MOLSON COORS BREWING CO, 10-K filed on 2/12/2019
Annual Report
v3.10.0.1
Document and Entity Information Document - USD ($)
12 Months Ended
Dec. 31, 2018
Feb. 07, 2019
Jun. 30, 2018
Document Information [Line Items]      
Entity Registrant Name MOLSON COORS BREWING CO    
Trading Symbol tap    
Entity Central Index Key 0000024545    
Document Type 10-K    
Document Period End Date Dec. 31, 2018    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
Current Fiscal Year End Date --12-31    
Amendment Flag false    
Entity Filer Category Large Accelerated Filer    
Entity Emerging Growth Company false    
Entity Small Business false    
Entity Shell Company false    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Public Float     $ 12,375,021,859
Class A common stock, voting      
Document Information [Line Items]      
Entity Common Stock, shares outstanding   2,560,668  
Common stock issued, Class B      
Document Information [Line Items]      
Entity Common Stock, shares outstanding   196,042,622  
Class A exchangeable shares      
Document Information [Line Items]      
Entity Common Stock, shares outstanding   2,757,201  
Class B Exchangeable Shares [Member]      
Document Information [Line Items]      
Entity Common Stock, shares outstanding   14,807,311  
v3.10.0.1
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Millions, $ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Sales $ 13,338.0 $ 13,471.5 $ 6,597.4
Excise taxes (2,568.4) (2,468.7) (1,712.4)
Net Sales 10,769.6 11,002.8 4,885.0
Cost of Goods Sold (6,584.8) (6,236.7) (2,999.0)
Gross profit 4,184.8 4,766.1 1,886.0
Marketing, general and administrative expenses (2,802.7) (3,052.0) (1,597.2)
Special items, net 249.7 (36.4) 2,532.9
Equity Income Loss in Equity Method Investment 0.0 0.0 500.9
Operating income (loss) 1,631.8 1,677.7 3,322.6
Other income (expense), net      
Interest expense (306.2) (349.3) (271.6)
Interest income 8.0 6.0 27.2
Total other non-service pension and postretirement benefits (costs), net 38.2 47.4 8.4
Other income (expense), net (12.0) 1.4 (32.5)
Total other income (expense), net (272.0) (294.5) (268.5)
Income (loss) before income taxes 1,359.8 1,383.2 3,054.1
Income tax benefit (expense) (225.2) 204.6 (1,454.3)
Net Income (Loss) 1,134.6 1,587.8 1,599.8
Net (income) loss attributable to noncontrolling interests (18.1) (22.2) (5.9)
Net income (loss) attributable to Molson Coors Brewing Company $ 1,116.5 $ 1,565.6 $ 1,593.9
Basic net income (loss) attributable to Molson Coors Brewing Company per share:      
Basic net income (loss) attributable to Molson Coors Brewing Company per share (in dollars per share) $ 5.17 $ 7.27 $ 7.52
Diluted net income (loss) attributable to Molson Coors Brewing Company per share:      
Diluted net income (loss) attributable to Molson Coors Brewing Company per share (in dollars per share) $ 5.15 $ 7.23 $ 7.47
Weighted-average shares—basic 216.0 215.4 212.0
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements 0.6 1.1 1.4
Weighted-average shares for diluted EPS 216.6 216.5 213.4
Amounts attributable to Molson Coors Brewing Company      
Income (loss) from discontinued operations, net of tax   $ 1.5 $ 2.8
Net income (loss) attributable to Molson Coors Brewing Company $ 1,116.5 $ 1,565.6 $ 1,593.9
Stock Compensation Plan [Member]      
Diluted net income (loss) attributable to Molson Coors Brewing Company per share:      
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 0.8 0.3 0.1
v3.10.0.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Net income (loss) including noncontrolling interests $ 1,134.6 $ 1,587.8 $ 1,599.8
Other comprehensive income (loss), net of tax:      
Foreign currency translation adjustments (359.0) 686.7 (234.4)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Reclassification Adjustment from AOCI, Realized upon Sale or Liquidation, Net of Tax 6.0 0.0 0.0
Unrealized gain (loss) on derivative and non-derivative financial instruments 10.9 (133.4) 9.7
Reclassification of derivative (gain) loss to income 2.5 1.3 (3.0)
Pension and other postretirement benefit adjustments 43.5 145.7 53.8
Other Comprehensive Income (Loss), Amortization of Net Prior Service Costs and Net Actuarial Losses, Net of Tax 4.9 3.6 22.8
Reclassification of historical share of MillerCoors' AOCI loss 0.0 0.0 258.2
Ownership share of unconsolidated subsidiaries' other comprehensive income (loss) (0.8) 10.4 22.3
Total other comprehensive income (loss), net of tax (292.0) 714.3 129.4
Comprehensive income (loss) 842.6 2,302.1 1,729.2
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest (16.1) (24.7) (3.0)
Net (income) loss attributable to noncontrolling interests (18.1) (22.2) (5.9)
Comprehensive income (loss) attributable to Molson Coors Brewing Company 826.5 2,277.4 1,726.2
As Restated      
Other comprehensive income (loss), net of tax:      
Total other comprehensive income (loss), net of tax $ (292.0) $ 714.3 $ 129.4
v3.10.0.1
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Dec. 31, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents $ 1,057.9 $ 418.6
Accounts and other receivables:    
Trade, less allowance for doubtful accounts of $14.5 and $17.2, respectively 736.0 728.3
Affiliate receivables 8.4 5.5
Other receivables, less allowance for doubtful accounts of $0.2 and $0.5, respectively 126.6 168.2
Inventories:    
Inventories, less allowance for obsolete inventories of $16.2 and $8.1, respectively 591.8 591.5
Other current assets, net 245.6 277.6
Total current assets 2,766.3 2,189.7
Properties, less accumulated depreciation of $2,558.8 and $2,096.6, respectively 4,608.3 4,673.7
Goodwill 8,260.8 8,405.5
Other intangibles, less accumulated amortization of $810.3 and $662.3, respectively 13,776.4 14,296.5
Other assets 698.0 681.5
Total assets 30,109.8 30,246.9
Current liabilities:    
Accounts payable and other current liabilities (includes affiliate payables of $0.1 and $0.4, respectively) 2,706.4 2,684.5
Current portion of long-term debt and short-term borrowings 1,594.5 714.8
Total current liabilities 4,300.9 3,399.3
Long-term debt 8,893.8 10,598.7
Pension and postretirement benefits 726.6 848.5
Deferred Tax Liabilities 2,128.9 1,896.3
Other liabilities 323.8 316.8
Total liabilities 16,374.0 17,059.6
Commitments and contingencies(Note 18)
Molson Coors Brewing Company stockholders' equity    
Preferred stock, $0.01 par value (authorized: 25.0 shares; none issued) 0.0 0.0
Paid-in capital 6,773.1 6,688.5
Retained earnings 7,692.9 6,958.4
Accumulated other comprehensive income (loss) (1,150.0) (860.0)
Class B common stock held in treasury at cost (9.5 shares and 9.5 shares, respectively) (471.4) (471.4)
Total Molson Coors Brewing Company stockholders' equity 13,507.4 12,978.4
Noncontrolling interests 228.4 208.9
Total equity 13,735.8 13,187.3
Total liabilities and equity 30,109.8 30,246.9
Class A common stock, voting    
Molson Coors Brewing Company stockholders' equity    
Common stock - Class A, $0.01 par value (authorized: 500.0 shares; issued and outstanding: 2.6 shares and 2.6 shares, respectively); Class B, $0.01 par value (authorized: 500.0 shares; issued and outstanding: 205.4 shares and 204.7 shares, respectively) 0.0 0.0
Total equity 0.0 0.0
Common stock issued, Class B    
Molson Coors Brewing Company stockholders' equity    
Common stock - Class A, $0.01 par value (authorized: 500.0 shares; issued and outstanding: 2.6 shares and 2.6 shares, respectively); Class B, $0.01 par value (authorized: 500.0 shares; issued and outstanding: 205.4 shares and 204.7 shares, respectively) 2.0 2.0
Total equity 2.0 2.0
Class A exchangeable shares    
Molson Coors Brewing Company stockholders' equity    
Exchangeable shares - Class A, no par value (issued and outstanding: 2.8 shares and 2.9 shares, respectively); Class B, no par value (issued and outstanding: 14.8 shares and 14.7 shares, respectively) 103.2 107.7
Total equity 103.2 107.7
Class B Exchangeable Shares [Member]    
Molson Coors Brewing Company stockholders' equity    
Exchangeable shares - Class A, no par value (issued and outstanding: 2.8 shares and 2.9 shares, respectively); Class B, no par value (issued and outstanding: 14.8 shares and 14.7 shares, respectively) 557.6 553.2
Total equity $ 557.6 $ 553.2
v3.10.0.1
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($)
shares in Millions, $ in Millions
Dec. 31, 2018
Dec. 31, 2017
Assets    
Trade receivables, allowance for doubtful accounts $ 14.5 $ 17.2
Current notes receivable and other receivables, allowance for doubtful accounts 0.2 0.5
Allowance for Obsolete Inventory, Finished Goods 16.2 8.1
Properties, accumulated depreciation 2,558.8 2,096.6
Other intangibles, accumulated amortization 810.3 662.3
Due to Affiliate, Current $ 0.1 $ 0.4
Equity [Abstract]    
Preferred stock, non-voting, par value $ 0.01 $ 0.01
Preferred stock, non-voting, authorized shares 25.0 25.0
Preferred stock, non-voting, issued shares 0.0 0.0
Treasury shares 9.5 9.5
Class A common stock, voting    
Equity [Abstract]    
Common stock, par value $ 0.01 $ 0.01
Common stock, authorized shares 500.0 500.0
Common stock, issued shares 2.6 2.6
Common stock, outstanding shares 2.6 2.6
Common stock issued, Class B    
Equity [Abstract]    
Common stock, par value $ 0.01 $ 0.01
Common stock, authorized shares 500.0 500.0
Common stock, issued shares 205.4 204.7
Class A exchangeable shares    
Equity [Abstract]    
Exchangeable shares, par value $ 0 $ 0
Exchangeable shares, issued shares 2.8 2.9
Exchangeable shares, outstanding shares 2.8 2.9
Class B Exchangeable Shares [Member]    
Equity [Abstract]    
Exchangeable shares, par value $ 0 $ 0
Exchangeable shares, issued shares 14.8 14.7
Exchangeable shares, outstanding shares 14.8 14.7
v3.10.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Cash flows from operating activities:      
Net income (loss) including noncontrolling interests $ 1,134.6 $ 1,587.8 $ 1,599.8
Business Combination, Step Acquisition, Equity Interest in Acquiree, Remeasurement Gain 0.0 0.0 (2,965.0)
Business Combination, Step Acquisition, Equity Interest in Acquiree, Remeasurement Loss 0.0 0.0 82.0
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Depreciation and amortization 857.5 812.8 388.4
Amortization of debt issuance costs and discounts 12.7 23.2 66.5
Share-based compensation 42.6 58.3 29.9
(Gain) loss on sale or impairment of properties and other assets, net (8.1) (0.4) 396.0
Unrealized (Gain) Loss on Foreign Currency Fluctuations and Derivative Instruments, net 193.1 (124.3) (20.7)
Income tax (benefit) expense 225.2 (204.6) 1,454.3
Income tax (paid) received 32.3 86.0 (165.0)
Interest expense, excluding interest amortization 304.2 338.8 262.3
Interest paid (308.7) (350.3) (162.5)
Pension (benefit) expense (57.2) (67.8) (11.6)
Pension contributions paid (8.9) (310.0) (12.1)
Change in current assets and liabilities (net of impact of business combinations) and other:      
Receivables (38.4) (7.2) 65.6
Inventories (10.6) 21.3 (23.2)
Payables and other current liabilities 27.6 31.0 144.9
Other assets and other liabilities (66.6) (28.3) (2.7)
Net cash provided by operating activities 2,331.3 1,866.3 1,126.9
