MOLSON COORS BEVERAGE CO, 10-K filed on 2/11/2021
Annual Report
v3.20.4
Cover Page - USD ($)
$ in Billions
12 Months Ended
Dec. 31, 2020
Feb. 04, 2021
Jun. 30, 2020
Document Information [Line Items]      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Dec. 31, 2020    
Current Fiscal Year End Date --12-31    
Document Transition Report false    
Entity File Number 1-14829    
Entity Registrant Name Molson Coors Beverage Company    
Entity Incorporation, State or Country Code DE    
Entity Tax Identification Number 84-0178360    
Entity Address, Address Line One P.O. Box 4030, NH353    
Entity Address, City or Town Golden    
Entity Address, State or Province CO    
Entity Address, Country US    
Entity Address, Postal Zip Code 80401    
City Area Code 303    
Local Phone Number 279-6565    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
ICFR Auditor Attestation Flag true    
Entity Shell Company false    
Entity Public Float     $ 6.3
Entity Central Index Key 0000024545    
Document Fiscal Year Focus 2020    
Document Fiscal Period Focus FY    
Amendment Flag false    
Class A common stock, voting      
Document Information [Line Items]      
Entity Common Stock, shares outstanding   2,561,670  
Common stock issued, Class B      
Document Information [Line Items]      
Entity Common Stock, shares outstanding   200,395,991  
Class A exchangeable shares      
Document Information [Line Items]      
Entity Common Stock, shares outstanding   2,718,267  
Class B Exchangeable Shares      
Document Information [Line Items]      
Entity Common Stock, shares outstanding   11,104,594  
Canada      
Document Information [Line Items]      
Entity Address, Address Line One 1555 Notre Dame Street East    
Entity Address, City or Town Montréal    
Entity Address, State or Province QC    
Entity Address, Country CA    
Entity Address, Postal Zip Code H2L 2R5    
City Area Code 514    
Local Phone Number 521-1786    
NEW YORK STOCK EXCHANGE, INC. | Class A common stock, voting      
Document Information [Line Items]      
Title of 12(b) Security Class A Common Stock, $0.01 par value    
Trading Symbol TAP.A    
Security Exchange Name NYSE    
NEW YORK STOCK EXCHANGE, INC. | Common stock issued, Class B      
Document Information [Line Items]      
Title of 12(b) Security Class B Common Stock, $0.01 par value    
Trading Symbol TAP    
Security Exchange Name NYSE    
NEW YORK STOCK EXCHANGE, INC. | Senior Notes Due 2024      
Document Information [Line Items]      
Title of 12(b) Security 1.25% Senior Notes due 2024    
Trading Symbol TAP    
Security Exchange Name NYSE    
v3.20.4
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Millions, $ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Sales $ 11,723.8 $ 13,009.1 $ 13,338.0
Excise taxes (2,069.8) (2,429.7) (2,568.4)
Net Sales 9,654.0 10,579.4 10,769.6
Cost of Goods Sold (5,885.7) (6,378.2) (6,584.8)
Gross profit 3,768.3 4,201.2 4,184.8
Marketing, general and administrative expenses (2,437.0) (2,728.0) (2,802.7)
Special items, net (1,740.2) (708.8) 249.7
Operating income (loss) (408.9) 764.4 1,631.8
Other income (expense), net      
Interest expense 274.6 280.9 306.2
Interest income 3.3 8.2 8.0
Total other non-service pension and postretirement benefits (costs), net 30.3 2.9 38.2
Other income (expense), net 6.0 (14.7) (12.0)
Total other income (expense), net (235.0) (284.5) (272.0)
Income (loss) before income taxes (643.9) 479.9 1,359.8
Income tax benefit (expense) (301.8) (233.7) (225.2)
Net Income (Loss) (945.7) 246.2 1,134.6
Net (income) loss attributable to noncontrolling interests (3.3) (4.5) (18.1)
Net income (loss) attributable to Molson Coors Beverage Company $ (949.0) $ 241.7 $ 1,116.5
Basic net income (loss) attributable to Molson Coors Beverage Company per share:      
Basic net income (loss) attributable to Molson Coors Beverage Company per share (in dollars per share) $ (4.38) $ 1.12 $ 5.17
Diluted net income (loss) attributable to Molson Coors Beverage Company per share:      
Diluted net income (loss) attributable to Molson Coors Beverage Company per share (in dollars per share) $ (4.38) $ 1.11 $ 5.15
Weighted-average shares—basic 216.8 216.6 216.0
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements 0.0 0.3 0.6
Weighted-average shares for diluted EPS 216.8 216.9 216.6
Common Stock, Dividends, Per Share, Declared $ 0.57 $ 1.96 $ 1.64
Amounts attributable to Molson Coors Beverage Company      
Net income (loss) attributable to Molson Coors Beverage Company $ (949.0) $ 241.7 $ 1,116.5
Share-based Payment Arrangement [Member]      
Diluted net income (loss) attributable to Molson Coors Beverage Company per share:      
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 2.7 1.3 0.8
v3.20.4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Statement of Comprehensive Income [Abstract]      
Net income (loss) including noncontrolling interests $ (945.7) $ 246.2 $ 1,134.6
Other comprehensive income (loss), net of tax:      
Foreign currency translation adjustments 113.6 177.6 (359.0)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Reclassification Adjustment from AOCI, Realized upon Sale or Liquidation, Net of Tax 0.0 0.0 6.0
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, after Tax (85.7) (84.2) 10.9
Reclassification of derivative (gain) loss to income (0.4) 0.5 2.5
Pension and other postretirement benefit adjustments (39.9) (39.8) 43.5
Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income and settlement (5.2) 19.7 4.9
Ownership share of unconsolidated subsidiaries' other comprehensive income (loss) 14.2 (10.6) (0.8)
Total other comprehensive income (loss), net of tax (3.4) 63.2 (292.0)
Comprehensive income (loss) (949.1) 309.4 842.6
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest (5.5) (5.1) (16.1)
Comprehensive income (loss) attributable to Molson Coors Beverage Company $ (954.6) $ 304.3 $ 826.5
v3.20.4
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Dec. 31, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 770.1 $ 523.4
Accounts and other receivables:    
Trade, less allowance for doubtful accounts of $18.1 and $12.1, respectively 549.6 705.9
Affiliate receivables 8.4 8.9
Other receivables, less allowance for doubtful accounts of $2.4 and $0.1, respectively 129.1 105.5
Inventories:    
Inventories, less allowance for obsolete inventories of $22.0 and $10.8, respectively 664.3 615.9
Other current assets, net 297.3 224.8
Total current assets 2,418.8 2,184.4
Properties, less accumulated depreciation of $3,416.4 and $3,004.6, respectively 4,250.3 4,546.5
Goodwill 6,151.0 7,631.4
Other intangibles, less accumulated amortization of $1,206.5 and $995.1, respectively 13,556.1 13,656.0
Other assets 954.9 841.5
Total assets 27,331.1 28,859.8
Current liabilities:    
Accounts payable and other current liabilities (includes affiliate payables of $0.5 and $0.0, respectively) 2,889.5 2,767.3
Current portion of long-term debt and short-term borrowings 1,020.1 928.2
Total current liabilities 3,909.6 3,695.5
Long-term debt 7,208.2 8,109.5
Pension and postretirement benefits 763.2 716.6
Deferred tax liabilities 2,381.6 2,258.6
Other liabilities 447.2 406.5
Total liabilities 14,709.8 15,186.7
Commitments and contingencies (Note 18)
Molson Coors Beverage Company stockholders' equity    
Preferred stock, $0.01 par value (authorized: 25.0 shares; none issued) 0.0 0.0
Paid-in capital 6,937.8 6,773.6
Retained earnings 6,544.2 7,617.0
Accumulated other comprehensive income (loss) (1,167.8) (1,162.2)
Class B common stock held in treasury at cost (9.5 shares and 9.5 shares, respectively) (471.4) (471.4)
Total Molson Coors Beverage Company stockholders' equity 12,365.0 13,419.4
Noncontrolling interests 256.3 253.7
Total equity 12,621.3 13,673.1
Total liabilities and equity 27,331.1 28,859.8
Class A common stock, voting    
Molson Coors Beverage 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: 209.8 shares and 205.7 shares, respectively) 0.0 0.0
Total equity 0.0 0.0
Common stock issued, Class B    
Molson Coors Beverage 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: 209.8 shares and 205.7 shares, respectively) 2.1 2.1
Total equity 2.1 2.1
Class A exchangeable shares    
Molson Coors Beverage Company stockholders' equity    
Exchangeable shares - Class A, no par value (issued and outstanding: 2.7 shares and 2.7 shares, respectively); Class B, no par value (issued and outstanding: 11.1 shares and 14.8 shares, respectively) 102.3 102.5
Total equity 102.3 102.5
Class B Exchangeable Shares    
Molson Coors Beverage Company stockholders' equity    
Exchangeable shares - Class A, no par value (issued and outstanding: 2.7 shares and 2.7 shares, respectively); Class B, no par value (issued and outstanding: 11.1 shares and 14.8 shares, respectively) 417.8 557.8
Total equity $ 417.8 $ 557.8
v3.20.4
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($)
$ in Millions
Dec. 31, 2020
Dec. 31, 2019
