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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the ~~Quarterly~~quarterly period ended June 30, ~~2020~~2021


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

Commission File Number: 1-14829

Molson Coors Beverage Company

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

P.O. BOX 4030, NH353, Golden, Colorado, USA

1555 Notre Dame Street East, Montréal, Québec, Canada

(Address of principal executive offices)

84-0178360

(I.R.S. Employer Identification No.)

80401

H2L 2R5

(Zip Code)

303-279-6565 (Colorado)

514-521-1786 (Québec)

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbols

Name of each exchange on which registered

Class A Common Stock, $0.01 par value

TAP.A

New York Stock Exchange

Class B Common Stock, $0.01 par value

TAP

New York Stock Exchange

1.25% Senior Notes due 2024

TAP

New York Stock Exchange

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, a 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~~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 July ~~23, 2020:~~22, 2021:

Class A Common Stock — ~~2,560,668~~2,561,706 shares

Class B Common Stock — ~~196,568,046~~200,572,269 shares

Exchangeable shares:

As of July ~~23, 2020,~~22, 2021, the following number of exchangeable shares were outstanding for Molson Coors Canada, Inc.:

Class A Exchangeable shares — ~~2,725,047~~2,718,167 shares

Class B Exchangeable shares — ~~14,826,118~~11,104,565 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 BEVERAGE COMPANY AND SUBSIDIARIES

INDEX


		Page
Glossary of Terms and Abbreviations			3
Cautionary Statement			4

PART I. FINANCIAL INFORMATION
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"	13
	Note 3, "Segment Reporting"	13
	Note 4, "Investments"	1514
	Note 5, "Special Items"	1615
	Note 6, "Income Tax"	1716
	Note 7, "Goodwill and Intangible Assets"	1817
	Note 8, "Debt"	2120
	Note 9, "Inventories"	2321
	Note 10, "Accumulated Other Comprehensive Income (Loss)"	2321
	Note 11, "Derivative Instruments and Hedging Activities"	2322
	Note 12, "Commitments and Contingencies"	2928
	Note 13, "Leases"
	~~Note 14, "Supplemental Guarantor Information"~~	3230
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4131
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5948
Item 4.	Controls and Procedures	6049
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	6050
Item 1A.	Risk Factors	6150
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6251
Item 3.	Defaults Upon Senior Securities	6251
Item 4.	Mine Safety Disclosures	6251
Item 5.	Other Information	6251
Item 6.	Exhibits	6352
Signature			6453

Glossary of Terms and Abbreviations


AOCI			Accumulated other comprehensive income (loss)
CAD			Canadian ~~dollar~~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
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~~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~~in Part I - Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report, and under the 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, impact of the cybersecurity incident, including on revenues and related expenses, expectations regarding future dividends, overall volume trends, consumer preferences, pricing trends, industry forces, cost reduction strategies, including our revitalization plan announced in 2019 and the estimated range of related charges and timing of cash charges, anticipated results, expectations for funding future capital expenditures and operations, 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 Part II - Item IA. Risk Factors in this report, 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, ~~2019.~~2020. 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 BEVERAGE COMPANY AND SUBSIDIARIES

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS~~INDEX

~~(IN MILLIONS, EXCEPT PER SHARE DATA)~~

~~(UNAUDITED)~~

Three Months Ended Six Months Ended
June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
Sales $ 3,029.8 $ 3,620.0 $ 5,567.6 $ 6,420.1
Excise taxes (526.4) (671.7) (961.4) (1,168.5)
Net sales 2,503.4 2,948.3 4,606.2 5,251.6
Cost of goods sold (1,456.6) (1,759.8) (2,935.6) (3,172.8)
Gross profit 1,046.8 1,188.5 1,670.6 2,078.8
Marketing, general and administrative expenses (524.5) (769.7) (1,154.2) (1,424.9)
Special items, net (64.3) 49.9 (150.9) 36.9
Operating income (loss) 458.0 468.7 365.5 690.8
Interest income (expense), net (69.7) (65.6) (138.6) (138.9)
Other pension and postretirement benefits (costs), net 7.6 8.4 15.1 17.0
Other income (expense), net 5.8 (10.9) 1.0 13.0
Income (loss) before income taxes 401.7 400.6 243.0 581.9
Income tax benefit (expense) (204.5) (70.4) (161.2) (102.6)
Net income (loss) 197.2 330.2 81.8 479.3
Net (income) loss attributable to noncontrolling interests (2.2) (0.8) (3.8) 1.5
Net income (loss) attributable to Molson Coors Beverage Company $ 195.0 $ 329.4 $ 78.0 $ 480.8

Net income (loss) attributable to Molson Coors Beverage Company per share:
Basic $ 0.90 $ 1.52 $ 0.36 $ 2.22
Diluted $ 0.90 $ 1.52 $ 0.36 $ 2.22
Weighted-average shares outstanding:
Basic 216.9 216.6 216.8 216.6
Dilutive effect of share-based awards 0.1 0.3 0.2 0.3
Diluted 217.0 216.9 217.0 216.9
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.~~


		Page
Glossary of Terms and Abbreviations		3
Cautionary Statement		4

PART I. FINANCIAL INFORMATION
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"	13
	Note 3, "Segment Reporting"	13
	Note 4, "Investments"	14
	Note 5, "Special Items"	15
	Note 6, "Income Tax"	16
	Note 7, "Goodwill and Intangible Assets"	17
	Note 8, "Debt"	20
	Note 9, "Inventories"	21
	Note 10, "Accumulated Other Comprehensive Income (Loss)"	21
	Note 11, "Derivative Instruments and Hedging Activities"	22
	Note 12, "Commitments and Contingencies"	28
	Note 13, "Leases"	30
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	49
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	52
Signature		53

~~MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)~~

~~(IN MILLIONS)~~

~~(UNAUDITED)~~

Three Months Ended Six Months Ended
June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
Net income (loss) including noncontrolling interests $ 197.2 $ 330.2 $ 81.8 $ 479.3
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments 119.7 42.1 (253.8) 113.6
Unrealized gain (loss) on derivative instruments (0.7) (38.3) (128.6) (68.0)
Reclassification of derivative (gain) loss to income (1.1) (0.3) (1.1) (0.2)
Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income (1.9) (0.5) (3.2) (1.1)
Ownership share of unconsolidated subsidiaries' other comprehensive income (loss) 0.8 0.8 1.5 1.8
Total other comprehensive income (loss), net of tax 116.8 3.8 (385.2) 46.1
Comprehensive income (loss) 314.0 334.0 (303.4) 525.4
Comprehensive (income) loss attributable to noncontrolling interests (3.3) (0.5) (2.0) 1.6
Comprehensive income (loss) attributable to Molson Coors Beverage Company $ 310.7 $ 333.5 $ (305.4) $ 527.0

~~See notes to unaudited condensed consolidated financial statements.~~

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
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

~~MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

~~(IN MILLIONS, EXCEPT PAR VALUE)~~

~~(UNAUDITED)~~

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 BEVERAGE COMPANY AND SUBSIDIARIES~~Cautionary Statement Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~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.

~~(IN MILLIONS)~~

~~(UNAUDITED)~~

Six Months Ended
June 30, 2020 June 30, 2019
Cash flows from operating activities:
Net income (loss) including noncontrolling interests $ 81.8 $ 479.3
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization 494.2 429.7
Amortization of debt issuance costs and discounts 4.0 7.5
Share-based compensation 11.8 18.6
(Gain) loss on sale or impairment of properties and other assets, net 7.7 (67.7)
Unrealized (gain) loss on foreign currency fluctuations and derivative instruments, net 40.9 (12.4)
Income tax (benefit) expense 161.2 102.6
Income tax (paid) received (16.7) (41.4)
Interest expense, excluding interest amortization 136.0 140.5
Interest paid (129.8) (140.9)
Change in current assets and liabilities and other 268.8 (87.8)
Net cash provided by (used in) operating activities 1,059.9 828.0
Cash flows from investing activities:
Additions to properties (345.1) (310.5)
Proceeds from sales of properties and other assets 3.0 99.9
Other 0.6 42.8
Net cash provided by (used in) investing activities (341.5) (167.8)
Cash flows from financing activities:
Exercise of stock options under equity compensation plans 4.0 1.4
Dividends paid (125.3) (177.4)
Payments on debt and borrowings (507.6) (1,070.8)
Proceeds on debt and borrowings 1.0 —
Net proceeds from (payments on) revolving credit facilities and commercial paper 199.8 (1.9)
Change in overdraft balances and other (21.7) 12.8
Net cash provided by (used in) financing activities (449.8) (1,235.9)
Cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents 268.6 (575.7)
Effect of foreign exchange rate changes on cash and cash equivalents (11.2) 8.0
Balance at beginning of year 523.4 1,057.9
Balance at end of period $ 780.8 $ 490.2

~~See notes~~Statements that refer to ~~unaudited condensed consolidated~~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 in Part I - Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations in this report, and under the 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, impact of the cybersecurity incident, including on revenues and related expenses, expectations regarding future dividends, overall volume trends, consumer preferences, pricing trends, industry forces, cost reduction strategies, including our revitalization plan announced in 2019 and the estimated range of related charges and timing of cash charges, anticipated results, expectations for funding future capital expenditures and operations, 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," and variations of such words and similar expressions are intended to identify forward-looking statements.

~~MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY~~

~~AND NONCONTROLLING INTERESTS~~

~~(IN MILLIONS)~~

~~(UNAUDITED)~~

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 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

~~See notes~~Forward-looking statements are subject to ~~unaudited condensed consolidated financial~~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 in Part II - Item IA. Risk Factors in this report, 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, 2020. 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.

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

INDEX


		Page
Glossary of Terms and Abbreviations		3
Cautionary Statement		4

PART I. FINANCIAL INFORMATION
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"	13
	Note 3, "Segment Reporting"	13
	Note 4, "Investments"	14
	Note 5, "Special Items"	15
	Note 6, "Income Tax"	16
	Note 7, "Goodwill and Intangible Assets"	17
	Note 8, "Debt"	20
	Note 9, "Inventories"	21
	Note 10, "Accumulated Other Comprehensive Income (Loss)"	21
	Note 11, "Derivative Instruments and Hedging Activities"	22
	Note 12, "Commitments and Contingencies"	28
	Note 13, "Leases"	30
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	49
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	52
Signature		53

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
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

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 in Part I - Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations in this report, and under the 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, impact of the cybersecurity incident, including on revenues and related expenses, expectations regarding future dividends, overall volume trends, consumer preferences, pricing trends, industry forces, cost reduction strategies, including our revitalization plan announced in 2019 and the estimated range of related charges and timing of cash charges, anticipated results, expectations for funding future capital expenditures and operations, 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," 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 in Part II - Item IA. Risk Factors in this report, 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, 2020. 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

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN MILLIONS, EXCEPT PER SHARE DATA)

(UNAUDITED)


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Sales	$	3,564.0	$	3,029.8	$	5,820.1	$	5,567.6
Excise taxes	(624.6)		(526.4)		(982.3)		(961.4)
Net sales	2,939.4		2,503.4		4,837.8		4,606.2
Cost of goods sold	(1,667.9)		(1,456.6)		(2,835.3)		(2,935.6)
Gross profit	1,271.5		1,046.8		2,002.5		1,670.6
Marketing, general and administrative expenses	(681.7)		(524.5)		(1,224.6)		(1,154.2)
Special items, net	(9.0)		(64.3)		(19.9)		(150.9)
Operating income (loss)	580.8		458.0		758.0		365.5
Interest income (expense), net	(67.9)		(69.7)		(133.2)		(138.6)
Other pension and postretirement benefits (costs), net	13.0		7.6		26.0		15.1
Other income (expense), net	(3.3)		5.8		(1.9)		1.0
Income (loss) before income taxes	522.6		401.7		648.9		243.0
Income tax benefit (expense)	(132.3)		(204.5)		(176.6)		(161.2)
Net income (loss)	390.3		197.2		472.3		81.8
Net (income) loss attributable to noncontrolling interests	(1.7)		(2.2)		0.4		(3.8)
Net income (loss) attributable to Molson Coors Beverage Company	$	388.6	$	195.0	$	472.7	$	78.0

Net income (loss) attributable to Molson Coors Beverage Company per share
Basic	$	1.79	$	0.90	$	2.18	$	0.36
Diluted	$	1.79	$	0.90	$	2.17	$	0.36

Weighted-average shares outstanding
Basic	217.1		216.9		217.1		216.8
Dilutive effect of share-based awards	0.5		0.1		0.4		0.2
Diluted	217.6		217.0		217.5		217.0

Anti-dilutive securities excluded from the computation of diluted EPS	1.3		2.3		1.5		2.1

See notes to unaudited condensed consolidated financial statements.

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(IN MILLIONS)

(UNAUDITED)


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Net income (loss) including noncontrolling interests	$	390.3	$	197.2	$	472.3	$	81.8
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	63.9		119.7		74.2		(253.8)
Reclassification of cumulative translation adjustment to income (loss)	0		0		7.5		0
Unrealized gain (loss) on derivative instruments	(59.5)		(0.7)		43.2		(128.6)
Reclassification of derivative (gain) loss to income (loss)	2.7		(1.1)		3.9		(1.1)
Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income (loss)	0.2		(1.9)		0.6		(3.2)
Ownership share of unconsolidated subsidiaries' other comprehensive income (loss)	0.4		0.8		0.8		1.5
Total other comprehensive income (loss), net of tax	7.7		116.8		130.2		(385.2)
Comprehensive income (loss)	398.0		314.0		602.5		(303.4)
Comprehensive (income) loss attributable to noncontrolling interests	(2.1)		(3.3)		(0.1)		(2.0)
Comprehensive income (loss) attributable to Molson Coors Beverage Company	$	395.9	$	310.7	$	602.4	$	(305.4)

See notes to unaudited condensed consolidated financial statements.

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT PAR VALUE)

(UNAUDITED)


	As of
	June 30, 2021		December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	1,308.9	$	770.1
Accounts receivable, net	932.3		558.0
Other receivables, net	154.4		129.1
Inventories, net	749.5		664.3
Other current assets, net	457.0		297.3
Total current assets	3,602.1		2,418.8
Properties, net	4,173.8		4,250.3
Goodwill	6,156.9		6,151.0
Other intangibles, net	13,498.3		13,556.1
Other assets	1,088.8		954.9
Total assets	$	28,519.9	$	27,331.1
Liabilities and equity
Current liabilities
Accounts payable and other current liabilities	$	3,366.8	$	2,889.5
Current portion of long-term debt and short-term borrowings	1,525.1		1,020.1
Total current liabilities	4,891.9		3,909.6
Long-term debt	6,701.9		7,208.2
Pension and postretirement benefits	751.8		763.2
Deferred tax liabilities	2,585.8		2,381.6
Other liabilities	352.1		447.2
Total liabilities	15,283.5		14,709.8
Commitments and contingencies (Note 12)	0		0
Molson Coors Beverage Company stockholders' equity
Capital stock
Preferred stock, $0.01 par value (authorized: 25.0 shares; NaN issued)	0		0
Class A common stock, $0.01 par value (authorized: 500.0 shares; issued and outstanding: 2.6 shares and 2.6 shares, respectively)	0		0
Class B common stock, $0.01 par value (authorized: 500.0 shares; issued: 210.0 shares and 209.8 shares, respectively)	2.1		2.1
Class A exchangeable shares, no par value (issued and outstanding: 2.7 shares and 2.7 shares, respectively)	102.3		102.3
Class B exchangeable shares, no par value (issued and outstanding: 11.1 shares and 11.1 shares, respectively)	417.8		417.8
Paid-in capital	6,955.2		6,937.8
Retained earnings	7,016.9		6,544.2
Accumulated other comprehensive income (loss)	(1,038.1)		(1,167.8)
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	12,984.8		12,365.0
Noncontrolling interests	251.6		256.3
Total equity	13,236.4		12,621.3
Total liabilities and equity	$	28,519.9	$	27,331.1

See notes to unaudited condensed consolidated financial statements.

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS)

(UNAUDITED)


	Six Months Ended
	June 30, 2021		June 30, 2020
Cash flows from operating activities
Net income (loss) including noncontrolling interests	$	472.3	$	81.8
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization	403.9		494.2
Amortization of debt issuance costs and discounts	3.1		4.0
Share-based compensation	16.5		11.8
(Gain) loss on sale or impairment of properties and other assets, net	2.5		7.7
Unrealized (gain) loss on foreign currency fluctuations and derivative instruments, net	(222.7)		40.9
Income tax (benefit) expense	176.6		161.2
Income tax (paid) received	(58.0)		(16.7)
Interest expense, excluding interest amortization	131.2		136.0
Interest paid	(122.5)		(129.8)


Change in current assets and liabilities and other	(54.4)		268.8
Net cash provided by (used in) operating activities	748.5		1,059.9
Cash flows from investing activities
Additions to properties	(211.9)		(345.1)
Proceeds from sales of properties and other assets	3.2		3.0
Other	8.6		0.6
Net cash provided by (used in) investing activities	(200.1)		(341.5)
Cash flows from financing activities
Exercise of stock options under equity compensation plans	4.5		4.0
Dividends paid	(0.2)		(125.3)


Payments on debt and borrowings	(1.9)		(507.6)
Proceeds on debt and borrowings	0		1.0


Net proceeds from (payments on) revolving credit facilities and commercial paper	1.4		199.8
Change in overdraft balances and other	(7.7)		(21.7)
Net cash provided by (used in) financing activities	(3.9)		(449.8)
Cash and cash equivalents
Net increase (decrease) in cash and cash equivalents	544.5		268.6
Effect of foreign exchange rate changes on cash and cash equivalents	(5.7)		(11.2)
Balance at beginning of year	770.1		523.4
Balance at end of period	$	1,308.9	$	780.8

See notes to unaudited condensed consolidated financial statements.

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

AND NONCONTROLLING INTERESTS

(IN MILLIONS)

(UNAUDITED)

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 March 31, 2020	$	12,946.0	$	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	$	0	$	2.1	$	102.5	$	557.8	$	6,786.3	$	7,571.2	$	(1,545.6)	$	(471.4)	$	265.1


																									Molson Coors Beverage Company Stockholders' Equity
				Molson Coors Beverage Company Stockholders' Equity																																									Accumulated	Common stock
																Accumulated		Common stock							Common stock				Exchangeable								other		held in		Non
				Common stock						Exchangeable										other				held in		Non			issued				shares issued				Paid-in-		Retained		comprehensive		treasury	controlling
				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
		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
As of March 31, 2021																						As of March 31, 2021	$	12,834.0	$	0	$	2.1	$	102.3	$	417.8	$	6,947.1	$	6,628.3	$	(1,045.4)	$	(471.4)	$	253.2

Shares issued under equity compensation plan	Shares issued under equity compensation plan	0.9		—		—		—		—		0.9		—		—		—		—		Shares issued under equity compensation plan	(0.4)		—		—		—		—		(0.4)		—		—		—		—
Amortization of share-based compensation	Amortization of share-based compensation	11.8		—		—		—		—		11.8		—		—		—		—		Amortization of share-based compensation	8.2		—		—		—		—		8.2		—		—		—		—
Purchase of noncontrolling interest	Purchase of noncontrolling interest	(0.1)		—		—		—		—		—		—		—		—		(0.1)		Purchase of noncontrolling interest	0.1		—		—		—		—		0.3		—		—		—		(0.2)

Net income (loss) including noncontrolling interests	Net income (loss) including noncontrolling interests	81.8		—		—		—		—		—		78.0		—		—		3.8		Net income (loss) including noncontrolling interests	390.3		—		—		—		—		—		388.6		—		—		1.7
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(385.2)		—		—		—		—		—		—		(383.4)		—		(1.8)		Other comprehensive income (loss), net of tax	7.7		—		—		—		—		—		—		7.3		—		0.4

Contributions from noncontrolling interests	Contributions from noncontrolling interests	14.0		—		—		—		—		—		—		—		—		14.0		Contributions from noncontrolling interests	1.7		—		—		—		—		—		—		—		—		1.7
Distributions and dividends to noncontrolling interests	Distributions and dividends to noncontrolling interests	(4.5)		—		—		—		—		—		—		—		—		(4.5)		Distributions and dividends to noncontrolling interests	(5.2)		—		—		—		—		—		—		—		—		(5.2)
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

As of June 30, 2021																						As of June 30, 2021	$	13,236.4	$	0	$	2.1	$	102.3	$	417.8	$	6,955.2	$	7,016.9	$	(1,038.1)	$	(471.4)	$	251.6


			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	$	0	$	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	$	0	$	2.1	$	102.5	$	557.8	$	6,786.3	$	7,571.2	$	(1,545.6)	$	(471.4)	$	265.1


			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 December 31, 2020	$	12,621.3	$	0	$	2.1	$	102.3	$	417.8	$	6,937.8	$	6,544.2	$	(1,167.8)	$	(471.4)	$	256.3

Shares issued under equity compensation plan	0.6		—		—		—		—		0.6		—		—		—		—
Amortization of share-based compensation	16.5		—		—		—		—		16.5		—		—		—		—
Purchase of noncontrolling interest	(0.1)		—		—		—		—		0.3		—		—		—		(0.4)

Net income (loss) including noncontrolling interests	472.3		—		—		—		—		—		472.7		—		—		(0.4)
Other comprehensive income (loss), net of tax	130.2		—		—		—		—		—		—		129.7		—		0.5

Contributions from noncontrolling interests	1.7		—		—		—		—		—		—		—		—		1.7
Distributions and dividends to noncontrolling interests	(6.1)		—		—		—		—		—		—		—		—		(6.1)

As of June 30, 2021	$	13,236.4	$	0	$	2.1	$	102.3	$	417.8	$	6,955.2	$	7,016.9	$	(1,038.1)	$	(471.4)	$	251.6

See notes to unaudited condensed consolidated financial statements.

