Investing in our Company involves risk.
−Removed: The reader should carefully consider the following risk factors and the other information contained within this report.
+Added: Investors should carefully consider the following risk factors and the other information contained within this report.
The risks set forth below are those that management believes are most likely to have a material adverse effect on us.
−Removed: The reader is encouraged to read each risk factor as related and interconnected to the other risk factors set forth in this section.
+Added: Investors are encouraged to read each risk factor as related and interconnected to the other risk factors set forth in this section.
However, the risks set forth below are not a comprehensive description of the risks facing our Company.
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Risks Related to our Company and Operations
−Removed: The novel coronavirus pandemic, efforts to mitigate or disrupt the pandemic and related weak, or weakening of, economic or other negative conditions, have disrupted, and may continue to disrupt our business, which has had and could continue to have a material adverse effect on our operations, liquidity, financial condition and financial results.
−Removed: Our business has been, and we currently expect will continue to be, materially and adversely affected by the coronavirus pandemic and related weak, or continued weakening of, economic or other negative conditions, particularly in regions where we derive a significant amount of our revenue or profit or where our suppliers and business partners are located, including, in North America and Europe.
−Removed: Specifically, the coronavirus pandemic has disrupted and we currently expect it to continue to disrupt our business and potential associated financial impacts.
−Removed: Those impacts include, but are not limited to, lower net sales in markets affected by the pandemic, including potential material shifts in, and impacts to, demand, the inability to sell our products to on-premise consumers and further disruption to the on-premise channel, including staged on premise re-openings and subsequent closure of on-premise accounts, our ability to reinstate or pay a dividend, the delay of, and potential increased costs related to, inventory production and fulfillment, including packaging availability impacted by package mix shifts related to off-premise demand, including significantly increased need for and limited supplies of aluminum cans and paperboard, and lower return rates of our returnable packaging in certain markets, potentially impacting net sales and cost of goods globally and increased incremental costs associated with mitigating the effects of the pandemic, including increased raw materials, freight and logistics costs and other expenses.
−Removed: Packaging material supply shortages and supply chain constraints have impacted and could continue to negatively impact our ability to meet increased demand in off-premise channels or particular packages, particularly aluminum cans, which in turn could impact our net sales revenues and market share.
−Removed: Continued disruption and
−Removed: declines in the global economy have impacted and could continue to impact our customers’ liquidity and capital resources and therefore our ability to collect, or the timeliness of collection of our accounts receivable from them, which may have a material adverse impact on our performance, cash flows and capital resources.
−Removed: The coronavirus pandemic is ongoing, and its dynamic nature, including uncertainties relating to the ultimate spread of the virus, newer variants, the severity of the disease, the duration of the pandemic, the roll out and efficacy of the vaccines and related prolonged weakening of economic or other negative conditions, such as a recession or slowed economic growth in our markets, and actions that may be taken by governmental authorities to contain the pandemic or to mitigate its impact, makes it difficult to forecast any effects on our results of operations for 2021 and in subsequent years.
−Removed: However, our results of operations in 2020 were negatively affected and we currently expect our results of operations for 2021 to be significantly and adversely affected.
−Removed: Specifically, difficult macroeconomic conditions in our markets, such as further decreases in per capita income and level of disposable income, increased and prolonged unemployment or a further decline in consumer confidence as a result of the coronavirus pandemic, as well as limited or significantly reduced points of access of our product, could continue to have a material adverse effect on the demand for our products.
−Removed: Under difficult economic conditions, consumers may continue to seek to reduce discretionary spending by forgoing purchases of our products, by shifting away from our above-premium products to lower-priced products offered by us or other companies or by shifting to off-premise from on-premise consumption, negatively impacting our net sales and margins.
−Removed: Softer consumer demand for our products could reduce our profitability and could negatively affect our overall financial performance.
−Removed: A significant portion of our consolidated net sales revenues are concentrated in markets where the coronavirus pandemic impacts have been significant.
+Added: The coronavirus pandemic, efforts to mitigate or disrupt the coronavirus pandemic and related weak, or weakening of, economic or other negative conditions, have disrupted, and may continue to disrupt our business, which has had and could continue to have a material adverse effect on our operations, liquidity, financial condition and financial results.
+Added: Our business has been, and we currently expect will continue to be, materially and adversely affected by the ongoing coronavirus pandemic and related weak, or weakening of, economic or other negative conditions, particularly in regions where we derive a significant amount of our revenue or profit or where our suppliers and business partners are located, including those in regions of our Americas segment and EMEA&APAC segment.
Therefore, unfavorable macroeconomic conditions, including as a result of the coronavirus pandemic and any resulting recession or slowed economic growth, have had, and could continue to have, an outsized negative impact on us.
−Removed: In addition, difficult economic conditions may have a negative impact on our ability to access capital markets and other funding sources, on acceptable terms or at all, should we seek future financing.
−Removed: Additionally, we may have unexpected costs and liabilities;
−Removed: revenue and cash provided by operations may continue to decline;
−Removed: macroeconomic conditions may continue to weaken;
−Removed: prolonged and severe levels of unemployment may negatively impact our consumers;
−Removed: and competitive pressures may increase, resulting in difficulty maintaining adequate liquidity and meeting our deleverage commitments and as a result, our credit ratings could be downgraded, which would adversely impact our business, including by increasing our costs of future borrowing and harming our ability to refinance our debt in the future on acceptable terms or access the capital markets, if we are able to obtain additional financing on terms that are acceptable to us at all.
−Removed: Further, notwithstanding the amendment to our revolving credit facility on June 19, 2020 to revise the leverage ratios under the financial maintenance covenant upwards for the six fiscal quarters beginning with the second quarter of 2020, should the impacts of the pandemic and resulting performance adversely affect our ability to remain compliant with our covenants in our revolving credit facility agreement and absent another amendment or waiver from participating lenders, the outstanding borrowings on our revolving credit facility agreement may become immediately due.
−Removed: Such events may additionally trigger an event of default on our senior notes resulting in the potential acceleration of amounts due thereunder.
−Removed: In addition, the coronavirus pandemic and related efforts to mitigate its spread, have impacted, and may continue to impact for the foreseeable future, customer traffic to the on-premise channel, which includes bars, restaurants and sporting, festival and other large venues.
−Removed: Many governmental authorities across our North America and Europe businesses have required that bars and restaurants limit, close or cease sit-down service, which has negatively impacted and we expect will continue to negatively impact on-premise sales of our beverages and previously led to the incurrence of costs to repurchase products that on-premise accounts or distributors were unable or prohibited from selling as a result of the governmental regulations.
−Removed: Despite the limited reopening of on-premise accounts in certain of our markets in the second and third quarters, sales to restaurants and bars have not returned to pre-pandemic levels and in many instances, the reopened on-premise accounts have been subsequently forced to close in certain of our markets as a result of an increase in the spread of the coronavirus.
+Added: Specifically, the coronavirus pandemic has disrupted, and we currently expect it to continue to disrupt, our business and we also continue to expect certain associated financial impacts.
+Added: Those impacts include, but are not limited to, lower net sales in markets affected by the coronavirus pandemic, including potential material shifts in, and impacts to, demand, the inability to sell our products to on-premise consumers and further disruption to the on-premise channel, including staged on premise re-openings and subsequent closure of on-premise accounts, our ability to pay a dividend, the delay of, and potential increased costs related to, inflation in the overall macro economy, our supply chain, inventory production and fulfillment including packaging availability impacted by package mix shifts based on the prevalence of different packaging types for on-premise and off-premise channels, and lower return rates of our returnable packaging in certain markets, potentially impacting net sales and cost of goods globally and increased incremental costs associated with mitigating the effects of the coronavirus pandemic, including increased raw materials, freight and logistics costs and other expenses and disruptions.
+Added: Continued disruption and declines in the global economy have impacted and could continue to impact our customers’ liquidity and capital resources and therefore our ability to collect, or the timeliness of collection of our accounts receivable from them, which may have a material adverse impact on our performance, cash flows and capital resources.
+Added: The coronavirus pandemic is ongoing, and its dynamic nature, including uncertainties relating to the continued spread of the virus, newer variants, the severity of the disease, which can depend on the particular variant, the duration of the coronavirus pandemic, the efficacy of the vaccines and vaccine boosters against the coronavirus and related variants and related vaccination efforts and associated prolonged weakening of economic or other negative conditions, such as a recession or slowed economic growth in our markets, and actions that may be taken by governmental authorities to attempt to mitigate the impact of the coronavirus pandemic, makes it difficult to forecast any effects on our results of operations for 2022 and in subsequent years.
+Added: However, our results of operations in 2020 and 2021 were negatively affected and we currently expect our results of operations for 2022 could be significantly adversely affected.
+Added: In addition, the coronavirus pandemic and related efforts to mitigate its spread, have impacted, and may continue to impact for the foreseeable future, customer traffic to the on-premise channel, which includes bars, restaurants and sporting events, festivals and other large venues.
+Added: Many governmental authorities across the geographic regions in our Americas and EMEA&APAC segments have required that bars and restaurants limit, close or cease sit-down service at points during 2020, 2021 and to-date in 2022, which has negatively impacted the results of operations in our Americas and EMEA&APAC segments, and we expect will continue to negatively impact on-premise sales of our beverages and previously led to the incurrence of costs to repurchase products that on-premise accounts or distributors were unable or prohibited from selling as a result of the governmental regulations.
+Added: Despite the reopening of on-premise accounts in certain of our markets during 2021, sales to restaurants and bars have not returned to pre-coronavirus pandemic levels and in many instances, the reopened on-premise accounts have been subsequently forced to close at various times in certain of our markets as a result of an increase in the spread of the coronavirus or the outbreak of new variants.
We currently expect that closures and reduced on-premise consumption may continue for an unknown period, negatively impacting our net sales and margins.
−Removed: We also expect some on-premise accounts will see a decrease in demand as colder weather in the North American and European markets may reduce or eliminate their outdoor seating capacity.
−Removed: In addition, sporting events, festivals and other large public gatherings where our products are served have been canceled or permitted to take place only with limited or no attendance by the public throughout North America and Europe and we expect them to largely remain cancelled until a vaccine is distributed to the majority of the public.
+Added: We also expect some on-premise accounts will again see a decrease in demand in certain markets in our Americas segment and our EMEA&APAC segment in the winter months, which may again reduce or eliminate their outdoor seating capacity and affect the results of our operations in our Americas and EMEA&APAC segments.
+Added: In addition, sporting events, festivals and other large public
+Added: Ta b l e of C o n t e n t s
+Added: gatherings where our products are served have been canceled or permitted to take place only with limited attendance by the public throughout the geographies included in our Americas and EMEA&APAC segments.
Additionally, these and other governmental or societal impositions of restrictions on public gatherings, especially if prolonged in nature, will have adverse effects on on-premise traffic and, in turn, our business.
−Removed: Even if such measures are not implemented and coronavirus does not spread more significantly, or if after the pandemic has subsided, fear of re-occurrence or the perceived risk of infection or health risk may adversely affect traffic to the on-premise channel and, in turn, may have a material adverse effect on our business, liquidity, financial condition and results of operations, particularly if any self-imposed or governmental changes are in place for a significant amount of time.
−Removed: Moreover, our operations could be disrupted by our employees or employees of our business partners, including our supply chain partners, being diagnosed with coronavirus or were suspected of having coronavirus or other illnesses since this could require us or our business partners to quarantine some or all such employees or close and disinfect our or their facilities.
−Removed: If a significant percentage of our workforce or the workforce of our business partners are unable to work or if we or our
−Removed: business partners are required to close our or their production facilities, including because of illness or travel or government restrictions in connection with the coronavirus pandemic, our operations, including manufacturing and distribution capabilities, may be negatively impacted, potentially materially adversely affecting our business, liquidity, financial condition or results of operations.
+Added: Even if such measures are relaxed at certain points in time and the coronavirus does not continue to spread as rapidly as in recent months, or if after the coronavirus pandemic has subsided, fear of re-occurrence or the perceived risk of infection or health risk may adversely affect traffic to the on-premise channel and, in turn, may have a material adverse effect on our business, liquidity, financial condition and results of operations, particularly if any self-imposed or governmental changes are in place for a significant amount of time.
+Added: Moreover, our operations could be disrupted by our employees or employees of our business partners, including our supply chain partners, being diagnosed with coronavirus or being suspected of having coronavirus or other illnesses since this could require us or our business partners to quarantine some or all such employees or close and disinfect our or their facilities.
+Added: In late 2021, our U.S.
+Added: and Canada corporate office and certain field sales employees who were working remotely returned to their respective work offices on a part-time basis.
+Added: If a significant percentage of our workforce or the workforce of our business partners are unable to work or if we or our business partners are required to close our or their office or production facilities, including because of illness, the risks of which may be increased due to employees returning to work, or travel or government restrictions in connection with the coronavirus pandemic, our operations, including manufacturing and distribution capabilities, may be negatively impacted, potentially materially adversely affecting our business, liquidity, financial condition or results of operations.
