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Item 7. Management’s Discussion and Analysis

2022-02-23 compared with 2021-02-11 · 365 added, 555 removed, 340 unchanged (73% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided to assist in understanding our Company, operations and current business environment and should be considered a supplement to, and read in conjunction with, the accompanying consolidated financial statements and notes included within Part II—Item 8 Financial Statements and Supplementary Data, as well as the discussion of our business and related risk factors in Part I—Item 1 Business and Part I—Item 1A Risk Factors, respectively.

For more than two centuries, we have been brewing beverages that unite people for all life’s moments.

From Coors Light , Miller Lite, Molson Canadian, Carling, and Staropramen to Coors Banquet, Blue Moon Belgian White, Blue Moon LightSky, Vizzy, Coors Seltzer, Leinenkugel’s Summer Shandy, Creemore Springs, Hop Valley and more, we produce many beloved and iconic beer brands.

While our Company’s history is rooted in beer, we offer a modern portfolio that expands beyond the beer aisle as well.

As a business, our ambition is to be the first choice for our people, our consumers and our customers, and our success depends on our ability to make our products available to meet a wide range of consumer segments and occasions.

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") in this Annual Report on Form 10-K is provided to assist in understanding our Company, operations and current business environment and should be considered a supplement to, and read in conjunction with, the accompanying audited consolidated financial statements and notes included within Part II—Item 8 Financial Statements and Supplementary Data , as well as the discussion of our business and related risk factors in Part I— Item 1 Business and Part I— Item 1A Risk Factors , respectively.

See also "Cautionary Statement Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995."

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Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2020 Form 10-K, filed with the SEC on February 11, 2021, which is available free of charge on the SEC's website at www.sec.gov and our corporate website at www.molsoncoors.com.

Such discussion does not reflect the recast of the historical presentation of segment information as a result of the reporting segment changes that became effective on January 1, 2020.

Our Fiscal Year

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We believe the STR metric is important because, unlike STWs, it provides the closest indication of the performance of our brands in relation to market and competitor sales trends.

Executive Summary

For more than two centuries, we have been brewing beverages that unite people for all life’s moments.

While the Company’s history is rooted in beer, we offer a modern portfolio that expands beyond the beer aisle with sparkling cocktails, hard coffee, canned wine, kombucha, cider and more.

Items Affecting Reported Results

Items Affecting Consolidated Results of Operations

Cybersecurity Incident

During March 2021, we experienced a systems outage that was caused by a cybersecurity incident.

We engaged leading forensic information technology firms and legal counsel to assist our investigation into the incident and we restored our systems after working to get the systems back up as quickly as possible.

Despite these actions, we experienced delays and disruptions to our business, including brewery operations, production and shipments.

This incident caused us to not produce or ship as much as we otherwise would have in the first quarter of 2021.

Subsequently, in the balance of 2021, we made progress recovering from the incident with increased shipments and have operationally recovered as of December 31, 2021.

In addition, we incurred certain incremental one-time costs of $2.4 million for the year ended December 31, 2021 related to consultants, experts and data recovery efforts, net of insurance recoveries.

Ta b l e of C o n t e n t s

Coronavirus Global Pandemic

The coronavirus pandemic had a material adverse effect on our operations, liquidity, financial condition and results of operations during our full year 2020 due mainly to the on-premise closures worldwide.

The effects of the pandemic remain highly uncertain especially around the severity and duration of the outbreak and actions by government authorities to contain the pandemic or address its impact, among other things.

Many governmental entities across North America and Europe required that bars and restaurants close or cease sit-down service during the second quarter of 2020 and again at the end of 2020, which negatively impacted the on-premise sales of our beverages and 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.

This can be seen in our financial results during the full year 2020.

During this same time, other restaurants and bars implemented closures and modified their hours, either voluntarily or as a result of governmental orders or quarantines.

At the end of the second quarter and into the third quarter of 2020, there was a phased reopening of a significant number of on-premise accounts in certain of our markets, but with restrictions and in the fourth quarter some of these re-openings were reversed and businesses were shut down again.

Sales to restaurants and bars have not returned to pre-pandemic levels and in many instances, the reopened on-premise accounts have been impacted by further restrictions or further shut downs imposed as a result of the increased spread of the coronavirus.

In addition, sporting events, festivals and other large public gatherings where our products are served have been canceled throughout North America and Europe.

Sales to on-premise customers tend to be higher margin than sales to off-premise (retail outlets) customers.

Additionally, these and other governmental or societal impositions of restrictions on public gatherings, especially if prolonged in nature, whether government or self-imposed, will have adverse effects on on-premise traffic and, in turn, our business.

We experienced a significant adverse volume impact in 2020 resulting from the initial closure of, and subsequent continued impacts to, the on-premise channel.

As perspective, we estimate that approximately 23% of our 2019 consolidated net sales resulted from on-premise consumption, with approximately 17% of our North America net sales and approximately 50-55% of our Europe net sales each coming from this important part of the industry, and in many of our markets the on-premise business had been reduced to zero for much of the second quarter of 2020.

We have been actively monitoring the impact of the coronavirus pandemic which has had a material adverse effect on our operations, liquidity, financial condition and results of operations in 2020 and 2021.

In 2021, while we saw improvements in the marketplace related to the coronavirus global pandemic as on-premise locations began to re-open across the world, including in the U.S.

and Europe, which led to a shift in revenue from off-premise to on-premise starting in the second quarter and continuing through the third quarter of 2021, during the fourth quarter of 2021, a new variant of coronavirus, Omicron, created additional uncertainty and negatively impacted our on-premise business.

While on-premise volumes in our EMEA&APAC segment progressively improved throughout 2021 as bars and restaurants reopened with restrictions, due to implications of the new coronavirus variant, consumer behavior in the U.K.

and across Central Europe became more uncertain as individuals were encouraged to work from home and reduce other personal interactions during the fourth quarter of 2021.

With a shift in consumer behavior and surge in coronavirus cases not only in Europe but also in the U.S.

and Canada at the end of the year, sales to the on-premise during the fourth quarter of 2021 were negatively impacted.

The extent to which our operations will continue to be impacted by the coronavirus pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including the level of governmental or societal orders or restrictions on public gatherings and on-premise venues, including any vaccine mandates or testing requirements, the severity and duration of the coronavirus pandemic by market, including continued or prolonged outbreaks of variants, changes in consumer behavior, the rate of vaccination and the efficacy of vaccines against the coronavirus and related variants.

We continue to actively monitor the ongoing evolution of the coronavirus pandemic and resulting impacts to our business.

Despite the improvements in re-openings of on-premise locations from 2020, closures and openings with restrictions continued to impact our financial results during 2021.

Specifically, beginning in the first quarter of 2020 and continuing into the first half of 2021, we experienced a significant decline in on-premise demand in the Americas and EMEA&APAC segments resulting from lockdowns and other government-imposed restrictions to the on-premise.

See further discussion in Part I.

Business regarding the historical percentage of volume and net sales represented in the on-premise within our North America and Europe segments and resulting implications to expected profitability as a result of the effective closures of the on-premise in the markets in which we operate.

While we began to see some of the on-premise return mid-year in many of our markets, with the exception of the U.K., which did not reopen until early July, business and consumer behavior in the channel has been slow and remains uncertain.

Subsequently, in the fourth quarter of 2020, the second pandemic wave triggered new lockdowns with different levels of restrictions in Europe and Canada depending on the market.

Therefore, as a result of this uncertainty, we currently continue to expect a significant adverse impact to both net sales and profit performance for fiscal 2021 and, possibly beyond.

In addition, where we have seen shifts in demand to the off-premise, and shifts into certain package types, which has strained our supply chain and package availability, particularly with aluminum can demand and other packaging materials, requiring that we strategically prioritize certain brands and package types.

Business regarding the historical percentage of on-premise channel versus off-premise within our Americas and EMEA&APAC segments and resulting implications to expected profitability as a result of the effective closures of the on-premise in the markets in which we operate.

While certain countries in Europe lifted lockdown restrictions, particularly in the U.K.

which resulted in the reopening of certain on-premise locations early in the second quarter of 2021 with measures removed early in the third quarter of 2021, the on-premise did not return to pre-pandemic levels in the EMEA&APAC segment.

In addition, during the first half of 2021, certain provinces of Canada, including the most populous provinces, endured lockdowns pursuant to which bars and restaurants were required to close.

During the third quarter of 2021, these venues began to reopen with varying degrees of restrictions;

however, during the fourth quarter of 2021 as a result of implications from the new coronavirus variant, restrictions in certain provinces were implemented and consumer behavior in the on-premise became more uncertain and as a result sales to the on-premise channel in the fourth quarter of 2021 were negatively impacted.

Throughout 2021, the U.S.

progressively reopened, and sales to restaurants and bars returned to near pre-coronavirus pandemic levels within the Americas segment but pulled back towards the end of the year as a result of the spread of the Omicron coronavirus variant.

Certain sporting events, festivals and other large public gatherings where our products are served have started to return with restrictions including proof of vaccination or negative coronavirus testing requirements.

While the U.S., Canada, and Western European countries have seen an increase in vaccination levels throughout 2021, certain Eastern European countries have lagged, and therefore, the risk of further coronavirus pandemic restrictions and governmental imposed lockdowns remains throughout Europe.

Throughout the world, any governmental or societal impositions of restrictions on public gatherings, especially if prolonged in nature, will continue to impact on-premise traffic and, in turn, our business.

In addition, where we have seen shifts in demand to the off-premise, and shifts back to the on-premise and the related shifts between certain package types, this has strained our supply chain and package availability, requiring that we strategically prioritize certain brands and package types and expand the number of suppliers we work with to ensure we can meet production requirements.

Our supply chain continues to work diligently to ensure sufficient supply of these high-demand brand and packages as we adjust to these changing consumer dynamics.

Further, during 2020, we recorded charges of $15.5 million within cost of goods sold related to temporary "thank you" pay for certain essential North America brewery employees.

Additionally, in order to support the challenges facing our on-premise customers and retailers, and our overall commitment to quality, during the first quarter of 2020, we initiated voluntary temporary keg relief programs in many of our markets providing customers with reimbursements for untapped kegs that met certain established return requirements.

As a result, our results for 2020 further include aggregate charges of $42.4 million, inclusive of a reduction to net sales of $30.3 million for reimbursements through these keg relief programs, as well as charges of $12.1 million within cost of goods sold related to obsolete finished goods keg inventories that were unable to be sold within our freshness specifications as a result of the ongoing on-premise impacts, as well as the costs to facilitate the above mentioned keg returns.

These keg return and inventory obsolescence charges were primarily recognized during the first quarter of 2020.

Further, during 2020, we recorded charges of $15.5 million within cost of goods sold related to temporary "thank you" pay for certain essential Americas segment brewery employees.

Additionally, in order to support and demonstrate our commitment to the continued viability of the many bars and restaurants which were negatively impacted by the coronavirus pandemic, during the first quarter of 2020, we initiated temporary keg relief programs in many of our markets.

We committed to provide customers with reimbursements for untapped kegs that met certain established return requirements in conjunction with the voluntary programs.

As a result, during 2020, we recognized a reduction to net sales of $30.3 million ($13.2 million for the Americas segment and $17.1 million for the EMEA&APAC segment) for reimbursements through these keg relief programs, substantially all of which was recognized in the first quarter of 2020 other than immaterial adjustments for changes in estimates during the remainder of 2020, reflecting estimated sales returns and reimbursements through these keg relief programs.

Ta b l e of C o n t e n t s

Further, during 2020, we recognized charges of $12.1 million ($9.2 million for the Americas segment and $2.9 million for the EMEA&APAC segment), substantially all of which were recognized in the first quarter of 2020 other than immaterial adjustments for changes in estimates during the remainder of 2020, within cost of goods sold related to obsolete finished goods keg inventories that were not expected to be sold within our freshness specifications, as well as the estimated costs to facilitate the above mentioned keg returns.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" for additional details.

As a result of the ongoing impacts of the pandemic, we have continued to take various mitigating actions to offset some of the implications to our employees and communities, as well as the challenges to performance, while also ensuring liquidity and deleverage remain key priorities as further discussed within "Liquidity and Capital Resources" below.

In addition to actions already taken, additional actions may be necessary.

Such potential actions include, but are not limited to, drawing on our revolving line of credit facility, issuing additional commercial paper under our U.S.

commercial paper program, issuing commercial paper under the COVID Corporate Financing Facility in the U.K.

(see Part II—Item 8 Financial Statements and Supplementary Data, Note 11, "Debt" for further discussion of the facilities and our remaining capacity), further accessing the capital markets, reducing discretionary spending including marketing, general and administrative as well as capital expenditures, asset monetization and taking advantage of certain governmental programs such as furloughs in the U.K.

and government relief and payment deferral programs, for example by the U.S.

Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), and other such government-sponsored legislation and programs.

Further, in response to the global economic uncertainty created by the coronavirus pandemic our board of directors suspended our regular quarterly dividends on our Class A and Class B common and exchangeable shares in May 2020.

As a result of the ongoing impacts of the coronavirus pandemic, we continue to take various mitigating actions to offset some of the implications to our employees and communities, as well as the challenges to performance, while also ensuring liquidity and deleveraging remain key priorities.

We continue to monitor the coronavirus pandemic and will take additional actions as necessary if the global coronavirus pandemic takes a further negative turn.

Such potential actions may include, but are not limited to, drawing on our revolving line of credit facility, issuing additional commercial paper under our U.S.

commercial paper program (see Part II—Item 8 Financial Statements and Supplementary Data, Note 11, "De b t " for further discussion of the facilities and our remaining capacity), further accessing the capital markets, reducing discretionary spending including capital expenditures and asset monetization.

In response to the global economic uncertainty created by the coronavirus pandemic, our board of directors suspended our regular quarterly dividends on our Class A and Class B common and exchangeable shares in May 2020.

In the third quarter of 2021, a quarterly dividend was reinstated.

See "Liquidity and Capital Resources" and Item 1A.

"Risk Factors" in this report for additional information regarding the impact of the global coronavirus pandemic.

We also continue to monitor the impacts of the pandemic on the recoverability of our assets, including goodwill and indefinite-lived intangible assets.