MOLSON COORS 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 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~~Our reporting segments ~~to 2 segments -~~include North America and 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: North America (North America segment), operating~~segment operates in the U.S., Canada and various countries in Latin and South ~~America;~~America, and our Europe ~~(Europe segment), operating~~segment operates in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries, and 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 the 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, ~~2019~~2020 ("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 in Note 2, "New Accounting 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 six months ended June 30, ~~2020~~2021 are not necessarily indicative of the results that may be achieved for the full ~~year.~~year or any other future period.

Cybersecurity Incident

During March 2021, we experienced a systems outage that was caused by a cybersecurity incident. We engaged leading forensic information technology firms and legal counsel to assist our investigation into the incident and we restored our systems after working to get the systems back up as quickly as possible. Despite these actions, we experienced some delays and disruptions to our business, including brewery operations, production and shipments. This incident caused us to not produce or ship as much as we would have in the first quarter of 2021. During the second quarter of 2021, we made progress recovering from the incident with increased shipments and continue to expect to recover fully by the end of 2021. In addition, we incurred certain incremental net one-time costs of $2.7 million in the six months ended June 30, 2021 related to consultants, experts and data recovery efforts, net of insurance recoveries.

Coronavirus Global Pandemic

~~On March 11, 2020,~~

Starting at the ~~World Health Organization characterized the outbreak~~end 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~~first quarter of 2020, 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.~~of operations in 2020. In 2021, we have begun to see initial improvements in the marketplace related to the coronavirus global pandemic as on-premise locations begin to open around the world at varying degrees. The extent to which our operations will continue to 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~~pandemic, including outbreaks of variants, the rate of vaccination and ~~actions by government authorities~~the efficacy of vaccines against the coronavirus and related variants. We continue to ~~contain~~actively monitor the ongoing evolution of the pandemic ~~or treat its impact, among other things.~~and resulting impacts to our business.

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~~were 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~~We committed to provide customers with reimbursements for untapped kegs that ~~meet~~met certain established return ~~requirements.~~requirements in conjunction with the voluntary programs. 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 of 2020 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 at a customer location to estimate the number of 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 of 2020 other than immaterial adjustments for changes in estimates during the second quarter of 2020, within cost of goods sold related to obsolete finished goods keg inventories that ~~are~~were 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 voluntary keg relief programs and the number of untapped kegs in the market relative to our expectations. Further, theThe actual duration of the coronavirus pandemic ~~including~~as a result of the ~~length~~evolution of variants, the rate of vaccination and the efficacy of vaccines against the coronavirus and related variants coupled with the severity 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,~~as well as large events, could result in ~~further~~future charges due to incremental finished goods keg inventory becoming obsolete in future periods.

~~Additionally, we~~

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 inwith 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 doubtful accounts. As of ~~both~~ June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, our allowance for trade receivables was approximately ~~$12~~$16 million and $18 million, respectively, and allowance activity was immaterial during the three and six months ended June 30, ~~2020.~~2021.

~~Further, in~~In response to the onset of the coronavirus pandemic in 2020, various governmental authorities globally ~~have~~ announced relief programs which among other items, ~~provide~~provided 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~~approximately $130 million as of June 30, 2021 and December 31, 2020 ~~are~~were included within accounts payable and other current liabilities on our unaudited condensed consolidated balance ~~sheet.~~sheets.

~~Finally, we continue to protect~~We protected and ~~support~~supported our liquidity position in response to the global economic uncertainty created by the coronavirus pandemic. ~~During~~Beginning with the second quarter of 2020 through the second quarter of 2021, our board of directors suspended our regular quarterly dividends on our Class A and Class B common and exchangeable ~~shares otherwise payable~~shares. A quarterly dividend was reinstated in ~~fiscal year 2020.~~the third quarter of 2021.

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~~Intangible Assets."

Revitalization Plan

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~~The revitalization plan ~~we made the determination to establish~~established Chicago, Illinois as our North American operational ~~headquarters, close~~headquarters. We closed our ~~existing~~ office in Denver, Colorado and ~~consolidate~~consolidated certain administrative functions into our other existing office locations. As ~~discussed above, in connection with these consolidation activities, effective~~of January 1, 2020, we changed our name to Molson Coors Beverage Company and 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~~will continue to incur charges ~~in the first half of 2020.~~through fiscal year 2021.

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

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 ~~$135.4~~$164.2 million and ~~$149.9~~$135.4 million during the six months ended June 30, ~~2020~~2021 and June 30, ~~2019,~~2020, respectively.

In June 2021, we rolled forward our July 2021 $250.0 million forward starting interest rate swap to May 2022 through a cashless settlement. The unrealized loss on the 2021 forward starting interest rate swap at the time of the transaction was factored into the effective interest rate assigned to the new May 2022 forward starting interest rate swap. See Note 11, "Derivative Instruments and Hedging Activities" for further details.

Other than the activity mentioned above and the supplemental non-cash activity related to the recognition of leases further discussed in Note 13, "Leases," there was no other significant non-cash activity during the six months ended June 30, ~~2020~~2021 and June 30, ~~2019.~~2020, respectively.

Share-Based Compensation

During the first half of 2021 and 2020, we granted stock options, RSUs and PSUs to certain officers and other eligible employees, and recognized share-based compensation expense of ~~$5.9~~$8.2 million and ~~$7.2~~$5.9 million during the three months ended June 30, ~~2020~~2021 and June 30, ~~2019,~~2020, respectively, and ~~$11.8~~$16.5 million and ~~$18.6~~$11.8 million during the six months ended June 30, ~~2020~~2021 and June 30, ~~2019,~~2020, respectively. The reduction in share-based compensation expense in the first half of 2020 was driven primarily by a decline in 2020 in immediate expense recognition for 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 certain performance conditions no longer being deemed probable.

2. New Accounting Pronouncements

New Accounting Pronouncements Recently Adopted

In ~~June 2016,~~December 2019, the FASB issued authoritative guidance ~~that changes~~intended to simplify the ~~impairment~~accounting for income taxes. This guidance eliminated certain exceptions to the general approach to the income tax accounting model ~~used to measure credit losses for most financial instruments. The~~and added new guidance ~~replaces~~to reduce the ~~existing incurred credit loss model, and requires the application of a forward-looking expected credit loss model, which will generally result~~complexity in ~~earlier recognition of allowances~~accounting for ~~credit losses for financial instruments that are in scope of the new guidance, including trade receivables.~~income taxes. We adopted this guidance in the first quarter of ~~2020,~~2021, which did not have a material impact on our financial statements.

In August 2018, the FASB issued authoritative guidance intended to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. 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 related to the 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 arrangement. We adopted this guidance prospectively in the first quarter of 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 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 beginning in the first quarter of 2020.

New Accounting Pronouncements Not Yet Adopted

In 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~~2022. However, it is ~~a full year after~~possible that LIBOR will become unavailable prior to that point. If LIBOR is not available, our financial contracts contain fallback provisions to determine the ~~current expected discontinuation date~~applicable replacement base rate. We anticipate managing the transition to an alternative rate using the language set out in our agreements and through potentially modifying the credit agreement governing our revolving credit facility. However, future market conditions may not allow immediate implementation of ~~LIBOR.~~our desired modifications and we may incur significant costs in connection with doing so. We are currently evaluating the potential impact of this guidance ~~on our financial statements.~~

In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes. This guidance eliminates certain exceptions to the general approach to the income tax accounting model, and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for annual periods beginning after December 15, 2020, including interim periods within those annual periods. We are currently evaluating the potential impact of this guidance and do not expect it will have a material impact on our financial 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~~include 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~~segments. Our North America segment ~~level, which is~~operates in the ~~basis on which~~U.S., Canada and various countries in Latin and South America and our ~~chief operating decision maker evaluates~~Europe segment operates in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the ~~performance~~Republic of Ireland, Romania, Serbia, the ~~business~~U.K., various other European countries, and ~~allocates resources accordingly.~~certain countries within the Middle East, Africa and Asia Pacific.

We also have certain activity that is not allocated to our segments, which has been reflected as “Unallocated” below. Specifically, "Unallocated" activity primarily includes ~~financing related~~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.

~~Historical results have been recast to retrospectively reflect these changes in segment reporting.~~

Summarized Financial Information

No single customer accounted for more than 10% of our consolidated sales for the three and six months ended June 30, ~~2020~~2021 or June 30, ~~2019.~~2020. 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 North America segment sales to the Europe segment.

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


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019			June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
		(In millions)															(In millions)
North America	North America	$	2,200.2	$	2,400.6	$	3,989.9	$	4,333.2	North America	$	2,422.4	$	2,200.2	$	4,114.4	$	3,989.9
Europe	Europe	307.1		554.1		624.7		929.8		Europe	520.5		307.1		727.4		624.7
Inter-segment net sales eliminations	Inter-segment net sales eliminations	(3.9)		(6.4)		(8.4)		(11.4)		Inter-segment net sales eliminations	(3.5)		(3.9)		(4.0)		(8.4)
Consolidated net sales	Consolidated net sales	$	2,503.4	$	2,948.3	$	4,606.2	$	5,251.6	Consolidated net sales	$	2,939.4	$	2,503.4	$	4,837.8	$	4,606.2

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

(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.

(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.


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
	(In millions)
North America	$	428.2	$	411.5	$	572.4	$	487.7
Europe	47.4		(11.0)		(42.0)		(87.8)
Unallocated	47.0		1.2		118.5		(156.9)
Consolidated income (loss) before income taxes	$	522.6	$	401.7	$	648.9	$	243.0

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

The following table presents total assets by segment:


		As of							As of
		June 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
		(In millions)							(In millions)
North America	North America	$	23,316.8	$	23,360.2	North America	$	24,312.1	$	23,375.6
Europe	Europe	5,322.0		5,499.6		Europe	4,207.8		3,955.5
Consolidated total assets	Consolidated total assets	$	28,638.8	$	28,859.8	Consolidated total assets	$	28,519.9	$	27,331.1

4. Investments

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 June 30, ~~2020~~2021 or December 31, ~~2019.~~2020. 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 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 ~~$57.3~~$46.8 million and ~~$37.7~~$38.2 million recorded as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, 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.

Consolidated VIEs

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


		As of															As of
		June 30, 2020						December 31, 2019							June 30, 2021				December 31, 2020
		Total Assets		Total Liabilities		Total Assets		Total Liabilities			Total Assets		Total Liabilities		Total Assets		Total Liabilities
		(In millions)															(In millions)
RMMC/RMBC	RMMC/RMBC	$	201.5	$	17.7	$	207.4	$	17.9	RMMC/RMBC	$	207.5	$	20.9	$	239.3	$	17.9
Other	Other	$	87.1	$	15.4	$	65.3	$	20.8	Other	$	84.7	$	19.2	$	93.4	$	18.0

1514

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							Three Months Ended				Six Months Ended
		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019			June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
		(In millions)															(In millions)
Employee-related charges	Employee-related charges									Employee-related charges
Restructuring	Restructuring	$	20.8	$	2.6	$	52.9	$	6.3	Restructuring	$	3.7	$	20.8	$	7.3	$	52.9
Impairments or asset abandonment charges	Impairments or asset abandonment charges									Impairments or asset abandonment charges
North America - Asset abandonment⁽¹⁾	North America - Asset abandonment⁽¹⁾	35.7		8.5		89.9		16.9		North America - Asset abandonment(1)	2.7		35.7		5.6		89.9
North America - Impairment losses(2)	North America - Impairment losses(2)	7.6		—		7.6		—		North America - Impairment losses(2)	0		7.6		0		7.6
Europe - Asset abandonment	Europe - Asset abandonment	0.2		—		0.5		0.6		Europe - Asset abandonment	2.6		0.2		4.7		0.5

Termination fees and other (gains) losses	Termination fees and other (gains) losses									Termination fees and other (gains) losses
North America⁽²⁾	North America⁽²⁾	—		(61.0)		—		(60.8)		North America⁽²⁾	0		0		0.4		0
Europe(3)	Europe(3)	—		—		—		0.1		Europe(3)	0		0		1.9		0
Total Special items, net	Total Special items, net	$	64.3	$	(49.9)	$	150.9	$	(36.9)	Total Special items, net	$	9.0	$	64.3	$	19.9	$	150.9

(1) ~~Following management approval in December 2019, in~~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~~the purchase ~~is expected to be~~was completed in the fourth quarter of ~~2020, subject to~~2020. Production at the ~~satisfaction~~Irwindale brewery ceased during the third quarter of ~~certain customary closing conditions.~~

2020. Charges incurred in the three and six months ended June 30, 2021 were immaterial. 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 consisted of accelerated depreciation in excess of normal depreciation, ~~of $33.5 million and $83.0 million, respectively. Charges also include~~as well as other closure costs including employee related ~~costs of $7.5 million and $14.8 million, recognized~~costs.

In addition, during the three and six months ended June 30, 2021 and June 30, 2020 ~~respectively, which are included within~~we incurred asset abandonment charges, primarily related to the ~~restructuring line above. We will continue to incur special charges during each reporting period through the expected sale~~accelerated depreciation in excess of normal depreciation as a result of the Montreal brewery closure, which is expected to occur in the ~~fourth quarter~~second half 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.2021.

~~Separately, during~~(2) During the three and six months ended June 30, 2020 ~~and June 30, 2019~~ we ~~incurred asset abandonment charges, consisting primarily~~recognized an aggregate impairment loss of ~~accelerated depreciation in excess of normal depreciation~~$7.6 million related to the closure of the ~~Vancouver brewery, which occurred~~office facility in ~~the third quarter of 2019, and the planned closure~~Denver, Colorado, including our lease right-of-use asset, in light 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 closuresublease market outlook during that same period as a result of the ~~Montreal brewery. However,~~coronavirus pandemic. No further impairment was recorded in 2021 due to the ~~uncertainty inherent in our estimates, these estimated future accelerated depreciation charges as well as~~signing of sublease agreements during the ~~timing of the brewery closure are subject to change.~~three months ended June 30, 2021.

~~(2)~~(3) During the ~~second quarter~~six months ended June 30, 2021, we recognized termination fees and other losses of ~~2019, we completed~~$1.9 million related to the sale of a disposal group within our India business which represented an insignificant part of our Europe segment. The loss includes the ~~existing Montreal brewery property~~reclassification of the associated cumulative foreign currency translation adjustment losses from AOCI into special items, net at the time of sale. See Note 10, "Accumulated Other Comprehensive Income (Loss)" for ~~$96.2 million (CAD 126.0 million) and recognized a gain of $61.3 million.~~further details.

Restructuring Activities

On October 28, 2019, as part of our revitalization plan, we ~~made the determination to establish~~established Chicago, Illinois as our North American operational headquarters, ~~close~~closed our ~~existing~~ office in Denver, Colorado and ~~consolidate~~consolidated certain administrative functions into our other existing office locations. In connection with these consolidation activities, certain impacted employees ~~have been~~were extended an opportunity to continue their employment with MCBC in the new organization and locations and, for those not continuing with MCBC, certain of such employees ~~have been~~were asked to provide transition assistance and offered severance and retention packages in connection with their termination of service. We expect the costs associated with the restructuring to be substantially 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~~reduced employment levels, in aggregate, by approximately 600 employees globally.

In connection with ~~these consolidation activities~~the revitalization plan, we incurred and ~~related organizational and personnel changes,~~expect we ~~currently expect~~may continue to incur ~~certain~~ cash and non-cash restructuring charges related to severance, retention and transition costs, employee relocation, non-cash asset related costs, lease impairment and exit costs in connection with our office lease in Denver, Colorado, and other transition activities ~~currently estimated~~related to the

consolidation activities and related organizational and personnel changes of the revitalization plan through 2021 which is expected to aggregate in the range of approximately ~~$90~~$100 million to $120 million. During the three and six months ended June 30, 2021, we recognized severance and retention charges of $1.1 million inand $2.6 million, respectively, and our remaining accrued restructuring balance related to the ~~aggregate, the majority~~revitalization plan as 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.~~June 30, 2021 was approximately $10 million. 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 the revitalization plan as of June 30, 2020 was approximately $33 million.~~respectively. 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 since December 31, ~~2019,~~2020, as reported in Part II - Item 8. Financial Statements and Supplementary Data, Note 7, "Special Items" in our Annual Report. We continually evaluate our cost structure and seek opportunities for further efficiencies and cost savings as part of ongoing and new initiatives. As such, we may incur additional restructuring related charges or adjustments to previously recorded charges in the future, however, we are unable to estimate the amount of charges at this time.

The accrued restructuring balances as of June 30, ~~2020~~2021 represent expected future cash payments required to satisfy our remaining obligations to terminated employees, the majority of which we expect to be paid in the next 12 months.


		North America		Europe		Total			North America		Europe		Total
		(In millions)											(In millions)
As of December 31, 2019		$	42.6	$	4.5	$	47.1
As of December 31, 2020								As of December 31, 2020	$	24.5	$	2.0	$	26.5
Charges incurred	Charges incurred	47.8		8.0		55.8		Charges incurred	6.1		1.1		7.2
Payments made	Payments made	(39.5)		(9.2)		(48.7)		Payments made	(16.4)		(1.4)		(17.8)
Changes in estimates	Changes in estimates	(2.1)		(0.8)		(2.9)		Changes in estimates	0.2		(0.1)		0.1
Foreign currency and other adjustments	Foreign currency and other adjustments	(0.5)		(0.1)		(0.6)		Foreign currency and other adjustments	0.2		0		0.2
As of June 30, 2020		$	48.3	$	2.4	$	50.7
As of June 30, 2021								As of June 30, 2021	$	14.6	$	1.6	$	16.2

North America Europe Total
(In millions)
As of December 31, 2018 $ 24.5 $ 1.1 $ 25.6
Charges incurred and changes in estimates 1.9 4.4 6.3
Payments made (18.7) (3.0) (21.7)
Foreign currency and other adjustments 0.1 — 0.1
As of June 30, 2019 $ 7.8 $ 2.5 $ 10.3


	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

6. Income Tax

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 %


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Effective tax rate	25	%	51	%	27	%	66	%

The ~~increase~~decrease in the effective tax rate ~~for~~during the three and six months ended June 30, ~~2020~~2021 compared to the prior year was primarily ~~driven~~due to a decrease in net discrete tax expense, partially offset by ~~approximately~~the effect of proportionally higher pretax income in jurisdictions with a higher tax rate. We recognized $38.5 million of net discrete tax expense through the second quarter of 2021 versus $121.7 million net discrete tax expense through the second quarter of 2020. The difference is primarily due to the $135 million of discrete tax expense recognized in the second quarter of 2020, which was related to the enactment of the hybrid regulations as further discussed below.