+Added: In addition, if governments elect to mandate the vaccine or regular testing of employees, such impositions may cause workforce shortages, particularly in our supply chain and with our supply chain partners, which could similarly have a negative impact on our operations including increased costs to implement such mandates.
The global beer industry and the broader alcohol industry are constantly evolving, and our position within the global beer industry and our markets in which we operate may fundamentally change.
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As a result of the increased global consolidation of brewers and the dynamic of an expanding new segment within the industry with new market entrants, the markets in which we operate, particularly the more mature markets, may evolve at a disadvantage to our current market position and local governments may intervene, which may fundamentally accelerate transformational changes to such markets.
−Removed: For example, the North American beer markets have long consisted of a select number of significant market participants with government-regulated routes to market.
+Added: For example, the U.S.
+Added: and Canada beer markets have long consisted of a select number of significant market participants with government-regulated routes to market.
However, evolution in these markets and our other beer markets, together with emerging changes to consumer preferences, have introduced a significant increase in market entrants and resulted in increased consumer choice and market competition, as well as increased government scrutiny.
−Removed: Specifically, our North American and European markets have experienced vast expansion in the craft beer industry along with the expansion of cider, flavored malt beverages (including hard seltzers), CBD beverages and other similar beverages.
−Removed: If our competitors are able to respond more quickly to the evolving trends within the craft beer, cider, hard seltzer, flavored malt beverages, CBD beverages and other similar beverages categories, or if our new products in these categories are not successful, our business and financial results may be adversely impacted.
+Added: Specifically, the markets in which we operate have experienced vast expansion in above premium, specifically in craft beer, cider, flavored malt beverages (including hard seltzers), ready to drink beverages, spirit-based beverages, CBD and other cannabis beverages and other similar beverages.
+Added: If our competitors are able to respond more quickly to the evolving trends within the craft beer, hard seltzer, flavored malt beverages, ready to drink malt-based, sugar-based and spirits-based beverages, CBD and other cannabis beverages and other similar beverages categories, or if our new products in these categories are not successful, our business and financial results may be adversely impacted.
In addition, certain states in the U.S.
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In Canada, changes to interprovincial trade rules, regulations, distribution models, and packaging requirements, such as government-owned retail outlets and industry standard returnable bottles, may be disadvantageous to us.
−Removed: Currently, in Ontario and other provinces, provincial governments are reviewing and/or changing this historical foundation as a result of this market evolution and increased demand by some for government's intervention to remove distribution restrictions.
+Added: Currently, in Ontario and other provinces, provincial governments are reviewing and/or changing this historical foundation as a result of this market evolution and increased demand by some for government's intervention to remove distribution regulations, including potential changes to the beer distribution and the retail systems in Ontario as discussed below.
We also compete generally with other alcoholic beverages.
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We believe this has been driven by a generational demographic shift away from beer in particular towards other alcoholic and non-alcoholic beverages.
−Removed: As discussed above, even within the beer industry we have seen a shift away from the traditionally most popular beer brands and segments and a corresponding expansion in the craft beer industry along with the expansion of cider, hard seltzers, flavored malt beverages, CBD beverages and other similar beverages.
−Removed: Accordingly, we have initiated our revitalization plan, pursuant to which we will strive to achieve more consistent topline growth by expanding beyond beer and into adjacent beverage categories.
+Added: As discussed above, even within the beer industry we have seen a shift away from the traditionally most popular beer brands and segments and a corresponding expansion in above premium beers, including craft and import beers along with
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+Added: the expansion of hard seltzers, flavored malt beverages, ready to drink malt-based, sugar-based and spirits-based beverages, CBD and other cannabis beverages and other similar beverages.
+Added: Accordingly, under the revitalization plan we announced in 2019, we are striving to achieve more consistent topline growth by growing our above premium beer offerings, expanding beyond beer and into adjacent alcohol and non-alcohol beverage categories.
However, if we are unsuccessful in evolving with, and navigating through, the changes to the markets in which we operate, there could be a material adverse effect on our business and financial results.
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In many of our markets, our primary competitors have greater financial, marketing, production and distribution resources than we do, and may be more diverse in terms of their geographies and brand portfolios.
+Added: Furthermore, our competitors may respond to industry and economic conditions and shifts in consumer behaviors more rapidly or effectively than us.
+Added: In order for us to remain competitive, we will need to quickly and correctly continue to adopt digital technologies, build analytical capabilities and scale brand expense investment levels, particularly following the coronavirus pandemic, which our competitors may be able to achieve faster and with more resources.
In all of the markets in which we operate, aggressive marketing strategies, such as reduced pricing, brand positioning, and increased capital or other investments by these competitors could have a material adverse effect on our business and financial results.
−Removed: In addition, continuing consolidation among major global brewers and between brewers and other beverage companies may lead to stronger or new competitors, loss of partner brands, negative impacts on our distributor networks and pressures from marketing and pricing tactics by competitors.
+Added: In addition, continuing consolidation among major global brewers and between brewers and other beverage companies and convergence of beverage categories may lead to stronger or new competitors, loss of partner brands, negative impacts on our distributor networks, alternate distribution networks and pressures from marketing and pricing tactics by competitors.
Further consolidation of distributors in our industry could reduce our ability to promote our brands in the markets in a manner that enhances rather than diminishes our brands' value, as well as reduce our ability to manage our pricing effectively and efficiently.
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Such pressures could have a material adverse impact on our business and our financial results and market share.
−Removed: Failure to generate significant cost savings and margin improvement through our ongoing
−Removed: initiatives could adversely affect our profitability.
+Added: Failure to generate significant cost savings and margin improvement through our ongoing initiatives could adversely affect our profitability.
Increased pressures for reduced pricing or difficulties in increasing prices while remaining competitive within our markets, as well as the need for increased capital investment, marketing and other expenditures could result in lower margins or loss of market share and volumes.
Moreover, most of our major markets are mature, so growth opportunities may be more limited to us than to our global competitors.
−Removed: For example, net sales in North America accounted for approximately 85% of our total 2020 net sales.
+Added: For example, net sales in our Americas segment accounted for approximately 83% of our total 2021 net sales.
As a result, to the extent that we are unable to maintain or grow our market share in our mature markets, our sales and, in turn, business and financial results could be materially and adversely affected.
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if consumer preferences shift away from our products, consumption of our products decline or we are unable to successfully and timely innovate beyond beer, our business and financial results could be materially adversely affected.
−Removed: Our Coors Light and Miller Lite brands in the U.S., Coors Light, Molson Canadian , Coors Original and Carling brands in Canada, and Carling, Staropramen, Jelen, Bergenbier and Coors Light brands in Europe represented more than half of each respective segment's sales volumes in 2020.
−Removed: Additionally, several of our brands represent a significant share of their respective market, therefore volatility in these markets could disproportionately impact the performance of these brands.
+Added: Our Coors Light and Miller Lite brands in the U.S., Coors Light, Molson Canadian , Coors Original and Carling brands in Canada, collectively, our brands in the Americas, and Carling, Staropramen, Jelen, Bergenbier and Coors brands in EMEA&APAC represented more than half of each respective segment's sales volumes in 2021.
+Added: Additionally, several of our brands represent a significant share of their respective market, therefore continued volatility in these markets could disproportionately impact the performance of these brands.
Consequently, any material shift in consumer preferences away from these brands, or from the categories in which they compete, could have a material adverse effect on our business and financial results.
Consumer preferences and tastes may shift away from our brands or beer generally due to, among others, changing taste preferences, demographics, downturn in economic conditions or perceived value, as well as changes in consumers' perception of our brands due to negative publicity, regulatory actions or litigation.
−Removed: Recently, there has been more attention focused on health concerns and the harmful consumption of alcoholic beverages which could result in a change in the social acceptability of beer and other alcoholic beverages which could materially impact the consumption of beer and our sales.
−Removed: Additionally, in some of our major markets, specifically North America and Europe, there has been a shift in consumer preferences within the total beer market away from premium brands to "craft beer" produced by smaller, regional microbreweries, as well as a shift within the total alcohol beverage market from beer to wine and spirits.
+Added: Recently, there has been more attention focused on health concerns and the harmful consumption of alcoholic beverages which could result in a change in the social acceptability of beer and other alcoholic beverages which could materially impact the consumption of beer, other alcohol beverages and our sales.
+Added: Additionally, there has been a shift in consumer preferences within the total beer market away from premium brands to above premium beers, including "craft beer" produced by smaller, regional microbreweries, as well as a shift within the total alcohol beverage market from beer to wine and spirits and continued shifts away from premium brands could impact our future results of operations in the Americas and EMEA&APAC segments.
More recently, the rapid growth of hard seltzers in the U.S.
−Removed: may have shifted some consumers away from our brands and beer generally.
+Added: may have shifted some consumers away from our brands and premium beer generally.
Moreover, several of our major markets are mature and we have a significant share in such markets, therefore, small movements in consumer preference, such as consumer shifts away from premium light brands, can also disproportionately impact our results.
−Removed: Although the ultimate impact is currently unknown, the emergence of legal cannabis in certain states in the United States and in Canada may result in a shift of discretionary income away from our products or a change in consumer preferences away from beer.
+Added: Although the ultimate impact is currently unknown, the emergence of legal cannabis in certain states in the U.S.
+Added: and in Canada may result in a shift of discretionary income away from our products or a change in consumer preferences
+Added: Ta b l e of C o n t e n t s
+Added: away from beer or our other products.
As a result, a shift in consumer preferences away from our products or beer or a decline in the consumption of our products could result in a material adverse effect on our business and financial results.
Furthermore, as part of our revitalization plan, our future topline growth will depend, in part, on our ability to timely innovate and develop new products beyond traditional beer.
−Removed: In connection with our revitalization plan, we plan to innovate, test and scale products faster than we have before.
+Added: In connection with our revitalization plan, we plan to continue to innovate, test and scale products faster than we have before.
However, the launch and ongoing success of new products are inherently uncertain, especially with respect to consumer appeal.
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In addition, the coronavirus pandemic has altered, and in some cases, delayed product innovation efforts.
−Removed: We were making progress against these ambitions, before the impact of the coronavirus pandemic became widespread throughout North America and Europe.
−Removed: As a result of this pandemic and resulting uncertainty in the economy, we are making adjustments in the short-term and intend to use the savings, generated from the revitalization plan, to help protect our cash and liquidity position.
+Added: We were making progress against these ambitions before the impact of the coronavirus pandemic became widespread throughout the markets in our Americas and EMEA&APAC segments.
Our inability to attract consumers to our product innovations relative to our competitors’ products, especially over time, could negatively affect our growth, business, and financial results.
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Deterioration to our brand equity may be difficult to combat or reverse and could have a material effect on our business and financial results.
−Removed: In addition, because our brands carry family names or we may partner with celebrities or other famous sponsors, personal activities by certain members of the Molson or Coors families or our promotional partners that harm their public image or reputation could also have an
−Removed: adverse effect on our brands or the Company.
+Added: In addition, because our brands carry family names or we may partner with celebrities or other famous sponsors, personal activities by certain members of the Molson or Coors families or our promotional partners that harm their public image or reputation could also have an adverse effect on our brands or our Company.
Further, our success is dependent on our ability to protect our intellectual property rights, including trademarks, patents, domain names, trade secrets and know-how.
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Changes in the social acceptability, perceptions and the political view of the beverage categories in which we operate, including alcohol and cannabis, could adversely affect our business.
−Removed: In recent years, there has been an increase in public and political attention on health and well-being as it relates to the alcohol beverage and other categories in which we operate.
−Removed: In addition, the alcoholic beverage industry is regularly the subject of anti-alcohol activist activity related to the health concerns from the misuse of alcohol and concerns regarding underage drinking and exposure to alcohol advertisements.
+Added: In recent years, there has been an increase in public and political attention on health and well-being as it relates to the alcohol beverage and other categories in which we operate including cannabis.
+Added: In addition, the alcoholic beverage industry is regularly the subject of anti-alcohol activist activity related to the health concerns from the harmful use of alcohol and concerns regarding underage drinking and exposure to alcohol advertisements.
Negative publicity regarding beer and changes in consumer perceptions in relation to beer, other alcoholic, CBD, or other cannabinoid beverages could adversely affect the sale and consumption of our products which could, in turn, adversely affect our business and financial conditions.
+Added: The changing legal landscape with respect to cannabis and the lack of consumer market data makes it difficult to predict the pace at which the cannabis market may grow, if at all, and the products that consumers will purchase in the cannabis marketplace.
Additionally, the concerns around alcohol, CBD and cannabis as well as health and well-being could result in unfavorable regulations or other legal requirements in certain of our markets, such as advertising, selling and other restrictions, increased taxes associated with our sales, or the establishment of minimum unit pricing.
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To the extent such views gain traction in regulations of jurisdictions in which we do or plan to do business, they could have a material adverse effect on our business and financial results.
+Added: For example, in February 2021, the European Union published its Europe Beating Cancer Plan.