Assets    
Accounts Receivable, Allowance for Credit Loss, Current $ 18.1 $ 12.1
Financing Receivable, Allowance for Credit Loss, Current 2.4 0.1
Allowance for Obsolete Inventory, Finished Goods 22.0 10.8
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment 3,416.4 3,004.6
Finite-Lived Intangible Assets, Accumulated Amortization 1,206.5 995.1
Due to Affiliate, Current $ 0.5 $ 0.0
Equity [Abstract]    
Preferred Stock, Non-voting, No Par Value $ 0.01 $ 0.01
Preferred Stock, Shares Authorized 25,000,000.0 25,000,000.0
Preferred Stock, Shares Issued 0 0
Treasury Stock, Shares 9,500,000 9,500,000
Class A common stock, voting    
Equity [Abstract]    
Common Stock, Par or Stated Value Per Share $ 0.01 $ 0.01
Common Stock, Shares Authorized 500,000,000.0 500,000,000.0
Common Stock, Shares, Issued 2,600,000 2,600,000
Common Stock, Shares, Outstanding 2,600,000 2,600,000
Common stock issued, Class B    
Equity [Abstract]    
Common Stock, Par or Stated Value Per Share $ 0.01 $ 0.01
Common Stock, Shares Authorized 500,000,000.0 500,000,000.0
Common Stock, Shares, Issued 209,800,000 205,700,000
Class A exchangeable shares    
Equity [Abstract]    
Exchangeable Stock, No Par Value $ 0 $ 0
Exchangeable Stock, Shares Issued 2,700,000 2,700,000
Exchangeable Stock, Shares Outstanding 2,700,000 2,700,000
Class B Exchangeable Shares    
Equity [Abstract]    
Exchangeable Stock, No Par Value $ 0 $ 0
Exchangeable Stock, Shares Issued 11,100,000 11,100,000
Exchangeable Stock, Shares Outstanding 14,800,000 14,800,000
v3.20.4
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Statement of Cash Flows [Abstract]      
Net Income (Loss) $ (945.7) $ 246.2 $ 1,134.6
Cash flows from operating activities:      
Net income (loss) including noncontrolling interests (945.7) 246.2 1,134.6
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Depreciation and amortization 922.0 859.0 857.5
Amortization of debt issuance costs and discounts 8.1 13.6 12.7
Share-based compensation 24.2 8.5 42.6
(Gain) loss on sale or impairment of properties and other assets, net 1,553.5 614.7 (8.1)
Unrealized (Gain) Loss on Foreign Currency Fluctuations and Derivative Instruments, net (111.4) 18.9 193.1
Income tax (benefit) expense 301.8 233.7 225.2
Income tax (paid) received (127.0) (57.0) 32.3
Interest expense, excluding interest amortization 266.0 272.4 304.2
Interest paid (271.9) (285.0) (308.7)
Change in current assets and liabilities (net of impact of business combinations) and other:      
Receivables 160.8 38.5 (38.4)
Inventories (46.2) (17.7) (10.6)
Payables and other current liabilities (50.1) (53.0) 27.6
Other assets and other liabilities 11.6 4.5 (132.7)
Net cash provided by operating activities 1,695.7 1,897.3 2,331.3
Cash flows from investing activities:      
Additions to properties (574.8) (593.8) (651.7)
Proceeds from sales of properties and other assets 158.8 115.9 32.5
Other 2.4 44.6 (49.9)
Net cash used in investing activities (413.6) (433.3) (669.1)
Cash flows from financing activities:      
Exercise of stock options under equity compensation plans 4.1 1.6 16.0
Dividends paid (125.3) (424.4) (354.2)
Payments on debt and borrowings (918.9) (1,586.2) (319.8)
Proceeds on debt and borrowings 1.5 3.0 0.0
Net proceeds from (payments on) revolving credit facilities and commercial paper 0.0 (4.7) (374.3)
Other (31.8) 3.7 23.4
Net Cash Provided by (Used in) Financing Activities (1,070.4) (2,007.0) (1,008.9)
Cash and cash equivalents:      
Cash and Cash Equivalents, Period Increase (Decrease), Excluding Exchange Rate Effect, Total 211.7 (543.0) 653.3
Effect of foreign exchange rate changes on cash and cash equivalents 35.0 8.5 (14.0)
Balance at beginning of year 523.4 1,057.9 418.6
Balance at end of year $ 770.1 $ 523.4 $ 1,057.9
v3.20.4
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
Paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Common stock held in treasury, Class B
Noncontrolling interest
Balance at Dec. 31, 2017 $ 13,187.3 $ 0.0 $ 2.0 $ 107.7 $ 553.2 $ 6,688.5 $ 6,958.4 $ (860.0) $ (471.4) $ 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        
Payments to Acquire Interest in Joint Venture 44.3         39.4       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)           (27.8)      
Contributions from noncontrolling interests 21.6                 21.6
Distributions and dividends to noncontrolling interests (22.8)                 (22.8)
Dividends declared and paid $ (354.2)           (354.2)      
Common Stock, Dividends, Per Share, Declared $ 1.64                  
Balance at Dec. 31, 2018 $ 13,735.8 0.0 2.0 103.2 557.6 6,773.1 7,692.9 (1,150.0) (471.4) 228.4
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Exchange of shares 0.0     (0.7) 0.2 0.5        
Shares issued under equity compensation plan (8.3)   0.1     (8.4)        
Amortization of share-based compensation 8.3         8.3        
Purchase of noncontrolling Interest 0.6         0.1       0.5
Noncontrolling Interest, Decrease from Deconsolidation (1.7)                 (1.7)
Net income (loss) including noncontrolling interests 246.2           241.7     4.5
Other comprehensive income (loss), net of tax 63.2             62.6   0.6
Initial Application Period Cumulative Effect Transition for Accounting Standards Update 2016-02 32.0           32.0      
Increase in retained earnings due to reclassification of stranded tax effects 0.0           74.8 (74.8)    
Contributions from noncontrolling interests 34.1                 34.1
Distributions and dividends to noncontrolling interests (12.7)                 (12.7)
Dividends declared and paid $ (424.4)           (424.4)      
Common Stock, Dividends, Per Share, Declared $ 1.96                  
Balance at Dec. 31, 2019 $ 13,673.1 0.0 2.1 102.5 557.8 6,773.6 7,617.0 (1,162.2) (471.4) 253.7
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Exchange of shares 0.0     (0.2) (140.0) 140.2        
Shares issued under equity compensation plan (0.5)   0.0     (0.5)        
Amortization of share-based compensation 24.2         24.2        
Purchase of noncontrolling Interest (0.2)         0.3       (0.5)
Net income (loss) including noncontrolling interests (945.7)           (949.0)     3.3
Other comprehensive income (loss), net of tax (3.4)             (5.6)   2.2
Contributions from noncontrolling interests 16.3                 16.3
Distributions and dividends to noncontrolling interests (18.7)                 (18.7)
Dividends declared and paid $ (123.8)           (123.8)      
Common Stock, Dividends, Per Share, Declared $ 0.57                  
Balance at Dec. 31, 2020 $ 12,621.3 $ 0.0 $ 2.1 $ 102.3 $ 417.8 $ 6,937.8 $ 6,544.2 $ (1,167.8) $ (471.4) $ 256.3
v3.20.4
Basis of Presentation and Summary of Significant Accounting Policies Cash flows (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]      
Capital Expenditures Incurred but Not yet Paid $ 171.9 $ 214.9 $ 221.0
Cash paid for interest 271.9 285.0 308.7
Cash paid for taxes, net of refunds $ 127.0 $ 57.0 $ (32.3)
v3.20.4
Basis of Presentation and Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2020
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 Beverage Company ("MCBC," "Molson Coors" or the "Company") (formerly known as Molson Coors Brewing Company), principally a holding company, and its operating and non-operating subsidiaries included within our reporting segments. On January 1, 2020, we changed our management structure from a corporate center and four segments to two segments - North America and Europe. The previous International segment was reconstituted with the Africa and Asia Pacific businesses reporting into the Europe segment and the remaining International business reporting into the North America segment. Accordingly, effective January 1, 2020, our reporting segments include: North America (North America segment), operating in the U.S., Canada and various countries in Latin and South America; and Europe (Europe segment), operating in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries, and certain countries within Africa and Asia Pacific. We have recast the historical presentation of segment information as a result of these reporting segment changes accordingly.
Unless otherwise indicated, comparisons are to comparable prior periods, and 2020, 2019 and 2018 refers to the 12 months ended December 31, 2020, December 31, 2019, and December 31, 2018, respectively.
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.
Coronavirus Global Pandemic
We are actively monitoring the impact of the coronavirus pandemic, which had a material adverse effect on our operations, liquidity, financial condition and results of operations during 2020 due to on-premise closures worldwide. The effects of the pandemic remain highly uncertain especially around the severity and duration of the outbreak and actions by government authorities to contain the pandemic or address its impact, among other things.