During the second quarter of 2021, the U.K. government enacted, and royal assent was received for, legislation to increase the corporate income tax rate from 19% to 25%. Remeasurement of our deferred tax liabilities under the higher income tax rate resulted in the recognition of additional discrete tax expense of approximately $18 million in the second quarter of ~~2020, as further discussed below. The increase in the effective tax rate during the six months ended June 30, 2020 was further driven by lower pretax income during the first 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 and have resulted in additional income tax expense of approximately $135 million, which was recognized upon enactment in 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.~~

In July 2020, the U.K. government enacted legislation to repeal the previously enacted reduction to the corporate income tax 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 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.

Due to anticipated settlements and expected expiration of statutes of limitations, it is reasonably possible that the amount of unrecognized tax benefits may decrease by approximately $250 million within the next 12 months.

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 will continue to monitor these regulations. The final hybrid regulations issued in April 2020 resulted in recognition of approximately $135 million of tax expense in the six months ended June 30, 2020. We currently estimate the impact of the final regulations to be cash tax outflows of approximately $100 million in 2021. We continue to analyze the potential cash impacts of the final regulations to minimize cash outflows over time.

7. Goodwill and Intangible Assets

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
Goodwill

~~(1) As a result~~The changes in the carrying amount of goodwill for 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~~segment are presented in the table below.


	North America
Changes in Goodwill	(In millions)
Balance as of December 31, 2020	$	6,151.0

Foreign currency translation	5.9
Balance as of June 30, 2021	$	6,156.9

As of December 31, 2020, due to ~~our~~the goodwill impairment recorded in the fourth quarter of 2020, the Europe ~~reporting unit. See further discussion below.~~segment had 0 goodwill. The North America segment had goodwill as of June 30, 2021 and December 31, 2020 as presented in the table above.

The gross amount of goodwill totaled approximately ~~$8.2 billion and $8.3~~$8.4 billion as of both June 30, ~~2020~~2021 and December 31, ~~2019, respectively.~~2020. Accumulated impairment losses as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 totaled ~~$651.9~~$2,276.0 million and ~~$681.3~~$2,264.5 million, respectively, and are comprised of a full impairment taken on the Europe reporting unit and a partial impairment taken on the North America reporting unit as well as our historic India reporting unit, which was fully impaired in 2019.

As of the date of our annual impairment test, performed as of October 1, 2020, the North America reporting unit goodwill balance was at risk of future impairment in the event of significant unfavorable changes in assumptions including the forecasted cash flows (including company-specific risks like the performance of our above premium transformation efforts and overall market performance of new innovations like hard seltzers, along with macro-economic risks such as the continued prolonged weakening of economic conditions, or significant unfavorable changes in tax rates, environmental or other regulations, including interpretations thereof), terminal growth rates, market multiples and/or weighted-average cost of capital utilized in the discounted cash flow analyses. For testing purposes of our reporting units, management's best estimates of the expected future results are the primary driver in determining the fair value. Current projections used for our North America reporting unit testing reflect growth assumptions associated with our revitalization plan to build on the strength of our iconic core brands, aggressively grow our above premium portfolio, expand beyond the beer aisle, invest in our capabilities and support our people and our communities all of which are intended to benefit the projected cash flows of the business. The cash flow assumptions were tempered somewhat by the impacts the coronavirus has had on our overall business and specifically our more profitable on-premise business.

We determined that there was ~~related to~~no triggering event that occurred during the first half of 2021 that would indicate the carrying value of our ~~North America segment.~~goodwill was greater than its fair value.

Intangible Assets, Other than Goodwill

The following table presents details of our intangible assets, other than goodwill, as of June 30, ~~2020:~~2021:

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	$	5,165.4	$	(1,179.9)	$	3,985.5
License agreements and distribution rights	15 - 20	208.9		(105.1)		103.8
Other	3 - 40	98.8		(29.5)		69.3
Intangible assets not subject to amortization:
Brands	Indefinite	8,216.1		—		8,216.1
Distribution networks	Indefinite	816.0		—		816.0
Other	Indefinite	307.6		—		307.6
Total		$	14,812.8	$	(1,314.5)	$	13,498.3

The following table presents details of our intangible assets, other than goodwill, as of December 31, ~~2019:~~2020:


		Useful life	Gross		Accumulated amortization		Net			Useful life	Gross		Accumulated amortization		Net
		(Years)	(In millions)										(Years)		(In millions)
Intangible assets subject to amortization:	Intangible assets subject to amortization:								Intangible assets subject to amortization:
Brands	Brands	10 - 50	$	5,036.3	$	(865.1)	$	4,171.2	Brands	10 - 50	$	5,128.4	$	(1,070.6)	$	4,057.8
License agreements and distribution rights	License agreements and distribution rights	15 - 20	202.0		(90.6)		111.4		License agreements and distribution rights	15 - 20	206.8		(99.5)		107.3
Other	Other	3 - 40	124.0		(39.4)		84.6		Other	3 - 40	109.1		(36.4)		72.7
Intangible assets not subject to amortization:	Intangible assets not subject to amortization:								Intangible assets not subject to amortization:
Brands	Brands	Indefinite	8,172.4		—		8,172.4		Brands	Indefinite	8,215.7		—		8,215.7
Distribution networks	Distribution networks	Indefinite	778.8		—		778.8		Distribution networks	Indefinite	795.0		—		795.0
Other	Other	Indefinite	337.6		—		337.6		Other	Indefinite	307.6		—		307.6
Total	Total		$	14,651.1	$	(995.1)	$	13,656.0	Total		$	14,762.6	$	(1,206.5)	$	13,556.1

The changes in the gross carrying amounts of intangible assets from December 31, ~~2019~~2020 to June 30, ~~2020~~2021 are primarily driven by the impact of foreign exchange rates, as a significant amount of intangible assets are denominated in foreign currencies.

Based on foreign exchange rates as of June 30, ~~2020,~~2021, the estimated future amortization expense of intangible assets is as follows:


Fiscal year	Fiscal year	Amount		Fiscal year	Amount
		(In millions)			(In millions)
2020 - remaining		$	108.3
2021		$	213.2
2021 - remaining				2021 - remaining	$	108.8
2022	2022	$	207.8	2022	$	213.5
2023	2023	$	206.7	2023	$	212.6
2024	2024	$	206.6	2024	$	210.9
2025				2025	$	210.8

Amortization expense of intangible assets was ~~$54.6~~$54.8 million and ~~$55.2~~$54.6 million for the three months ended June 30, ~~2020~~2021 and June 30, ~~2019,~~2020, respectively, and ~~$109.5~~$109.3 million and ~~$110.6~~$109.5 million for the six months ended June 30, ~~2020~~2021 and June 30, ~~2019,~~2020, 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 Testing~~

As of the date of ~~completion~~our annual impairment test of ~~our 2019~~indefinite-lived intangible assets, performed as of October 1, 2020, the fair value of the indefinite-lived Miller, Coors and Carling brands and distribution networks were sufficiently in excess of their carrying values. We determined at the annual 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 concludeddate that the ~~components within the U.S., Canada and~~Staropramen indefinite-lived brand intangible asset in 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 component level, however, the associated goodwill balance was fully impaired in the third quarter of 2019.

~~As discussed in~~ ~~Note 3, "Segment Reporting,"~~ effective January 1, 2020, we changed our management structure from a 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 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 consolidated North America segment level. As a result of these changes, we re-evaluated our historical reporting unit conclusions and have consolidated our previously separate U.S. and Canada reporting units into a single North America reporting unit effective January 1, 2020. There were no changes to our existing Europe reporting unit, which was considered to be at risk of future impairment ~~following~~as a result of the ~~completion of our October 1, 2019 annual impairment testing.~~coronavirus' impact on the on-premise

1918

business throughout Europe that commenced in 2020 and is continuing in 2021. No triggering events occurred during the first half of 2021 that would indicate the carrying value of these indefinite-lived assets was greater than their fair value.

We ~~completed an interim impairment assessment~~continuously monitor the performance of the underlying definite-lived intangible assets for ~~our U.S. and Canada reporting units as of January 1, 2020 immediately prior to the reporting unit change, as well as~~potential triggering events suggesting an impairment ~~assessment of the combined North America reporting unit immediately after the change, and determined that~~review should be performed. While no ~~impairments existed. Additionally, as the changes resulted~~triggering events have occurred in the ~~combination~~first half of ~~our historical U.S. and Canada reporting units into a single North America reporting unit, no further reallocation of goodwill was required.~~

~~Additionally, as a result of the structural changes discussed above, including the centralization of the brand management and strategy for our~~ ~~Coors~~ ~~brands across North America,~~2021, 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 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 effects of the coronavirus pandemic, and related impacts to the interest rate environment as well as market multiples, required an additional interim impairment assessment as of June 30, 2020. While factors are present that indicate that triggering events may exist, such as the 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 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 at risk of future impairment. We will continue to monitor the ~~length and severity of the~~ impacts of the ~~pandemic to~~coronavirus in our ~~business, and if the duration is prolonged~~key markets and the ~~severity~~potential implications that may have on the values of ~~its impacts continues or worsens, this may indicate the need to perform future interim impairment analyses that could result in material impairments.~~definite-lived intangible assets.

~~Key~~Fair Value 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 intangible assets are discussed in Part II—Item 8 Financial Statements, Note 10, "Goodwill and Intangible Assets" in our Annual Report, and represent Level 3 measurements.

Overall Considerations

Based on known facts and circumstances, we evaluate and consider recent events and uncertain items, as well as the 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 progress we are making against our revitalization plan, challenges within the beer industry for further weakening or additional systemic structural 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 in Canada 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."

While historical performance and current expectations have resulted in fair values of our reporting units and 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 Intangible Assets~~

Regarding definite-lived intangible assets, we continuously monitor the performance of the underlying assets for potential triggering events suggesting an impairment review should be performed. No such triggering events were identified in the first half of 2020 that resulted in an impairment loss.

2019

8. Debt

Debt ~~obligations~~Obligations


		As of							As of
		June 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
		(In millions)							(In millions)
Long-term debt:	Long-term debt:					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	CAD 500 million 2.84% notes due July 2023	368.3		384.9		CAD 500 million 2.84% notes due July 2023	$	403.3	$	392.9
CAD 500 million 3.44% notes due July 2026	CAD 500 million 3.44% notes due July 2026	368.3		384.9		CAD 500 million 3.44% notes due July 2026	403.3		392.9
$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
$1.0 billion 2.1% notes due July 2021(1)						$1.0 billion 2.1% notes due July 2021(1)	1,000.0		1,000.0
$500 million 3.5% notes due May 2022(2)						$500 million 3.5% notes due May 2022(2)	502.3		503.7
$2.0 billion 3.0% notes due July 2026	$2.0 billion 3.0% notes due July 2026	2,000.0		2,000.0		$2.0 billion 3.0% notes due July 2026	2,000.0		2,000.0
$1.1 billion 5.0% notes due May 2042	$1.1 billion 5.0% notes due May 2042	1,100.0		1,100.0		$1.1 billion 5.0% notes due May 2042	1,100.0		1,100.0
$1.8 billion 4.2% notes due July 2046	$1.8 billion 4.2% notes due July 2046	1,800.0		1,800.0		$1.8 billion 4.2% notes due July 2046	1,800.0		1,800.0
EUR 800 million 1.25% notes due July 2024	EUR 800 million 1.25% notes due July 2024	898.7		897.0		EUR 800 million 1.25% notes due July 2024	948.6		977.3
Finance leases and other	Finance leases and other	121.5		129.5		Finance leases and other	100.2		97.8
Less: unamortized debt discounts and debt issuance costs	Less: unamortized debt discounts and debt issuance costs	(53.1)		(56.7)		Less: unamortized debt discounts and debt issuance costs	(47.2)		(50.3)
Total long-term debt (including current portion)	Total long-term debt (including current portion)	8,477.1		9,030.8		Total long-term debt (including current portion)	8,210.5		8,214.3
Less: current portion of long-term debt	Less: current portion of long-term debt	(403.4)		(921.3)		Less: current portion of long-term debt	(1,508.6)		(1,006.1)
Total long-term debt	Total long-term debt	$	8,073.7	$	8,109.5	Total long-term debt	$	6,701.9	$	7,208.2

Short-term borrowings:

Commercial paper programs⁽³⁾⁽⁴⁾		$	199.9	$	—
Other short-term borrowings⁽⁵⁾		9.7		6.9

Short-term borrowings(3)						Short-term borrowings(3)	$	16.5	$	14.0
Current portion of long-term debt	Current portion of long-term debt	403.4		921.3		Current portion of long-term debt	1,508.6		1,006.1
Current portion of long-term debt and short-term borrowings	Current portion of long-term debt and short-term borrowings	$	613.0	$	928.2	Current portion of long-term debt and short-term borrowings	$	1,525.1	$	1,020.1

(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,~~2021, we ~~have~~had cross currency swaps associated with our $1.0 billion 2.1% senior notes due July 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)~~ See Note 11, "Derivative Instruments and Hedging Activities" for further details. We ~~maintain~~repaid our $1.0 billion 2.1% notes at maturity on July 15, 2021 using a ~~$1.5 billion revolving credit facility with a maturity date~~combination 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.

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~~and also settled 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.~~associated cross currency swap.

~~(4)~~(2)On~~May 26, 2020, Molson Coors Brewing Company (UK) Limited (“MCBC U.K.”), a subsidiary of MCBC that operates~~The fair value hedges related to these notes have been settled and ~~manages~~are being amortized over 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 maturitieslife 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.~~respective note.

~~(5)~~(3)As of June 30, ~~2020,~~2021, we had ~~$6.9~~$12.5 million in bank overdrafts and ~~$39.3~~$129.0 million in bank cash related to our cross-border, cross-currency cash pool, for a net positive position of ~~$32.4~~$116.5 million. As of December 31, ~~2019,~~2020, we had ~~$1.1~~$11.0 million in bank overdrafts and ~~$55.0~~$103.7 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of ~~$53.9~~$92.7 million. We had total outstanding borrowings of ~~$2.8~~$4.0 million and $3.0 million under our 2 JPY ~~overdraft~~ facilities as of ~~both~~ June 30, ~~2020~~2021 and December 31, ~~2019.~~2020, respectively. In addition, we have USD, CAD and GBP ~~lines of credit~~overdraft facilities under which we had no0 outstanding borrowings as of June 30, ~~2020~~2021 or December 31, ~~2019.~~2020.

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 June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the fair value of our outstanding long-term debt (including the current portion of long-term debt) was approximately ~~$8.7~~$8.9 billion and ~~$9.2~~$9.1 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.

~~Debt Covenants~~

~~On June 19, 2020, we entered into to an amendment to our existing~~

Revolving Credit Facility and Commercial Paper

We maintain a $1.5 billion revolving credit facility ~~agreement, which among~~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 ~~things, revised the~~borrowings at any time at variable interest rates. We use this facility from time to time to leverage ~~ratios under the financial maintenance covenant for each fiscal quarter ending~~cash needs including debt repayments. We had 0 borrowings drawn on ~~or after June 30, 2020 through the maturity of the credit facility. The maximum leverage ratio, as defined by the amended~~this revolving credit facility ~~agreement~~and 0 commercial paper borrowings as of June 30, ~~2020 is 4.75x~~2021 or December 31, 2020.

Subsequent to June 30, 2021, we had net ~~debt to EBITDA, with an increase to 5.25x net debt to EBITDA~~commercial paper borrowings of approximately $140 million, as of ~~the last day of the fiscal quarter ending September 30, 2020 through March 31, 2021, followed by a 0.50x reduction to 4.75x net debt to EBITDA for the fiscal quarter ending June 30,~~July 29, 2021. ~~The leverage ratio requirement~~As such, as of ~~the last day of the fiscal quarter ending September 30,~~July 29, 2021, ~~is reduced by 0.25x~~we have approximately $1.4 billion available 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, 2021 through maturity of the~~draw on our total $1.5 billion revolving credit facility.

Debt Covenants

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, the maximum leverage ratio, as defined by our revolving credit facility agreement as of June 30, 2021 is 4.75x net debt to EBITDA. As of June 30, ~~2020,~~2021, we were in compliance with all of these restrictions and have met all debt payment obligations. All of our outstanding senior notes as of June 30, ~~2020~~2021 rank pari-passu.

9. Inventories


		As of							As of
		June 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
		(In millions)							(In millions)
Finished goods	Finished goods	$	244.9	$	236.7	Finished goods	$	330.6	$	266.7
Work in process	Work in process	93.1		84.0		Work in process	82.7		72.7
Raw materials	Raw materials	223.2		227.1		Raw materials	235.3		242.2
Packaging materials	Packaging materials	77.9		68.1		Packaging materials	100.9		82.7
Inventories, net	Inventories, net	$	639.1	$	615.9	Inventories, net	$	749.5	$	664.3

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, 2019		$	(652.5)	$	(87.8)	$	(351.0)	$	(70.9)	$	(1,162.2)
As of December 31, 2020												As of December 31, 2020	$	(539.5)	$	(173.9)	$	(397.7)	$	(56.7)	$	(1,167.8)
Foreign currency translation adjustments	Foreign currency translation adjustments	(242.9)		—		—		—		(242.9)		Foreign currency translation adjustments	40.5		—		—		—		40.5
Reclassification of cumulative translation adjustment to income (loss)(1)												Reclassification of cumulative translation adjustment to income (loss)(1)	7.5		—		—		—		7.5
Gain (loss) on net investment hedges	Gain (loss) on net investment hedges	3.5		—		—		—		3.5		Gain (loss) on net investment hedges	37.4		—		—		—		37.4
Unrealized gain (loss) on derivative instruments	Unrealized gain (loss) on derivative instruments	—		(171.0)		—		—		(171.0)		Unrealized gain (loss) on derivative instruments	—		58.7		—		—		58.7
Reclassification of derivative (gain) loss to income		—		(1.4)		—		—		(1.4)
Reclassification of derivative (gain) loss to income (loss)												Reclassification of derivative (gain) loss to income (loss)	—		5.3		—		—		5.3

Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income		—		—		(4.2)		—		(4.2)
Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income (loss)												Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income (loss)	—		—		0.8		—		0.8
Ownership share of unconsolidated subsidiaries' other comprehensive income (loss)	Ownership share of unconsolidated subsidiaries' other comprehensive income (loss)	—		—		—		2.0		2.0		Ownership share of unconsolidated subsidiaries' other comprehensive income (loss)	—		—		—		1.0		1.0
Tax benefit (expense)	Tax benefit (expense)	(12.6)		42.7		1.0		(0.5)		30.6		Tax benefit (expense)	(4.2)		(16.9)		(0.2)		(0.2)		(21.5)

As of June 30, 2020		$	(904.5)	$	(217.5)	$	(354.2)	$	(69.4)	$	(1,545.6)
As of June 30, 2021												As of June 30, 2021	$	(458.3)	$	(126.8)	$	(397.1)	$	(55.9)	$	(1,038.1)

~~Reclassifications~~(1) As a result of the sale of a disposal group within our India business, the associated cumulative foreign currency translation adjustment was reclassified from AOCI ~~to net income (loss) were immaterial for the three~~ and ~~six months ended June 30, 2020 and June 30, 2019.~~recognized within special items.

