾
Cross currency swaps	$	5.2	Interest income (expense), net	$	—	Interest income (expense), net	$	8.5
Total	$	5.2		$	—		$	8.5


Six Months Ended June 30, 2020
Non-derivative financial instruments in net investment hedge relationships	Amount of gain (loss) recognized in OCI on derivative		Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative		Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)	Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
EUR 800 million notes due 2024	$	(1.7)	Other income (expense), net	$	—	Other income (expense), net	$	—
Total	$	(1.7)		$	—		$	—


Six Months Ended June 30, 2019
Derivatives in cash flow hedge relationships	Amount of gain (loss) recognized in OCI on derivative			Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative
Forward starting interest rate swaps	$	(78.7)		Interest income (expense), net	$	(1.5)
Foreign currency forwards	(11.5)			Cost of goods sold	2.3
				Other income (expense), net	(0.5)
Total	$	(90.2)	-90200000		$	0.3


Six Months Ended June 30, 2019
Derivatives in net investment hedge relationships	Amount of gain (loss) recognized in OCI on derivative		Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative		Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)	Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)⁽¹⁾
Cross currency swaps	$	6.6	Interest income (expense), net	$	—	Interest income (expense), net	$	10.4
Total	$	6.6		$	—		$	10.4


Six Months Ended June 30, 2019
Non-derivative financial instruments in net investment hedge relationships	Amount of gain (loss) recognized in OCI on derivative		Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative		Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)	Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
EUR 800 million notes due 2024	$	7.6	Other income (expense), net	$	—	Other income (expense), net	$	—
EUR 500 million notes due 2019	10.1		Other income (expense), net	—		Other income (expense), net	—
Total	$	17.7		$	—		$	—

(1)Represents amounts excluded from the assessment of ~~September~~effectiveness for which the difference between changes in fair value and period amortization is recorded in other comprehensive income.

We expect net gains of approximately $3 million (pretax) recorded in AOCI as of June 30, ~~2019 we expect our reclassification of AOCI into earnings~~2020 related to cash flow hedges towill be ~~immaterial over~~reclassified into earnings within the next 12 ~~months as our expected net losses primarily offset our expected net gains.~~months. For derivatives designated in cash flow hedge relationships, the maximum length of time over which forecasted transactions are hedged as of ~~September~~June 30, ~~2019~~2020 is approximately 4 years, as well as those related to our forecasted debt issuances in 2021, 2022, and 2026.

The Effect of Fair Value and Cash Flow Hedge Accounting on the Unaudited Condensed Consolidated Statements of Operations (in millions):


Three Months Ended June 30, 2020
	Location and amount of gain (loss) recognized in income on fair value and cash flow hedging relationships⁽¹⁾
	Cost of goods sold		Other income (expense), net		Interest income (expense), net
Total amount of income and expense line items presented in the unaudited condensed consolidated statement of operations in which the effects of fair value or cash flow hedges are recorded	$	(1,456.6)	$	5.8	$	(69.7)
Gain (loss) on cash flow hedging relationships:
Forward starting interest rate swaps
Amount of gain (loss) reclassified from AOCI into income	—		—		(0.7)

Foreign currency forwards
Amount of gain (loss) reclassified from AOCI into income	2.6		(0.5)		—


Three Months Ended June 30, 2019
	Location and amount of gain (loss) recognized in income on fair value and cash flow hedging relationships⁽¹⁾
	Cost of goods sold		Other income (expense), net		Interest income (expense), net
Total amount of income and expense line items presented in the unaudited condensed consolidated statement of operations in which the effects of fair value or cash flow hedges are recorded	$	(1,759.8)	$	(10.9)	$	(65.6)
Gain (loss) on cash flow hedging relationships:
Forward starting interest rate swaps
Amount of gain (loss) reclassified from AOCI into income	—		—		(0.8)

Foreign currency forwards
Amount of gain (loss) reclassified from AOCI into income	1.5		(0.3)		—


Six Months Ended June 30, 2020
	Location and amount of gain (loss) recognized in income on fair value and cash flow hedging relationships⁽¹⁾
	Cost of goods sold		Other income (expense), net		Interest income (expense), net
Total amount of income and expense line items presented in the unaudited condensed consolidated statement of operations in which the effects of fair value or cash flow hedges are recorded	$	(2,935.6)	$	1.0	$	(138.6)
Gain (loss) on cash flow hedging relationships:
Forward starting interest rate swaps
Amount of gain (loss) reclassified from AOCI into income	—		—		(1.4)

Foreign currency forwards
Amount of gain (loss) reclassified from AOCI into income	3.6		(0.8)		—

Three Months Ended September 30, 2019

Location and amount of gain (loss) recognized in income on fair value and cash flow hedging relationships⁽¹⁾
Cost of goods sold Other income (expense), net Interest income (expense), net
Total amount of income and expense line items presented in the unaudited condensed consolidated statement of operations in which the effects of fair value or cash flow hedges are recorded $ (1,685.4 ) $ (13.7 ) $ (65.6 )
Gain (loss) on cash flow hedging relationships:
Forward starting interest rate swaps
Amount of gain (loss) reclassified from AOCI into income —
—
(0.7 )
Foreign currency forwards
Amount of gain (loss) reclassified from AOCI into income 0.5
(0.1 ) —

Three Months Ended September 30, 2018

Location and amount of gain (loss) recognized in income on fair value and cash flow hedging relationships⁽¹⁾
Cost of goods sold Other income (expense), net Interest income (expense), net
Total amount of income and expense line items presented in the unaudited condensed consolidated statement of operations in which the effects of fair value or cash flow hedges are recorded $ (1,714.0 ) $ 0.2
(67.4 )
Gain (loss) on cash flow hedging relationships:
Forward starting interest rate swaps
Amount of gain (loss) reclassified from AOCI into income —
—
(0.8 )
Foreign currency forwards
Amount of gain (loss) reclassified from AOCI into income 0.4
0.1
—

Nine Months Ended September 30, 2019

Location and amount of gain (loss) recognized in income on fair value and cash flow hedging relationships⁽¹⁾
Cost of goods sold Other income (expense), net
Interest income (expense), net

Total amount of income and expense line items presented in the unaudited condensed consolidated statement of operations in which the effects of fair value or cash flow hedges are recorded $ (4,858.2 ) $ (0.7 ) $ (204.5 )
Gain (loss) on cash flow hedging relationships:
Forward starting interest rate swaps
Amount of gain (loss) reclassified from AOCI into income

—
—
(2.2 )
Foreign currency forwards
Amount of gain (loss) reclassified from AOCI into income 2.8
(0.6 ) —

Interest income (expense), net

(1) We had no outstanding fair value hedges during the first ~~three quarters~~half of ~~2019~~2020 or ~~2018.~~2019.

The Effect of Derivatives Not Designated as Hedging Instruments on the Unaudited Condensed Consolidated Statements of Operations (in millions):

Three Months Ended September 30, 2019
Derivatives not in hedging relationships
Location of gain (loss) recognized in
income on derivative

Amount of gain (loss) recognized in
income on derivative
Commodity swaps Cost of goods sold $ (25.3 )
Warrants Other income (expense), net (11.4 )
Total $ (36.7 )

Three Months Ended June 30, 2020

Derivatives not in hedging relationships

Location of gain (loss) recognized in
income on derivative

Amount of gain (loss) recognized in
income on derivative

Commodity swaps

Cost of goods sold

24.6

Warrants

Other income (expense), net

0.3

Total

24.9

Three Months Ended June 30, 2019

Derivatives not in hedging relationships

Location of gain (loss) recognized in
income on derivative

Amount of gain (loss) recognized in
income on derivative

Commodity swaps

Cost of goods sold

(37.2)

Warrants

Other income (expense), net

(15.0)

Total

(52.2)

Three Months Ended September 30, 2018
Derivatives not in hedging relationships
Location of gain (loss) recognized in
income on derivative

Amount of gain (loss) recognized in
income on derivative
Commodity swaps Cost of goods sold $ (8.1 )
Total $ (8.1 )

Six Months Ended June 30, 2020

Derivatives not in hedging relationships

Location of gain (loss) recognized in
income on derivative

Amount of gain (loss) recognized in
income on derivative

Commodity swaps

Cost of goods sold

(87.9)

Warrants

Other income (expense), net

(1.4)

Total

(89.3)

Nine Months Ended September 30, 2019
Derivatives not in hedging relationships
Location of gain (loss) recognized in
income on derivative

Amount of gain (loss) recognized in
income on derivative
Commodity swaps Cost of goods sold $ (29.8 )
Warrants Other income (expense), net (3.5 )
Total $ (33.3 )

Six Months Ended June 30, 2019

Derivatives not in hedging relationships

Location of gain (loss) recognized in
income on derivative

Amount of gain (loss) recognized in
income on derivative

Commodity swaps

Cost of goods sold

(4.5)

Warrants

Other income (expense), net

7.9

Total

3.4

Nine Months Ended September 30, 2018
Derivatives not in hedging relationships
Location of gain (loss) recognized in
income on derivative

Amount of gain (loss) recognized in
income on derivative
Commodity swaps Cost of goods sold $ (20.3 )
Total $ (20.3 )

~~Lower commodity prices relative to our hedged positions, primarily for aluminum~~The gains and ~~diesel, drove the larger~~ losses recognized in income related to our commodity swaps ~~for~~are largely driven by changes in the ~~three~~respective commodity market prices, primarily in aluminum and ~~nine months ended September 30, 2019 as compared to the three and nine months ended September 30, 2018.~~diesel.

12. Commitments and Contingencies

Litigation and Other Disputes and Environmental

Related to litigation, other disputes and environmental issues, we have an aggregate accrued contingent liability of ~~$16.7~~$20.6 million and ~~$13.7~~$16.2 million as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. While we cannot predict the eventual aggregate cost for litigation, other disputes and environmental matters in which we are currently involved, we believe adequate reserves have been provided for losses that are probable and estimable. Additionally, as noted below, there are certain loss contingencies that we deem reasonably possible for which a range of loss is not estimable at this time; for all other matters, we

believe that any reasonably possible losses in excess of the amounts accrued are immaterial to our unaudited condensed consolidated interim financial statements. Our litigation, other disputes and environmental issues are discussed in further detail within Part II—Item 8 Financial Statements, Note 18, "Commitments and Contingencies" in our Annual Report and did not significantly change during the first ~~three quarters~~half of ~~2019,~~2020, except as noted below.

Other than those disclosed below, we are also 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, other than as noted, none of these disputes or legal actions are expected to have a material impact on our business, 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.

On February 12, 2018, Stone Brewing Company filed a trademark infringement lawsuit in federal court in the Southern District of California against Molson Coors Beverage Company USA LLC ("MCBC USA" formerly known as MillerCoors ~~LLC~~LLC) alleging that the Keystone brand has “rebranded” itself as “Stone” and is marketing itself in a manner confusingly similar to Stone Brewing Company's registered Stone trademark. Stone Brewing Company seeks treble damages in the amount of ~~MillerCoors’~~MCBC USA's profit from Keystone sales. ~~MillerCoors~~MCBC USA subsequently filed an answer and counterclaims against Stone Brewing Company. On May 31, 2018, Stone Brewing Company filed a motion to dismiss ~~MillerCoors'~~MCBC USA's counterclaims and for a preliminary injunction seeking to bar ~~MillerCoors~~MCBC USA from continuing to use “STONE” on Keystone Light cans and related marketing materials. In March 2019, the court denied Stone Brewing Company’s motion for preliminary injunction and its motion to dismiss ~~MillerCoors’~~MCBC USA's counterclaims. NoDiscovery is closed and trial ~~date has been scheduled.~~is currently scheduled to begin in October 2020. We intend to vigorously assert and defend our rights in this lawsuit. A range of potential loss is not estimable at this time.

In December 2018, the U.S. Department of Treasury issued a regulation that impacts our ability to claim a refund of certain federal duties, taxes, and fees paid for beer sold between the U.S. and certain other countries effective in February 2019. As a result, based on the terms of the regulation, it is the U.S. Department of Treasury's position that future claims will no longer be accepted, and we may be further unable to collect ~~historically~~previously claimed, but not yet received, refunds. In January 2020, the United States Court of International Trade issued an opinion and order ruling the challenged portions of this regulation dealing with refunds of certain federal duties, taxes and fees paid with respect to certain imported beer, to the extent of certain exported beer, to be unlawful. On April 17, 2020, the U.S. Department of Treasury appealed this ruling as well as filed a motion for stay of the enforcement of judgment and suspension of claims pending appeal. The U.S. Department of Treasury's motion to stay was denied pending appeal and they were ordered to pay on all claims under the accelerated payment program. As a result, we have collected approximately $24 million of previously filed claims during the second quarter of 2020, and have previously claimed, but not yet received, refunds of approximately ~~$40~~$20 million ~~which are~~ recorded within other ~~non-current assets~~receivables, net on our unaudited condensed consolidated balance sheet as of ~~September~~June 30, ~~2019.~~

2020. On July 23, 2020, the U.S. Department of Treasury filed its opening appellate brief in the United States Court of Appeals for the Federal Circuit. We will continue to monitor this matter including our ability to collect the remainder of our previously claimed refunds, our potential liability to repay refunds received, as well our ability to claim ongoing refunds as the appeal process progresses.

On February 15, 2019, ~~two~~2 purported stockholders filed substantially similar putative class action complaints against the Company, Mark R. Hunter, and Tracey I. Joubert (the “Defendants”) in the United States District Court for the District of Colorado (the “Colorado District Court”), and in the United States District Court for the Northern District of Illinois (the “Illinois District Court”). On February 21, 2019, another purported stockholder filed a substantially similar complaint in the Colorado District Court. The plaintiffs purport to represent a class of the Company’s stockholders and assert that the Defendants violated Sections 10(b) and 20(a) of the Exchange Act by allegedly making false and misleading statements or omissions regarding the Company’s restatement of consolidated financial statements for the years ended December 31, 2016 and December 31, 2017, and that the Company purportedly lacked adequate internal controls over financial reporting. The plaintiffs seek, among other things, an unspecified amount of damages and ~~reasonable~~ attorneys’ fees, expert fees and other costs. On April 16, 2019, motions to consolidate and appoint a lead plaintiff were filed in each case. On May 24, 2019, the securities class action suit filed with the Illinois District Court was transferred to the Colorado District Court, ~~but~~and subsequently was voluntarily dismissed on July 25, 2019. On October 2, 2019, the class action lawsuits originally filed in Colorado District Court were consolidated, and, on October 3, 2019, the court appointed a lead plaintiff and lead counsel for the consolidated case. On ~~October 11,~~December 9, 2019, the ~~parties~~lead plaintiff filed its amended complaint alleging that the Defendants made false statements and material omissions to the market beginning in February 2017 and ending in February 2019, which, it alleges, misled the market as to the strength of our financial condition and internal control processes related to financial accounting. The amended complaint further alleges that the Company and the Defendants caused the Company to falsely report its financial results by overstating retained earnings, net income, and tax benefits and understating deferred tax liabilities in an effort to inflate the price of our common stock. We filed a ~~joint~~ motion to ~~enter a schedule for filing an~~dismiss the amended complaint ~~and anticipated~~on January 23, 2020; the plaintiff subsequently filed an opposition to our motion to ~~dismiss.~~dismiss on March 9, 2020; and we filed our reply brief in support of our motion to dismiss on April 8, 2020. The motion remains pending before the trial judge. We intend to defend the claims vigorously. A range of potential loss is not estimable at this time.

On March 26, 2019, a purported stockholder filed a purported shareholder derivative action in Colorado District Court against the Company’s board of directors and certain officers (the “Individual Defendants”), and the Company as a nominal defendant. On May 14, 2019, another purported stockholder filed a substantially similar complaint in the Colorado District Court. On August 12, 2019, a third derivative complaint was filed in Colorado District Court by a purported stockholder. All ~~three~~3 derivative complaints assert claims against the Individual Defendants for breaches of fiduciary duty and unjust enrichment arising out of the Company’s dissemination to shareholders of purportedly materially misleading and inaccurate information in connection with the Company’s restatement of consolidated financial statements for the years ended December 31, 2016 and December 31, 2017. The complaints further allege that the Company lacked adequate internal controls over financial reporting. The third derivative complaint filed in August also alleges the Individual Defendants violated Sections 14(a) and 20(a) of the Exchange Act by issuing misleading statements in the Company’s proxy statement. The relief sought in the complaints include changes to the Company’s corporate governance procedures, unspecified damages, restitution, and attorneys’ fees, expert fees, other costs and such other relief as the court deems proper. The parties have agreed to stay the proceedings in the shareholder derivative actions until the federal district courts rule on anticipated motions to dismiss in the above mentioned consolidated securities action. All ~~three~~3 derivative actions have been administratively closed, subject to being reopened for good cause shown. A range of potential loss is not estimable at this time.

In June 2019, the Ontario government adopted a bill that, if enacted, would terminate a 10-year Master Framework Agreement that was originally signed between the previous government administration and ~~MCBC,~~Molson Canada 2005, a wholly owned indirect subsidiary of the Company, Labatt Brewing Company Limited, Sleeman Breweries Ltd., and Brewers Retail Inc. in 2015 and dictates the terms of the beer distribution and retail systems in Ontario through 2025. The government has not yet proclaimed the bill as law. The impacts of these potential legislative changes are unknown at this time, but could have a negative impact on the results of operations, cash flows and financial position of the ~~Canada~~North America segment. While discussions remain ongoing with the government to reach a mutually agreeable alternative to the enactment of the law, it is unclear how the ~~Company~~coronavirus pandemic will impact these discussions. Molson Canada 2005 and the other Master Framework Agreement signatories are prepared to vigorously defend ~~their~~our rights and pursue legal recourse, should the Master Framework Agreement be unilaterally terminated by the enactment of the legislation.

Guarantees and Indemnities

We guarantee indebtedness and other obligations to banks and other third parties for some of our equity method investments and consolidated subsidiaries. As of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the unaudited condensed consolidated balance sheets include liabilities related to these guarantees of ~~$59.7~~$57.3 million and ~~$35.9~~$37.7 million, respectively. See Note 4, "Investments" for further detail.

Separately, related to our Cervejarias Kaiser Brasil S.A. ("Kaiser") indemnities, we have accrued ~~$13.7~~$10.4 million and ~~$14.7~~$14.2 million, in aggregate, as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. The maximum potential claims amount remaining for the Kaiser-related purchased tax credits was ~~$84.2~~$64.0 million, based on foreign exchange rates as of ~~September~~June 30, ~~2019.~~2020. Our Kaiser liabilities are discussed in further detail within Part II—Item 8 Financial Statements, Note 18, "Commitments and Contingencies" in our Annual Report and did not significantly change during the first ~~three quarters~~half of ~~2019.~~2020.

Supplemental balance sheet information related to leases as of June 30, 2020 and December 31, 2019 was as follows:


		As of
		June 30, 2020		December 31, 2019
	Balance Sheet Classification	(In millions)
Operating Leases
Operating lease right-of-use assets	Other assets	$	140.6	$	154.5
Current operating lease liabilities	Accounts payable and other current liabilities	$	47.2	$	46.6
Non-current operating lease liabilities	Other liabilities	108.5		119.5
Total operating lease liabilities		$	155.7	$	166.1

Finance Leases
Finance lease right-of-use assets	Properties, net	$	64.6	$	73.0
Current finance lease liabilities	Current portion of long-term debt and short-term borrowings	$	32.8	$	34.5
Non-current finance lease liabilities	Long-term debt	56.2		60.0
Total finance lease liabilities		$	89.0	$	94.5

Supplemental cash flow information related to leases for the six months ended June 30, 2020 and June 30, 2019 was as follows:

Separately, we recorded an impairment loss inclusive of our Denver, Colorado office lease right-of use asset during the three months ended June 30, 2020 as discussed in Note 5, "Special Items".

14. Supplemental Guarantor Information

SEC Registered Securities

On May 3, 2012, MCBC issued $1.9 billion of senior notes, in a registered public offering, consisting of $300 million 2.0% senior notes due 2017 (subsequently repaid in the second quarter of 2017), $500 million 3.5% senior notes due 2022, and $1.1 billion 5.0% senior notes due 2042. Additionally, on July 7, 2016, MCBC issued $500 million 1.45% senior notes due 2019 (subsequently repaid in the third quarter of 2019), $1.0 billion 2.10% senior notes due 2021, $2.0 billion 3.0% senior notes due 2026, $1.8 billion 4.2% senior notes due 2046 and EUR $800.0 million 1.25% senior notes due 2024, in a registered public offering. In December 2017, MCBC completed an exchange offer in which it issued publicly registered senior notes in exchange for its $500 million 1.90% senior notes due 2019 (subsequently repaid in the first quarter of 2019), $500 million 2.25% senior notes due 2020 and our EUR 500 million floating rate senior notes due 2019 ~~(subsequently repaid in the first quarter of 2019), which were issued in private placement transactions in March 2017.~~ "Parent Issuer" in the below tables is specifically referring to MCBC in its capacity as the issuer of these 2012 ~~2016~~ and ~~2017~~2016 issuances. These senior notes are guaranteed on a senior unsecured basis by the Subsidiary Guarantors. Each of the Subsidiary Guarantors is 100% owned by the Parent Issuer. The guarantees are full and unconditional and joint and several.

The following information sets forth the unaudited condensed consolidating statements of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, unaudited condensed consolidating balance sheets as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, and unaudited condensed consolidating statements of cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018.~~2019. Investments in subsidiaries are accounted for under the equity method; accordingly, entries necessary to consolidate the Parent Issuer and all of our guarantor and non-guarantor subsidiaries are reflected in the eliminations column. In the opinion of management, separate complete financial statements of MCBC and the Subsidiary Guarantors would not provide additional material information that would be useful in assessing their financial composition.