In particular, given the length and severity of the impacts of the coronavirus pandemic on our Europe business, as well as the protracted recovery currently expected in certain on-premise markets, we recorded a goodwill impairment loss of $1,484.3 million in the fourth quarter of 2020.

If the duration of the pandemic is prolonged and the severity of its impact continues or worsens, it could result in additional significant impairment losses.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 10, "Goodwill and Intangible Assets" for further details.

"Risk Factors " in this report for additional information regarding the impact of the global coronavirus pandemic on our liquidity.

We also continue to monitor the impacts of the coronavirus pandemic on the recoverability of our assets, including goodwill and indefinite-lived intangible assets.

Given the length and severity of the impacts of the global coronavirus pandemic on our EMEA&APAC segment, as well as the protracted recovery expected in certain on-premise markets, we recorded a goodwill impairment loss of $1,484.3 million in the fourth quarter of 2020.

If the duration of the coronavirus pandemic is further prolonged and the severity of its impact continues or worsens, it could result in additional significant impairment losses.

See P art II—Item 8 Financial Statements and Supplementary Data, Note 10, "Goodwill a n d I n t a n g i b l e A s s e t s " for further details.

Revitalization Plan

On October 28, 2019, we initiated a revitalization plan designed to allow us to invest across our business to drive long-term, sustainable success.

Under this plan, we intend to accelerate investments behind our largest brands, invest significantly in the above premium segment and invest more in whitespace and beyond beer opportunities.

Progress has been made against these ambitions despite the complexities and adversity brought by the coronavirus pandemic.

The savings from the

revitalization plan have been routed not only to the goals of the revitalization plan, but also to protecting our cash and liquidity position during the uncertainties brought on by the pandemic.

The combined segment share for Coors Light and Miller Lite continued to grow in the United States in 2020 despite the constraints of the pandemic restrictions.

We increased the proportion of our above premium products in our North America portfolio and introduced new hard seltzer products to markets in the United States and parts of Europe.

Additionally, Truss, our joint venture with HEXO, introduced ready-to-drink cannabis beverages in Canada.

See "Outlook" below for additional discussion regarding progress on our revitalization plan.

During 2020, we also established Chicago, Illinois as our North America segment operational headquarters, closed our office in Denver, Colorado and consolidated certain administrative functions into our other existing office locations.

Effective January 1, 2020, we changed our management structure from a corporate center and four segments to two segments - North America and Europe.

We also have certain activity that is not allocated to our segments, which has been reflected as “Unallocated.” Specifically, "Unallocated" activity primarily includes financing related costs such as interest expense and income, foreign exchange gains and losses on intercompany balances related to financing and other treasury-related activities, and the unrealized changes in fair value on our commodity swaps not designated in hedging relationships recorded within cost of goods sold, which are later reclassified when realized to the segment in which the underlying exposure resides.

Additionally, only the service cost component of net periodic pension and OPEB cost is reported within each operating segment, and all other components remain unallocated.

We recasted the historical presentation of segment information as a result of these reporting segment changes accordingly.

See Part II - Item 8.

Financial Statements, Note 3,"Segment Reporting" for additional details.

In connection with these consolidation activities, we currently expect to continue to incur certain cash and non-cash restructuring charges related to severance, retention and transition costs, employee relocation, non-cash asset related costs, lease impairment and exit costs in connection with our office lease in Denver, Colorado and other transition activities currently estimated in the range of approximately $100 million to $120 million in the aggregate, the majority of which are cash charges that we began recognizing as special items in the fourth quarter of 2019, and have been, and will continue to, further recognize through 2021.

During 2020 and 2019 we recognized severance and retention charges of $35.6 million and $41.2 million, respectively.

These charges, along with the other revitalization costs, bring the aggregate of such charges to approximately $100 million since the plan was initiated in 2019.

See Part II—Item 8 Financial Statements and Supplementary Data, “Note 7, Special Items” for additional details related to these restructuring and other charges.

After taking into account all changes in each of the business units, including Europe, the execution of the plan has reduced employment levels, in aggregate, by approximately 600 employees globally.

We currently expect the costs associated with the restructuring to be substantially recognized by the end of fiscal year 2021.

Summary of Consolidated Results of Operations

On October 28, 2019, we initiated a revitalization plan designed to allow us to invest across our portfolio to drive long-term, sustainable growth.

The revitalization plan established Chicago, Illinois as our Americas segment operational headquarters.

We closed our office in Denver, Colorado and consolidated certain administrative functions into our other existing office locations.

As of January 1, 2020, we changed our name to Molson Coors Beverage Company and changed our management structure to two segments - Americas and EMEA&APAC.

We began to incur charges related to these restructuring activities during the fourth quarter of 2019 and we recognized severance and retention charges of $4.0 million, $35.6 million and $41.2 million during the years ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively.

As of the year ended December 31, 2021, the revitalization plan restructuring charges were substantially complete.

See Part II—Item 8 Financial Statements and Supplementary Data Note 7, "Special Items" and Note 10, "Goodwill and Intangibles" for further discussion of the impacts of this plan.

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Cost Inflation

We are experiencing cost inflation, including higher transportation and input costs which negatively impacted our results of operations during the year ended December 31, 2021.

We expect cost inflation to continue to have a negative impact in 2022.

Higher transportation costs are a result of increased fuel prices, a short supply of truck drivers worldwide and increased freight costs.

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.

We are taking steps to reduce the impact of driver shortages by shipping more beverages via rail.

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.

The volatility of aluminum prices, inclusive of Midwest Premium and tariffs, continued to significantly impact our results during the year ended December 31, 2021.

To the extent these prices continue to fluctuate, our business and financial results could be materially adversely impacted.

We continue to monitor these risks and rely on our risk management hedging program, pricing, our premiumization strategy and cost savings programs to help mitigate some of the inflationary pressure.

Items Affecting Americas Segment Results of Operations

In February 2021, a winter ice storm severely impacted the southern U.S.

In particular, local government authorities in Texas were forced to impose energy restrictions, causing the Fort Worth brewery to be offline which resulted in our inability to produce or ship product during the downtime.

Irwindale, California Brewery Sale

Following management approval in December 2019, in January 2020, we announced plans to cease production at our Irwindale, California brewery and entered into an option agreement with Pabst, granting Pabst an option to purchase our Irwindale, California brewery, including plant equipment and machinery and the underlying land for $150 million, subject to adjustment as further specified in the option agreement.

Pursuant to the option agreement, on May 4, 2020, Pabst exercised its option to purchase the Irwindale brewery and the purchase was completed in the fourth quarter of 2020.

Production at the Irwindale brewery ceased during the third quarter of 2020.

We recorded special items charges related to the Irwindale brewery closure as further discussed in Part II—Item 8 Financial Statements and Supplementary Data Note 7, "Special Items" .

Montreal Brewery Sale

In further efforts to optimize the Canada and U.S.

brewery network, in the third quarter of 2017, we announced a plan to build a more efficient and flexible brewery in Longueuil, Québec.

During the second quarter of 2019, we completed the sale of our Montreal brewery for $96.2 million, resulting in a $61.3 million gain, which was recorded as special items, net in the consolidated statement of operations.

In conjunction with the sale, we agreed to lease back the existing property to continue operations on an uninterrupted basis until the new brewery became operational.

Completion of the Longueuil, Québec brewery occurred during the fourth quarter of 2021.

Items Affecting EMEA&APAC Segment Results of Operations

Fiscal Year 2020 Goodwill Impairment

In fiscal year 2020, we recorded a goodwill impairment charge related to our EMEA&APAC reporting unit of $1,484.3 million as a result of the annual goodwill impairment analysis.

Consequently, the EMEA&APAC reporting unit was fully impaired as of December 31, 2020.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 10, "Goodwill and Intangible Assets" for additional information.

Impairment of a Disposal Group

During the third quarter of 2020, we recognized an impairment loss of $30.0 million recorded within special items, net related to the held for sale classification of a disposal group within our India business, representing an insignificant part of our EMEA&APAC segment.

The sale of the India business disposal group was completed during the first quarter of 2021.

During the fourth quarter of 2021, we recognized an impairment loss of $13.5 million within special items, net related to the held for sale classification of the remaining portion of our India business.

Consolidated Results of Operations

The following table highlights summarized components of our consolidated statements of operations for the years ended December 31, 2021, December 31, 2020 and December 31, 2019.

See Part II—Item 8 Financial Statements and Supplementary Data, “Consolidated Statements of Operations” for additional details of our U.S.

GAAP results.

See Part II—Item 8 Financial Statements and Supplementary Data, “ Consolidated Statements of Operatio ns ” for additional details of our U.S.

GAAP results comparing December 31, 2021 and December 31, 2020.

Ta b l e of C o n t e n t s

For the years ended

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(In millions, except percentages and per share data)

Financial volume in hectoliters 84.479 (8.9) % 92.722 (4.0) % 96.627

Net sales $ 10,279.7 6.5 % $ 9,654.0 (8.7) % $ 10,579.4

Net income (loss) attributable to MCBC

$ (949.0) N/M $ 241.7 (78.4) % $ 1,116.5

Net income (loss) attributable to MCBC per diluted share

$ (4.38) N/M $ 1.11 (78.4) % $ 5.15

Cost of goods sold (6,226.3) 5.8 % (5,885.7) (7.7) % (6,378.2)

Gross profit 4,053.4 7.6 % 3,768.3 (10.3) % 4,201.2

Marketing, general and administrative expenses (2,554.5) 4.8 % (2,437.0) (10.7) % (2,728.0)

Special items, net (44.5) (97.4) % (1,740.2) 145.5 % (708.8)

Operating income (loss) 1,454.4 N/M (408.9) N/M 764.4

Total other income (expense), net (215.4) (8.3) % (235.0) (17.4) % (284.5)

Income (loss) before income taxes 1,239.0 N/M (643.9) N/M 479.9

Income tax benefit (expense) (230.5) (23.6) % (301.8) 29.1 % (233.7)

Net income (loss) 1,008.5 N/M (945.7) N/M 246.2

Net (income) loss attributable to noncontrolling interests (2.8) (15.2) % (3.3) (26.7) % (4.5)

Net income (loss) attributable to MCBC $ 1,005.7 N/M $ (949.0) N/M $ 241.7

Net income (loss) attributable to MCBC per diluted share $ 4.62 N/M $ (4.38) N/M $ 1.11

Financial volume in hectoliters 84.028 (0.5) % 84.479 (8.9) % 92.722

Brand volume in hectoliters 80.673 (1.7) % 82.033 (7.8) % 88.946

N/M = Not meaningful

2020 Financial Highlights

• In 2020, we incurred a net loss attributable to MCBC of $949.0 million compared to net income attributable to MCBC of $241.7 million in the prior year, primarily attributable to a goodwill impairment loss in our Europe segment of $1,484.3 million recorded in the fourth quarter of 2020, lower financial volume, higher tax expense driven by $135 million related to the enactment of the U.S.

final hybrid regulation in the second quarter of 2020, keg sales returns and other coronavirus-related costs, partially offset by lower marketing, general and administrative expenses, an approximate $108 million year-over-year favorable variance resulting from unrealized mark-to-market changes on our commodity positions, a goodwill impairment loss in our North America segment of $668.3 million recorded in 2019 and positive pricing in North America and Europe.

• During 2020, we repaid our $500 million 2.25% notes and CAD $500 million 2.75% notes upon their respective maturities throughout the year as part of our deleveraging commitment.

• We generated cash flow from operating activities of approximately $1.7 billion, representing a 10.6% decrease from approximately $1.9 billion in 2019.

The decrease in operating cash flow in 2020 compared to 2019 was primarily driven by lower net income after adjusting for non-cash add-backs and higher cash paid for taxes, partially offset by favorable timing of working capital.

Notably, working capital benefited from the deferral of approximately $130 million in tax payments from various government-sponsored payment deferral programs initiated in response to the coronavirus pandemic, of which we currently anticipate the majority to be paid in 2021 as these amounts become due.

• Regional financial highlights:

• In our North America segment, income before income taxes increased 67.5% to $1,080.5 million in 2020, versus $645.0 million in 2019, driven by lower special charges, lower marketing, general and administrative expenses, and positive pricing, partially offset by impacts from lower financial volume, inflation and higher transportation costs within cost of goods sold.

Lower special charges are primarily due to the goodwill impairment charge of $668.3 million in the third quarter of the prior year.

• In our Europe segment, we incurred a loss before income taxes of $1,603.7 million in 2020 compared to income before income taxes of $102.4 million in 2019, primarily due to higher special charges including the above mentioned goodwill impairment loss and lower gross profit as a result of the on-premise impacts of the coronavirus pandemic.

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

Worldwide Brand Volume

Worldwide brand volume (or "brand volume" when discussed by segment) reflects owned brands sold to unrelated external customers within our geographic markets, net of returns and allowances, royalty volume and an adjustment from STWs to STRs calculated consistently with MCBC owned volume.

Contract brewing and wholesaler volume is removed from worldwide brand volume as this is non-owned volume for which we do not directly control performance.

We believe this definition of worldwide brand volume more closely aligns with how we measure the performance of our owned brands within the markets in which they are sold.

Foreign currency impacts on results

During 2021, foreign currency movements favorably impacted our consolidated USD income before income taxes by $4.5 million (favorably impacting income before income taxes of our Americas segment by $2.1 million, our EMEA&APAC segment by $0.3 million and unallocated by $2.1 million).

Included in this amount are both translational and transactional impacts of changes in foreign exchange rates.

The impact of transactional foreign currency gains and losses is recorded within other income (expense) in our consolidated statements of operations.

Worldwide brand volume (or "brand volume" when discussed by segment) reflects owned or actively managed brands sold to unrelated external customers within our geographic markets (net of returns and allowances), royalty volume and our proportionate share of equity investment worldwide brand volume calculated consistently with MCBC owned volume.

Financial volume represents owned brands sold to unrelated external customers within our geographical markets, net of returns and allowances as well as contract brewing, wholesale non-owned brand volume and company-owned distribution volume.

Contract brewing and wholesaler volume is included within financial volume, but is removed from worldwide brand volume, as this is non-owned volume for which we do not directly control performance.

Royalty volume consists of our brands produced and sold by third parties under various license and contract-brewing agreements and because this is owned volume, it is included in worldwide brand volume.