During 2020, we recorded charges of $15.5 million within cost of goods sold related to temporary "thank you" pay for certain essential North America brewery employees. Additionally, in order to support and demonstrate our commitment to the continued viability of the many bars and restaurants which have been negatively impacted by the coronavirus pandemic, during the first quarter of 2020, we initiated temporary keg relief programs in many of our markets. As part of these voluntary programs, we committed to provide customers with reimbursements for untapped kegs that met certain established return requirements. As a result, during 2020, we recognized a reduction to net sales of $30.3 million reflecting sales returns and reimbursements through these keg relief programs, substantially all of which was recognized in the first quarter other than immaterial adjustments for changes in estimates recognized during the remainder of 2020. Further, during 2020, we recognized charges of $12.1 million, substantially all of which was recognized in the first quarter other than immaterial adjustments for changes in estimates recognized during the remainder of 2020, within cost of goods sold related to obsolete finished goods keg inventories that were not expected to be sold within our freshness specifications, as well as the costs to facilitate the above mentioned keg returns. As of December 31, 2020 and December 31, 2019, our aggregate allowance for obsolete inventories was approximately $22 million and $11 million, respectively. The actual duration of the coronavirus pandemic, including the length of government-mandated closures or ceased sit-down service limitations at bars and restaurants coupled with the subsequent economic recovery period relative to the assumptions utilized to derive these estimates, could result in further charges due to incremental finished goods keg inventory becoming obsolete in future periods.
Additionally, we continue to monitor the impacts of the coronavirus pandemic on our customers’ liquidity and capital resources and therefore our ability to collect, or the timeliness of collection of our accounts receivable. While these receivables are not concentrated in any specific customer and our allowance on these receivables factors in expected credit loss, continued disruption and declines in the global economy could result in difficulties in our ability to collect and require increases to our allowance for doubtful accounts. As of December 31, 2020 and December 31, 2019, our allowance for trade receivables was approximately $18 million and $12 million, respectively, and allowance activity was immaterial during the year ended December 31, 2020.
Further, in response to the coronavirus pandemic, various governmental authorities globally have announced relief programs which among other items, provide temporary deferrals of income and non-income based tax payments, which have
positively impacted our operating cash flows in the year ended December 31, 2020. These temporary deferrals of approximately $130 million as of December 31, 2020, are included within accounts payable and other current liabilities and other liabilities on the consolidated balance sheets.
Finally, we continue to protect and support our liquidity position in response to the global economic uncertainty created by the coronavirus pandemic. In May 2020, our board of directors suspended our regular quarterly dividends on our Class A and Class B common and exchangeable shares.
For considerations of the effects of the coronavirus pandemic and impairment charges taken related to our goodwill and indefinite-lived intangible assets, see Note 10, "Goodwill and Intangible Assets."
Revitalization Plan
On October 28, 2019, we initiated a revitalization plan designed to allow us to invest across our portfolio to drive long-term, sustainable success. As part of our revitalization plan, we made the determination to establish Chicago, Illinois as our North American operational headquarters, close our office in Denver, Colorado and consolidate certain administrative functions into our other existing office locations. In connection with these consolidation activities, effective January 1, 2020, we changed our management structure to two segments - North America and Europe. We began to incur charges related to these restructuring activities during the fourth quarter of 2019 and have been, and will continue to, further recognize charges through fiscal 2021.
We also changed our name from Molson Coors Brewing Company to Molson Coors Beverage Company in January 2020 in order to better reflect our strategic intent to expand beyond beer and into other growth adjacencies in the beverage industry. See Note 3, "Segment Reporting," Note 7, "Special Items" and Note 10, "Goodwill and Intangible Assets" for further discussion of the impacts of this plan.
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.
Revenue Recognition
Our net sales represent the sale of beer, malt beverages and other adjacencies, 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. 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.
Disaggregation of Revenue
We have evaluated our primary revenue generating activities under the disaggregation disclosure criteria outlined within the guidance and concluded that disclosure at the geographical segment level depicts how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. We have also evaluated our other revenue generating activities and concluded that these 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 years ended December 31, 2020 and December 31, 2019, 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 years ended December 31, 2020 or December 31, 2019.
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 and fulfill contracts 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, 2020 or December 31, 2019. 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 $25.0 million and $38.8 million for 2019 and 2018, respectively. There were no integration costs recorded in 2020 as the activity related to the acquisition of the remaining portion of MillerCoors LLC ("MillerCoors"), which occurred on October 11, 2016 (the "Acquisition"), was completed by the end of 2019.
This classification also includes general and administrative costs for functions such as finance, legal, human resources and information technology, along with integration costs as noted above. These costs primarily consist 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.
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.
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 our operations. For instance, aggregate unrealized and realized foreign exchange gains and losses resulting from the 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 remain unallocated. 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).
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.
When working capital funds are available after satisfying all other business obligations, we may distribute cash from a foreign subsidiary to its U.S. parent and record the tax impacts associated with these transactions. However, to the extent current earnings are not otherwise distributed or planned to be distributed, in the current year, they are considered permanently reinvested in our foreign operations. We currently would not expect the aggregate of these permanently reinvested earnings, which are largely in deficit positions for U.S. tax purposes, to result in any material U.S. taxes, if distributed.
The tax benefit from an uncertain tax position is recognized only if it is determined that the tax position will more likely 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.
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 hedging relationships and derivative and non-derivative instruments designated in 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, when 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, the remeasurement of these instruments is recorded as a component of foreign currency translation adjustments within OCI. We release stranded tax effects from AOCI using either a specific identification approach or portfolio approach based on the nature of the underlying item.
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.
Non-cash activity includes non-cash issuances of share-based awards, as well as non-cash investing activities related to movements in our guarantee of indebtedness of certain equity method investments. We also had other non-cash activities primarily related to capital expenditures incurred but not yet paid of $171.9 million, $214.9 million and $221.0 million during 2020, 2019 and 2018, respectively. Additionally, the initial recognition of the warrants discussed in Note 16, “Derivative Instruments and Hedging Activities” represents a non-cash financing activity in 2018.
Other than the activity mentioned above and the supplemental non-cash activity related to the recognition of leases discussed in Note 19, "Leases," there was no other significant non-cash activity in 2020, 2019 and 2018. See Note 4, "Investments," Note 13, "Share-Based Payments," Note 16, “Derivative Instruments and Hedging Activities” and Note 19, "Leases" 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. This methodology takes into consideration historical loss experience and current and forecasted changes in cash flows based on internal and external information.
In the U.K., loans are extended to a portion of the retail outlets that sell our brands. We establish an 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 2020, 2019 and 2018.
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 $16.4 million and $11.4 million as of December 31, 2020, and December 31, 2019, 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 sold 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. Software maintenance and training costs are expensed in the period incurred. Implementation costs incurred in hosting arrangements that are service contracts are capitalized within other assets and are immaterial. See Note 2, "New Accounting Pronouncements" for further discussion of the changes to the accounting for implementation costs incurred in a hosting arrangement that became effective January 1, 2020.
Properties held under finance 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. Finance lease assets for which ownership is transferred at the end of the lease, or there is a purchase option that we are reasonably certain to exercise, 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. Effective January 1, 2020, we have two reporting units, North America and Europe. See further discussion in Note 10, "Goodwill and Intangibles."
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. See Note 4, "Investments" for further information regarding our equity method investments.
There are no related parties that own interests in our equity method investments as of December 31, 2020.
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.
Leases
We account for leases in accordance with Accounting Standards Codification (“ASC”) Topic 842, Leases, which we adopted on January 1, 2019, electing not to adjust comparative periods presented and applying a modified retrospective transition approach as of the effective date of adoption.
We enter into contractual arrangements for the utilization of certain non-owned assets, primarily real estate and equipment, which are evaluated as finance or operating leases upon commencement, and are accounted for accordingly. Specifically, under ASC 842, a contract is or contains a lease when, (1) the contract contains an explicitly or implicitly identified asset and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract in exchange for consideration. We assess whether an arrangement is or contains a lease at inception of the contract. For all contractual arrangements deemed to be leases (other than short-term leases), as of the lease commencement date, we recognize on the consolidated balance sheet a liability for
our obligation related to the lease and a corresponding asset representing our right to use the underlying asset over the period of use.
For leases that qualify as short-term leases, we have elected, for all classes of underlying assets, to not apply the balance sheet recognition requirements of ASC 842, and instead, we recognize the lease payments in the consolidated statements of operations on a straight-line basis over the lease term. We have also made the election, for our existing real estate and equipment classes of underlying assets, to account for lease and non-lease components as a single lease component.