MOLSON COORS ~~BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Three Months Ended
September 30, 2019
Parent
Issuer
Subsidiary
Guarantors

Subsidiary
Non
Guarantors
Eliminations Consolidated
Sales $ 31.5
$ 2,631.6
$ 1,004.3
$ (169.4 ) $ 3,498.0
Excise taxes —
(367.6 ) (288.8 ) —
(656.4 )
Net sales 31.5
2,264.0
715.5
(169.4 ) 2,841.6
Cost of goods sold (2.0 ) (1,330.5 ) (477.5 ) 124.6
(1,685.4 )
Gross profit 29.5
933.5
238.0
(44.8 ) 1,156.2
Marketing, general and administrative expenses (45.0 ) (528.6 ) (161.4 ) 44.8
(690.2 )
Special items, net —
(324.9 ) (378.4 ) —
(703.3 )
Equity income (loss) in subsidiaries (398.3 ) (320.3 ) (265.3 ) 983.9
—
Operating income (loss) (413.8 ) (240.3 ) (567.1 ) 983.9
(237.3 )
Interest income (expense), net (74.7 ) 87.2
(78.1 ) —
(65.6 )
Other pension and postretirement benefits (costs), net —
1.2
6.8
—
8.0
Other income (expense), net (0.4 ) (59.7 ) 46.4
—
(13.7 )
Income (loss) before income taxes (488.9 ) (211.6 ) (592.0 ) 983.9
(308.6 )
Income tax benefit (expense) 86.1
(185.4 ) 8.6
—
(90.7 )
Net income (loss) (402.8 ) (397.0 ) (583.4 ) 983.9
(399.3 )
Net (income) loss attributable to noncontrolling interests —
—
(3.5 ) —
(3.5 )
Net income (loss) attributable to MCBC $ (402.8 ) $ (397.0 ) $ (586.9 ) $ 983.9
$ (402.8 )
Comprehensive income (loss) attributable to MCBC $ (602.5 ) $ (592.5 ) $ (696.9 ) $ 1,289.4
$ (602.5 )

MOLSON COORS ~~BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(IN MILLIONS)

(UNAUDITED)

Three Months Ended
September 30, 2018
Parent
Issuer
Subsidiary
Guarantors

Subsidiary
Non
Guarantors
Eliminations Consolidated
Sales $ 2.1
$ 2,714.4
$ 1,030.9
$ (122.3 ) $ 3,625.1
Excise taxes —
(391.2 ) (299.7 ) —
(690.9 )
Net sales 2.1
2,323.2
731.2
(122.3 ) 2,934.2
Cost of goods sold (0.5 ) (1,356.2 ) (479.2 ) 121.9
(1,714.0 )
Gross profit 1.6
967.0
252.0
(0.4 ) 1,220.2
Marketing, general and administrative expenses (57.4 ) (496.6 ) (160.3 ) 0.4
(713.9 )
Special items, net (0.1 ) (34.2 ) (2.3 ) —
(36.6 )
Equity income (loss) in subsidiaries 434.7
18.9
62.6
(516.2 ) —
Operating income (loss) 378.8
455.1
152.0
(516.2 ) 469.7
Interest income (expense), net (78.5 ) 90.9
(79.8 ) —
(67.4 )
Other pension and postretirement benefits (costs), net (0.1 ) (0.5 ) 8.2
—
7.6
Other income (expense), net —
(9.4 ) 9.6
—
0.2
Income (loss) before income taxes 300.2
536.1
90.0
(516.2 ) 410.1
Income tax benefit (expense) 38.1
(101.5 ) (1.1 ) —
(64.5 )
Net income (loss) 338.3
434.6
88.9
(516.2 ) 345.6
Net (income) loss attributable to noncontrolling interests —
—
(7.3 ) —
(7.3 )
Net income (loss) attributable to MCBC $ 338.3
$ 434.6
$ 81.6
$ (516.2 ) $ 338.3
Comprehensive income (loss) attributable to MCBC $ 367.3
$ 435.9
$ 51.0
$ (486.9 ) $ 367.3


	Three Months Ended
	June 30, 2019
	Parent Issuer		Subsidiary Guarantors		Subsidiary Non Guarantors		Eliminations		Consolidated
Sales	$	38.3	$	2,765.8	$	988.9	$	(173.0)	$	3,620.0
Excise taxes	—		(380.2)		(291.5)		—		(671.7)
Net sales	38.3		2,385.6		697.4		(173.0)		2,948.3
Cost of goods sold	(2.4)		(1,398.4)		(479.9)		120.9		(1,759.8)
Gross profit	35.9		987.2		217.5		(52.1)		1,188.5
Marketing, general and administrative expenses	(71.5)		(565.6)		(184.7)		52.1		(769.7)
Special items, net	—		52.0		(2.1)		—		49.9
Equity income (loss) in subsidiaries	374.5		(66.7)		85.0		(392.8)		—
Operating income (loss)	338.9		406.9		115.7		(392.8)		468.7
Interest income (expense), net	(76.2)		88.3		(77.7)		—		(65.6)
Other pension and postretirement benefits (costs), net	—		1.1		7.3		—		8.4
Other income (expense), net	(0.1)		22.5		(33.3)		—		(10.9)
Income (loss) before income taxes	262.6		518.8		12.0		(392.8)		400.6
Income tax benefit (expense)	66.8		(143.8)		6.6		—		(70.4)
Net income (loss)	329.4		375.0		18.6		(392.8)		330.2
Net (income) loss attributable to noncontrolling interests	—		—		(0.8)		—		(0.8)
Net income (loss) attributable to MCBC	$	329.4	$	375.0	$	17.8	$	(392.8)	$	329.4

Comprehensive income (loss) attributable to MCBC	$	333.5	$	424.0	$	1.1	$	(425.1)	$	333.5

MOLSON COORS ~~BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(IN MILLIONS)

(UNAUDITED)

Nine Months Ended
September 30, 2019
Parent
Issuer
Subsidiary
Guarantors

Subsidiary
Non
Guarantors
Eliminations Consolidated
Sales $ 96.1
$ 7,606.7
$ 2,688.1
$ (472.8 ) $ 9,918.1
Excise taxes —
(1,032.5 ) (792.4 ) —
(1,824.9 )
Net sales 96.1
6,574.2
1,895.7
(472.8 ) 8,093.2
Cost of goods sold (5.9 ) (3,864.2 ) (1,323.0 ) 334.9
(4,858.2 )
Gross profit 90.2
2,710.0
572.7
(137.9 ) 3,235.0
Marketing, general and administrative expenses (188.1 ) (1,552.1 ) (512.8 ) 137.9
(2,115.1 )
Special items, net (0.4 ) (281.3 ) (384.7 ) —
(666.4 )
Equity income (loss) in subsidiaries 221.5
(450.0 ) (186.2 ) 414.7
—
Operating income (loss) 123.2
426.6
(511.0 ) 414.7
453.5
Interest income (expense), net (228.3 ) 255.7
(231.9 ) —
(204.5 )
Other pension and postretirement benefits (costs), net —
3.5
21.5
—
25.0
Other income (expense), net (0.5 ) (67.1 ) 66.9
—
(0.7 )
Income (loss) before income taxes (105.6 ) 618.7
(654.5 ) 414.7
273.3
Income tax benefit (expense) 183.6
(395.2 ) 18.3
—
(193.3 )
Net income (loss) 78.0
223.5
(636.2 ) 414.7
80.0
Net (income) loss attributable to noncontrolling interests —
—
(2.0 ) —
(2.0 )
Net income (loss) attributable to MCBC $ 78.0
$ 223.5
$ (638.2 ) $ 414.7
$ 78.0
Comprehensive income (loss) attributable to MCBC $ (75.5 ) $ 102.3
$ (760.2 ) $ 657.9
$ (75.5 )


	Six Months Ended
	June 30, 2020
	Parent Issuer		Subsidiary Guarantors		Subsidiary Non Guarantors		Eliminations		Consolidated
Sales	$	5.7	$	4,568.4	$	1,245.0	$	(251.5)	$	5,567.6
Excise taxes	—		(610.0)		(351.4)		—		(961.4)
Net sales	5.7		3,958.4		893.6		(251.5)		4,606.2
Cost of goods sold	(0.9)		(2,455.5)		(719.3)		240.1		(2,935.6)
Gross profit	4.8		1,502.9		174.3		(11.4)		1,670.6
Marketing, general and administrative expenses	(63.1)		(825.3)		(277.2)		11.4		(1,154.2)
Special items, net	(15.4)		(127.1)		(8.4)		—		(150.9)
Equity income (loss) in subsidiaries	241.1		(233.3)		(3.7)		(4.1)		—
Operating income (loss)	167.4		317.2		(115.0)		(4.1)		365.5
Interest income (expense), net	(120.4)		14.9		(33.1)		—		(138.6)
Other pension and postretirement benefits (costs), net	(0.3)		10.2		5.2		—		15.1
Other income (expense), net	(0.3)		(0.1)		1.4		—		1.0
Income (loss) before income taxes	46.4		342.2		(141.5)		(4.1)		243.0
Income tax benefit (expense)	31.6		(99.7)		(93.1)		—		(161.2)
Net income (loss)	78.0		242.5		(234.6)		(4.1)		81.8
Net (income) loss attributable to noncontrolling interests	—		—		(3.8)		—		(3.8)
Net income (loss) attributable to MCBC	$	78.0	$	242.5	$	(238.4)	$	(4.1)	$	78.0
Comprehensive income (loss) attributable to MCBC	$	(305.4)	$	1.8	$	(523.2)	$	521.4	$	(305.4)

MOLSON COORS ~~BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(IN MILLIONS)

(UNAUDITED)

Nine Months Ended
September 30, 2018
Parent
Issuer
Subsidiary
Guarantors

Subsidiary
Non
Guarantors
Eliminations Consolidated
Sales $ 7.0
$ 7,823.7
$ 2,853.2
$ (370.3 ) $ 10,313.6
Excise taxes —
(1,099.0 ) (863.7 ) —
(1,962.7 )
Net sales 7.0
6,724.7
1,989.5
(370.3 ) 8,350.9
Cost of goods sold (1.5 ) (3,982.9 ) (1,364.7 ) 360.3
(4,988.8 )
Gross profit 5.5
2,741.8
624.8
(10.0 ) 3,362.1
Marketing, general and administrative expenses (188.5 ) (1,473.9 ) (487.3 ) 10.0
(2,139.7 )
Special items, net (0.5 ) 279.5
(11.3 ) —
267.7
Equity income (loss) in subsidiaries 1,332.1
(60.7 ) 124.8
(1,396.2 ) —
Operating income (loss) 1,148.6
1,486.7
251.0
(1,396.2 ) 1,490.1
Interest income (expense), net (244.9 ) 257.7
(240.1 ) —
(227.3 )
Other pension and postretirement benefits (costs), net (0.1 ) 2.5
25.1
—
27.5
Other income (expense), net 0.1
(49.7 ) 49.8
—
0.2
Income (loss) before income taxes 903.7
1,697.2
85.8
(1,396.2 ) 1,290.5
Income tax benefit (expense) 136.8
(364.7 ) (3.7 ) —
(231.6 )
Net income (loss) 1,040.5
1,332.5
82.1
(1,396.2 ) 1,058.9
Net (income) loss attributable to noncontrolling interests —
—
(18.4 ) —
(18.4 )
Net income (loss) attributable to MCBC $ 1,040.5
$ 1,332.5
$ 63.7
$ (1,396.2 ) $ 1,040.5
Comprehensive income attributable to MCBC $ 904.1
$ 1,148.4
$ (43.3 ) $ (1,105.1 ) $ 904.1


	Six Months Ended
	June 30, 2019
	Parent Issuer		Subsidiary Guarantors		Subsidiary Non Guarantors		Eliminations		Consolidated
Sales	$	64.6	$	4,975.1	$	1,683.8	$	(303.4)	$	6,420.1
Excise taxes	—		(664.9)		(503.6)		—		(1,168.5)
Net sales	64.6		4,310.2		1,180.2		(303.4)		5,251.6
Cost of goods sold	(3.9)		(2,533.7)		(845.5)		210.3		(3,172.8)
Gross profit	60.7		1,776.5		334.7		(93.1)		2,078.8
Marketing, general and administrative expenses	(143.1)		(1,023.5)		(351.4)		93.1		(1,424.9)
Special items, net	(0.4)		43.6		(6.3)		—		36.9
Equity income (loss) in subsidiaries	619.8		(129.7)		79.1		(569.2)		—
Operating income (loss)	537.0		666.9		56.1		(569.2)		690.8
Interest income (expense), net	(153.6)		168.5		(153.8)		—		(138.9)
Other pension and postretirement benefits (costs), net	—		2.3		14.7		—		17.0
Other income (expense), net	(0.1)		(7.4)		20.5		—		13.0
Income (loss) before income taxes	383.3		830.3		(62.5)		(569.2)		581.9
Income tax benefit (expense)	97.5		(209.8)		9.7		—		(102.6)
Net income (loss)	480.8		620.5		(52.8)		(569.2)		479.3
Net (income) loss attributable to noncontrolling interests	—		—		1.5		—		1.5
Net income (loss) attributable to MCBC	$	480.8	$	620.5	$	(51.3)	$	(569.2)	$	480.8
Comprehensive income attributable to MCBC	$	527.0	$	694.8	$	(63.3)	$	(631.5)	$	527.0

MOLSON COORS ~~BREWING COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING BALANCE SHEET~~

~~(IN MILLIONS)~~

~~(UNAUDITED)~~

As of
September 30, 2019
Parent
Issuer
Subsidiary
Guarantors

Subsidiary
Non
Guarantors
Eliminations Consolidated
Assets
Current assets:
Cash and cash equivalents $ 14.6
$ 79.8
$ 315.8
$ —
$ 410.2
Accounts receivable, net —
442.4
379.1
—
821.5
Other receivables, net 28.4
70.7
30.0
—
129.1
Inventories, net —
471.1
171.7
—
642.8
Other current assets, net 18.6
168.8
95.9
—
283.3
Intercompany accounts receivable —
3,876.5
88.8
(3,965.3 ) —
Total current assets 61.6
5,109.3
1,081.3
(3,965.3 ) 2,286.9
Properties, net 17.2
3,256.9
1,157.9
—
4,432.0
Goodwill —
6,142.4
1,406.8
—
7,549.2
Other intangibles, net 4.5
11,745.1
1,837.6
—
13,587.2
Net investment in and advances to subsidiaries 25,685.9
3,110.6
4,435.2
(33,231.7 ) —
Other assets 150.9
348.4
488.1
(91.1 ) 896.3
Total assets $ 25,920.1
$ 29,712.7
$ 10,406.9
$ (37,288.1 ) $ 28,751.6
Liabilities and equity
Current liabilities:
Accounts payable and other current liabilities $ 117.1
$ 1,690.3
$ 887.4
$ —
$ 2,694.8
Current portion of long-term debt and short-term borrowings 764.2
407.4
22.2
—
1,193.8
Intercompany accounts payable 3,102.5
158.4
704.4
(3,965.3 ) —
Total current liabilities 3,983.8
2,256.1
1,614.0
(3,965.3 ) 3,888.6
Long-term debt 7,224.6
765.0
68.9
—
8,058.5
Pension and postretirement benefits 3.5
700.3
11.9
—
715.7
Deferred tax liabilities —
1,517.5
787.7
(91.1 ) 2,214.1
Other liabilities 199.2
182.9
86.1
—
468.2
Intercompany notes payable 1,347.6
16.8
5,998.5
(7,362.9 ) —
Total liabilities 12,758.7
5,438.6
8,567.1
(11,419.3 ) 15,345.1
MCBC stockholders' equity 13,162.4
30,271.5
2,960.2
(33,231.7 ) 13,162.4
Intercompany notes receivable (1.0 ) (5,997.4 ) (1,364.5 ) 7,362.9
—
Total stockholders' equity 13,161.4
24,274.1
1,595.7
(25,868.8 ) 13,162.4
Noncontrolling interests —
—
244.1
—
244.1
Total equity 13,161.4
24,274.1
1,839.8
(25,868.8 ) 13,406.5
Total liabilities and equity $ 25,920.1
$ 29,712.7
$ 10,406.9
$ (37,288.1 ) $ 28,751.6

~~MOLSON COORS BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

(IN MILLIONS)

(UNAUDITED)


	As of
	June 30, 2020
	Parent Issuer		Subsidiary Guarantors		Subsidiary Non Guarantors		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	217.5	$	119.1	$	444.2	$	—	$	780.8
Accounts receivable, net	—		406.7		307.0		—		713.7
Other receivables, net	4.5		96.8		27.8		—		129.1
Inventories, net	—		470.6		168.5		—		639.1
Other current assets, net	1.4		172.5		106.1		—		280.0
Intercompany accounts receivable	123.4		1,149.1		105.5		(1,378.0)		—
Total current assets	346.8		2,414.8		1,159.1		(1,378.0)		2,542.7
Properties, net	6.4		3,161.7		1,175.9		—		4,344.0
Goodwill	—		6,137.1		1,424.7		—		7,561.8
Other intangibles, net	3.0		11,556.6		1,824.4		—		13,384.0

Net investment in and advances to subsidiaries	21,339.2		8,006.1		4,352.5		(33,697.8)		—

Other assets	142.0		346.7		400.9		(83.3)		806.3
Total assets	$	21,837.4	$	31,623.0	$	10,337.5	$	(35,159.1)	$	28,638.8
Liabilities and equity
Current liabilities:
Accounts payable and other current liabilities	$	133.8	$	2,001.5	$	1,057.4	$	—	$	3,192.7
Current portion of long-term debt and short-term borrowings	199.9		399.2		13.9		—		613.0
Intercompany accounts payable	920.8		167.9		289.3		(1,378.0)		—
Total current liabilities	1,254.5		2,568.6		1,360.6		(1,378.0)		3,805.7
Long-term debt	7,253.3		746.2		74.2		—		8,073.7
Pension and postretirement benefits	7.5		673.8		13.4		—		694.7

Deferred tax liabilities	—		1,569.6		732.2		(83.3)		2,218.5
Other liabilities	320.3		166.5		91.4		—		578.2
Intercompany notes payable	—		3,683.0		3,726.2		(7,409.2)		—
Total liabilities	8,835.6		9,407.7		5,998.0		(8,870.5)		15,370.8
MCBC stockholders' equity	13,002.9		25,940.4		7,757.4		(33,697.8)		13,002.9
Intercompany notes receivable	(1.1)		(3,725.1)		(3,683.0)		7,409.2		—
Total stockholders' equity	13,001.8		22,215.3		4,074.4		(26,288.6)		13,002.9
Noncontrolling interests	—		—		265.1		—		265.1
Total equity	13,001.8		22,215.3		4,339.5		(26,288.6)		13,268.0
Total liabilities and equity	$	21,837.4	$	31,623.0	$	10,337.5	$	(35,159.1)	$	28,638.8

As of
December 31, 2018
Parent
Issuer
Subsidiary
Guarantors

Subsidiary
Non
Guarantors
Eliminations Consolidated
Assets
Current assets:
Cash and cash equivalents $ 515.8
$ 156.1
$ 386.0
$ —
$ 1,057.9
Accounts receivable, net —
427.3
317.1
—
744.4
Other receivables, net 50.0
48.3
28.3
—
126.6
Inventories, net —
451.6
140.2
—
591.8
Other current assets, net 3.0
157.2
85.4
—
245.6
Intercompany accounts receivable —
2,366.0
31.0
(2,397.0 ) —
Total current assets 568.8
3,606.5
988.0
(2,397.0 ) 2,766.3
Properties, net 19.0
3,427.5
1,161.8
—
4,608.3
Goodwill —
6,444.0
1,816.8
—
8,260.8
Other intangibles, net 6.0
11,800.0
1,970.4
—
13,776.4
Net investment in and advances to subsidiaries 25,475.0
3,893.2
4,579.7
(33,947.9 ) —
Other assets 159.9
193.2
436.0
(91.1 ) 698.0
Total assets $ 26,228.7
$ 29,364.4
$ 10,952.7
$ (36,436.0 ) $ 30,109.8
Liabilities and equity
Current liabilities:
Accounts payable and other current liabilities $ 170.8
$ 1,651.0
$ 884.6
$ —
$ 2,706.4
Current portion of long-term debt and short-term borrowings 1,572.6
—
21.9
—
1,594.5
Intercompany accounts payable 1,836.5
120.9
439.6
(2,397.0 ) —
Total current liabilities 3,579.9
1,771.9
1,346.1
(2,397.0 ) 4,300.9
Long-term debt 7,765.6
1,097.4
30.8
—
8,893.8
Pension and postretirement benefits 3.2
711.2
12.2
—
726.6
Deferred tax liabilities —
1,461.1
758.9
(91.1 ) 2,128.9
Other liabilities 26.0
199.3
98.5
—
323.8
Intercompany notes payable 1,347.6
63.6
5,998.6
(7,409.8 ) —
Total liabilities 12,722.3
5,304.5
8,245.1
(9,897.9 ) 16,374.0
MCBC stockholders' equity 13,507.4
30,057.5
3,890.4
(33,947.9 ) 13,507.4
Intercompany notes receivable (1.0 ) (5,997.6 ) (1,411.2 ) 7,409.8
—
Total stockholders' equity 13,506.4
24,059.9
2,479.2
(26,538.1 ) 13,507.4
Noncontrolling interests —
—
228.4
—
228.4
Total equity 13,506.4
24,059.9
2,707.6
(26,538.1 ) 13,735.8
Total liabilities and equity $ 26,228.7
$ 29,364.4
$ 10,952.7
$ (36,436.0 ) $ 30,109.8

MOLSON COORS ~~BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

(IN MILLIONS)

(UNAUDITED)


	As of
	December 31, 2019
	Parent Issuer		Subsidiary Guarantors		Subsidiary Non Guarantors		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	15.7	$	119.6	$	388.1	$	—	$	523.4
Accounts receivable, net	—		396.3		318.5		—		714.8
Other receivables, net	14.4		58.4		32.7		—		105.5
Inventories, net	—		449.1		166.8		—		615.9
Other current assets, net	3.0		126.0		95.8		—		224.8
Intercompany accounts receivable	94.1		190.0		14.9		(299.0)		—
Total current assets	127.2		1,339.4		1,016.8		(299.0)		2,184.4
Properties, net	19.8		3,294.7		1,232.0		—		4,546.5
Goodwill	—		6,146.5		1,484.9		—		7,631.4
Other intangibles, net	4.0		11,750.6		1,901.4		—		13,656.0

Net investment in and advances to subsidiaries	21,200.6		8,364.9		4,497.9		(34,063.4)		—