Cash flows from investing activities:      
Additions to properties (651.7) (599.6) (341.8)
Proceeds from sales of properties and other assets 32.5 60.5 174.5
Acquisition of businesses, net of cash acquired 0.0 0.0 (11,961.0)
Investment in MillerCoors 0.0 0.0 (1,253.7)
Return of capital from MillerCoors 0.0 0.0 1,086.9
Other (49.9) 0.9 8.5
Net cash used in investing activities (669.1) (538.2) (12,286.6)
Cash flows from financing activities:      
Proceeds from Issuance of Common Stock 0.0 0.0 2,525.6
Exercise of stock options under equity compensation plans 16.0 4.0 11.2
Dividends paid (354.2) (353.4) (352.9)
Payments on debt and borrowings (319.8) (3,000.1) (223.9)
Proceeds on debt and borrowings 0.0 1,536.0 9,460.6
Debt issuance costs (0.5) (7.0) (60.7)
Net proceeds from (payments on) revolving credit facilities and commercial paper (374.3) 374.3 (1.1)
Other 23.9 (50.2) (40.9)
Net Cash Provided by (Used in) Financing Activities (1,008.9) (1,496.4) 11,317.9
Cash and cash equivalents:      
Net increase (decrease) in cash and cash equivalents 653.3 (168.3) 158.2
Effect of foreign exchange rate changes on cash and cash equivalents (14.0) 26.0 (28.2)
Balance at beginning of year 418.6 560.9 430.9
Balance at end of year 1,057.9 418.6 560.9
Millercoors [Member]      
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Equity Income in MillerCoors 0.0 0.0 (488.6)
Distributions from MillerCoors $ 0.0 $ 0.0 $ 488.6
v3.10.0.1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND NONCONTROLLING INTERESTS - USD ($)
$ in Millions
Total
Common stock issued, Class A
Common stock issued, Class B
Exchangeable shares issued, Class A
Exchangeable shares issued, Class B
Retained earnings
Accumulated other comprehensive income (loss)
Common stock held in treasury, Class B
Paid-in capital
Noncontrolling interest
Balance at Dec. 31, 2015 $ 7,063.1 $ 0.0 $ 1.7 $ 108.2 $ 603.0 $ 4,505.2 $ (1,704.1) $ (471.4) $ 4,000.4 $ 20.1
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Exchange of shares 0.0     (0.1) (31.8)       31.9  
Shares issued under equity compensation plan (1.1)   0.0           (1.1)  
Amortization of share-based compensation 32.3               32.3  
Replacement share-based awards issued in conjunction with Acquisition 46.4               46.4  
Acquisition of businesses 186.3                 186.3
Purchase of noncontrolling interest (0.1)               0.1 (0.2)
Net income (loss) including noncontrolling interests 1,599.8         1,593.9       5.9
Other comprehensive income (loss), net of tax 129.4           132.3     (2.9)
Stock Issued During Period, Value, New Issues 2,525.6   0.3           2,525.3  
Dividends declared and paid - $1.64 per share (352.9)         (352.9)       0.0
Balance at Dec. 31, 2016 11,222.6 0.0 2.0 108.1 571.2 5,746.2 (1,571.8) (471.4) 6,635.3 203.0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Exchange of shares 0.0     (0.4) (18.0)       18.4  
Shares issued under equity compensation plan (22.9)               (22.9)  
Amortization of share-based compensation 57.3               57.3  
Purchase of noncontrolling interest 1.8               0.4 1.4
Net income (loss) including noncontrolling interests 1,587.8         1,565.6       22.2
Other comprehensive income (loss), net of tax 714.3           711.8     2.5
Dividends declared and paid - $1.64 per share (353.4)         (353.4)       0.0
Balance at Dec. 31, 2017 13,187.3 0.0 2.0 107.7 553.2 6,958.4 (860.0) (471.4) 6,688.5 208.9
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Exchange of shares 0.0     (4.5) 4.4       0.1  
Shares issued under equity compensation plan 2.8               2.8  
Amortization of share-based compensation 42.2               42.2  
Adjustments to Additional Paid in Capital, Warrant Issued                 39.4  
Payments to Acquire Interest in Joint Venture 44.3                 4.9
Purchase of noncontrolling interest (0.2)               0.1 (0.3)
Net income (loss) including noncontrolling interests 1,134.6         1,116.5       18.1
Other comprehensive income (loss), net of tax (292.0)           (290.0)     (2.0)
Initial Application Period Cumulative Effect Transition for Accounting Standards Update 2014-09           (27.8)        
Proceeds from (Payments to) Noncontrolling Interests                   21.6
Dividends declared and paid - $1.64 per share (354.2)         (354.2)       0.0
Balance at Dec. 31, 2018 $ 13,735.8 $ 0.0 $ 2.0 $ 103.2 $ 557.6 $ 7,692.9 $ (1,150.0) $ (471.4) $ 6,773.1 $ 228.4
v3.10.0.1
Basis of Presentation and Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Summary of Significant Accounting Policies
Unless otherwise noted in this report, any description of "we", "us" or "our" includes Molson Coors Brewing Company ("MCBC" or the "Company"), principally a holding company, and its operating and non-operating subsidiaries included within our reporting segments and Corporate. Our reporting segments include: MillerCoors LLC ("MillerCoors" or U.S. segment), operating in the U.S.; Molson Coors Canada ("MCC" or Canada segment), operating in Canada; Molson Coors Europe (Europe segment), operating in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K. and various other European countries; and Molson Coors International ("MCI" or International segment), operating in various other countries.
Unless otherwise indicated, comparisons are to comparable prior periods, and 2018, 2017 and 2016 refers to the 12 months ended December 31, 2018, December 31, 2017, and December 31, 2016, respectively. On October 11, 2016, we completed the acquisition of SABMiller plc's ("SABMiller") 58% economic interest and 50% voting interest in MillerCoors and all trademarks, contracts and other assets primarily related to the "Miller International Business," as defined in the purchase agreement, outside of the U.S. and Puerto Rico (the "Acquisition") from Anheuser-Busch InBev SA/NV ("ABI"), and MillerCoors, previously a joint venture between MCBC and SABMiller, became a wholly-owned subsidiary of MCBC. Accordingly, for periods prior to October 11, 2016, our 42% economic ownership interest in MillerCoors was accounted for under the equity method of accounting, and, therefore, its results of operations were reported as equity income in MillerCoors in the consolidated statements of operations, and our 42% share of MillerCoors' net assets was reported as investment in MillerCoors in the consolidated balance sheets. Beginning October 11, 2016, MillerCoors was fully consolidated and continues to be reported as our U.S. segment. See Note 4, "Acquisition and Investments" for further discussion.
Our consolidated financial statements and related disclosures reflect new accounting pronouncements adopted during the year as discussed in Note 2, "New Accounting Pronouncements."
Unless otherwise indicated, information in this report is presented in USD and comparisons are to comparable prior periods. Our primary operating currencies, other than USD, include the CAD, the GBP, and our Central European operating currencies such as the EUR, CZK, HRK and RSD.
Principles of Consolidation
Our consolidated financial statements include our accounts and our majority-owned and controlled domestic and foreign subsidiaries, as well as certain VIEs for which we are the primary beneficiary. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
Our consolidated financial statements are prepared in accordance with U.S. GAAP. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions used to determine certain amounts that affect the financial statements are reasonable, based on information available at the time they are made. To the extent there are differences between these estimates and actual results, our consolidated financial statements may be materially affected.
Restatement of Previously Issued Consolidated Financial Statements for Income Tax Accounting Errors
As part of preparing our 2018 consolidated financial statements, MCBC identified errors in the accounting for income taxes related to the deferred tax liabilities for our partnership in MillerCoors. Following the Acquisition in 2016, MillerCoors continued as a partnership for tax purposes until 2018, at which point the partnership was dissolved. Upon the dissolution of the MillerCoors partnership, we changed our outside basis deferred tax liability for our investment in the partnership to separate deferred tax positions for each of the individual book-tax basis differences in the underlying assets and liabilities of MillerCoors. In doing so, we identified a difference between the deferred tax liabilities recorded and the deferred tax liabilities required related to our acquired partnership interest in MillerCoors. Specifically, upon closing of the Acquisition and completion of the related deferred income tax calculations associated with the remeasurement of the previously held equity interest in MillerCoors, we did not reconcile the outside basis deferred income tax liability for the investment in the partnership to the book-tax differences in the underlying assets and liabilities within the partnership, which would have identified the difference resulting from the Acquisition. As a result of completing this reconciliation as part of preparing our 2018 consolidated financial statements, we concluded that the previously issued 2017 and 2016 consolidated financial statements were misstated. Accordingly, we have restated our 2016 consolidated financial statements to increase deferred tax liabilities (and related subtotals) and corresponding deferred tax expense by $399.1 million, with a corresponding decrease to net income and earnings per share. For 2017, the change to the deferred tax liabilities caused by the aforementioned error required revaluation due to the effects of the 2017 Tax Act. This impact, along with further insignificant income tax errors in the recorded tax effects related to the remeasurement of the previously held equity interest in MillerCoors, resulted in a required correction to decrease deferred tax liabilities and deferred tax expense by $151.4 million, resulting in increases to our net income and earnings per share for the year ended December 31, 2017. These adjustments resulted in an aggregate increase to our deferred tax liabilities and total liabilities and a corresponding decrease in retained earnings and total equity of $247.7 million as of December 31, 2017. These errors had no impact on any period prior to the Acquisition (which was completed during the fourth quarter of 2016), and, further, there is no impact on the previously disclosed cash tax benefits resulting from the election to treat the Acquisition as an asset acquisition for U.S. tax purposes and accordingly the related tax benefit. Impacts to the condensed consolidated statements of cash flow are limited to changes within operating activities as noted below, and, therefore, there are no impacts on the operating, investing or financing subtotals. Refer to Note 20, "Quarterly Financial Information (Unaudited)," for the impact of correcting these previously reported errors on our unaudited quarterly results.