+Added: As part of the plan, by the end of 2023, the European Union will issue a proposal for mandatory health warnings on alcohol beverage product labels.
Weak, or weakening of, economic or other negative conditions in the markets in which we do business, including reductions in discretionary consumer spending, could have a material adverse effect on our business and financial results.
Beer consumption in many of our markets is closely tied to general economic conditions and a significant portion of our portfolio consists of premium and above premium brands.
−Removed: Difficult macroeconomic conditions in our markets, such as further decreases in per capita income and level of disposable income driven by increases to inflation, income taxes, the cost of living, increased and prolonged unemployment or a further decline in consumer confidence as a result of the coronavirus pandemic or otherwise, as well as limited or significantly reduced points of access of our product, political or economic instability other country-specific factors could continue to have a material adverse effect on the demand for our products.
+Added: Difficult macroeconomic conditions in our markets, such as further decreases in per capita income and level of disposable income driven by increases to inflation, income (and other) taxes, the
+Added: Ta b l e of C o n t e n t s
+Added: cost of living, increased and prolonged continued unemployment or a further decline in consumer confidence, in each case, as a result of the coronavirus pandemic or otherwise, as well as limited or significantly reduced points of access of our product, political or economic instability or other country-specific factors could continue to have a material adverse effect on the demand for our products.
For example, a trend towards value brands in certain of our markets or deterioration of the current economic conditions could result in a material adverse effect on our business and financial results.
−Removed: A significant portion of our consolidated net sales revenues are concentrated in North America and Europe.
−Removed: Therefore, unfavorable macroeconomic conditions, such as a recession or slowed economic growth, in North America or Europe could negatively affect consumer demand for our product in these important markets.
−Removed: Under difficult economic conditions, consumers may continue to seek to reduce discretionary spending by forgoing purchases of our products, by shifting away from our above-premium products to lower-priced products offered by us or other companies or by shifting to off-premise from on-premise consumption, negatively impacting our net sales and margins.
+Added: A significant portion of our consolidated net sales are concentrated in the U.S., Canada and countries in Europe, and accordingly represent the majority of net sales within our Americas and EMEA&APAC segments, respectively.
+Added: Therefore, unfavorable macroeconomic conditions, such as a recession or continued slowed economic growth, in the U.S., Canada or countries in Europe could negatively affect consumer demand for our product in these important markets, which consequently, may negatively affect the results of operations in our Americas and EMEA&APAC segments.
+Added: Under difficult economic conditions, consumers may seek to reduce discretionary spending by forgoing purchases of our products, by shifting away from our above premium products to lower-priced products offered by us or other companies or by shifting to off-premise from on-premise consumption, negatively impacting our net sales and margins.
Softer consumer demand for our products could reduce our profitability and could negatively affect our overall financial performance.
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Uncertain economic and financial market conditions may also adversely affect the financial condition of our customers, suppliers and other business partners.
−Removed: Any significant decrease in in consumers' purchases of our products or our inability to collect accounts receivable, resulting from an adverse impact of the global markets on consumers' financial condition could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Our restructuring activities related to our revitalization plan may not be successful and the estimated costs associated with such activities may be more than expected, and our restructuring activities may adversely impact employee hiring and retention.
−Removed: On October 28, 2019, as part of the 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.
−Removed: However, the coronavirus pandemic has altered, and in some cases, delayed our ability to implement components of the revitalization plan.
−Removed: We were making progress against these ambitions before the impact of the coronavirus pandemic became widespread.
−Removed: As a result of this pandemic and resulting uncertainty in the economy, we made adjustments in the short-term and used a significant portion of the savings generated from the revitalization to help protect our cash and liquidity position.
−Removed: In connection with these consolidation activities, we currently expect to incur certain cash and non-cash restructuring charges related to severance, retention and transition costs, non-cash asset related costs, lease exit costs in connection with our office lease in Denver, Colorado, and other transition activities currently estimated in the range
−Removed: 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 fiscal year 2021.
−Removed: During 2020 and 2019, we recognized severance and retention charges of $35.6 million and $41.2 million, respectively, bringing the aggregate of such charges to approximately $100 million since the plan was initiated.
−Removed: These expenses will adversely impact our results of operations during the relevant periods and will reduce our cash position.
−Removed: Additionally, the amount of these estimated expenses, as well as our ability to achieve the anticipated cost savings, revitalization plan goals and other benefits of our restructuring activities, are subject to various assumptions and uncertainties.
−Removed: We may also experience additional costs in connection with these restructuring activities due to delays or other unforeseen circumstances.
−Removed: There is no assurance that we will successfully implement, or fully realize the anticipated costs and other benefits of our restructuring activities or execute successfully on our restructuring plan, in the time frames we desire or at all.
−Removed: If we fail to realize the anticipated benefits, including ongoing cost savings, or if we incur charges or costs in amounts that are greater than anticipated, our business, financial condition and operating results may be adversely affected.
−Removed: In connection with the consolidation of our office locations, we experienced a certain amount of employee turnover and have had to recruit, hire and train new talent.
−Removed: The turnover, the onboarding of new talent and any resulting distraction has the potential to negatively impact the overall performance of our employees and employee morale, resulting in loss of institutional knowledge, inefficiencies, higher short- or long-term costs, or decreased productivity.
−Removed: As a result of these or other similar risks, our business, plans, strategies, financial condition and operating results may be adversely affected.
+Added: Any significant decrease in consumers' purchases of our products or our inability to collect accounts receivable, resulting from an adverse impact of the global markets on consumers' financial condition could have a material adverse effect on our business, financial condition and results of operations.
+Added: ESG issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition and results of operations and damage our reputation.
+Added: Companies across all industries are facing increasing scrutiny relating to their ESG practices and policies.
+Added: Increased focus and activism related to ESG may hinder our access to capital, as investors may reconsider their capital investment as a result of their assessment of our ESG practices.
+Added: In particular, investor advocacy groups, institutional investors, other market participants, stockholders, employees, consumers and customers have increasingly focused on ESG practices of companies, including sustainability performance and risk mitigation efforts.
+Added: These stakeholders have placed increased importance on ESG practices and their effect on companies from an investor, consumer, customer or employee perspective.
+Added: If our ESG practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our stock price, brand, sales, ability to access capital markets, reputation and employee retention, among other things, may be negatively affected.
+Added: In addition, as part of our Company's Our Imprint 2025 strategy, we have published goals across a range of ESG areas, including alcohol responsibility, environmental sustainability and DEI matters.
+Added: If we do not adapt to or comply with, new ESG regulations, including climate change and related ESG disclosure requirements, or fail to meet the ESG goals under Our Imprint 2025 strategy or evolving investor, industry or stakeholder expectations and standards, or if we are perceived (whether or not valid) to have not responded appropriately to the growing concern for ESG issues, customers and consumers may choose to stop purchasing our products or purchase products from another company or a competitor, and our reputation, business or financial condition may be adversely affected.
+Added: Although we intend to meet these goals, we may be required to expend significant resources to do so, which could increase our operational costs.
+Added: Moreover, we may determine that it is in the best interest of our Company and our stockholders to prioritize other business, social, governance or sustainable investments over the achievement of our current goals based on economic, technological developments, regulatory and social factors, business strategy or pressure from investors, activist groups or other stakeholders.
+Added: If we are unable to meet these commitments, then we could incur adverse publicity and reaction from investors, activist groups or other stakeholders, which could adversely impact the perception of us and our products and services by current and potential customers, as well as investors, which could in turn adversely impact our results of operations.
Climate change and other weather events may negatively affect our business and financial results.
There is concern that a gradual increase in global average temperatures could cause significant changes in global weather patterns and an increase in the frequency and severity of natural disasters.
+Added: Global climate change is expected to have various impacts on our operations, ranging from more frequent extreme weather events to extensive governmental policy developments and shifts in consumer preferences, which have the potential individually or collectively to significantly disrupt our business as well as negatively affect our suppliers, supply chain and customers.
Changing weather patterns and more volatile weather conditions could result in decreased agricultural productivity in certain regions that may impact quality, limit availability or increase the cost of key agricultural commodities, such as hops, barley and other cereal grains, which are important ingredients for our products.
−Removed: Increased frequency or duration of extreme weather conditions could also impair production capabilities, disrupt our supply chain, distribution networks and routes to market, or impact demand for our products.
−Removed: Public concern over climate change may result in new or increased regional, federal and global legal and regulatory requirements to reduce or mitigate carbon emissions, or to limit or impose additional costs on carbon and water usage.
−Removed: In the event that such regulation is more stringent than current regulatory obligations, or the measures that we are currently undertaking to monitor and improve our resource efficiency, we may experience disruptions in, or increases in our costs of, operation and delivery due to investments in facilities and equipment or relocate our facilities.
+Added: Increased frequency or duration of extreme weather conditions, including power disruptions due to the foregoing,
+Added: Ta b l e of C o n t e n t s
+Added: could also impair production capabilities, disrupt our supply chain, distribution networks and routes to market, or impact demand for our products, any of which may cause us to experience additional costs to maintain or resume operations.
+Added: Public concern over climate change has resulted in, and may continue to result in, new or increased regional, federal and global legal and regulatory requirements to reduce or mitigate carbon emissions, to limit or impose additional costs on carbon and water usage or other climate-related objectives.
+Added: In the event that such regulation is more stringent than current regulatory obligations, or the measures that we are currently undertaking to monitor and improve our resource efficiency, we may experience disruptions in, or increases in our costs of, operation and delivery due to investments in facilities and equipment or the relocation of our facilities.
In particular, new regulation and taxation of fuel and energy could increase the cost of operation, including fuel required to operate our facilities or transport and distribute our products, thereby increasing the distribution and supply chain costs associated with our products.
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Any failure to achieve our enterprise-wide sustainability goals, or perception (whether or not valid) of our failure to act responsibly, or to effectively respond to new, or changes in, environmental, legal or regulatory requirements could adversely affect our business, reputation or financial condition.
+Added: Beyond the commercial pressures implicated by climate change concerns, our operations may face potential adverse physical effects.
+Added: For example, we have a major brewery in the state of Colorado, which has recently experienced several major wildfires, and we have another major brewery in Texas, which experienced a severe winter weather event in 2021.
+Added: If any of these or other of our properties and production facilities were to experience a significant operational disruption or catastrophic loss due to natural disasters or severe weather events, it could delay or disrupt production, shipments, and revenue, and result in potentially significant expenses to repair or replace these properties.
An inadequate supply or availability of quality water could have a material adverse effect on, among other things, our sales, production processes, other costs and, in turn, profitability.
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Further, unavailability of clean water at our breweries or our other facilities or the facilities of our suppliers could limit our ability to brew, which could cause a decrease in production.
+Added: We have substantial brewery operations in the states of Colorado and Texas, which have been areas vulnerable to water scarcity conditions.
+Added: Certain western U.S.
+Added: states are experiencing an extended period of drought, which can impact the quality and quantity of agricultural ingredients such as barley and hops, and a recurrence of such conditions could have an adverse effect upon our agricultural supply chain.
We and our suppliers are dependent on sufficient amounts of quality water for operation of our breweries and key facilities and the key facilities of our significant suppliers.
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If water available to our operations or the operations of our suppliers becomes scarce or the quality of that water deteriorates, we may incur increased production costs or face production constraints.
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Loss, operational disruptions or closure of a major brewery or other key facility, including those of our suppliers, due to unforeseen or catastrophic events or otherwise, could have a material adverse effect on our business and financial results.
−Removed: Our business could be interrupted and our financial results could be materially adversely impacted by physical risks such as earthquakes, fires, hurricanes, floods, acts of war, terror attacks, cyber-attacks and other disruptions in information technology systems, disease outbreaks or pandemics, such as the ongoing coronavirus pandemic, and other natural disasters or catastrophic events that damage, disrupt or destroy one of our breweries or key facilities or the key facilities of our significant suppliers.
+Added: Our business could be interrupted and our financial results could be materially adversely impacted by physical risks such as earthquakes, fires, hurricanes, floods, acts of war, terror attacks, cyber-attacks and other disruptions in information technology systems, including the March 2021 cybersecurity incident discussed in more detail below, disease outbreaks or pandemics, such as the ongoing coronavirus pandemic, and other natural disasters or catastrophic events that damage, disrupt or destroy one of our breweries or key facilities or the key facilities of our significant suppliers.
Climate change and warmer global temperatures may also increase the intensity and frequency of these extreme weather events.
If any of our breweries or key facilities or the key facilities of our significant suppliers were to experience a significant operational disruption or catastrophic loss, it could delay or disrupt production, shipments and revenue, and result in potentially significant expenses to repair or replace these properties.