Other assets	137.2		364.4		417.9		(78.0)		841.5
Total assets	$	21,488.8	$	31,260.5	$	10,550.9	$	(34,440.4)	$	28,859.8
Liabilities and equity
Current liabilities:
Accounts payable and other current liabilities	$	170.7	$	1,722.0	$	874.6	$	—	$	2,767.3
Current portion of long-term debt and short-term borrowings	499.7		415.1		13.4		—		928.2
Intercompany accounts payable	—		150.7		148.3		(299.0)		—
Total current liabilities	670.4		2,287.8		1,036.3		(299.0)		3,695.5
Long-term debt	7,250.3		779.1		80.1		—		8,109.5
Pension and postretirement benefits	7.2		695.5		13.9		—		716.6

Deferred tax liabilities	—		1,593.3		743.3		(78.0)		2,258.6
Other liabilities	142.6		172.2		91.7		—		406.5
Intercompany notes payable	—		—		65.0		(65.0)		—
Total liabilities	8,070.5		5,527.9		2,030.3		(442.0)		15,186.7
MCBC stockholders' equity	13,419.4		25,796.5		8,266.9		(34,063.4)		13,419.4
Intercompany notes receivable	(1.1)		(63.9)		—		65.0		—
Total stockholders' equity	13,418.3		25,732.6		8,266.9		(33,998.4)		13,419.4
Noncontrolling interests	—		—		253.7		—		253.7
Total equity	13,418.3		25,732.6		8,520.6		(33,998.4)		13,673.1
Total liabilities and equity	$	21,488.8	$	31,260.5	$	10,550.9	$	(34,440.4)	$	28,859.8

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(IN MILLIONS)

(UNAUDITED)


	Six Months Ended
	June 30, 2020
	Parent Issuer		Subsidiary Guarantors		Subsidiary Non Guarantors		Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	690.7	$	262.9	$	106.3	$	—	$	1,059.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to properties	(4.8)		(255.3)		(85.0)		—		(345.1)
Proceeds from sales of properties and other assets	—		1.4		1.6		—		3.0


Other	3.2		(4.2)		1.6		—		0.6
Net intercompany investing activity	(73.2)		(3,626.6)		(3,587.7)		7,287.5		—
Net cash provided by (used in) investing activities	(74.8)		(3,884.7)		(3,669.5)		7,287.5		(341.5)
CASH FLOWS FROM FINANCING ACTIVITIES:

Exercise of stock options under equity compensation plans	4.0		—		—		—		4.0

Dividends paid	(115.3)		—		(10.0)		—		(125.3)
Payments on debt and borrowings	(500.0)		(0.2)		(7.4)		—		(507.6)
Proceeds on debt and borrowings	—		—		1.0		—		1.0
Net proceeds from (payments on) revolving credit facilities and commercial paper	199.8		—		—		—		199.8
Change in overdraft balances and other	(2.6)		(34.5)		15.4		—		(21.7)
Net intercompany financing activity	—		3,659.7		3,627.8		(7,287.5)		—
Net cash provided by (used in) financing activities	(414.1)		3,625.0		3,626.8		(7,287.5)		(449.8)
CASH AND CASH EQUIVALENTS:
Net increase (decrease) in cash and cash equivalents	201.8		3.2		63.6		—		268.6
Effect of foreign exchange rate changes on cash and cash equivalents	—		(3.7)		(7.5)		—		(11.2)
Balance at beginning of year	15.7		119.6		388.1		—		523.4
Balance at end of period	$	217.5	$	119.1	$	444.2	$	—	$	780.8

Nine Months Ended
September 30, 2019
Parent
Issuer
Subsidiary
Guarantors

Subsidiary
Non
Guarantors
Eliminations Consolidated
Net cash provided by (used in) operating activities $ 990.0
$ 341.7
$ 162.0
$ (205.5 ) $ 1,288.2
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to properties (7.2 ) (276.8 ) (173.3 ) —
(457.3 )
Proceeds from sales of properties and other assets —
97.3
3.7
—
101.0
Other 46.2
0.2
(9.1 ) —
37.3
Net intercompany investing activity 46.5
69.4
48.4
(164.3 ) —
Net cash provided by (used in) investing activities 85.5
(109.9 ) (130.3 ) (164.3 ) (319.0 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options under equity compensation plans 1.5
—
—
—
1.5
Dividends paid (276.3 ) (205.5 ) (24.6 ) 205.5
(300.9 )
Payments on debt and borrowings (1,566.3 ) (0.3 ) (9.3 ) —
(1,575.9 )
Net proceeds from (payments on) revolving credit facilities and commercial paper 264.8
—
(1.9 ) —
262.9
Change in overdraft balances and other (3.5 ) (9.8 ) 12.1
—
(1.2 )
Net intercompany financing activity —
(95.8 ) (68.5 ) 164.3
—
Net cash provided by (used in) financing activities (1,579.8 ) (311.4 ) (92.2 ) 369.8
(1,613.6 )
CASH AND CASH EQUIVALENTS:
Net increase (decrease) in cash and cash equivalents (504.3 ) (79.6 ) (60.5 ) —
(644.4 )
Effect of foreign exchange rate changes on cash and cash equivalents 3.1
3.3
(9.7 ) —
(3.3 )
Balance at beginning of year 515.8
156.1
386.0
—
1,057.9
Balance at end of period $ 14.6
$ 79.8
$ 315.8
$ —
$ 410.2

MOLSON COORS ~~BREWING~~BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(IN MILLIONS)

(UNAUDITED)


	Six Months Ended
	June 30, 2019
	Parent Issuer		Subsidiary Guarantors		Subsidiary Non Guarantors		Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	663.1	$	217.6	$	(23.2)	$	(29.5)	$	828.0
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to properties	(5.1)		(186.0)		(119.4)		—		(310.5)
Proceeds from sales of properties and other assets	—		96.5		3.4		—		99.9



Other	46.2		0.2		(3.6)		—		42.8
Net intercompany investing activity	20.0		(9.5)		48.4		(58.9)		—
Net cash provided by (used in) investing activities	61.1		(98.8)		(71.2)		(58.9)		(167.8)
CASH FLOWS FROM FINANCING ACTIVITIES:

Exercise of stock options under equity compensation plans	1.4		—		—		—		1.4
Dividends paid	(163.0)		(29.5)		(14.4)		29.5		(177.4)

Payments on debt and borrowings	(1,066.3)		(0.2)		(4.3)		—		(1,070.8)

Net proceeds from (payments on) revolving credit facilities and commercial paper	—		—		(1.9)		—		(1.9)
Change in overdraft balances and other	(2.9)		(9.6)		25.3		—		12.8
Net intercompany financing activity	—		(69.3)		10.4		58.9		—
Net cash provided by (used in) financing activities	(1,230.8)		(108.6)		15.1		88.4		(1,235.9)
CASH AND CASH EQUIVALENTS:
Net increase (decrease) in cash and cash equivalents	(506.6)		10.2		(79.3)		—		(575.7)
Effect of foreign exchange rate changes on cash and cash equivalents	3.0		4.2		0.8		—		8.0
Balance at beginning of year	515.8		156.1		386.0		—		1,057.9
Balance at end of period	$	12.2	$	170.5	$	307.5	$	—	$	490.2

Nine Months Ended
September 30, 2018
Parent
Issuer
Subsidiary
Guarantors

Subsidiary
Non
Guarantors
Eliminations Consolidated
Net cash provided by (used in) operating activities $ 827.7
$ 836.6
$ 263.9
$ (136.8 ) $ 1,791.4
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to properties (9.0 ) (338.0 ) (144.0 ) —
(491.0 )
Proceeds from sales of properties and other assets —
2.5
5.0
—
7.5
Other —
(0.8 ) (49.2 ) —
(50.0 )
Net intercompany investing activity 34.5
(22.9 ) 189.9
(201.5 ) —
Net cash provided by (used in) investing activities 25.5
(359.2 ) 1.7
(201.5 ) (533.5 )
CASH FLOWS FROM FINANCING ACTIVITIES:

Exercise of stock options under equity compensation plans 6.7
—
—
—
6.7
Dividends paid (243.8 ) —
(158.6 ) 136.8
(265.6 )
Payments on debt and borrowings —
(307.2 ) (3.0 ) —
(310.2 )
Net proceeds from (payments on) revolving credit facilities and commercial paper (378.4 ) —
3.6
—
(374.8 )
Change in overdraft balances and other (5.5 ) (7.4 ) 33.4
—
20.5
Net intercompany financing activity (32.6 ) (181.1 ) 12.2
201.5
—
Net cash provided by (used in) financing activities (653.6 ) (495.7 ) (112.4 ) 338.3
(923.4 )
CASH AND CASH EQUIVALENTS:
Net increase (decrease) in cash and cash equivalents 199.6
(18.3 ) 153.2
—
334.5
Effect of foreign exchange rate changes on cash and cash equivalents —
2.9
(5.9 ) —
(3.0 )
Balance at beginning of year 6.6
140.9
271.1
—
418.6
Balance at end of period $ 206.2
$ 125.5
$ 418.4
$ —
$ 750.1

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") in this Quarterly Report on Form 10-Q is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, the accompanying notes and the MD&A included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018~~2019 ("Annual Report"), as well as our unaudited condensed consolidated interim financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q. Due to the seasonality of our operating results, quarterly financial results are not an appropriate basis from which to project annual results.

Unless otherwise noted in this report, any description of "we," "us" or "our" includes Molson Coors ~~Brewing~~Beverage Company ("MCBC" or the "Company") (formerly known as Molson Coors Brewing Company), principally a holding company, and its operating and non-operating subsidiaries included within our reporting segments. As further discussed below, on January 1, 2020, we changed our management structure from a corporate center and four segments to two segments - North America and ~~Corporate.~~Europe. Our International segment was reconstituted with the Africa and Asia Pacific businesses reporting into the Europe segment and the remaining International business reporting into the North America segment. Accordingly, effective January 1, 2020, our reporting segments include: ~~MillerCoors LLC ("MillerCoors" or U.S.~~North America (North America segment), operating in the U.S.~~; Molson Coors~~, Canada ~~("MCC" or Canada segment), operating~~and various countries in ~~Canada; Molson Coors~~Latin and South America; and Europe (Europe segment), operating in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K. ~~and~~, various other European ~~countries;~~countries, and ~~Molson Coors International ("MCI" or International segment), operating in various other countries.~~certain countries within Africa and Asia Pacific. We have recast the historical presentation of segment information as a result of these reporting segment changes accordingly.

Operational Measures

We have certain operational measures, such as STWs and STRs, which we believe are important metrics. STW is a metric that we use in our business to reflect the sales from our operations to our direct customers, generally wholesalers. We believe the STW metric is important because it gives an indication of the amount of beer and adjacent products that we have produced and shipped to customers. STR is a metric that we use in our business to refer to sales closer to the end consumer than STWs, which generally means sales from our wholesalers or our company to retailers, who in turn sell to consumers. We believe the STR metric is important because, unlike STWs, it provides the closest indication of the performance of our brands in relation to market and competitor sales trends.

Executive Summary

We are one of the world's largest brewers and have a diverse portfolio of owned and partner brands, including global ~~priority~~ brands Blue Moon, Coors Banquet, Coors Light, Miller Genuine Draft, Miller Lite, and Staropramen, regional champion brands Carling, Molson Canadian and other leading country-specific brands, as well as craft and specialty beers such as Creemore Springs, Cobra, Sharp's Doom Bar ~~Henry's Hard~~ and Leinenkugel's. With centuries of brewing heritage, we ~~have been crafting~~craft high-quality, innovative ~~products~~beverages with the purpose of ~~delighting the world's beer drinkers and with the~~uniting people to celebrate all life's moments. As a business, our ambition is to be the first choice for our people, our consumers and ~~customers. Our~~our customers, and our success depends on our ability to make our products available to meet a wide range of consumer segments and occasions.

Coronavirus Global Pandemic

On March 11, 2020, the World Health Organization characterized the outbreak of the novel coronavirus disease, known as COVID-19, as a global pandemic and recommended containment and mitigation measures. We are actively monitoring the impact of the coronavirus pandemic, which has had, and we currently expect will continue to have, a material adverse effect on our operations, liquidity, financial condition and financial results for our full year 2020 and, possibly, beyond. The extent to which our operations will be impacted by the pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity and duration of the outbreak and actions by government authorities to contain the pandemic or treat its impact, among other things.

Many governmental entities across North America and Europe required that bars and restaurants close or cease sit-down service for the majority of the second quarter of 2020, which has negatively impacted, and we currently expect will continue to negatively impact, on-premise sales of our beverages and previously led to the incurrence of costs to repurchase products that on-premise accounts or distributors were unable or prohibited from selling as a result of the governmental regulations. Other restaurants and bars have also implemented closures and/or modified their hours, either voluntarily or as a result of governmental orders or quarantines. While we did see some restaurants and bars begin to reopen late in the second quarter of

2020, business has not returned to pre-pandemic levels and remains uncertain. In addition, sporting events, festivals and other large public gatherings where our products are served have been canceled throughout North America and Europe. See "Outlook" for additional details. Sales to on-premise customers tend to be higher margin than sales to off-premise (retail outlets) customers. Additionally, these and other governmental or societal impositions of restrictions on public gatherings, especially if prolonged in nature, whether government or self-imposed, will have adverse effects on on-premise traffic and, in turn, our business.

As expected, we experienced a significant adverse volume impact in the second quarter of 2020 resulting from the closure of the on-premise channel in nearly all of our markets for most of the quarter. Specifically, for the second quarter of 2020, we estimate that nearly all of our consolidated net sales resulted from off-premise consumption. This compares to our previously provided estimate that approximately 23% of our 2019 consolidated net sales resulted from on-premise consumption, with approximately 17% of our North America net sales and approximately 50-55% of our Europe net sales each coming from this important part of the industry, and in many of our markets the on-premise business had been reduced to zero for much of the second quarter. See further discussion below under "Results of Operations" regarding the historical percentage of volume and net sales represented in the on-premise within our North America and Europe segment businesses and resulting implications to expected profitability as a result of the effective closures of the on-premise in the markets in which we operate. While we began to see some of the on-premise return in June in many of these markets, with the notable exception of the U.K. which did not reopen until early July, business and consumer behavior in the channel has been slow and remains uncertain. Therefore, as a result of this uncertainty, along with the growing risk of a return of shutdowns in certain markets, we currently continue to expect a significant adverse impact to both net sales and profit performance for the third quarter and fiscal year 2020, and, possibly, beyond.

In addition, where we have seen shifts in demand to the off-premise, and certain package types, this has strained our supply chain and package availability, particularly with aluminum can demand and other packaging materials, requiring that we strategically prioritize certain brands and package types. Our supply chain continues to work diligently to ensure sufficient supply of these high demand brand and packages as we adjust to these changing consumer dynamics.

Further, during the three and six months ended June 30, 2020, we recorded charges of $15.5 million within cost of goods sold related to temporary "thank you" pay for certain essential North America brewery employees. Additionally, in order to support the challenges facing our on-premise customers and retailers, and our overall commitment to quality, during the first quarter of 2020, we initiated voluntary temporary keg relief programs in many of our markets which will provide customers with reimbursements for untapped kegs that meet certain established return requirements. As a result, our results for the six months ended June 30, 2020, further include aggregate charges of $48.6 million, inclusive of a reduction to net sales of $31.8 million for estimated reimbursements through these keg relief programs, as well as charges of $16.8 million within cost of goods sold related to obsolete finished goods keg inventories that are not expected to be sold within our freshness specifications as a result of the ongoing on-premise impacts, as well as the estimated costs to facilitate the above mentioned keg returns. These keg return and inventory obsolescence charges were recognized primarily during the first quarter of 2020. See Part I—Item 1. Financial Statements, Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” for additional details.

With the continued spread of the coronavirus and the reversal of certain on-premise re-openings, the extent, severity and duration to which our operations will be impacted by the pandemic remains uncertain. Therefore, we previously withdrew our financial outlook for 2020 and beyond and have determined that the market remains too unpredictable to provide an updated detailed financial outlook at this time.

As a result of the ongoing impacts of the pandemic, during the second quarter of 2020 we continued to take various mitigating actions to offset some of the implications to our employees and communities, as well as the immediate challenges to performance, while also ensuring liquidity and deleverage remain key priorities as further discussed within "Outlook" below. In addition to actions already taken, additional actions may be necessary. Such potential actions include, but are not limited to, drawing on our revolving line of credit facility, issuing additional commercial paper under our U.S. commercial paper program, issuing commercial paper under the recently established COVID Corporate Financing Facility in the U.K. (see Part I—Item 1. Financial Statements, Note 8, "Debt" for further discussion of the facilities and our remaining capacity), further accessing the capital markets, reducing discretionary spending including marketing, general and administrative as well as capital expenditures, asset monetization and taking advantage of certain governmental programs such as furloughs in the U.K. and government relief and payment deferral programs, for example by the U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), and other such government-sponsored legislation and programs. Our board of directors also suspended our regular quarterly dividends on our Class A and Class B common and exchangeable shares otherwise payable in fiscal year 2020. See "Liquidity and Capital Resources" and Part II—Item 1A. "Risk Factors" in this report for additional information regarding the impact of the global coronavirus pandemic. We also continue to monitor the impacts of the pandemic on the recoverability of our assets, including goodwill and indefinite-lived intangible assets. While we have not recognized any resulting impairment losses at this time, if the duration of the pandemic is prolonged and the severity of its impact continues or worsens, it could result in significant impairment losses. See Part I—Item 1. Financial Statements, Note 7, "Goodwill and Intangible Assets" for further details.

Revitalization Plan

On October 28, 2019, we initiated a revitalization plan designed to allow ~~Molson Coors~~us to invest across our portfolio ~~at the level necessary~~ to drive long-term, sustainable success. ~~See discussion of anticipated impacts~~As part of this plan, we planned to accelerate investments behind our largest brands, invest significantly in the above premium segment, and invest more in whitespace and beyond beer opportunities. We were making progress against these ambitions before the impact of the coronavirus pandemic became widespread throughout North America and Europe. As a result of this pandemic and resulting uncertainty in the economy, we are making adjustments in the short-term and intend to use the savings we continue to generate from the revitalization plan to help protect our cash and liquidity position. See additional discussion of the implications of the pandemic above.

We also made the determination to establish Chicago, Illinois as our North American operational headquarters, close our existing office in Denver, Colorado and consolidate certain administrative functions into our other existing office locations. Effective January 1, 2020, we changed our management structure from a corporate center and four segments to two segments - North America and Europe. The North America segment consolidates the United States, Canada and corporate center, enabling us to move more quickly with an integrated portfolio strategy. The Europe segment allows for standalone operations, developed and supported by a European-based team, including local leadership, commercial, supply chain and support functions. The existing International team was reconstituted to more effectively grow our global brands - with the Africa and Asia Pacific businesses reporting into the European segment and the remaining International business reporting into the North America segment.

We also have certain activity that is not allocated to our segments, which has been reflected as “Unallocated”. Specifically, "Unallocated" activity primarily includes financing related costs such as interest expense and income, foreign exchange gains and losses on intercompany balances related to financing and other treasury-related activities, and the unrealized changes in fair value on our commodity swaps not designated in hedging relationships recorded within cost of goods sold, which are later reclassified when realized to the segment in which the underlying exposure resides. Additionally, only the service cost component of net periodic pension and OPEB cost is reported within each operating segment, and all other components remain unallocated. We have recast the historical presentation of segment information as a result of these reporting segment changes accordingly.

In connection with these consolidation activities, we currently expect to incur certain cash and non-cash restructuring charges related to severance, retention and transition costs, employee relocation, non-cash asset related costs, lease exit costs in connection with our office lease in Denver, Colorado, and other transition activities currently estimated in the range of approximately $90 million to $120 million in the aggregate, the majority of which will be cash charges that we began recognizing in the fourth quarter of 2019, and will be further recognized through the balance of fiscal years 2020 and 2021. In the second quarter and first half of 2020, we recognized severance and retention charges of $8.4 million and $31.1 million, respectively, bringing the aggregate of such charges to approximately $72 million since the plan was initiated. Actual severance and retention costs related to this restructuring, which are primarily being recognized ratably over the employees' required future service period, may differ from original estimates based on actual employee turnover levels prior to achieving severance and retention eligibility requirements. Employee relocation charges are recognized in the period incurred and totaled $4.4 million and $6.4 million for the three and six months ended June 30, 2020, respectively. Additionally, during the second quarter of 2020, we recognized aggregate impairment losses of $7.6 million related to the closure of the office facility in Denver, Colorado, including our lease right-of use asset, in light of the sublease market outlook as a result of the coronavirus pandemic. Should our ability to obtain future subtenant occupancy for the office location significantly differ from the estimates and assumptions used to determine its fair value, additional impairment losses may be recognized in the future. We recorded these charges as special items within our unaudited condensed consolidated statements of operations. See Part ~~I-Item~~I—Item 1. Financial Statements, ~~Note 3, “Segments”~~ ~~and~~ Note 5, "Special ~~Items"~~Items”~~, as well as~~ for additional details.

After taking into account all changes in each of the ~~Outlook section~~business units, including Europe, the plan is expected to reduce employment levels, in aggregate, by approximately 600 employees globally. We currently expect the costs associated with the restructuring to be substantially recognized by the end of ~~this MD&A.~~fiscal year 2021.

Summary of Consolidated Results of Operations

The following table highlights summarized components of our unaudited condensed consolidated statements of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018.~~2019. See Part I-Item 1. Financial Statements for additional details of our U.S. GAAP results.