The impacts of these corrections to fiscal years 2016 and 2017 are as follows:
 
Year Ended
 
Year Ended
 
December 31, 2017
 
December 31, 2016
 
As Reported
 
As Restated
 
As Reported
 
As Restated
 
(In millions)
Consolidated Statements of Operations:
 
 
 
 
 
 
 
Income tax benefit (expense)
$
53.2

 
$
204.6

 
$
(1,055.2
)
 
$
(1,454.3
)
Net income (loss)
$
1,436.4

 
$
1,587.8

 
$
1,998.9

 
$
1,599.8

Net income (loss) attributable to Molson Coors Brewing Company
$
1,414.2

 
$
1,565.6

 
$
1,993.0

 
$
1,593.9

Basic net income (loss) attributable to Molson Coors Brewing Company per share
$
6.57

 
$
7.27

 
$
9.40

 
$
7.52

Diluted net income (loss) attributable to Molson Coors Brewing Company per share
$
6.53

 
$
7.23

 
$
9.34

 
$
7.47

 
Year Ended
 
Year Ended
 
December 31, 2017
 
December 31, 2016
 
As Reported
 
As Restated
 
As Reported
 
As Restated
 
(In millions)
Consolidated Statements of Comprehensive Income:
 
 
 
 
 
 
 
Net income (loss) including noncontrolling interests
$
1,436.4

 
$
1,587.8

 
$
1,998.9

 
$
1,599.8

Comprehensive income (loss)
$
2,150.7

 
$
2,302.1

 
$
2,128.3

 
$
1,729.2

Comprehensive income (loss) attributable to Molson Coors Brewing Company
$
2,126.0

 
$
2,277.4

 
$
2,125.3

 
$
1,726.2

 
As of
 
As of
 
December 31, 2017
 
December 31, 2016
 
As Reported
 
As Restated
 
As Reported
 
As Restated
 
(In millions)
Consolidated Balance Sheets:
 
 
 
 
 
 
 
Deferred tax liabilities
$
1,648.6

 
$
1,896.3

 
$
1,699.0

 
$
2,098.1

Total liabilities
$
16,811.9

 
$
17,059.6

 
$
17,719.8

 
$
18,118.9

Retained earnings
$
7,206.1

 
$
6,958.4

 
$
6,145.3

 
$
5,746.2

Total Molson Coors Brewing Company stockholders' equity
$
13,226.1

 
$
12,978.4

 
$
11,418.7

 
$
11,019.6

Total equity
$
13,435.0

 
$
13,187.3

 
$
11,621.7

 
$
11,222.6

 
Year Ended
 
Year Ended
 
December 31, 2017
 
December 31, 2016
 
As Reported
 
As Restated
 
As Reported
 
As Restated
 
(In millions)
Consolidated Statements of Cash Flows:
 
 
 
 
 
 
Net income (loss) including noncontrolling interests
$
1,436.4

 
$
1,587.8

 
$
1,998.9

 
$
1,599.8

Income tax (benefit) expense
$
(53.2
)
 
$
(204.6
)
 