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 half of ~~2020.~~2021. 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. ~~Our~~Except as noted below, our significant derivative positions have not changed considerably since ~~year-end.~~December 31, 2020.

Forward Starting Interest Rate Swaps

During the third quarter of 2018, we entered into forward starting interest rate swaps with a notional amount totaling $1.5 billion with termination dates of July 2021, May 2022 and July 2026. The swaps had effective dates mirroring the terms of the forecasted debt issuances. Under the agreements, we are required to early terminate these swaps at the time we expect to issue the related forecasted debt. We have designated these contracts as cash flow hedges. As a result, the unrealized mark-to-market gains or losses will be recorded to AOCI until termination at which point the realized gain or loss of these swaps at issuance of the hedged debt will be reclassified from AOCI and amortized to interest expense over the term of the hedged debt.

23In June 2021, we early terminated our $250.0 million forward starting interest rate swap that was set to terminate in July 2021. This forward starting interest rate swap was rolled forward to May 2022 through a cashless settlement. The new May 2022 forward starting interest rate swap is incremental to our existing May 2022 forward starting interest rate swap that was executed in 2018, both of which are hedging our forecasted debt issuance expected to occur next year. At the time of the transaction, there was approximately $33.4 million of unrealized losses recorded in AOCI. Approximately $1.7 million was recorded to interest expense in the second quarter when it became probable that one of the forecasted interest payments originally hedged would not occur. The remaining $31.7 million will be amortized to interest expense throughout the term of the respective debt unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the loss will be recorded to interest expense at that time. The new forward starting interest rate swap has an effective date of June 2021, with a termination date of May 2022 and an effective interest rate of approximately 3.22%.

Cash settlements related to interest rate contracts are generally classified as operating activities on the condensed consolidated statements of cash flows. However, due to an other-than-insignificant financing element in the May 2022 forward starting interest rate swap that was designated in June 2021, the cash flow related to this contract will be classified as financing activities.

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 Corp. ("HEXO") at a strike price of CAD ~~6.00~~24.00 per share are estimated using the Black-Scholes option-pricing model.

The table below summarizes our derivative assets and liabilities that were measured at fair value as of June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.


				Fair value measurements as of June 30, 2020													Fair value measurements as of June 30, 2021
		As of June 30, 2020		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)			As of June 30, 2021		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	Cross currency swaps	$	12.0	$	—	$	12.0	$	—	Cross currency swaps	$	(17.8)	$	0	$	(17.8)	$	0
Interest rate swaps	Interest rate swaps	(291.3)		—		(291.3)		—		Interest rate swaps	(159.1)		0		(159.1)		0
Foreign currency forwards	Foreign currency forwards	8.1		—		8.1		—		Foreign currency forwards	(6.8)		0		(6.8)		0
Commodity swaps and options		(81.3)		—		(81.3)		—
Warrants		1.1		—		1.1		—
Commodity swaps										Commodity swaps	288.7		0		288.7		0

Total	Total	$	(351.4)	$	—	$	(351.4)	$	—	Total	$	105.0	$	0	$	105.0	$	0

Fair value measurements as of December 31, 2019
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)
Cross currency swaps $ 10.0 $ — $ 10.0 $ —
Interest rate swaps (111.5) — (111.5) —
Foreign currency forwards 2.1 — 2.1 —
Commodity swaps and options (41.2) — (41.2) —
Warrants 2.7 — 2.7 —
Total $ (137.9) $ — $ (137.9) $ —


			Fair value measurements as of December 31, 2020
	As of December 31, 2020		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(In millions)
Cross currency swaps	$	(26.5)	$	0	$	(26.5)	$	0
Interest rate swaps	(221.5)		0		(221.5)		0
Foreign currency forwards	(4.9)		0		(4.9)		0
Commodity swaps and options	65.2		0		65.2		0
Warrants	0.3		0		0.3		0
Total	$	(187.4)	$	0	$	(187.4)	$	0

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had no significant transfers between Level 1 and Level 2. New derivative contracts transacted during the six months ended June 30, ~~2020~~2021 were all included in Level 2.

Results of Period Derivative Activity

The tables below include the results of our derivative activity in our unaudited condensed consolidated balance sheets as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, and our unaudited condensed consolidated statements of operations for the three and six months ended June 30, ~~2020~~2021 and June 30, ~~2019.~~

2020.

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


		As of June 30, 2020																						As of June 30, 2021
				Derivative Assets						Derivative Liabilities											Derivative Assets					Derivative Liabilities
		Notional amount		Balance sheet location	Fair value		Balance sheet location			Fair value			Notional amount				Balance sheet location		Fair value		Balance sheet location			Fair value
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:																								Derivatives designated as hedging instruments:
Cross currency swaps	Cross currency swaps	$	400.0	Other current assets	$	—	Accounts payable and other current liabilities			$	—	Cross currency swaps	$	400.0			Other current assets		$	0	Accounts payable and other current liabilities			$	(17.8)
				Other non-current assets	12.0		Other liabilities			—
Interest rate swaps												Interest rate swaps	$	1,500.0			Other current assets		0		Accounts payable and other current liabilities			(69.6)
																	Other non-current assets		0		Other liabilities			(89.5)
Interest rate swaps		$	1,500.0	Other non-current assets	—		Other liabilities			(291.3)
Foreign currency forwards	Foreign currency forwards	$	191.2	Other current assets	5.8		Accounts payable and other current liabilities			(0.2)		Foreign currency forwards	$	194.7			Other current assets		0.3		Accounts payable and other current liabilities			(5.1)
				Other non-current assets	2.7		Other liabilities			(0.2)							Other non-current assets		0.3		Other liabilities			(2.3)
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments							$	20.5						$	(291.7)		Total derivatives designated as hedging instruments				$	0.6				$	(184.3)
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:																								Derivatives not designated as hedging instruments:
Commodity swaps⁽¹⁾	Commodity swaps⁽¹⁾	$	950.3	Other current assets	$	6.4	Accounts payable and other current liabilities			$	(76.4)	Commodity swaps(1)	$	817.6			Other current assets		$	189.0	Accounts payable and other current liabilities			$	(2.6)
				Other non-current assets	9.4		Other liabilities			(20.7)							Other non-current assets		102.4		Other liabilities			(0.1)
Commodity options⁽¹⁾	Commodity options⁽¹⁾	$	18.4	Other current assets	—		Accounts payable and other current liabilities			—		Commodity options(1)	$	16.8			Other current assets		0		Accounts payable and other current liabilities			0

Warrants	Warrants	$	50.8	Other non-current assets	1.1		Other liabilities			—		Warrants	$	55.7			Other current assets		0		Accounts payable and other current liabilities			0
Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments							$	16.9						$	(97.1)		Total derivatives not designated as hedging instruments				$	291.4				$	(2.7)


		As of December 31, 2019																											As of December 31, 2020
				Derivative Assets								Derivative Liabilities														Derivative Assets							Derivative Liabilities
		Notional amount		Balance sheet location	Fair value				Balance sheet location			Fair value				Notional amount				Balance sheet location		Fair value				Balance sheet location			Fair value
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:																				Derivatives designated as hedging instruments:
Cross currency swaps	Cross currency swaps	$	900.0	Other current assets	$	1.8			Accounts payable and other current liabilities			$	—	Cross currency swaps		$	400.0			Other current assets		$	0			Accounts payable and other current liabilities			$	(26.5)
				Other non-current assets	8.2				Other liabilities			—
Interest rate swaps	Interest rate swaps	$	1,500.0	Other non-current assets	—				Other liabilities			(111.5)		Interest rate swaps		$	1,500.0			Other non-current assets		0				Accounts payable and other current liabilities			(47.7)
																										Other liabilities			(173.8)
Foreign currency forwards	Foreign currency forwards	$	237.9	Other current assets	1.9				Accounts payable and other current liabilities			(0.8)		Foreign currency forwards		$	181.2			Other current assets		0.3				Accounts payable and other current liabilities			(3.0)
				Other non-current assets	1.4				Other liabilities			(0.4)								Other non-current assets		0				Other liabilities			(2.2)
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments						$	13.3						$	(112.7)		Total derivatives designated as hedging instruments							$	0.3						$	(253.2)
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:																				Derivatives not designated as hedging instruments:
Commodity swaps⁽¹⁾	Commodity swaps⁽¹⁾	$	598.4	Other current assets	$	5.7			Accounts payable and other current liabilities			$	(36.4)	Commodity swaps(1)		$	918.9			Other current assets		$	44.5			Accounts payable and other current liabilities			$	(20.6)
				Other non-current assets	1.0				Other liabilities			(11.5)								Other non-current assets		45.4				Other liabilities			(4.1)
Commodity options⁽¹⁾	Commodity options⁽¹⁾	$	18.4	Other current assets	—				Accounts payable and other current liabilities			—		Commodity options(1)		$	16.8			Other current assets		0				Accounts payable and other current liabilities			0
Warrants	Warrants	$	53.1	Other non-current assets	2.7				Other liabilities			—		Warrants		$	54.2			Other non-current assets		0.3				Other liabilities			0
Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments									$	9.4							$	(47.9)		Total derivatives not designated as hedging instruments						$	90.2						$	(24.7)

(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.

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	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)								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	Line item in the balance sheet in which the hedged item is included			As of June 30, 2021			As of December 31, 2020				As of June 30, 2021			As of December 31, 2020
		(In millions)																			(In millions)
Current portion of long-term debt and short-term borrowings	Current portion of long-term debt and short-term borrowings	$	—		$	—		$	—		$	(0.2)	Current portion of long-term debt and short-term borrowings		$	0		$	0			$	0		$	0
Long-term debt	Long-term debt	$	—		$	—		$	5.1		$	6.5	Long-term debt		$	0		$	0			$	2.3		$	3.7

(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 June 30, 2020
Three Months Ended June 30, 2021							Three Months Ended June 30, 2021
Derivatives in cash flow hedge relationships	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	Forward starting interest rate swaps	$	6.1	Interest income (expense), net	$	(0.7)	Forward starting interest rate swaps	$	(76.7)	Interest income (expense), net	$	(2.4)
Foreign currency forwards	Foreign currency forwards	(7.0)		Cost of goods sold	2.6		Foreign currency forwards	(1.8)		Cost of goods sold	(1.7)
				Other income (expense), net	(0.5)					Other income (expense), net	0.4
Total	Total	$	(0.9)		$	1.4	Total	$	(78.5)		$	(3.7)


Three Months Ended June 30, 2020
Three Months Ended June 30, 2021										Three Months Ended June 30, 2021
Derivatives in net investment hedge relationships	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⁾		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	Cross currency swaps	$	(7.8)	Interest income (expense), net	$	—	Interest income (expense), net	$	2.8	Cross currency swaps	$	(6.5)	Interest income (expense), net	$	0	Interest income (expense), net	$	2.8

Total	Total	$	(7.8)		$	—		$	2.8	Total	$	(6.5)		$	0		$	2.8

~~Three 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~~

~~(16.2)~~

~~Other income (expense), net~~

—

~~Other income (expense), net~~

—

~~Total~~

~~(16.2)~~

—


Three Months Ended June 30, 2021
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	$	(10.2)	Other income (expense), net	$	0	Other income (expense), net	$	0

Total	$	(10.2)		$	0		$	0

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)~~

—


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
Forward starting interest rate swaps	$	6.1	Interest income (expense), net	$	(0.7)
Foreign currency forwards	(7.0)		Cost of goods sold	2.6
			Other income (expense), net	(0.5)
Total	$	(0.9)		$	1.4

2624

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


Three 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	$	(7.8)	Interest income (expense), net	$	0	Interest income (expense), net	$	2.8
Total	$	(7.8)		$	0		$	2.8

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~~

—


Three 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	$	(16.2)	Other income (expense), net	$	0	Other income (expense), net	$	0

Total	$	(16.2)		$	0		$	0


Six Months Ended June 30, 2021
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	62.4		Interest income (expense), net	(3.2)
Foreign currency forwards	(3.7)		Cost of goods sold	(2.6)
			Other income (expense), net	0.5
Total	$	58.7		$	(5.3)


Six Months Ended June 30, 2021
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	$	8.7	Interest income (expense), net	$	0	Interest income (expense), net	$	5.7
Total	$	8.7		$	0		$	5.7


Six Months Ended June 30, 2021
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	$	28.7	Other income (expense), net	$	0	Other income (expense), net	$	0
Total	$	28.7		$	0		$	0


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	$	0	Interest income (expense), net	$	8.5
Total	$	5.2		$	0		$	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	$	0	Other income (expense), net	$	0
Total	$	(1.7)		$	0		$	0

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

WeAs of June��30, 2021, we expect ~~net gains~~our reclassification of ~~approximately $3 million (pretax) recorded in~~ AOCI ~~as of June 30, 2020~~into earnings related to cash flow hedges ~~will~~to be ~~reclassified into earnings within~~approximately $8 million over the next 12 months. For derivatives designated in cash flow hedge relationships, the maximum length of time over which forecasted transactions are hedged as of June 30, ~~2020~~2021 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
Three Months Ended June 30, 2021								Three Months Ended June 30, 2021
		Location and amount of gain (loss) recognized in income on fair value and cash flow hedging relationships⁽¹⁾											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			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	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)	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	$	(1,667.9)	$	(3.3)	$	(67.9)
Gain (loss) on cash flow hedging relationships:	Gain (loss) on cash flow hedging relationships:							Gain (loss) on cash flow hedging relationships:
Forward starting interest rate swaps	Forward starting interest rate swaps							Forward starting interest rate swaps
Amount of gain (loss) reclassified from AOCI into income	Amount of gain (loss) reclassified from AOCI into income	—		—		(0.7)		Amount of gain (loss) reclassified from AOCI into income	—		—		(2.4)

Foreign currency forwards	Foreign currency forwards							Foreign currency forwards
Amount of gain (loss) reclassified from AOCI into income	Amount of gain (loss) reclassified from AOCI into income	2.6		(0.5)		—		Amount of gain (loss) reclassified from AOCI into income	(1.7)		0.4		—

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
Three Months Ended June 30, 2020								Three Months Ended June 30, 2020
		Location and amount of gain (loss) recognized in income on fair value and cash flow hedging relationships⁽¹⁾											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			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	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)	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:	Gain (loss) on cash flow hedging relationships:							Gain (loss) on cash flow hedging relationships:
Forward starting interest rate swaps	Forward starting interest rate swaps							Forward starting interest rate swaps
Amount of gain (loss) reclassified from AOCI into income	Amount of gain (loss) reclassified from AOCI into income	—		—		(1.4)		Amount of gain (loss) reclassified from AOCI into income	—		—		(0.7)

Foreign currency forwards	Foreign currency forwards							Foreign currency forwards
Amount of gain (loss) reclassified from AOCI into income	Amount of gain (loss) reclassified from AOCI into income	3.6		(0.8)		—		Amount of gain (loss) reclassified from AOCI into income	2.6		(0.5)		—

2826


Six Months Ended June 30, 2019
Six Months Ended June 30, 2021								Six Months Ended June 30, 2021
		Location and amount of gain (loss) recognized in income on fair value and cash flow hedging relationships⁽¹⁾											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			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	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	$	(3,172.8)	$	13.0	$	(138.9)	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	$	(2,835.3)	$	(1.9)	$	(133.2)
Gain (loss) on cash flow hedging relationships:	Gain (loss) on cash flow hedging relationships:							Gain (loss) on cash flow hedging relationships:
Forward starting interest rate swaps	Forward starting interest rate swaps							Forward starting interest rate swaps
Amount of gain (loss) reclassified from AOCI into income	Amount of gain (loss) reclassified from AOCI into income	—		—		(1.5)		Amount of gain (loss) reclassified from AOCI into income	—		—		(3.2)

Foreign currency forwards	Foreign currency forwards							Foreign currency forwards
Amount of gain (loss) reclassified from AOCI into income	Amount of gain (loss) reclassified from AOCI into income	2.3		(0.5)		—		Amount of gain (loss) reclassified from AOCI into income	(2.6)		0.5		—


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)		—

(1) We had no outstanding fair value hedges during the first half of ~~2020~~2021 or ~~2019.~~2020.

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

Three Months Ended June 30, ~~2020~~2021

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

$137.2

~~24.6~~

Warrants

Other income (expense), net

~~0.3~~ (0.6)

Total

~~24.9~~136.6

Three Months Ended June 30, ~~2019~~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

~~(37.2)~~

24.6

Warrants

Other income (expense), net

~~(15.0)~~0.3

Total

~~(52.2)~~24.9

Six Months Ended June 30, ~~2020~~2021

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

$265.1

~~(87.9)~~

Warrants

Other income (expense), net

~~(1.4)~~(0.3)

Total

~~(89.3)~~264.8

Six Months Ended June 30, ~~2019~~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)

~~(4.5)~~

Warrants

Other income (expense), net

~~7.9~~ (1.4)

Total

~~3.4~~ (89.3)

The gains and losses recognized in income related to our commodity swaps are largely driven by changes in the respective commodity market ~~prices, primarily in aluminum and diesel.~~prices.

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 ~~$20.6~~$15.7 million and ~~$16.2~~$17.9 million as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, 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 half of ~~2020,~~2021, 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) 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 MCBC USA's profit from Keystone sales. MCBC USA subsequently filed an answer and counterclaims against Stone Brewing Company. On May 31, 2018, Stone Brewing Company filed a motion to dismiss MCBC USA's counterclaims and for a preliminary injunction seeking to bar 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 MCBC USA's counterclaims. ~~Discovery is closed and~~The jury trial ~~is currently~~ scheduled to begin inon October ~~2020.~~13, 2020 was continued by the court and has now been reset to begin on November 8, 2021. 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 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 $20 million recorded within other receivables, net on our unaudited condensed consolidated balance sheet as of June 30, 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, 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 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, 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 December 9, 2019, the 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 motion to dismiss the amended complaint on January 23, 2020; the plaintiff subsequently filed an opposition to our motion to 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 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. All 3 derivative actions have been administratively closed ~~subject~~and stayed. The Schmier derivative case was dismissed on June 3, 2021 and the Murr derivative case was dismissed on June 28, 2021. Plaintiffs in the lone remaining derivative case, Fong, filed a motion to ~~being reopened~~dismiss that case on June 25, 2021. The court has not yet ruled on that motion. Relatedly, but in a different action, the United States District Court for ~~good cause shown. A~~the District of Colorado dismissed with prejudice on December 2, 2020 a putative class action complaint filed against the Company, Mark Hunter, and Tracey Joubert asserting largely the same allegations as those in the above mentioned purported derivative suits. No appeal was taken and that case is now fully resolved and closed. In the lone remaining administratively closed purported derivative suit, a range of potential loss is not estimable at this time.

Regulatory Contingencies

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 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 $51 million of previously filed claims through the second quarter of 2021, and have previously claimed, but not yet received, refunds of approximately $8 million recorded within other receivables, net on our unaudited condensed consolidated balance sheet as of June 30, 2021. 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. An opposition/response brief was filed on October 1, 2020 and final reply brief was submitted on December 11, 2020. The Federal Circuit Court of Appeals heard oral argument on March 1, 2021 and took the matter under advisement. 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.

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 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 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 coronavirus pandemic will impact these discussions.~~ Molson Canada 2005 and the other Master Framework Agreement signatories are prepared to vigorously defend 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 June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the unaudited condensed consolidated balance sheets include liabilities related to these guarantees of ~~$57.3~~$46.8 million and ~~$37.7~~$38.2 million, respectively. See Note 4, "Investments" for further detail.

Separately, related to our Cervejarias Kaiser Brasil S.A. ("Kaiser") indemnities, we ~~have~~ accrued ~~$10.4~~$11.5 million and ~~$14.2~~$7.7 million, in aggregate, as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The maximum potential claims amount remaining for the Kaiser-related purchased tax credits was ~~$64.0~~$70.4 million, based on foreign exchange rates as of June 30, ~~2020.~~2021. 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 half of ~~2020.~~2021.