	Three Months Ended										Six Months Ended
	June 30, 2020		June 30, 2019		% change		June 30, 2020		June 30, 2019		% change
	(In millions, except percentages and per share data)
Financial volume in hectoliters	22.586		25.811		(12.5)	%	41.014		45.912		(10.7)	%
Net sales	$	2,503.4	$	2,948.3	(15.1)	%	$	4,606.2	$	5,251.6	(12.3)	%
Net income (loss) attributable to MCBC	$	195.0	$	329.4	(40.8)	%	$	78.0	$	480.8	(83.8)	%
Net income (loss) attributable to MCBC per diluted share	$	0.90	$	1.52	(40.8)	%	$	0.36	$	2.22	(83.8)	%

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 % change September 30, 2019 September 30, 2018 % change
(In millions, except percentages and per share data)
Financial volume in hectoliters 25.044
26.513
(5.5 )% 70.956
75.071
(5.5 )%
Net sales $ 2,841.6
$ 2,934.2
(3.2 )% $ 8,093.2
$ 8,350.9
(3.1 )%
Net income (loss) attributable to MCBC $ (402.8 ) $ 338.3
N/M
$ 78.0
$ 1,040.5
(92.5 )%
Net income (loss) attributable to MCBC per diluted share $ (1.86 ) $ 1.56
N/M
$ 0.36
$ 4.80
(92.5 )%

~~N/M = Not meaningful~~

~~Third~~Second Quarter ~~2019~~2020 Financial Highlights

During the ~~third~~second quarter of ~~2019,~~2020, we recognized ~~a net loss attributable to MCBC of $402.8 million, representing a decrease of $741.1 million versus the prior year. The decrease in~~ net income attributable to MCBC ~~was primarily driven by the impact~~ of ~~aggregate goodwill and intangible asset impairment losses~~$195.0 million compared to net income of ~~$691.9~~$329.4 million ~~primarily related to our Canada reporting unit. The decrease was also due to lower volume, inflation, and cycling a net benefit from the amicable resolution of a vendor dispute~~ in the prior ~~year,~~year. This decrease was driven by an increase in special charges of approximately $114 million resulting from charges associated with the revitalization plan, the Irwindale brewery closure and cycling the gain on sale of the Montreal brewery, lower financial volume and unfavorable mix, partially offset by ~~positive global pricing~~lower marketing, general and ~~mix,~~administrative expense, favorable impacts to cost of goods sold related to unrealized mark-to-market changes on our commodity positions and cost savings, ~~lower restructuring charges, lower incentive compensation,~~as well as favorable unrealized mark-to-market changes on our HEXO Corp. ("HEXO") warrants within other income (expense), net. The significant decline in marketing, general and ~~lower marketing spend.~~ administrative expense was driven by prioritizing and shifting spend including media to platforms with higher audiences in the current environment, while suspending on-premise activation spending and reducing or eliminating spend in areas that have been significantly impacted, such as sports and in-market activations. We also adjusted timing of spend behind brands and packs that were constrained by supply. Further, we also realized cost savings related to the revitalization plan. Finally, net income was adversely impacted by the increase in the effective tax rate to 51% driven by approximately $135 million of discrete tax expense recognized in the second quarter of 2020 related to hybrid regulations enacted by the U.S. Department of Treasury in the second quarter of 2020.

Net sales of approximately ~~$2.8~~$2.5 billion in the ~~third~~second quarter of ~~2019~~2020 decreased ~~3.2%~~15.1% from the prior year, driven by financial volume declines related to on-premise closures resulting from the coronavirus pandemic across all of our major markets, as well as unfavorable global mix, partially offset by higher net ~~sales per hectoliter growth.~~pricing in the U.S. and Canada.

Regional financial highlights:

•

~~In our~~ ~~U.S. segment~~, income before income taxes decreased 6.9% to $348.3 million in the third quarter of 2019, compared to the prior year, primarily driven by lower volume, cost inflation, as well as cycling a net benefit from the amicable resolution of a vendor dispute in the prior year, partially offset by higher net pricing, cycling special charges in the prior year related to restructuring, and cost savings.

•In our North America segment, income before income taxes decreased 8.2% to $411.5 million in the second quarter of 2020, compared to the prior year primarily driven by higher special charges, lower financial volume and the cost of "thank you" pay for certain essential North America brewery employees as a result of the coronavirus pandemic, partially offset by lower marketing, general and administrative expense, cost savings in cost of goods sold, the favorable resolution of our property tax appeal for our Golden, Colorado brewery and higher net pricing. The lower marketing, general and administrative expense was driven by cost mitigation actions taken and anticipated shifts in the timing of marketing spend into the second half of 2020 as a result of the coronavirus pandemic as well as cost savings related to the revitalization plan.

•In our Europe segment, we reported a loss before income taxes of $11.0 million in the second quarter of 2020, compared to income of $43.4 million in the prior year, primarily due to lower gross profit as a result of the closure of the on-premise channel across all markets for the majority of the second quarter, with the exception of the U.K. which remained closed until early July compared to other European markets which started to reopen gradually toward the end of May and early June, partially offset by lower marketing, general and administrative expense driven by cost mitigation actions and lower incentive compensation, lower special charges and favorable foreign currency movements.

•

~~Our~~ ~~Canada segment~~ reported a loss before income taxes of $615.5 million in the third quarter of 2019, a decrease from the prior year, driven primarily by the $668.3 million goodwill impairment loss recognized in the third quarter of 2019 as well as the gross profit impacts of volume declines, higher cost of goods sold per hectoliter, partially offset by lower marketing, general and administrative expense. See Part I-Item 1. Financial Statements, ~~Note 7, "Goodwill and Intangible Assets"~~ ~~for additional information.~~

•

~~In our~~ ~~Europe segment~~, income before income taxes decreased 19.3% to $77.5 million in the third quarter of 2019, compared to prior year, driven by current year special charges of $13.7 million, primarily related to the write down of intangible assets following the termination of distribution, brewing and joint venture agreements with a partner in one of our markets, as well as unfavorable foreign currency movements, increased brand investments, soft industry demand and inflation, partially offset by positive net pricing and mix and lower incentive compensation.


•	~~Our~~ ~~International segment~~ reported a loss before income taxes of $7.7 million in the third quarter of 2019, compared to a loss of $1.0 million in the prior year, primarily driven by higher special charges due to an aggregate impairment loss of $12.2 million related to our India business, partially offset by lower marketing, general and administrative expense.

See "Results of ~~Operations~~Operations"" below for further analysis of our segment results.

~~Core brand~~

Brand highlights:

~~Global priority~~•Blue Moon global brand volume decreased ~~2.2%~~19.9% in the ~~third~~second quarter of 2020 versus 2019, driven by declines in North America, specifically in the U.S. primarily as a result of the on-premise impacts of the coronavirus pandemic.

•Carling brand volume in Europe decreased 34.5% during the second quarter of 2020 versus ~~2018,~~2019, due to lower volumes in the U.K., the brand's primary market as a result of the on-premise impacts of the coronavirus pandemic.

•Coors global brand volume - Coors Light global brand volume decreased 10.9% during the second quarter of 2020 versus 2019. The overall volume decrease in the second quarter of 2020 was primarily driven by declines across North America and Europe primarily as a result of the on-premise impacts of the coronavirus pandemic. Despite volume declines in the U.S., Coors Light gained share of the U.S. premium light segment for the fifth consecutive quarter. Coors Banquet and Coors Original in Canada and ~~International~~Latin America brand volume, on an aggregate basis, increased 0.7% during the second quarter of 2020 versus 2019.

•Miller global brand volume - Miller Lite global brand volumes decreased 6.5% during the second quarter of 2020 versus 2019, primarily driven by declines in the U.S. and Latin America primarily as a result of the on-premise impacts of the coronavirus pandemic, partially offset by growth in ~~Europe.~~

•

~~Blue Moon Belgian White~~ ~~global brand volume increased 2.3% in the third quarter~~Canada. However, Miller Lite gained share of ~~2019 versus 2018, driven by growth in Canada and Europe, partially offset by declines in~~ the U.S. premium light segment for the twenty-third consecutive quarter. Miller Genuine Draft global brand volume decreased 21.2% during the second quarter of 2020 versus 2019, primarily due to a decrease in Latin America as a result of the coronavirus pandemic.

•Staropramen global brand volume, including royalty volume, decreased 25.1% during the second quarter of 2020 versus 2019, primarily due to lower volumes in all European markets as a result of the on-premise impacts of the coronavirus pandemic.


•	~~Carling~~ ~~brand volume in Europe increased 1.2% during the third quarter of 2019 versus 2018, driven by higher volumes in the U.K., the brand's primary market.~~

•

~~Coors~~ ~~global brand volume -~~ ~~Coors Light~~ global brand volume decreased 4.1% during the third quarter of 2019 versus 2018. The overall volume decrease in the third quarter of 2019 was primarily driven by lower brand volume in the U.S., International, and Canada, partially offset by growth in Europe. Volumes in the U.S. were lower than prior year, although ~~Coors Light~~ gained share of the U.S. premium light segment for the second consecutive quarter. The declines in International were driven by competitive pressures in Mexico along with economic decline in Puerto Rico. The declines in Canada are primarily the result of industry declines due to ongoing competitive pressures in Quebec and Ontario and a continued shift in consumer preference to value brands in the West. ~~Coors Banquet~~ ~~global brand volume decreased 1.5% during the third quarter of 2019 versus 2018 driven by the U.S., partially offset by the introduction of~~ ~~Coors Original~~ ~~in International markets.~~

•

~~Miller~~ ~~global brand volume~~ ~~- Miller Lite~~ ~~global brand volumes increased 0.7% during the third quarter of 2019 versus 2018, primarily driven by International and Canada, partially offset by the U.S. However,~~ ~~Miller Lite~~ ~~gained share of the U.S. premium light segment for the twentieth consecutive quarter.~~ ~~Miller Genuine Draft~~ ~~global brand volumedecreased 11.4% during the third quarter of 2019 versus 2018, due to decreases in all segments.~~


•	~~Molson Canadian~~ brand volume in Canada decreased 9.4% during the third quarter of 2019 versus 2018, primarily driven by industry declines as well as share declines due to competitive pressures in the West and Ontario.


•	~~Staropramen~~ ~~global brand volume, including royalty volume, increased 3.0% during the third quarter of 2019 versus 2018, driven by higher volumes in all major markets for the brand.~~

Worldwide Brand Volume

Worldwide brand volume (or "brand volume" when discussed by segment) reflects owned brands sold to unrelated external customers within our geographic markets, net of returns and allowances, royalty volume and an adjustment from STWs to STRs calculated consistently with MCBC owned volume. Contract brewing and wholesaler volume is removed from worldwide brand volume as this is non-owned volume for which we do not directly control performance. We believe this definition of worldwide brand volume more closely aligns with how we measure the performance of our owned brands within the markets in which they are sold. Financial volume represents owned brands sold to unrelated external customers within our geographical markets, net of returns and allowances as well as contract brewing, wholesale non-owned brand volume and company-owned distribution volume. Royalty volume consists of our brands produced and sold by third parties under various license and contract-brewing agreements and because this is owned volume, it is included in worldwide brand volume. The adjustment from STWs to STRs provides the closest indication of the performance of our owned brands in relation to market and competitor sales trends, as it reflects sales volume one step closer to the end consumer and generally means sales from our wholesalers or our company to retailers.


	Three Months Ended						Six Months Ended
	June 30, 2020	June 30, 2019	% change		June 30, 2020	June 30, 2019	% change
	(In millions, except percentages)
Volume in hectoliters:
Financial volume	22.586	25.811	(12.5)	%	41.014	45.912	(10.7)	%
Less: Contract brewing, wholesaler and non-beer volume	(1.566)	(2.129)	(26.4)	%	(3.163)	(3.935)	(19.6)	%
Add: Royalty volume	0.673	1.040	(35.3)	%	1.552	1.777	(12.7)	%
Add: STW to STR adjustment	(0.218)	(0.427)	(48.9)	%	(0.063)	(1.264)	(95.0)	%
Total worldwide brand volume	21.475	24.295	(11.6)	%	39.340	42.490	(7.4)	%

Worldwide Brand Volume by Segment
North America	16.151	17.523	(7.8)	%	29.897	31.216	(4.2)	%
Europe	5.324	6.772	(21.4)	%	9.443	11.274	(16.2)	%
Total	21.475	24.295	(11.6)	%	39.340	42.490	(7.4)	%

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 % change September 30, 2019 September 30, 2018 % change
(In millions, except percentages)
Volume in hectoliters:
Financial volume 25.044
26.513
(5.5 )% 70.956
75.071
(5.5 )%
Less: Contract brewing, wholesaler and non-beer volume (1.986 ) (2.222 ) (10.6 )% (5.921 ) (6.401 ) (7.5 )%
Add: Royalty volume 1.169
1.171
(0.2 )% 2.946
2.944
0.1 %
Add: STW to STR adjustment 0.441
(0.178 ) N/M
(0.823 ) (1.484 ) (44.5 )%
Total worldwide brand volume 24.668
25.284
(2.4 )% 67.158
70.130
(4.2 )%

~~N/M = Not meaningful~~

Our worldwide brand volume decreased ~~2.4%~~11.6% and ~~4.2%~~7.4% during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020, respectively, compared to prior year, ~~primarily~~while financial volume decreased 12.5% and 10.7% during the three and six months ended June 30, 2020, respectively, compared to prior year. This reflects the impacts of the coronavirus pandemic and the related closure of on-premise outlets in both North America and Europe, as well as market share declines in part due to prioritization of certain key brands and package types to meet off-premise demand, and lower contract brewing volumes in North America. Despite this and the gradual re-opening of on-premise locations in certain geographies, the increase in off-premise brand volumes was not sufficient to offset the volume losses experienced related to the closure of the on-premise, resulting in ~~all segments driven by challenging market dynamics in~~overall brand volume declines. This has continued into July 2020 as we see further uncertainty around the ~~U.S., Canada~~re-opening of the on-premise across North America and Europe.

As a result, we do not expect off-premise volumes to fully offset the loss of the on-premise volume due to closures related to the pandemic.

Net Sales Drivers

For the three months ended ~~September~~June 30, ~~2019~~2020 versus ~~September~~June 30, ~~2018,~~2019, by segment (in percentages):


	Volume		Price, Product and Geography Mix		Currency		Total
Consolidated	(12.5)	%	(1.8)	%	(0.8)	%	(15.1)	%
North America	(8.3)	%	0.4	%	(0.4)	%	(8.3)	%
Europe	(24.8)	%	(17.6)	%	(2.2)	%	(44.6)	%

Volume Price, Product and Geography Mix Currency Other Total
Consolidated (5.5 )% 3.7 % (1.1 )% (0.3 )% (3.2 )%
U.S. (7.1 )% 5.2 % — % (0.4 )% (2.3 )%
Canada (8.4 )% 3.9 % (0.9 )% (0.4 )% (5.8 )%
Europe (0.3 )% 1.9 % (5.1 )% 0.1 % (3.4 )%
International (23.2 )% 10.0 % (0.1 )% (2.4 )% (15.7 )%

For the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 versus ~~September~~June 30, ~~2018,~~2019, by segment (in percentages):


	Volume		Price, Product and Geography Mix		Currency		Total
Consolidated	(10.7)	%	(1.0)	%	(0.6)	%	(12.3)	%
North America	(8.1)	%	0.5	%	(0.3)	%	(7.9)	%
Europe	(18.8)	%	(11.9)	%	(2.1)	%	(32.8)	%

Volume Price, Product and Geography Mix Currency Other Total
Consolidated (5.5 )% 4.1 % (1.5 )% (0.2 )% (3.1 )%
U.S. (6.1 )% 4.7 % — % (0.3 )% (1.7 )%
Canada (6.3 )% 2.7 % (2.8 )% (0.1 )% (6.5 )%
Europe (3.3 )% 4.2 % (5.9 )% (0.1 )% (5.1 )%
International (21.1 )% 9.0 % (1.1 )% (1.9 )% (15.1 )%

Income taxes

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Effective tax rate (29 )% 16 % 71 % 18 %


	Three Months Ended						Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Effective tax rate	51	%	18	%	66	%	18	%

Since 2018, the U.S. Department of Treasury has continued to issue proposed, temporary and final regulations to implement provisions of the 2017 Tax Act. We have continued to monitor these regulations, and on April 7, 2020, the U.S. Department of Treasury enacted final hybrid regulations with full retroactive application to January 1, 2018, with a few exceptions. We have reviewed the final regulations and their impact on our tax positions and financial statements. The final regulations, associated with the taxability of certain interest, impact tax positions we took in 2018 and 2019 ~~versus 2018,~~and have resulted in additional income tax expense of approximately $135 million, which was ~~primarily driven by~~recognized upon enactment in the ~~$668.3 million impairment loss~~second quarter of 2020. The impact of the finalized regulations could result in cash tax outflows up to ~~nondeductible goodwill~~this amount in 2021. We continue to analyze the potential cash impacts of ~~our Canada reporting unit, as well as other discrete~~the final regulations to minimize any cash outflows.

Refer to Part I - Item 1. Financial Statements, Note 6, "Income Tax" for ~~additional details~~discussion regarding our effective tax rate.

Results of Operations

~~United States~~North America Segment


	Three Months Ended										Six Months Ended
	June 30, 2020		June 30, 2019		% change		June 30, 2020		June 30, 2019		% change
	(In millions, except percentages)
Financial volume in hectoliters⁽¹⁾⁽²⁾	17.648		19.240		(8.3)	%	32.104		34.922		(8.1)	%
Sales⁽²⁾	$	2,548.8	$	2,783.2	(8.4)	%	$	4,603.8	$	5,003.1	(8.0)	%
Excise taxes	(348.6)		(382.6)		(8.9)	%	(613.9)		(669.9)		(8.4)	%
Net sales⁽²⁾	2,200.2		2,400.6		(8.3)	%	3,989.9		4,333.2		(7.9)	%
Cost of goods sold⁽²⁾	(1,302.0)		(1,386.7)		(6.1)	%	(2,434.4)		(2,573.9)		(5.4)	%
Gross profit	898.2		1,013.9		(11.4)	%	1,555.5		1,759.3		(11.6)	%
Marketing, general and administrative expenses	(425.2)		(609.9)		(30.3)	%	(921.8)		(1,122.0)		(17.8)	%
Special items, net⁽³⁾	(64.1)		51.6		N/M		(143.2)		42.0		N/M
Operating income (loss)	408.9		455.6		(10.3)	%	490.5		679.3		(27.8)	%
Interest income (expense), net	(0.7)		4.3		N/M		(1.7)		2.0		N/M
Other income (expense), net	3.3		(11.4)		N/M		(1.1)		13.1		N/M
Income (loss) before income taxes	$	411.5	$	448.5	(8.2)	%	$	487.7	$	694.4	(29.8)	%

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 % change September 30, 2019 September 30, 2018 % change
(In millions, except percentages)
Financial volume in hectoliters⁽¹⁾
15.976
17.206
(7.1 )% 47.216
50.262
(6.1 )%
Sales⁽¹⁾
$ 2,140.6
$ 2,199.8
(2.7 )% $ 6,284.6
$ 6,416.1
(2.0 )%
Excise taxes (250.1 ) (264.0 ) (5.3 )% (723.2 ) (760.0 ) (4.8 )%
Net sales⁽¹⁾
1,890.5
1,935.8
(2.3 )% 5,561.4
5,656.1
(1.7 )%
Cost of goods sold⁽¹⁾
(1,106.9 ) (1,118.7 ) (1.1 )% (3,275.9 ) (3,298.5 ) (0.7 )%
Gross profit 783.6
817.1
(4.1 )% 2,285.5
2,357.6
(3.1 )%
Marketing, general and administrative expenses (434.1 ) (420.4 ) 3.3 % (1,264.4 ) (1,248.6 ) 1.3 %
Special items, net⁽²⁾
(3.7 ) (29.7 ) (87.5 )% (6.8 ) (34.5 ) (80.3 )%
Operating income (loss) 345.8
367.0
(5.8 )% 1,014.3
1,074.5
(5.6 )%
Interest income (expense), net 2.6
7.6
(65.8 )% 4.6
8.0
(42.5 )%
Other income (expense), net (0.1 ) (0.4 ) (75.0 )% (0.2 ) (1.1 ) (81.8 )%
Income (loss) before income taxes $ 348.3
$ 374.2
(6.9 )% $ 1,018.7
$ 1,081.4
(5.8 )%
N/M = Not meaningful


~~(1)~~	~~Includes gross inter-segment sales, purchases, and volumes, which are eliminated in the consolidated totals.~~

~~(2)~~

(1)Excludes royalty volume of 0.288 million and 0.803 million hectoliters for the three and six months ended June 30, 2020, and excludes royalty volume of 0.523 million and 0.918 million hectoliters for the three and six months ended June 30, 2019, respectively. The results for the three and six months ended June 30, 2019 have been recast to reflect the segment changes as part of the revitalization plan.

(2)Includes gross inter-segment sales, purchases, and volumes, which are eliminated in the consolidated totals.

(3)See Part I—Item 1. Financial Statements, Note 5, "Special Items"~~Note 5, "Special Items"~~ for detail of special items.

Significant events

~~Throughout 2018, U.S. financial~~We continue to monitor the coronavirus pandemic, which has had, and we currently expect will continue to have, a material adverse effect on our North America results of operations for fiscal year 2020 and, possibly, beyond. As expected, we experienced a significant adverse impact in the first half of 2020 resulting from the closure of the on-premise channel for the majority of the second quarter. While we began to see some of the on-premise return in June, business and consumer behavior in the channel has been uncertain and has not returned to pre-pandemic levels. For the second quarter of 2020, we estimate that nearly all of our North America volume and net sales was from the off-premise channel. This compares to our 2019 estimate that approximately 16% and 17% of our North America volume and net sales, respectively, was from the on-premise channel, which tends to be more profitable than the off-premise channel as a result of its higher above premium brand mix. We have seen some of the on-premise demand shift to the off-premise; however, this shift has not been proportionate to the severe declines in volume lost from the on-premise closures and weakened demand. As a result of the coronavirus pandemic and resulting government-imposed restrictions and related on-premise closures, this portion of our business effectively ceased entirely from the middle of March and into June. Additionally, continuing governmental or societal impositions on bars and restaurants and restrictions on public gatherings including ~~shipment timing~~the growing risk of a return of shutdowns, especially if prolonged in nature, we expect will continue to have adverse effects on on-premise traffic and, ~~distributor inventory levels,~~in turn, our business performance, cash flows and liquidity. Further, the CAD has recently become volatile as ~~well~~a result of the ongoing uncertainties and impacts of the coronavirus pandemic. Any significant weakening of the CAD to the USD could have an adverse impact on our results due to the relative magnitude of our Canadian business.

Our results for the six months ended June 30, 2020 include a reduction to net sales of $19.6 million and charges to cost of goods sold of $12.2 million related to the recognition of estimated sales returns and finished good obsolescence reserves and related costs resulting from the on-premise impacts of the coronavirus pandemic. These charges were primarily recognized during the first quarter of 2020, with immaterial adjustments for changes in estimates recognized in the second quarter. We also recognized charges to cost of goods sold of $15.5 million related to temporary "thank you" pay for certain essential North America brewery employees.