$
1,055.2

 
$
1,454.3


The impacts of the restatement have been reflected throughout the financial statements, including the applicable footnotes, as appropriate.
Revenue Recognition
We account for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, which we adopted on January 1, 2018, using the modified retrospective transition approach (see Note 2, "New Accounting Pronouncements" for impacts of adoption).
Our net sales represent the sale of beer and other malt beverages (including adjacencies, such as cider and hard soda), net of excise tax. Sales are stated net of incentives, discounts and returns. Sales of products are for cash or otherwise agreed upon credit terms. Our payment terms vary by location and customer, however, the time period between when revenue is recognized and when payment is due is not significant. Our revenue generating activities have a single performance obligation and are recognized at the point in time when control transfers and our obligation has been fulfilled, which is when the related goods are shipped or delivered to the customer, depending upon the method of distribution and shipping terms. Where our products are sold under consignment arrangements, revenue is not recognized until control has transferred, which is when the product is sold to the end customer. Revenue is measured as the amount of consideration we expect to receive in exchange for the sale of our product. The cost of various programs, such as price promotions, rebates and coupons are treated as a reduction of sales. In certain of our markets, we make cash payments to customers such as slotting or listing fees, or payments for other marketing or promotional activities. These cash payments are recorded as a reduction of revenue unless we receive a distinct good or service as defined under ASC 606. Specifically, a good or service is considered distinct when it is separately identifiable from other promises in the contract, we receive a benefit from the good or service, and the benefit is separable from the sale of our product to the customer.
Certain payments made to customers are conditional on the achievement of volume targets, marketing commitments, or both. If paid in advance, we record such payments as prepayments and amortize them over the relevant period to which the customer commitment is made (generally up to five years). When the payment is not for a distinct good or service, or fair value cannot be reasonably estimated, the amortization of the prepayment or the cost as incurred is recorded as a reduction of revenue. Where a distinct good or service is received and fair value can be reasonably estimated, the cost is included as marketing, general and administrative expenses. The amounts deferred are reassessed regularly for recoverability over the contract period and are impaired where there is objective evidence that the benefits will not be realized or the asset is otherwise not recoverable. Separately, as discussed below, we analyze whether these advance payments contain a significant financing component for potential adjustment to the transaction price.
Our primary revenue generating activity represents the sale of beer and other malt beverages to customers, including both domestic and exported product sales. Our customer could be a distributor, retail or on-premise outlet, depending on the market. The majority of our revenues are generated from brands that we own and brew ourselves, however, we also import or brew and sell certain non-owned partner brands under licensing and related arrangements. In addition, primarily in the U.K., as well as certain other countries in our Europe segment, we sell other beverage companies' products to on-premise customers to provide them with a full range of products for their retail outlets. We refer to this as the "factored brand business." Sales from this business are included in our net sales and cost of goods sold when ultimately sold. In the factored brand business, we normally purchase inventory, which includes excise taxes charged by the vendor, take orders from customers for such brands, negotiate with the customers on pricing and invoice customers for the product and related costs of delivery. In addition, we incur the risk of loss at times we are in possession of the inventory and for the receivables due from the customers. Revenues for owned brands, partner and imported brands, as well as factored brands are recognized at the point in time when control is transferred to the customer as discussed above.
Other Revenue Generating Activities
We contract manufacture for other brewers in some of our markets. These contractual agreements require us to brew, package and ship certain brands to these brewers, who then sell the products to their own customers in their respective markets. Revenues under contract brewing arrangements are recognized when our obligation related to the finished product is fulfilled and control of the product transfers to these other brewers.
We also have licensing agreements with third party partners who brew and distribute our products in various markets across our segments. Under these agreements, we are compensated based on the amount of products sold by our partners in these markets at an agreed upon royalty rate or profit percentage. We apply the sales-based royalty practical expedient to these licensing arrangements and recognize revenue as product is sold by our partners at the agreed upon rate.
We have evaluated these other revenue generating activities under the disaggregation disclosure criteria outlined within the guidance and concluded that these other revenue generating activities are immaterial for separate disclosure. See Note 3, "Segment Reporting," for disclosure of revenues by geographic segment.
Variable Consideration
Our revenue generating activities include variable consideration which is recorded as a reduction of the transaction price based upon expected amounts at the time revenue for the corresponding product sale is recognized. For example, customer promotional discount programs are entered into with certain distributors for certain periods of time. The amount ultimately reimbursed to distributors is determined based upon agreed-upon promotional discounts which are applied to distributors' sales to retailers. Other common forms of variable consideration include volume rebates for meeting established sales targets, and coupons and mail-in rebates offered to the end consumer. The determination of the reduction of the transaction price for variable consideration requires that we make certain estimates and assumptions that affect the timing and amounts of revenue and liabilities recorded. We estimate this variable consideration, including analyzing for a potential constraint on variable consideration, by taking into account factors such as the nature of the promotional activity, historical information and current trends, availability of actual results, and expectations of customer and consumer behavior.
We do not have standard terms that permit return of product; however, in certain markets where returns occur we estimate the amount of returns as variable consideration based on historical return experience and adjust our revenue accordingly. Products that do not meet our high quality standards are returned by the customer or recalled and destroyed and are recorded as a reduction of revenue. The reversal of revenue is recorded upon determination that the product will be recalled and destroyed. We estimate the costs required to facilitate product returns and record them in cost of goods sold as required.
During the twelve months ended December 31, 2018, adjustments to revenue from performance obligations satisfied in the prior period due to changes in estimates in variable consideration were immaterial.
Significant Financing Component and Costs to Obtain Contracts
In certain of our businesses where such practices are legally permitted, we make loans or advanced payments to retail outlets that sell our brands. For arrangements that do not span greater than one year, we apply the practical expedient available under ASC 606 and do not adjust the transaction price for the effects of a potential significant financing component. We further analyze arrangements that span greater than one year on an ongoing basis to determine whether a significant financing component exists. No such arrangements existed during the twelve months ended December 31, 2018.
Advance payments to customers, where legally permitted, are deferred and amortized as a reduction to revenue over the expected period of benefit and tested for recoverability as appropriate. All other costs to obtain contracts and fulfill are expensed as incurred based on the nature, significance and expected benefit of these costs relative to the contract.
Contract Assets and Liabilities
We continually evaluate whether our revenue generating activities and advanced payment arrangements with customers result in the recognition of contract assets or liabilities. No such assets or liabilities existed as of December 31, 2018, or December 31, 2017. Separately, trade accounts receivable, including affiliate receivables, approximates receivables from contracts with customers.
Shipping and Handling
Freight costs billed to customers for shipping and handling are recorded as revenue. Shipping and handling expense related to costs incurred to deliver product are recognized within cost of goods sold. We account for shipping and handling activities that occur after control has transferred as a fulfillment cost as opposed to a separate performance obligation, and the costs of shipping and handling are recognized concurrently with the related revenue.
Excise Taxes
Excise taxes remitted to tax authorities are government-imposed excise taxes on beer. Excise taxes are shown in a separate line item in the consolidated statements of operations as a reduction of sales. Excise taxes are recognized as a current liability within accounts payable and other current liabilities on the consolidated balance sheets, with the liability subsequently reduced when the taxes are remitted to the tax authority.
Cost of Goods Sold
Our cost of goods sold includes costs we incur to make and ship beer and other malt beverages. These costs include brewing materials, such as barley, hops and various grains. Packaging materials, such as glass bottles, aluminum cans, cardboard and paperboard are also included in our cost of goods sold. Additionally, our cost of goods sold include both direct and indirect labor, shipping and handling including freight costs, utilities, maintenance costs, warehousing costs, purchasing and receiving costs, depreciation, promotional packaging, other manufacturing overheads and costs to purchase factored and other non-owned brands from suppliers, as well as the estimated cost to facilitate product returns.
Marketing, General and Administrative Expenses
Our marketing, general and administrative expenses include media advertising (television, radio, digital, print), tactical advertising (signs, banners, point-of-sale materials) and promotion costs on both local and national levels within our operating segments. The creative portion of our advertising activities is expensed as incurred. Production costs of advertising and promotional materials are expensed when the advertising is first run. Marketing, general and administrative expenses also include integration costs of $38.8 million and $70.6 million for 2018 and 2017, respectively, and acquisition and integration costs of $108.4 million for 2016 associated with the Acquisition.
This classification includes general and administrative costs for functions such as finance, legal, human resources and information technology, along with acquisition and integration costs as noted above, which consist primarily of labor and outside services, as well as bad debt expense related to our allowance for doubtful accounts. Unless capitalization is allowed or required by U.S. GAAP, legal costs are expensed when incurred. These costs also include our marketing and sales organizations, including labor and other overheads. This line item additionally includes amortization costs associated with intangible assets, as well as certain depreciation costs related to non-production equipment and share-based compensation.
Share-based compensation is recognized using a straight-line method over the vesting period of the awards. We include estimated forfeitures expected to occur when calculating share-based compensation expense. Our share-based compensation plan and the awards within it contain provisions that accelerate vesting of awards upon change in control, retirement, disability or death of eligible employees and directors. Our share-based awards are considered vested when the employee's retention of the award is no longer contingent on providing service, which for certain awards can result in immediate recognition for awards granted to retirement-eligible individuals or accelerated recognition for awards granted to individuals that will become retirement eligible within the stated vesting period. Also, if less than the stated vesting period, we recognize these costs over the period from the grant date to the date retirement eligibility is achieved.
Special Items
Our special items represent charges incurred or benefits realized 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; specifically, such items are considered to be one of the following:
infrequent or unusual items,
impairment or asset abandonment-related losses,