Our leases have remaining lease terms of up to approximately 18 years. Certain of our lease agreements contain options to extend or early terminate the agreement. The lease term used to calculate the right-of-use asset and lease liability at commencement includes the impacts of options to extend or terminate the lease when it is reasonably certain that we will exercise that option. When determining whether it is reasonably certain that we will exercise an option at commencement, we consider various existing economic factors, including real estate strategies, the nature, length, and terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term. Based on these determinations, we generally conclude that the exercise of renewal options would not be reasonably certain in determining the lease term at commencement. Assumptions made at the commencement date are re-evaluated upon occurrence of certain events requiring a lease modification. Additionally, for certain equipment leases involving groups of similar leased assets with similar lease terms, we apply a portfolio approach to effectively account for the operating lease right-of-use assets and liabilities.
The discount rate used to calculate the present value of the future minimum lease payments is the rate implicit in the lease, when readily determinable. As the rate implicit in the lease is rarely readily determinable, we use our incremental borrowing rate relative to the leased asset.
Certain of our leases include variable lease payments, primarily for items such as property taxes, insurance, maintenance, and other operating expenses associated with leased assets. These variable payments are excluded from the measurement of our lease assets and liabilities, and are recognized in the period in which the obligation for those payments is incurred. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Lease-related expense is recorded within either cost of goods sold or marketing, general and administrative expenses on the consolidated statements of operations, depending on the function of the underlying leased asset, with the exception of interest on finance lease liabilities, which is recorded within interest expense on the consolidated statements of operations.
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, Brewers' Retail Inc. ("BRI") and Brewers' Distributor Ltd. ("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. 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), as appropriate. 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 respective period throughout the year.
v3.20.4
New Accounting Pronouncements
12 Months Ended
Dec. 31, 2020
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]  
New Accounting Pronouncements
Adoption of New Accounting Pronouncements and Securities and Exchange Commission Rules
In June 2016, the FASB issued guidance that changes the impairment model used to measure credit losses for most financial instruments. The new guidance replaces the existing incurred credit loss model, and requires the application of a forward-looking expected credit loss model, which will generally result in earlier recognition of allowances for credit losses for financial instruments that are in scope of the new guidance, including trade receivables. We adopted this guidance in the first quarter of 2020, which did not have a material impact on our financial statements.
In August 2018, the FASB issued authoritative guidance intended to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance also requires presentation of the capitalized implementation costs in the statement of financial position and in the statement of cash flows in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented, and the expense related to the capitalized implementation costs to be presented in the same line item in the statement of operations as the fees associated with the hosting element (service) of the arrangement. We adopted this guidance prospectively in the first quarter of 2020, which did not have a material impact on our financial statements. However, the adoption of this guidance resulted in the change in presentation of capitalized implementation costs related to hosting arrangements from properties to other assets on the consolidated balance sheet, as well as the expense related to such costs no longer being classified as depreciation expense and cash flows related to those costs no longer being presented as investing activities beginning in the first quarter of 2020.
In March 2020, the SEC finalized its proposed updates to Rule 3-10 of Regulation S-X, Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant's Securities (the
"Rule"). The Rule simplifies the disclosure requirements for issuers and guarantors of securities that are registered or being registered under the Securities Act of 1933. The Rule also eliminates the requirement to disclose condensed consolidating financial information within the financial statements for qualifying entities and permits abbreviated disclosures of the guarantor/issuer relationship within Part II, Item 7, Management's Discussion and Analysis. The Rule is effective on January 4, 2021 and voluntary compliance prior to the effective date is permitted. We adopted the Rule effective January 1, 2020 and, as such, no longer include condensed consolidating information within Part II, Item 8, Financial Statements.
New Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued authoritative guidance which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and are effective for all entities upon issuance, March 12, 2020 through December 31, 2022, which is a full year after the current expected discontinuation date of LIBOR. We are currently evaluating the potential impact of this guidance on our financial statements.
In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes. This guidance eliminates certain exceptions to the general approach to the income tax accounting model, and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for annual periods beginning after December 15, 2020, including interim periods within those annual periods. We plan to adopt this guidance in the first quarter of 2021 and do not expect it will have a material impact on our financial statements.
Other than the items noted above, there have been no new accounting pronouncements not yet effective or adopted in the current year that we believe have a significant impact, or potential significant impact, to our consolidated financial statements.
New Accounting Pronouncements and Changes in Accounting Principles New Accounting Pronouncements
Adoption of New Accounting Pronouncements and Securities and Exchange Commission Rules
In June 2016, the FASB issued guidance that changes the impairment model used to measure credit losses for most financial instruments. The new guidance replaces the existing incurred credit loss model, and requires the application of a forward-looking expected credit loss model, which will generally result in earlier recognition of allowances for credit losses for financial instruments that are in scope of the new guidance, including trade receivables. We adopted this guidance in the first quarter of 2020, which did not have a material impact on our financial statements.
In August 2018, the FASB issued authoritative guidance intended to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance also requires presentation of the capitalized implementation costs in the statement of financial position and in the statement of cash flows in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented, and the expense related to the capitalized implementation costs to be presented in the same line item in the statement of operations as the fees associated with the hosting element (service) of the arrangement. We adopted this guidance prospectively in the first quarter of 2020, which did not have a material impact on our financial statements. However, the adoption of this guidance resulted in the change in presentation of capitalized implementation costs related to hosting arrangements from properties to other assets on the consolidated balance sheet, as well as the expense related to such costs no longer being classified as depreciation expense and cash flows related to those costs no longer being presented as investing activities beginning in the first quarter of 2020.
In March 2020, the SEC finalized its proposed updates to Rule 3-10 of Regulation S-X, Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant's Securities (the
"Rule"). The Rule simplifies the disclosure requirements for issuers and guarantors of securities that are registered or being registered under the Securities Act of 1933. The Rule also eliminates the requirement to disclose condensed consolidating financial information within the financial statements for qualifying entities and permits abbreviated disclosures of the guarantor/issuer relationship within Part II, Item 7, Management's Discussion and Analysis. The Rule is effective on January 4, 2021 and voluntary compliance prior to the effective date is permitted. We adopted the Rule effective January 1, 2020 and, as such, no longer include condensed consolidating information within Part II, Item 8, Financial Statements.
New Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued authoritative guidance which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and are effective for all entities upon issuance, March 12, 2020 through December 31, 2022, which is a full year after the current expected discontinuation date of LIBOR. We are currently evaluating the potential impact of this guidance on our financial statements.
In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes. This guidance eliminates certain exceptions to the general approach to the income tax accounting model, and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for annual periods beginning after December 15, 2020, including interim periods within those annual periods. We plan to adopt this guidance in the first quarter of 2021 and do not expect it will have a material impact on our financial statements.
Other than the items noted above, there have been no new accounting pronouncements not yet effective or adopted in the current year that we believe have a significant impact, or potential significant impact, to our consolidated financial statements.
v3.20.4
Segment Reporting
12 Months Ended
Dec. 31, 2020
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
Our reporting segments are based on the key geographic regions in which we operate, and previously included the U.S., Canada, Europe and International segments. As part of our revitalization plan announced in the fourth quarter of 2019, we made the determination to establish Chicago, Illinois as our North American operational headquarters, closed our office in Denver, Colorado and consolidated certain administrative functions into our other existing office locations. In connection with these consolidation activities, effective January 1, 2020, we changed our management structure from a corporate center and four segments to two segments - North America and Europe. The North America segment consolidated the United States, Canada and corporate center, with a centralized North American leadership team, integrated North American supply chain network and centralized marketing and support functions, enabling us to move more quickly with an integrated portfolio strategy. The Europe segment allows for standalone operations, developed and supported by a European-based team, including local leadership, commercial, supply chain and support functions. The previous International segment was reconstituted to more effectively grow our global brands with the Africa and Asia Pacific businesses reporting into the Europe segment and the remaining International business reporting into the North America segment. As a result of these structural changes, the review of discrete financial information by our chief operating decision maker, our President and Chief Executive Officer, is now performed only at the consolidated North America and Europe geographic segment level, which is the basis on which our chief operating decision maker evaluates the performance of the business and allocates resources accordingly.
Historical results have been recast to retrospectively reflect these changes in segment reporting.
Reporting Segments
North America
The North America segment consists of our production, marketing and sales of our brands and other owned and licensed brands in the U.S., Canada and various countries in Latin and South America. In the U.S., we have an agreement to brew, package and ship products for Pabst Brewing Company, LLC, and in Canada, we contract brew and package certain Labatt brands for the U.S. market. We also have an agreement with Heineken N.V. ("Heineken") that grants us the right to import, market, distribute and sell certain Heineken products in Canada.
The North America 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. In the third quarter of 2020, we formed The Yuengling Company LLC ("TYC"), a joint venture owned equally by MCBC and DGY West Holdings, LP ("DGY West") that, pursuant to an operating agreement, formed to expand commercialization of Yuengling's brands with operation currently expected to commence in the second half of 2021. BRI, BDL and TYC are all accounted for as equity method investments.
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., Central Europe and various other European countries, along with certain countries within Africa and Asia Pacific. Our European business also has licensing agreements and distribution agreements with various other brewers.