As part of our revitalization plan announced during the fourth quarter of 2019, we initiated restructuring activities and continue to incur severance and other employee-related costs as ~~financial results were impacted by brewery system implementations~~special items.

Following management approval in December 2019, in January 2020, we announced plans to cease production at our ~~Golden, Colorado, Trenton, Ohio~~Irwindale, California brewery and ~~Fort Worth, Texas breweries. Specifically, we saw strong financial volumes~~entered into an option agreement with ~~increased shipments~~Pabst Brewing Company, LLC ("Pabst"), granting Pabst an option to purchase our Irwindale, California brewery, including plant equipment and machinery and the underlying land for $150 million, subject to adjustment as further specified in the ~~third quarter of 2018 preparing for~~option agreement. Pursuant to the ~~implementations,~~option agreement, on May 4, 2020, Pabst exercised its option to purchase the Irwindale Brewery which ~~led~~is expected to ~~lower shipments~~be completed in the fourth quarter of ~~2018. The Milwaukee, Wisconsin~~2020, subject to the satisfaction of certain customary closing conditions. We recorded special charges related to the planned Irwindale brewery ~~implementation occurred~~closure as further discussed in the first quarter of 2019, the Albany, Georgia brewery implementation occurred in the third quarter of 2019 and the Irwindale, California brewery implementation occurred early in the fourth quarter of 2019. We expect such implementations to impact 2019 U.S. financial volume trends, including quarterly shipment timing and distributor inventory levels, as well as quarterly financial results and related 2018 comparisons.Part I—Item 1. Financial Statements, Note 5, "Special Items".

The volatility of aluminum prices, inclusive of Midwest Premium and tariffs, ~~and freight and fuel costs~~ continued to significantly impact our results during the first ~~three quarters~~half of ~~2019.~~2020. To the extent these prices continue to fluctuate, our business and financial results could be materially adversely impacted. We continue to monitor these risks and rely on our risk management hedging program to help mitigate price risk exposure for commodities including aluminum and fuel.

~~Volume and net sales~~

Brand volume decreased 3.9%, on a trading day adjusted basis, for the three months ended September 30, 2019 and decreased 4.1% for the nine months ended September 30, 2019, compared to prior year, partially driven by challenging industry dynamics. STWs, excluding contract brewing volume, decreased 6.2% and 5.4% during the three and nine months ended September 30, 2019, respectively, driven by lower brand volume and quarterly timing of distributor inventories as we expect brand volume and STW trends to largely converge on a full year basis.

Net sales per hectoliter on a brand volume basis increased 4.3% and 3.8% for the three and nine months ended September 30, 2019, compared to prior year, driven by higher net pricing. Net sales per hectoliter on a reported basis increased 5.2% and 4.7% for the three and nine months ended September 30, 2019 compared to prior year.

~~Cost of goods sold~~

Cost of goods sold per hectoliter for the three and nine months ended September 30, 2019 increased 6.6% and 5.7%, respectively, compared to prior year, driven by inflation, volume deleverage and other factors, including a substantial unanticipated increase in property tax at our Golden, Colorado brewery, partially offset by cost savings. Cost of goods sold per hectoliter for the nine months ended September 30, 2019 was also negatively impacted by increased packaging costs associated with our bottle furnace rebuild.

~~Marketing, general and administrative expenses~~

Marketing, general and administrative expenses for the three and nine months ended September 30, 2019 increased 3.3% and 1.3%, respectively, compared to prior year, primarily driven by cycling a net benefit from the amicable resolution of a vendor dispute in the prior year, partially offset by the incremental cost reductions related to the restructuring initiated in the third quarter of 2018. For the nine months ended September 30, 2019, the increase was also driven by cycling lower employee incentive compensation in the prior year. Third quarter marketing, general and administrative expense also reflects the benefit of lower incentive compensation for the second consecutive year.

~~Canada Segment~~

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 % change September 30, 2019 September 30, 2018 % change
(In millions, except percentages)
Financial volume in hectoliters⁽¹⁾
2.202
2.405
(8.4 )% 6.169
6.585
(6.3 )%
Sales⁽¹⁾
$ 486.4
$ 519.4
(6.4 )% $ 1,317.2
$ 1,418.9
(7.2 )%
Excise taxes (120.1 ) (130.5 ) (8.0 )% (316.9 ) (348.8 ) (9.1 )%
Net sales⁽¹⁾
366.3
388.9
(5.8 )% 1,000.3
1,070.1
(6.5 )%
Cost of goods sold⁽¹⁾
(217.6 ) (218.8 ) (0.5 )% (630.1 ) (641.9 ) (1.8 )%
Gross profit 148.7
170.1
(12.6 )% 370.2
428.2
(13.5 )%
Marketing, general and administrative expenses (79.8 ) (87.2 ) (8.5 )% (255.8 ) (262.5 ) (2.6 )%
Special items, net⁽²⁾
(672.3 ) (5.9 ) N/M
(626.4 ) (17.2 ) N/M
Operating income (loss) (603.4 ) 77.0
N/M
(512.0 ) 148.5
N/M
Other income (expense), net (12.1 ) 0.5
N/M
(1.3 ) (0.6 ) 116.7 %
Income (loss) before income taxes $ (615.5 ) $ 77.5
N/M
$ (513.3 ) $ 147.9
N/M

~~N/M = Not meaningful~~


~~(1)~~	~~Includes gross inter-segment sales, purchases, and volumes, which are eliminated in the consolidated totals.~~


~~(2)~~	~~See Part I-Item 1. Financial Statements,~~ ~~Note 5, "Special Items"~~ ~~for detail of special items.~~

~~Significant events~~

We identified a triggering event requiring an interim impairment assessment of the goodwill within our Canada reporting unit at the end of the third quarter of 2019, as a result, in part, of prolonged weakening of the Canadian beer industry negatively impacting the performance of the Canada business in the current year and the expected future cash flows of the Canada reporting unit. The interim goodwill impairment analysis resulted in a goodwill impairment loss recognized within our Canada reporting unit of $668.3 million, which was recorded as a special item. See Part I-Item 1. Financial Statements, ~~Note 7, "Goodwill and Intangible Assets"~~ for additional information, including the risks associated with potential future impairment losses related to the remaining goodwill within our Canada reporting unit and to our indefinite-lived intangible assets.

As part of our ongoing assessment and optimization of our Canadian supply chain network, we have incurred and continue to incur significant capital expenditures associated with the completion of the new brewery in Chilliwack, British Columbia, most of which we expect to be funded with the previously received proceeds from the sale of the Vancouver brewery in 2016. The final closure of the Vancouver brewery was completed in the third quarter of 2019. The new Chilliwack brewery is now up and running with transition of full production to the brewery currently underway.

In further efforts to help optimize the ~~Canada~~North America brewery network, in the third quarter of 2017, we announced a plan to build a more efficient and flexible brewery in ~~the greater Montreal area. Additionally, during~~Longueuil, Quebec. During the second quarter of 2019, we completed the sale of our Montreal brewery for $96.2 million (CAD 126.0 million), resulting in a $61.3 million gain, which was recorded as a special item. In conjunction with the sale, we agreed to lease back the existing property to continue operations on an uninterrupted basis until the new brewery is operational, which we currently expect to occur in 2021. However, due to the uncertainty inherent in our estimates, the timing of the brewery closure is subject to change. We will continue to incur significant capital expenditures associated with the construction of the new brewery in Longueuil, ~~Quebec.~~Quebec, through its estimated completion in late 2021.

In June 2019, the Ontario government adopted a bill that, if enacted, would terminate a 10-year Master Framework Agreement that was originally signed between the previous government administration and ~~MCBC,~~Molson Canada 2005, a wholly owned indirect subsidiary of the Company, Labatt Brewing Company Limited, Sleeman Breweries Ltd., and Brewers Retail Inc. in 2015 and ~~dictates~~governs the terms of the beer distribution and retail systems in Ontario through 2025. The government has not yet proclaimed the bill as law. The impacts of these potential legislative changes are unknown at this time, but could have a negative impact on the results of operations, cash flows and financial position of the ~~Canada~~North America segment. While discussions remain ongoing with the government to reach a mutually agreeable alternative to the enactment of the law, it is unclear how the ~~Company~~coronavirus pandemic will impact these discussions. Molson Canada 2005 and the other Master Framework Agreement signatories are prepared to vigorously defend their rights and pursue legal recourse, should the Master Framework Agreement be unilaterally terminated by the enactment of the legislation. For additional information, see Part I—Item 1. Financial Statements, Note 12, "Commitments and Contingencies."

In June 2019, Health Canada released final regulations resulting in the legalization of new classes of cannabis products including edibles and cannabis infused beverages on October 17, 2019, with product sales being permitted sixty days after submission of the beverage formulations to Health Canada and satisfaction of all other licensing and regulatory preconditions. ~~While~~Truss, our ~~Truss~~ joint venture with ~~Hexo has been making progress preparing for the launch of Cannabis-infused products~~HEXO in Canada, launched its first cannabis infused product, Veryvell Drops, across the Canadian market ~~including~~and we expect it will launch its ready to drink beverage portfolio throughout the ~~on-going construction~~remainder of 2020. Separately, in April 2020, we completed the formation of a ~~production facility~~new joint venture with HEXO to explore opportunities for non-alcohol hemp-derived CBD beverages in ~~Belleville, Ontario, we currently expect that Truss will be able to launch products in the first half of 2020, subject to and after all of its licenses and regulatory clearances have been obtained.~~Colorado.

Foreign currency impact on results

During the three ~~and nine~~ months ended ~~September~~June 30, ~~2019, the CAD appreciated versus the~~2020, foreign currency movements favorably impacted our North America USD ~~on an average basis, resulting in an increase of $9.6~~income before income taxes by $1.1 million and ~~$9.2 million, respectively, to~~during the six months ended June 30, 2020, foreign currency movements unfavorably impacted our North America USD ~~earnings~~income before income ~~taxes.~~taxes by $1.3 million. Included in this amount are both translational and transactional impacts of changes in foreign exchange rates. The impact of transactional foreign currency gains and losses is recorded within other income (expense) in our unaudited condensed consolidated statements of operations.

Volume and net sales

~~Our Canada brand~~Brand volume decreased ~~5.1%~~7.8% and ~~5.3% during~~4.2%, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively, versus~~2020 compared to prior year, ~~primarily~~ due to ~~industry declines. The decrease~~the closure of ~~8.4% in financial volume for~~on-premise outlets as a result of the ~~quarter was also impacted by lower contract manufacturing volume~~coronavirus pandemic as well as ~~negative impacts of~~estimated market share declines in North America. Financial volume declined 8.3% and 8.1% for the three and six months ended June 30, 2020 respectively, compared to prior year, reflecting lower brand volume, unfavorable shipment timing ~~of customer inventory levels.~~in the U.S. largely due to aluminum can supply and other packaging material constraints as well as lower contract brewing volume.

~~Our net~~

Net sales per hectoliter on a brand volume basis increased ~~2.7%~~0.9% and ~~2.5% in local currency during~~decreased 0.1% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to prior ~~year, primarily~~year. The increase in the second quarter was driven by ~~positive~~favorable geographic mix and net ~~pricing.~~pricing increases in the U.S. and Canada, partially offset by brand and channel mix attributed to the shift of volume from on-premise to off-premise as a result of the coronavirus pandemic. The slight decline for the six months ended June 30, 2020 was driven by the estimated keg sales returns and reimbursements recognized in the first quarter of 2020 related to the on-premise impacts of the coronavirus pandemic as well as negative brand mix, partially offset by net price increases in the U.S. and Canada. Net sales per hectoliter on a reported basis in local currency increased ~~3.9%~~0.4% and ~~2.7%~~0.5% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively,~~2020 compared to prior year.

Cost of goods sold

Cost of goods sold per hectoliter in local currency ~~increased 9.7% and 8.0% during~~for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020 increased 2.9% and 3.3%, respectively, compared to prior year, driven by volume deleverage as well as temporary "thank you" pay for certain essential North America brewery employees, partially offset by cost savings and the favorable resolution of our property tax appeal for our Golden, Colorado brewery. Additionally, cost of goods sold per hectoliter in local currency for the six months ended June 30, 2020 was also impacted by finished good obsolescence reserves and related costs recognized in the first quarter of 2020 resulting from the on-premise impacts of the coronavirus pandemic.

Marketing, general and administrative expenses

Marketing, general and administrative expenses in local currency for the three and six months ended June 30, 2020 decreased 29.9% and 17.6%, respectively, compared to prior year, primarily driven by ~~volume deleverage,~~cost mitigation actions and anticipated shifts in the timing of marketing spend into the second half of 2020 as a result of the coronavirus pandemic leading to significant reductions in marketing expense in the second quarter, reduced discretionary spending, cost savings related to the revitalization plan as well as cycling higher project costs in the prior year ~~distribution gains,~~related to brewery ~~start-up costs, and inflation, partially offset by cost savings.~~

~~Marketing, general and administrative expenses~~

Our marketing, general and administrative expenses decreased 7.7% and increased 0.5% in local currency for the three and nine months ended September 30, 2019, respectively, compared to prior year. For the three months ended September 30, 2019, the decrease was primarily driven by timing of brand investments and lower incentive compensation, partially offset by Truss joint venture start-up costs. For the nine months ended September 30, 2019, the increase was driven by Truss joint venture start-up costs, partially offset by lower employee-related expenses, including lower incentive compensation.

system implementations.

Other income (expense), net

~~For~~The change in other income (expense) during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, other expense~~2020 was primarily driven by unrealized mark-to-market ~~losses of $11.4 million and $3.5 million, respectively,~~changes on ~~the~~our HEXO ~~warrants received in connection with the formation of the Truss joint venture as further detailed in Part I - Item 1. Financial Statements,~~ ~~Note 11, "Derivative Instruments and Hedging Activities."~~warrants.

Europe Segment


	Three Months Ended								Nine Months Ended									Three Months Ended										Six Months Ended
	September 30, 2019			September 30, 2018			% change		September 30, 2019			September 30, 2018			% change			June 30, 2020		June 30, 2019		% change		June 30, 2020		June 30, 2019		% change
	(In millions, except percentages)																	(In millions, except percentages)
Financial volume in hectoliters⁽¹⁾⁽²⁾	6.873			6.891			(0.3	)%	17.618			18.211			(3.3	)%	Financial volume in hectoliters⁽¹⁾⁽²⁾	4.963		6.601		(24.8)	%	8.965		11.046		(18.8)	%
Sales⁽²⁾	$	831.9		$	860.6		(3.3	)%	$	2,210.7		$	2,353.0		(6.0	)%	Sales⁽²⁾	$	484.9	$	843.2	(42.5)	%	$	972.2	$	1,428.4	(31.9)	%
Excise taxes	(273.9		)	(282.7		)	(3.1	)%	(751.3		)	(814.7		)	(7.8	)%	Excise taxes	(177.8)		(289.1)		(38.5)	%	(347.5)		(498.6)		(30.3)	%
Net sales⁽²⁾	558.0			577.9			(3.4	)%	1,459.4			1,538.3			(5.1	)%	Net sales⁽²⁾	307.1		554.1		(44.6)	%	624.7		929.8		(32.8)	%
Cost of goods sold	(339.7		)	(346.9		)	(2.1	)%	(925.0		)	(968.2		)	(4.5	)%
Cost of goods sold⁽²⁾																	Cost of goods sold⁽²⁾	(217.9)		(348.3)		(37.4)	%	(469.9)		(613.2)		(23.4)	%
Gross profit	218.3			231.0			(5.5	)%	534.4			570.1			(6.3	)%	Gross profit	89.2		205.8		(56.7)	%	154.8		316.6		(51.1)	%
Marketing, general and administrative expenses	(124.4		)	(133.3		)	(6.7	)%	(403.6		)	(407.4		)	(0.9	)%	Marketing, general and administrative expenses	(99.3)		(159.8)		(37.9)	%	(232.4)		(302.9)		(23.3)	%
Special items, net⁽³⁾	(13.7		)	(0.6		)	N/M		(18.6		)	(5.4		)	N/M		Special items, net⁽³⁾	(0.2)		(1.7)		(88.2)	%	(7.7)		(5.1)		51.0	%
Operating income (loss)	80.2			97.1			(17.4	)%	112.2			157.3			(28.7	)%	Operating income (loss)	(10.3)		44.3		N/M		(85.3)		8.6		N/M
Interest income (expense), net	(1.5		)	(1.5		)	—	%	(4.3		)	(3.6		)	19.4	%	Interest income (expense), net	(1.3)		(1.5)		(13.3)	%	(2.7)		(2.8)		(3.6)	%
Other income (expense), net	(1.2		)	0.4			N/M		(2.1		)	(0.8		)	162.5	%	Other income (expense), net	0.6		0.6		—	%	0.2		(0.8)		N/M
Income (loss) before income taxes	$	77.5		$	96.0		(19.3	)%	$	105.8		$	152.9		(30.8	)%	Income (loss) before income taxes	$	(11.0)	$	43.4	N/M		$	(87.8)	$	5.0	N/M

N/M = Not meaningful


~~(1)~~	Excludes royalty volume of 0.492 million hectoliters and 1.265 million hectoliters for the three and nine months ended September 30, 2019, respectively, and excludes royalty volume of 0.522 million hectoliters and 1.318 million hectoliters for the three and nine months ended September 30, 2018, respectively.


~~(2)~~	~~Includes gross inter-segment sales and volumes, which are eliminated in the consolidated totals.~~

~~(3)~~

(1)Excludes royalty volume of 0.385 million and 0.749 million hectoliters for the three and six months ended June 30, 2020, and excludes royalty volume of 0.517 million and 0.859 million hectoliters for the three and six months ended June 30, 2019, respectively. The results for the three and six months ended June 30, 2019 have been recast to reflect the segment changes as part of the revitalization plan.

(2)Includes gross inter-segment sales, purchases, and volumes, which are eliminated in the consolidated totals.

(3)See Part I-Item 1. Financial Statements, Note 5, "Special Items"~~Note 5, "Special Items"~~ for detail of special items.

Significant events

We continue to monitor the coronavirus pandemic, which has had, and we currently expect will continue to have, a material adverse effect on our Europe results of operations for fiscal year 2020 and, possibly, beyond. As expected, we experienced a significant adverse impact in the first half of 2020 resulting from the closure of the on-premise channel for the majority of the second quarter. While we began to see some of the on-premise return in June, with the notable exception of the U.K., business and consumer behavior in the channel has been uncertain and has not returned to pre-pandemic levels. For the second quarter of 2020, we estimate that nearly all of our Europe volume and net sales, respectively, was from the off-premise channel. This compares to our 2019 estimate that approximately 40% and 50-55% of our Europe volume and net sales, respectively, was from the on-premise channel, which tends to be more profitable than the off-premise channel. In addition, the U.K. is further negatively being impacted by the on-premise restrictions as the U.K. comprises approximately 55% of our Europe net sales, which were $1,986.4 million for the year ended December 31, 2019 (the Europe net sales includes the U.K. factored brand business, which represents approximately 17% of this amount), and, we estimate, nearly 60% and approximately 70-75% of the U.K. volume and net sales revenue, respectively, originate from the U.K. on-premise channel. As a result of the coronavirus pandemic and resulting government-imposed restrictions and related on-premise closures, this portion of our business has effectively ceased entirely from the middle of March through early June across all of Europe and continuing into early July in the U.K. Additionally, the governmental or societal impositions on bars and restaurants and restrictions on public gatherings including the growing risk of a return of shutdowns, especially if prolonged in nature, we expect will continue to have adverse effects on on-premise traffic and, in turn, our business performance, cash flows and liquidity.

Our results for the six months ended June 30, 2020 include a reduction to net sales of $12.2 million and charges to cost of goods sold of $4.6 million related to the recognition of estimated sales returns and finished good obsolescence reserves and related costs resulting from the on-premise impacts of the coronavirus pandemic. These charges were primarily recognized during the first quarter of 2020, with immaterial adjustments for changes in estimates recognized in the second quarter.

The U.K. ~~was expected to leave~~exited the European Union (EU) on ~~October 31, 2019, however, the exit date has now been extended through~~ January 31, ~~2020. As a result, the terms of the withdrawal remain unknown,~~2020, which subjects our Europe segment to regulatory and market uncertainty as the U.K. remains in the ~~U.K.~~EU customs union and insingle market until December 31, 2020, while the ~~rest~~full terms of ~~Europe.~~future trade agreements continue to be negotiated. The GBP has recently become volatile as a result of ~~ongoing~~the government discussions ~~leading up~~related to the ~~initial extended exit date resulting in the weakening~~uncertainty and terms of the ~~GBP to~~exit as well as from the ~~USD during~~ongoing uncertainties and impacts of the ~~third quarter of 2019, which has had an adverse impact on our European revenues as reported in USD due to the significance of U.K. sales.~~coronavirus pandemic. Any ~~further~~ significant weakening of the GBP to the USD could have ~~a further~~an adverse impact on our ~~results.~~

~~During the third quarter of 2019, our Grolsch joint venture arrangement as well as the related brewing and distribution agreements for the~~ ~~Grolsch~~ ~~brands in the U.K. and Ireland were terminated. As a result, we have deconsolidated the Grolsch joint venture and recorded aggregate special charges of $12.4 million, primarily related~~results due to the ~~impairment~~importance and relative magnitude of ~~the associated definite-lived intangible assets. See Part I-Item 1. Financial Statements,~~ ~~Note 4, "Investments"~~ ~~for further discussion.~~U.K. sales.

Foreign currency impact on results

Our Europe segment operates in numerous countries within Europe and each country's operations utilize distinct currencies. Foreign currency movements ~~unfavorably~~favorably impacted our Europe ~~USD income before income taxes by $4.9 million and $6.8 million for the three and nine months ended September 30, 2019, respectively. Included in this amount are both~~

translational and transactional impacts of changes in foreign exchange rates. The impact of transactional foreign currency gains and losses is recorded within other income (expense) in our unaudited condensed consolidated statements of operations.

~~Volume and net sales~~

Our Europe brand volume decreased 0.7% and 3.3% for the three and nine months ended September 30, 2019, respectively, compared to prior year, due to soft industry demand which also drove the 0.3% decrease in financial volume for the third quarter. The decrease in brand volume for the nine months ended September 30, 2019 was also driven by cycling the benefit of higher consumption from the World Cup in the second quarter of 2018.