restructuring charges and other atypical employee-related costs, or
fees on termination of significant operating agreements and gains (losses) on disposal of investments.
The items classified as special items are not necessarily non-recurring, however, they are deemed to be incremental to income earned or costs incurred by the company in conducting normal operations, and therefore are presented separately from other components of operating income.
Equity Income in MillerCoors
On October 11, 2016, following the close of the Acquisition, MillerCoors became a wholly-owned subsidiary of MCBC and as a result, MCBC owns 100% of the outstanding equity and voting interests of MillerCoors. Prior to October 11, 2016, MCBC's equity income in MillerCoors represented our proportionate share for the period of the net income of our investment in MillerCoors accounted for under the equity method. This amount reflected adjustments to eliminate intercompany gains and losses, and to amortize, if appropriate, any difference between cost and underlying equity in net assets upon the formation of MillerCoors.
Interest Expense, net
Our interest costs are associated with borrowings to finance our operations and acquisitions. Interest earned on our cash and cash equivalents across our business is recorded as interest income. Changes in estimates (if any) to mandatorily redeemable noncontrolling interest liabilities, which are presented within other current and non-current liabilities on the consolidated balance sheet, are also recognized within interest expense.
We capitalize interest cost as a part of the original cost of acquiring certain fixed assets if the cost of the capital expenditure and the expected time to complete the project are considered significant.
Other Income (Expense)
Our other income (expense) classification primarily includes gains and losses associated with activities not directly related to brewing and selling beer and other malt beverages. For instance, aggregate unrealized and realized foreign exchange gains and losses resulting from remeasurement and settlement of foreign-denominated monetary assets and liabilities, as well as certain gains or losses on sales of non-operating assets and the mark-to-market activity associated with warrants are classified in this line item. These gains and losses are reported in the operating segment in which they occur; however, foreign exchange gains and losses on intercompany balances related to financing and other treasury-related activities are reported within the Corporate segment. The initial recording of foreign-denominated transactions are classified based on the nature of the transaction, with the unrealized or realized foreign exchange gains or losses resulting from the subsequent remeasurement of the monetary asset or liability, and its ultimate settlement, classified in other income (expense).
Discontinued Operations
We no longer present the activity related to foreign exchange movements nor the liabilities associated with our indemnities resulting from the historical sale of the Kaiser business, as discussed in Note 18, "Commitments and Contingencies," within discontinued operations and have accordingly reclassified the activity into other income within continuing operations of the consolidated statements of operations, and the liabilities into other current and long-term liabilities within the consolidated balance sheets. This change has been applied retrospectively and prospectively. As a result, we reclassified a foreign exchange gain of $1.5 million and a loss of $2.8 million from discontinued operations to other income (expense), net for the fiscal years 2017 and 2016, respectively.
Income Taxes
Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of our assets, liabilities, and certain unrecognized gains and losses recorded in accumulated other comprehensive income (loss). We apply the intraperiod tax allocation rules to allocate our provision for income taxes between continuing operations and other categories of earnings, such as other comprehensive income (loss), when we meet the criteria prescribed by U.S. GAAP.
We provide for taxes that may be payable if undistributed earnings of overseas subsidiaries were to be remitted to the U.S., except for those earnings that we consider to be permanently reinvested. However, we continue to monitor the impacts of the 2017 Tax Act, as defined in Note 6, "Income Tax," including yet to be issued regulations and interpretations, on the tax consequences of future repatriations. Future sales of foreign subsidiaries are not exempt from capital gains tax in the U.S. under the 2017 Tax Act. However, we have no plans to dispose of any of our foreign subsidiaries and are not recording deferred taxes on outside basis differences in foreign subsidiaries for the sale of a foreign subsidiary.
The tax benefit from an uncertain tax position is recognized only if it is more likely than not that the tax position will be sustained based on its technical merits. We measure and record the tax benefits from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Interest, penalties and offsetting positions related to unrecognized tax benefits are recognized as a component of income tax expense. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized.
We account for the tax effects of global intangible low-taxed income (“GILTI”) as a component of income tax expense in the period the tax arises, to the extent applicable.
Other Comprehensive Income (Loss)
OCI represents income and losses for the reporting period, including the related tax impacts, which are excluded from net income (loss) and recognized directly within AOCI as a component of equity. OCI also includes amounts reclassified to income during the reporting period that were previously recognized within AOCI. Amounts remaining within AOCI are expected to be reclassified out of AOCI in the future, at which point they will be recognized within the consolidated statement of operations as a component of net income (loss). We recognize OCI related to the translation of assets and liabilities of our foreign subsidiaries which are denominated in currencies other than USD, unrealized gains and losses on the effective portion of our derivatives designated in cash flow and net investment hedging relationships, actuarial gains and losses and prior service costs related to our pension and other post-retirement benefit plans, as well as our proportionate share of our equity method investments' OCI. Additionally, we do not have the expectation or intent to cash settle certain of our intercompany note receivable and note payable positions in the foreseeable future; therefore, the remeasurement of these instruments is recorded as a component of foreign currency translation adjustments within OCI.
Earnings Per Share
Basic EPS was computed using the weighted-average number of shares of common stock outstanding during the period. Diluted EPS includes the additional dilutive effect of our potentially dilutive securities, which include RSUs, DSUs, PSUs, and stock options. The dilutive effects of our potentially dilutive securities are calculated using the treasury stock method. Our calculation of weighted-average shares includes Class A common stock and Class B common stock, and Class A exchangeable shares and Class B exchangeable shares. All classes of stock have in effect the same dividend rights and share equitably in undistributed earnings. Holders of Class A common stock receive dividends only to the extent dividends are declared and paid to holders of Class B common stock. See Note 8, "Stockholders' Equity" for further discussion of the Class A common stock and Class B common stock and Class A exchangeable shares and Class B exchangeable shares. We have no unvested outstanding equity share awards that contain non-forfeitable rights to dividends.
Cash and Cash Equivalents
Cash consists of cash on hand and bank deposits. Cash equivalents represent highly liquid investments with original maturities of three months or less. Our cash deposits are maintained with multiple, reputable financial institutions.
Supplementary cash flow 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. Additionally, the initial recognition of the warrants discussed in Note 16, “Derivative Instruments and Hedging Activities” represents a non-cash financing activity in 2018. In 2016, total Acquisition consideration includes non-cash investing activity related to the issuance of replacement share-based compensation awards, as well as the elimination of a net payable owed by MCBC to MillerCoors.
During 2018 and 2017, we had non-cash activities related to the recognition of capital leases, and during 2017, we also had non-cash activities related to the acquisition of a business. We also had non-cash activities related to capital expenditures incurred but not yet paid during each period presented. This aggregate non-cash activity totaled $236.5 million, $265.5 million and $177.4 million, for 2018, 2017 and 2016, respectively.
There was no other significant non-cash activity in 2018, 2017 and 2016 other than mentioned above. See Note 4, "Acquisition and Investments," Note 10, "Goodwill and Intangible Assets," Note 13, "Share-Based Payments," and Note 16, “Derivative Instruments and Hedging Activities” for further discussion.
Accounts Receivable and Notes Receivable
We record accounts and notes receivable at net realizable value. This carrying value includes an appropriate allowance for estimated uncollectible amounts to reflect any loss anticipated on the accounts and notes receivable balances. We calculate this allowance based on our country-specific history of write-offs, level of past-due accounts based on the contractual terms of the receivables and our relationships with and the economic status of our customers, which may be impacted by current macroeconomic and regulatory factors specific to the country of origin.
In the U.K., loans are extended to a portion of the retail outlets that sell our brands. An allowance for credit losses is maintained to provide for loan losses deemed to be probable related to specifically identified loans and for losses in the loan portfolio that have been incurred at the balance sheet date. We establish our allowance through a provision for loan losses charged against earnings and recorded in marketing, general and administrative expenses. Loan balances that are written off are recorded against the allowance as a write-off. Activity within the allowance for credit losses was immaterial for fiscal years 2018, 2017 and 2016.
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out ("FIFO") method. We regularly assess the shelf-life of our inventories and reserve for those inventories when it becomes apparent the product will not be sold within our freshness specifications.
Other current assets
Other current assets include prepaid assets, maintenance and operating supplies, promotion materials and derivative assets that are expected to be recognized or realized within the next 12 months. Maintenance and operating supplies include our inventories of spare parts, which are kept on hand for repairs and maintenance of machinery and equipment. The majority of spare parts within our business include motors, fillers and other components that are required to maintain a normal level of production in the event that expected maintenance and/or repairs are required. These parts are inventoried within current assets as they are reasonably expected to be used during the normal operating cycle of the business and are reserved for excess and obsolescence, as appropriate. The allowance for obsolete supplies was $9.2 million and $7.4 million as of December 31, 2018, and December 31, 2017, respectively.
Properties
Properties are stated at original cost less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets, which are reviewed periodically and have the following ranges: buildings and improvements: 20-40 years; machinery and equipment: 3-25 years; furniture and fixtures: 3-10 years; returnable containers: 2-15 years; and software: 3-5 years. Land is not depreciated, and construction in progress is not depreciated until ready for service. Costs of enhancements or modifications that substantially extend the capacity or useful life of an asset are capitalized and depreciated accordingly. Ordinary repairs and maintenance are expensed as incurred. When property is retired or otherwise disposed of, the cost and accumulated depreciation are removed from our consolidated balance sheets and the resulting gain or loss, if any, is reflected in our consolidated statements of operations. Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset (or asset group) may not be recoverable.
Returnable containers are recorded at acquisition cost and consist of returnable bottles, kegs, pallets and crates that are both in our direct control within our breweries, warehouses and distribution facilities and those that we indirectly control in the market through our agreements with our customers and other brewers and for which a deposit is received. The deposits received on our returnable containers in the market are recorded as deposit liabilities, included as current liabilities within accounts payable and other current liabilities in the consolidated balance sheets. We estimate that the loss, breakage and deterioration of our returnable containers is comparable to the depreciation calculated on an estimated useful life of up to 4 years for bottles, 5 years for pallets, 7 years for crates, and 15 years for returnable kegs. We also own and maintain other equipment in the market related to delivery of our products to end consumers, for example on-premise dispense equipment and refrigeration units. This equipment is recorded at acquisition cost and depreciated over lives of up to 7 years, depending on the market, reflecting the use of the equipment, as well as the loss and deterioration of the asset.