−Removed: Such significant disruptions could be due to, among other things, the loss or disruption of the timely availability of adequate supplies of essential raw materials, including as a result of illness to our respective employees or their families or governmental restrictions on such employees' ability to travel or perform necessary business functions or as a result of the need for us or our suppliers to operate our respective businesses with substantial modifications to employee travel and employee work locations;
+Added: Such significant disruptions could be due to, among other things, the loss or disruption of the timely availability of adequate supplies of essential raw materials, including as a result of cyber-attacks and other disruptions in information technology systems;
+Added: illness to our respective employees or their families or governmental restrictions on such employees' ability to travel or perform necessary business functions or as a result of the need for us or our suppliers to operate our respective businesses with substantial modifications to employee travel and employee work locations;
transportation and logistics challenges, including as a result of port and border closures and other governmental restrictions and the availability and capacity of shipping channels as customers may shift to increased online shopping;
and the loss or disruption of other manufacturing, distribution and supply capabilities.
+Added: Recently, we experienced certain of the foregoing risks and losses in connection with the March 2021 cybersecurity incident.
Additionally, certain catastrophes are not covered by our general insurance policies, which could result in significant unrecoverable losses.
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Further, significant excess capacity at any of our breweries as a result of increased efficiencies in our supply chain process or continued volume declines, could result in under-utilization of our assets, which could lead to excess overhead expenses or additional costs incurred associated with the closure of one or more of our facilities.
−Removed: For example, as part of a strategic review of our supply chain network, certain breweries and bottling lines were closed in recent years, and we have and continue to incur brewery closure costs, including charges associated with the planned closure of the Irwindale brewery in 2020, which was subsequently sold to Pabst Brewing Company, LLC, in the fourth quarter of 2020.
+Added: For example, as part of a strategic review of our supply chain network, certain breweries and bottling lines were closed in recent years, and we have incurred brewery closure costs, including charges associated with the planned closure of the Irwindale brewery in 2020, which was subsequently sold to Pabst Brewing Company, LLC, in the fourth quarter of 2020.
We regularly review our supply chain network to ensure that our supply chain capacity is aligned with the needs of the business.
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In addition, we have experienced minor temporary workforce disruptions in our supply chain as a result of the coronavirus pandemic.
−Removed: We have implemented employee safety measures, based on guidance from the Centers for Disease Control and Prevention and World Health Organization, across all our supply chain facilities, including proper hygiene, social distancing, mask use and temperature screenings.
−Removed: These measures may not be sufficient to prevent the spread of the coronavirus among our employees, illness, travel restrictions, absenteeism or other workforce disruptions could negatively affect our supply chain, manufacturing, distribution or other business processes.
+Added: We have implemented employee safety measures, based on guidance from the Centers for Disease Control and Prevention, the Occupational Safety and Health Administration and World Health Organization, across all our supply chain facilities, including proper hygiene, social distancing and mask use.
+Added: These measures may not be sufficient to prevent the spread of the coronavirus among our employees and illness, travel restrictions, absenteeism or other workforce disruptions could negatively affect our supply chain, manufacturing, distribution or other business processes.
We may face additional production disruptions in the future which may place constraints on our ability to produce products in a timely manner or may increase our costs.
−Removed: Due to a high concentration of workers represented by unions or trade councils in North America and Europe, we could be significantly affected by labor strikes, work stoppages or other employee-related issues.
−Removed: As of December 31, 2020, approximately 33% and 29% of our North American and European workforces, respectively, are represented by trade unions or councils.
+Added: For instance, if a government or other regulatory authority were to impose mandatory vaccination or testing requirements, this could significantly increase our costs and could cause significant workforce disruptions and negatively impact our hiring and retention of employees, all of which could negatively affect our supply chain, manufacturing, distribution or other business processes.
+Added: Due to a high concentration of workers represented by unions or trade councils in our Americas and EMEA&APAC segments, we could be significantly affected by labor strikes, work stoppages or other employee-related issues.
+Added: As of December 31, 2021, approximately 32% and 26% of our Americas and EMEA&APAC workforces, respectively, are represented by trade unions or councils.
Stringent labor laws in certain of our key markets expose us to a greater risk of loss should we experience labor disruptions in those markets.
A prolonged labor strike, work stoppage or other employee-related issue, could have a material adverse effect on our business and financial results.
−Removed: For example, in the first quarter of 2017, our Toronto brewery unionized employees commenced a labor strike initiated from on-going negotiations of the collective bargaining agreement.
−Removed: This labor strike resulted in slower than expected production at the Toronto brewery in the first quarter of 2017.
+Added: For example, in the first few months of 2021, we experienced a labor disruption with our Toronto brewery unionized employees resulting from on-going negotiations of the collective bargaining agreement.
+Added: This labor disruption resulted in slightly slower than expected production at the Toronto brewery in the first few months of 2021.
From time to time, our collective bargaining agreements come due for renegotiation, and, if we are unable to timely complete negotiations, affected employees may strike, which could have an adverse effect on our business and financial results.
+Added: For example, in late 2021 and 2022 we have been negotiating collective bargaining agreements with our Québec unionized sales, distribution and brewery employees.
+Added: Although we believe that our relations with the labor unions that represent our Québec employees are generally good, no assurance can be made that we will successfully negotiate those agreements and unsuccessful negotiations may affect our business and operations.
+Added: If a strike or lockout were to occur, it could have an adverse effect on our business and financial results.
Because of our reliance on third-party service providers and internal and outsourced systems for our information technology and certain other administrative functions, we could experience a disruption to our business.
−Removed: We rely extensively on information services providers worldwide for our information technology functions including network, help desk, hardware and software configuration.
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+Added: extensively on information services providers worldwide for our information technology functions including network, help desk, hardware and software configuration.
Additionally, we rely on internal networks and information systems and other technology, including the internet and third-party hosted services, to support a variety of business processes and activities, including procurement and supply chain, manufacturing, distribution, invoicing and collection of payments.
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A breach of our information systems could cause material financial or reputational harm.
−Removed: Our information systems may be the target of cyber-attacks or other security breaches, which, if successful, could, among other things, expose us to the loss of key business, employee, customer or vendor information, cause us to breach our legal, regulatory or contractual obligations, create an inability to access or rely upon critical business records or cause a disruption of our operations.
+Added: Our information systems may be the target of cyber-attacks or other security breaches, which, if successful, could, among other things, cause a disruption to our operations, expose us to the loss of key business, employee, customer or vendor information, cause us to breach our legal, regulatory or contractual obligations, generate a disruption in the continuity of our business applications and services, create an inability to access or rely upon critical business records, cause reputational damage, or impact the costs or ability to obtain adequate insurance coverage.
These breaches may result from human errors, equipment failure, or fraud or malice on the part of employees or third parties.
−Removed: If our information systems suffer severe damage, disruption or shutdown, we could experience delays in reporting our financial results and we may lose revenue and profits as a result of our inability to timely manufacture, distribute, invoice and collect payments from our customers.
+Added: A breach of our information systems, including the March 2021 cybersecurity incident disclosed in Part II - Item 7.
+Added: Management 's Discussion and Analysis of Financial Condition and Results of Operation in this report, could subject us to litigation, including class action or derivative lawsuits regulatory fines, and penalties, any of which could have a significant negative impact on our cash flows, competitive position, reputation, financial condition or results of operation.
+Added: If our information systems suffer outages we could experience delays and disruptions in our business, including brewery operations, production and shipments, such as those we experienced with the March 2021 cybersecurity incident.
+Added: In addition, if our information systems suffer severe damage, disruption or shutdown, such as those we experienced with the March 2021 cybersecurity incident, we could experience delays in reporting our financial results, and we may lose revenue and profits as a result of our inability to timely invoice and collect payments from customers.
We have seen an increase in the number of such attacks recently as a large number of our employees are working remotely and accessing our technology infrastructure remotely as a result of the coronavirus pandemic.
+Added: In addition, the March 2021 cybersecurity incident may embolden other individuals or groups to target our information systems and impact the costs or ability for us to obtain adequate insurance coverages moving forward.
Further, such attacks may originate from nation states or attempts by outside parties, hackers, criminal organizations or other threat actors.
−Removed: We expend significant financial resources to protect against threats and cyber-attacks and may be required to further expend financial resources to alleviate problems caused by physical, electronic and cyber security breaches.
+Added: We expend significant financial resources to protect against threats and cyber-attacks and may be required to further expend financial resources to alleviate problems caused by physical, electronic and cyber security breaches, including the potential for increased ongoing expense related to the March 2021 cybersecurity incident and to address possible increased information system attacks as a result of the incident.
As techniques used to breach security are growing in frequency and sophistication and are generally not recognized until launched against a target, regardless of our expenditures and protection efforts, we may not be able to implement security measures in a timely manner or, if and when implemented, these measures could be circumvented.
−Removed: Misuse, leakage or falsification of information could result in a violation of data privacy laws and regulations, such as the European Union's General Data Protection Regulation, damage our reputation and credibility or expose us to increased risk of lawsuits, loss of existing or potential future customers and/or increases in our security costs, any of which could have a material adverse effect on our business and financial results.
−Removed: In addition, we may suffer financial and reputational damage because of lost or misappropriated confidential information and may become subject to legal action and increased regulatory oversight or consumers may avoid our brands due to negative publicity.
We could also be required to spend significant financial and other resources to remedy the damage caused by a security breach or to repair or replace networks and information systems, which could have a material adverse effect on our business and financial results.
+Added: For example, we incurred certain incremental one-time costs of $2.4 million in the year ended December 31, 2021 related to consultants, experts and data recovery efforts, net of insurance recoveries.
+Added: Misuse, leakage or falsification of information could result in a violation of data privacy laws and regulations, including but not limited to, the European Union's General Data Protection Regulation, California Privacy Rights Act, which will take effect on January 1, 2023, or the Virginia Consumer Data Protection Act, which will take effect on January 1, 2023, damage our reputation and credibility or expose us to increased risk of lawsuits, loss of existing or potential future customers and/or increases in our security costs, any of which could have a material adverse effect on our business and financial results.
+Added: In addition, we may suffer financial and reputational damage because of lost or misappropriated confidential information and may become subject to legal action and increased regulatory oversight or consumers may avoid our brands due to negative publicity.
In the event of a breach resulting in loss of data, such as personally identifiable information or other such data protected by data privacy or other laws, we may be liable for damages, fines and penalties for such losses under applicable regulatory frameworks despite not handling the data.
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Poor investment performance of pension plan holdings and other factors impacting pension plan costs could unfavorably affect our business, liquidity and our financial results.
−Removed: Our costs of providing defined benefit pension plans are dependent upon a number of factors, such as the rates of return on the plans' assets, discount rates, the level of interest rates used to measure the required minimum funding levels of the plans, exchange rate fluctuations, government regulation, court rulings or other changes in legal requirements, global equity prices, and our required and/or voluntary contributions to the plans.
+Added: Our costs of providing defined benefit pension plans are dependent upon a number of factors, such as the rates of return on the plans' assets, discount rates, the level of interest rates used to measure the required minimum funding levels of the plans, exchange rate fluctuations, government regulation, court
+Added: Ta b l e of C o n t e n t s
+Added: rulings or other changes in legal requirements, global equity prices, and our required and/or voluntary contributions to the plans.
While we comply with the minimum funding requirements, we have certain qualified pension plans with obligations which exceed the value of the plans' assets.
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Our future success depends on our ability to identify, attract and retain qualified personnel on a timely basis.
−Removed: If we were to experience turnover of senior management or if a member of our senior management were to become ill or incapacitated, our stock price, our results of operations and our client relationships could each be adversely impacted and such events may make recruiting for future management positions more difficult.
+Added: If we were to experience turnover of senior management or if a member of our senior management were to become ill or incapacitated, our stock price, our results of operations, our commercial and supply chain operations and our vendor or customer relationships could each be adversely impacted and such events may make recruiting for future management positions more difficult.
In addition, we must successfully integrate any new management personnel that we hire within our organization, or who join our organization as a result of an acquisition, in order to achieve our operating objectives, and changes in other key management positions may temporarily affect our financial performance and results of operations as new management becomes familiar with our business.
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If we are not able to maintain compliance with stated financial covenants or if we breach other covenants in any debt agreement, we could be in default under such agreement or trigger a cross-default of other debt instruments.
−Removed: Such a default would adversely affect our credit ratings, may allow our creditors to accelerate the related
−Removed: indebtedness, and may result in the acceleration of any other indebtedness to which a cross-acceleration or cross-default provision applies.
+Added: Such a default would adversely affect our credit ratings, may allow our creditors to accelerate the related indebtedness, and may result in the acceleration of any other indebtedness to which a cross-acceleration or cross-default provision applies.