13. Leases

Supplemental balance sheet information related to leases as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 was as follows:


			As of									As of
			June 30, 2020		December 31, 2019				June 30, 2021			December 31, 2020
		Balance Sheet Classification	(In millions)								Balance Sheet Classification	(In millions)
Operating Leases	Operating Leases						Operating Leases
Operating lease right-of-use assets	Operating lease right-of-use assets	Other assets	$	140.6	$	154.5	Operating lease right-of-use assets	Other assets	$	133.9		$	136.2
Current operating lease liabilities	Current operating lease liabilities	Accounts payable and other current liabilities	$	47.2	$	46.6	Current operating lease liabilities	Accounts payable and other current liabilities	$	48.1		$	47.1
Non-current operating lease liabilities	Non-current operating lease liabilities	Other liabilities	108.5		119.5		Non-current operating lease liabilities	Other liabilities	101.5			106.4
Total operating lease liabilities	Total operating lease liabilities		$	155.7	$	166.1	Total operating lease liabilities		$	149.6		$	153.5

Finance Leases	Finance Leases						Finance Leases
Finance lease right-of-use assets	Finance lease right-of-use assets	Properties, net	$	64.6	$	73.0	Finance lease right-of-use assets	Properties, net	$	63.2		$	60.5
Current finance lease liabilities	Current finance lease liabilities	Current portion of long-term debt and short-term borrowings	$	32.8	$	34.5	Current finance lease liabilities	Current portion of long-term debt and short-term borrowings	$	4.1		$	4.1
Non-current finance lease liabilities	Non-current finance lease liabilities	Long-term debt	56.2		60.0		Non-current finance lease liabilities	Long-term debt	62.6			59.9
Total finance lease liabilities	Total finance lease liabilities		$	89.0	$	94.5	Total finance lease liabilities		$	66.7		$	64.0

Supplemental cash flow information related to leases for the six months ended June 30, ~~2020~~2021 and June 30, ~~2019~~2020 was as ~~follows:~~follows

Six Months Ended
June 30, 2020 June 30, 2019
(In millions)
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from operating leases $ 25.7 $ 26.2
Operating cash flows from finance leases $ 1.9 $ 1.8
Financing cash flows from finance leases $ 3.1 $ 1.1
Supplemental non-cash information on right-of-use assets obtained in exchange for new lease liabilities:
Operating leases $ 12.0 $ 25.6

~~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"~~.


	Six Months Ended
	June 30, 2021	June 30, 2020
	(In millions)
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from operating leases	28.0	25.7
Operating cash flows from finance leases	2.4	1.9
Financing cash flows from finance leases	1.3	3.1
Supplemental non-cash information on right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	21.6	12.0
Finance leases	3.7	0

~~14. Supplemental Guarantor Information~~

For purposes of this Note 14, including the tables, "Parent Issuer" shall mean MCBC. "Subsidiary Guarantors" shall mean certain Canadian and U.S. subsidiaries reflecting the substantial operations of our North America segment.

~~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. "Parent Issuer" in the below tables is specifically referring to MCBC in its capacity as the issuer of these 2012 and 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.

None of our other outstanding debt is registered with the SEC, and such other outstanding debt is guaranteed on a senior unsecured basis by the Parent and/or Subsidiary Guarantors. These guarantees are full and unconditional and joint and several. See ~~Note 8, "Debt"~~ ~~for details of all debt issued and outstanding as of June 30, 2020.~~

~~Presentation~~

The following information sets forth the unaudited condensed consolidating statements of operations for the three and six months ended June 30, 2020 and June 30, 2019, unaudited condensed consolidating balance sheets as of June 30, 2020 and December 31, 2019, and unaudited condensed consolidating statements of cash flows for the six months ended June 30, 2020 and June 30, 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.

3230

~~MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS~~

~~(IN MILLIONS)~~

~~(UNAUDITED)~~

Three Months Ended
June 30, 2020
Parent
Issuer Subsidiary
Guarantors Subsidiary
Non
Guarantors Eliminations Consolidated
Sales $ 4.0 $ 2,529.4 $ 631.7 $ (135.3) $ 3,029.8
Excise taxes — (346.8) (179.6) — (526.4)
Net sales 4.0 2,182.6 452.1 (135.3) 2,503.4
Cost of goods sold (0.5) (1,237.8) (346.9) 128.6 (1,456.6)
Gross profit 3.5 944.8 105.2 (6.7) 1,046.8
Marketing, general and administrative expenses (26.4) (384.7) (120.1) 6.7 (524.5)
Special items, net (10.1) (54.0) (0.2) — (64.3)
Equity income (loss) in subsidiaries 275.9 (158.4) 16.5 (134.0) —
Operating income (loss) 242.9 347.7 1.4 (134.0) 458.0
Interest income (expense), net (60.9) 22.0 (30.8) — (69.7)
Other pension and postretirement benefits (costs), net (0.3) 5.1 2.8 — 7.6
Other income (expense), net 0.3 3.9 1.6 — 5.8
Income (loss) before income taxes 182.0 378.7 (25.0) (134.0) 401.7
Income tax benefit (expense) 13.0 (102.9) (114.6) — (204.5)
Net income (loss) 195.0 275.8 (139.6) (134.0) 197.2
Net (income) loss attributable to noncontrolling interests — — (2.2) — (2.2)
Net income (loss) attributable to MCBC $ 195.0 $ 275.8 $ (141.8) $ (134.0) $ 195.0
Comprehensive income (loss) attributable to MCBC $ 310.7 $ 394.8 $ 18.1 $ (412.9) $ 310.7

~~MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS~~

~~(IN MILLIONS)~~

~~(UNAUDITED)~~

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 BEVERAGE COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS~~

~~(IN MILLIONS)~~

~~(UNAUDITED)~~

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 BEVERAGE COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS~~

~~(IN MILLIONS)~~

~~(UNAUDITED)~~

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 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

~~MOLSON COORS 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

~~MOLSON COORS 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

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, ~~2019~~2020 ("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.~~report. 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 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~~Our reporting segments ~~to two segments -~~include North America and 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: North America (North America segment), operating~~segment operates in the U.S., Canada and various countries in Latin and South ~~America;~~America and our Europe ~~(Europe segment), operating~~segment operates in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries, and certain countries within the Middle East, 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~~For over two centuries, we have ~~a diverse portfolio of owned and partner brands, including global 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~~ ~~and~~ ~~Leinenkugel's. With centuries of~~been brewing ~~heritage, we craft high-quality, innovative~~ beverages ~~with the purpose of uniting~~that unite people to celebrate all ~~life's~~life’s moments. From Coors Light, Miller Lite, Molson Canadian, Carling and Staropramen to Coors Banquet, Blue Moon Belgian White, Blue Moon LightSky, Vizzy, Leinenkugel’s Summer Shandy, Creemore Springs, Hop Valley and more, we produce many beloved and iconic beer brands. While the company’s history is rooted in beer, Molson Coors offers a modern portfolio that expands beyond the beer aisle as well. As a business, our ambition is to be the first choice for our people, our consumers and our customers, and our success depends on our ability to make our products available to meet a wide range of consumer segments and occasions.

Cybersecurity Incident

During March 2021, we experienced a systems outage that was caused by a cybersecurity incident. We engaged leading forensic information technology firms and legal counsel to assist our investigation into the incident and we restored our systems after working to get the systems back up as quickly as possible. Despite these actions, we experienced delays and disruptions to our business, including brewery operations, production and shipments. This incident caused a shift in our production and shipments from the first quarter of 2021 to the balance of fiscal year 2021. During the second quarter of 2021, we made progress recovering from the incident with increased shipments and continue to expect to recover fully by the end of 2021. In addition, we incurred certain incremental net one-time costs of $2.7 million in the six months ended June 30, 2021 related to consultants, experts and data recovery efforts, net of insurance recoveries.

Coronavirus Global Pandemic

~~On March 11, 2020,~~Starting at the ~~World Health Organization characterized the outbreak~~end 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~~first quarter of 2020, 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.~~of operations in 2020. In 2021, we have begun to see improvements in the marketplace related to the coronavirus global pandemic as on-premise locations begin to open across the world, including in the U.S. which led to a shift in revenue from off-premise to on-premise during the second quarter of 2021. The extent to which our operations will continue to 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~~pandemic, including outbreaks of variants, the rate of vaccination and ~~actions by government authorities~~the efficacy of vaccines against the coronavirus and related variants. We continue to ~~contain~~actively monitor the ongoing evolution of the pandemic ~~or treat its impact, among other things.~~and resulting impacts to our business.

~~Many~~

Despite the improvements in re-openings of on-premise locations, closures and openings with restrictions impacted the financial results during the three and six months ended June 30, 2021. Certain governmental entities across ~~North America and~~ Europe, particularly throughout the U.K., required that bars and restaurants close ~~or cease sit-down service for~~during the ~~majority~~first quarter of 2021 which continued to negatively impact the on-premise sales of our beverages. Certain countries in Europe slowly started to reopen in the second quarter of ~~2020,~~2021 with a partial re-opening with restrictions in the U.K. In addition, during the first quarter of 2021 and second quarter of 2021, certain provinces of Canada, including the most populous provinces, continued to endure lockdowns pursuant to which ~~has negatively impacted,~~bars and ~~we currently expect will continue~~restaurants were required to ~~negatively impact, on-premise~~close. Throughout the first six months of 2021, while the U.S. started to reopen, 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 because certain bars and ~~remains uncertain. In addition,~~restaurants remain closed, have modified hours or restricted capacity. Certain sporting events, festivals and other large public gatherings where our products are served have started to return with reduced capacities or other restrictions and other events have been ~~canceled throughout North America and Europe.~~postponed. 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~~Throughout the world, any governmental or societal impositions of restrictions on public gatherings, especially if prolonged in nature ~~whether government or self-imposed,~~ will ~~have adverse effects on~~continue to impact 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~~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~~and demonstrate our ~~on-premise customers and retailers, and our overall~~ commitment to ~~quality,~~the continued viability of the many bars and restaurants which were negatively impacted by the coronavirus pandemic, during the first quarter of 2020, we initiated ~~voluntary~~ temporary keg relief programs in many of our ~~markets which will~~markets. We committed to provide customers with reimbursements for untapped kegs that ~~meet~~met certain established return ~~requirements.~~requirements in conjunction with the voluntary programs. As a result, ~~our results for~~during the six months ended June 30, 2020, ~~further include aggregate charges of $48.6 million, inclusive of~~we recognized a reduction to net sales of $31.8 million, substantially all of which was recognized in the first quarter of 2020 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, as well as~~programs.

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 changes in estimates during the second quarter of 2020, within cost of goods sold related to obsolete finished goods keg inventories that ~~are~~were 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~~continue 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~~priorities. We continue to ~~actions already taken,~~monitor the pandemic and will take additional actions ~~may be necessary.~~as necessary if the pandemic takes a negative turn. Such potential actions may 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 and asset ~~monetization and taking advantage of certain governmental programs such as furloughs in~~monetization.

In response to the ~~U.K. and government relief and payment deferral programs, for example~~global economic uncertainty created by the ~~U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), and other such government-sponsored legislation and programs. Our~~coronavirus pandemic, 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~~May 2020. In the third quarter of 2021, a quarterly dividend was reinstated. 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~~pandemic on our liquidity. While we are encouraged by the improvements through the second quarter of 2021, we continue to monitor the impacts of the pandemic on the recoverability of our assets, including goodwill and indefinite-lived intangible assets. ~~While~~Given the length and severity of the impacts of the coronavirus pandemic on our Europe business, as well as the protracted recovery expected in certain on-premise markets, we ~~have not recognized any resulting~~recorded a goodwill impairment ~~losses at this time, if~~loss of $1,484.3 million in the fourth quarter of 2020. If the duration of the pandemic is prolonged and the severity of its impact ~~continues or~~ worsens, it could result in additional significant impairment losses. See Part I—Item 1. Financial Statements, Note 7, "Goodwill and Intangible Assets" for further ~~details.~~detail as well as Part I - Item 1A. "Risk Factors" in our Annual Report.

Revitalization Plan

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 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 theThe 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~~established Chicago, Illinois as our North American operational ~~headquarters, close~~headquarters. We closed our ~~existing~~ office in Denver, Colorado and ~~consolidate~~consolidated certain administrative functions into our other existing office locations. ~~Effective~~As of January 1, 2020, we changed our name to Molson Coors Beverage Company and 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~~We began 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~~these restructuring 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~~during the fourth quarter of 2019 and will ~~be further recognized~~continue to incur charges through ~~the balance of~~ fiscal ~~years 2020 and~~year 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 1. Financial Statements, Note 5, "Special ~~Items”~~Items" for ~~additional~~further details.

After taking into account all changes in each of the 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 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 six months ended June 30, ~~2020~~2021 and June 30, ~~2019.~~2020. See Part I-Item 1. Financial Statements for additional details of our U.S. GAAP results.


		Three Months Ended										Six Months Ended											Three Months Ended				Six Months Ended
		June 30, 2020		June 30, 2019		% change		June 30, 2020		June 30, 2019		% change			June 30, 2021		June 30, 2020		% change		June 30, 2021		June 30, 2020		% change
		(In millions, except percentages and per share data)																							(In millions, except percentages and per share data)
Financial volume in hectoliters	Financial volume in hectoliters	22.586		25.811		(12.5)	%	41.014		45.912		(10.7)	%	Financial volume in hectoliters	23.823		22.586		5.5	%	40.040		41.014		(2.4)	%
Net sales	Net sales	$	2,503.4	$	2,948.3	(15.1)	%	$	4,606.2	$	5,251.6	(12.3)	%	Net sales	$	2,939.4	$	2,503.4	17.4	%	$	4,837.8	$	4,606.2	5.0	%
Net income (loss) attributable to MCBC	Net income (loss) attributable to MCBC	$	195.0	$	329.4	(40.8)	%	$	78.0	$	480.8	(83.8)	%	Net income (loss) attributable to MCBC	$	388.6	$	195.0	99.3	%	$	472.7	$	78.0	N/M
Net income (loss) attributable to MCBC per diluted share	Net income (loss) attributable to MCBC per diluted share	$	0.90	$	1.52	(40.8)	%	$	0.36	$	2.22	(83.8)	%	Net income (loss) attributable to MCBC per diluted share	$	1.79	$	0.90	98.9	%	$	2.17	$	0.36	N/M

N/M = Not meaningful

Second Quarter ~~2020~~2021 Financial Highlights

Net sales of approximately $2.9 billion in the second quarter of 2021 increased 17.4% from the prior year, primarily due to higher financial volumes, favorable brand and channel mix as well as positive pricing. Financial volume growth of 5.5% was primarily due to improved brand volume growth, particularly in Europe as a result of an increase in on-premise re-openings, as well as favorable shipment timing in the U.S., higher contract brewing and wholesaler volumes. Improved brand volume growth, particularly in Europe, was due to on-premise re-openings, higher above premium and core brand volumes, partially offset by lower economy brand volumes.

During the second quarter of ~~2020,~~2021, we recognized net income attributable to MCBC of ~~$195.0~~$388.6 million compared to ~~net income of $329.4~~$195.0 million in the prior year. ~~This decrease~~The increase was ~~driven by an increase in~~primarily due to higher financial volumes, favorable net pricing, positive brand and channel mix, lower tax expense, lower special items 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 lower marketing, general and administrative expense, favorable impacts to cost of goods sold related to unrealized mark-to-market changes on our commodity positions and cost savings, as well as favorable unrealized gains in our mark-to-market ~~changes on our HEXO Corp. ("HEXO") warrants within other income (expense), net. The significant decline in~~commodity positions, partially offset by higher marketing, general and administrative ("MG&A") expense ~~was driven by prioritizing~~ and ~~shifting spend~~higher cost of goods sold inflation, including ~~media to platforms with~~ higher ~~audiences in the current environment, while suspending on-premise activation spending~~transportation, brewery 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 $2.5 billion in the second quarter of 2020 decreased 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 pricing in the U.S. and Canada.packaging material costs.

Regional financial highlights:

•In our North America segment, income before income taxes ~~decreased 8.2%~~increased 4.1% to ~~$411.5~~$428.2 million in the second quarter of ~~2020,~~2021, compared to $411.5 million in the prior year primarily ~~driven by~~due to net pricing increases, lower special items charges, favorable brand mix in the U.S., cost savings in cost of goods sold, higher ~~special charges, lower~~ financial ~~volume~~volumes and the ~~cost~~cycling of prior year charges for temporary "thank you" pay for certain essential North America brewery employees, ~~as a result of the coronavirus pandemic,~~ partially offset by ~~lower marketing, general~~higher MG&A expense and ~~administrative expense, cost savings in~~inflation within cost of goods sold, including higher transportation, brewery and packaging material costs, increased inventory obsolescence, as well as the cycling of favorable prior year resolution of ~~our~~a property tax appeal for ~~our~~the Golden, Colorado ~~brewery and~~brewery. The higher ~~net pricing. The lower~~MG&A expense reflects increased 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 investment on innovation brandsas well as ~~cost savings related to~~ the ~~revitalization plan.~~cycling of lower spending in the prior year in areas impacted by the coronavirus pandemic.

•In our Europe segment, ~~we reported a loss~~income before income taxes ~~of $11.0~~increased to $47.4 million in the second quarter of ~~2020,~~2021, compared to ~~income~~a loss of ~~$43.4~~$11.0 million in the prior year primarily due to higher financial volumes as a result of progressive re-opening of the on-premise channel during the quarter compared to greater restrictions in the same period of the prior year, favorable channel, geographic and brand mix, positive pricing and the impacts of favorable foreign currency, partially offset by higher MG&A expenses due to lower ~~gross profit~~spend in the prior year driven by cost mitigation efforts as a result of the ~~closure~~impact 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 Maycoronavirus pandemic and ~~early June, partially offset by lower marketing, general and administrative expense driven by cost mitigation actions and lower incentive compensation, lower~~higher special ~~charges and favorable foreign currency movements.~~items charges.

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

~~Brand highlights:~~

•~~Blue Moon~~ global brand volume decreased 19.9% in the 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 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 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 Canada. However, ~~Miller Lite~~ ~~gained share of 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.