The costs of acquiring or developing internal-use computer software, including directly-related payroll costs for internal resources, are capitalized and classified within properties. Implementation costs incurred in hosting arrangements that are service contracts are also capitalized within properties. Software maintenance and training costs are expensed in the period incurred.
Properties held under capital lease are depreciated using the straight-line method over the estimated useful life or the lease term, whichever is shorter, and the related depreciation is included in depreciation expense. Capital lease assets for which ownership is transferred at the end of the lease, or there is a bargain purchase option, are amortized over the useful life that would be assigned if the asset were owned.
Goodwill and Other Intangible Assets
Goodwill is allocated to the reporting unit in which the business that created the goodwill resides. A reporting unit is an operating segment, or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management. As of the date of our annual impairment test, performed as of October 1, the operations in each of the specific regions within our U.S., Canada, Europe and International segments are considered components based on the availability of discrete financial information and the regular review by segment management. We have concluded that the components within the U.S., Canada and Europe segments each meet the criteria as having similar economic characteristics and therefore have aggregated these components into the U.S., Canada and Europe reporting units, respectively. Additionally, we determined that the components within our International segment do not meet the criteria for aggregation with the exception of the operations of our India businesses, which constitute a separate reporting unit. As required, we evaluate the carrying value of our goodwill and indefinite-lived intangible assets for impairment at the reporting unit level at least annually or when an interim triggering event occurs that would indicate that impairment may have taken place. Our annual test is performed as of the first day of our fiscal fourth quarter. We continuously monitor the performance of our other definite-lived intangible assets and evaluate for impairment when evidence exists that certain events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Significant judgments and assumptions are required in such impairment evaluations. Definite-lived intangible assets are stated at cost less accumulated amortization. Amortization is recorded using the straight-line method over the estimated lives of the assets as this approximates the pattern in which the assets economic benefits are consumed.
Equity Method Investments
We apply the equity method of accounting to 20% to 50% owned investments where we exercise significant influence or VIEs for which we are not the primary beneficiary. We use the cumulative earnings approach for determining cash flow presentation of cash distributions received from equity method investees. Distributions received are included in our consolidated statements of cash flows as operating activities, unless the cumulative distributions exceed our portion of the cumulative equity in the net earnings of the equity method investment, in which case the excess distributions are deemed to be returns of the investment and are classified as investing activities in our consolidated statements of cash flows. Equity method investments as of December 31, 2018, include Brewers' Retail, Inc. ("BRI") and Brewers' Distributor Ltd. ("BDL") in Canada.
There are no related parties that own interests in our equity method investments as of December 31, 2018.
Derivative Hedging Instruments
We use derivatives as part of our normal business operations to manage our exposure to fluctuations in interest rates, foreign currency exchange, commodity prices, production and packaging material costs and for other strategic purposes related to our core business. We enter into derivatives for risk management purposes only, including derivatives designated in hedge accounting relationships as well as those derivatives utilized as economic hedges. We do not enter into derivatives for trading or speculative purposes. We recognize our derivatives on the consolidated balance sheets as assets or liabilities at fair value and are classified in either current or non-current assets or liabilities based on each contract's respective unrealized gain or loss position and each contract's respective maturity. Our policy is to present all derivative balances on a gross basis, without regard to counterparty master netting agreements or similar arrangements. Further, our current derivative agreements do not allow us to net positions with the same counterparty and therefore, we present our derivative positions gross in our consolidated balance sheets.
Changes in fair values of outstanding cash flow and net investment hedges are recorded in OCI, until earnings are affected by the variability of cash flows of the underlying hedged item or the sale of the underlying net investment, respectively. Effective cash flow hedges offset the gains or losses recognized on the underlying exposure in the consolidated statements of operations, or for net investment hedges, the foreign exchange translation gain or loss recognized in AOCI. Changes in fair value of outstanding fair value hedges and the offsetting changes in fair value of the hedged item are recognized in earnings. Changes in fair value of the derivative attributable to components allowed to be excluded from the assessment of hedge effectiveness are deferred in AOCI and recognized in earnings over the life of the hedge.
We record realized gains and losses from derivative instruments in the same financial statement line item as the hedged item/forecasted transaction. Changes in unrealized gains and losses for derivatives not designated in a hedge accounting relationship are recorded directly in earnings each period and are also recorded in the same financial statement line item as the hedged item/forecasted transaction. Cash flows from the settlement of derivatives, including both economic hedges and those designated in hedge accounting relationships, appear in the consolidated statements of cash flows in the same categories as the cash flows of the hedged item.
In accordance with authoritative accounting guidance, we do not record the fair value of derivatives for which we have elected the Normal Purchase Normal Sale ("NPNS") exemption. We account for these contracts on an accrual basis, recording realized settlements related to these contracts in the same financial statement line items as the corresponding transaction.
Pension and Postretirement Benefits
We maintain retirement plans for the majority of our employees. We offer different types of plans within each segment, including defined benefit plans, defined contribution plans and OPEB plans. Each plan is managed locally and in accordance with respective local laws and regulations. Our equity investments, BRI and BDL, maintain defined benefit, defined contribution and postretirement benefit plans as well.
We recognize the underfunded or overfunded status of a defined benefit postretirement plan as an asset or liability in the consolidated balance sheets and recognize changes in the funded status in the year in which the changes occur within OCI. The funded status of a plan, measured as the difference between the fair value of plan assets and the projected benefit obligation, and the related net periodic pension cost are calculated using a number of significant actuarial assumptions. Changes in net periodic pension cost and funding status may occur in the future due to changes in these assumptions.
We use the fair value approach to calculate the market-related value of pension plan assets used to determine net periodic pension cost, which includes measuring the market-related value of plan assets at fair value for purposes of determining the expected return on plan assets and amount of gain or loss subject to amortization.
Projected benefit obligation is the actuarial present value as of the measurement date of all benefits attributed by the plan benefit formula to employee service rendered before the measurement date using assumptions as to future compensation levels and years of service if the plan benefit formula is based on those future compensation levels and years of service. Accumulated benefit obligation is the actuarial present value of benefits (whether vested or unvested) attributed by the plan benefit formula to employee service rendered before the measurement date and based on employee service and compensation, if applicable, prior to that date. Accumulated benefit obligation differs from projected benefit obligation in that it includes no assumption about future compensation levels and years of service.
We employ the corridor approach for determining each plan's potential amortization from AOCI of deferred gains and losses, which occur when actual experience differs from estimates, into our net periodic pension and postretirement benefit cost. This approach defines the "corridor" as the greater of 10% of the projected benefit obligation or 10% of the market-related value of plan assets and requires amortization of the excess net gain or loss that exceeds the corridor over the average remaining service periods of active plan participants. For plans closed to new entrants and the future accrual of benefits, the average remaining life expectancy of all plan participants (including retirees) is used.
Fair Value Measurements
The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable and other current liabilities approximate fair value as recorded due to the short-term nature of these instruments. In addition, the carrying amounts of our trade loan receivables, net of allowances, approximate fair value. The fair value of derivatives is estimated by discounting the estimated future cash flows utilizing observable market interest, foreign exchange and commodity rates adjusted for non-performance credit risk associated with our counterparties (assets) or with MCBC (liabilities). Additionally, the fair value of warrants is estimated using the Black-Scholes valuation model. See Note 16, "Derivative Instruments and Hedging Activities" for additional information. Based on current market rates for similar instruments, the fair value of long-term debt is presented in Note 11, "Debt."
U.S. GAAP guidance for fair value includes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). Our financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy.
The three levels of the hierarchy are as follows:
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.
Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are less active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from, or corroborated by, observable market data by correlation or other means (market corroborated inputs).
Level 3—Unobservable inputs that reflect the assumptions that we believe market participants would use in pricing the asset or liability. We develop these inputs based on the best information available, including our own data.
Foreign 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 OCI. Gains and losses from foreign currency transactions are included in earnings for the period. Revenue and expenses are translated at the average exchange rates during the period.
v3.10.0.1
New Accounting Pronouncements
12 Months Ended
Dec. 31, 2018
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]  
New Accounting Pronouncements
In March 2017, the FASB issued authoritative guidance intended to improve the consistency, transparency and usefulness of financial information related to defined benefit pension or other postretirement plans. Under the new guidance, an employer must disaggregate the service cost component from the other components of net benefit cost within the statements of operations. Specifically, the new guidance requires us to report only the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period; while the other components of net benefit cost are now presented in the consolidated statements of operations separately from the service cost component and outside of operating income. The amendments in this update also allow only the service cost component to be eligible for capitalization when applicable. We have also determined that only service cost will be reported within each operating segment and all other components will be reported within the Corporate segment. The guidance related to the income statement presentation of service costs and other pension and postretirement benefit costs is applied retrospectively, while the capitalization of service costs component is applied prospectively. We adopted this guidance as of January 1, 2018, which was a classification adjustment only and had no impact to our consolidated net income.
The following table shows the (increase) decrease for the respective line item within the consolidated statement of operations for consolidated and segment reporting amounts for the year ended December 31, 2017. There was no impact to the International segment in 2017.
 