Unallocated
We also have certain activity that is not allocated to our segments, which has been reflected as “Unallocated” below. Specifically, "Unallocated" activity primarily includes financing-related costs such as interest expense and income, foreign exchange gains and losses on intercompany balances related to financing and other treasury-related activities, and the unrealized changes in fair value on our commodity swaps not designated in hedging relationships recorded within cost of goods sold, which are later reclassified when realized to the segment in which the underlying exposure resides. Additionally, only the service cost component of net periodic pension and OPEB cost is reported within each operating segment, and all other components remain unallocated.
Summarized Financial Information
No single customer accounted for more than 10% of our consolidated sales in 2020, 2019 or 2018. Consolidated net sales represent sales to third-party external customers less excise taxes. Inter-segment transactions impacting net sales revenues and income (loss) before income taxes eliminate upon consolidation and are primarily related to North America segment sales to, and royalties received from, the Europe segment.
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. Additionally, integration costs of $25.0 million and $38.8 million for 2019 and 2018, respectively, were recorded within marketing, general and administrative expenses, primarily within our North America segment. No integration costs were recorded in the year ended December 31, 2020.
Year ended December 31, 2020
 North America
Europe(1)
Unallocated(2)
Inter-segment net sales eliminations
Consolidated(3)
 (In millions)
Net sales$8,237.0 $1,431.9 $— $(14.9)$9,654.0 
Interest expense(2.6)(5.7)(266.3)— (274.6)
Interest income0.2 0.3 2.8 — 3.3 
Income (loss) before income taxes$1,080.5 $(1,603.7)$(120.7)$— $(643.9)
Income tax benefit (expense)  (301.8)
Net income (loss)  (945.7)
Net (income) loss attributable to noncontrolling interests  (3.3)
Net income (loss) attributable to MCBC  $(949.0)
(1)During the fourth quarter of 2020, we recorded a goodwill impairment loss related to the Europe reporting unit of $1,484.3 million, which was recorded as a special item. See Note 10, "Goodwill and Intangible Assets" for further discussion.
(2)Includes unrealized mark-to-market changes on our commodity hedge positions. We recorded unrealized gains of $107.6 million for the year ended December 31, 2020.
(3)During 2020, the coronavirus pandemic had a material adverse effect on our operations, liquidity, financial condition and results of operations during 2020 due to on-premise closures worldwide. In 2020, we experienced a reduction in volume as a result of the on-premise closures worldwide and due to the keg relief program, experienced a reduction in net sales and an increase in our inventory allowance for obsolete inventory.
 Year ended December 31, 2019
 
North America(1)
Europe
Unallocated(2)
Inter-segment net sales eliminationsConsolidated
 (In millions)
Net sales$8,618.2 $1,986.4 $— $(25.2)$10,579.4 
Interest expense2.8 (6.2)(277.5)— (280.9)
Interest income— 0.5 7.7 — 8.2 
Income (loss) before income taxes$645.0 $102.4 $(267.5)$— $479.9 
Income tax benefit (expense)  (233.7)
Net income (loss)  246.2 
Net (income) loss attributable to noncontrolling interests  (4.5)
Net income (loss) attributable to MCBC  $241.7 
(1)During the third quarter of 2019, we recorded a goodwill impairment loss to our North America reporting unit of $668.3 million, which was recorded as a special item. See Note 10, "Goodwill and Intangible Assets" for further discussion. During the second quarter of 2019, we completed the sale of our existing Montreal brewery for $96.2 million, resulting in a $61.3 million gain.
(2)Includes unrealized mark-to-market valuation on our commodity hedge positions. We recorded unrealized losses of $0.8 million for the year ended December 31, 2019.
 Year ended December 31, 2018
 
North America(1)
Europe
Unallocated(2)
Inter-segment net sales eliminationsConsolidated
 (In millions)
Net sales$8,724.4 $2,070.4 $— $(25.2)$10,769.6 
Interest expense8.8 (5.6)(309.4)— (306.2)
Interest income— 0.5 7.5 — 8.0 
Income (loss) before income taxes$1,661.9 $128.6 $(430.7)$— $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 7, "Special Items."
(2)Includes 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.
The following table presents total assets and select cash flow information by segment:
AssetsDepreciation and amortizationCapital expenditures
 As of December 31,For the years ended December 31,For the years ended December 31,
 20202019202020192018202020192018
 (In millions)
North America$23,375.6 $23,360.2 $743.0 $676.9 $667.6 $461.4 $450.7 $499.7 
Europe3,955.5 5,499.6 179.0 182.1 189.9 113.4 143.1 152.0 
Consolidated$27,331.1 $28,859.8 $922.0 $859.0 $857.5 $574.8 $593.8 $651.7 
The following table presents net sales by geography, based on the location of the customer:
 For the years ended
 December 31, 2020December 31, 2019December 31, 2018
 (In millions)
Net sales to unaffiliated customers:   
United States and its territories$7,016.1 $7,244.9 $7,272.1 
Canada1,111.6 1,231.3 1,298.2 
United Kingdom663.7 1,119.1 1,184.6 
Other foreign countries(1)
862.6 984.1 1,014.7 
Consolidated net sales$9,654.0 $10,579.4 $10,769.6 
(1)Reflects net sales from the individual countries within certain countries in Europe, Latin America, South America, Africa and Asia. No individual country has total net sales exceeding 10% of the total consolidated net sales.
The following table presents net properties by geographic location:
 As of
 December 31, 2020December 31, 2019
 (In millions)
Net properties:  
United States and its territories$2,393.7 $2,760.2 
Canada941.9 831.9 
United Kingdom384.2 406.5 
Other foreign countries(1)
530.5 547.9 
Consolidated net properties$4,250.3 $4,546.5 
(1)Reflects net sales from the individual countries within certain countries in Europe, Latin America, South America, Africa and Asia. No individual country has total net properties exceeding 10% of the total consolidated net properties.
v3.20.4
Investments
12 Months Ended
Dec. 31, 2020
Equity Method Investments and Joint Ventures [Abstract]  
Investments Investments
Our investments include both equity method and consolidated investments. Those entities identified as VIEs have been evaluated to determine whether we are the primary beneficiary. The VIEs included under "Consolidated VIEs" below are those for which we have concluded that we are the primary beneficiary and accordingly, we have consolidated these entities. None of our consolidated VIEs held debt as of December 31, 2020 or December 31, 2019. We have not provided any financial support to any of our VIEs during 2020 that we were not previously contractually obligated to provide. Amounts due to and due from our equity method investments are recorded as affiliate accounts payable and affiliate accounts receivable. See below under "Affiliate Transactions" for further details.
In the third quarter of 2020, we formed The Yuengling Company LLC ("TYC") , a joint venture equally owned by MCBC and DGY West that, pursuant to an operating agreement, formed to expand commercialization of Yuengling's brands with operation currently expected to commence in the second half of 2021. TYC will oversee any new market expansion outside Yuengling's current 22-state footprint and New England. We have concluded that TYC is a VIE for which we are not the primary beneficiary and will therefore apply the equity method of accounting. We have an obligation to proportionately fund TYC's operations. Initial funding of TYC is expected to begin in the first quarter of 2021 and is expected to be immaterial. Transactions between MCBC and TYC are expected to include billings for product under a supply agreement and fees under a services agreement and will be considered affiliate transactions.
Authoritative guidance related to the consolidation of VIEs requires that we continually reassess whether we are the primary beneficiary of VIEs in which we have an interest. As such, the conclusion regarding the primary beneficiary status is subject to change and we continually evaluate circumstances that could require consolidation or deconsolidation. Our consolidated VIEs are Cobra Beer Partnership, Ltd. ("Cobra U.K."), Rocky Mountain Metal Container (“RMMC”), Rocky Mountain Bottle Company (“RMBC”) and Truss, as well as other immaterial entities. Our unconsolidated VIEs are BRI and BDL, as well as other immaterial investments.
Both BRI and BDL have outstanding third-party debt which is guaranteed by their respective shareholders. As a result, we have a guarantee liability of $38.2 million and $37.7 million recorded as of December 31, 2020 and December 31, 2019, respectively, which is presented within accounts payable and other current liabilities on the consolidated balance sheets and represents our proportionate share of the outstanding balance of these debt instruments. The carrying value of the guarantee liability equals fair value, which considers an adjustment for our own non-performance risk and is considered a Level 2 measurement. The offset to the guarantee liability was recorded as an adjustment to our respective equity method investment within the consolidated balance sheets. The resulting change in our equity method investments during the year due to movements in the guarantee represents a non-cash investing activity.
Equity Method Investments
Brewers' Retail Inc.
BRI is a beer distribution and retail network for the Ontario region of Canada, with majority of the ownership residing with Molson Coors Canada ("MCC"), Labatt Breweries of Canada LP (a subsidiary of ABI) and Sleeman Breweries Ltd. (a subsidiary of Sapporo International). BRI charges its owners administrative fees that are designed so the entity operates on a cash neutral basis. This administrative fee is based on costs incurred, net of other revenues earned, and is allocated in accordance with the operating agreement to its owners based on volume of products. Contractual provisions cause participation in governance and other interests to fluctuate based on this calculated market share requiring frequent primary beneficiary evaluations. However, based on the existing structure, control is shared, and remains shared through such changes, and therefore we do not anticipate becoming the primary beneficiary in the foreseeable future. We consider BRI an affiliate. See "Affiliate Transactions" section below summarizing our transactions and balances with affiliates, including BRI.