Worldwide Brand and Financial Volume

Worldwide brand volume (or "brand volume" when discussed by segment) reflects owned or actively managed 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								Three Months Ended			Six Months Ended
		June 30, 2020	June 30, 2019	% change		June 30, 2020	June 30, 2019	% change			June 30, 2021	June 30, 2020	% change		June 30, 2021	June 30, 2020	% change
		(In millions, except percentages)															(In millions, except percentages)
Volume in hectoliters:	Volume in hectoliters:									Volume in hectoliters:
Financial volume	Financial volume	22.586	25.811	(12.5)	%	41.014	45.912	(10.7)	%	Financial volume	23.823	22.586	5.5	%	40.040	41.014	(2.4)	%
Less: Contract brewing, wholesaler and non-beer volume		(1.566)	(2.129)	(26.4)	%	(3.163)	(3.935)	(19.6)	%
Less: Contract brewing and wholesaler volume										Less: Contract brewing and wholesaler volume	(1.833)	(1.566)	17.0	%	(3.071)	(3.163)	(2.9)	%
Add: Royalty volume	Add: Royalty volume	0.673	1.040	(35.3)	%	1.552	1.777	(12.7)	%	Add: Royalty volume	1.124	0.673	67.0	%	2.050	1.552	32.1	%
Add: STW to STR adjustment	Add: STW to STR adjustment	(0.218)	(0.427)	(48.9)	%	(0.063)	(1.264)	(95.0)	%	Add: STW to STR adjustment	(0.983)	(0.218)	N/M		(0.640)	(0.063)	N/M
Total worldwide brand volume	Total worldwide brand volume	21.475	24.295	(11.6)	%	39.340	42.490	(7.4)	%	Total worldwide brand volume	22.131	21.475	3.1	%	38.379	39.340	(2.4)	%

Worldwide Brand Volume by Segment
Worldwide Brand Volume by Segment in hectoliters										Worldwide Brand Volume by Segment in hectoliters
North America	North America	16.151	17.523	(7.8)	%	29.897	31.216	(4.2)	%	North America	15.986	16.151	(1.0)	%	28.817	29.897	(3.6)	%
Europe	Europe	5.324	6.772	(21.4)	%	9.443	11.274	(16.2)	%	Europe	6.145	5.324	15.4	%	9.562	9.443	1.3	%
Total	Total	21.475	24.295	(11.6)	%	39.340	42.490	(7.4)	%	Total	22.131	21.475	3.1	%	38.379	39.340	(2.4)	%

Our worldwide brand volume ~~decreased 11.6% and 7.4% during~~increased 3.1% for the three months ended June 30, 2021 and decreased 2.4% for the six months ended June 30, ~~2020,~~2021, respectively, compared to prior ~~year, while financial~~year. Financial volume ~~decreased 12.5% and 10.7% during~~increased 5.5% for the three months ended June 30, 2021 and decreased 2.4% for the six months ended June 30, ~~2020,~~2021, respectively, compared to prior year. ~~This reflects~~The growth in the three months ended June 30, 2021 was primarily due to the increase in re-openings of the on-premise channel, particularly in our Europe segment as well as favorable shipment timing. The decline for the six months ended June 30, 2021 was primarily due to the impacts of the coronavirus pandemic ~~and~~which had a greater impact in the ~~related closure of~~2021 first quarter due to on-premise ~~outlets~~restrictions in both North America and Europe, particularly in the U.K. and Canada 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~~cycling of the ~~on-premise, resulting in overall brand volume declines. This has continued into July~~March 2020 ~~as we see further uncertainty around~~pantry loading at the ~~re-opening~~onset 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~~coronavirus pandemic.

Net Sales Drivers

For the three months ended June 30, ~~2020~~2021 versus June 30, ~~2019,~~2020, 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) %


	Financial Volume		Price, Product and Geography Mix		Currency		Total
Consolidated	5.5	%	8.2	%	3.7	%	17.4	%
North America	1.9	%	6.4	%	1.8	%	10.1	%
Europe	17.8	%	34.5	%	17.2	%	69.5	%

For the six months ended June 30, ~~2020~~2021 versus June 30, ~~2019,~~2020, 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) %


	Financial Volume		Price, Product and Geography Mix		Currency		Total
Consolidated	(2.4)	%	4.7	%	2.7	%	5.0	%
North America	(3.2)	%	5.0	%	1.3	%	3.1	%
Europe	—	%	5.7	%	10.7	%	16.4	%

Income taxes

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 %


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Effective tax rate	25	%	51	%	27	%	66	%

The ~~increase~~decrease in the effective tax rate ~~for~~during the three and six months ended June 30, ~~2020~~2021 compared to the prior year was primarily ~~driven~~due to a decrease in net discrete tax expense, partially offset by ~~approximately~~the effect of proportionally higher pretax income in jurisdictions with a higher tax rate. We recognized $38.5 million net discrete tax expense through second quarter of 2021 versus $121.7 million net discrete tax expense through second quarter of 2020. The difference is primarily due to the $135 million of discrete tax expense recognized in the second quarter of 2020, which was related to the enactment of the hybrid regulations ~~enacted in~~as further discussed below.

During the second quarter of ~~2020, as further discussed below. The increase in the effective tax rate during the six months ended June 30, 2020 was further driven by lower pretax income during the first half of 2020.~~

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 and have resulted in additional income tax expense of approximately $135 million, which was recognized upon enactment in 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.

~~In July 2020,~~2021, the U.K. government enacted, and royal assent was received for, legislation to ~~repeal the previously enacted reduction to~~increase the corporate income tax rate ~~that was due~~from 19% to ~~take effect April 1, 2020, which will change~~25%. Remeasurement of our deferred tax liabilities under the ~~previously anticipated corporate~~higher income tax rate ~~from 17% to 19%. We anticipate~~resulted in the ~~impact to estimated income~~recognition of additional discrete tax expense of approximately $18 million in ~~the third~~second quarter of ~~2020 will be immaterial.~~2021.

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

4635

Segment Results of Operations

North America Segment


		Three Months Ended										Six Months Ended											Three Months Ended				Six Months Ended
		June 30, 2020		June 30, 2019		% change		June 30, 2020		June 30, 2019		% change			June 30, 2021		June 30, 2020		% change		June 30, 2021		June 30, 2020		% change
		(In millions, except percentages)																							(In millions, except percentages)
Financial volume in hectoliters⁽¹⁾⁽²⁾	Financial volume in hectoliters⁽¹⁾⁽²⁾	17.648		19.240		(8.3)	%	32.104		34.922		(8.1)	%	Financial volume in hectoliters(1)(2)	17.986		17.648		1.9	%	31.088		32.104		(3.2)	%
Sales⁽²⁾	Sales⁽²⁾	$	2,548.8	$	2,783.2	(8.4)	%	$	4,603.8	$	5,003.1	(8.0)	%	Sales(2)	$	2,775.7	$	2,548.8	8.9	%	$	4,711.6	$	4,603.8	2.3	%
Excise taxes	Excise taxes	(348.6)		(382.6)		(8.9)	%	(613.9)		(669.9)		(8.4)	%	Excise taxes	(353.3)		(348.6)		1.3	%	(597.2)		(613.9)		(2.7)	%
Net sales⁽²⁾	Net sales⁽²⁾	2,200.2		2,400.6		(8.3)	%	3,989.9		4,333.2		(7.9)	%	Net sales(2)	2,422.4		2,200.2		10.1	%	4,114.4		3,989.9		3.1	%
Cost of goods sold⁽²⁾	Cost of goods sold⁽²⁾	(1,302.0)		(1,386.7)		(6.1)	%	(2,434.4)		(2,573.9)		(5.4)	%	Cost of goods sold(2)	(1,448.6)		(1,302.0)		11.3	%	(2,561.9)		(2,434.4)		5.2	%
Gross profit	Gross profit	898.2		1,013.9		(11.4)	%	1,555.5		1,759.3		(11.6)	%	Gross profit	973.8		898.2		8.4	%	1,552.5		1,555.5		(0.2)	%
Marketing, general and administrative expenses	Marketing, general and administrative expenses	(425.2)		(609.9)		(30.3)	%	(921.8)		(1,122.0)		(17.8)	%	Marketing, general and administrative expenses	(537.8)		(425.2)		26.5	%	(968.2)		(921.8)		5.0	%
Special items, net⁽³⁾	Special items, net⁽³⁾	(64.1)		51.6		N/M		(143.2)		42.0		N/M		Special items, net(3)	(5.8)		(64.1)		(91.0)	%	(12.3)		(143.2)		(91.4)	%
Operating income (loss)	Operating income (loss)	408.9		455.6		(10.3)	%	490.5		679.3		(27.8)	%	Operating income (loss)	430.2		408.9		5.2	%	572.0		490.5		16.6	%
Interest income (expense), net	Interest income (expense), net	(0.7)		4.3		N/M		(1.7)		2.0		N/M		Interest income (expense), net	(0.4)		(0.7)		(42.9)	%	(0.7)		(1.7)		(58.8)	%
Other income (expense), net	Other income (expense), net	3.3		(11.4)		N/M		(1.1)		13.1		N/M		Other income (expense), net	(1.6)		3.3		N/M		1.1		(1.1)		N/M
Income (loss) before income taxes	Income (loss) before income taxes	$	411.5	$	448.5	(8.2)	%	$	487.7	$	694.4	(29.8)	%	Income (loss) before income taxes	$	428.2	$	411.5	4.1	%	$	572.4	$	487.7	17.4	%

N/M = Not meaningful

(1)Excludes royalty volume of 0.585 million hectoliters and 1.152 million hectoliters for the three and six months ended June 30, 2021, respectively, and excludes royalty volume of 0.288 million hectoliters 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" for detail of special items.

Significant events

In March 2021, we experienced a systems outage that was caused by a cybersecurity incident. We engaged leading forensic information technology firms and legal counsel to assist our investigation into the incident and we restored our systems after working to get the systems back up as quickly as possible. Despite these actions, we experienced delays and disruptions to our business, including brewery operations, production and shipments. This incident caused a shift in our production and shipments from the first quarter of 2021 to the balance of fiscal year 2021.

In February 2021, a winter ice storm severely impacted the southern United States. In particular, local government authorities in Texas were forced to impose energy restrictions, causing the Fort Worth brewery to be offline which resulted in our inability to produce or ship product during the downtime.

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~~starting at the end of the first ~~half~~quarter of 2020, ~~resulting from the closure~~and we expect it will continue to have a material adverse effect on our results of operations in 2021. While we have begun to see the on-premise ~~channel for the majority of the second quarter. While we began~~reopen, due to ~~see some of the on-premise return in June, business~~limitations and restrictions as well as consumer ~~behavior in the channel has been uncertain and~~uncertainty, volume 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 the growing risk of ~~a return~~variants, the rate of vaccination, the effectiveness and prompt distribution of vaccines and further shutdowns, ~~especially if prolonged~~specifically in ~~nature, we expect~~certain populous provinces of Canada, will continue to have adverse effects on on-premise traffic and, in turn, our business performance, cash flows and liquidity. Further, the CAD has recently become volatile as 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~~included 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 at the onset 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.~~quarter of 2020. 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.~~employees during the three months ended June 30, 2020.

4736

As part of our revitalization plan announced during the fourth quarter of 2019, we initiated restructuring activities and will continue to incur severance and other employee-related costs as special ~~items.~~items through the end of 2021.

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 which is expected to be~~brewery and the purchase was completed in the fourth quarter of ~~2020, subject to~~2020. Production at the ~~satisfaction~~Irwindale brewery ceased during the third quarter of ~~certain customary closing conditions.~~2020. We recorded special charges related to the ~~planned~~ Irwindale brewery closure during the six months ended June 30, 2020 as further discussed in Part I—Item 1. Financial Statements, Note 5, "Special ~~Items"~~Items.".

The volatility of aluminum prices, inclusive of Midwest Premium and tariffs, continued to significantly impact our results during the first half of ~~2020.~~2021. 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.

In further efforts to help optimize the North America brewery network, in the third quarter of 2017, we announced a plan to build a more efficient and flexible brewery in 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, and the impacts of the coronavirus pandemic potentially delaying construction of the new brewery, 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, 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 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 ~~governs~~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 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 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. 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. Truss, our joint venture with HEXO in Canada, launched its first cannabis infused product, ~~Veryvell Drops~~, across the Canadian market and we expect it will launch its ready to drink beverage portfolio throughout the remainder of 2020. Separately, in April 2020, we completed the formation of a new joint venture with HEXO to explore opportunities for non-alcohol hemp-derived CBD beverages in Colorado.

Foreign currency impact on results

During the three and six months ended June 30, ~~2020,~~2021, foreign currency movements favorably impacted our ~~North America USD~~ income (loss) before income taxes by ~~$1.1~~$0.7 million and ~~during the six months ended June 30, 2020, foreign currency movements unfavorably impacted our North America USD income before income taxes by $1.3 million.~~$0.9 million, respectively. Included in ~~this amount~~these amounts 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

Brand volume decreased ~~7.8%~~1.0% and ~~4.2%,~~3.6% for the three and six months ended June 30, ~~2020~~2021, respectively, compared to prior ~~year,~~year. The decrease in brand volume was primarily due to lower economy brand volumes in the ~~closure of on-premise outlets as a result of the coronavirus pandemic as well as estimated market share~~U.S. and declines in ~~North America.~~Canada, partially offset by growth in both the Latin America and the U.S. above premium portfolio. Financial volume ~~declined 8.3% and 8.1%~~increased 1.9% for the three months ended June 30, 2021 and decreased 3.2% for the six months ended June 30, ~~2020 respectively,~~2021, compared to prior ~~year, reflecting lower brand volume, unfavorable~~year. The increase in the three months ended June 30, 2021 was driven by favorable shipment timing in the U.S. ~~largely~~and strong volume performance in Latin America. The decrease in the six months ended June 30, 2021 was reflective of the lower brand volume and lower U.S. shipments attributed to the March 2021 cybersecurity incident and the February 2021 Fort Worth, Texas brewery shutdown due to ~~aluminum can supply and other packaging material constraints as well as lower contract brewing volume.~~

a winter storm, partially offset by favorable U.S. shipment timing in the second quarter of 2021.

Net sales per hectoliter on a brand volume basis in local currency increased ~~0.9%~~4.7% and ~~decreased 0.1%~~3.8% for the three and six months ended June 30, ~~2020,~~2021, respectively, compared to prior year. The increase in the ~~second quarter~~three months ended June 30, 2021 was ~~driven by favorable geographic~~primarily due to positive brand mix in the U.S. and net pricing increases in the U.S. and Canada, partially offset by ~~brand and channel~~unfavorable geographic mix attributed to ~~the shift of~~growing license volume ~~from on-premise to off-premise as a result of the coronavirus pandemic.~~in Latin America. The ~~slight decline~~increase for the six months ended June 30, ~~2020~~2021 was ~~driven by~~primarily due to the same factors as the three month period in addition to cycling prior year estimated keg sales returns and ~~reimbursements recognized in the first quarter of 2020~~reimbursement 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.~~pandemic. Net sales per hectoliter on a ~~reported~~ financial volume

basis in local currency increased ~~0.4%~~6.3% and ~~0.5%~~5.1% for the three and six months ended June 30, ~~2020~~2021, respectively, compared to the prior year.

Cost of goods sold

Cost of goods sold per hectoliter in local currency increased 7.2% and 7.1% for the three and six months ended June 30, ~~2020 increased 2.9% and 3.3%,~~2021, respectively, compared to prior year ~~driven~~primarily due to cost inflation, including higher transportation costs, brewery and packaging material costs, mix impacts due to premiumization, increased inventory obsolescence and cycling the favorable prior year resolution of a property tax appeal for the Golden, Colorado brewery, partially offset by ~~volume deleverage as well as~~cost savings and the cycling of prior year charges for the 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~~employees. The increase in ~~local currency for~~ the six months ended June 30, ~~2020~~2021 was also ~~impacted~~due to volume deleverage, partially offset by cycling 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~~increased 26.5% and 5.0% for the three and six months ended June 30, ~~2020 decreased 29.9% and 17.6%,~~2021, respectively, compared to prior year primarily ~~driven by cost mitigation actions~~ due to increased marketing investment on innovation brands, higher media spend behind Coors Light and ~~anticipated shifts~~Miller Lite and the cycling of lower spend in the ~~timing of marketing spend into the second half of 2020 as a result of~~prior year in areas impacted by the coronavirus pandemic, ~~leading to significant reductions in marketing expense in the second quarter, reduced discretionary spending,~~partially offset by cost savings related to the revitalization ~~plan as well as cycling higher project costs in the prior year related to brewery system implementations.~~plan.

Other income (expense), net

The change in other income (expense), net during the three and six months ended June 30, ~~2020~~2021 was primarily ~~driven by~~due to foreign currency transaction (gains) losses and the unrealized mark-to-market changes on our HEXO warrants.

Europe Segment


		Three Months Ended										Six Months Ended											Three Months Ended				Six Months Ended
		June 30, 2020		June 30, 2019		% change		June 30, 2020		June 30, 2019		% change			June 30, 2021		June 30, 2020		% change		June 30, 2021		June 30, 2020		% change
		(In millions, except percentages)																							(In millions, except percentages)
Financial volume in hectoliters⁽¹⁾⁽²⁾	Financial volume in hectoliters⁽¹⁾⁽²⁾	4.963		6.601		(24.8)	%	8.965		11.046		(18.8)	%	Financial volume in hectoliters(1)(2)	5.844		4.963		17.8	%	8.966		8.965		—	%
Sales⁽²⁾	Sales⁽²⁾	$	484.9	$	843.2	(42.5)	%	$	972.2	$	1,428.4	(31.9)	%	Sales(2)	$	791.8	$	484.9	63.3	%	$	1,112.5	$	972.2	14.4	%
Excise taxes	Excise taxes	(177.8)		(289.1)		(38.5)	%	(347.5)		(498.6)		(30.3)	%	Excise taxes	(271.3)		(177.8)		52.6	%	(385.1)		(347.5)		10.8	%
Net sales⁽²⁾	Net sales⁽²⁾	307.1		554.1		(44.6)	%	624.7		929.8		(32.8)	%	Net sales(2)	520.5		307.1		69.5	%	727.4		624.7		16.4	%
Cost of goods sold⁽²⁾	Cost of goods sold⁽²⁾	(217.9)		(348.3)		(37.4)	%	(469.9)		(613.2)		(23.4)	%	Cost of goods sold(2)	(324.7)		(217.9)		49.0	%	(500.8)		(469.9)		6.6	%
Gross profit	Gross profit	89.2		205.8		(56.7)	%	154.8		316.6		(51.1)	%	Gross profit	195.8		89.2		119.5	%	226.6		154.8		46.4	%
Marketing, general and administrative expenses	Marketing, general and administrative expenses	(99.3)		(159.8)		(37.9)	%	(232.4)		(302.9)		(23.3)	%	Marketing, general and administrative expenses	(143.9)		(99.3)		44.9	%	(256.4)		(232.4)		10.3	%
Special items, net⁽³⁾	Special items, net⁽³⁾	(0.2)		(1.7)		(88.2)	%	(7.7)		(5.1)		51.0	%	Special items, net(3)	(3.2)		(0.2)		N/M		(7.6)		(7.7)		(1.3)	%
Operating income (loss)	Operating income (loss)	(10.3)		44.3		N/M		(85.3)		8.6		N/M		Operating income (loss)	48.7		(10.3)		N/M		(37.4)		(85.3)		(56.2)	%
Interest income (expense), net	Interest income (expense), net	(1.3)		(1.5)		(13.3)	%	(2.7)		(2.8)		(3.6)	%	Interest income (expense), net	(1.6)		(1.3)		23.1	%	(3.0)		(2.7)		11.1	%
Other income (expense), net	Other income (expense), net	0.6		0.6		—	%	0.2		(0.8)		N/M		Other income (expense), net	0.3		0.6		(50.0)	%	(1.6)		0.2		N/M
Income (loss) before income taxes	Income (loss) before income taxes	$	(11.0)	$	43.4	N/M		$	(87.8)	$	5.0	N/M		Income (loss) before income taxes	$	47.4	$	(11.0)	N/M		$	(42.0)	$	(87.8)	(52.2)	%

N/M = Not meaningful

(1)Excludes royalty volume of 0.539 million hectoliters and 0.898 million hectoliters for the three and six months ended June 30, 2021, respectively, and excludes royalty volume of 0.385 million hectoliters 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.~~I - Item I. Financial Statements, Note 5, "Special Items" for detail of special items.

Significant events

We continue to monitor the coronavirus pandemic, which ~~has~~ had a material adverse effect on our Europe results of operations in 2020 and we ~~currently~~ expect it will continue to have a material adverse effect on our Europe results of operations ~~for fiscal year~~in 2021. In the fourth quarter of 2020, a new pandemic wave triggered new lockdowns with different levels of restrictions in Europe from one market to another and ~~possibly, beyond. As expected, we experienced a significant adverse impact in~~continued through the first half of ~~2020 resulting from~~2021. The additional lockdowns, particularly in the ~~closure of~~U.K, had

an adverse effect on on-premise sales during the ~~on-premise channel for the majority~~first quarter and part 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~~quarter 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.~~ liquidity until on premise locations fully reopen and all restrictions are lifted.

Our results for the six months ended June 30, 2020 ~~include~~included 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.~~quarter of 2020.