Net sales per hectoliter on a brand volume basis increased 2.9% and 4.6% in local currency for the three and nine months ended September 30, 2019, respectively, compared to prior year, driven by positive net pricing and favorable sales mix, partially offset by slight decline in brand volumes. Net sales per hectoliter on a reported basis increased 1.9% and 4.2% in local currency for the three and nine months ended September 30, 2019, respectively, compared to prior year.

~~Cost of goods sold~~

Cost of goods sold per hectoliter increased 3.5% and 5.0% in local currency for the three and nine months ended September 30, 2019, respectively, versus prior year, primarily due to inflation. For the nine months ended September 30, 2019, the increase was also driven by volume deleverage.

~~Marketing, general and administrative expenses~~

Marketing, general and administrative expenses decreased 1.7% and increased 5.6% in local currency for the three and nine months ended September 30, 2019, respectively, compared to prior year. For the three months ended September 30, 2019, the decrease was primarily driven by lower incentive compensation, offsetting higher marketing investments focused on our national champion brands, and premiumization initiatives. For the nine months ended September 30, 2019, the increase was primarily due to higher marketing investments focused on our national champion brands and premiumization initiatives, as well as cycling a benefit from the partial reversal of bad debt provisions in the second quarter of 2018, partially offset by lower incentive compensation.

~~International Segment~~

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 % change September 30, 2019 September 30, 2018 % change
(In millions, except percentages)
Financial volume in hectoliters⁽¹⁾
0.443
0.577
(23.2 )% 1.368
1.734
(21.1 )%
Sales $ 68.8
$ 80.7
(14.7 )% $ 196.8
$ 231.6
(15.0 )%
Excise taxes (12.3 ) (13.7 ) (10.2 )% (33.5 ) (39.2 ) (14.5 )%
Net sales 56.5
67.0
(15.7 )% 163.3
192.4
(15.1 )%
Cost of goods sold⁽²⁾
(34.3 ) (42.0 ) (18.3 )% (102.3 ) (123.9 ) (17.4 )%
Gross profit 22.2
25.0
(11.2 )% 61.0
68.5
(10.9 )%
Marketing, general and administrative expenses (17.1 ) (24.1 ) (29.0 )% (52.9 ) (59.8 ) (11.5 )%
Special items, net⁽³⁾
(12.3 ) (0.4 ) N/M
(13.1 ) (3.2 ) N/M
Operating income (loss) (7.2 ) 0.5
N/M
(5.0 ) 5.5
N/M
Other income (expense), net (0.5 ) (1.5 ) (66.7 )% (0.5 ) (1.5 ) (66.7 )%
Income (loss) before income taxes $ (7.7 ) $ (1.0 ) N/M
$ (5.5 ) $ 4.0
N/M

~~N/M = Not meaningful~~


~~(1)~~	Excludes royalty volume of 0.677 million hectoliters and 1.681 million hectoliters for the three and nine months ended September 30, 2019, respectively, and excludes royalty volume of 0.649 million hectoliters and 1.626 million hectoliters for the three and nine months ended September 30, 2018, respectively.


~~(2)~~	~~Includes gross inter-segment purchases, which are eliminated in the consolidated totals.~~


~~(3)~~	~~See Part I-Item 1. Financial Statements,~~ ~~Note 5, "Special Items"~~ ~~for detail of special items.~~

~~Significant events~~

During the third quarter of 2019, we recognized an aggregate impairment loss of $12.2 million related to the goodwill of our India reporting unit and a definite-lived brand intangible asset, which were recorded as special items. See Part I-Item 1. Financial Statements, ~~Note 7, "Goodwill and Intangible Assets"~~ ~~for additional information.~~

~~Foreign currency impact on results~~

Our International segment operates in numerous countries around the world and each country's operations utilize distinct currencies. Foreign currency movements unfavorably impacted our International segment's USD loss before income taxes by ~~$0.9~~$1.2 million and ~~$1.6~~$4.0 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively. Included in this amount are both translational and transactional impacts of changes in foreign exchange rates. The impact of transactional foreign currency gains and losses is recorded within other income (expense) in our unaudited condensed consolidated statements of operations.

Volume and net sales

Our ~~International~~Europe brand volume decreased ~~8.6%~~21.4% and ~~9.3% in~~16.2% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, compared to prior year, primarily driven by India supply chain~~2020, respectively, as a result of the coronavirus pandemic. Financial volume declined 24.8% and ~~demand constraints, economic decline in Paraguay~~18.8% for the three and ~~Puerto Rico along with timing of STWs. For the nine~~six months ended ~~September~~June 30, ~~2019,~~2020 respectively, also as a result of the ~~decrease was also due to higher net pricing on~~ ~~Coors Light~~ ~~in Mexico, partially offset by growth in several of our focus markets.~~coronavirus pandemic.

Net sales per hectoliter on a brand volume basis decreased ~~7.6%~~12.7% and ~~5.3%~~9.6% in local currency infor the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to prior year, ~~primarily due to~~driven by unfavorable channel and geographic mix, ~~partially offset by positive net pricing. For~~particularly in the ~~nine months ended September 30, 2019,~~higher margin U.K. business, which has a more significant exposure to the ~~decrease~~on-premise channel and remained closed until early July compared to other European markets which started to reopen gradually toward the end of May and early June as a result of the coronavirus pandemic. Net sales per hectoliter on a brand volume basis was also ~~driven~~impacted by the ~~shift~~estimated keg sales returns primarily recognized in the first quarter of 2020 related to ~~local production in Mexico.~~the on-premise impacts resulting from the coronavirus pandemic and slightly unfavorable pricing during the second quarter of 2020. Net sales per hectoliter on a reported basis ~~increased 10.0%~~decreased 23.4% and ~~9.0%~~14.6% in local currency for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to prior year.

Cost of goods sold

Cost of goods sold per hectoliter ~~increased 6.1%~~decreased 13.4% and ~~5.4%~~2.5% in local currency for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, ~~compared to~~versus prior year, ~~primarily~~ driven by changes in geographic mix, partially offset by volume deleverage and ~~inflation.~~cost inflation as well as the estimated finished good obsolescence reserves and costs resulting from the on-premise impacts of the coronavirus pandemic recognized primarily in the first quarter of 2020.

Marketing, general and administrative expenses

Marketing, general and administrative ~~expense~~expenses decreased ~~29.5%~~35.5% and ~~10.7%~~20.8% in local currency infor the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to prior year, ~~driven by lower marketing spend~~primarily as a result of actions taken to mitigate the impacts associated with the coronavirus pandemic and lower incentive compensation. For the nine months ended September 30, 2019, the decrease was partially offset by cycling the $2.0 million of settlement proceeds received related to our Colombia business in the first quarter of 2018.

Unallocated

~~Corporate~~


	Three Months Ended								Nine Months Ended									Three Months Ended										Six Months Ended
	September 30, 2019			September 30, 2018			% change		September 30, 2019			September 30, 2018			% change			June 30, 2020		June 30, 2019		% change		June 30, 2020		June 30, 2019		% change
	(In millions, except percentages)																	(In millions, except percentages)
Financial volume in hectoliters	—			—			—	%	—			—			—	%	Financial volume in hectoliters	—		—		—	%	—		—		—	%
Sales	$	0.1		$	0.2		(50.0	)%	$	0.6		$	0.7		(14.3	)%	Sales	$	—	$	—	—	%	$	—	$	—	—	%
Excise taxes	—			—			—	%	—			—			—	%	Excise taxes	—		—		—	%	—		—		—	%
Net sales	0.1			0.2			(50.0	)%	0.6			0.7			(14.3	)%	Net sales	—		—		—	%	—		—		—	%
Cost of goods sold	(16.7		)	(23.2		)	(28.0	)%	(16.7		)	(63.0		)	(73.5	)%	Cost of goods sold	59.4		(31.2)		N/M		(39.7)		2.9		N/M
Gross profit	(16.6		)	(23.0		)	(27.8	)%	(16.1		)	(62.3		)	(74.2	)%	Gross profit	59.4		(31.2)		N/M		(39.7)		2.9		N/M
Marketing, general and administrative expenses	(34.8		)	(48.9		)	(28.8	)%	(138.4		)	(161.4		)	(14.3	)%	Marketing, general and administrative expenses	—		—		—	%	—		—		—	%
Special items, net⁽¹⁾	(1.3		)	—			N/M		(1.5		)	328.0			N/M
Special items, net																	Special items, net	—		—		—	%	—		—		—	%
Operating income (loss)	(52.7		)	(71.9		)	(26.7	)%	(156.0		)	104.3			N/M		Operating income (loss)	59.4		(31.2)		N/M		(39.7)		2.9		N/M
Interest expense, net	(66.7		)	(73.5		)	(9.3	)%	(204.8		)	(231.7		)	(11.6	)%
Interest income (expense), net																	Interest income (expense), net	(67.7)		(68.4)		(1.0)	%	(134.2)		(138.1)		(2.8)	%
Other pension and postretirement benefits (costs), net	8.0			7.6			5.3	%	25.0			27.5			(9.1	)%	Other pension and postretirement benefits (costs), net	7.6		8.4		(9.5)	%	15.1		17.0		(11.2)	%
Other income (expense), net	0.2			1.2			(83.3	)%	3.4			4.2			(19.0	)%	Other income (expense), net	1.9		(0.1)		N/M		1.9		0.7		171.4	%
Income (loss) before income taxes	$	(111.2	)	$	(136.6	)	(18.6	)%	$	(332.4	)	$	(95.7	)	N/M		Income (loss) before income taxes	$	1.2	$	(91.3)	N/M		$	(156.9)	$	(117.5)	33.5	%

N/M = Not meaningful


~~(1)~~	~~See Part I-Item 1. Financial Statements,~~ ~~Note 5, "Special Items"~~ ~~for detail of special items.~~

Cost of goods sold

The unrealized changes in fair value on our commodity swaps, which are economic hedges, are recorded as cost of goods sold within ~~our Corporate business activities.~~unallocated and make up the entirety of the activity presented within cost of goods sold in the table above for both the three and six months ended June 30, 2020 and June 30, 2019. As the exposure we are managing is realized, we reclassify the gain or loss to the segment in which the underlying exposure resides, allowing our segments to realize the economic effects of the derivative without the resulting unrealized mark-to-market volatility. Lower commodity market prices relative to our hedged positions on our commodity swaps drove total unrealized mark-to-market losses of $14.9 million and $12.0 million, respectively, recognized in cost of goods sold for the three and nine months ended September 30, 2019, and total unrealized mark-to-market losses of $23.2 million and $62.8 million, respectively, recognized in cost of goods sold for the three and nine months ended September 30, 2018.

~~Marketing, general and administrative expenses~~

Marketing, general and administrative expenses decreased in the three and nine months ended September 30, 2019, primarily due to lower incentive compensation, and for the nine months ended September 30, 2019, the decrease was also due to higher integration costs recognized in the prior year. Specifically, we recorded integration costs of $19.1 million for the nine months ended September 30, 2019, and $24.6 million for the nine months ended September 30, 2018, within marketing, general and administrative expenses.

Interest ~~expense,~~income (expense), net

Net interest expense decreased ~~for~~during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the prior year, primarily driven by the repayment of debt as part of our deleveraging ~~commitments as well as risk management strategies to reduce interest expense.~~commitments. See Part I—Item 1. Financial Statements, Note 8, "Debt" ~~and~~ ~~Note 11, "Derivative Instruments and Hedging Activities"~~ for further details.

Liquidity and Capital Resources

Our primary sources of liquidity ~~include~~have included cash provided by operating activities and access to external capital. However, a continued worldwide disruption could materially affect our future access to our sources of liquidity. In the event of a sustained market deterioration and continued declines in net sales, profit and operating cash flow, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions. We currently believe that our cash and cash equivalents, cash flows from operations and cash provided by short-term and long-term borrowings, when necessary, will be ~~more than~~ adequate to meet our ongoing operating requirements, scheduled principal and interest payments on debt, ~~anticipated dividend~~

~~payments~~capital expenditures and ~~capital expenditures~~other obligations for the twelve months subsequent to the date of the issuance of this quarterly report,

and our long-term liquidity requirements. Additionally, in the second quarter of 2020, as part of our planned actions to mitigate liquidity considerations related to the coronavirus pandemic, we amended our $1.5 billion revolving credit facility to revise the leverage ratios under the financial maintenance covenant upwards for the six fiscal quarters beginning second quarter 2020 to consider the effects of the pandemic on our business. Separately we have entered into the COVID Corporate Financing Facility commercial paper program in the U.K. allowing for an incremental borrowing capacity of up to GBP 300 million as further discussed below.

AWe are currently focused on navigating the recent challenges presented by the coronavirus pandemic by preserving our liquidity and managing our cash flow through taking preemptive action to enhance our ability to meet our short-term liquidity needs. Specifically, we have taken several actions and considered various potential actions that may be needed to meet short-term and mid-term liquidity needs and have resources in place should we need to act on any of these quickly. Such potential actions include, but are not limited to, drawing on our $1.5 billion revolving credit facility, including issuing commercial paper under our U.S. commercial paper program, issuing, as necessary, up to GBP 300 million in commercial paper under the COVID Corporate Financing Facility in the U.K.(see Part I—Item 1. Financial Statements, Note 8, "Debt" regarding details of our current borrowings and remaining capacities under these programs), further accessing the capital markets, reducing discretionary spending including marketing, general and administrative as well as capital expenditures, asset monetization, and taking advantage of certain governmental programs such as furloughs in the U.K. and government relief and payment deferral programs, for example by the U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), discussed below, and other such government-sponsored legislation and programs. In addition, we and our board of directors continue to actively evaluate various capital allocation considerations, which most recently led to taking the action in late May 2020 to suspend our regular quarterly dividends otherwise payable in fiscal year 2020.

While we currently expect to have the necessary cash on hand to repay obligations when due, continued declines in net sales and profit could have a material adverse effect on our financial operations, cash flow and our ability to raise capital. The coronavirus pandemic is ongoing, and because of its dynamic nature, including uncertainties relating to the ultimate spread of the virus, the severity of the disease, the duration of the pandemic, the duration of on-premise closures and related prolonged weakening of economic or other negative conditions, and governmental reactions, we cannot fully anticipate future conditions given the substantial uncertainties in the economy in general. We may have unexpected costs and liabilities; revenue and cash provided by operations may decline; macroeconomic conditions may continue to weaken; prolonged and severe levels of unemployment may negatively impact our consumers; and competitive pressures may increase. These factors may result in difficulty maintaining liquidity, meeting our deleverage commitments and complying with our revolving credit facility covenants. As a result, our credit ratings could be downgraded, which would increase our costs of future borrowing and harm our ability to refinance our debt in the future on acceptable terms or at all. However, in anticipation of these uncertainties, we entered into Amendment No. 2 to our $1.5 billion revolving credit facility on June 19, 2020. While the amendment did not increase our borrowing capacity or extend the term of the facility, it, among other things, (i) temporarily increases certain levels of the applicable rate by 25 basis points for the period beginning June 19, 2020 and ending on the last day of the fiscal quarter ending September 30, 2021, and (ii) revises the leverage ratios under the financial maintenance covenant for each fiscal quarter ending on or after June 30, 2020 through the maturity of the Credit Agreement.

There can be no assurance that we will be able to secure additional liquidity if our revolving credit facility is fully drawn, the capital markets become inaccessible or if our credit rating is adversely impacted, which may result in difficulties in accessing debt markets or increase our debt costs. Even if we have access to the capital markets, we may not be able to raise capital on acceptable terms or at all. If we are unable to maintain or access adequate liquidity, our ability to timely pay our obligations when due could be adversely affected.

Continued disruption and declines in the global economy could also impact our customers' liquidity and capital resources and therefore our ability to collect, or the timeliness of collection of our accounts receivable from them, which may have a material adverse impact on our performance, cash flows and capital resources. We continue to monitor our accounts receivable aging and have recorded reserves as appropriate. In addition, measures taken by governmental agencies to provide relief to businesses could further impact our ability to collect from customers. See Part I—Item 1. Financial Statements, Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” for additional discussion related to our accounts receivable and associated reserves.

Additionally, in response to the coronavirus pandemic, various governmental authorities globally have announced relief programs which we continue to monitor and evaluate, such as the CARES Act in the U.S. Certain of these relief programs provide temporary deferrals of income and non-income based tax payments, which have positively impacted our operating cash flows in the first half of 2020. We anticipate that a significant portion of the over $500 million of cash flow benefits recognized through the second quarter of 2020 resulting from these temporary deferrals will reverse in the second half of 2020, with the remaining amounts reversing beyond this fiscal year as these deferred payments programs end and payments are due.

While a significant portion of our cash flows from operating activities is generated within the U.S., our cash balances may be comprised of cash held outside the U.S. and in currencies other than USD. As of ~~September~~June 30, ~~2019,~~2020, approximately ~~89%~~69% of our cash and cash equivalents ~~were~~was located outside the U.S., largely denominated in foreign currencies. The recent fluctuations in foreign currency exchange rates may have a material impact on these foreign cash balances. We accrue for tax consequences on the earnings of our foreign subsidiaries upon repatriation. When the earnings are considered indefinitely reinvested outside of the U.S., we do not accrue taxes. However, we ~~will~~ continue to assess the impact of the 2017 Tax Act and related U.S. Department of Treasury proposed, temporary and final regulations, on the tax consequences of future cash repatriations. We utilize a variety of tax planning and financing strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed. We periodically review and evaluate these strategies, including external committed and non-committed credit agreements accessible by MCBC and each of our operating subsidiaries. We believe these financing arrangements, along with the cash generated from the operations of our U.S. ~~segment,~~business and other liquidity measures resulting from considerations of the on-going coronavirus global pandemic, as discussed above, are sufficient to fund our current cash needs in the U.S.

Additionally, our cash balances in foreign countries are often subject to additional restrictions and covenants. We may, therefore, have difficulties repatriating cash held outside of the U.S. which would also be subject to various repatriation taxes. In some countries repatriation of certain foreign balances is restricted by local laws and could have adverse tax consequences if we were to move the cash to another country. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. or other countries and may adversely affect our liquidity.

Separately, as discussed in Part I - Item 1. Financial Statements, Note 6, "Income Tax", the U.S. Department of Treasury recently enacted final hybrid regulations which impact tax positions we took in 2018 and 2019 and have resulted in additional income tax expense of approximately $135 million recognized during the second quarter of 2020. The impact of the finalized regulations could result in cash tax outflows up to this amount in 2021. We continue to analyze the potential cash impacts of the final regulations to minimize any cash outflows.

Cash Flows and Use of Cash

Our business generates positive operating cash flow each year, and our debt maturities are of a longer-term nature. However, our liquidity could be impacted significantly by the risk factors we described in Part I—Item 1A. "Risk Factors" in our Annual ~~Report.~~Report, Part II-Item 1A. "Risk Factors" in this report and the items listed above.

Cash Flows from Operating Activities

Net cash provided by operating activities of approximately ~~$1.3~~$1.1 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2019 decreased~~2020 increased by ~~$503.2~~$231.9 million compared to net cash provided by operating activities of $828.0 million during the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. This ~~decrease is~~benefit was primarily driven by ~~cycling the proceeds received during the first quarter~~favorable timing of ~~2018 of $328.0 million related to the Adjustment Amount (as defined~~working capital, lower cash paid for taxes and ~~further discussed in Part I—Item 1. Financial Statements,~~ ~~Note 5, "Special Items"), as well as~~lower interest paid, partially offset by lower net income adjusted for non-cash ~~add backs~~add-backs during the six months ended June 30, 2020. Notably, working capital and ~~higher~~ cash paid for taxes ~~partially offset by lower interest~~benefited from over $500 million in deferred tax payments from various government-sponsored payment deferral programs initiated in response to the coronavirus pandemic, of which we currently anticipate a significant portion to be paid ~~during~~in the ~~nine months ended September 30, 2019.~~second half of 2020 with the remaining amounts to be paid beyond this fiscal year.

Cash Flows from Investing Activities

Net cash used in investing activities of ~~$319.0~~$341.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019 decreased~~2020 increased by ~~$214.5~~$173.7 million compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, driven primarily by the receipt of $94.2 million of net proceeds from the sale of our Montreal brewery during the second quarter of 2019, higher capital expenditures and lower net cash inflows from other investing activities ~~compared to outflows in the prior year,~~ including the proceeds of approximately $47 million received from the voluntary settlement of our cross currency swaps during the second quarter of ~~2019, and higher cash paid for acquisitions in the prior year, as well as lower capital expenditures.~~2019.

Cash Flows from Financing Activities

Net cash used in financing activities was $449.8 million for the six months ended June 30, 2020 compared to net cash used in financing activities of approximately ~~$1.6~~$1.2 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2019 compared to $923.4 million for the nine months ended September 30, 2018.~~2019. This ~~increase~~decrease was primarily driven by ~~higher~~lower net ~~repayments on~~ debt ~~and borrowings~~repayments for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018, as well as increased~~2019 and lower dividends paid resulting from the suspension of dividend payments in the ~~third~~second quarter of ~~2019,~~2020, partially offset by an increase in borrowings under our commercial paper ~~program for the nine months ended September 30, 2019 compared to the repayment of borrowings under our commercial paper program for the nine months ended September 30, 2018.~~program.

Capital Resources

Cash and Cash Equivalents

As of ~~September~~June 30, ~~2019,~~2020, we had total cash and cash equivalents of ~~$410.2~~$780.8 million, compared to ~~approximately $1.1 billion~~$523.4 million as of December 31, ~~2018~~2019 and ~~$750.1~~$490.2 million as of ~~September~~June 30, ~~2018.~~2019. The ~~decrease~~increase in cash and cash equivalents from both prior periods was primarily driven by ~~debt repayments, capital expenditures and dividend payments, partially offset by~~ cash generated from operating activities, including the above-mentioned deferred tax payments from

various government-sponsored payment deferral programs and ~~proceeds received from~~borrowings under our commercial paper program, partially offset by the ~~sale~~repayment of ~~our Montreal brewery~~debt, capital expenditures and ~~from the voluntary settlement of our cross currency swaps during the second quarter of 2019.~~

dividend payments.