The adjustment from STWs to STRs provides the closest indication of the performance of our owned brands in relation to market and competitor sales trends, as it reflects sales volume one step closer to the end consumer and generally means sales from our wholesalers or our company to retailers.

Our worldwide brand volume definition also includes an adjustment from Sales-to-Wholesaler (STW) volume to Sales-to-Retailer (STR) volume.

We believe the brand volume metric is useful to investors and management because, unlike financial volume and STWs, it provides the closest indication of the performance of our brands in relation to market and competitor sales trends.

As part of the revitalization plan strategy to grow our above premium portfolio and expand beyond the beer aisle, we have de-prioritized certain non-core economy SKUs.

This strategy is intended to drive sustainable net sales growth and earnings growth, despite potential volume declines as the portfolio mix shifts towards a higher composition of above premium products.

Ta b l e of C o n t e n t s

For the years ended

3 unchanged sentences

Financial volume 84.028 (0.5) % 84.479 (8.9) % 92.722

Contract brewing, wholesaler and non-beer volume (6.355) (17.6) % (7.715) (5.7) % (8.182)

Contract brewing and wholesaler volume (6.730) 5.9 % (6.355) (17.6) % (7.715)

Royalty volume 4.475 18.3 % 3.783 (10.5) % 4.226

STW to STR adjustment 0.126 N/M (0.287) (19.8) % (0.358)

STW to STR adjustment (1.100) N/M 0.126 N/M (0.287)

Total worldwide brand volume 80.673 (1.7) % 82.033 (7.8) % 88.946

Worldwide Brand Volume by Segment

North America 61.313 (5.1) % 64.640 (3.5) % 67.017

Europe 20.720 (14.8) % 24.306 (3.3) % 25.124

Total 82.033 (7.8) % 88.946 (3.5) % 92.141

N/M = Not meaningful

Our worldwide brand volume decreased 7.8% in 2020 compared to 2019, while financial volume decreased 8.9% in 2020 compared to 2019.

The decrease in 2020 reflects the impacts of the coronavirus pandemic and the related closure of on-premise outlets in both North America and Europe, as well as market share declines in part due to prioritization of certain key brands and package types to meet off-premise demand while dealing with packaging supply constraints, and lower contract brewing volumes in North America.

Despite this and the gradual re-opening of on-premise locations during the third quarter of 2020, the increase in off-premise brand volumes was not sufficient to offset the volume losses experienced related to the on-premise restrictions, resulting in overall brand volume declines.

Subsequently, in the fourth quarter of 2020, the second pandemic wave triggered new lockdowns with different levels of restrictions in Europe from one market to another.

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

The decrease in 2019 was due to lower volume in all segments primarily driven by challenging industry dynamics.

Net Sales Drivers

The following table highlights the drivers of change in net sales for the year ended December 31, 2021 versus December 31, 2020, by segment (in percentages).

Volume Price, Product and Geography Mix Currency Other Total

Financial Volume Price and Sales Mix Currency Total

Consolidated (0.5) % 5.2 % 1.8 % 6.5 %

North America (6.0) % 1.7 % (0.1) % — % (4.4) %

Europe (17.3) % (11.1) % 0.5 % — % (27.9) %

Americas (2.0) % 4.0 % 1.0 % 3.0 %

EMEA&APAC 3.9 % 15.7 % 6.3 % 25.9 %

The following table highlights the drivers of change in net sales on a reported basis for the year ended December 31, 2020 versus December 31, 2019, by segment (in percentages).

Volume Price, Product and Geography Mix Currency Other Total

Financial Volume Price and Sales Mix Currency Total

Consolidated (8.9) % 0.1 % 0.1 % (8.7) %

North America (4.3) % 3.4 % (0.3) % — % (1.2) %

Europe (3.3) % 3.9 % (4.7) % — % (4.1) %

Cost Savings Initiatives

Our next generation cost savings program, which began in 2020, is expected to deliver approximately $600 million of cost savings over the three year program term through 2022 and is focused around many of the same functions of the business as the 2017 to 2019 program.

These cost savings include approximately $150 million related to the revitalization plan.

Total cost savings delivered in 2020 totaled approximately $270 million.

Depreciation and Amortization

Depreciation and amortization expense was $922.0 million in 2020, an increase of $63.0 million compared to 2019, primarily driven by incremental accelerated depreciation related to brewery closures.

Americas (6.0) % 1.7 % (0.1) % (4.4) %

EMEA&APAC (17.3) % (11.1) % 0.5 % (27.9) %

Net sales per hectoliter on a brand volume basis in local currency increased 3.8% for the year ended December 31, 2021 compared to prior year.

The increase for the year ended December 31, 2021 was primarily due to positive net pricing in both the Americas and EMEA&APAC segments, as well as favorable sales mix resulting from portfolio premiumization and fewer on-premise channel restrictions.

Net sales per hectoliter on a financial volume basis in local currency increased 5.2% for the year ended December 31, 2021, compared to prior year.

Worldwide brand volume decreased 1.7% for the year ended December 31, 2021, compared to prior year, while financial volume decreased 0.5% compared to prior year.

The decline in brand volumes for the year ended December 31, 2021 was primarily due to lower economy portfolio volumes, including the de-prioritization of certain non-core SKUs in the U.S., partially offset by growth in the above premium portfolio volumes due to the increased premiumization efforts and favorable U.S.

domestic shipments as we worked to rebuild distributor inventory levels.

Ta b l e of C o n t e n t s

Cost of goods sold

Cost of goods sold per hectoliter in local currency increased 4.4% for the year ended December 31, 2021, compared to prior year.

The increase for the year ended December 31, 2021 was primarily due to cost inflation mainly on input materials and transportation costs and the mix impacts of the portfolio premiumization and unfavorable foreign exchange movements, partially offset by changes to our unrealized mark-to-market commodity positions, lower depreciation and cost savings.

Marketing, general and administrative expenses

Marketing, general and administrative expenses increased 4.8% for the year ended December 31, 2021, compared to prior year.

The increase for the year ended December 31, 2021 was primarily due to higher marketing spend in both the Americas and EMEA&APAC segments to support new innovations and core brands, as well as the cycling of lower spend in areas impacted by the coronavirus pandemic, partially offset by lower depreciation expense, cost savings and lower incentive compensation.

Special items, net

See Part II—Item 8 Financial Statements and Supplementary Data, Note 7, "Special Items" for detail of special items, net.

Total other income (expense), net

Total other income (expense), net improved 8.3% for the year ended December 31, 2021, compared to prior year primarily due to lower pension and OPEB non-service costs and lower interest expense driven by the repayment of debt as a result of our continued deleveraging actions.

Income taxes benefit (expense)

For the years ended

1 unchanged sentence

Effective tax rate 19 % (47) % 49 %

The decrease to the effective tax rate, when compared to the statutory rate, for fiscal year 2020 is primarily driven by two items.

The impact of the $1,484.3 million goodwill impairment, recorded within our Europe segment in the fourth quarter of 2020, of which a majority related to nondeductible goodwill and the recognition of approximately $135 million of tax expense following the enactment of the U.S.

final hybrid regulations, recorded in the second quarter of 2020 as further discussed below.

Since 2018, the U.S.

Department of Treasury has continued to issue proposed, temporary and final regulations to implement provisions of the 2017 Tax Act.

We have continued to monitor these regulations, and on April 7, 2020, the U.S.

Department of Treasury enacted final hybrid regulations with full retroactive application to January 1, 2018, with a few exceptions.

The final hybrid 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 issuance in the second quarter of 2020.

We currently believe the impact of the finalized regulations could be cash tax outflows

up to approximately $100 million in 2021.

We continue to analyze the potential cash impacts of the final regulations to minimize cash outflows over time.

During the third quarter of 2020, the U.K.

government enacted, and royal assent was received for, legislation to repeal the previously enacted reduction to the U.K.

corporate income tax rate.

This legislation changed the previously anticipated corporate income tax rate of 17% back to 19%.

Remeasurement of our deferred tax liabilities under the higher income tax rate resulted in the recognition of additional tax expense of approximately $6 million in 2020.

The increase in our effective tax rate for the year ended December 31, 2021 as compared to the year ended December 31, 2020 was primarily due to (i) the approximate $1.5 billion goodwill impairment charge in our EMEA&APAC segment recognized in the fourth quarter of 2020, and (ii) $18 million of tax expense recognized in the second quarter of 2021, which related to the remeasurement of our deferred tax liabilities following an announced corporate income tax rate increase in the U.K.

from 19% to 25%.

These increases to the effective tax rate were partially offset by $135 million of tax expense recognized in the second quarter of 2020 related to the hybrid regulations enacted in the U.S., and the release of $73 million of reserves for unrecognized tax positions as a result of an effective settlement reached on a tax audit during the third quarter of 2021.

As a result of the effective settlement reached, which included resolution of the impact of the final U.S.

tax hybrid regulations, we paid cash tax and associated interest of approximately $125 million in the fourth quarter of 2021.

Our tax rate can be more or less volatile and may change with, among other things, the amount and source of pre-tax income or loss, our ability to utilize foreign tax credits, excess tax benefits or deficiencies from share-based compensation, changes in tax laws, and the movement of liabilities established pursuant to accounting guidance for uncertain tax positions as statutes of limitations expire, positions are effectively settled, or when additional information becomes available.

There are proposed or pending tax law changes in various jurisdictions and other changes to regulatory environments in countries in which we do business that, if enacted, may have an impact on our effective tax rate.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Income Tax" for additional details regarding our effective tax rate.

See Part II—Item 8 Financial S tatements and Supplementary Data, Note 6, "Income Tax" for additional details regarding our effective tax rate.

Cost Savings Initiatives

Our next generation cost savings program, which began in 2020, is expected to deliver approximately $600 million of cost savings over the three year program through 2022 and is focused around many of the same functions of the business as the 2017 to 2019 program.

These cost savings include approximately $150 million related to the revitalization plan.

Total cost savings delivered in 2021 and 2020 totaled approximately $220 million and $270 million, respectively.

Depreciation and Amortization

Depreciation and amortization expense of $786.1 million for the year ended December 31, 2021 decreased by $135.9 million compared to $922.0 million for the year ended December 31, 2020, primarily due to the decrease in accelerated depreciation expense recorded as a result of certain facility closures as well as assets becoming fully depreciated during the year.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 7, "Special Items" for further discussion.

Ta b l e of C o n t e n t s

Segment Results of Operations

North America Segment

Americas Segment

For the years ended

1 unchanged sentence

(In millions, except percentages)

Financial volume in hectoliters (1)

65.010 (6.0) % 69.180 (4.3) % 72.283

$ 9,505.8 (4.8) % $ 9,985.3 (1.7) % $ 10,157.4

Excise taxes (1,268.8) (7.2) % (1,367.1) (4.6) % (1,433.0)

Net sales (1)

$ 8,485.0 3.0 % $ 8,237.0 (4.4) % $ 8,618.2

Cost of goods sold (1)

(4,983.1) (2.5) % (5,112.5) — % (5,112.3)

Gross profit 3,253.9 (7.2) % 3,505.7 (2.9) % 3,612.1

Marketing, general and administrative expenses (1,960.2) (9.5) % (2,166.5) (2.0) % (2,211.2)

Special items, net (2)

(212.5) (69.0) % (685.6) N/M 261.9

Operating income 1,081.2 65.4 % 653.6 (60.7) % 1,662.8

Interest income (expense), net (2.4) N/M 2.8 (68.2) % 8.8

Other income (expense), net 1.7 N/M (11.4) 17.5 % (9.7)

Income (loss) before income taxes $ 1,176.5 8.9 % $ 1,080.5 67.5 % $ 645.0

N/M = Not meaningful

Financial volume in hectoliters (2)

63.737 (2.0) % 65.010 (6.0) % 69.180

Brand volume in hectoliters 59.334 (3.2) % 61.313 (5.1) % 64.640

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

(2) Excludes royalty volume of 2.507 million hectoliters, 2.052 million hectoliters and 2.258 million hectoliters for 2021, 2020 and 2019, respectively.

The results for 2019 and 2018 have been recast to reflect the segment changes as part of the revitalization plan.

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

(3) See Part II—Item 8 Financial Statements and Supplementary Data, Note 7, "Special Items" for detail of special items.

Significant events

We continue to monitor the coronavirus pandemic, which had a material adverse effect on our North America results of operations for fiscal year 2020 and we expect it will continue to have a material adverse effect on our results of operations in 2021.

We experienced a significant adverse impact in the first half of 2020 resulting from the initial closure of, and subsequent continued impacts to, the on-premise channel.

While we began to see some of the on-premise return in June, due to limitations and restrictions as well as consumer uncertainty, volume has not returned to pre-pandemic levels.

Additionally, continuing governmental or societal impositions on bars and restaurants and restrictions on public gatherings including the growing risk of a return of shutdowns, especially if prolonged in nature, we expect will continue to have adverse effects on on-premise traffic and, in turn, our business performance, cash flows and liquidity.

Further, the CAD has become volatile as a result of the

ongoing uncertainties and impacts of the coronavirus pandemic.

Any significant weakening of the CAD to the USD could have an adverse impact on our results due to the relative magnitude of our Canadian business.

Our results for 2020 include a reduction to net sales of $13.2 million and charges to cost of goods sold of $9.2 million related to the recognition of sales returns and finished good obsolescence charges and related costs resulting from the on-premise impacts of the coronavirus pandemic.

These charges were primarily recognized during the first quarter of 2020, with adjustments recognized in subsequent quarters in 2020.

We also recognized charges to cost of goods sold of $15.5 million related to temporary "thank you" pay for certain essential North America brewery employees.

In the third quarter of 2020, we formed a joint venture equally owned by MCBC and DGY West Holdings, LP that was formed to expand commercialization of Yuengling's brands with operation currently expected to commence in the second half of 2021.

TYC will oversee any new market expansion in the U.S.

outside Yuengling's current 22-state footprint and New England.

We expect that TYC will expand in a methodical pace following disciplined and steady growth.

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

Following management approval in December 2019, in January 2020, we announced plans to cease production at our Irwindale, California brewery and entered into an option agreement with Pabst Brewing Company, LLC ("Pabst"), granting Pabst an option to purchase our Irwindale, California brewery, including plant equipment and machinery and the underlying land for $150 million, subject to adjustment as further specified in the option agreement.