Our significant debt level and the terms of such debt could, among other things:
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• limit our ability to refinance our indebtedness on terms acceptable to us, or at all;
−Removed: • limit our flexibility to plan for and adjust to changing business and market conditions, including successfully
−Removed: execute our revitalization plan, and increase our vulnerability to general adverse economic and industry
−Removed: conditions, such as the current economic climate caused by the coronavirus pandemic;
+Added: • limit our flexibility to plan for and adjust to changing business and market conditions, including successfully execute our revitalization plan, and increase our vulnerability to general adverse economic and industry conditions, such as the current economic climate caused by the coronavirus pandemic;
• require us to make unfavorable changes to our current financing structure;
−Removed: • require us to dedicate a substantial portion of our cash flow to make interest and principal payments on our
−Removed: debt, thereby limiting the availability of our cash flow to fund future acquisitions, working capital, business
−Removed: activities, and other general corporate requirements;
−Removed: • limit our ability to obtain additional financing for working capital, capital expenditures, strategic
−Removed: opportunities, including acquisitions or other investments, to fund growth or for general corporate purposes,
−Removed: even when necessary to maintain adequate liquidity, particularly if any ratings assigned to our debt securities
−Removed: by rating organizations were revised downward;
+Added: • require us to dedicate a substantial portion of our cash flow to make interest and principal payments on our debt, thereby limiting the availability of our cash flow to fund future acquisitions, working capital, business activities, and other general corporate requirements;
+Added: • limit our ability to obtain additional financing for working capital, capital expenditures, strategic opportunities, including acquisitions or other investments, to fund growth or for general corporate purposes, even when necessary to maintain adequate liquidity, particularly if any ratings assigned to our debt securities by rating organizations were revised downward;
• adversely impact our competitive position in the industry.
−Removed: In addition, certain of our current and future debt and derivative financial instruments have or, in the future, could have interest rates that are tied to reference interest rates, such as the LIBOR.
+Added: In addition, certain of our current and future debt and derivative financial instruments have or, in the future, could have interest rates that are tied to reference interest rates.
The volatility and availability of such reference rates are out of our control.
Accordingly, changes to or the unavailability of such rates, could result in increases to the cost of debt which would negatively affect our profitability.
−Removed: For example, in 2017, the UK’s Financial Conduct Authority announced that after 2021 it would no longer persuade or compel panel banks to submit the rates required to calculate LIBOR, and it is unclear whether the banks currently reporting information used to set LIBOR will stop doing so after 2021.
−Removed: At this time, it is not possible to predict the effect any discontinuance, modification or other reforms to LIBOR or any other reference rate, or the establishment of alternative reference rates will have on us.
−Removed: However, should LIBOR no longer be available or if the methods of calculating LIBOR change from their current form, our borrowing costs could increase, which would negatively affect our profitability, and the attractiveness of borrowings under our current credit facility or future debt issuances could diminish, thereby limiting our access to capital.
+Added: For example, in March 2021, the U.K.’s Financial Conduct Authority announced that after 2021 it would no longer persuade or compel panel banks to submit the rates required to calculate LIBOR with the exception of the majority of U.S.
+Added: dollar LIBOR tenors ceasing at the end of June 2023.
+Added: Regulators, industry groups and certain committees such as the Alternative Reference Rates Committee ("ARRC") have, among other things, published recommended fallback language for LIBOR-linked financial instruments and identified recommended alternatives for certain LIBOR rates, such as the Secured Overnight Financing Rate ("SOFR") as a more robust reference rate alternative to USD LIBOR.
+Added: SOFR is calculated based on short-term repurchase agreements, backed by Treasury securities.
+Added: SOFR is observed and backward looking, which stands in contrast with LIBOR under the current methodology, which is an estimated forward-looking rate and relies, to some degree, on
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+Added: the expert judgment of submitting panel members.
+Added: Given that SOFR is a secured rate backed by government securities, it is a rate that does not take into account bank credit risk, as is the case with LIBOR.
+Added: SOFR is therefore likely to be lower than LIBOR and is less likely to correlate with the funding costs of financial institutions.
+Added: Because of these and other differences, there is no assurance that SOFR will perform the same way as LIBOR would have performed at any time, and there is no guarantee that it is a comparable substitute for LIBOR.
+Added: Whether or not SOFR attains market traction as a LIBOR replacement tool remains in question.
+Added: However, the consequences of the adoption of any such alternative reference rates such as SOFR cannot be predicted and could have an adverse impact on the amount of interest and commitment fees that we pay under our credit facility.
+Added: Likewise, the unavailability of LIBOR may have an adverse impact on interest rates and other financing costs under other debt instruments and other financial obligations of ours, as well as the market value of and the payments we receive under any LIBOR-linked securities or investments that we may own from time to time.
+Added: In addition, financial markets generally may be adversely affected by the discontinuation of LIBOR, the uncertainties regarding its discontinuation, the alternative reference rates that are being or may be used in place of LIBOR and other issues related to LIBOR.
+Added: Any of the foregoing could adversely affect our results of operations and financial condition.
+Added: Any such discontinuance, modification, alternative reference rates or other reforms may cause our borrowing costs to increase, which would negatively affect our profitability, and the attractiveness of borrowings under our current credit facility or future debt issuances could diminish, thereby limiting our access to capital.
A deterioration in our credit rating could increase our borrowing rates or have an adverse effect on our ability to obtain future financing or refinance current debt.
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While we have publicly expressed our intention to maintain an investment grade debt rating, ratings are determined by third-party rating agencies and in some cases the events that may cause us to suffer a ratings downgrade are unpredictable and outside of our control, such as the economic climate caused by the coronavirus pandemic and its impact on our business.
−Removed: A credit ratings downgrade, particularly a downgrade below investment grade, could increase our costs of future borrowing, negatively impact our hedging instruments and harm our ability to refinance our debt in the future on acceptable terms or access the capital markets.
+Added: A credit ratings downgrade, particularly a downgrade below investment grade, could increase our costs of future borrowing, negatively impact our hedging instruments or sources of short-term liquidity and harm our ability to refinance our debt in the future on acceptable terms or access the capital markets.
Default by, or failure of, one or more of our counterparty financial institutions could cause us to incur significant losses.
−Removed: As part of our risk management activities, we enter into transactions involving derivative financial instruments, including, among others, forward contracts, commodity swap contracts, option contracts, with various financial institutions.
+Added: As part of our risk management activities, we enter into transactions involving derivative financial instruments, including, among others, forward contracts, commodity swap contracts and option contracts, with various financial institutions.
In addition, we have significant amounts of cash and cash equivalents on deposit or in accounts with banks or other financial institutions in the U.S.
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If one of our counterparties were to become insolvent or file for bankruptcy, our ability to recover losses incurred as a result of default or to retrieve our assets that are deposited or held in accounts with such counterparty may be limited by the counterparty's liquidity or the applicable laws governing the insolvency or bankruptcy proceedings.
−Removed: Our operations face significant exposure to changes in commodity prices, which could materially and adversely affect our business and financial results.
−Removed: We use a large volume of agricultural and other raw materials, some of which are purchased through supply contracts with third parties, to produce our products, including barley, malted barley, hops, corn, other various starches, water and packaging materials, including aluminum cans and bottles, glass and polyethylene
−Removed: terephthalate containers, as well as, cardboard and other paper products.
+Added: Our operations face significant exposure to changes in commodity and other input prices, which could materially and adversely affect our business and financial results.
+Added: We use a large volume of agricultural and other raw materials, some of which are purchased through supply contracts with third parties, to produce our products, including barley, malted barley, hops, corn, other various starches, water and packaging materials, including aluminum cans and bottles, glass and polyethylene terephthalate containers, as well as, cardboard and other paper products.
We also use a significant amount of diesel fuel, natural gas and electricity in our operations.
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and increased the price of aluminum used in some of our product packaging.
−Removed: In addition, our North America business unit is exposed to variability in the market price of a regional premium differential (referred to as “Midwest Premium” in the U.S.) charged by industry participants to deliver aluminum from the smelter to the manufacturing facility.
+Added: In addition, in the U.S., we are exposed to variability in the market price of a regional premium differential (referred to as “Midwest Premium”) charged by industry participants to deliver aluminum from the smelter to the manufacturing facility.
This premium differential also fluctuates in relation to several conditions, including based on the supply of and demand for aluminum in a particular region, associated transportation costs and warehouse financing transactions, which limit the amount of physical aluminum available to consumers and increases the price differential as a result.
During times of greater volatility in the Midwest Premium, the variability in our cost of goods sold can also increase.
−Removed: In addition to impacting the price we pay for the raw materials we purchase, changing premium differentials impact our end consumers as we must either pass on the increased cost to those consumers or experience a decrease in our profit margins as a result of the Midwest Premium differential.
+Added: In addition to impacting the price we pay for the raw materials we purchase, changing premium differentials impact our end consumers as we must either pass on the increased cost to those consumers or experience
+Added: Ta b l e of C o n t e n t s
+Added: a decrease in our profit margins as a result of the Midwest Premium differential.
Increases in the Midwest Premium, or the inability to pass through any fluctuation in aluminum prices or regional premiums to our end consumers, could have a material adverse effect on our business, financial condition, results of operations and cash flow.
Further, despite our ability to source raw materials necessary to meet demand for our products, certain raw materials such as barely, malted barley, hops, corn, other various starches, water and packaging materials, including aluminum cans and, bottles, glass and polyethylene terephthalate containers, as well as cardboard and other paper products, have been adversely impacted by the coronavirus pandemic.
−Removed: In recent years, we experienced a shift in the allocation among different packaging types toward aluminum cans and bottles and away from glass bottles.
−Removed: This accelerated in 2020 due to the coronavirus pandemic where we observed a shift in volume to off-premise channels and aluminum cans and away from on-premise channels and glass bottles.
−Removed: In general, aluminum cans allow for lower packaging costs compared to most other types of packaging materials.
−Removed: The trend away from glass bottles could result in higher fixed cost deleverage related to these assets and an ultimate decreased need for the assets that support this packaging, which could adversely impact profitability.
+Added: In 2020, we experienced a shift in the allocation among different packaging types toward aluminum cans and bottles and away from glass bottles.
+Added: This accelerated in 2020 and continued in 2021 due to the coronavirus pandemic where we observed a shift in volume to off-premise channels and aluminum cans and away from on-premise channels and glass bottles.
+Added: In 2021, with the reopening of the on-premise channels, we have seen a shift in volume back to the on-premise channels and glass bottles, which led to tightness in glass bottles supplies.
+Added: The shifting consumption patterns between off-premise and on-premise, and the corresponding shift between aluminum and glass bottle packaging could result in supply shortages, higher costs and out-of-stocks, which could adversely impact sales and profitability.
In Canada, the standard returnable bottle requires significant investment behind our returnable bottle inventory and bottling equipment.
−Removed: Although we are unable to predict the impact to our ability to source these materials in the future, we expect these supply pressures to continue into 2021.
We distribute our products and receive raw materials primarily by rail or truck.
Reduced availability of rail or trucking capacity has caused, and could continue to cause, us to incur unanticipated expenses.
−Removed: In particular, reduced trucking capacity due to shortages of drivers, as a result of the coronavirus pandemic, and a federal regulation requiring drivers to electronically log their driving hours, among other reasons, have caused an increase in the cost of transportation for us and our suppliers.
−Removed: We believe commodity and other cost increases and volatility especially due to the coronavirus pandemic, could continue in the future.
+Added: In particular, reduced trucking capacity due to shortages of drivers, as a result of the coronavirus pandemic in general and in Europe specifically due to the U.K.'s departure from the European Union, and a federal regulation requiring drivers to electronically log their driving hours, among other reasons, have caused an increase in the cost of transportation for us and our suppliers.
+Added: We believe commodity and other cost increases and volatility especially due to the coronavirus pandemic, and inflationary pressures could continue in the future.
If such increases occur or exceed our estimates or projections and we are not able to increase the prices of our products or achieve cost savings to offset such cost increases, our business, financial condition and results of operations would be harmed.
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Sustained price increases may lead to declines in volume as competitors may not adjust their prices or consumers may decide not to pay the higher prices, which could lead to sales declines and loss of market share, and our projections may not accurately predict the volume impact of price increases, which could adversely affect our business, financial condition and results of operations.
−Removed: Furthermore, to the extent any of the foregoing factors affect the availability or prices of ingredients or packaging or our hedging arrangements do not effectively or completely hedge changes in commodity price risks and we are not able to pass these increased costs along to customers, our business and financial results could also be materially adversely impacted.
+Added: Furthermore, to the extent any of the foregoing factors affect the availability or prices of ingredients or packaging or our hedging arrangements do not effectively or completely hedge changes in commodity price risks, including cost inflation, and we are not able to pass these increased costs along to customers, our business and financial results could also be materially adversely impacted.
+Added: Our operations are dependent on the global supply chain and impacts of supply chain constraints and inflationary pressure could adversely impact our operating results.
+Added: Our businesses have been, and may continue to be, impacted by supply chain constraints, raw materials and ingredient shortages, resulting in inflationary pressure on material costs, longer lead times, port congestion and increased freight costs caused, in part, by the coronavirus pandemic and the uncertain economic environment.
+Added: In addition, current or future governmental policies may increase the risk of inflation, which could further increase the costs of raw materials and other components for our businesses.
+Added: Similarly, if costs of goods continue to increase, our suppliers may seek price increases from us.
+Added: If we are unable to mitigate the impact of supply chain constraints and inflationary pressure through price increases or other measures, our results of operations and financial condition could be negatively impacted.
+Added: Even if we are able to raise the prices of our products, consumers might react negatively to such price increases, which could have a material adverse effect on, among other things, our brand, reputation and sales.