Borrowings

During the first quarter of ~~2019, we repaid our EUR 500 million variable rate notes and our $500 million 1.90% notes, both of which matured in March 2019. Additionally, on July 15, 2019,~~2020, we repaid our $500 million ~~1.45%~~2.25% notes, ~~through a combination of cash on hand and commercial paper.~~which matured in March 2020. Notional amounts below are presented in USD based on the applicable exchange rate as of ~~September~~June 30, ~~2019.~~2020. We have economically converted ~~our $500 million 2.25% senior notes due 2020 and~~ a portion of our $1.0 billion 2.1% senior notes due 2021 to EUR denominated using cross currency swaps of ~~$500 million and~~ $400 ~~million, respectively.~~million. Refer to Part I—Item 1. Financial Statements, Note 8, "Debt" for ~~details~~details.

~~The impact of the reclassification of finance leases to debt is included in the "other" column in the table above. See Part I—Item 1. Financial Statements,~~
~~Note 2, "New Accounting Pronouncements"~~ ~~for further details.~~

Based on the credit profile of our lenders that are party to our credit facilities, we are confident in our ability to continue to draw on our revolving credit facility if the need arises. As of ~~September~~June 30, ~~2019,~~2020, we had ~~$1.2~~$1.3 billion available to draw on our $1.5 billion revolving credit facility, as the borrowing capacity is also reduced by borrowings under our commercial paper program. As of ~~September~~June 30, ~~2019,~~2020, we had total outstanding borrowings under our commercial paper program of ~~$264.9~~approximately $200 million. ~~During the third quarter~~Subsequent to June 30, 2020, we had net commercial paper payments of ~~2019,~~approximately $25 million, for a total amount outstanding of approximately $175 million as of July 30, 2020. As such, as of July 30, 2020, we ~~extended the maturity date of~~have approximately $1.3 billion available to draw on our total $1.5 billion revolving credit ~~facility by one year to July 7, 2024.~~facility. We had no borrowings drawn on this revolving credit facility and no commercial paper borrowings as of December 31, ~~2018.~~ 2019. Additionally, we expect to use commercial paper issuances and cash on hand to fund the upcoming repayment of our CAD 500 million 2.75% notes due September 2020, which we began purchasing CAD in anticipation of this upcoming maturity during July 2020.

Separately, on May 26, 2020, Molson Coors Brewing Company (UK) Limited (“MCBC U.K.”), a subsidiary of MCBC that operates and manages the Company’s business in the U.K., established a commercial paper facility for the purpose of issuing short-term, unsecured Sterling-denominated notes that are eligible for purchase under the Joint HM Treasury and Bank of England’s COVID Corporate Financing Facility commercial paper program (the “CCFF Program”) in an aggregate principal amount up to GBP 300 million, which may be increased from time to time as provided in the Dealer Agreement (as defined in Part I—Item 1. Financial Statements, Note 8, "Debt"). Commercial paper issuances under the CCFF Program do not impact the borrowing capacity under our revolving credit facility. We had no borrowings outstanding under the CCFF Program as of June 30, 2020 or July 30, 2020.

In addition, we intend to further utilize our cross-border, cross currency cash pool as well as our commercial paper ~~program~~programs for liquidity as needed. We also have JPY, ~~overdraft facilities, and~~ CAD, GBP and USD ~~lines~~overdraft facilities as well as an additional JPY line of credit ~~with~~across several banks should we need additional short-term liquidity.

Under the terms of each of our debt facilities, we must comply with certain restrictions. These include customary events of default and specified representations, warranties and covenants, as well as covenants that restrict our ability to incur certain additional priority indebtedness (certain thresholds of secured consolidated net tangible assets), certain leverage threshold percentages, create or permit liens on assets and restrictions on mergers, acquisitions and certain types of sale lease-back transactions. ~~Additionally, under the $1.5 billion~~

On June 19, 2020, we entered into to an amendment to our existing revolving credit facility agreement, which among other things, revised the leverage ratios under the financial maintenance covenant for each fiscal quarter ending on or after June 30, 2020 through the maturity of the credit facility. The maximum leverage ratio, as defined by the amended revolving credit facility agreement as of June 30, 2020 is 4.75x net debt to EBITDA, with an increase to 5.25x net debt to EBITDA as of the last day of the fiscal quarter ending September 30, 2020 through March 31, 2021, followed by a ~~decline~~0.50x reduction to 4.75x net debt to EBITDA for the fiscal quarter ending June 30, 2021. The leverage ratio requirement as of the last day of the fiscal quarter ending September 30, 2021 is reduced by 0.25x to 4.50x net debt to EBITDA, with a further 0.50x reduction to 4.00x net debt to EBITDA as of the last day of the fiscal quarter ending December 31, ~~2020.~~2021 through maturity of the credit facility. As of ~~September~~June 30, 2020 and December 31, 2019, we were in compliance with all of these restrictions, have met such financial ratios and have met all debt payment obligations. All of our outstanding senior notes as of ~~September~~June 30, ~~2019~~2020 rank pari-passu.

See Part I—Item 1. Financial Statements, Note 8, "Debt" for a complete discussion and presentation of all borrowings and available sources of borrowing, including lines of credit.

Credit Rating

Our current long-term credit ratings are BBB-/~~Stable~~Negative Outlook, Baa3/Stable Outlook and BBB(Low)/~~Stable~~Negative Outlook with Standard & Poor's, Moody's and DBRS, respectively. Our short-term credit ratings are A-3, Prime-3 and R-2(low), respectively. A securities rating is not a recommendation to buy, sell or hold securities, and it may be revised or withdrawn at any time by the applicable rating agency.

Foreign Exchange

Foreign exchange risk is inherent in our operations primarily due to the significant operating results that are denominated in currencies other than USD. Our approach is to reduce the volatility of cash flows and reported earnings which result from currency fluctuations rather than business related factors. Therefore, we closely monitor our operations in each country and seek to adopt appropriate strategies that are responsive to foreign currency fluctuations. Our financial risk management policy is intended to offset a portion of the potentially unfavorable impact of exchange rate changes on net income and earnings per share. See Part II—Item 8. Financial Statements and Supplementary Data, Note 16, "Derivative Instruments and Hedging Activities" of our Annual Report for additional information on our financial risk management strategies.

Our consolidated financial statements are presented in USD, which is our reporting currency. Assets and liabilities recorded in foreign currencies that are the functional currencies for the respective operations are translated at the prevailing exchange rate at the balance sheet date. Translation adjustments resulting from this process are reported as a separate component of other comprehensive income. Revenue and expenses are translated at the ~~weighted-average~~average exchange rates during the ~~period.~~respective period throughout the year. Gains and losses from foreign currency transactions are included in earnings for the period. The significant exchange rates to the USD used in the preparation of our consolidated financial results for the primary foreign currencies used in our foreign operations (functional currency) are as follows:


	Three Months Ended			Six Months Ended
	June 30, 2020	June 30, 2019	June 30, 2020	June 30, 2019
Weighted-Average Exchange Rate (1 USD equals)
Canadian Dollar (CAD)	1.36	1.33	1.36	1.33
Euro (EUR)	0.91	0.89	0.91	0.89
British Pound (GBP)	0.81	0.78	0.80	0.78
Czech Koruna (CZK)	23.91	22.69	23.80	22.67
Croatian Kuna (HRK)	6.74	6.56	6.75	6.56
Serbian Dinar (RSD)	107.44	104.46	106.92	104.11
Romanian Leu (RON)	4.35	4.22	4.35	4.18
Bulgarian Lev (BGN)	1.77	1.74	1.77	1.73
Hungarian Forint (HUF)	313.79	286.00	311.51	284.89

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Weighted-Average Exchange Rate (1 USD equals)
Canadian Dollar (CAD) 1.31

1.31
1.32
1.29
Euro (EUR) 0.90

0.86
0.89
0.83
British Pound (GBP) 0.81

0.77
0.79
0.74
Czech Koruna (CZK) 23.30

22.07
22.75
21.72
Croatian Kuna (HRK) 6.62

6.38
6.58
6.30
Serbian Dinar (RSD) 106.37

101.89
104.55
97.41
Romanian Leu (RON) 4.26

4.00
4.23
3.94
Bulgarian Lev (BGN) 1.75

1.69
1.74
1.66
Hungarian Forint (HUF) 293.83

278.50
289.90
263.61

As of
September 30, 2019 December 31, 2018
Closing Exchange Rate (1 USD equals)
Canadian Dollar (CAD) 1.32
1.36
Euro (EUR) 0.92
0.87
British Pound (GBP) 0.81
0.78
Czech Koruna (CZK) 23.67
22.43
Croatian Kuna (HRK) 6.80
6.46
Serbian Dinar (RSD) 107.87
103.20
Romanian Leu (RON) 4.35
4.06
Bulgarian Lev (BGN) 1.79
1.71
Hungarian Forint (HUF) 307.26
279.94


	As of
	June 30, 2020	December 31, 2019
Closing Exchange Rate (1 USD equals)
Canadian Dollar (CAD)	1.36	1.30
Euro (EUR)	0.89	0.89
British Pound (GBP)	0.81	0.75
Czech Koruna (CZK)	23.74	22.70
Croatian Kuna (HRK)	6.74	6.63
Serbian Dinar (RSD)	104.71	104.93
Romanian Leu (RON)	4.31	4.27
Bulgarian Lev (BGN)	1.74	1.74
Hungarian Forint (HUF)	315.51	295.21

The weighted-average exchange rates in the above table have been calculated based on the average of the foreign exchange rates during the relevant period and have been weighted according to the foreign denominated earnings ~~before interest and taxes~~from

operations of the USD equivalent. During the first half of 2020, the coronavirus pandemic has resulted in increased volatility in exchange rates including the weakening of the CAD and GBP versus the USD. If foreign currencies in the countries in which we operate devalue significantly in future periods, most significantly the CAD, GBP and other European operating currencies included in the above table, then the impact on USD reported earnings may be material.

Capital Expenditures

We incurred ~~$370.0~~$271.4 million, and have paid ~~$457.3~~$345.1 million, for capital improvement projects worldwide in the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, excluding capital spending by equity method joint ventures, representing ~~a decrease~~an increase of ~~$49.4~~$27.9 million from the ~~$419.4~~$243.5 million of capital expenditures incurred in the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. This ~~decrease~~increase was primarily due to the timing of projects, asincluding the on-going construction of the new brewery in Longueuil, Quebec and increased investments to modernize our Golden, Colorado brewery.

As a partial mitigating action to prepare to offset some of the financial implications of the coronavirus pandemic, we ~~currently expect to incur total~~have reduced our capital ~~expenditures of~~expenditure plans by approximately ~~$700~~$200 million for full year ~~2019,~~2020, based on foreign exchange rates as of ~~September~~June 30, ~~2019.~~2020. This expectation includes capital expenditures associated with the construction of our new ~~Chilliwack, British Columbia brewery, which was substantially completed in the third quarter of 2019, the new~~ Longueuil, Quebec brewery, which is ~~currently underway~~under construction and not currently expected to be completed until 2021, and ~~commencement of the~~ increased investment to modernize our Golden, Colorado brewery, which ~~is expected to begin~~began in the fourth quarter of ~~2019~~2019. However, certain aspects of both projects are currently delayed and may continue ~~over~~to be delayed as a result of the ~~next several years, as well as the consolidated capital expenditures related to our Truss joint venture with HEXO in Canada.~~pandemic.

We ~~continue~~are currently focused on navigating the challenges presented by the coronavirus pandemic. Specifically, we have considered various actions that may be needed in relation to mitigation efforts, such as, but not limited to, reducing and/or delaying discretionary capital expenditure spend.

In light of this, we have heightened our focus on where and how we employ our remaining planned capital expenditures, ~~specifically~~with an emphasis on strengthening our focus on required returns on invested capital as we determine how to best allocate cash within the business.

Contractual Obligations and Commercial Commitments

There were no material changes to our contractual obligations and commercial commitments outside the ordinary course of business or due to factors similar in nature to inflation, changing prices on operations or changes in the remaining terms of the contracts since December 31, ~~2018,~~2019, as reported in Part II - Item 7. Management's Discussion and Analysis, Contractual Obligations and Commercial Commitments in our Annual Report, with the exception of the repayment of our $500 million ~~1.90% notes and EUR 500 million~~2.25% notes during the first quarter of ~~2019,~~2020. However, we continue to review and monitor our contractual obligations and commitments relative to the ~~repayment of our $500 million 1.45% notes in July 2019.~~potential considerations resulting from the on-going coronavirus pandemic.

Guarantees

We guarantee indebtedness and other obligations to banks and other third parties for some of our equity method investments and consolidated subsidiaries. See Part I - Item 1. Financial Statements, Note 12, "Commitments and Contingencies" for further discussion.

Contingencies

We are party to various legal proceedings arising in the ordinary course of business, environmental litigation and indemnities associated with our sale of Kaiser to FEMSA. See Part I—Item 1. Financial Statements, Note 12, "Commitments and Contingencies" for further discussion.

Off-Balance Sheet Arrangements

Refer to Part II—Item 8 Financial Statements, Note 18, "Commitments and Contingencies" in our Annual Report for discussion of off-balance sheet arrangements. As of ~~September~~June 30, ~~2019,~~2020, we did not have any other material off-balance sheet arrangements (as defined in Item 303(a)(4)(ii) of Regulation S-K).

Outlook

~~On October 28, 2019,~~We have seen the benefits of our work in response to the short-term impacts of the coronavirus pandemic and are confident in how we ~~initiated~~are positioning the business for the long term. However, we are still actively monitoring the continued evolution of the coronavirus pandemic and resulting impacts to our business. While we began to see some of the on-premise return in June in many of our markets, with the notable exception of the U.K. which remained closed until early July, business in the channel has been slow, remains uncertain and has not returned to pre-pandemic levels. Therefore, as a ~~revitalization plan designed to allow Molson Coors to invest across our portfolio at the level necessary to drive long-term, sustainable success. As part~~result of this ~~plan,~~uncertainty, along with the growing risk of a return of shutdowns in certain markets, we currently continue to expect a

significant adverse impact to both net sales and profit performance for the third quarter and fiscal year 2020, and, possibly, beyond.

The coronavirus pandemic continues to impact our business due to on-premise losses across all our geographies, and disproportionately in Europe, and we expect negative trends in volume, net sales revenue, mix, and unfavorable fixed cost absorption in cost of goods sold will continue for the foreseeable future. Off-premise demand has been strong, but it has not fully offset the on-premise losses and, while the current on-premise trends continue, we do not expect that any increase in total off-premise volumes due to ~~accelerate investments behind~~channel shifting will be sufficient to offset the on-premise losses. In addition, where we have seen shifts in demand to the off-premise, and certain package types, this has strained our ~~largest~~supply chain and package availability, particularly with aluminum can demand and other packaging materials, requiring that we strategically prioritize certain brands ~~by focusing on recruitment especially~~and package types. Our supply chain continues to work diligently to ensure sufficient supply of ~~new legal age drinking consumers, by driving relevance with breakthrough marketing~~these high demand brands and ~~innovating on core brands~~packages as we adjust to ~~attract new legal age drinkers.~~these changing consumer dynamics. We ~~already see evidence~~currently expect these supply constraints to remain a challenge for the third quarter of ~~this effort behind our largest brands with~~ ~~Coors Light, with highly acclaimed~~ ~~Coors Light~~ ~~“Made to Chill” campaign that launched in the U.S. already showing positive results. Now, after declining performance over the past few years~~2020. However, in the U.S., ~~Coors Light~~ ~~is gaining segment share and seeing~~we expect domestic shipment trends to be higher than brand volume ~~improvement under the new campaign. Our plan is to put more resources behind breakthrough marketing like this. Additionally, we are introducing the new~~ ~~Miller Lite~~ ~~campaign in the U.S. that just launched during the World Series last week. The brand is redefining the iconic “Miller Time” slogan for a new generation of legal age drinkers, connecting them to~~ ~~Miller Lite~~ ~~in a way that we have not done before. These are very different new campaigns for two of our biggest brands.~~

We additionally plan to invest significantly in the above premium segment, the fastest growing area of the beer industry, with added investment in existing brands, new innovations and potentially through new acquisitions. We expect to invest more in whitespace and beyond beer opportunities. We have had success in the above premium segment, including, portfolio transformation in Europe, a meaningful part of our volume now from above premium, ~~Blue Moon~~ ~~and~~ ~~Peroni~~ ~~improving and growing in the U.S. and~~ ~~Belgian Moon~~ up in Canada in 2019 year to date. However, our revitalization plan designed to give us the resources we need to aggressively build in the above premium through innovation and potential acquisition and investments, including more investment behind ideas like ~~Saint Archer Gold~~, ~~Blue Moon Light Sky, and~~ ~~Coors Peak~~ ~~in the U.S. and~~ ~~Coors Slice~~ ~~and~~ ~~Molson Ultra~~ ~~in Canada. We also intend to expand a “test and learn” approach that allows us to determine market potential for products and then quickly scale up~~trends as we ~~are with~~ ~~Movo~~ ~~wine spritzers, and~~ ~~Saint Archer Gold, both expected to be available nationally in the U.S. in 2020. We also expect this plan will also allow us to invest behind an even stronger second year of~~ ~~Cape Line~~ ~~sparkling cocktails and a stronger third year of~~ ~~Arnold Palmer Spiked~~ ~~in the U.S. Finally, we need to do more - our pipeline includes the recent introductions of~~ ~~La Colombe~~ ~~hard coffee in the U.S.,~~ ~~Pip & Wild~~ ~~premium ciders in the U.K., and~~ ~~Vizzy~~ ~~hard seltzer in the U.S., which we plan to launch early in 2020, and Truss’s new line of Cannabis-infused nonalcoholic beverages in Canada, including the recently announced~~ ~~Flow Glow, a CBD-infused spring water.~~

We also expect to put a greater focus on bringing new beverages to the market faster and with more precision. This includes expanding the model that has reduced the time it takes to bring innovations to market from 18 months to as little as four months in the U.S., and expanding a “test and learn” approach that evaluates market potentialbuild distributor inventories for ~~products and then quickly scales up. As part of the revitalization plan we will also invest in improving our digital competencies, expanding data resources and building out innovation systems.~~

To make these new investments possible, we plan to unlock approximately $150 million in savings, increasing our 2020-2022 cost savings program from $450 million to $600 million, by simplifying our structure. We will move from a corporate center and four business units to two streamlined business units - North America and Europe.

The North America business unit will consolidate the United States, Canada and corporate center, enabling us to move much more quickly with an integrated portfolio strategy. The Europe business unit will be structured to allow for standalone operations, developed and supported by a European-based team, including a local leadership, commercial, supply chain and support functions. The existing International team will be reconstituted to more effectively grow our global brands - with the Africa and Asia businesses reporting into the European business unit and the remaining International business reporting into the North America business unit. The change in structure to two business units will not be effective until January 2020 and therefore the resulting financial reporting changes will not be reflected until our first quarter 2020 results.

We expect our marketing investment to increase in the second half of 2020 in North America as further discussed below, but some of this ~~fiscal~~spend will be dependent on a number of factors including the anticipated return of live sports. Additionally, we will be cycling lower incentive compensation, particularly long-term incentive compensation, from the prior year in both the third and ~~fiscal years 2020 and 2021. The consolidation activities are expected to be substantially completed by~~fourth quarters, as well as a non-recurring vendor benefit in the ~~end of fiscal year 2021. Costs related to these restructuring activities are expected to be recorded as special items within our unaudited condensed consolidated statements of operations beginning~~U.S. in the fourth quarter of ~~2019.~~2020.

Further, in response to the coronavirus pandemic, various governmental authorities globally have announced relief programs which among other items, provide temporary deferrals of income and non-income based tax payments, which have positively impacted our operating cash flows in the first half of 2020. We anticipate that a significant portion of the over $500 million of cash flow benefits recognized through the first half of 2020 resulting from these temporary deferrals will reverse in the second half of 2020, with the remaining amounts reversing beyond this fiscal year as these deferred payments programs end and payments are due.

Despite these obstacles, we continue to effectively navigate the coronavirus pandemic taking numerous actions to protect our employees and mitigate short-term challenges while simultaneously working to position our business to succeed in the longer term including:

•We instituted and provided approximately $16 million of "thank you" pay for certain essential North America brewery employees which concluded in the second quarter as well as a paid leave policy and voluntary paid leave program, while also taking necessary steps to protect our employees by implementing additional health and safety measures in breweries and distribution centers,

•We prioritized and shifted our marketing spend significantly including shifting media to platforms with higher audiences in the current environment while suspending on-premise activation spending and reducing or eliminating spend in areas that have been significantly impacted, for example sports and in-market activations. We also ~~plan to change~~adjusted the timing of spend behind brands and packs that were constrained by supply. These actions resulted in significant reductions in spend in the second quarter of 2020 versus the second quarter of 2019. With the expected improvement in availability of our ~~name to Molson~~ brands, as well as the very successful launch of Vizzy and Blue Moon LightSky as well as the upcoming launch of Coors ~~Beverage Company, starting January~~Seltzer, we currently anticipate marketing spend in the third and fourth quarter of 2020 to ~~better reflect our strategic intent~~be above the prior year in North America,

•While second quarter of 2020 shipments were below desired levels driven in part by the on-premise closures, we strategically prioritized brands and package types to ~~expand beyond beer and into other growth adjacencies.~~

~~In addition~~meet off-premise demand leading to the revitalization plan, we will continue our ongoing efforts to modernize our brewery footprint and will invest several hundred million dollars to modernize our brewery in Golden, Colorado over the next several years. These previously planned brewery investments will allow for more flexible capacity to better meet demand and fulfill future growth opportunities, while increasing supply chain efficiency.