We have an obligation to proportionately fund BRI's operations. As a result of this obligation, we continue to record our proportional share of BRI's net income or loss and OCI activity, including when we have a negative equity method balance. As of December 31, 2020 and December 31, 2019, we had a positive equity method investment balance of $31.9 million and $27.2 million, respectively. See "Affiliate Transactions" below for BRI affiliate transactions including administrative fees charged to MCBC under the agreement with BRI which are recorded in cost of goods sold, as well as for BRI affiliate due to and due from balances as of December 31, 2020 and December 31, 2019, respectively, related to trade receivables and payables for sales to external customers and costs incurred by BRI offset by administrative fees charged and paid by MCBC (which may be in a payable or receivable position depending on the amount under or over charged).
Brewers' Distributor Ltd.
BDL is a distribution operation owned by MCC and Labatt Breweries of Canada LP (a subsidiary of ABI) that, pursuant to an operating agreement, acts as an agent for the distribution of their products in the western provinces of Canada. The two owners share equal voting control of this business. We consider BDL an affiliate. See "Affiliate Transactions" section below summarizing our transactions and balances with affiliates, including BDL.
BDL charges the owners administrative fees that are designed so the entity operates at break-even profit levels. This administrative fee is based on costs incurred, net of other revenues earned, and is allocated in accordance with the operating agreement to the owners based on volume of products. Our investment in BDL was $27.0 million and $30.0 million as of December 31, 2020 and December 31, 2019, respectively. See "Affiliate Transactions" section below for BDL affiliate transactions including administrative fees charged to MCBC under the agreement with BDL which are recorded in cost of goods sold, as well as for BDL affiliate due to and due from balances as of December 31, 2020 and December 31, 2019, respectively, related to trade receivables and payables for sales to external customers and costs incurred by BDL offset by administrative fees charged and paid by MCBC (which may be in a payable or receivable position depending on the amount under or over charged).
Other
We have certain other immaterial equity investments we enter into from time to time that align with our organizational strategies and growth initiatives.
Our equity method investments are not considered significant for disclosure of financial information on either an individual or aggregated basis and there were no significant undistributed earnings as of December 31, 2020 or December 31, 2019, for any of these companies.
Affiliate Transactions
All transactions with our equity method investments are considered related party transactions and recorded within our affiliate accounts. The following table summarizes transactions with affiliates:
For the years ended
December 31, 2020December 31, 2019December 31, 2018
(In millions)
Administrative fees, net charged from BRI$87.6 $96.8 $94.0 
Administrative fees, net charged from BDL$32.1 $35.7 $40.2 
Amounts due to and due from affiliates as of December 31, 2020 and December 31, 2019, respectively, are as follows:
Amounts due from affiliatesAmounts due to affiliates
December 31, 2020December 31, 2019December 31, 2020December 31, 2019
(In millions)
BRI$6.0 $4.6 $— $— 
BDL2.1 4.0 — — 
Other0.3 0.3 0.5 — 
Total$8.4 $8.9 $0.5 $— 
Consolidated VIEs
Rocky Mountain Metal Container
RMMC, a Colorado limited liability company, is a joint venture with Ball Corporation in which we hold a 50% interest. Our U.S. business has a can and end supply agreement with RMMC. Under this agreement, we purchase substantially all of the output of RMMC. RMMC manufactures cans and ends at our facilities, which RMMC is operating under a use and license agreement. As RMMC is a limited liability company (“LLC”), the tax consequences flow to the joint venture partners.
Rocky Mountain Bottle Company
RMBC, a Colorado limited liability company, is a joint venture with Owens-Brockway Glass Container, Inc. in which we hold a 50% interest. Our U.S. business has a supply agreement with RMBC under which we agree to purchase output approximating the agreed upon annual plant capacity of RMBC. RMBC manufactures bottles at our facilities, which RMBC is operating under a lease agreement. As RMBC is an LLC, the tax consequences flow to the joint venture partners.
Cobra U.K.
We hold a 50.1% interest in Cobra U.K., which owns the worldwide rights to the Cobra beer brand (with the exception of the Indian sub-continent, owned by Cobra India). The noncontrolling interest is held by the founder of the Cobra beer brand. We consolidate the results and financial position of Cobra U.K., and it is reported within our Europe operating segment.
Truss
On October 4, 2018, a wholly-owned subsidiary within our Canadian business completed the formation of Truss LP, an independent Canadian joint venture with HEXO to pursue opportunities to develop, produce and market non-alcoholic, cannabis-infused beverages in Canada. Truss is structured as a standalone company with its own board of directors and an independent management team. We maintain a 57.5% controlling interest in Truss, which is a VIE that is consolidated. In connection with the formation of Truss, HEXO also issued warrants to our Canadian subsidiary, which are further discussed in Note 16, "Derivative Instruments and Hedging Activities." Truss also subleases the location of its production facility in Belleville, Ontario from HEXO.
The following summarizes the assets and liabilities of our consolidated VIEs (including noncontrolling interests):
 As of
 December 31, 2020December 31, 2019
 Total AssetsTotal LiabilitiesTotal AssetsTotal Liabilities
 (In millions)
RMMC/RMBC$239.3 $17.9 $207.4 $17.9 
Other$93.4 $18.0 $65.3 $20.8 
Grolsch Deconsolidation
In 2019, we received termination notices of our Grolsch U.K. Ltd. ("Grolsch") joint venture arrangement, as well as the related brewing and distribution agreements for the Grolsch brands in the U.K. and Ireland. We therefore reassessed our status as the primary beneficiary of the joint venture and concluded that we were no longer able to exert control over the operations or direction of the joint venture or otherwise influence the activities that most significantly impact the economics of the entity. As a result, we deconsolidated the joint venture and recorded an aggregate immaterial loss on the deconsolidation and termination of the Grolsch business as a special item in 2019.
v3.20.4
Other Income and Expense
12 Months Ended
Dec. 31, 2020
Other Income and Expenses [Abstract]  
Other Income and Expense Other Income and Expense
 For the years ended
 December 31, 2020December 31, 2019December 31, 2018
 (In millions)
Gain on sale of non-operating asset$— $— $11.7 
Gain (loss) from other foreign exchange and derivative activity, net2.8 (20.4)(31.9)
Other, net(1)
3.2 5.7 8.2 
Other income (expense), net$6.0 $(14.7)$(12.0)
(1)During 2019, we received a payment and recorded a gain of CAD 2.0 million, or $1.5 million, resulting from a purchase price agreement related to the historical sale of Molson Inc.'s ownership interest in the Montreal Canadiens, which is considered an affiliate of MCBC.
    During 2018, we recorded a non-cash gain of CAD 5.8 million, or $4.3 million, resulting from the release of our guarantee of the Montreal Canadiens' obligations under a ground lease for the Bell Centre Arena as a result of an independent transaction by the Montreal Canadiens with the lessor.
v3.20.4
Income Tax
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Tax Income Tax
Our income (loss) before income taxes on which the provision for income taxes was computed is as follows:
 For the years ended
 December 31, 2020December 31, 2019December 31, 2018
 (In millions)
Domestic$1,151.7 $1,136.1 $1,320.4 
Foreign(1,795.6)(656.2)39.4 
Total$(643.9)$479.9 $1,359.8 
The components of the provision for income taxes are as follows:
 For the years ended
 December 31, 2020December 31, 2019December 31, 2018
 (In millions)
Current:   
Federal$79.0 $69.1 $(22.9)
State5.2 9.4 (4.7)
Foreign111.4 46.7 38.7 
Total current tax (benefit) expense$195.6 $125.2 $11.1 
Deferred:   
Federal$101.9 $128.3 $232.2 
State19.5 22.2 31.2 
Foreign(15.2)(42.0)(49.3)
Total deferred tax (benefit) expense$106.2 $108.5 $214.1 
Total income tax (benefit) expense$301.8 $233.7 $225.2 
A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows:
 For the years ended
 December 31, 2020December 31, 2019December 31, 2018
($ in millions)
Statutory federal income tax rate21.0 %$(135.2)21.0 %$100.8 21.0 %$285.5 
State income taxes, net of federal benefits(1.7)%11.0 3.4 %16.4 1.4 %18.8 
Effect of foreign tax rates and tax planning3.5 %(22.3)(21.2)%(101.8)(8.1)%(109.5)
Effect of foreign tax law and rate changes(0.9)%6.0 — %— — %— 
Effect of unrecognized tax benefits(26.1)%167.9 3.7 %18.0 0.8 %10.9 
Change in valuation allowance1.3 %(8.4)6.0 %28.8 0.7 %9.5 
Goodwill impairment(41.4)%266.8 36.5 %175.3 — %— 
Other, net(2.6)%16.0 (0.7)%(3.8)0.8 %10.0 
Effective tax rate / Tax (benefit) expense(46.9)%$301.8 48.7 %$233.7 16.6 %$225.2 
The decrease to the effective tax rate, when compared to the statutory rate, for fiscal year 2020 is primarily driven by two items. The impact of the $1,484.3 million goodwill impairment, recorded within our Europe segment in the fourth quarter of 2020, of which a majority related to nondeductible goodwill and the recognition of approximately $135 million of tax expense following the enactment of the U.S. final hybrid regulations, recorded in the second quarter of 2020. The increase in the effective tax rate, when compared to the statutory rate, for fiscal year 2019 was primarily driven by the $668.3 million goodwill impairment recorded within our North America segment in 2019, increased valuation allowances, and the recognition of other one-time tax expenses. The decrease in the effective tax rate, when compared to the statutory rate, for fiscal year 2018 was primarily driven by one-time tax benefits.