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 special ~~items.~~

~~The U.K. exited~~items through the European Union (EU) on January 31, 2020, which subjects our Europe segment to regulatory and market uncertainty as the U.K. remains in the EU customs union and single market until December 31, 2020, while the full termsend of future trade agreements continue to be negotiated. The GBP has recently become volatile as a result of the government discussions related to the uncertainty and terms of the exit as well as from the ongoing uncertainties and impacts of the coronavirus pandemic. Any significant weakening of the GBP to the USD could have an adverse impact on our results due to the importance and relative magnitude of U.K. sales.2021.

Foreign currency impact on results

Our Europe segment operates in numerous countries ~~within Europe~~ and each country's operations utilize distinct currencies. ~~Foreign~~During the three months ended June 30, 2021, foreign currency movements favorably impacted our ~~Europe USD loss~~income (loss) before income taxes by ~~$1.2~~$4.8 million and ~~$4.0 million for~~during the ~~three and~~ six months ended June 30, ~~2020, respectively.~~2021, foreign currency movements unfavorably impacted our income (loss) before income taxes by $3.5 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 Europe brand volume ~~decreased 21.4%~~increased 15.4% and ~~16.2%~~1.3% for the three and six months ended June 30, ~~2020,~~2021, respectively, compared to prior year. The increase in Europe brand volume was primarily due to less severe on-premise restrictions as a result of the coronavirus ~~pandemic.~~pandemic across Europe. Financial volume ~~declined 24.8%~~increased 17.8% and ~~18.8%~~was flat for the three and six months ended June 30, ~~2020~~2021, respectively, ~~also as a result of the coronavirus pandemic.~~compared to prior year.

Net sales per hectoliter on a brand volume basis ~~decreased 12.7% and 9.6%~~ in local currency increased 16.6% and 5.9% for the three and six months ended June 30, ~~2020,~~2021, respectively, compared to prior ~~year, driven by unfavorable channel and geographic mix, particularly~~year. The increase in the ~~higher margin U.K. business, which has a more significant exposure~~three months ended June 30, 2021 was primarily due to favorable channel, geographic and brand mix due to on-premise starting to reopen at various levels throughout Europe and positive pricing. The increase for the six months ended June 30, 2021 was primarily due to favorable brand and channel mix and favorable pricing, as well as the cycling of prior year estimated keg sales returns and reimbursements related to the 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~~impacts of the coronavirus ~~pandemic.~~pandemic and positive pricing. Net sales per hectoliter on a ~~brand~~financial volume basis was also impacted by the estimated keg sales returns primarily recognized in the first quarter of 2020 related to 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 decreased 23.4% and 14.6% in local currency increased 29.4% and 5.6% for the three and six months ended June 30, ~~2020,~~2021, respectively, compared to prior year.

Cost of goods sold

Cost of goods sold per hectoliter ~~decreased 13.4% and 2.5%~~ in local currency increased 13.7% and decreased 3.1% for the three and six months ended June 30, ~~2020,~~2021, respectively, ~~versus~~compared to prior ~~year, driven by changes~~year. The increase in ~~geographic~~the three months ended June 30, 2021 was primarily due to unfavorable channel and brand mix and cost inflation, partially offset by the positive impact of volume ~~deleverage~~leverage. The decrease in the six months ended June 30, 2021 was primarily due to cost savings and ~~cost inflation as well as~~the impact of the cycling of the estimated finished ~~good~~goods obsolescence reserves and costs recognized in the six months ended June 30, 2020 resulting from the on-premise impacts of the coronavirus pandemic, ~~recognized primarily in the first quarter of 2020.~~partially offset by unfavorable channel and brand mix and cost inflation.

Marketing, general and administrative expenses

Marketing, general and administrative expenses ~~decreased 35.5%~~increased 44.9% and ~~20.8% in local currency~~10.3% for the three and six months ended June 30, ~~2020,~~2021, respectively, compared to prior ~~year,~~year. The increase in the three months ended June 30, 2021 was primarily due to increased support for our brands, increased incentive compensation as ~~a result of actions taken~~well as unfavorable foreign currency movements. The increase in the six months ended June 30, 2021 was primarily due to ~~mitigate~~unfavorable foreign currency movements and an increase in the ~~impacts associated with the coronavirus pandemic and lower incentive compensation.~~marketing support for our brands.

Unallocated


		Three Months Ended										Six Months Ended											Three Months Ended				Six Months Ended
		June 30, 2020		June 30, 2019		% change		June 30, 2020		June 30, 2019		% change			June 30, 2021		June 30, 2020		% change		June 30, 2021		June 30, 2020		% change
		(In millions, except percentages)																							(In millions, except percentages)
Financial volume in hectoliters	Financial volume in hectoliters	—		—		—	%	—		—		—	%	Financial volume in hectoliters	—		—		—	%	—		—		—	%
Sales	Sales	$	—	$	—	—	%	$	—	$	—	—	%	Sales	$	—	$	—	—	%	$	—	$	—	—	%
Excise taxes	Excise taxes	—		—		—	%	—		—		—	%	Excise taxes	—		—		—	%	—		—		—	%
Net sales	Net sales	—		—		—	%	—		—		—	%	Net sales	—		—		—	%	—		—		—	%
Cost of goods sold	Cost of goods sold	59.4		(31.2)		N/M		(39.7)		2.9		N/M		Cost of goods sold	101.9		59.4		71.5	%	223.4		(39.7)		N/M
Gross profit	Gross profit	59.4		(31.2)		N/M		(39.7)		2.9		N/M		Gross profit	101.9		59.4		71.5	%	223.4		(39.7)		N/M
Marketing, general and administrative expenses	Marketing, general and administrative expenses	—		—		—	%	—		—		—	%	Marketing, general and administrative expenses	—		—		—	%	—		—		—	%
Special items, net	Special items, net	—		—		—	%	—		—		—	%	Special items, net	—		—		—	%	—		—		—	%
Operating income (loss)	Operating income (loss)	59.4		(31.2)		N/M		(39.7)		2.9		N/M		Operating income (loss)	101.9		59.4		71.5	%	223.4		(39.7)		N/M
Interest income (expense), net	Interest income (expense), net	(67.7)		(68.4)		(1.0)	%	(134.2)		(138.1)		(2.8)	%	Interest income (expense), net	(65.9)		(67.7)		(2.7)	%	(129.5)		(134.2)		(3.5)	%
Other pension and postretirement benefits (costs), net	Other pension and postretirement benefits (costs), net	7.6		8.4		(9.5)	%	15.1		17.0		(11.2)	%	Other pension and postretirement benefits (costs), net	13.0		7.6		71.1	%	26.0		15.1		72.2	%
Other income (expense), net	Other income (expense), net	1.9		(0.1)		N/M		1.9		0.7		171.4	%	Other income (expense), net	(2.0)		1.9		N/M		(1.4)		1.9		N/M
Income (loss) before income taxes	Income (loss) before income taxes	$	1.2	$	(91.3)	N/M		$	(156.9)	$	(117.5)	33.5	%	Income (loss) before income taxes	$	47.0	$	1.2	N/M		$	118.5	$	(156.9)	N/M

N/M = Not meaningful

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 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~~2021 and June 30, ~~2019.~~2020. 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. See Part I—Item 1. Financial Statements, Note 11, "Derivative Instruments and Hedging Activities" for further information.

Interest income (expense), net

Net interest expense decreased ~~during~~for the three and six months ended June 30, ~~2020~~2021 compared to the prior year, primarily ~~driven by~~due to the repayment of debt as part of our deleveraging commitments. See Part I—Item 1. Financial Statements, Note 8, "Debt" for further details.

Other pension and postretirement benefit (costs), net

Unallocated other pension and postretirement benefits increased for the three and six months ended June 30, 2021 compared to the prior year primarily due to lower pension and postretirement non-service costs.

Liquidity and Capital Resources

Our primary sources of liquidity have included cash provided by operating activities and access to external capital. However, athe ~~continued~~ worldwide disruption caused by the coronavirus pandemic 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 adequate to meet our ongoing operating requirements, scheduled principal and interest payments on debt, capital expenditures and 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~~

We continue 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.~~

~~We are currently focused~~focus on navigating the ~~recent~~lingering 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.~~ considerations.

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 effects of the coronavirus pandemic isare ongoing, and because of its dynamic nature, including uncertainties relating to the ~~ultimate~~ spread of variants, the ~~virus,~~rate of vaccinations and the ~~severity~~efficacy of ~~the disease,~~vaccines, the duration of the pandemic, the duration of on-premise restrictions and 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~~increased 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~~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 Agreement.~~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~~implemented 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 2020. Of the ~~first half of 2020. We anticipate that a significant portion of the over $500~~approximate $130 million of cash flow benefits recognized ~~through the second quarter of~~in 2020 ~~resulting~~ from these temporary deferrals, ~~will reverse~~the majority is expected to be paid 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.~~

2021.

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 June 30, ~~2020,~~2021, approximately ~~69%~~35% of our cash and cash equivalents ~~was~~were 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. To the extent necessary, we accrue for tax consequences on the earnings of our foreign subsidiaries upon repatriation. However, we 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. 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.~~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~~issued final hybrid regulations ~~which impact tax positions we took~~ in ~~2018 and 2019 and have~~April 2020, which resulted in ~~additional income tax expense~~recognition of approximately $135 million ~~recognized during~~in the ~~second quarter of~~six months ended June 30, 2020. ~~The~~We currently estimate the impact of the ~~finalized~~final regulations ~~could result in~~to be cash tax outflows ~~up to this amount~~of approximately $100 million in 2021. We continue to analyze the potential cash impacts of the final regulations to minimize any cash ~~outflows.~~outflows over time.

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, 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 $1.1 billion~~was $748.5 million for the six months ended June 30, ~~2020 increased by $231.9~~2021 compared to $1,059.9 million ~~compared to~~for the six months ended June 30, 2020. The decrease in net cash provided by operating activities of ~~$828.0~~$311.4 million was primarily due to the unfavorable timing of working capital and higher cash paid for taxes partially offset by higher net income adjusted for non-cash add-backs and lower interest paid during the six months ended June 30, ~~2019. This benefit was primarily driven by favorable~~2021. The unfavorable timing of working capital ~~lower cash paid for taxes and lower interest paid, partially offset~~was impacted by ~~lower net income adjusted for non-cash add-backs during~~prior year tax payment deferrals, timing of receipts related to higher volumes as well as incentive payments. During the six months ended June 30, ~~2020. Notably,~~2020, working capital and cash paid for taxes benefited from over $500 million in ~~deferred~~ tax ~~payments~~payment deferrals 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 in the second half of 2020 with the remaining amounts to be paid beyond this fiscal year.~~pandemic.

Cash Flows from Investing Activities

Net cash used in investing activities of ~~$341.5~~$200.1 million for the six months ended June 30, ~~2020 increased~~2021 decreased by ~~$173.7~~$141.4 million compared to the six months ended June 30, ~~2019, driven~~2020, 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~~due to lower capital expenditures and ~~lower net cash~~higher inflows from other investing activities, including the ~~proceeds~~sale of ~~approximately $47 million received from~~ the ~~voluntary settlement~~India disposal group. The decrease in capital expenditures was primarily due to the timing of ~~our cross currency swaps during the second quarter of 2019.~~capital projects.

Cash Flows from Financing Activities

Net cash used in financing activities was $3.9 million for the six months ended June 30, 2021 compared to $449.8 million for the six months ended June 30, ~~2020 compared to~~2020. The decrease in the net cash used in financing activities ~~of approximately $1.2 billion for the six months ended June 30, 2019. This decrease~~ was primarily ~~driven by~~due to lower net debt repayments, ~~for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 and~~ lower ~~dividends paid resulting from~~dividend payments as a result of the suspension of our dividend ~~payments in~~from May 2020 through the second quarter of ~~2020,~~2021 and lower net cash outflows from other financing activities, partially offset by ~~an increase in~~lower borrowings under our revolving credit facility and commercial paper program.

Capital Resources

Cash and Cash Equivalents

As of June 30, ~~2020,~~2021, we had total cash and cash equivalents of ~~$780.8~~$1,308.9 million, compared to ~~$523.4~~$770.1 million as of December 31, ~~2019~~2020 and ~~$490.2~~$780.8 million as of June 30, ~~2019.~~2020. The increase in cash and cash equivalents from ~~both prior periods~~December 31, 2020 was primarily ~~driven by~~due to the cash generated from operating activities, partially offset by capital expenditures. The increase in cash and cash equivalents from June 30, 2020 was primarily due to cash generated from operating activities and the proceeds from the sale of properties and other assets, including the ~~above-mentioned deferred tax payments from~~prior year Irwindale brewery sale, partially offset by capital expenditures, the repayment of debt and repayment of borrowings under our revolving credit facility and commercial paper program.

5342

~~various government-sponsored payment deferral programs and borrowings under our commercial paper program, partially offset by the repayment of debt, capital expenditures and dividend payments.~~

Borrowings

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

5443

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 June 30, 2021 and December 31, 2020, we had ~~$1.3~~$1.5 billion available to draw on our $1.5 billion revolving credit facility, as ~~the borrowing capacity is also reduced by borrowings under our~~there were no outstanding revolving credit facility or commercial paper ~~program. As of June 30, 2020, we had total outstanding borrowings under our commercial paper program of approximately $200 million.~~borrowings. Subsequent to June 30, ~~2020,~~2021, we had net commercial paper ~~payments~~borrowings of approximately ~~$25 million, for a total amount outstanding of approximately $175~~$140 million as of July ~~30, 2020.~~29, 2021. As such, as of July ~~30, 2020,~~29, 2021, we have approximately ~~$1.3~~$1.4 billion available to draw on our total $1.5 billion revolving credit facility. We had no borrowings drawn on this revolving credit facility and no commercial paper borrowings as of December 31, 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 programs for liquidity as needed. We also have JPY, CAD, GBP and USD overdraft facilities as well as an additional JPY line of credit across several banks should we need additional short-term liquidity.

~~On June 19, 2020, we entered into to an amendment to our existing~~ Additionally, under the $1.5 billion 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~~2021 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 ~~0.50x~~0.25x reduction to ~~4.75x~~4.50x net debt to EBITDA for the fiscal quarter ending ~~June~~September 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, 2021 through maturity of the credit facility. As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, 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 June 30, ~~2020~~2021 rank pari-passu.

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

Credit Rating

Our current long-term credit ratings are BBB-/Negative Outlook, Baa3/Stable Outlook and BBB(Low)/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.

Guarantor Information

SEC Registered Securities

For purposes of this disclosure, including the tables, "Parent Issuer" shall mean MCBC. "Subsidiary Guarantors" shall mean certain Canadian and U.S. subsidiaries reflecting the substantial operations of our North America segment.

Pursuant to the indenture dated May 3, 2012 (as amended, the "May 2012 Indenture"), MCBC issued its outstanding 3.5% senior notes due 2022 and 5.0% senior notes due 2042. Additionally, pursuant to the indenture dated July 7, 2016, MCBC issued its outstanding 2.1% senior notes due 2021 (subsequently repaid in July 2021), 3.0% senior notes due 2026, 4.2% senior

notes due 2046 and 1.25% senior notes due 2024. The senior notes issued under the May 2012 Indenture and the July 2016 Indenture were registered under the Securities Act of 1933, as amended. These senior notes are guaranteed on a senior unsecured basis by certain subsidiaries of MCBC, which are listed on Exhibit 22 of our Annual Report (the "Subsidiary Guarantors", and together with the Parent Issuer, the "Obligor Group"). "Parent Issuer" in this section is specifically referring to MCBC in its capacity as the issuer of the senior notes under the May 2012 Indenture and the July 2016 Indenture. Each of the Subsidiary Guarantors is 100% owned by the Parent Issuer. The guarantees are full and unconditional and joint and several.

None of our other outstanding debt was issued in a transaction that was registered with the SEC, and such other outstanding debt is issued or otherwise generally guaranteed on a senior unsecured basis by the Obligor Group or other consolidated subsidiaries of MCBC. These other guarantees are also full and unconditional and joint and several.

The senior notes and related guarantees rank pari-passu with all other unsubordinated debt of the Obligor Group and senior to all future subordinated debt of the Obligor Group. The guarantees can be released upon the sale or transfer of a Subsidiary Guarantors' capital stock or substantially all of its assets, or if such Subsidiary Guarantor ceases to be a guarantor under our other outstanding debt.

See Part I—Item 1. Financial Statements, Note 8, "Debt" for details of all debt issued and outstanding as of June 30, 2021.

The following summarized financial information relates to the Obligor Group as of June 30, 2021 on a combined basis, after elimination of intercompany transactions and balances between the Obligor Group, and excluding the investments in and equity in the earnings of any non-guarantor subsidiaries. The balances and transactions with non-guarantor subsidiaries have been separately presented.

Summarized Financial Information of Obligor Group


	Six Months Ended
	June 30, 2021
	(in millions)
Net sales, out of which:	$	4,072.1
Intercompany sales to non-guarantor subsidiaries	$	14.3
Gross profit, out of which:	$	1,743.1
Intercompany net costs from non-guarantor subsidiaries	$	(210.8)

Net interest expense third parties	$	(130.1)
Intercompany net interest income from non-guarantor subsidiaries	$	60.7

Income before income taxes	$	744.6
Net income	$	570.3


	As of June 30, 2021		As of December 31, 2020
	(in millions)
Total current assets, out of which:	$	2,630.5	$	1,662.5
Intercompany receivables from non-guarantor subsidiaries	$	248.7	$	184.4
Total noncurrent assets, out of which:	$	25,500.3	$	25,378.7
Noncurrent intercompany notes receivable from non-guarantor subsidiaries	$	4,053.4	$	3,962.2

Total current liabilities, out of which:	$	3,786.4	$	3,089.4
Current portion of long-term debt and short-term borrowings	$	1,503.7	$	1,001.4
Intercompany payables due to non-guarantor subsidiaries	$	90.0	$	72.3
Total noncurrent liabilities, out of which:	$	13,666.3	$	14,046.4
Long-term debt	$	6,624.0	$	7,129.8
Noncurrent intercompany notes payable due to non-guarantor subsidiaries	$	4,226.2	$	4,117.6

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 average exchange rates during the 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				Three Months Ended		Six Months Ended
		June 30, 2020	June 30, 2019	June 30, 2020	June 30, 2019		June 30, 2021	June 30, 2020	June 30, 2021	June 30, 2020
Weighted-Average Exchange Rate (1 USD equals)	Weighted-Average Exchange Rate (1 USD equals)					Weighted-Average Exchange Rate (1 USD equals)
Canadian Dollar (CAD)	Canadian Dollar (CAD)	1.36	1.33	1.36	1.33	Canadian Dollar (CAD)	1.22	1.36	1.25	1.36
Euro (EUR)	Euro (EUR)	0.91	0.89	0.91	0.89	Euro (EUR)	0.83	0.91	0.83	0.91
British Pound (GBP)	British Pound (GBP)	0.81	0.78	0.80	0.78	British Pound (GBP)	0.71	0.81	0.72	0.80
Czech Koruna (CZK)	Czech Koruna (CZK)	23.91	22.69	23.80	22.67	Czech Koruna (CZK)	21.17	23.91	21.27	23.80
Croatian Kuna (HRK)	Croatian Kuna (HRK)	6.74	6.56	6.75	6.56	Croatian Kuna (HRK)	6.23	6.74	6.23	6.75
Serbian Dinar (RSD)	Serbian Dinar (RSD)	107.44	104.46	106.92	104.11	Serbian Dinar (RSD)	97.59	107.44	97.76	106.92
Romanian Leu (RON)	Romanian Leu (RON)	4.35	4.22	4.35	4.18	Romanian Leu (RON)	4.09	4.35	4.07	4.35
Bulgarian Lev (BGN)	Bulgarian Lev (BGN)	1.77	1.74	1.77	1.73	Bulgarian Lev (BGN)	1.62	1.77	1.62	1.77
Hungarian Forint (HUF)	Hungarian Forint (HUF)	313.79	286.00	311.51	284.89	Hungarian Forint (HUF)	291.45	313.79	297.71	311.51

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


	As of
	June 30, 2021	December 31, 2020
Closing Exchange Rate (1 USD equals)
Canadian Dollar (CAD)	1.24	1.27
Euro (EUR)	0.84	0.82
British Pound (GBP)	0.72	0.73
Czech Koruna (CZK)	21.51	21.47
Croatian Kuna (HRK)	6.32	6.18
Serbian Dinar (RSD)	99.11	96.34
Romanian Leu (RON)	4.16	3.98
Bulgarian Lev (BGN)	1.65	1.60
Hungarian Forint (HUF)	296.32	296.94

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 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, EUR and other European operating currencies included in the above table, then the impact on USD reported earnings may be material.