Corporate
 
Europe
 
U.S.
 
Canada
 
Consolidated
Cost of goods sold
$

 
$
(27.5
)
 
$
7.3

 
$
0.7

 
$
(19.5
)
Marketing, general and administrative expenses

 
(18.6
)
 
(0.6
)
 
(0.4
)
 
(19.6
)
Special items, net

 

 
(5.4
)
 
(2.9
)
 
(8.3
)
Other pension and postretirement benefits (costs), net
47.4

 

 

 

 
47.4

Total
$
47.4

 
$
(46.1
)
 
$
1.3

 
$
(2.6
)
 
$


The following table shows the (increase) decrease for the respective line item within the consolidated statement of operations for consolidated and segment reporting amounts for the year ended December 31, 2016.
 
Corporate
 
International
 
Europe
 
U.S.
 
Canada
 
Consolidated
Cost of goods sold
$

 
$

 
$
(7.3
)
 
$
(1.0
)
 
$
(3.2
)
 
$
(11.5
)
Marketing, general and administrative expenses
0.1

 
0.1

 
(4.8
)
 
(1.4
)
 
(1.4
)
 
(7.4
)
Special items, net

 

 

 

 
10.5

 
10.5

Other pension and postretirement benefits (costs), net
8.4

 

 

 

 

 
8.4

Total
$
8.5

 
$
0.1

 
$
(12.1
)
 
$
(2.4
)
 
$
5.9

 
$


Revenue Recognition
In May 2014, the FASB issued authoritative guidance related to new accounting requirements for the recognition of revenue from contracts with customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for the goods or services.
We adopted this guidance and related amendments as of January 1, 2018, applying the modified retrospective transition approach to all contracts. Based on our comprehensive assessment of the new guidance, including our evaluation of the five-step approach outlined within the guidance, we concluded that the adoption did not have a significant impact to our core revenue generating activities. However, the adoption resulted in a change in presentation of certain cash payments made to customers as well as the timing of recognition of certain promotional discounts. Specifically, certain cash payments to customers were previously recorded within marketing, general and administrative expenses in the consolidated statements of operations. Upon the adoption of the new guidance, many of these cash payments did not meet the specific criteria within the new guidance of providing a “distinct” good or service, and therefore, were required to be presented as a reduction of revenue. The impact of this change resulted in a reduction of revenue and marketing, general and administrative expenses by approximately $60 million during 2018, primarily within our Canada segment, with no impact to net income. Furthermore, upon adoption of the new guidance, certain of our promotional discounts which are deemed variable consideration under the new guidance, are now recognized at the time of the related shipment of product, which is earlier than recognized under historical guidance. This change in recognition timing has shifted financial statement recognition primarily amongst quarters, however, the full-year impact was not significant to our financial results. We also evaluated the requirements of the new guidance on our other revenue generating activities such as contract brewing and license arrangements, and concluded that no changes to our historical accounting treatment was required.
As a result of the cumulative impact of adopting the new guidance, we recorded a reduction to opening retained earnings of $27.8 million as of January 1, 2018, with an offsetting increase primarily within accounts payable and other current liabilities and the related tax effects, related primarily to the accelerated recognition of certain promotional discounts. Results for reporting periods beginning after January 1, 2018, are presented under the new guidance, while prior period amounts have not been adjusted and continue to be reported in accordance with historical accounting guidance. The following tables provide a comparison of our current period results of operations and financial position under the new guidance, versus our financial statements if the historical guidance had continued to be applied:
 
Year ended December 31, 2018
 
Under Historical Guidance
 
As Reported Under New Guidance
 
Effect of Change
 
(In millions, except per share data)
Consolidated Statement of Operations:
 
Sales
$
13,393.5

 
$
13,338.0

 
$
(55.5
)
Excise taxes
(2,568.4
)
 
(2,568.4
)
 

Net sales
10,825.1

 
10,769.6

 
(55.5
)
Cost of goods sold
(6,584.8
)
 
(6,584.8
)
 

Gross profit
4,240.3

 
4,184.8

 
(55.5
)
Marketing, general and administrative expenses
(2,862.4
)
 
(2,802.7
)
 
59.7

Special items, net
249.7

 
249.7

 

Operating income (loss)
1,627.6

 
1,631.8

 
4.2

Interest expense
(306.2
)
 
(306.2
)
 

Interest income
11.4

 
8.0

 
(3.4
)
Other pension and postretirement benefits (costs), net
38.2

 
38.2

 

Other income (expense), net
(12.0
)
 
(12.0
)
 

Income (loss) before income taxes
1,359.0

 
1,359.8

 
0.8

Income tax benefit (expense)
(225.1
)
 
(225.2
)
 
(0.1
)
Net income (loss)
1,133.9

 
1,134.6

 
0.7

Net (income) loss attributable to noncontrolling interests
(18.1
)
 
(18.1
)
 

Net income (loss) attributable to MCBC
$
1,115.8

 
$
1,116.5

 
$
0.7

Basic net income (loss) attributable to MCBC per share
$
5.17

 
$
5.17

 
$

Diluted net income (loss) attributable to MCBC per share
$
5.15

 
$
5.15

 
$

 
As of December 31, 2018
 
Under Historical Guidance
 
As Reported Under New Guidance
 
Effect of Change
 
(In millions)
Consolidated Balance Sheet:
 
Assets
 
 
 
 
 
Trade accounts receivable, net
$
735.9

 
$
736.0

 
$
0.1

Other current assets, net
$
242.4

 
$
245.6

 
$
3.2

Liabilities and equity
 
 
 
 
 
Accounts payable and other current liabilities
$
2,667.4

 
$
2,706.4

 
$
39.0

Deferred tax liabilities
$
2,137.7

 
$
2,128.9

 
$
(8.8
)
Retained earnings
$
7,720.0

 
$
7,692.9

 
$
(27.1
)
Accumulated other comprehensive income (loss)

$
(1,150.2
)
 
$
(1,150.0
)
 
$
0.2


These changes are primarily driven by the reclassification of certain cash payments to customers from marketing, general and administrative expenses to a reduction of revenue, as well as the change in the timing of recognition of certain promotional discounts and cash payments to customers. This adoption had no impact to our cash flows from operating, investing or financing activities. See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" for further details on our significant accounting policies for revenue recognition pursuant to the new guidance.
Financial and Commodity Risks
In August 2017, the FASB issued authoritative guidance intended to refine and expand hedge accounting for both financial and commodity risks. The revised guidance will create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes. In addition, this guidance makes certain targeted improvements to simplify the application of hedge accounting guidance. This guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. We early adopted this guidance during the second quarter of 2018. All transition requirements have been applied to hedging relationships existing on the date of adoption and the effect of the adoption is reflected as of January 1, 2018. The adoption of this guidance did not result in a cumulative adjustment to the opening balance of retained earnings as of January 1, 2018, and did not have any other material effect on our results of operations, financial position or cash flows. All required disclosures under the new guidance have been made in Note 16, "Derivative Instruments and Hedging Activities."

New Accounting Pronouncements Not Yet Adopted
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. This guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those annual periods, with early adoption permitted. We are currently evaluating the potential impact on our financial position, results of operations, and statement of cash flows upon adoption of this guidance, which will result in the change in presentation of capitalized implementation costs related to hosting arrangements from properties to other assets on the consolidated balance sheet, as well as the expense related to such costs no longer being classified as depreciation expense and cash flows related to those costs no longer being presented as investing activities.

In February 2018, the FASB issued authoritative guidance intended to improve the usefulness of financial information related to the enactment of the 2017 Tax Act, as defined in Note 6, "Income Tax." This guidance provides an option to reclassify from AOCI to retained earnings the stranded tax effects resulting from the change in the U.S. federal corporate income tax rate as a result of the 2017 Tax Act. This guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. We are currently evaluating the potential impact on our financial statements in order to determine whether to elect to make this reclassification upon adoption of this guidance.

In February 2016, the FASB issued authoritative guidance intended to increase transparency and comparability among organizations by requiring the recognition of lease assets and liabilities on the balance sheet and disclosure of key information about leasing arrangements. We will adopt this guidance and all related amendments applying the modified retrospective transition approach to all lease arrangements as of the effective date of adoption, January 1, 2019. Additionally, for existing leases as of the effective date, we will elect the package of practical expedients available at transition to not reassess the historical lease determination, lease classification and initial direct costs.

For operating leases, the adoption of this new guidance is currently expected to result in the recognition of right-of-use ("ROU") assets of between approximately $150 million and $160 million, and aggregate current and non-current lease liabilities of between approximately $160 million and $170 million, as of the effective date of adoption, including immaterial reclassifications of prepaid and deferred rent balances into ROU assets. Additionally, as a result of the cumulative impact of adopting the new guidance, we expect to record a net increase to opening retained earnings of between $30 million and $35 million as of January 1, 2019, with the offsetting impact within other assets, related to our share of the accelerated recognition of deferred gains on non-qualifying and other sale-leaseback transactions by an equity method investment within our Canada segment. We are in the process of finalizing this transition adjustment calculation, which will be completed during the first quarter of 2019. Additionally, while our accounting for finance leases will remain unchanged at adoption, we will prospectively change the presentation of finance lease liabilities within the consolidated balance sheets to be presented within current portion of long-term debt and short-term borrowings and long-term debt, as appropriate. The adoption of this guidance is not expected to impact our cash flows from operating, investing, or financing activities.
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 consolidated financial statements.
v3.10.0.1
Segment Reporting
12 Months Ended
Dec. 31, 2018
Segment Reporting [Abstract]  
Segment Reporting
Segment Reporting
Our reporting segments are based on the key geographic regions in which we operate, which are the basis on which our chief operating decision maker evaluates the performance of the business.
Reporting Segments
United States
The U.S. segment consists of our production, marketing and sales of our brands and other owned and licensed brands in the U.S. Prior to the completion of the Acquisition on October 11, 2016, MillerCoors was a limited liability company that we jointly owned with SABMiller and which operated in the U.S. and Puerto Rico. See Note 4, "Acquisition and Investments" for further discussion. Effective January 1, 2017, the results of the MillerCoors Puerto Rico business, which were previously reported as part of the U.S. segment, are reported within the International segment. We have not recast historical results for these changes on the basis of materiality.
Canada
The Canada segment consists of our production, marketing and sales of our brands and other owned and licensed brands in Canada. The Canada segment also includes BRI, our joint venture arrangement related to the distribution and retail sale of beer in Ontario, and BDL, our joint venture arrangement related to the distribution of beer in the western provinces. Both BRI and BDL are accounted for as equity method investments.
We have an agreement with Heineken N.V. ("Heineken") that grants us the right to import, market, distribute and sell Heineken products. Additionally, as a result of the Acquisition, beginning October 11, 2016, we have the right to brew or import, market, distribute and sell certain Miller brands in Canada. We also contract brew and package certain Labatt and Asahi brands for the U.S. market.
Europe
The Europe segment consists of our production, marketing and sales of our brands as well as a number of smaller regional brands in the U.K., the Republic of Ireland and Central Europe. As a result of the Acquisition, a portion of the operating results of the international Miller brand portfolio are reported in the Europe segment. Additionally, effective January 1, 2017, European markets including Sweden, Spain, Germany, Ukraine and Russia, which were previously reported under our International segment, are reported within our Europe segment. Our European business also has licensing agreements and distribution agreements with various other brewers.
International
The objective of the International segment is to grow and expand our business and brand portfolio in new and existing markets, including emerging markets, outside the U.S., Canada, and Europe segments. The International segment includes operations in Latin America (the Caribbean, Central America, Mexico and South America), Asia Pacific (Australia, India, Japan and South Korea) and South Africa and surrounding markets. International operates through a combination of export and license arrangements, in addition to our India business that produces, markets and sells our products and our Japan business that imports, markets and sells our and certain other third-party products. As a result of the Acquisition, effective January 1, 2017, European markets including Sweden, Spain, Germany, Ukraine and Russia, which were previously reported under our International segment, are reported within our Europe segment while the results of the MillerCoors Puerto Rico business, which were previously reported as part of the U.S. segment, are reported within the International segment.
Corporate
Corporate is not a reportable segment and primarily includes interest and certain other general and administrative costs that are not allocated to any of the operating segments. The majority of these corporate costs relate to worldwide administrative functions, such as corporate affairs, legal, human resources, information technology, finance, internal audit, insurance, ethics and compliance, and risk management, global growth, supply chain and commercial initiatives, as well as acquisition, integration and financing costs associated with the Acquisition. Additionally, Corporate includes the results of our water resources and energy operations in Colorado as well as 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.
Summarized Financial Information
No single customer accounted for more than 10% of our consolidated sales in 2018, 2017 or 2016. 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 in consolidation and, for fiscal year 2018 are U.S. segment sales of $104.5 million to our International segment and $19.0 million to our Canada segment, as well as approximately $12 million of Canada inter-segment sales to the U.S.
The following tables represent consolidated net sales, interest expense, interest income and reconciliations of amounts shown as income (loss) before income taxes to income (loss) attributable to MCBC. Income (loss) before income taxes includes the impact of special items; refer to Note 7, "Special Items" for further discussion. Income (loss) before income taxes for 2017 and 2016 has been adjusted to reflect the adoption of the new accounting pronouncement resulting in the reclassification of all non-service components of pension and other postretirement costs to Corporate as discussed in Note 2, "New Accounting Pronouncements." Additionally, various costs associated with the Acquisition, including its related financing, were recorded in 2018, 2017 and 2016; refer to Note 4, "Acquisition and Investments" for details.
 