+Added: If our competitors maintain or substantially lower their prices, we may lose customers and mark down prices.
+Added: Our profitability may be impacted by prices that do not offset the inflationary pressures, which may impact gross margins.
+Added: Even though our businesses are working to alleviate supply chain constraints through various measures, such as sourcing from additional suppliers and using alternative delivery methods or materials, we are unable to predict the impact of these constraints on the timing of revenue and operating costs of our business in the near future.
+Added: Packaging material supply shortages and supply chain constraints, including cost inflation, have impacted and could continue to negatively impact our ability to meet increased demand in off-premise channels or particular packages, particularly aluminum cans, which in turn could impact our net sales and market share.
+Added: In addition, in 2021, shortages of raw materials and disruption to the global supply chain negatively impacted sales, costs and inventory availability and may continue to have a negative impact on future results and profitability.
+Added: For example, we are experiencing higher transportation costs and input costs.
+Added: Higher transportation costs are a result of increased fuel prices, a short supply of truckers worldwide and increased freight costs.
+Added: Driver shortages are forcing us to use the spot market and to pay spot market prices which are higher than they have been in many years.
+Added: We are also taking steps to reduce the impact of driver shortages by shipping more beverages on rail.
+Added: Besides impacting our outbound shipments, our suppliers are facing difficulty in timely delivering the materials we need and we are also experiencing increased supply costs due to overall cost inflation.
+Added: The volatility of aluminum prices, inclusive of Midwest Premium and tariffs, continued to significantly impact our results during the year ended December 31, 2021.
+Added: To the extent these prices continue to fluctuate, our business and financial results could be materially adversely impacted.
+Added: Ta b l e of C o n t e n t s
We may incur impairments of the carrying value of our goodwill and other intangible assets which could have a material adverse effect on our business and financial results.
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Potential resulting charges from an impairment of goodwill or brand intangible, as well as reclassification of an indefinite-lived to a definite-lived brand intangible, could have a material adverse effect on our results of operations.
−Removed: For example, the results of our annual goodwill impairment testing completed as of October 1, 2020, indicated that the fair value of
−Removed: our Europe reporting unit was below its carrying value.
−Removed: As a result, we recorded an impairment charge of approximately $1.5 billion recorded within special items in our consolidated statements of operations during the fourth quarter of 2020.
−Removed: Additionally, we identified a triggering event requiring an interim impairment assessment of the goodwill within our historical Canada reporting unit at the end of the third quarter of 2019, which resulted in a goodwill impairment loss of $668.3 million recorded within special items in our consolidated statements of operations during the third quarter of 2019.
−Removed: Furthermore, in the fourth quarter of 2016, an impairment loss of $495.2 million was recorded on the Molson core brand indefinite-lived intangible assets and it was determined that the Molson core brands had characteristics that had evolved which indicated a definite-life was more appropriate.
−Removed: These brands were therefore reclassified as definite-lived intangible assets and are being amortized over useful lives ranging from 30 to 50 years.
−Removed: Our most recent impairment analysis, conducted as of October 1, 2020, the first day of our fiscal fourth quarter, indicated that the fair value of the North America reporting unit was estimated at approximately 7% in excess of its carrying value.
−Removed: As noted above, the carrying value of our Europe reporting unit was determined to be in excess of its fair value such that an impairment loss of approximately $1.5 billion was recorded.
−Removed: In the current year testing, it was determined that the fair value of the North America reporting unit declined during the year and is considered to be at risk of future impairment in the event of significant unfavorable changes in the forecasted cash flows (including Company-specific risks like the performance of our above-premium transformation efforts and overall market performance of new innovations like hard seltzers, along with macro-economic risks like the continued prolonged weakening of economic conditions, or significant unfavorable changes in tax rates, environmental or other regulations, including interpretations thereof), terminal growth rates, market multiples and/or weighted-average cost of capital utilized in the discounted cash flow analyses.
−Removed: The Staropramen indefinite-lived intangible asset is also considered to be at risk of future impairment with a fair value estimated at approximately 9% in excess of its carrying value as of the impairment testing date.
−Removed: Although the fair values of our North America reporting unit and indefinite-lived intangible assets are either equal to or in excess of their carrying values, the fair values are sensitive to the aforementioned potential unfavorable changes that could have an adverse impact on future analyses.
−Removed: Any future impairment of the North America reporting unit or our indefinite-lived intangible assets, or reclassification of indefinite-lived intangible assets to definite-lived, may result in material charges that could have a material adverse effect on our business and financial results, as evidenced by the charges incurred during the third quarter of 2019 and fourth quarter of 2020, as previously noted above.
+Added: For example, the results of our 2020 annual goodwill impairment testing completed as of October 1, 2020, indicated that the fair value of our EMEA&APAC reporting unit was below its carrying value.
+Added: As a result, we recorded an impairment charge of approximately $1.5 billion recorded within special items, net, in our consolidated statements of operations during the fourth quarter of 2020.
+Added: As of the year ended December 31, 2020, the EMEA&APAC reporting unit was fully impaired.
+Added: Additionally, we identified a triggering event requiring an interim impairment assessment of the goodwill within our historical Canada reporting unit at the end of the third quarter of 2019, which resulted in a goodwill impairment loss of $668.3 million recorded within special items, net, in our consolidated statements of operations during the third quarter of 2019.
+Added: Additionally, our impairment analysis, conducted as of October 1, 2021, indicated that the fair value of the Americas reporting unit was estimated at less than 10% in excess of its carrying value.
+Added: In the current year testing, it was determined that the fair value of the Americas reporting unit is considered to be at risk of future impairment in the event of significant unfavorable changes in the forecasted cash flows (including Company-specific risks like the performance of our above-premium transformation efforts and overall market performance of new innovations like hard seltzers, and our expansion in products beyond-the-beer aisle, along with macro-economic risks like the continued prolonged weakening of economic conditions and cost inflation, or significant unfavorable changes in income tax rates, environmental or other regulations, including interpretations thereof), terminal growth rates, market multiples and/or weighted-average cost of capital utilized in the discounted cash flow analyses.
+Added: Although the fair values of our Americas reporting unit and indefinite-lived intangible assets are either equal to or in excess of their carrying values, the fair values are sensitive to the aforementioned potential unfavorable changes that could have an adverse impact on future analyses.
+Added: Any future impairment of the Americas reporting unit or our indefinite-lived intangible assets, or reclassification of indefinite-lived intangible assets to definite-lived, may result in material charges that could have a material adverse effect on our business and financial results, as evidenced by the charges incurred during the fourth quarter of 2020 and third quarter of 2019, as previously noted above.
The testing of our goodwill for impairment is also predicated upon our determination of our reporting units.
Any change to the conclusion of our reporting units or the aggregation of components within our reporting units could result in a different outcome to our annual impairment test.
−Removed: See Part II—Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Estimates and Part II—Item 8 Financial Statements and Supplementary Data, Note 10, "Goodwill and Intangible Assets" for additional information related to the results of our annual impairment testing.
+Added: See Part II—Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations, " Critical Accounting Estimates " and P art II—Item 8 Financial Statements and Supplementary Data, Note 10, "Goodwill and Intangible Assets" for additional information related to the results of our annual impairment testing.
+Added: The estimates and assumptions on which our financial projections are based may prove to be inaccurate, which may cause our actual results to materially differ from such projections, which may adversely affect our future profitability, cash flows and stock price.
+Added: Our financial projections, including any sales or earnings guidance or outlook we may provide from time to time, are dependent on certain estimates and assumptions related to, among other things, our revitalization plan, category growth, development and launch of innovative new products, market share projections, product pricing, sales, volume and product mix, foreign exchange rates and volatility, tax rates, commodity prices, distribution through truck versus railcar, cost savings, accruals for estimated liabilities, including litigation reserves, measurement of benefit obligations for pension and other postretirement benefit plans, and our ability to generate sufficient cash flow to reinvest in our existing business, fund internal growth, repurchase our stock, make acquisitions, invest in joint ventures, pay dividends and meet debt obligations.
+Added: In addition, our ability to achieve our revitalization plan goals, and the anticipated cost savings and other benefits of our restructuring activities, are subject to various assumptions and uncertainties.
+Added: There is no assurance that we will fully realize the anticipated costs and other benefits of our restructuring activities or execute successfully on our revitalization plan, in the time frames we desire or at all.
+Added: Our financial projections are based on historical experience and on various other estimates and assumptions that we believe to be reasonable under the circumstances and at the time they are made, and our actual results may differ materially from our financial projections, especially in light of the increased difficulty in making such estimates and assumptions as a result of the coronavirus pandemic.
+Added: Any material variation between our financial projections and our actual results may adversely affect our future profitability, cash flows and stock price.
Risks Related to Our Dependence on Third Parties
Termination of one or more manufacturer/distribution/production agreements, or issues caused by our dependence on the parties to these agreements, could have a material adverse effect on our business and financial results.
−Removed: We manufacture and/or distribute products of other beverage companies through various joint venture, licensing, distribution, contract brewing or other similar arrangements, such as our agreement to import, market, distribute and sell certain Heineken brands in Canada, our arrangements with ABI to brew and distribute Beck's , Stella Artois , Lowenbrau and Spaten and to distribute Hoegaarden , Leffe , and Corona in Central Europe.
+Added: Ta b l e of C o n t e n t s
+Added: manufacture and/or distribute products of other beverage companies through various joint venture, licensing, distribution, contract brewing or other similar arrangements, such as our agreement to import, market, distribute and sell certain Heineken brands in Canada, our arrangements with ABI to brew and distribute Beck's , Stella Artois , and Lowenbrau and to distribute Hoegaarden , Leffe , and Corona in Central Europe.
We also have agreements with Asahi for the production and import of Pilsner Urquell and Peroni Nastro Azurro into the U.S.
1 unchanged sentence
These agreements have varying expiration dates and performance criteria, with several agreements approaching expiration in the near future.
−Removed: Non-renewal of these agreements or loss of one more or more of these arrangements, because of failure of performance, failure to come to terms on a negotiated extension, as a result of industry consolidation or otherwise, could have a material adverse effect on our business and financial results.
+Added: Non-renewal of these agreements or loss of one or more of these arrangements, because of failure of performance, failure to come to terms on a negotiated extension, as a result of industry consolidation or otherwise, could have a material adverse effect on our business and financial results.
As part of our efforts to streamline operations and to manage costs, we outsource aspects of our manufacturing processes and other functions and continue to evaluate additional outsourcing.
1 unchanged sentence
For example, during a market upturn, our contract manufacturers may be unable to meet our demand requirements, which may preclude us from fulfilling our customers' orders on a timely basis.
−Removed: Additionally, in 2020, as a result of the coronavirus pandemic, a producer in Canada claimed force majeure under our agreement with them, which limited our ability to get certain of our products into the market.
The ability of these parties to perform is largely outside of our control.
2 unchanged sentences
Our business includes various joint venture and industry agreements which standardize parts of the supply chain system.
−Removed: An example includes our warehousing and customer delivery systems in Canada organized under joint venture
−Removed: agreements with other brewers.
+Added: An example includes our warehousing and customer delivery systems in Canada organized under joint venture agreements with other brewers.
Any negative change in these agreements or material terms within these agreements could have a material adverse effect on our business and financial results.
12 unchanged sentences
A deterioration of the financial condition or results of operations of one or more of our major suppliers could adversely affect our business and financial results.
−Removed: In addition, we are actively monitoring the coronavirus pandemic and its potential impact on our supply chain and our consolidated results of operations.
−Removed: Due to restrictions resulting from the pandemic, global supply may be constrained, which may cause the price of certain ingredients and raw materials used in our products to increase and/or we may experience disruptions to our operations.
+Added: In addition, we are continuing to actively manage the coronavirus pandemic's impact on our supply chain and our consolidated results of operations.
+Added: The demand for packaging materials in the beverage industry has significantly increased and there has been a shortage of capacity and increases in costs, as manufacturers attempt to adjust their supply chains to keep up with the increased demand, which has further increased due to the coronavirus pandemic.
+Added: Due to restrictions resulting from the coronavirus pandemic, global supply may continue to be constrained, which has caused, and may continue to cause, the price of certain ingredients and raw materials used in our products to increase and/or we may experience disruptions to our operations.
Risks Related to Legal Matters, Governmental Regulations and our International Operations
1 unchanged sentence
We are from time to time involved in or subject to a variety of litigation, claims, legal or regulatory proceedings or matters related to our business, our advertising and marketing practices, product claims, product labeling and ingredients, our intellectual property rights, alleged infringement or misappropriation by us of intellectual property rights of others, tax, environmental, privacy, insurance, ERISA and employment matters.
−Removed: For instance, we have received notice of potential claims involving some current and former employees regarding our employment practices, which we are in the process of investigating.
Such matters, even those that are ultimately non-meritorious, can be complex, costly, and highly disruptive to business operations by diverting the attention and energies of management and other key personnel, and may generate adverse publicity that damages our reputation or brand image.