Pursuant to the option agreement, on May 4, 2020, Pabst exercised its option to purchase the Irwindale Brewery and the purchase was completed in the fourth quarter of 2020.

Production at the Irwindale brewery ceased during the third quarter of 2020.

We recorded special charges related to the planned Irwindale brewery closure as further discussed in Part II—Item 8 Financial Statements and Supplementary Data, Note 7, "Special Items."

The volatility of aluminum, inclusive of Midwest Premium and tariffs, continued to significantly impact our results during 2020.

To the extent these prices continue to fluctuate, our business and financial results could be materially adversely impacted.

We continue to monitor these risks and rely on our risk management hedging program to help mitigate price risk exposure for commodities including aluminum and fuel.

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, as a result, in part, of prolonged weakening of the Canadian beer industry negatively impacting the performance of the Canada business through the third quarter of 2019 and the expected future cash flows of the Canada reporting unit.

The interim goodwill impairment analysis resulted in a goodwill impairment loss recognized within our historical Canada reporting unit of $668.3 million, which was recorded as a special item.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 10, "Goodwill and Intangible Assets" for additional information.

In further efforts to help optimize the North America brewery network, in the third quarter of 2017, we announced a plan to build a more efficient and flexible brewery in Longueuil, Quebec.

During the second quarter of 2019, we completed the sale of our Montreal brewery for $96.2 million, resulting in a $61.3 million gain, which was recorded as a special item.

In conjunction with the sale, we agreed to lease back the existing property to continue operations on an uninterrupted basis until the new brewery is operational, which we currently expect to occur in 2021.

However, due to the uncertainty inherent in our estimates, and the impacts of the coronavirus pandemic potentially delaying construction of the new brewery, the timing of the brewery closure is subject to change.

We will continue to incur significant capital expenditures associated with the construction of the new brewery in Longueuil, Quebec, through its estimated completion in late 2021.

In June 2019, the Ontario government in Canada adopted a bill that, if enacted, would terminate a 10-year Master Framework Agreement that was originally signed between the previous government administration and Molson Canada 2005, a wholly owned indirect subsidiary of the Company, Labatt Brewing Company Limited, Sleeman Breweries Ltd., and Brewers Retail Inc.

in 2015 and governs the terms of the beer distribution and retail systems in Ontario through 2025.

The government has not yet proclaimed the bill as law.

The impacts of these potential legislative changes are unknown at this time, but could have a negative impact on the results of operations, cash flows and financial position of the North America segment.

While discussions remain ongoing with the government to reach a mutually agreeable alternative to the enactment of the law, it is unclear how the coronavirus pandemic will impact these discussions.

Molson Canada 2005 and the other Master Framework Agreement signatories are prepared to vigorously defend their rights and pursue legal recourse, should the Master Framework Agreement be unilaterally terminated by the enactment of the legislation.

For additional information, See Part II—Item 8 Financial Statements and Supplementary Data, Note 18, "Commitments and Contingencies."

In June 2019, Health Canada released final regulations resulting in the legalization of new classes of cannabis products including edibles and cannabis infused beverages on October 17, 2019, with product sales being permitted sixty days after submission of the beverage formulations to Health Canada and satisfaction of all other licensing and regulatory preconditions.

Truss, our joint venture with HEXO in Canada, began rolling out its range of THC and CBD infused beverages across the Canadian market during the third quarter of 2020.

Separately, in April 2020, we completed the formation of a new joint venture with HEXO to explore opportunities for non-alcohol hemp-derived CBD beverages in Colorado.

Foreign currency impact on results

During 2020, foreign currency movements unfavorably impacted our North America USD income before income taxes by $0.3 million.

Included in this amount are both translational and transactional impacts of changes in foreign exchange rates.

The impact of transactional foreign currency gains and losses is recorded within other income (expense) in our consolidated statements of operations.

Volume and net sales

Brand volume decreased 5.1% in 2020 compared to 2019, due to on-premise outlet restrictions as well as packaging constraints contributing to the declines in the economy and premium segments.

Financial volume declined 6.0% in 2020 compared to 2019, reflecting lower brand volume, unfavorable shipment timing in the U.S.

largely due to aluminum can supply and other packaging material constraints as well as lower contract brewing volume.

Net sales per hectoliter on a brand volume basis increased 1.6% in local currency in 2020 compared to 2019, driven by positive brand and package mix in the U.S.

as well as net pricing increases in the U.S.

and Canada, partially offset by negative channel and brand mix in Canada attributed to the shift of volume from on-premise to off-premise and the estimated keg sales returns and reimbursements recognized in the first quarter of 2020 related to the on-premise impacts of the coronavirus pandemic.

Net sales per hectoliter on a reported basis in local currency increased 1.9% in 2020 compared to 2019.

Cost of goods sold

Cost of goods sold per hectoliter in local currency increased 3.9% in 2020 compared to prior year, impacted by finished goods obsolescence charges and related costs primarily recognized in the first quarter of 2020 resulting from the on-premise impacts of the coronavirus pandemic as well as temporary "thank you" pay for certain essential North America brewery employees, partially offset by cost savings and the favorable resolution of our property tax appeal for our Golden, Colorado brewery.

Marketing, general and administrative expenses

Marketing, general and administrative expenses in local currency decreased 9.4% in 2020 compared to 2019 primarily driven by lower marketing spend in areas impacted by the coronavirus pandemic, such as sports and live entertainment events, and other cost mitigation actions, as well as cost savings related to the revitalization plan, partially offset by cycling lower incentive compensation and a non-recurring vendor benefit in the prior year.

Other income (expense), net

Other income was $1.7 million in 2020 compared to other expense of $11.4 million in 2019 primarily driven by unrealized mark-to-market changes on our HEXO warrants, partially offset by a $1.5 million gain recognized in 2019 on the sale of the Company's ownership interest in the Montreal Canadiens.

Europe Segment

The results for 2019 were recasted to reflect the segment changes as part of the revitalization plan.

Net sales and volume

Net sales per hectoliter on a brand volume basis in local currency increased 3.2% for the year ended December 31, 2021, compared to prior year.

The increase for the year ended December 31, 2021 was primarily due to positive net pricing and favorable brand mix, partially offset by unfavorable geographic mix attributed to growing license volume in Latin America.

Net sales per hectoliter on a financial volume basis in local currency increased 4.0% for the year ended December 31, 2021, compared to the prior year.

Brand volume decreased 3.2% for the year ended December 31, 2021, compared to prior year.

The decrease for the year ended December 31, 2021 was primarily due to a decline in the U.S.

economy portfolio, including the de-prioritization and rationalization of non-core SKUs, partially offset by growth in Latin America and the U.S.

above premium portfolio.

Financial volumes decreased 2.0% for the year ended December 31, 2021, compared to prior year, due to lower brand volume, partially offset by favorable U.S.

domestic shipment trends as we worked to rebuild distributor inventory levels.

Income (loss) before income taxes

Income (loss) before income taxes increased 8.9% for the year ended December 31, 2021, compared to prior year.

The increase for the year ended December 31, 2021 was primarily due to positive net pricing and favorable brand mix, lower net special items charges, lower depreciation expense, and cost savings partially offset by cost inflation mainly on input materials and transportation costs, lower financial volumes and higher MG&A spend.

The higher MG&A spend was driven by higher marketing spend to support new innovations and core brands and the cycling of lower spend in areas impacted by the coronavirus pandemic, partially offset by lower incentive compensation expense, cost savings and equity income from the TYC joint venture which started distribution in Texas in the third quarter of 2021.

EMEA&APAC Segment

For the years ended

1 unchanged sentence

(In millions, except percentages)

Financial volume in hectoliters (1)(2)

19.560 (17.3) % 23.660 (3.3) % 24.469

$ 2,232.9 (26.8) % $ 3,049.0 (4.9) % $ 3,205.8

Excise taxes (801.0) (24.6) % (1,062.6) (6.4) % (1,135.4)

Net sales (1)

$ 1,802.3 25.9 % $ 1,431.9 (27.9) % $ 1,986.4

Cost of goods sold (1,025.1) (20.5) % (1,290.1) (3.1) % (1,331.5)

Gross profit 406.8 (41.6) % 696.3 (5.8) % 738.9

Marketing, general and administrative expenses (476.8) (15.1) % (561.5) (5.1) % (591.5)

Special items, net (3)

(1,527.7) N/M (23.2) 90.2 % (12.2)

Operating income (loss) (1,597.7) N/M 111.6 (17.5) % 135.2

Interest income (expense), net (5.4) (5.3) % (5.7) 11.8 % (5.1)

Other income (expense), net (0.6) (82.9) % (3.5) 133.3 % (1.5)

Income (loss) before income taxes $ (1,603.7) N/M $ 102.4 (20.4) % $ 128.6

Income (loss) before income taxes $ 32.9 N/M $ (1,603.7) N/M $ 102.4

Financial volume in hectoliters (2)

20.315 3.9 % 19.560 (17.3) % 23.660

Brand volume in hectoliters 21.339 3.0 % 20.720 (14.8) % 24.306

N/M = Not meaningful

(1) Excludes royalty volume of 1.731 million hectoliters, 1.968 million hectoliters and 2.040 million hectoliters for 2020, 2019 and 2018, respectively.

The results for 2019 and 2018 have been recast to reflect the segment changes as part of the revitalization plan.

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

(3) See Part II—Item 8 Financial Statements and Supplementary Data, Note 7, "Special Items" for detail of special items.

Significant events

We continue to monitor the coronavirus pandemic, which had a material adverse effect on our Europe results of operations in 2020 and we expect it will continue to have a material adverse effect on our Europe results of operations in 2021.

We experienced a significant adverse impact particularly in the second and fourth quarters of 2020 resulting from the closure of, and subsequent continued impacts to, the on-premise channel.

While we began to see some of the on-premise return during June, and the on-premise reopening in July 2020 in the U.K., consumer behavior throughout Europe in the channel has been uncertain and has not returned to pre-pandemic levels.

Subsequently, in the fourth quarter of 2020, the second pandemic wave triggered new lockdowns with different levels of restrictions in Europe from one market to another.

Our results for fiscal year 2020 include a reduction to net sales of $17.1 million and charges to cost of goods sold of $2.9 million related to the recognition of sales returns and finished goods obsolescence charges and related costs resulting from the on-premise impacts of the coronavirus pandemic.

These charges were preliminarily recognized during the first quarter of 2020, with further adjustments for changes in estimates recognized during the year.

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

exited the EU on January 31, 2020 and entered a twelve month transition period.

The treaty regarding the U.K.

and EU trade relationship became effective on January 1, 2021.

left the single market and customs union on December 31, 2020, the treaty guarantees "zero tariff and zero quota" trade on goods.

See Part I—Item 1A Risk Factors under "Risks Specific to the Europe Segment" for further discussion of the risks specific to the U.K.'s exit from the EU.

The GBP has been volatile as a result of the government discussions related to the uncertainty and terms of the exit as well as from the ongoing uncertainties and impacts of the coronavirus pandemic.

Any significant weakening of the GBP to the USD could have an adverse impact on our results due to the importance and relative magnitude of U.K.

We completed our required annual goodwill and indefinite-lived intangible asset impairment testing as of October 1, 2020, the first day of our fourth quarter, and recorded a goodwill impairment charge related to our Europe reporting unit of $1,484.3 million, which was recorded as a special item.

This impairment charge was a result of the expected prolonged impacts of the coronavirus on the European beer industry.

During the third quarter of 2019, we recognized an aggregate impairment loss of $12.2 million related to the goodwill of our India reporting unit and a definite-lived brand intangible asset, which were

recorded as special items.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 10, "Goodwill and Intangible Assets" for additional information.

During the third quarter of 2020, we recognized an impairment loss of $30.0 million recorded within special items related to the held for sale classification of a disposal group within our India business, representing an insignificant part of our Europe segment.

In 2019, our Grolsch joint venture arrangement as well as the related brewing and distribution agreements for the Grolsch brands in the U.K.

and Ireland were terminated.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 4 , " Investments " for further information.

Foreign currency impact on results

Our Europe segment operates in numerous countries, and each country's operations utilize distinct currencies.

During 2020, foreign currency movements unfavorably impacted our Europe USD loss before income taxes by $74.3 million, primarily driven by the approximate $78 million translational impacts of the goodwill impairment recorded.

Included in this amount are both translational and transactional impacts of changes in foreign exchange rates.

The impact of transactional foreign currency gains and losses is recorded within other income (expense) in our consolidated statements of operations.

Volume and net sales

Our Europe brand volume decreased 14.8% in 2020 compared to 2019 as a result of the coronavirus pandemic.

Financial volume declined 17.3% in 2020 compared to 2019, also as a result of the coronavirus pandemic.

Net sales per hectoliter on a brand volume basis decreased 8.1% in local currency in 2020 compared to 2019, primarily driven by unfavorable channel, brand and geographic mix, particularly from our higher margin U.K.

business, which has a more significant exposure to the on-premise channel which was restricted for much of the year due to the coronavirus pandemic.

Net sales per hectoliter on a brand volume basis was also impacted by the keg sales returns primarily recognized in the first quarter of 2020 related to the on-premise impacts resulting from the coronavirus pandemic.

Net sales per hectoliter on a reported basis decreased 13.4% in local currency in 2020 compared to 2019.

Cost of goods sold

Cost of goods sold per hectoliter decreased 4.3% in local currency in 2020 compared to 2019, driven by changes in geographic and product mix, partially offset by volume deleverage and cost inflation as well as the finished good obsolescence charges and costs resulting from the on-premise impacts of the coronavirus pandemic.

Marketing, general and administrative expenses

Marketing, general and administrative expenses decreased 15.4% in local currency in 2020 compared to 2019, primarily as a result of actions taken to mitigate the impacts associated with the coronavirus pandemic, and lower incentive compensation.

Ta b l e of C o n t e n t s

(2) Excludes royalty volume of 1.968 million hectoliters, 1.731 million hectoliters and 1.968 million hectoliters for 2021, 2020 and 2019, respectively.

The results for 2019 were recasted to reflect the segment changes as part of the revitalization plan.

Net sales and volume

Net sales per hectoliter on a brand volume basis in local currency increased 10.1% for the year ended December 31, 2021, compared to prior year.