~~Interest~~

~~We anticipate 2019 consolidated net interest expense of approximately $275 million, based on foreign exchange as of September 30, 2019.~~

~~Tax~~

~~We expect our effective tax rate to be~~positive mix in the ~~range of 18%~~U.S. and continue to ~~22%~~work diligently to deliver product to meet these evolving shifts in demand,

•We reduced discretionary spending, limited new hiring and restricted travel,

•We reduced our planned 2020 capital expenditures by approximately $200 million and those reductions remain on target without sacrificing our ability to invest in necessary safety and maintenance projects and return-focused capital investments to our breweries, such as our Fort Worth, Texas seltzer expansion,

•We entered into an amendment to our existing $1.5 billion revolving credit facility agreement, which among other things, favorably revises the leverage ratios under the financial maintenance covenant for ~~2019, which remains subject to additional definitive guidance from~~each fiscal quarter ending on or after June 30, 2020 through the ~~U.S. government regarding the implementation~~maturity of the ~~2017 Tax Act. Our preliminary expectation for our long-term effective tax rate (after 2019) is~~credit facility giving us greater financial flexibility,

•We established a commercial paper facility in the ~~range~~U.K. for the purpose of ~~20%~~issuing short-term, unsecured GBP-denominated notes that are eligible for purchase under the Joint HM Treasury and Bank of England’s COVID Corporate Financing Facility commercial paper program in an aggregate principal amount up to ~~24%.~~GBP 300 million adding incremental borrowing capacity,

~~Deleverage & Dividends~~•Our board of directors suspended our regular quarterly dividends on our Class A and Class B common and exchangeable shares otherwise payable in the 2020 fiscal year, and

•We remain committed to maintaining our investment grade debt ~~rating~~rating.

Amidst the backdrop of this global pandemic, we are very pleased with our second quarter of 2020 financial performance, our progress in improving liquidity, and efforts to advance our long-term goals for the business. While we ~~intend~~are confident in our ability to achieve long-term success, we are mindful of the challenges and continued uncertainty that lie ahead. During this time of great uncertainty, our management and board will continue to ~~deleverage further~~take prudent and proactive actions which are in ~~2019~~the best interests of the Company, our employees, consumers, customers and our stockholders. Our decisions will be guided by, and consistent with, the Company’s overall financial discipline, ensuring adequate liquidity and our continued desire to maintain our investment grade rating. Our actions remain focused on doing what is best not only in accordance with our plans. We have suspended our share repurchase program as we continue to pay down debt which we plan to revisit as we further deleverage. Our latest quarterly dividend, declared at $0.57the near-term, but positioning the business for medium and ~~paid on September 13, 2019, brings our dividend in-line with our ongoing target of 20% to 25% of prior fiscal year EBITDA.~~long-term success.

Critical Accounting Estimates

Our accounting policies and accounting estimates critical to our financial condition and results of operations are set forth in our Annual Report and did not change during the first ~~three quarters~~half of ~~2019,~~2020, except as noted below. See Part I—Item 1. Financial Statements, Note 2, "New Accounting Pronouncements" for discussion of recently adopted accounting pronouncements. See also Part I—Item 1. Financial Statements, Note 7, "Goodwill and Intangible Assets" for discussion of the ~~results~~interim impairment analysis performed as of January 1, 2020 as a result of our change in reporting units and aggregation of the ~~2018 annual impairment testing analysis, 2019 interim impairment analyses resulting from triggering events,~~Coors indefinite-lived intangible brand assets, and the related risks to our indefinite-lived intangible brand assets and goodwill amounts associated with our reporting units.

New Accounting Pronouncements Not Yet Adopted

See Part I—Item 1. Financial Statements, Note 2, "New Accounting Pronouncements" for a description of all new accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, we actively manage our exposure to various market risks by entering into various supplier-based and market-based hedging transactions, authorized under established risk management policies that place clear controls on these activities. Our objective in managing these exposures is to decrease the volatility of our earnings and cash flows due to changes in underlying rates and costs.

The counterparties to our market-based transactions are generally highly rated institutions. We perform assessments of their credit risk regularly. Our market-based transactions include a variety of derivative financial instruments, none of which are used for trading or speculative purposes.

For details of our derivative instruments that are presented on the balance sheet, including their fair values as of period end, see Part I—Item 1. Financial Statements, Note 11, "Derivative Instruments and Hedging Activities." On a rolling twelve-month basis, maturities of derivative financial instruments held on ~~September~~June 30, ~~2019~~2020, based on foreign exchange rates as of ~~September~~June 30, ~~2019~~2020, are as follows:


Total	Total		Less than 1 year			1 - 3 years			3 - 5 years		More than 5 years			Total	Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
(In millions)	(In millions)													(In millions)
$	(163.4	)	$	(15.8	)	$	(40.7	)	$	—	$	(106.9	)	(351.4)	$	(64.4)	$	(103.4)	$	0.1	$	(183.7)

Sensitivity Analysis

Our market risk sensitive derivative and other financial instruments, as defined by the SEC, are debt, foreign currency forward contracts, commodity swaps, commodity options, cross currency swaps, forward starting interest rate swaps and warrants. We monitor foreign exchange risk, interest rate risk, commodity risk, equity price risk and related derivatives using a sensitivity analysis.

The following table presents the results of the sensitivity analysis, which reflects the impact of a hypothetical 10% adverse change in each of these risks to our derivative and debt portfolio, with the exception of interest rate risk to our forward starting interest rate swaps in which we have applied an absolute 1% adverse change to the respective instrument's interest rate:


	As of							As of
	September 30, 2019			December 31, 2018				June 30, 2020		December 31, 2019
	(In millions)							(In millions)
Estimated fair value volatility							Estimated fair value volatility
Foreign currency risk:							Foreign currency risk:
Forwards	$	(28.1	)	$	(35.1	)	Forwards	$	(20.5)	$	(25.8)
Foreign currency denominated debt	$	(185.5	)	$	(249.3	)	Foreign currency denominated debt	$	(182.8)	$	(194.2)
Cross currency swaps	$	(86.8	)	$	(43.3	)	Cross currency swaps	$	(39.5)	$	(89.2)
Interest rate risk:							Interest rate risk:
Debt	$	(261.8	)	$	(302.1	)	Debt	$	(239.4)	$	(255.4)
Forward starting interest rate swaps	$	(161.3	)	$	(126.2	)	Forward starting interest rate swaps	$	(189.6)	$	(150.4)

Commodity price risk:							Commodity price risk:
Commodity swaps	$	(58.3	)	$	(77.5	)	Commodity swaps	$	(83.0)	$	(52.9)
Commodity options	$	—		$	—		Commodity options	$	—	$	—
Equity price risk:							Equity price risk:
Warrants	$	(3.0	)	$	(2.8	)	Warrants	$	(0.2)	$	(0.6)

The volatility of the applicable rates and prices are dependent on many factors that cannot be forecast with reliable accuracy. Therefore, actual changes in fair values could differ significantly from the results presented in the table above.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~September~~June 30, ~~2019~~2020 to provide reasonable assurance that information required to be disclosed in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the ~~SEC's~~SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applies its judgment in assessing the costs and benefits of such controls and procedures that, by their nature, can only provide reasonable assurance regarding management's control objectives. Also, we have investments in certain unconsolidated entities that we do not control or manage.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the three months ended ~~September~~June 30, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information regarding litigation, other disputes and environmental and regulatory proceedings see Part I—Item 1. Financial Statements, Note 12, "Commitments and Contingencies."

We are also 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 are expected to have a material impact on our business, 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.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report and the risk factor noted below, you should carefully consider the factors discussed in Part I—Item 1A. "Risk Factors" in our Annual Report, which could materially affect our business, financial condition and/or future ~~results.~~results and may be further impacted by the coronavirus pandemic. The risks described in our Annual Report and herein are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, cash flows and/or future results. ~~There~~

The novel coronavirus pandemic, efforts to mitigate or disrupt the pandemic and related weak, or weakening of, economic or other negative conditions, have disrupted, and may continue to disrupt our business, which has had and could continue to have a material adverse effect on our operations, liquidity, financial condition and financial results.

Our business has been, noand we currently expect will continue to be, materially and adversely affected by the coronavirus pandemic and related weak, or continued weakening of, economic or other negative conditions, particularly in regions where we derive a significant amount of our revenue or profit or where our suppliers and business partners are located, including, in North America and Europe. Specifically, the coronavirus pandemic has been disruptive and may continue to cause a disruption to our business and potential associated financial impacts include, but are not limited to, lower net sales in markets affected by the pandemic, including potential material ~~changes~~shifts in, and impacts to, demand, the inability to sell our products to on-premise consumers and further disruption to the ~~risk factors contained in our Annual Report, except as outlined below.~~

~~Our restructuring activities~~on-premise channel, including staged on premise re-openings and subsequent closure of on-premise accounts, the delay of, and potential increased costs related to, inventory production and fulfillment, including packaging availability impacted by package mix shifts related to off-premise demand, including significantly increased need for aluminum cans and paperboard, and lower return rates of our ~~revitalization plan may not be successful~~returnable packaging in certain markets, potentially impacting net sales and ~~the estimated~~cost of goods globally and potential incremental costs associated with mitigating the effects of the pandemic, including increased raw materials, freight and logistics costs and other expenses. Packaging material supply shortages and supply chain constraints have impacted and could continue to negatively impact our ability to meet increased demand in off-premise channels or particular packages, which in turn could impact our net sales revenues and market share. Continued disruption and declines in the global economy have impacted and could continue to impact our customers’ liquidity and capital resources and therefore our ability to collect, or the timeliness of collection of our accounts receivable from them, which may have a material adverse impact on our performance, cash flows and capital resources. The coronavirus pandemic is ongoing, and its dynamic nature, including uncertainties relating to the ultimate spread of the virus, the severity of the disease, the duration of the pandemic and related prolonged weakening of economic or other negative conditions, such ~~activities~~as a recession or slowed economic growth in our markets, and actions that may be ~~more than expected, and our restructuring activities may adversely~~taken by governmental authorities to contain the pandemic or to mitigate its impact, ~~employee hiring and retention.~~

~~On October 28, 2019, as part of the revitalization plan, we made the determination~~makes it difficult to establish Chicago, Illinois as our North American operational headquarters, close our existing office in Denver, Colorado and consolidate certain administrative functions into our other existing office locations. In connection with these consolidation activities, we expect to incur certain cash and non-cash restructuring charges related to employee relocation, severance, retention and transition costs, non-cash asset related costs, lease exit costs in connection with office leases in Denver, Colorado, and other transition activities currently estimated in the range of approximately $120 million to $180 million in the aggregate, the majority of which will be cash charges that will be spread through the balance of this fiscal year and fiscal years 2020 and 2021. These expenses will adversely impactforecast any effects on our results of operations ~~during~~for 2020 and in subsequent years. However, our results of operations have been negatively affected and we currently expect our results of operations for the ~~relevant periods~~remainder of 2020 to be significantly and ~~will reduce~~adversely affected.

Specifically, difficult macroeconomic conditions in our ~~cash position. Additionally,~~markets, such as further decreases in per capita income and level of disposable income, increased and prolonged unemployment or a further decline in consumer confidence as a result of the ~~amount of these estimated expenses,~~coronavirus pandemic, as well as limited or significantly reduced points of access of our product, could continue to have a material adverse effect on the demand for our products. Under difficult economic conditions, consumers may continue to seek to reduce discretionary spending by forgoing purchases of our products, by shifting away from our above-premium products to lower-priced products offered by us or other companies or by shifting to off-premise from on-premise consumption, negatively impacting our net sales and margins. Softer consumer demand for our products, particularly in North America, could reduce our profitability and could negatively affect our overall financial performance. A significant portion of our consolidated net sales revenues are concentrated in the United States and Europe, where the coronavirus pandemic impacts have been significant. Therefore, unfavorable macroeconomic conditions, in the U.S. and Europe, including as a result of the coronavirus pandemic and any resulting recession or slowed economic growth, have had, and could continue to have, an outsized negative impact on us. In addition, difficult economic conditions may have a negative impact on our ability to ~~achieve the anticipated cost savings, revitalization strategy goals~~access capital markets and other ~~benefits~~funding sources, on acceptable terms or at all, should we seek future financing. Additionally, we may have unexpected costs and liabilities; revenue and cash provided by operations may decline; macroeconomic conditions may continue to weaken; prolonged and severe levels of unemployment may negatively impact our consumers; and competitive pressures may increase, resulting in difficulty maintaining adequate liquidity and meeting our deleverage commitments and as a result, our credit ratings could be downgraded, which would adversely impact our business, including by increasing our costs of future borrowing and harming our ability to refinance our debt in the future on acceptable terms or access the capital markets, if we are able to obtain additional financing on terms that are acceptable to us at all. Further, notwithstanding the amendment to our revolving credit facility on June 19, 2020 to revise the leverage ratios under the financial maintenance covenant upwards for the six fiscal quarters beginning second quarter 2020, should the impacts of the pandemic and resulting performance adversely affect our ability to remain compliant with our covenants in our revolving credit facility agreement and absent another amendment or waiver from participating lenders, the outstanding borrowings on our revolving credit facility agreement may become immediately due. Such events may additionally trigger an event of default on our senior notes resulting in the potential acceleration of amounts due thereunder.

In addition, the coronavirus pandemic and related efforts to mitigate its spread, have impacted, and may continue to impact for the foreseeable future, customer traffic to the on-premise channel, which includes bars, restaurants and sporting, festival and other large venues. Many governmental authorities in our North America and Europe businesses have required that bars and restaurants close or cease sit-down service, which has negatively impacted and we expect will continue to negatively impact on-premise sales of our ~~restructuring activities,~~beverages and previously led to the incurrence of costs to repurchase products that on-premise accounts or distributors were unable or prohibited from selling as a result of the governmental regulations. Despite the limited reopening of on-premise accounts in certain of our markets in in the second quarter, sales to restaurants and bars have not returned to pre-pandemic levels and in many instances, the reopened on-premise accounts have been subsequently forced to close in certain of our markets as a result of an increase in the spread of the coronavirus. We currently expect that closures and reduced on-premise consumption may continue for an unknown period, negatively impacting our net sales and margins. In addition, sporting events, festivals and other large public gatherings where our products are ~~subject~~served have been canceled throughout North America and Europe. Additionally, these and other governmental or societal impositions of restrictions on public gatherings, especially if prolonged in nature, will have adverse effects on on-premise traffic and, in turn, our business. Even if such measures are not implemented and coronavirus does not spread more significantly, or if after the pandemic has initially subsided, fear of re-occurrence or the perceived risk of infection or health risk may adversely affect traffic to ~~various assumptions~~the on-premise channel and, ~~uncertainties. We~~in turn, may ~~also experience additional costs~~have a material adverse effect on our business, liquidity, financial condition and results of operations, particularly if any self-imposed or governmental changes are in ~~connection~~place for a significant amount of time.

Moreover, our operations could be disrupted by our employees or employees of our business partners, including our supply chain partners, being diagnosed with ~~these restructuring activities due to delays~~coronavirus or were suspected of having coronavirus or other ~~unforeseen circumstances. There is no assurance that we will successfully implement,~~illnesses since this could require us or ~~fully realize the anticipated costs~~our business partners to quarantine some or all such employees or close and ~~other benefits~~disinfect our or their facilities. If a significant percentage of our ~~restructuring activities~~workforce or ~~execute successfully on~~the workforce of our ~~restructuring plan, in the time frames we desire or at all. If we fail~~business partners are unable to ~~realize the anticipated benefits, including ongoing cost savings,~~work or if we ~~incur charges~~ or ~~costs in amounts that are greater than anticipated,~~ our business ~~financial condition and operating results may be adversely affected.~~

~~In addition,~~partners are required to close our or their production facilities, including because of illness or travel or government restrictions in connection with the ~~announcement that we plan to consolidate~~coronavirus pandemic, our ~~office locations, we~~operations, including manufacturing and distribution capabilities, may ~~experience attrition in our workforce. We will also likely~~ be required to hire and train new employees to replace certain employees who were affected by our restructuring activities. The increased turnover in our employees could distract management and others from the operation ofnegatively impacted, potentially materially adversely affecting our business, and make it more difficult to retain and hire new talent. The turnover and any resulting distraction could also negatively impact the overall performance of our employees, resulting in inefficiencies, higher short- or long-term costs, or decreased productivity. As a result of these or other similar risks, our business, plans, strategies,liquidity, financial condition ~~and operating~~or results ~~may be adversely affected.~~of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following are filed or incorporated by reference as a part of this Quarterly Report on Form 10-Q:

(a) Exhibits

Exhibit

Number

Document Description

10.1

~~Extension Agreement,~~Amendment No. 2, dated as of ~~July 7, 2019,~~June 19, 2020, by and among Molson Coors Beverage Company, Molson Coors Brewing Company (UK) Limited, Molson Canada 2005, Molson Coors Canada Inc. and Molson Coors International LP, the ~~Lenders~~lenders party thereto, and Citibank, N.A., as ~~Administrative Agent~~administrative agent (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on ~~July 8, 2019)~~June 22, 2020).

10.2*10.2

Dealer Agreement dated May 21, 2020 by and between Molson Coors Brewing Company ~~Amended~~(UK) Limited, Molson Coors Beverage Company, Lloyds Bank Corporate Markets PLC, as arranger, and ~~Restated Change in Control Protection Program dated~~Lloyds Bank Corporate Markets PLC, as ~~of July 18, 2019~~dealer (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K, filed on ~~July 24, 2019)~~May 26, 2020).

10.3*10.3

~~Offer Letter,~~Deed of Guarantee dated ~~as of July 30, 2019,~~May 21, 2020 by ~~and between~~ Molson Coors ~~Brewing~~Beverage Company ~~and Gavin Hattersley~~in favor of the holders thereunder (incorporated by reference to Exhibit ~~10.1~~10.2 of our Current Report on Form 8-K filed on ~~July 31, 2019)~~May 26, 2020).

31.1

Section 302 Certification of Chief Executive Officer.

31.2

Section 302 Certification of Chief Financial Officer.

Written Statement of Chief Executive Officer and Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 USC. Section 1350).

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.**

101.SCH

XBRL Taxonomy Extension Schema Document.**

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.**

101.LAB

XBRL Taxonomy Extension Label Linkbase Document.**

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.**

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.**

~~Represents a management contract or a compensatory plan or arrangement.~~

Attached as Exhibit 101 to this report are the following documents formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Statements of Operations, (ii) the Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) the Unaudited Condensed Consolidated Balance Sheets, (iv) the Unaudited Condensed Consolidated Statements of Cash Flows, (v) the Unaudited Condensed Consolidated Statements of Stockholders' Equity and Noncontrolling Interests, (vi) the Notes to Unaudited Condensed Consolidated Financial Statements, and (vii) document and entity information.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MOLSON COORS BEVERAGE COMPANY

~~MOLSON COORS BREWING COMPANY~~

By:

~~By:~~

/s/ BRIAN C. TABOLT

Brian C. Tabolt

Vice President and Controller

(Principal Accounting Officer)

~~October~~July 30, ~~2019~~2020



(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
	(In millions)
Operating lease expense	$	18.1	$	54.2
Finance lease expense	2.9		8.7
Total lease expense	$	21.0	$	62.9



	Nine Months Ended September 30, 2019
	(In millions)
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from operating leases	$	39.6
Operating cash flows from finance leases	$	2.7
Financing cash flows from finance leases	$	1.8
Supplemental non-cash information on right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	$	36.4
Finance leases	$	2.1



	Weighted-Average Remaining Lease Term (Years)	Weighted-Average Discount Rate
Operating leases	5.0	4.2%
Finance leases	9.2	6.3%



	Operating Leases		Finance Leases
Year	(In millions)
2019	$	49.4	$	6.1
2020	40.2		36.2
2021	32.6		5.9
2022	24.6		5.9
2023	17.0		5.8
Thereafter	21.0		64.2
Total future minimum lease payments	$	184.8	$	124.1
Less: interest on finance leases			(38.8		)
Present value of future minimum finance lease payments			$	85.3



	As of September 30, 2019		As of December 31, 2018
Expected term (years)	2.0		2.8
Estimated volatility	74.39	%	88.71	%
Risk-free interest rate	1.56	%	2.04	%
Expected dividend yield	—	%	—	%


	As of June 30, 2020
			Derivative Assets						Derivative Liabilities
	Notional amount		Balance sheet location	Fair value		Balance sheet location			Fair value
Derivatives designated as hedging instruments:
Cross currency swaps	$	400.0	Other current assets	$	—	Accounts payable and other current liabilities			$	—
			Other non-current assets	12.0		Other liabilities			—

Interest rate swaps	$	1,500.0	Other non-current assets	—		Other liabilities			(291.3)
Foreign currency forwards	$	191.2	Other current assets	5.8		Accounts payable and other current liabilities			(0.2)
			Other non-current assets	2.7		Other liabilities			(0.2)
Total derivatives designated as hedging instruments							$	20.5			$	(291.7)
Derivatives not designated as hedging instruments:
Commodity swaps⁽¹⁾	$	950.3	Other current assets	$	6.4	Accounts payable and other current liabilities			$	(76.4)
			Other non-current assets	9.4		Other liabilities			(20.7)
Commodity options⁽¹⁾	$	18.4	Other current assets	—		Accounts payable and other current liabilities			—

Warrants	$	50.8	Other non-current assets	1.1		Other liabilities			—
Total derivatives not designated as hedging instruments							$	16.9			$	(97.1)


~~(1)~~	~~Notional includes offsetting buy and sell positions, shown in terms of absolute value. Buy and sell positions are shown gross in the asset and/or liability position, as appropriate.~~



Three Months Ended September 30, 2018
Derivatives in cash flow hedge relationships	Amount of gain (loss) recognized in OCI on derivative			Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative
Forward starting interest rate swaps	$	17.9		Interest expense, net	$	(0.8	)
Foreign currency forwards	(5.2		)	Cost of goods sold	0.4
				Other income (expense), net	0.1
Total	$	12.7			$	(0.3	)



Nine Months Ended September 30, 2018
Derivatives in cash flow hedge relationships	Amount of gain (loss) recognized in OCI on derivative		Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative
Forward starting interest rate swaps	$	17.9	Interest expense, net	$	(2.3	)
Foreign currency forwards	8.8		Cost of goods sold	(0.5		)
			Other income (expense), net	0.1
Total	$	26.7		$	(2.7	)


~~(1)~~Three Months Ended June 30, 2020									~~Represents amounts~~
Non-derivative financial instruments in net investment hedge relationships	Amount of gain (loss) recognized in OCI on derivative		Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI on derivative		Location of gain (loss) recognized in income on derivative (amount excluded from ~~the assessment~~effectiveness testing)	Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness ~~for which the difference between changes in fair value and period amortization is recorded in other comprehensive income.~~testing)
EUR 800 million notes due 2024	$	(16.2)	Other income (expense), net	$	—	Other income (expense), net	$	—

Total	$	(16.2)		$	—		$	—