2 unchanged sentences
Actual outcomes, including judgments, awards, settlements or orders, could have a material adverse effect on our business, financial condition, operating results, or cash flows and damage our corporate reputation and our brands.
+Added: Ta b l e of C o n t e n t s
Our operations in developing and emerging markets expose us to additional risks which could harm our business and financial results.
−Removed: We expect our operations in developing and emerging markets to become more significant to our operating results as we continue to further expand internationally.
+Added: We continue to operate in developing and emerging markets.
In certain of these markets, we have limited operating experience and may not succeed.
−Removed: In addition to risks described elsewhere in this Annual Report, our operations in these markets expose us to additional risks, including:
+Added: In addition to risks described elsewhere in this report, our operations in these markets expose us to additional risks, including:
changes in local political, economic, social and labor conditions;
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laws and regulations designed to combat governmental corruption, including the U.S.
−Removed: Foreign Corrupt Practices Act and the U.K.
+Added: Foreign Corrupt Practices Act, the U.K.
+Added: Bribery Act and the U.K.
+Added: Proceeds of Crime Act.
Violations of these laws and regulations could result in fines and penalties, criminal sanctions against us, our officers, or our employees, prohibitions on the conduct of our business and prohibitions on our ability to offer our products and services in one or more countries, each of which could have a materially negative effect on our reputation, brands and our operating results.
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That system, consisting of required separation of manufacturers, distributors and retailers, dates back to the repeal of prohibition and is periodically subject to legal challenges.
−Removed: To the extent that such challenges are successful and allow changes to the three-tier system, such changes could have a material adverse effect on our North America segment results of operations.
+Added: To the extent that such challenges are successful and allow changes to the three-tier system, including through the expansion of e-commerce and direct-to-consumer offerings such changes could have a material adverse effect on our Americas segment results of operations.
Further, in Canada, our products are required to be distributed through each province's respective provincial liquor board.
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To the extent that we fail to adequately manage these risks through our risk management policies intended to protect our exposure to currency movements, which may affect our operations, including if our hedging arrangements do not effectively or completely hedge changes in foreign currency rates, our results of operations may be materially and adversely affected.
−Removed: For example, as a result of the U.K.
−Removed: vote in 2016 to leave the European Union, the GBP experienced a significant decline in comparison to USD and EUR and may continue to be volatile.
−Removed: Any significant further weakening of the GBP to the USD, will have an adverse impact on our European revenues as reported in USD due to the importance and relative magnitude of U.K.
−Removed: Additionally, the strengthening of the USD against the Canadian dollar, European currencies and various other global currencies would adversely impact our USD reported results due to the impact on foreign currency translation.
+Added: For instance, the strengthening of the USD against the Canadian dollar, European currencies and various other global currencies would adversely impact our USD reported results due to the impact on foreign currency translation.
Changes in tax, environmental, trade or other regulations or failure to comply with existing licensing, trade and other regulations could cause volatility or have a material adverse effect on our business and financial results.
1 unchanged sentence
These laws and regulations are subject to frequent re-evaluation, varying interpretations and political debate and inquiries from government regulators charged with their enforcement, which could have a material adverse effect on our business and financial results.
−Removed: In addition, U.S.
−Removed: legislative initiatives, including as proposed by the current presidential administration, to reform U.S.
−Removed: corporate tax law could have a material adverse impact on our tax rate and our cash tax expectations.
−Removed: For example, on December 22, 2017, the 2017 Tax Act was enacted in the U.S., which resulted in a number of significant changes to U.S.
−Removed: federal income tax law for U.S.
−Removed: corporations.
−Removed: Most notably, the statutory federal corporate income tax rate was changed from 35% to 21% for corporations and, as a result, we recorded an estimated net tax benefit of approximately $567 million in our consolidated statements of operations during the fourth quarter of 2017 driven by the effects of the 2017 Tax Act on our deferred tax positions as of December 31, 2017.
−Removed: Since 2018, the U.S.
−Removed: Treasury Department has continued to issue proposed, temporary and final regulations to implement provisions of the 2017 Tax Act.
−Removed: We have continued to monitor these regulations and on April 7, 2020, the Treasury Department enacted final hybrid regulations with full retroactive application to January 1, 2018, with a few exceptions.
−Removed: We have reviewed the final regulations and their impact on our tax positions and financial statements.
−Removed: The final regulations, associated with the taxability of certain interest, impact tax positions we took in 2018 and 2019 and have resulted in additional income tax expense of approximately $135 million which was recognized upon enactment in the second quarter of 2020.
−Removed: We currently believe the impact of the finalized regulations could be cash tax outflows up to approximately $100 million in 2021.
−Removed: We continue to analyze the potential cash impacts of the final regulations to minimize cash outflows over time.
−Removed: Separately, in December 2018, the U.S.
−Removed: Treasury Department issued a regulation that impacts our ability to claim a refund of certain federal duties, taxes, and fees paid for beer sold between the U.S.
−Removed: and certain other countries effective as of February 2019.
−Removed: In The National Association of Manufacturers v.
−Removed: United States, Slip Op.
−Removed: 20-09 (CIT January 24, 2020), the U.S.
−Removed: Court of International Trade issued an opinion ruling the portion of the regulation dealing with refunds of certain federal duties, taxes and fees paid with respect to imported beer, to the extent of exported beer, to be unlawful.
−Removed: In April 2020, the Government appealed the decision of the U.S.
−Removed: Court of International Trade with the U.S.
−Removed: Court of Appeals for the Federal Circuit, seeking to restore the stricken down regulation.
−Removed: The plaintiffs and Government have filed appellate briefs with the court as of December 2020;
−Removed: it is not known how much time will elapse thereafter prior to the issuance of an opinion by the Court of Appeals.
−Removed: government ultimately prevails, the Company may be required to return (by refund, credit or drawback) approximately $49 million in funds previously collected, which would have an adverse impact on our financial results.
−Removed: Additionally, modifications of U.S.
−Removed: laws and policies governing foreign trade and investment, including trade agreements and tariffs such as the United States-Mexico-Canada Agreement, or aluminum tariffs, could adversely affect our supply chain, business and results of operations.
+Added: Ta b l e of C o n t e n t s
+Added: In addition, changes to existing tax laws or the adoption of new tax laws, particularly in the U.S., U.K.
+Added: and Canada, could have a material adverse impact to our effective tax rate and future cash tax liabilities.
+Added: The current economic and political environment may result in significant tax law changes in the numerous jurisdictions in which we operate.
+Added: More specifically, recent proposals to reform tax laws in the U.S.
+Added: and foreign jurisdictions could significantly impact how U.S.
+Added: multinational business are taxed on their foreign earnings.
+Added: Congress has proposed several pieces of tax legislation, which if ultimately enacted, could have a material effect on our effective tax rate.
+Added: In addition, our effective tax rate could be materially affected by certain tax proposals developed by the Organization for Economic Cooperation and Development and European Commission regarding the taxation of multinational businesses.
+Added: Continued economic and political pressures to increase tax revenues in jurisdictions in which we operate, or the adoption of new or reformed tax legislation or regulation, may make resolving tax disputes more difficult.
+Added: The final resolution of tax audits and any related litigation can differ from our historical provisions and accruals, resulting in an adverse effect on our financial performance.
+Added: Additionally, modifications of laws and policies governing foreign trade and investment, including trade agreements and tariffs such as the United States-Mexico-Canada Agreement, the European Union-United Kingdom Trade and Cooperating Agreement, or aluminum tariffs, could adversely affect our supply chain, business and results of operations.
For example, in June 2018, U.S.
4 unchanged sentences
aluminum tariffs, the implementation of additional tariffs and retaliatory tariffs from trade partners or related uncertainties could further increase the cost of certain of our imported materials, thereby adversely affecting our profitability.
+Added: In addition, the European Union-United Kingdom Trade and Cooperating Agreement became effective in May 2021 and resulted in certain disruptions in trade and the movement of goods, including prolonged transportation delays, which affected our ability to source raw materials and packaging for our products as well as our ability to import and export products.
Furthermore, various jurisdictions have adopted, or may seek to adopt, additional product labeling or warning requirements or limitations on the availability of our beverages relating to perceived adverse health consequences of some of our beverages.
3 unchanged sentences
and abroad, have considered, and are expected to consider, legislation aimed at reducing the amount of plastic waste.
−Removed: Programs have included banning certain types of products, mandating certain rates of recycling and/or the use of recycled materials, imposing deposits or taxes on packaging material, and requiring retailers or manufacturers to take back packaging used for their products.
+Added: Programs have included banning certain types of products, mandating certain rates of recycling and/or the use of recycled materials, imposing deposits or excise taxes on packaging material, and requiring retailers or manufacturers to take back packaging used for their products.
Such legislation, as well as voluntary initiatives, aimed at reducing the level of plastic wastes, could reduce the demand for certain of our products that contain plastic packaging, result in greater costs for manufacturers of plastic products or otherwise impact our business, financial condition and results of operations.
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business excise taxes on malt beverages were approximately $15 per hectoliter sold on a reported basis.
−Removed: This includes the impact of the U.S.
+Added: This included the impact of the U.S.
Craft Beverage Modernization and Tax Reform Act, which took effect on January 1, 2018 for all qualified large domestic brewers and importers and was made permanent by the U.S.
Consolidated Appropriations Act, 2021 on December 27, 2020.
−Removed: This law resulted in reduced excise taxes for MCBC in the U.S.
−Removed: by $2 per barrel on the first six million barrels, which equates to $1,70 per hectoliter on this portion of volume.
−Removed: We transfer a portion of our share of these savings to distributors consistent with the revenue splitting approach of our U.S.
+Added: This law resulted in reduced U.S.
+Added: federal excise taxes by $2 per barrel on the first six million barrels, which equated to $1.70 per hectoliter on this portion of our 2021 volume sold.
+Added: Our practice is to transfer a portion of these savings to distributors consistent with the revenue splitting approach of our U.S.
business' economic model.
−Removed: State excise taxes are levied in specific states at varying rates.
+Added: Excise taxes are levied in specific state and local jurisdictions at varying rates.
Increased excise taxes could have a material adverse effect on our profitability.
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Additionally, uncertainties exist with respect to the interpretation of, and potential future developments in, complex domestic and international tax laws and regulations, the amount and timing of future taxable income and the interaction of such laws and regulations among jurisdictions.
−Removed: Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded.
+Added: Given the wide range of international business relationships and the long-term nature
+Added: Ta b l e of C o n t e n t s
+Added: and complexity of existing contractual agreements, differences arising between the actual results and assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded.
+Added: Coronavirus pandemic vaccination mandates adopted by federal, state and local governments, as well as by certain healthcare systems, could have a material adverse impact on our business and results of operations.
+Added: In addition to government-imposed shutdowns or restrictions on our business activities due to the coronavirus pandemic, governments may impose vaccine or testing requirements on some or all of our employees.
+Added: Additionally, many state and local governments in which our business operates have implemented or announced COVID-19 vaccination requirements applicable to certain of our employees, and additional vaccination mandates may be announced in the future.
+Added: It is currently not possible to predict with certainty the impact these vaccination mandates will have on our business, especially on our workforce.
+Added: Our implementation of these requirements may result in costs to us in the form of vaccinations or testing of employees.
+Added: These requirements may also result in attrition in our workforce, including attrition of critically skilled labor, and difficulty securing future labor needs, which could have a material adverse effect on our business, financial condition, and results of operations.
+Added: We also have modified our business practices for the continued health and safety of our employees, including the requirements of vaccines, subject to certain medical and religious exemptions, for all non-union office-based employees in the U.S.
+Added: We may take further actions, or be required to take further actions, that are in the best interests of our employees.
+Added: Our suppliers and customers have also implemented such measures, which has resulted in, and we expect it will continue to result in, disruptions or delays and higher costs.
+Added: The implementation of health and safety practices by us, our suppliers or our customers could impact customer demand, supplier deliveries, our productivity and costs, which could have a material adverse impact on our business, financial condition or results of operations.
Risks Related to Acquisitions and Joint Ventures
2 unchanged sentences
Rocky Mountain Metal Container), and with Owens-Brockway Glass Container Inc.
−Removed: Rocky Mountain Bottle Company), for a portion of our
−Removed: aluminum and glass packaging supply in the U.S.
−Removed: We have also entered into a joint venture with D.G.
−Removed: Yuengling & Son, Inc.
−Removed: ("Yuengling") to expand the distribution of Yuengling beer in the U.S.
+Added: Rocky Mountain Bottle Company), for a portion of our aluminum and glass packaging supply in the U.S., respectively.
+Added: In addition, we have entered into joint ventures with HEXO to pursue opportunities to develop, produce and market non-alcoholic, cannabis-infused beverages in Canada and CBD beverages in certain U.S.
+Added: We have also entered into a joint venture with Yuengling to expand the distribution of Yuengling beer in the U.S.
+Added: We also have a joint venture in the U.K.
+Added: regarding the production and distribution of Cobra beer.