The increase for the year ended December 31, 2021 was primarily due to favorable geographic, channel and brand mix and positive net pricing.

Net sales per hectoliter on a financial volume basis in local currency increased 15.1% for the year ended December 31, 2021, compared to prior year.

Brand volume increased 3.0% for the year ended December 31, 2021, compared to prior year.

The increase for the year ended December 31, 2021 was primarily due to the benefit of fewer on-premise restrictions and growth in the above premium portfolio.

Financial volumes increased 3.9% for the year ended December 31, 2021, compared to prior year, primarily due to higher brand volumes and factored sales.

Income (loss) before income taxes

Income (loss) before income taxes was income of $32.9 million for the year ended December 31, 2021 compared to a loss of $1,603.7 million in the prior year.

The improvement of income (loss) before income taxes of $1,636.6 million for the year ended December 31, 2021 was primarily due to the cycling of special items in the prior year related to the $1.5 billion goodwill impairment of the EMEA&APAC segment, favorable sales mix, positive net pricing and higher financial volumes, partially offset by cost inflation and higher MG&A spend mainly due to the cycling of lower prior year spend in areas impacted by the coronavirus pandemic.

Unallocated Segment

We have certain activity that is not allocated to our segments and primarily includes financing-related costs such as interest expense and income, foreign exchange gains and losses on intercompany balances related to financing and other treasury-related activities, and the unrealized changes in fair value on our commodity swaps not designated in hedging relationships.

Additionally, only the service cost component of net periodic pension and OPEB cost is reported within each operating segment, and all other components remain unallocated.

For the years ended

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(In millions, except percentages)

Financial volume in hectoliters — — % — — % —

Sales $ — — % $ — — % $ —

Excise taxes — — % — — % —

Net sales — — % — — % —

Cost of goods sold $ 236.6 119.9 % $ 107.6 N/M $ (0.8)

Gross profit 236.6 119.9 % 107.6 N/M (0.8)

Marketing, general and administrative expenses — — % — — % —

Special items, net — — % — — % —

Operating income (loss) 236.6 119.9 % 107.6 N/M (0.8)

Interest expense, net (263.5) (2.3) % (269.8) (10.6) % (301.9)

Other pension and postretirement benefits (costs), net 30.3 N/M 2.9 (92.4) % 38.2

Other income (expense), net 4.9 N/M 0.2 N/M (0.8)

Income (loss) before income taxes $ (120.7) (54.9) % $ (267.5) (37.9) % $ (430.7)

Total other income (expense), net (207.0) (9.3) % (228.3) (14.4) % (266.7)

Income (loss) before income taxes $ 29.6 N/M $ (120.7) (54.9) % $ (267.5)

N/M = Not meaningful

Cost of goods sold

The unrealized changes in fair value on our commodity swaps, which are economic hedges, are recorded as cost of goods sold within unallocated and make up the entirety of the activity presented with cost of goods sold in the table above for 2020, 2019 and 2018.

As the exposure we are managing is realized, we reclassify the gain or loss to the segment in which the underlying exposure resides, allowing our segments to realize the economic effects of the derivative without the resulting unrealized mark-to-market volatility.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 1 6 , "De rivative Instruments and Hedging Activities " for further information.

Interest income (expense), net

Net interest expense decreased in 2020 compared to 2019, primarily driven by the repayment of debt as part of our deleveraging commitments.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 11, "Debt" for further details.

Other pension and postretirement benefits (costs), net

Other pension and postretirement benefits were $30.3 million for the year ended 2020 compared to $2.9 million in 2019, primarily driven by a pension settlement charge of $29.8 million recognized in 2019.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 15, "Employee Retirement Plans and Postretirement Benefits" for further discussion of other pension and postretirement benefits.

The unrealized changes in fair value on our commodity derivatives, which are economic hedges, are recorded as cost of goods sold within unallocated and make up the entirety of the activity presented with cost of goods sold in the table above for 2021, 2020 and 2019.

As the exposure we are managing is realized, we reclassify the gain or loss on our commodity derivatives to the segment in which the underlying exposure resides, allowing our segments to realize the economic effects of the derivative without the resulting unrealized mark-to-market volatility.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 16, "Derivative Instruments and Hedging Activities" for further information.

Total other income (expense), net

Total other expense, net decreased 9.3% for the year ended December 31, 2021 compared to the prior year primarily due to lower pension and OPEB non-service costs and lower interest expense driven by the repayment of debt as a result of our continued deleveraging actions.

See Part II - Item 8.

Financial Statements and Supplementary Data, Note 11 "Debt" for further details on our debt instruments.

See Part II - Item 8 Financial Statements and Supplementary Data, Note 15, "Employee Retirement Plans and Postretirement Benefits" for further discussion of other pension and OPEB.

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Liquidity and Capital Resources

Our primary sources of liquidity have included cash provided by operating activities and access to external capital.

However, the worldwide economic disruption caused by the coronavirus pandemic could materially affect our future access to our sources of liquidity.

In the event of a sustained market deterioration and continued declines in net sales, profit and operating cash flow, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions.

We currently believe that our cash and cash equivalents, cash flows from operations and cash provided by short-term and long-term borrowings, when necessary, will be adequate to meet our ongoing operating requirements, scheduled principal and interest payments on debt, capital expenditures and other obligations for the next twelve months, and our long-term liquidity requirements.

Additionally, in the second quarter of 2020, as part of our planned actions to mitigate liquidity considerations related to the coronavirus pandemic, we amended our $1.5 billion revolving credit facility to revise the leverage ratios under the financial maintenance covenant upwards for the six fiscal quarters beginning with the second quarter 2020 in response to the effects of the pandemic on our business.

Separately, we entered into a COVID Corporate Financing Facility

commercial paper program in the U.K.

allowing for an incremental borrowing capacity of up to GBP 300 million as further discussed below.

We are currently focused on navigating the recent challenges presented by the coronavirus pandemic by preserving our liquidity and managing our cash flow through taking preemptive action to enhance our ability to meet our short-term liquidity needs.

However, the ongoing worldwide disruption caused by the coronavirus pandemic could materially affect our future access to our sources of liquidity.

In the event of a sustained market deterioration and declines in net sales, profit and operating cash flow, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions.

We currently believe that our cash and cash equivalents, cash flows from operations and cash provided by short-term and long-term borrowings, when necessary, will be adequate to meet our ongoing operating requirements, scheduled principal and interest payments on debt, capital expenditures and other obligations for the twelve months subsequent to the date of the issuance of this annual report, and our long-term liquidity requirements.

We continue to focus on navigating the ongoing challenges presented by the coronavirus pandemic by preserving our liquidity and managing our cash flow through taking preemptive actions to enhance our ability to meet our short-term liquidity needs.

Specifically, we have taken several actions and considered various potential actions that may be needed to meet short-term and mid-term liquidity needs and have resources in place should we need to act on any of these quickly.

Such potential actions include, but are not limited to, drawing on the available $1.5 billion revolving credit facility, including issuing commercial paper under our U.S.

commercial paper program, issuing, as necessary, up to GBP 300 million in commercial paper under the COVID Corporate Financing Facility in the U.K.

(see Part II—Item 8 Financial Statements and Supplementary Data, Note 11, "Debt" regarding details of our current borrowings and remaining capacities under these programs), further accessing the capital markets, reducing discretionary spending including marketing, general and administrative as well as capital expenditures, asset monetization, and taking advantage of certain governmental programs such as furloughs in the U.K.

and government relief and payment deferral programs, for example by the U.S.

Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), discussed below, and other such government-sponsored legislation and programs.

In addition, we and our board of directors continue to actively evaluate various capital allocation considerations.

Specifically, we currently intend to maintain our investment grade debt rating and we are committed to further deleverage in 2021 in accordance with our plans.

Further, our current expectation is that the Company's board of directors will be in a position to reinstate a dividend in the second half of 2021.

While we currently expect to have the necessary cash on hand to repay obligations when due, continued declines in net sales and profit could have a material adverse effect on our financial operations, cash flow and our ability to raise capital.

The coronavirus pandemic is ongoing, and because of its dynamic nature, including uncertainties relating to the ultimate spread of the virus, the severity of the disease, the duration of the pandemic, the duration of on-premise closures and related prolonged weakening of economic or other negative conditions, and governmental reactions, we cannot fully anticipate future conditions given the substantial uncertainties in the economy in general.

Such potential actions include, but are not limited to, drawing on our $1.5 billion revolving credit facility, including issuing commercial paper under our U.S.

commercial paper program (see Part II—Item 8.

Financial Statements and Supplementary Data, Note 11, "Debt " regarding details of our current borrowings and remaining capacities under these programs), further accessing the capital markets, reducing discretionary spending including marketing, general and administrative as well as capital expenditures, asset monetization, and taking advantage of certain government-sponsored legislation and programs.

We intend to maintain our investment grade debt rating as demonstrated by our continued deleveraging actions which included the repayment of our $1.0 billion 2.1% notes that were due July 2021.

We do not have any restrictions that prevent or limit our ability to declare or pay dividends.

On July 15, 2021, our Company's Board of Directors reinstated a quarterly dividend after it was suspended during the second quarter of 2020 to preserve our liquidity position as a result of the coronavirus pandemic.

While we currently expect to have the necessary cash on hand to repay obligations when due, declines in net sales and profit could have a material adverse effect on our financial operations, cash flow and our ability to raise capital.

The coronavirus pandemic is ongoing, and because of its dynamic nature, including uncertainties relating to the spread of variants, the rate of vaccinations and the efficacy of vaccines, the duration of the coronavirus pandemic, the duration of on-premise restrictions and closures and related prolonged weakening of economic or other negative conditions, including the impacts on the global supply chain and governmental reactions, we cannot fully anticipate future conditions given the substantial uncertainties in the economy in general.

We may have unexpected costs and liabilities;

revenue and cash provided by operations may decline;

macroeconomic conditions may continue to weaken;

prolonged and severe levels of unemployment may negatively impact our consumers;

macroeconomic conditions may weaken;

and competitive pressures may increase.

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2 to our revolving credit facility on June 19, 2020.

While the amendment did not increase our borrowing capacity or extend the term of the facility, it, among other things, (i) temporarily increased certain levels of the applicable rate by 25 basis points for the period beginning June 19, 2020 and ending on the last day of the fiscal quarter ending September 30, 2021, and (ii) revised the leverage ratios under the financial maintenance covenant for each fiscal quarter ending on or after June 30, 2020 through the maturity of the Credit Agreement.

While the amendment did not increase our borrowing capacity or extend the term of the facility, it, among other things, revised the leverage ratios under the financial maintenance covenant for each fiscal quarter ending on or after June 30, 2020 through the maturity of the Credit Agreement.

There can be no assurance that we will be able to secure additional liquidity if our revolving credit facility is fully drawn, the capital markets become inaccessible or if our credit rating is adversely impacted, which may result in difficulties in accessing debt markets or increase our debt costs.

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See Part II—Item 8 Financial Statements and Supplementary Data, Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” for additional discussion related to our accounts receivable and associated reserves.

Additionally, in response to the coronavirus pandemic, various governmental authorities globally have announced relief programs which we continue to monitor and evaluate, such as the CARES Act in the U.S.

Certain of these relief programs provide temporary deferrals of income and non-income based tax payments, which have positively impacted our operating cash flows in 2020.

Of the approximate $130 million of cash flow benefits recognized in 2020 from these temporary deferrals, the majority is expected to be paid in 2021.

Additionally, in response to the coronavirus pandemic, various governmental authorities globally implemented relief programs which we continue to monitor and evaluate, such as the CARES Act in the U.S.

Certain of these relief programs

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provide temporary deferrals of non-income based tax payments, which positively impacted our operating cash flows in 2020.

Of the $130 million of temporary net tax payment deferrals as of December 31, 2020, approximately $105 million was repaid during the year ended December 31, 2021, with approximately $25 million outstanding as of December 31, 2021.

The majority of the remaining balance is expected to be paid during the year ended December 31, 2022.

While a significant portion of our cash flows from operating activities is generated within the U.S., our cash balances may be comprised of cash held outside the U.S.

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The recent fluctuations in foreign currency exchange rates may have a material impact on these foreign cash balances.

When the earnings

are considered indefinitely reinvested outside of the U.S., we do not accrue taxes.

When the earnings are considered indefinitely reinvested outside of the U.S., we do not accrue taxes.

To the extent necessary, we accrue for tax consequences on the earnings of our foreign subsidiaries upon repatriation.

However, we continue to assess the impact of the 2017 Tax Act and related U.S.

Department of Treasury proposed, temporary and final regulations, on the tax consequences of future cash repatriations.

We utilize a variety of tax planning and financing strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed.

We periodically review and evaluate these strategies, including external committed and non-committed credit agreements accessible by MCBC and each of our operating subsidiaries.

We may utilize tax planning and financing strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed.

We periodically review and evaluate these plans and strategies, including externally committed and non-committed credit agreements accessible by the Company and each of its operating subsidiaries.

We believe these financing arrangements, along with the cash generated from the operations of our U.S.

business and other liquidity measures resulting from considerations of the on-going coronavirus global pandemic, as discussed above, are sufficient to fund our current cash needs in the U.S.

business and other liquidity measures resulting from considerations of the ongoing coronavirus global pandemic, as discussed above, are sufficient to fund our current cash needs in the U.S.

Additionally, our cash balances in foreign countries are often subject to additional restrictions and covenants.

We may, therefore, have difficulties repatriating cash held outside of the U.S.

which would also be subject to various repatriation taxes.

We may therefore have difficulties repatriating cash held outside of the U.S., and such repatriation may be subject to tax.

In some countries, repatriation of certain foreign balances is restricted by local laws and could have adverse tax consequences if we were to move the cash to another country.

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or other countries and may adversely affect our liquidity.

Separately, as discussed in See Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Income Tax" , the U.S.

Department of Treasury recently enacted final hybrid regulations which impact tax positions we took in 2018 and 2019 and have resulted in additional income tax expense of approximately $135 million recognized during the second quarter of 2020.

We currently believe the impact of the finalized regulations could be cash tax outflows up to approximately $100 million in 2021.

We continue to analyze the potential cash impacts of the final regulations to minimize cash outflows over time.