Additionally, our foreign businesses operate in jurisdictions with statutory income tax rates that differ from the U.S. Federal statutory rate. Specifically, the statutory income tax rates in the countries in Europe in which we operate range from 9% to 25%, and Canada has a statutory income tax rate of approximately 26%.
During the third quarter of 2020, the U.K. government enacted legislation to repeal the previously enacted reduction to the U.K. corporate income tax rate. Remeasurement of our deferred tax liabilities resulted in the recognition of additional tax expense of approximately $6 million in 2020.
 As of
 December 31, 2020December 31, 2019
 (In millions)
Non-current deferred tax assets:  
Compensation-related obligations$60.9 $54.8 
Pension and postretirement benefits102.4 115.9 
Derivative instruments76.5 41.8 
Tax credit carryforwards56.2 41.1 
Tax loss carryforwards331.6 267.1 
Accrued liabilities and other75.5 50.1 
Valuation allowance(62.2)(73.8)
Total non-current deferred tax assets$640.9 $497.0 
Non-current deferred tax liabilities:  
Fixed assets358.3 353.7 
Partnerships and investments19.6 18.8 
Foreign exchange gain/loss— — 
Intangible assets2,396.9 2,279.9 
Total non-current deferred tax liabilities$2,774.8 $2,652.4 
Net non-current deferred tax assets— — 
Net non-current deferred tax liabilities$2,133.9 $2,155.4 
The overall decrease in net deferred tax liabilities of $21.5 million in 2020 is primarily due to an increase in deferred tax assets of $143.9 million attributable to additional tax loss carryforwards, tax credits, and future deductible temporary differences generated in 2020, offset by an increase in deferred tax liabilities of $122.4 million related to the amortization of goodwill and indefinite-lived intangible assets for U.S. tax purposes due to the Acquisition. Additionally, our deferred tax balances are also impacted by foreign exchange rates, as a significant amount of our deferred tax assets and liabilities are in foreign jurisdictions.
Our deferred tax valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits on tax loss carryforwards from operations in various jurisdictions. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that the deferred tax assets will not be realized. We have evaluated the realizability of our deferred tax assets in each jurisdiction by assessing the adequacy of expected taxable income, including the reversal of existing temporary differences, historical and projected operating results and the availability of prudent and feasible tax planning strategies. Based on this analysis, we have determined that the valuation allowances recorded in each period presented are appropriate.
We have deferred tax assets for U.S. tax carryforwards that expire between 2021 and 2040 of $62.4 million as of December 31, 2020, and that expire between 2020 and 2039 of $63.2 million as of December 31, 2019. We have U.S. tax losses that may be carried forward indefinitely of $19.9 million and $0 million as of December 31, 2020 and December 31, 2019, respectively. We have foreign tax loss carryforwards that expire between 2021 and 2040 of $283.5 million as of December 31, 2020, and that expire between 2020 and 2039 of $233.8 million as of December 31, 2019. We have foreign tax losses that may be carried forward indefinitely of $22.0 million and $11.2 million as of December 31, 2020 and December 31, 2019, respectively.
 As of
 December 31, 2020December 31, 2019
 (In millions)
Domestic net non-current deferred tax liabilities$1,542.8 $1,488.5 
Foreign net non-current deferred tax assets105.7 34.8 
Foreign net non-current deferred tax liabilities696.8 701.7 
Net non-current deferred tax liabilities$2,133.9 $2,155.4 
The fiscal year 2020 and 2019 amounts above exclude $142.1 million and $68.4 million, respectively, of unrecognized tax benefits that have been recorded as a reduction of non-current deferred tax assets, which is presented within non-current deferred tax liabilities due to jurisdictional netting on the consolidated balance sheets.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, is as follows:
 For the years ended
 December 31, 2020December 31, 2019December 31, 2018
 (In millions)
Balance at beginning of year$72.4 $51.6 $41.9 
Additions for tax positions related to the current year22.8 18.1 22.3 
Additions for tax positions of prior years132.1 — 0.7 
Reductions for tax positions of prior years(1.6)— (8.4)
Settlements(0.4)— — 
Release due to statute expirations— (0.8)(1.6)
Foreign currency adjustment10.4 3.5 (3.3)
Balance at end of year$235.7 $72.4 $51.6 
Our remaining unrecognized tax benefits as of December 31, 2020, relate to tax years that are currently open to examination. Annual tax provisions include amounts considered sufficient to pay assessments that may result from examination of prior year tax returns; however, the amount ultimately paid upon resolution of issues may differ materially from the amount accrued.     
Due to anticipated settlements and expected expiration of statutes of limitation, it is reasonably possible that the amount of unrecognized tax benefits may decrease by an amount up to $150 million within the next 12 months.
 For the years ended
 December 31, 2020December 31, 2019December 31, 2018
(In millions)
Reconciliation of unrecognized tax benefits balance
Estimated interest and penalties$11.4 $2.9 $2.3 
Unrecognized tax positions235.7 72.4 51.6 
Total unrecognized tax benefits$247.1 $75.3 $53.9 
Presented net against non-current deferred tax assets$142.1 $68.4 $47.8 
Current (included in accounts payable and other current liabilities)98.0 — — 
Non-current (included within other liabilities)7.0 6.9 6.1 
Total unrecognized tax benefits$247.1 $75.3 $53.9 
Amount of unrecognized tax benefits that would impact the effective tax rate, if recognized(1)
$87.7 $72.4 $51.6 
(1)Amounts exclude the potential effects of valuation allowances, which may fully or partially offset the impact to the effective tax rate.
We file income tax returns in most of the federal, state and provincial jurisdictions in the U.S., Canada and various countries in Europe. Tax years through 2013 are closed in the U.S. In Canada, tax years through tax year 2014 are closed or have been effectively settled through examination except for issues relating to intercompany cross-border transactions. The statute of limitations for intercompany cross-border transactions is closed through tax year 2012. Tax years through 2013 are closed for most European jurisdictions in which we operate, with statutes of limitations varying from 3 to 7 years. When working capital funds are available after satisfying all other business obligations, we may distribute cash from a foreign subsidiary to its U.S. parent and record the tax impacts associated with these transactions. However, to the extent current earnings are not otherwise distributed or planned to be distributed, in the current year, they are considered permanently reinvested in our foreign operations. We currently would not expect the aggregate of these permanently reinvested earnings, which are largely in deficit positions for U.S. tax purposes, to result in any material U.S. taxes, if distributed.
v3.20.4
Special Items
12 Months Ended
Dec. 31, 2020
Unusual or Infrequent Items, or Both [Abstract]  
Special Items Special Items
We have incurred charges or realized benefits that either we do not believe to be indicative of our core operations, or we believe are significant to our current operating results warranting separate classification. As such, we have separately classified these charges (benefits) as special items.
 For the years ended
 December 31, 2020December 31, 2019December 31, 2018
 (In millions)
Employee-related charges
Restructuring$67.6 $52.4 $34.7 
Impairments or asset abandonment charges
North America - Asset abandonment(1)
115.8 38.8 32.7 
North America - Impairment losses(2)
39.6 671.7 — 
Europe - Asset abandonment(3)
3.7 1.2 3.8 
Europe - Impairment losses(4)
1,516.2 12.2 — 
Termination fees and other (gains) losses
North America(5)
(2.0)(68.3)(326.9)
Europe(6)
(0.7)0.8 6.0 
Total Special items, net$1,740.2 $708.8 $(249.7)
(1)Following management approval in December 2019, in January 2020, we announced plans to cease production at our Irwindale, California brewery and entered into an option agreement with Pabst Brewing Company, LLC ("Pabst"), granting Pabst an option to purchase our Irwindale, California brewery, including plant equipment and machinery and the underlying land for $150 million, subject to adjustment as further specified in the option agreement. Pursuant to the option agreement on May 4, 2020, Pabst exercised its option to purchase the Irwindale brewery and the purchase was completed in the fourth quarter of 2020. Production at the Irwindale brewery ceased during the third quarter of 2020.