Capital Expenditures

We incurred ~~$271.4~~$204.3 million, and ~~have~~ paid ~~$345.1~~$211.9 million, for capital improvement projects worldwide in the six months ended June 30, ~~2020,~~2021, excluding capital spending by equity method joint ventures, representing ~~an increase~~a decrease of ~~$27.9~~$67.1 million from the ~~$243.5~~$271.4 million of capital expenditures incurred in the six months ended June 30, ~~2019.~~2020. This ~~increase~~decrease was primarily due to the timing of ~~projects, including 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 have reduced our~~expenditures for capital expenditure plans by approximately $200 million for full year 2020, based on foreign exchange rates as of June 30, 2020. This expectation includes capital expenditures associated with the construction of our new Longueuil, Quebec brewery, which is under construction and not currently expected to be completed until 2021, and increased investment to modernize our Golden, Colorado brewery, which began in the fourth quarter of 2019. However, certain aspects of both projects are currently delayed and mayprojects. We continue to ~~be delayed as a result of the pandemic.~~

We 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, 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, ~~2019,~~2020, as reported in Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Contractual Obligations and Commercial Commitments in our Annual Report with the exception of the repayment of our ~~$500 million 2.25%~~$1.0 billion 2.1% notes ~~during the first quarter of 2020. However, we~~in July 2021. We continue to review and monitor our contractual obligations and commitments relative to the 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 June 30, ~~2020,~~2021, we did not have any other material off-balance sheet ~~arrangements (as defined in Item 303(a)(4)(ii) of Regulation S-K).~~arrangements.

Outlook

While the first quarter of 2021 was a challenge with the February 2021 Texas winter storm, the March 2021 cybersecurity incident, and the continued government restrictions related to the pandemic, including those that shut down the entire on-premise channel in the U.K., the second quarter of 2021 showed improvements in our performance. We ~~have seen~~continue to strive to build on the ~~benefits~~strength of our ~~work~~iconic core brands, grow our above premium portfolio, expand beyond the beer aisle, invest in response to the short-term impacts of the coronavirus pandemic and are confident in how we 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 result of this uncertainty, along with the growing risk of a return of shutdowns in certain markets, we currently continue to expect a

5747

~~significant adverse impact~~capabilities and support our people and communities. While uncertainty still exists in the severity and duration of the pandemic, including outbreaks of variants, the rate of vaccination and the efficacy of vaccines against the coronavirus and related variants we continue to ~~both net sales~~make progress under the revitalization plan, and ~~profit performance for~~continue to reinvest in the ~~third~~business to drive sustainable top- and bottom-line growth.

We experienced delays and disruptions to our business, including brewery operations, production and shipments in the first quarter of 2021 as a result of the March 2021 cybersecurity incident. This incident caused a shift in our production and shipments from the first quarter of 2021 to the balance of fiscal year ~~2020,~~2021. During the second quarter of 2021, we made progress recovering from the incident with increased shipments and ~~possibly, beyond.~~

~~The coronavirus pandemic continues~~expect to ~~impact our business due to on-premise losses across all our geographies, and disproportionately in Europe, and~~recover fully by the end of the year. In addition, 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~~to improve in total off-premise volumes due to 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 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 brands and packages as we adjust to these changing consumer dynamics. We currently expect these supply constraints to remain a challenge for the third quarter of 2020. However, in the U.S., we expect domestic shipment trends to be higher than brand volume trends as we build distributor inventories for the balance of the ~~year.~~

~~We expect our marketing investment to increase~~year as we lap restrictions in the second half of 2020 in North America as further discussed below, but some of this 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 comparison period.

We plan to build on the strength of our core brands, Coors Light and Miller Lite, by putting even more marketing behind these two iconic brands in ~~both~~2021.

Our revitalization plan continues to deliver results as we grow our above premium portfolio and expand beyond the ~~third and fourth quarters, as well as a non-recurring vendor benefit~~beer aisle. We delivered positive brand mix in the U.S. in the ~~fourth~~second quarter of ~~2020.~~

~~Further,~~2021 which was driven by strong growth in ~~response~~our U.S. hard seltzer portfolio. To continue to grow our share of the ~~coronavirus pandemic, various governmental authorities globally have announced relief programs which among other items, provide temporary deferrals~~hard seltzer market, we introduced line extensions of ~~income~~our hard seltzer Vizzy and ~~non-income based tax payments, which have positively impacted~~improved the supply of Topo Chico Hard Seltzer to meet the demand. In addition, we expanded our ~~operating cash flows~~hard seltzer portfolio around the world with Vizzy and Coors Seltzer recently launching in Canada. We launched the Three Fold hard seltzer brand in the ~~first half of 2020.~~U.K. and extended seltzers into Central Europe as well. We ~~anticipate that a significant portion~~are also investing in our hard seltzer production capacity in the U.S., Canada and the U.K. which will drive efficiencies and improve our profit margin. We plan to continue to grow our share of the ~~over $500 million of cash flow benefits recognized through the first half of 2020 resulting from these temporary deferrals will reverse~~hard seltzer market.

We also expect to have further growth opportunities in 2021 as we bring Yuengling brands west in the ~~second half of 2020,~~U.S. under our new joint venture, which will oversee any new market expansion outside Yuengling's current 22-state footprint and New England, beginning with ~~the remaining amounts reversing beyond this fiscal year as these deferred payments programs end and payments are due.~~

~~With the continued spread of the coronavirus and the reversal of certain on-premise re-openings, the extent, severity and duration~~plans 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 unpredictablebring Yuengling to ~~provide an updated detailed financial outlook at this time.~~

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 succeedTexas in the ~~longer term including:~~third quarter of 2021.

•We expect this expansion beyond beer to continue throughout 2021. In early 2021, we commenced our new energy drink partnership with ~~We instituted~~ZOA and ~~provided approximately $16 million of "thank you" pay for certain essential North America brewery employees which concluded in~~co-owner Dwayne Johnson continues to amplify the ~~second quarter~~product across his social media presence 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,through new TV campaigns that will debut during the Olympics.

•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 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 brands, as well as the very successful launch of ~~Vizzy~~ ~~and~~ ~~Blue Moon LightSky~~ ~~as well as the upcoming launch of~~ ~~Coors Seltzer, we currently anticipate marketing spend in the third and fourth quarter of 2020 to 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 meet off-premise demand leading to positive mix in the U.S. and continue to 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 each fiscal quarter ending on or after June 30, 2020 through the maturity of the credit facility giving us greater financial flexibility,

•We established a commercial paper facility in the U.K. for the purpose of 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 GBP 300 million adding incremental borrowing capacity,

•~~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.~~

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 are confident in our ability to achieve long-term success, we are mindful of the continued challenges and ~~continued~~the uncertainty that ~~lie ahead. During this time of great uncertainty, our management~~remains and ~~board will continue to take prudent and proactive actions which~~ are in 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 the near-term, but also positioning the business for ~~medium~~medium- and long-term success. Our improved financial flexibility has enabled us to invest in our business while continuing to de-lever our balance sheet and to reinstate a dividend.

Interest

We anticipate 2021 consolidated net interest expense of approximately $270 million, plus or minus 5%.

Deleverage & Dividends

We repaid in full our $1.0 billion 2.1% notes at maturity on July 15, 2021 using a combination of commercial paper borrowings and cash on hand and also settled the associated cross currency swap. In addition, a quarterly dividend was reinstated in the third quarter of 2021. We currently intend to maintain our investment grade debt rating and we are committed to further deleveraging in 2021 in accordance with our plans.

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 half of ~~2020,~~2021, 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 ~~interim impairment analysis performed as of January 1, 2020 as a result~~results of our ~~change in reporting units and aggregation of the~~ ~~Coors~~ ~~indefinite-lived intangible brand assets, and~~2020 annual impairment testing analysis, the related risks to our indefinite-lived intangible brand assets and the 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~~any new accounting ~~pronouncements.~~pronouncements that have or could have a significant impact on our financial statements.

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 June 30, ~~2020,~~2021, based on foreign exchange rates as of June 30, ~~2020,~~2021, 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)
$	(351.4)	$	(64.4)	$	(103.4)	$	0.1	$	(183.7)	105.0	$	94.2	$	100.3	$	—	$	(89.5)

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
		June 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
		(In millions)							(In millions)
Estimated fair value volatility	Estimated fair value volatility					Estimated fair value volatility
Foreign currency risk:	Foreign currency risk:					Foreign currency risk:
Forwards	Forwards	$	(20.5)	$	(25.8)	Forwards	$	(22.1)	$	(20.5)
Foreign currency denominated debt	Foreign currency denominated debt	$	(182.8)	$	(194.2)	Foreign currency denominated debt	$	(186.5)	$	(190.4)
Cross currency swaps	Cross currency swaps	$	(39.5)	$	(89.2)	Cross currency swaps	$	(41.7)	$	(43.0)
Interest rate risk:	Interest rate risk:					Interest rate risk:
Debt	Debt	$	(239.4)	$	(255.4)	Debt	$	(207.0)	$	(219.7)
Forward starting interest rate swaps	Forward starting interest rate swaps	$	(189.6)	$	(150.4)	Forward starting interest rate swaps	$	(163.0)	$	(177.1)

Commodity price risk:	Commodity price risk:					Commodity price risk:
Commodity swaps	Commodity swaps	$	(83.0)	$	(52.9)	Commodity swaps	$	(106.9)	$	(96.0)
Commodity options	Commodity options	$	—	$	—	Commodity options	$	—	$	—
Equity price risk:	Equity price risk:					Equity price risk:
Warrants	Warrants	$	(0.2)	$	(0.6)	Warrants	$	—	$	(0.1)

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 June 30, ~~2020~~2021 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 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 June 30, ~~2020~~2021 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

Litigation and other disputes

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 and may be further impacted by the coronavirus pandemic.~~results. 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.

~~The novel coronavirus pandemic, efforts to mitigate~~A breach of our information systems could cause material financial or ~~disrupt the pandemic and related weak, or weakening of, economic or other negative conditions,~~reputational harm.

Our information systems have ~~disrupted,~~been, 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, and we currently expect will continue to~~ be ~~materially and adversely affected by~~in the ~~coronavirus pandemic and related weak, or continued weakening~~future, the target of ~~economic~~cyber-attacks 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 tosecurity breaches, which, if successful, could, among other things, cause a disruption to our operations, expose us to the loss of key business, employee, customer or vendor information, cause us to breach our legal, regulatory or contractual obligations, generate a disruption in the continuity of our business applications and ~~potential associated financial impacts include, but are not limited to, lower net sales in markets affected by the pandemic, including potential material shifts in, and impacts to, demand, the~~services, create an inability to ~~sell our products~~access or rely upon critical business records, cause reputational damage, or impact the costs or ability to ~~on-premise consumers and further disruption to~~obtain adequate insurance coverage. These breaches may result from human errors, equipment failure, or fraud or malice on the ~~on-premise channel, including staged on premise re-openings and subsequent closure~~part 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 ratesemployees or third parties. A breach of our ~~returnable packaging~~information systems, including the March 2021 cybersecurity incident disclosed in ~~certain markets, potentially impacting net sales~~P art 1 - Item 2. Management's Discussion and ~~cost~~Analysis of ~~goods globally~~Financial Condition and ~~potential incremental costs associated with mitigating the effects~~Results of ~~the pandemic,~~Operations in this report, could subject us to litigation, including ~~increased raw materials, freight~~class action or derivative lawsuits, regulatory fines, and ~~logistics costs and other expenses. Packaging material supply shortages and supply chain constraints have impacted and~~penalties, any of which 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~~significant negative impact on our ~~performance,~~ cash flows, competitive position, financial condition or results of operations. If our information systems suffer outages, we could experience delays and ~~capital resources. The coronavirus pandemic is ongoing,~~disruptions in our business, including brewery operations, production 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,shipments, such as ~~a recession~~those we experienced with the March 2021 cybersecurity incident. In addition, if our information systems suffer severe damage, disruption or ~~slowed economic growth~~shutdown, such as those we experienced with the March 2021 cybersecurity incident, we could experience delays in reporting our ~~markets, and actions that may be taken by governmental authorities to contain the pandemic or to mitigate its impact, makes it difficult to forecast any effects on our~~financial results, ~~of operations for 2020 and in subsequent years. However, our results of operations have been negatively affected~~ and we ~~currently expect~~may lose revenue and profits as a result of our ~~results~~inability to timely invoice and collect payments from our customers. We have seen an increase in the number of ~~operations for the remainder~~such attacks recently as a large number of ~~2020 to be significantly~~our employees are working remotely and ~~adversely affected.~~

~~Specifically, difficult macroeconomic conditions in~~accessing our ~~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~~technology infrastructure remotely as a result of the coronavirus ~~pandemic, as well as limited~~pandemic. In addition, the March 2021 cybersecurity incident may embolden other individuals or ~~significantly reduced points of access of~~groups to target our ~~product, could continue~~information systems and impact the costs or ability for us to ~~have a material adverse effect on the demand for our products. Under difficult economic conditions, consumers~~obtain adequate insurance coverages moving forward. Further, such attacks may ~~continue to seek to reduce discretionary spending~~originate from nation states or attempts by ~~forgoing purchases of our products, by shifting away from our above-premium products to lower-priced products offered by us~~outside parties, hackers, criminal organizations or other ~~companies or~~threat actors.

We expend significant financial resources to protect against threats and cyber-attacks and may be required to further expend financial resources to alleviate problems caused by ~~shifting~~physical, electronic and cyber security breaches, including the potential for increased ongoing expenses related to ~~off-premise from on-premise consumption, negatively impacting our net sales~~the March 2021 cybersecurity incident 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, includingto address possible increased information system attacks as a result of the ~~coronavirus pandemic~~incident. As techniques used to breach security are growing in frequency and ~~any resulting recession~~sophistication and are generally not recognized until launched against a target, regardless of our expenditures and protection efforts, we may not be able to implement security measures in a timely manner or, ~~slowed economic growth, have had,~~if and when implemented, these measures could ~~continue~~be circumvented. We could also be required to ~~have, an outsized negative impact on us. In addition, difficult economic conditions may have a negative impact on our ability to access capital markets~~spend significant financial and other ~~funding sources, on acceptable terms~~resources to remedy the damage caused by a security breach or ~~at all, should we seek future financing. Additionally, we may have unexpected costs~~to repair or replace networks 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 ratingsinformation systems, which 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 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 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 the on-premise channel and, in turn, may have a material adverse effect on our business ~~liquidity,~~and financial ~~condition~~results. For example, we incurred certain incremental net one-time costs of $2.7 million in the six months ended June 30, 2021 related to consultants, experts and ~~results~~data recovery efforts, net of ~~operations, particularly if~~insurance recoveries.

Misuse, leakage or falsification of information could result in a violation of data privacy laws and regulations, such as the European Union's General Data Protection Regulation, damage our reputation and credibility or expose us to increased risk of lawsuits, loss of existing or potential future customers and/or increases in our security costs, any ~~self-imposed or governmental changes are in place for~~of which could have a ~~significant amount of time.~~

~~Moreover, our operations could be disrupted by our employees or employees of~~material adverse effect on our business ~~partners, including~~and financial results. In addition, we may suffer financial and reputational damage because of lost or misappropriated confidential information and may become subject to legal action and increased regulatory oversight or consumers may avoid our ~~supply chain partners, being diagnosed with coronavirus or were suspected~~brands due to negative publicity. In the event of ~~having coronavirus~~a breach resulting in loss of data, such as personally identifiable information or other ~~illnesses since this could require us~~such data protected by data privacy or our business partners to quarantine some or all such employees or close and disinfect our or their facilities. If a significant percentage of our workforce or the workforce of our business partners are unable to work or ifother laws, we or our business partners are required to close our or their production facilities, including because of illness or travel or government restrictions in connection with the coronavirus pandemic, our operations, including manufacturing and distribution capabilities, may be ~~negatively impacted, potentially materially adversely affecting~~liable for damages, fines and penalties for such losses under applicable regulatory frameworks despite not handling the data. Further, the regulatory framework around data custody, data privacy and breaches varies by jurisdiction and is an evolving area of law. We may not be able to limit our ~~business, liquidity, financial condition~~liability or ~~results~~damages in the event of ~~operations.~~such a loss.

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.

6251

ITEM 6. EXHIBITS

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

(a) Exhibits

Exhibit
Number

Document Description

10.1

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

~~10.2~~

Dealer Agreement dated May 21, 2020 by and between Molson Coors Brewing Company (UK) Limited, Molson Coors Beverage Company, Lloyds Bank Corporate Markets PLC, as arranger, and Lloyds Bank Corporate Markets PLC, as dealerrestated (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on May ~~26, 2020)~~28, 2021).

~~10.3~~10.2

~~Deed~~Directors Service Agreement, dated as of ~~Guarantee dated May 21,~~April 30, 2020, by and between Molson Coors ~~Beverage~~Brewing Company ~~in favor of the holders thereunder (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed on May 26, 2020).~~(UK) Limited and Simon Cox.

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.*

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.

6352

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

By:

/s/ ~~BRIAN C. TABOLT~~ROXANNE M. STELTER

~~Brian C. Tabolt~~Roxanne M. Stelter

Vice President and Controller

(Principal Accounting Officer)

July ~~30, 2020~~29, 2021

6453


	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


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, 2020
	Parent Issuer		Subsidiary Guarantors		Subsidiary Non Guarantors		Eliminations		Consolidated
Sales	$	4.0	$	2,529.4	$	631.7	$	(135.3)	$	3,029.8
Excise taxes	—		(346.8)		(179.6)		—		(526.4)
Net sales	4.0		2,182.6		452.1		(135.3)		2,503.4
Cost of goods sold	(0.5)		(1,237.8)		(346.9)		128.6		(1,456.6)
Gross profit	3.5		944.8		105.2		(6.7)		1,046.8
Marketing, general and administrative expenses	(26.4)		(384.7)		(120.1)		6.7		(524.5)
Special items, net	(10.1)		(54.0)		(0.2)		—		(64.3)
Equity income (loss) in subsidiaries	275.9		(158.4)		16.5		(134.0)		—
Operating income (loss)	242.9		347.7		1.4		(134.0)		458.0
Interest income (expense), net	(60.9)		22.0		(30.8)		—		(69.7)
Other pension and postretirement benefits (costs), net	(0.3)		5.1		2.8		—		7.6
Other income (expense), net	0.3		3.9		1.6		—		5.8
Income (loss) before income taxes	182.0		378.7		(25.0)		(134.0)		401.7
Income tax benefit (expense)	13.0		(102.9)		(114.6)		—		(204.5)
Net income (loss)	195.0		275.8		(139.6)		(134.0)		197.2
Net (income) loss attributable to noncontrolling interests	—		—		(2.2)		—		(2.2)
Net income (loss) attributable to MCBC	$	195.0	$	275.8	$	(141.8)	$	(134.0)	$	195.0

Comprehensive income (loss) attributable to MCBC	$	310.7	$	394.8	$	18.1	$	(412.9)	$	310.7


	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)	%