Separately, as discussed in See Part II—Item 8 Financial Sta tements and Supplementary Data, Note 6, "Income Tax" , during third quarter 2021, an income tax audit settlement, which included resolution of the impact of the final U.S.

tax hybrid regulations recorded in the second quarter of 2020, was reached with taxing authorities.

The settlement resulted in the cash payment of approximately $125 million in the fourth quarter of 2021, including incremental tax liability and related interest.

Guarantor Information

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"Subsidiary Guarantors" shall mean certain Canadian and U.S.

subsidiaries reflecting the substantial operations of our North America segment.

subsidiaries reflecting the substantial operations of our Americas segment.

Pursuant to the indenture dated May 3, 2012 (as amended, the "May 2012 Indenture"), MCBC issued its outstanding 3.5% senior notes due 2022 and 5.0% senior notes due 2042.

Additionally, pursuant to the indenture dated July 7, 2016, MCBC issued its outstanding 2.1% senior notes due 2021, 3.0% senior notes due 2026, 4.2% senior notes due 2046 and 1.25% senior notes due 2024.

The 2.1% senior notes and its associated cross currency swap were subsequently repaid in July 2021 upon maturity using a combination of commercial paper borrowings and cash on hand.

The senior notes issued under the May 2012 Indenture and the July 2016 Indenture were registered under the Securities Act of 1933, as amended.

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See Part II—Item 8 Financial Statements and Supplementary Data , Note 11, "Debt" for details of all debt issued and outstanding as of December 31, 2021.

The following summarized financial information relates to the Obligor Group as of December 31, 2020 on a combined basis, after elimination of intercompany transactions and balances between the Obligor Group, and excluding the investments in and equity in the earnings of any non-guarantor subsidiaries.

The following summarized financial information relates to the Obligor Group as of December 31, 2021 on a combined basis, after elimination of intercompany transactions and balances between the Obligor Group, and excluding the investments in

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and equity in the earnings of any non-guarantor subsidiaries.

The balances and transactions with non-guarantor subsidiaries have been separately presented.

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Cash Flows from Operating Activities

Net cash provided by operating activities of approximately $1.7 billion in 2020 decreased by $201.6 million compared to 2019.

This decrease was primarily driven by lower net income adjusted for non-cash add-backs and higher cash paid for taxes partially offset by favorable timing of working capital.

Net cash provided by operating activities of $1,573.5 million for the year ended December 31, 2021 decreased by $122.2 million compared to $1,695.7 million for the year ended December 31, 2020, primarily due to the unfavorable timing of working capital and higher cash paid for income taxes, partially offset by higher net income adjusted for non-cash add-backs and lower interest paid.

The unfavorable timing of working capital included $230 million of an unfavorable impact related to prior year net tax payment deferrals, partially offset by the timing of receipts and payments related to higher financial volumes in the fourth quarter of 2021 compared to the fourth quarter of 2020.

Prior year working capital benefited from approximately $130 million of net tax payment deferrals related to various government-sponsored payment deferral programs associated with the coronavirus pandemic, while in 2021 we made over $100 million of net repayments against the net tax payment deferrals.

Cash Flows from Investing Activities

Net cash used in investing activities of $413.6 million in 2020 decreased by $19.7 million compared to 2019.

This decrease was primarily driven by higher proceeds from the sale of breweries (approximately $150 million from the sale of the Irwindale brewery completed in the fourth quarter of 2020 compared with the receipt of $94.2 million of net proceeds from the sale of our Montreal brewery during the second quarter of 2019) and lower capital expenditures, partially offset by the lower cash inflows from other investing activities including proceeds received from the voluntary settlement of our cross currency swaps during the second quarter of 2019.

Net cash used in investing activities of $509.9 million for the year ended December 31, 2021 increased by $96.3 million compared to $413.6 million for the year ended December 31, 2020, primarily due to lower proceeds from the sale of properties and other assets, including $150 million from the sale of the Irwindale Brewery completed in the fourth quarter of fiscal 2020, and higher net cash outflows from other investing activities, partially offset by lower capital expenditures.

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Cash Flows from Financing Activities

Net cash used in financing activities of approximately $1.1 billion in 2020 decreased by $936.6 million compared to 2019.

This decrease was primarily driven by lower net repayments on debt and borrowings and lower dividends paid resulting from the suspension of dividend payments in the second quarter of 2020, partially offset by higher net cash outflows from other financing activities.

Net cash used in financing activities of approximately $1,172.2 million for the year ended December 31, 2021 increased by $101.8 million compared to $1,070.4 million for the year ended December 31, 2020, primarily due to higher net debt repayments and higher dividend payments, partially offset by lower net cash outflows from other financing activities.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 11, "Debt" for a summary of our financing activities and debt position as of December 31, 2021 and December 31, 2020.

Capital Resources

Capital Resources, including Material Cash Requirements

Cash and Cash Equivalents

As of December 31, 2020, we had total cash and cash equivalents of $770.1 million compared to $523.4 million as of December 31, 2019.

The increase in cash and cash equivalents as of December 31, 2020 from December 31, 2019 was primarily driven by cash generated from operating activities, including the above-mentioned deferral of tax payments from various government-sponsored payment deferral programs and the proceeds from the sale of the Irwindale brewery, partially offset by the repayment of debt, capital expenditures and dividend payments.

We had total cash and cash equivalents of $637.4 million as of December 31, 2021, compared to $770.1 million as of December 31, 2020.

The decrease in cash and cash equivalents from December 31, 2020 to December 31, 2021 was primarily due to net debt repayments, including the repayment of our $1.0 billion 2.1% senior notes which matured in July 2021, capital expenditures and dividend payments, partially offset by net cash provided by operating activities and proceeds from the sale of properties and other assets.

See Part II—Item 8 Financial Statements and Supplementary Data, Consolidated Statements of Cash Flows for additional detail.

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Working Capital

We actively manage working capital through inventory management as well as management of accounts payable and accounts receivable to ensure we are able to meet short-term obligations and we are effectively using assets to increase profitability.

During 2020, we repaid our $500 million 2.25% notes and CAD 500 million 2.75% notes upon their respective maturities throughout the year.

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In July 2021, we repaid our $1.0 billion 2.1% notes upon maturity.

Notional amounts are presented in USD based on the applicable exchange rate as of December 31, 2021.

We have economically converted a portion of our $1.0 billion 2.1% senior notes due 2021 to EUR denominated using cross currency swaps of $400 million.

Refer to Part II—Item 8 Financial Statements and Supplementary Data, Note 11, "Debt" for details.

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Based on the credit profile of our lenders that are party to our credit facilities, we are confident in our ability to continue to draw on our revolving credit facility if the need arises.

As of December 31, 2021 and December 31, 2020, we had $1.5 billion available to draw under our $1.5 billion revolving credit facility, as there were no outstanding revolving credit facility or commercial paper borrowings.

Separately, on May 26, 2020, Molson Coors Brewing Company (UK) Limited (“MCBC U.K.”), a subsidiary of MCBC that operates and manages the Company’s business in the U.

K., established a commercial paper facility for the purpose of issuing short-term, unsecured Sterling-denominated notes that are eligible for purchase under the Joint HM Treasury and Bank of England’s COVID Corporate Financing Facility commercial paper program (the “CCFF Program”) in an aggregate principal amount up to GBP 300 million, subject to certain conditions, which may be increased from time to time as provided in the Dealer Agreement (as defined in Part II—Item 8 Financial Statements and Supplementary Data, Note 11, "Debt" ).

Commercial paper issuances under the CCFF Program do not impact the borrowing capacity under our revolving credit facility.

We had no borrowings outstanding under the CCFF Program as of December 31, 2020.

To the extent MCBC U.K.

has borrowings outstanding under the CCFF Program with maturities extending beyond May 19, 2021, there are certain additional conditions placed on the operations of MCBC U.K., including capital distributions and senior executive compensation, and as a consequence we currently do not anticipate having any borrowings under the CCFF Program with maturities extending beyond May 19, 2021, unless such previously described conditions under the CCFF Program are modified.

In addition, we intend to further utilize our cross-border, cross currency cash pool as well as our commercial paper programs for liquidity as needed.

We also have JPY, CAD, GBP and USD overdraft facilities as well as an additional JPY line of credit across several banks should we need additional short-term liquidity.

We intend to further utilize our cross-border, cross currency cash pool as well as our commercial paper programs for liquidity as needed.

We also have a JPY line of credit as well as JPY, CAD, GBP and USD overdraft facilities across several banks should we need additional short-term liquidity.

Under the terms of each of our debt facilities, we must comply with certain restrictions.

These include customary events of default and specified representations, warranties and covenants, as well as covenants that restrict our ability to incur certain additional priority indebtedness (certain thresholds of secured consolidated net tangible assets), certain leverage threshold percentages, create or permit liens on assets, and restrictions on mergers, acquisitions, and certain types of sale lease-back transactions.

On June 19, 2020, we entered into to an amendment to our existing revolving credit facility agreement, which among other things, revised the leverage ratios under the financial maintenance covenant for each fiscal quarter ending on or after June 30, 2020 through the maturity of the credit facility.

The maximum leverage ratio, as defined by the amended revolving credit facility agreement as of December 31, 2020 is 5.25x net debt to EBITDA with a 0.50x reduction to 4.75x net debt to EBITDA for the fiscal quarter ending June 30, 2021.

The leverage ratio requirement as of the last day of the fiscal quarter ending September 30, 2021 is reduced by 0.25x to 4.50x net debt to EBITDA, with a further 0.50x reduction to 4.00x net debt to EBITDA as of the last day of the fiscal quarter ending December 31, 2021 through maturity of the credit facility.

The maximum leverage ratio, as defined by the amended revolving credit facility agreement as of the last day of the fiscal year ended December 31, 2021 is 4.00x net debt to EBITDA, through maturity of the credit facility.

As of December 31, 2021 and December 31, 2020, we were in compliance with all of these restrictions, have met such financial ratios and have met all debt payment obligations.

All of our outstanding senior notes as of December 31, 2021 rank pari-passu.

In October 2021, we further amended our existing revolving credit facility agreement to replace LIBOR with designated replacement rates for any future borrowings denominated in EUR or GBP to ensure continued, uninterrupted access to these markets should we need it.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 11, "Debt" for a complete discussion and presentation of all borrowings and available sources of borrowing, including lines of credit.

Credit Rating

Our current long-term credit ratings are BBB-/Negative Outlook, Baa3/Stable Outlook and BBB(Low)/Negative Outlook with Standard & Poor's, Moody's and DBRS, respectively.

Our short-term credit ratings are A-3, Prime-3 and R-2(low), respectively.

A securities rating is not a recommendation to buy, sell or hold securities, and it may be revised or withdrawn at any time by the applicable rating agency.

Foreign Exchange

Foreign exchange risk is inherent in our operations primarily due to the significant operating results that are denominated in currencies other than USD.

Our approach is to reduce the volatility of cash flows and reported earnings which result from currency fluctuations rather than business related factors.

Therefore, we closely monitor our operations in each country and seek to adopt appropriate strategies that are responsive to foreign currency fluctuations.

Our financial risk management policy is intended to offset a portion of the potentially unfavorable impact of exchange rate changes on net income and earnings per share.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 16, "Derivative Instruments and Hedging Activities" for additional information on our financial risk management strategies.

Our consolidated financial statements are presented in USD, which is our reporting currency.

Assets and liabilities recorded in foreign currencies that are the functional currencies for the respective operations are translated at the prevailing exchange rate at the balance sheet date.

Translation adjustments resulting from this process are reported as a separate component of other comprehensive income.

Revenue and expenses are translated at the average exchange rates during the respective period throughout the year.

Gains and losses from foreign currency transactions are included in earnings for the period.

The significant exchange rates to the USD used in the preparation of our consolidated financial results for the primary foreign currencies used in our foreign operations (functional currency) are as follows:

For the years ended

December 31, 2020 December 31, 2019 December 31, 2018

Weighted-Average Exchange Rate (1 USD equals)

Canadian dollar (CAD) 1.32 1.32 1.30

Euro (EUR) 0.85 0.89 0.84

British pound (GBP) 0.78 0.79 0.77

Czech Koruna (CZK) 23.11 22.78 21.93

Croatian Kuna (HRK) 6.50 6.60 6.32

Serbian Dinar (RSD) 100.14 104.81 99.74

Romanian Leu (RON) 4.19 4.26 4.00

Bulgarian Lev (BGN) 1.67 1.74 1.67

Hungarian Forint (HUF) 303.65 292.42 267.65

December 31, 2020 December 31, 2019

Closing Exchange Rate (1 USD equals)

Canadian dollar (CAD) 1.27 1.30

Euro (EUR) 0.82 0.89

British pound (GBP) 0.73 0.75

Czech Koruna (CZK) 21.47 22.70

Croatian Kuna (HRK) 6.18 6.63

Serbian Dinar (RSD) 96.34 104.93

Romanian Leu (RON) 3.98 4.27

Bulgarian Lev (BGN) 1.60 1.74

Hungarian Forint (HUF) 296.94 295.21

The weighted-average exchange rates in the above table have been calculated based on the average of the foreign exchange rates during the relevant period and have been weighted according to the foreign denominated earnings from operations of the USD equivalent.

If foreign currencies in the countries in which we operate devalue significantly in future periods, most significantly the CAD, GBP, EUR and other European operating currencies included in the above table, then the impact on USD reported earnings may be material.

Capital Expenditures

In 2020, we incurred $530.0 million, and have paid $574.8 million, for capital improvement projects worldwide, excluding capital spending by equity method joint ventures, representing an approximate 11% decrease versus 2019 capital expenditures incurred of $593.0 million.

This decrease was primarily due to a targeted reduction of capital expenditures resulting from mitigating actions in response to the coronavirus pandemic in 2020.

Specifically, as one of the mitigating actions we took to offset some of the financial implications of the coronavirus pandemic, in the first quarter we reduced our capital expenditure plans by approximately $170 million for full year 2020.

Despite the revised expectations, with improved liquidity and strong cash management, we were able to accelerate certain investments in expanding our production capacity and capabilities to support new innovations and growth initiatives resulting in slightly higher capital spend than previously communicated.

These capital expenditures include adding capacity for our innovations, specifically additional seltzer capacity.

We continue to focus on where and how we employ our planned capital expenditures, with an emphasis on strengthening our focus on required returns on invested capital as we determine how to best allocate cash within the business.