Year ended December 31, 2018
 
U.S.
 
Canada
 
Europe
 
International
 
Corporate(1)
 
Inter-segment net sales eliminations
 
Consolidated
 
(In millions)
Net sales
$
7,259.9

 
$
1,392.1

 
$
2,002.6

 
$
250.1

 
$
0.8

 
$
(135.9
)
 
$
10,769.6

Interest expense
8.8

 

 
(5.6
)
 

 
(309.4
)
 

 
(306.2
)
Interest income

 

 
0.5

 

 
7.5

 

 
8.0

Income (loss) before income taxes
$
1,320.7

 
$
157.0

 
$
186.4

 
$
(2.7
)
 
$
(301.6
)
 
$

 
$
1,359.8

Income tax benefit (expense)
 

 
 

 
 

 
 

 
 
 
 
 
(225.2
)
Net income (loss)
 

 
 

 
 

 
 

 
 
 
 
 
1,134.6

Net (income) loss attributable to noncontrolling interests
 

 
 

 
 

 
 

 
 
 
 
 
(18.1
)
Net income (loss) attributable to MCBC
 

 
 

 
 

 
 

 
 
 
 
 
$
1,116.5


(1)
During the first quarter of 2018, we recorded a gain of $328.0 million related to the Adjustment Amount as defined and further discussed in Note 4, "Acquisition and Investments." Additionally, related to the unrealized mark-to-market valuation on our commodity hedge positions, we recorded unrealized losses of $166.2 million for the year ended December 31, 2018, compared to unrealized gains of $123.3 million for the year ended December 31, 2017.
 
Year ended December 31, 2017
 
U.S.
 
Canada
 
Europe(1)
 
International
 
Corporate(2)
 
Inter-segment net sales eliminations
 
Consolidated
 
 
 
 
 
 
 
As Restated
 
(In millions)
Net sales
$
7,505.7

 
$
1,458.0

 
$
1,940.7

 
$
264.0

 
$
0.9

 
$
(166.5
)
 
$
11,002.8

Interest expense
13.1

 

 

 

 
(362.4
)
 

 
(349.3
)
Interest income

 

 
3.6

 

 
2.4

 

 
6.0

Income (loss) before income taxes
$
1,394.2

 
$
210.2

 
$
234.9

 
$
(19.7
)
 
$
(436.4
)
 
$

 
$
1,383.2

Income tax benefit (expense)
 

 
 

 
 

 
 

 
 
 
 
 
204.6

Net income (loss)
 

 
 

 
 

 
 

 
 
 
 
 
1,587.8

Net (income) loss attributable to noncontrolling interests
 

 
 

 
 

 
 

 
 
 
 
 
(22.2
)
Net income (loss) attributable to MCBC
 

 
 

 
 

 
 

 
 
 
 
 
$
1,565.6


(1)
In the first quarter of 2017, we recorded a provision for an estimate of uncollectible receivables of approximately $11 million related to Agrokor, a large customer in Croatia. We have subsequently reduced this exposure and as of December 31, 2018, our estimated provision of uncollectible receivables from Agrokor totals approximately $3 million. The settlement plan related to this matter was approved in October 2018, and did not have a significant impact on our financial statements. Separately, during the first quarter of 2017, we released an indirect tax loss contingency, which was initially recorded in the fourth quarter of 2016, for a benefit of approximately $50 million. See Note 18, "Commitments and Contingencies" for details.
(2)
Related to the unrealized mark-to-market valuation on our commodity hedge positions, we recorded unrealized gains of $123.3 million for the twelve months ended December 31, 2017, compared to unrealized gains of $23.1 million for the twelve months ended December 31, 2016.
 
Year ended December 31, 2016
 
U.S.(1)
 
Canada
 
Europe(2)
 
International
 
Corporate
 
Inter-segment net sales eliminations
 
Consolidated
 
 
 
 
 
 
 
As Restated
 
(In millions)
Net sales
$
1,566.6

 
$
1,425.7

 
$
1,760.2

 
$
163.6

 
$
1.0

 
$
(32.1
)
 
$
4,885.0

Interest expense

 

 

 

 
(271.6
)
 

 
(271.6
)
Interest income

 

 
3.6

 

 
23.6

 

 
27.2

Income (loss) before income taxes
$
3,568.0

 
$
(119.7
)
 
$
137.6

 
$
(39.6
)
 
$
(492.2
)
 
$

 
$
3,054.1

Income tax benefit (expense)
 

 
 
 
 

 
 

 
 
 
 
 
(1,454.3
)
Net income (loss)
 

 
 
 
 

 
 

 
 
 
 
 
1,599.8

Net (income) loss attributable to noncontrolling interests
 

 
 
 
 

 
 

 
 
 
 
 
(5.9
)
Net income (loss) attributable to MCBC
 

 
 
 
 

 
 

 
 
 
 
 
$
1,593.9


(1)
Prior to October 11, 2016, MCBC’s 42% share of MillerCoors' results of operations was reported as equity income in MillerCoors in the consolidated statements of operations. As a result of the Acquisition, beginning October 11, 2016, MillerCoors' results were fully consolidated into MCBC’s consolidated financial statements. The above table reflects this treatment accordingly. Also included in net income attributable to MCBC is a net special items gain of approximately $3.0 billion related to the fair value remeasurement of our pre-existing 42% interest in MillerCoors over its carrying value, as well as the reclassification of the loss related to MCBC's historical AOCI on our 42% interest in MillerCoors. Refer to Note 4, "Acquisition and Investments" for further discussion.
(2)
During the fourth quarter of 2016, we recorded a charge of approximately $50 million within excise taxes due to assessments received from a local country regulatory authority in Europe related to indirect tax calculations. See Note 18, "Commitments and Contingencies" for further discussion.
The following table presents total assets and select cash flow information by segment:
 
Assets
 
Depreciation and amortization
 
Capital expenditures
 
As of December 31,
 
For the years ended December 31,
 
For the years ended December 31,
 
2018
 
2017
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
 
(In millions)
U.S.(1)
$
19,057.1

 
$
19,353.6

 
$
514.0

 
$
485.7

 
$
105.7

 
$
322.0

 
$
351.5

 
$
105.4

Canada
4,640.5

 
4,835.7

 
141.9

 
131.2

 
98.4

 
165.3

 
99.9

 
72.2

Europe
5,430.0

 
5,522.0

 
188.0

 
182.3

 
175.7

 
150.0

 
131.6

 
144.4

International
274.1

 
294.8

 
9.9

 
9.6

 
5.1

 
3.1

 
2.3

 
4.9

Corporate
708.1

 
240.8

 
3.7

 
4.0

 
3.5

 
11.3

 
14.3

 
14.9

Consolidated
$
30,109.8

 
$
30,246.9

 
$
857.5

 
$
812.8

 
$