Charges associated with the brewery closure for the year ended December 31, 2020 and 2019 totaled $117.7 million and $15.8 million, respectively, excluding the fourth quarter gain on sale of the brewery of $2.1 million. The charges for the year ended December 31, 2020 primarily consisted of accelerated depreciation in excess of normal depreciation of $96.0 million and employee related costs of retention and severance of $16.5 million. The employee related costs of retention and severance are included in the restructuring line above. The charges for fiscal year 2019 primarily consisted of accelerated depreciation in excess of normal depreciation of $8.0 million and employee related costs of retention and severance of $1.1 million.
In addition to incurring accelerated depreciation for Irwindale, in 2020, 2019 and 2018, we incurred asset abandonment charges, related to the accelerated depreciation in excess of normal depreciation as a result of the Vancouver brewery closure, which occurred in the third quarter of 2019, and the planned Montreal brewery closure, which is currently expected to occur in 2021. We currently expect to incur additional charges, including estimated accelerated depreciation charges in excess of normal depreciation of approximately CAD 10 million, through the completion of the Montreal brewery closure. However, due to the uncertainty inherent in our estimates, these estimated future accelerated depreciation charges as well as the timing of the brewery closure are subject to change.
Charges in 2018 also included accelerated depreciation in excess of normal depreciation related to the closure of the Colfax, California cidery, which was completed during the first quarter of 2019, as well as other costs associated with
the previously closed Eden, North Carolina brewery, including net charges associated with the sale of the Eden real property.
(2)Of the $39.6 million of impairment losses recognized in the North America segment for the year ended December 31, 2020, we recorded aggregate impairment losses of $17.0 million related to certain regional craft brand definite-lived intangible assets during the fourth quarter of 2020. The estimates and assumptions used to determine the fair value represent Level 3 measurements and additional impairment losses may be recognized in the future. The remaining $22.6 million of impairments recognized in 2020 were related to definite-lived tangible assets associated with these regional craft brands.
Of the $671.7 million of impairment losses recognized in the North America segment in fiscal year 2019, we recorded $668.3 million of goodwill impairment losses related to the North America reporting unit. See Note 10, "Goodwill and Intangible Assets" for further discussion.
(3)We incurred asset abandonment charges in our Europe segment in fiscal year 2020 primarily related to the closure of a small brewery in Europe as a result of the ongoing impacts of the coronavirus pandemic. Further, as a result of our continued strategic review of our European supply chain network, during 2020, 2019 and 2018, we incurred charges consisting primarily of accelerated depreciation in excess of normal depreciation related to the closure of our Burton South brewery and Alton brewery and other associated closure costs.
(4)During the fourth quarter of 2020, we recognized goodwill impairment losses on the Europe reporting unit of $1,484.3 million. See Note 10, "Goodwill and Intangible Assets" for further discussion. In addition, during the fourth quarter of 2020, we incurred impairment losses as a result of small brewery closures in Europe as a result of the ongoing impact of the coronavirus pandemic. During the third quarter of 2020, we recognized an impairment loss of $30.0 million related to the held for sale classification of a disposal group within our India business, representing an insignificant part of our Europe segment. The held for sale disposal group was measured at fair value on a nonrecurring basis using Level 3 inputs. The estimated fair value less cost to sell was determined using a market approach, based upon the expected net sales proceeds of the disposal group. The remaining carrying value of the disposal group held for sale is presented within other current assets, net on our consolidated balance sheet as of December 31, 2020.
During the third quarter of 2019, we recorded goodwill impairment losses within the former India reporting unit of $6.1 million. We also recorded impairment losses related to definite-lived intangible assets in India of $6.1 million. See Note 10, "Goodwill and Intangible Assets" for further discussion.
(5)During 2020, we recognized termination fees and other gains of $2.0 million, which was primarily due to the gain recorded on the sale of the Irwindale brewery.
During the second quarter of 2019, we completed the sale of the existing Montreal brewery property for $96.2 million, and recognized a gain of $61.3 million. See Note 19, "Leases" for further discussion.
During the first quarter of 2018, we received $330.0 million from ABI, of which $328.0 million constituted a purchase price adjustment (the "Adjustment Amount"), related to the Miller International Business which was acquired in our acquisition of the remaining portion of MillerCoors which occurred on October 11, 2016. As this settlement occurred following the finalization of purchase accounting, we recorded the settlement proceeds related to the Adjustment Amount as a gain within special items, net in our consolidated statement of operations in the North America segment and within cash provided by operating activities in our consolidated statement of cash flows for the year ended December 31, 2018.
(6)During 2019, we recognized a special charge of $0.5 million related to the deconsolidation of the Grolsch joint venture.
Represents charges related to the exit of our China business in 2018, consisting primarily of the reclassification of the associated cumulative foreign currency translation adjustment from AOCI upon substantial liquidation in the fourth quarter of 2018. See Note 14, "Accumulated Other Comprehensive Income (Loss)" for further details.
Restructuring Activities
On October 28, 2019, as part of our revitalization plan, we made the determination to establish Chicago, Illinois as our North American operational headquarters, close our office in Denver, Colorado and consolidate certain administrative functions into our other existing office locations. In connection with these consolidation activities, certain impacted employees were extended an opportunity to continue their employment with MCBC in the new organization and locations and, for those not continuing with MCBC, certain of such employees were asked to provide transition assistance and offered severance and retention packages in connection with their termination of service. We expect the costs associated with the restructuring to be substantially recognized by the end of fiscal year 2021. After taking into account all changes in each of the business units,
including Europe, the revitalization plan has reduced employment levels, in aggregate, by approximately 600 employees globally.
In connection with these consolidation activities and related organizational and personnel changes, we currently expect to incur certain cash and non-cash restructuring charges related to severance, retention and transition costs, employee relocation, non-cash asset related costs, lease impairment and exit costs in connection with our office lease in Denver, Colorado, and other transition activities currently estimated in the range of approximately $100 million to $120 million in the aggregate, the majority of which will be cash charges that we began recognizing in the fourth quarter of 2019, and will be further recognized through the balance of 2021. During 2020 and 2019 we recognized severance and retention charges of $35.6 million and $41.2 million, respectively, and our remaining accrued restructuring balance related to the revitalization plan as of December 31, 2020 was approximately $19 million. Actual severance and retention costs related to this restructuring, which are primarily being recognized ratably over the employees’ required future service period, may differ from original estimates based on actual employee turnover levels prior to achieving severance and retention eligibility requirements. Employee relocation charges are recognized in the period incurred and totaled $11.0 million in 2020. Additionally, during 2020 and 2019, we recognized aggregate impairment losses of $7.6 million and $2.1 million, respectively, related to the closure of the office facility in Denver, Colorado, including our lease right-of-use asset, in light of the sublease market outlook as a result of the coronavirus pandemic. Should our ability to obtain future subtenant occupancy for the office location significantly differ from the estimates and assumptions used to determine its fair value, which represent Level 3 measurements, additional impairment losses may be recognized in the future.
Separately, during the third quarter of 2018, we initiated global restructuring activities primarily in the U.S. in order to align our cost base with our scale of business. As a result, we reduced U.S. employment levels by approximately 300 employees in the fourth quarter of 2018. Severance costs related to these restructuring activities were recorded as special items in our consolidated statements of operations.
We continually evaluate our cost structure and seek opportunities for further efficiencies and cost savings as part of ongoing and new initiatives. As such, we may incur additional restructuring related charges or adjustments to previously recorded charges in the future, however, we are unable to estimate the amount of charges at this time.
The accrued restructuring balances as of December 31, 2020 represent expected future cash payments required to satisfy our remaining obligations, the majority of which we expect to be paid in the next 12 months.
North AmericaEuropeTotal
(In millions)
Balance as of December 31, 2017$4.9 $2.0 $6.9 
Charges incurred and changes in estimates31.2 3.5 34.7 
Payments made(11.5)(4.3)(15.8)
Foreign currency and other adjustments(0.1)(0.1)(0.2)
Balance as of December 31, 2018$24.5 $1.1 $25.6 
Charges incurred and changes in estimates43.4 9.0 52.4 
Payments made(25.5)(5.6)(31.1)
Foreign currency and other adjustments0.2 — 0.2 
Balance as of December 31, 2019$42.6 $4.5 $47.1 
Charges incurred63.7 9.5 73.2 
Payments made(77.3)(11.1)(88.4)
Changes in estimates(4.6)(1.0)(5.6)
Foreign currency and other adjustments0.1 0.1 0.2 
Balance as of December 31, 2020$24.5 $2.0 $26.5 
v3.20.4
Stockholders' Equity
12 Months Ended
Dec. 31, 2020
Equity [Abstract]  
Stockholders' Equity Stockholders' Equity
Changes to the number of shares of capital stock issued were as follows:
 Common stock
issued
Exchangeable
shares issued
 Class AClass BClass AClass B
 (Share amounts in millions)
Balance as of December 31, 20172.6 204.7 2.9 14.7 
Shares issued under equity compensation plans— 0.7 — — 
Shares exchanged for Class B exchangeable shares— — (0.1)