Contractual Obligations and Commercial Commitments

Contractual Obligations

A summary of our consolidated contractual obligations as of December 31, 2020, based on foreign exchange rates as of December 31, 2020, is as follows:

We guarantee indebtedness and other obligations to banks and other third parties for some of our equity method investments and consolidated subsidiaries.

Guarantees of the outstanding third-party debt of our equity method investments, which are classified as current on the consolidated balance sheets, have been excluded from the contractual obligations table above.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 4, "Investments" and Note 18, "Commitments and Contingencies" for further discussion.

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Material Cash Requirements from Contractual and Other Obligations

A summary of our material cash requirements from our contractual and other obligations as of December 31, 2021, based on foreign exchange rates as of December 31, 2021, is as follows.

Payments due by period

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See Part II—Item 8 Financial Statements and Supplementary Data, Note 11, "Debt" , Note 15, "Employee Retirement Plans and Postretirement Benefits," Note 16, "Derivative Instruments and Hedging Activities," Note 18, "Commitments and Contingencies" and Note 19, "Leases" for additional information.

(1) Represents expected contributions under our defined benefit pension plans in the next twelve months and our benefit payments under postretirement benefit plans for all periods presented.

(1) Represents expected contributions of $4.1 million under our defined benefit pension plans in the next twelve months and our benefit payments under postretirement benefit plans for all periods presented.

The net underfunded liability as of December 31, 2021 of our defined benefit pension plans (excluding our overfunded plans) and postretirement benefit plans is $51.2 million and $648.7 million, respectively.

Defined benefit pension plan contributions in future years will vary based on a number of factors, including actual plan asset returns and interest rates, and as such, have been excluded from the above table.

We fund pension plans to meet the requirements set forth in applicable employee benefits laws.

We may also voluntarily increase funding levels to meet financial goals.

Excluding BRI and BDL, in 2021 we expect to make contributions to our defined benefit pension plans of approximately $4 million and benefit payments under our OPEB plans of approximately $43 million, based on foreign exchange rates as of December 31, 2020.

pension plan is subject to a statutory valuation for funding purposes every three years.

The most recent valuation as of June 30, 2019 indicated that the plan does not have a funding deficit relative to the plan's statutory funding objective, and therefore, no MCBC contributions are currently required.

We have taken numerous steps to reduce our exposure to these long-term pension obligations, including the closure of the U.K.

pension plans to future earning of service credit, benefit modifications in several of our Canada plans and entering into partial buy-in and buy-out contracts for some of our plans.

However, given the dependence upon the global financial markets for the financial health of our plans, the plans may continue to periodically require potentially significant amounts of cash funding.

(2) Primarily includes non-cancelable purchase commitments as of December 31, 2020 that are enforceable and legally binding.

Approximately $1.6 billion of the total other long-term obligations relate to long-term supply contracts with

third parties to purchase raw material, packaging material and energy used in production.

Our aggregate commitments for advertising and promotions, including sports sponsorship, total approximately $779 million.

The remaining amounts relate to derivative payments, sales and marketing, distribution, information technology services, open purchase orders and other commitments.

Included in other long-term obligations are unrecognized tax benefits of $98.0 million that are included in the less than one year column.

Additionally, unrecognized tax benefits of $7.0 million and $11.0 million of indemnities provided to FEMSA are included in the more than 5 years column because we cannot reasonably estimate the timing of future cash flows related to these items.

The unrecognized tax benefit amounts exclude positions we would expect to settle using deferred tax assets.

We guarantee indebtedness and other obligations to banks and other third parties for some of our equity method investments and consolidated subsidiaries.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 4, "Investments" and Note 18, "Commitments and Contingencies" for further discussion.

Defined benefit pension plan contributions in future years will vary based on a number of factors, including actual plan asset returns and interest rates, and thus, have been excluded from the above table.

(2) See Part II—Item 8 Financial Statements and Supplementary Data, Note 18, "Commitments and Contingencies" for further discussion of the majority of the other long-term obligations which includes supply and distribution and advertising and promotions commitments.

The remaining balance relates to derivative payments, sales and marketing, supply and distribution, information technology services, open purchase orders and other commitments.

Other Commercial Commitments

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Standby letters of credit $ 62.2 $ 59.1 $ 3.0 $ — $ 0.1

Credit Rating

Our current long-term credit ratings are BBB-/Stable Outlook, Baa3/Stable Outlook and BBB(Low)/Negative Outlook with Standard & Poor's, Moody's and DBRS, respectively.

Our short-term credit ratings are A-3, Prime-3 and R-2(low), respectively.

A securities rating is not a recommendation to buy, sell or hold securities, and it may be revised or withdrawn at any time by the applicable rating agency.

Capital Expenditures

We incurred $558.6 million, and paid $522.6 million, for capital improvement projects worldwide for the year ended December 31, 2021, excluding capital spending by equity method joint ventures, representing an increase of $28.6 million from the $530.0 million of capital expenditures incurred in the year ended December 31, 2020.

This increase was primarily due to the timing of expenditures for capital projects.

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Contingencies

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Refer to Part II—Item 8 Financial Statements, Note 18, "Commitments and Contingencies" for discussion of off-balance sheet arrangements.

As of December 31, 2020, we did not have any other material off-balance sheet arrangements (as defined in Item 303(a)(4)(ii) of Regulation S-K).

Outlook for 2021

We set bold plans for our business for 2020 with the introduction of the revitalization plan at the end of 2019 which positioned our company well despite the headwinds experienced as a result of the coronavirus in 2020.

We continue to strive to build on the strength of our iconic core brands, grow our above premium portfolio, expand beyond the beer aisle, invest in our capabilities and support our people and communities.

Our accomplishments in 2020 have given us momentum for 2021, which is intended to be a year of investment as we continue to deliver our revitalization plan and drive towards long-term growth.

We have seen success in our response to the short-term impacts of the coronavirus pandemic, positioning ourselves to succeed in the medium- and long-term.

The coronavirus pandemic continues to impact our business due to significantly reduced on-premise sales across all our geographies, disproportionately so in Europe as well as Canada, with on-premise location capacity restrictions and limits that have and we believe will continue to prevent sales from returning to pre-pandemic levels.

We currently expect to continue to see on-premise sales lag behind pre-pandemic levels due to continued capacity restrictions, potential additional closures in the near term, uncertainty in the distribution and effectiveness of the vaccines, the evolving of additional variants of coronavirus and other limitations at on-premise locations.

As a result, we currently expect to see a continued strength of our off-premise sales compared to pre-pandemic levels.

However, as we have seen throughout the pandemic, the strong off-premise sale performance is not expected to completely offset the declines in on-premise sale performance.

Further, one of the biggest challenges for beverage companies in 2020 was the packaging supply shortage as a result of the significant increase in off-premise sales, particularly aluminum cans in North America.

Our supply chain has worked diligently to ensure sufficient supply of high demand brands and packages notwithstanding these packaging challenges.

inventory levels steadily improve in 2020.

While work remains and industry standard can supply constraints continue due to high demand, supplies for glass bottles, paperboard and tall aluminum cans have improved and we believe all have returned

to normal availability and we currently expect industry standard can supply to return to normal material availability by the end of the first quarter of 2021.

With the plan to build on the strength of our core brands, we made progress as we continued to grow the combined segment share for Coors Light and Miller Lite in the United States even while on-premise sales remain constrained due to pandemic restrictions.

These brands finished 2020 with stronger brand health and, in 2021, we expect to put even more marketing behind these two iconic brands.

Our plan to grow our above premium portfolio progressed meaningfully as we announced our plans to significantly expand our production capacity for both hard seltzers and our newly released Blue Moon LightSky.

We expect these expansions will allow us to meet increasing demand in the near future and we further plan to expand our hard seltzer and innovation production capacity in 2021 and 2022.

Blue Moon LightSky was launched in the U.S.

in February 2020 and was the top selling new beer in the United States in 2020 per Nielsen.

Additionally, we launched Vizzy hard seltzer in the U.S.

in April 2020 and launched Coors Seltzer , also in the U.S., during the third quarter of 2020.

These two hard seltzers have diversified our portfolio and we believe position us well in the growing hard seltzer market and, in 2021, we have strong plans to accelerate marketing support behind Coors Seltzer, as well as expand both Vizzy and Coors Seltzer into Canada.

Also, this year, through an exclusive agreement with The Coca-Cola Company in the U.S., we expect to launch Topo Chico Hard Seltzer, which is an extension of an iconic brand with an already large following in various markets across the U.S., and, separately, we also intend to launch Proof Point , a new differentiated hard seltzer with premium ingredients like real spirits, early this year in the U.S.

We plan to continue to grow our share of the hard seltzer market with these newly launched, or to be launched, products working towards the most diversified hard seltzer portfolio in the industry and we believe expanding production capacity will make the expected growth possible.

We also expect to have further growth opportunities in 2021 as we bring Yuengling brands west in the U.S.

under our new joint venture, which will oversee any new market expansion outside Yuengling's current 22-state footprint and New England, beginning with plans to bring Yuengling to Texas in the fall of 2021.

We also have a distribution deal for Bodega Bay hard seltzer in the U.K.

and Ireland, which allows us to be an early entrant in the hard seltzer segment in these markets and have plans to extend seltzers into Central Europe as well.

We plan to build on the strategy to grow our above premium portfolio into the future.

In addition to our growth in the hard seltzer market, we made further steps this year to expand our portfolio beyond the beer aisle for future growth opportunities.

Specifically, we launched MOVO , our first canned wine.

Truss, our Canadian joint venture with HEXO, launched Veryvell CBD and THC drops earlier in 2020 and its first ready-to-drink cannabis beverages during the third quarter of 2020 as well as launched our first CBD-based products in Colorado.

In addition, we launched a new line of non-alcohol products through our minority stake in the beverage incubator LA Libations LLC.

We expect this expansion beyond beer to continue into 2021 and beyond.

Future expansions beyond beer in 2021 include the commencement of the distribution of ready-to-drink La Colombe coffees in the U.S.

in early 2021, our new energy drink partnership with ZOA and our first entry into the fast-growing RTD cocktail space through an exclusive equity and distribution agreement with Superbird , an above premium blue agave tequila-based cocktail.

Our performance and agility in navigating the coronavirus pandemic and executing against our revitalization plan has proven meaningful, but we recognize there are still challenges ahead.

We are mindful of the continued challenges and the uncertainty that remains and are focused on doing what is best not only in the near-term, but also positioning the business for medium- and long-term success.

In addition, in response to the coronavirus pandemic, we took steps in 2020 to improve our financial flexibility including continuing to pay down debt, amending the covenants on our $1.5 billion revolving credit facility, adding a commercial paper facility in our U.K.

business, suspending the dividend in May 2020, reducing our capital expenditures in 2020 and generally reducing our discretionary spend.

We took these steps as we remain committed to maintaining our investment grade rating.

Our next generation cost savings program, which began in 2020 and is a three-year program and includes the anticipated benefits of the revitalization plan, is currently expected to deliver approximately $600 million through 2022.

We plan to reinvest these additional cost savings behind our brands and growing other capabilities.

Total cost savings delivered in 2020 totaled approximately $270 million.

We anticipate 2021 consolidated net interest expense of approximately $270 million, plus or minus 5% and based on foreign exchange and interest rates as of December 31, 2020.

We expect our effective tax rate to be in the range of 20 to 23 percent for 2021, which remains subject to additional guidance, final regulations, and tax law changes issued from the U.S.

Deleverage & Dividends

We currently intend to maintain our investment grade debt rating and we are committed to further deleveraging in 2021 in accordance with our plans.

Further, our current expectation is that the Company's board of directors will be in a position to reinstate a dividend in the second half of 2021.

As of December 31, 2021, we did not have any other material off-balance sheet arrangements.

Critical Accounting Estimates

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Pension and Other Postretirement Benefits

Our defined benefit pension plans cover certain current and former employees in the U.S., Canada, the U.K.

Our defined benefit pension plans cover certain current and former employees in the U.S., Canada and the U.K.

Benefit accruals for the majority of employees in our U.S.

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In the U.S., we also participate in, and make contributions to, multi-employer pension plans.

Our OPEB plans provide medical benefits for retirees and their eligible dependents as well as life insurance and, in some cases, dental and vision coverage, for certain retirees in Canada, the U.S., and Europe.

The U.S., Canada and U.K.

defined benefit pension plans are primarily funded, but the Japan plan and all OPEB plans are unfunded.

defined benefit pension plans are primarily funded, but all OPEB plans are unfunded.

We also offer defined contribution plans in each of our segments.

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As of December 31, 2021, on a weighted-average basis, the discount rates used were 2.27% for our defined benefit pension plans and 2.59% for our OPEB plans.

The change from the weighted-average discount rates of 2.55% for our defined benefit pension plans and 2.91% for our postretirement plans as of December 31, 2019 is primarily the result of declining interest rates during 2020.

The change from the weighted-average discount rates of 1.84% for our defined benefit pension plans and 2.10% for our postretirement plans as of December 31, 2020 is primarily due to increasing interest rates in 2021.

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A 50 basis point change in our discount rate assumptions would have had the following effects on the projected benefit obligation balances as of December 31, 2021 for our pension and OPEB plans:

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Based on the above factors and expected asset allocations, we have assumed, on a weighted-average basis, an EROA of 3.11% for our defined benefit pension plan assets for cost recognition in 2022.

This is a decrease from the weighted-average rate of 3.24% we had assumed for 2020.

This is an increase from the weighted-average rate of 3.03% we assumed for 2021.

We believe that our EROA assumptions are appropriate;

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However, considerable judgment is required in selecting an appropriate methodology and interpreting market data to develop the estimates of fair value, especially in the absence of quoted market values in an active market.

Changes in these assumptions

or the use of different market inputs may have a material impact on the estimated fair values or the ultimate amount at which the plan assets are available to satisfy our plan obligations.

Changes in these assumptions or the use of different market inputs may have a material impact on the estimated fair values or the ultimate amount at which the plan assets are available to satisfy our plan obligations.

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Equity assets are diversified between domestic and other international investments.

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As of year-end 2021, the deferred losses of several of our Canadian plans, as well as those in our U.K.

plan, and the deferred gains of our U.S.

plans, and the deferred gains of our U.S.

plan, exceeded the 10% corridor.