+Added: Additionally, in certain Canadian provinces, we rely on joint venture agreements, BRI and BDL, to distribute our products via retail outlets that are mandated and regulated by provincial government regulators.
+Added: As previously referenced, BRI owns and operates commercial retail outlets, known as The Beer Store, in Ontario, and BDL facilitates the distribution of our products in the western Canadian provinces.
We may enter into additional joint ventures in the future.
3 unchanged sentences
Our joint venture arrangements may require us, among other matters, to pay certain costs or to make certain capital investments or to seek our joint venture partner's consent to take certain actions.
−Removed: In addition, our joint venture partners may be unable or unwilling to meet their economic or other obligations under the operative documents, and we may be required to either fulfill those obligations alone to ensure the ongoing success of a joint venture or to dissolve and liquidate a joint venture.
+Added: In addition, our joint venture partners may be unable or unwilling to meet their economic or other obligations under the operative documents, or may become insolvent or file for bankruptcy protection and we may be required to either fulfill those obligations alone to ensure the ongoing success of a joint venture or to dissolve and liquidate a joint venture.
Failure to successfully identify, complete or integrate attractive acquisitions and joint ventures into our existing operations could have an adverse effect on our business and financial results.
We have made a number of acquisitions and entered into several strategic joint ventures.
−Removed: In order to compete in the consolidating global brewing industry, we anticipate that we may, from time to time, in the future acquire additional businesses or enter into additional joint ventures that we believe would provide a strategic fit with our business such as the Acquisition and our joint ventures with HEXO and Yuengling and various other craft acquisitions we have made recently.
+Added: In order to compete in the consolidating global brewing and beverage industry, we anticipate that we may, from time to time, in the future acquire additional businesses or enter into additional joint ventures that we believe would provide a strategic fit with our business such as the Acquisition and our joint ventures with HEXO and Yuengling and various other craft acquisitions we have made recently.
Potential risks associated with acquisitions and joint ventures could include, among other things:
13 unchanged sentences
and managing tax costs or inefficiencies associated with integrating our operations following completion of an acquisition or entry into a joint venture.
−Removed: Additional Risks Related to our North America Segment
−Removed: business is highly dependent on independent distributors to sell our products, with no assurance that these distributors will effectively sell our products.
+Added: Ta b l e of C o n t e n t s
+Added: Additional Risks Related to our Americas Segment
+Added: business is highly dependent on independent distributors to sell our products, with no assurance that these distributors will effectively sell our products, and distributor consolidation in the U.S.
+Added: could harm our business performance.
We sell nearly all of our products, including all of our imported products, in the U.S.
2 unchanged sentences
Consequently, if we are not allowed, or are unable under acceptable terms or at all, to replace unproductive or inefficient distributors, our business, financial position and results of operation may be adversely affected, which could have a material adverse effect on our business and financial results.
+Added: Further, in recent years, there has been consolidation of independent distributors, resulting in distributors with increased leverage over suppliers due to the distributor's share of the supplier business, exclusive territorial appointments and regulatory protection of distribution agreements.
+Added: In addition, distributor consolidation, regardless of size, carries a risk of decreased investment in service and local marketing in the interest of paying down the leverage required to fund a transaction.
+Added: Consolidation among distributors could create a more challenging competitive landscape for our products and could hinder the distribution and sale of our products.
+Added: Changes in distributors' strategies, including a reduction in the number of brands they carry, may adversely affect our growth, business, financial results and market share.
Government mandated changes to the retail distribution model resulting from new regulations may have a material adverse effect on our Canada business.
2 unchanged sentences
The government has not yet proclaimed the bill as law.
−Removed: The impacts of these potential legislative changes are unknown at this time but could have a negative impact on the results of operations, cash flows and financial position of the North America segment.
−Removed: While discussions remain ongoing with the government to reach a mutually agreeable alternative to the enactment of the law, we and the other Master Framework Agreement signatories are prepared to vigorously defend our rights and pursue legal recourse, should the Master Framework Agreement be unilaterally terminated by the enactment of the legislation.
−Removed: Our Canadian business faces numerous risks relating to its joint venture in the Canadian cannabis industry.
+Added: Even if the legislation is proclaimed into law, the Master Framework Agreement is set to expire in 2025 unless renewed.
+Added: While we have engaged, and continue to plan to engage in discussions with the government to renew the agreement or otherwise reach a mutually agreeable alternative to the enactment of the law, we and the other Master Framework Agreement signatories are prepared to vigorously defend our rights and pursue legal recourse, should the Master Framework Agreement be unilaterally terminated by the enactment of the legislation.
+Added: Unilateral termination or expiration of the Master Framework Agreement could have material impacts to the results of operations, cash flows and financial position of the Americas segment.
+Added: Our Americas business faces numerous risks relating to its joint ventures in the Canadian cannabis industry and the U.S.
+Added: CBD beverage industry.
In 2018, a wholly-owned subsidiary within our Canadian business completed the formation of an independent Canadian joint venture with HEXO, a Canadian entity listed on the New York Stock Exchange and the Toronto Stock Exchange that serves the Canadian cannabis market.
−Removed: The joint venture, Truss LP ("Truss"), is developing non-alcoholic, cannabis-infused beverages for the Canadian market.
−Removed: In 2020, Truss launched its first cannabis infused product, Veryvell Drops , as well as its ready to drink beverage portfolio across the Canadian market.
−Removed: Separately, in April 2020, we completed the formation of a new joint venture with HEXO to explore opportunities for non-alcohol hemp-derived CBD beverages in Colorado.
+Added: The joint venture, Truss LP ("Truss"), is producing and marketing developing non-alcoholic, cannabis-infused beverages for the Canadian market.
+Added: In 2020, Truss launched its first cannabis infused product, Verywell Drops, as well as its ready to drink beverage portfolio across the Canadian market.
The success and consumer acceptance of any products produced by the joint venture cannot be assured.
1 unchanged sentence
CBD market may negatively impact:
−Removed: consumer, business partner, investor or public sentiment regarding our brands, North America beer business or our company.
−Removed: The emerging cannabis industry in North America and in other jurisdictions is evolving rapidly and subjects us to a high degree of political, legal and regulatory uncertainty.
+Added: consumer, business partner, investor or public sentiment regarding our brands, Americas' beer business or our company.
+Added: The emerging cannabis industry in Canada and the U.S.
+Added: and in other jurisdictions is evolving rapidly and subjects us to a high degree of political, legal and regulatory uncertainty.
The occurrence of any of the above risks could have a material adverse effect on our business.
−Removed: We may experience adverse effects on our Canada business and financial results due to declines in the overall Canadian beer industry, continued price discounting, increased cost of goods sold and higher taxes.
−Removed: If the Canadian beer market continues to decline, the impact to our financial results could be exacerbated due to our significant share of the overall market.
−Removed: Additionally, continuation or acceleration of price discounting, in Ontario, Québec, Alberta or other provinces, as well as increases in our cost of goods sold, could adversely impact our business.
−Removed: Further, changes in the Canadian tax legislation, such as the potential for an increase in beer excise taxes, could decrease our net sales.
−Removed: Although the ultimate impact is currently unknown, the legalization of cannabis in Canada may result in a shift of discretionary income away from our products or a change in consumer preferences away from beer or our other products.
−Removed: Moreover, the future success and earnings growth of the Canada business depends, in part, on our ability to efficiently conduct our operations.
−Removed: Failure to generate significant cost savings and margin improvement through our ongoing initiatives could adversely affect our profitability.
+Added: In addition, there is regulatory uncertainty in the U.S.
+Added: regarding the status of food and beverage products that contain U.S.
+Added: hemp-derived ingredients, including CBD.
+Added: While our involvement in the U.S.
+Added: CBD market consists of operations and sales of such products in states where the sale and distribution of hemp-derived CBD beverages is permitted, U.S.
+Added: federal law enforcement officials may still elect to take enforcement action against companies under the Controlled Substances Act or the Food and Drug Administration may send a cease and desist letter, either of which action could have an impact on our involvement in the U.S.
If we are required to move away from the industry standard returnable bottle we use today in Canada, we may incur unexpected losses.
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The ultimate resolution of these claims is not under our control.
−Removed: These indemnity obligations are recorded as liabilities on our consolidated balance sheets, however, we could incur future statement of operations charges as facts further develop resulting in changes to our estimates or changes in our assessment of probability of loss on these items as well as due to fluctuations in foreign exchange rates.
+Added: These indemnity obligations are recorded as liabilities on our consolidated balance sheets, however, we could incur future statement of operations charges as
+Added: Ta b l e of C o n t e n t s
+Added: facts further develop resulting in changes to our estimates or changes in our assessment of probability of loss on these items as well as due to fluctuations in foreign exchange rates.
Due to the uncertainty involved in the ultimate outcome and timing of these contingencies, significant adjustments to the carrying value of our indemnity liabilities and corresponding statement of operations charges/credits could result in the future.
−Removed: Additional Risks Related to our Europe Segment
−Removed: departure from the European Union could adversely affect us.
−Removed: Approximately 7% of our consolidated net sales in 2020 came from the U.K., which is our largest market in Europe.
−Removed: exited the European Union on January 31, 2020 and entered a twelve month transition period.
−Removed: On December 24, 2020, the deal laying out the future relationship between the U.K.
−Removed: and the EU was agreed, and subsequently endorsed on December 30, 2020.
−Removed: vote to leave the European Union triggered a decline in the GBP in comparison to USD and EUR.
−Removed: Any significant continued weakening of the GBP to the USD will have an adverse impact on our European revenues as reported in USD due to the importance of U.K.
−Removed: Furthermore, the withdrawal may result in disruption to, and decline of, the U.K.
−Removed: and European economies.
−Removed: Weakening of economic conditions or economic uncertainties tend to harm the beer business, and if such conditions continue to persist in the U.K.
−Removed: or in the rest of Europe, it may have a material adverse effect on our Europe segment.
−Removed: The withdrawal may also result in disruption in trade and the movement of goods, including prolonged transportation delays, which could negatively affect our ability to source raw materials and packaging for our products as well as our ability to import and export products.
−Removed: We face regulatory and market uncertainty and may need to quickly adapt to regulatory changes and market volatility, including potential increased legal and regulatory complexities and potential higher costs of conducting business in the U.K.
−Removed: or the rest of Europe.
−Removed: Any of these effects, among others, could adversely affect our European business, results of operations, and financial condition.
+Added: Additional Risks Related to our EMEA&APAC Segment
Economic trends and intense competition in European markets could unfavorably affect our profitability.
14 unchanged sentences
Similarly, our bylaws require the authorization of a super-majority (two-thirds) of the board of directors to take certain transformational actions.
−Removed: Thus, it is possible that the Company will not be authorized to take action even if it is supported by a simple majority of the board of directors.
−Removed: The interests of the controlling stockholders may differ from those of other stockholders and could prevent the Company from making certain decisions or taking certain actions that would be in the best interest of the other stockholders.
−Removed: Our Class B common stock has fewer voting rights than our Class A common stock and holders of our Class A common stock have the ability to effectively control or have a significant influence over certain company actions requiring stockholder approval, which could have a material adverse effect on Class B stockholders.
+Added: Thus, it is possible that our Company will not be authorized to take action even if it is supported by a simple majority of the board of directors.
+Added: The interests of the controlling stockholders may differ from those of other stockholders and could prevent our Company from making certain decisions or taking certain actions that would be in the best interest of the other stockholders.
+Added: Our Class B common stock has fewer voting rights than our Class A common stock and holders of our Class A common stock have the ability to effectively control or have a significant influence over certain of our actions requiring stockholder approval, which could have a material adverse effect on Class B stockholders.
See Part II—Item 8 Financial Statements and Supplementary Data, Note 8, "Stockholders' Equity" for additional information regarding voting rights of Class A and Class B stockholders.
−Removed: The estimates and assumptions on which our financial projections are based may prove to be inaccurate, which may cause our actual results to materially differ from such projections, which may adversely affect our future profitability, cash flows and stock price.
−Removed: Our financial projections, including any sales or earnings guidance or outlook we may provide from time to time, are dependent on certain estimates and assumptions related to, among other things, category growth, development and launch of innovative new products, market share projections, product pricing and sale, volume and product mix, foreign exchange rates and volatility, tax rates, commodity prices, distribution, cost savings, accruals for estimated liabilities, including litigation reserves, measurement of benefit obligations for pension and other postretirement benefit plans, and our ability to generate sufficient cash flow to reinvest in our existing business, fund internal growth, repurchase our stock, make acquisitions, invest in joint ventures, pay dividends and meet debt obligations.
−Removed: Our financial projections are based on historical experience and on various other estimates and assumptions that we believe to be reasonable under the circumstances and at the time they are made, and our actual results may differ materially from our financial projections, especially in light of the increased difficulty in making such estimates and assumptions as a result of the coronavirus pandemic.
−Removed: Any material variation between our financial projections and our actual results may adversely affect our future profitability, cash flows and stock price.
UNRESOLVED STAFF COMMENTS
+Added: Ta b l e of C o n t e n t s
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.