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however, significant changes in our assumptions may materially affect our postretirement benefit obligations and related costs.

As of December 31, 2020, the health care trend rates used were ranging ratably from 6.00% in 2021 to 3.57% in 2040, consistent with our health care trend rates ranging ratably from 6.25% in 2020 to 3.57% in 2040 used as of December 31, 2019.

As of December 31, 2021, the health care trend rates used were ranging ratably from 6.0% in 2022 to 3.57% in 2040, consistent with our health care trend rates ranging ratably from 6.0% in 2021 to 3.57% in 2040 as of December 31, 2020.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 15, "Employee Retirement Plans and Postretirement Benefits" for further information.

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A reporting unit is an operating segment, or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management.

As discussed in Part II—Item 8 Financial Statements and Supplementary Data, Note 3, "Segment Reporting," effective January 1, 2020, we changed our management structure from a corporate center and four segments to two segments - North America and Europe.

These structural changes included leadership re-alignment with a centralized North America leadership team, an integrated North American supply chain network, and centralized marketing and innovations functions including movement to a single brand manager and North America marketing strategy for our major brands.

Additionally, as part of our leadership re-alignment, we moved from two separate U.S.

and Canada segment managers to a single North America segment manager, our President and Chief Executive Officer, who reviews discrete financial information only at the consolidated North

America segment level.

As a result of these changes, we re-evaluated our historical reporting unit conclusions and have consolidated our previously separate U.S.

and Canada reporting units into a single North America reporting unit effective January 1, 2020.

There were no changes to our existing Europe reporting unit, which was considered to be at risk of future impairment following the completion of our October 1, 2019 annual impairment testing.

We completed an interim impairment assessment for our former U.S.

and Canada reporting units as of January 1, 2020 immediately prior to the reporting unit change, as well as an impairment assessment of the combined North America reporting unit immediately after the change, and determined that no impairments existed.

Additionally, as the changes resulted in the combination of our former U.S.

and Canada reporting units into a single North America reporting unit, no further reallocation of goodwill was required.

Additionally, as a result of the structural changes discussed above, including the centralization of the brand management and strategy for our Coors brands across North America, we aggregated our Coors brand indefinite-lived intangible asset in the U.S.

and Coors Light distribution agreement indefinite-lived intangible asset in Canada into a single unit of accounting for the purpose of testing for impairment, effective January 1, 2020.

We completed an interim impairment assessment for each individual indefinite-lived intangible asset immediately prior to aggregation and determined that no impairments existed.

We evaluate the carrying value of our goodwill and indefinite-lived intangible assets for impairment at least annually or when an interim triggering event occurs that would indicate that impairment may have taken place.

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If the fair value exceeds carrying value, then we conclude that no goodwill impairment has occurred.

If a reporting unit's carrying value exceeds its fair value, we would recognize an impairment loss in an amount equal to the excess up to the total amount of goodwill allocated to that reporting unit.

If a reporting

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unit's carrying value exceeds its fair value, we would recognize an impairment loss in an amount equal to the excess up to the total amount of goodwill allocated to that reporting unit.

We use a combination of discounted cash flow analyses and market approaches to determine the fair value of each of our reporting units, and an excess earnings approach to determine the fair values of our indefinite-lived brand intangible assets.

We utilized a qualitative assessment for our water rights in the U.S., in order to determine whether the fair value of those indefinite-lived intangible assets was in excess of their carrying value.

We utilized a qualitative assessment for our water rights in the U.S.

in order to determine whether the fair value of those indefinite-lived intangible assets was in excess of their carrying value.

Our discounted cash flow projections include assumptions for growth rates for sales, costs and profits, which are based on various long-range financial and operational plans of each reporting unit or each indefinite-lived intangible asset.

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Discount rates for the indefinite-lived intangible analysis by brand largely reflect the rates supporting the overall reporting unit valuation but may differ slightly to adjust for country or market specific risk associated with a particular brand, among other factors.

Our market-based valuations utilize earnings multiples of comparable public companies, which are reflective of the market in which each respective reporting unit operates, and recent comparable market transactions.

Changes in the factors used in our fair value estimates, including the impacts of the coronavirus pandemic, declines in industry or company-specific beer volume sales, margin erosion, termination of brewing and/or distribution agreements with other brewers, and discount rates used, could have a significant impact on the fair values of the reporting units and indefinite-lived intangible assets.

Our market-based valuations utilize earnings multiples of comparable public companies, which are reflective of the market in which each respective reporting unit operates.

Changes in the factors used in our fair value estimates, including the impacts of the coronavirus pandemic, declines in industry or company-specific beer volume sales, cost inflation or other margin erosion, termination of brewing and/or distribution agreements with other brewers, and discount rates used, could have a significant impact on the fair values of the reporting units and indefinite-lived intangible assets.

Reporting Units and Goodwill

As of the October 1, 2020 testing date, the carrying value of the Europe reporting unit was determined to be in excess of its fair value such that an impairment loss of $1,484.3 million was recorded.

The fair value of the North America reporting unit was estimated at approximately 7% in excess of carrying value, as of the October 1, 2020 testing date, which is a decline during the year, and therefore the reporting unit is considered to be at risk of future impairment.

Goodwill allocated to the North America reporting unit as of December 31, 2020 is $6.2 billion.

The decline in fair value of the North America reporting unit in the current year is largely due to the perceived risk in the execution of our revitalization efforts amidst a global pandemic.

These challenges were partially offset by the reduction to the discount rate as a result of the recent interest rate environment.

We continue to invest behind above premium brands and innovation.

While the preliminary results are promising, including successful launches of brands like Blue Moon LightSky , Vizzy and Coors Seltzer in 2020, the growth targets included in management’s forecasted future cash flows are inherently at risk given the recent introduction of these brands.

In the Europe reporting unit, impacts from the coronavirus pandemic drove significant headwinds that had an adverse impact on current year brand volumes and overall company performance as the Europe business relies heavily on the on-premise business.

uncertainty around the ongoing impacts of the pandemic including governmental or societal impositions on bars and restaurants and restrictions on public gatherings that limit many on-premise locations to operate at full capacity, if at all, have negatively impacted the forecasted future cash flows of the reporting unit.

As of the October 1, 2020 testing date, the fair value of our North America reporting unit was determined to be in excess of its carrying value although noted to be at risk of future impairment while the Europe reporting unit's fair value resulted in an impairment.

The fair value determinations are sensitive to further unfavorable changes in forecasted cash flows, macroeconomic conditions, market multiples or discount rates that could negatively impact future analyses, including the further extent, duration and impact of the ongoing pandemic on our reporting units.

As of the October 1, 2021 testing date, the fair value of our Americas reporting unit was estimated at approximately 6% in excess of its carrying amount and therefore no goodwill impairment charge was required for the Americas reporting unit.

However, the Americas reporting unit is considered to be at risk for future impairments consistent with the 2020 testing results.

The fair value in the current year is still largely impacted by the continued perceived risk of realizing management’s revitalization efforts and the ongoing impacts from the coronavirus pandemic.

In addition, the fair value as of the 2021 test was impacted by assumptions related to increased cost inflation pressures in the medium term.

The fair value of the Americas reporting unit is heavily dependent upon transforming our company including strengthening our iconic core brands, growing our above premium portfolio and expanding beyond beer.

Despite successful launches of Blue Moon LightSky and Vizzy , and early success around products like Topo Chico Hard Seltzer and our joint venture expansion of Yuengling , there is not enough historical data yet to comfortably predict future impacts.

Additionally, the fact that these products were launched in the midst of a global pandemic makes understanding and predicting their market positions and potential in a normal economy even more challenging.

While the Americas reporting unit appears to be weathering the ongoing impacts of the pandemic and cost inflation, there is still inherent risk in achieving our goals.

The key assumptions used to derive the estimated fair values of our reporting units represent Level 3 measurements.

Goodwill allocated to the Americas reporting unit as of December 31, 2021 was $6.2 billion.

As of the October 1, 2020 testing date, the carrying value of the EMEA&APAC reporting unit was determined to be in excess of its fair value such that an impairment loss of $1,484.3 million, the full value of goodwill as of October 1, 2020, was recorded.

Indefinite-Lived Intangible Assets

The Coors indefinite-lived brands in North America, the Miller indefinite-lived brands in the U.S.

and the Carling brands in Europe continue to be sufficiently in excess of their respective carrying values as of the annual testing date.

The fair value of the indefinite-lived Staropramen brand in Europe is 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 annual testing date.

The fair value decline of the Staropramen brand versus the prior year was a result of the coronavirus’ impact on the on-premise business throughout Europe during 2020 and potentially beyond.

We utilize Level 3 fair value measurements in our impairment analysis of certain indefinite-lived intangible assets, including the Coors brands in North America, Miller brands in the U.S.

and the Staropramen and Carling brands in Europe.

The fair values of the Coors indefinite-lived brands in the Americas, the Miller indefinite-lived brands in the U.S.

and the Carling brands in the U.K.

continue to be sufficiently in excess of their respective carrying values as of the annual testing date.

The fair value of the Staropramen brand increased versus the prior year and is sufficiently in excess of its carrying value as of the annual testing date.

The increase in the fair value of the Staropramen brand was a result of the progressive reopening of the on-premise business throughout Europe, but more impactfully Western Europe, during the year and the related improvement to expected future cash flows based on our long-range plan for this brand.

We utilize Level 3 fair value measurements in our impairment analysis of certain indefinite-lived intangible assets, including the Coors brands in the Americas, Miller brands in the U.S.

and the Staropramen and Carling brands in EMEA&APAC.

An excess earnings approach is used to determine the fair values of these assets as of the testing date.

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Separately, we performed a qualitative assessment of our water rights indefinite-lived intangible assets in the U.S.

to determine whether it was more likely than not that the fair values of these assets were greater than their respective carrying amounts.

to determine whether it was more likely than not that the fair values of these assets

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were greater than their respective carrying amounts.

Based on this qualitative assessment, we determined that a full quantitative analysis was not necessary.

Key Assumptions

As of the date of our annual impairment test, performed as of October 1, the North America reporting unit goodwill balance is 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.

As of the date of our annual impairment test, performed as of October 1, the Americas reporting unit goodwill balance is 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 and cost inflation, or significant unfavorable changes in tax rates, environmental or other regulations, including interpretations thereof), terminal growth rates, market multiples and/or weighted-average cost of capital utilized in the discounted cash flow analyses.

For testing purposes of our reporting units, management's best estimates of the expected future results are the primary driver in determining the fair value.

Current projections used for our North America reporting unit testing reflect growth assumptions associated with our revitalization plan to build on the strength of our iconic core brands, aggressively grow our above premium portfolio, expand beyond the beer aisle, invest in our capabilities and support our people and our communities all of which are intended to benefit the projected cash flows of the business.

These cash flow assumptions are tempered somewhat by the impacts the coronavirus has had on our overall business and specifically our more profitable on-premise segment.

The coronavirus pandemic had a disproportional impact on our Europe business as a greater portion of its business takes place on-premise.

Additionally, European countries have had and continue to impose stricter measures, i.e.

lockdowns and social distancing requirements, to control the spread of the pandemic relative to our North American markets.

Such stricter measures have limited many on-premise locations from operating at full capacity.

Current projections used for the Americas reporting unit testing reflect growth assumptions associated with our revitalization plan to build on the strength of our iconic core brands, aggressively grow our above premium portfolio, expand beyond the beer aisle, invest in our capabilities and support our people and our communities, all of which are intended to benefit the projected cash flows of the business.

These cash flow assumptions are tempered somewhat by the impacts the coronavirus pandemic has had on our overall business and specifically our more profitable on-premise segment.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors.

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Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately impact the estimated fair value of our reporting units and indefinite-lived intangible assets may include such items as:

(i) a decrease in expected future cash flows, specifically, a decrease in sales volume and increase in costs that could significantly impact our immediate and long-range results, a decrease in sales volume driven by a prolonged weakness in consumer demand or other competitive pressures adversely affecting our long-term volume trends, a continuation of the trend away from core brands in certain of our markets, especially in markets where our core brands represent a significant portion of the market, unfavorable working capital changes and an inability to successfully achieve our cost savings targets, (ii) adverse changes in macroeconomic conditions or an economic recovery that significantly differs from our assumptions in timing and/or degree (such as a global pandemic or recession), (iii) significant unfavorable changes in tax rates such as increased corporate income

tax rates, (iv) volatility in the equity and debt markets or other country specific factors which could result in a higher weighted-average cost of capital, (v) sensitivity to market multiples;

(i) a decrease in expected future cash flows, specifically, an inability to execute on our strategic initiatives or an increase in costs that could significantly impact our immediate and long-range results, by a prolonged weakness in consumer demand or other competitive pressures adversely affecting our long-term volume trends, a continuation of the trend away from core brands in certain of our markets, especially in markets where our core brands represent a significant portion of the market, unfavorable working capital changes and an inability to successfully achieve our cost savings targets, (ii) adverse changes in macroeconomic conditions or an economic recovery that significantly differs from our assumptions in timing and/or degree (such as a global pandemic or recession), (iii) significant unfavorable changes in tax rates such as increased corporate income tax rates, (iv) volatility in the equity and debt markets or other country specific factors which could result in a higher weighted-average cost of capital, (v) sensitivity to market multiples;

and (vi) regulation limiting or banning the manufacturing, distribution or sale of alcoholic beverages.

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These facts and circumstances are subject to change and may impact future analyses.

For example, we continue to monitor the challenges within the beer industry for further weakening or additional systemic structural declines, as well as for adverse changes in macroeconomic conditions such as the coronavirus pandemic that could significantly impact our immediate and long-range results.

Specifically, subsequent to the January 1, 2020 interim impairment assessments, the World Health Organization, characterized the outbreak of the coronavirus disease as a global pandemic as further discussed in Part II—Item 8 Financial Statements and Supplementary Data, Note 1 , "Basis of Presentation and Summary of Significant Accounting Policies." Our business has been, and could continue to be, materially and adversely impacted by the coronavirus pandemic.

The related weakening of economic conditions during a prolonged pandemic could lead to a material impairment as the duration and severity of the pandemic and resulting impacts to our financial projections are further understood.

Additionally, we are monitoring the impacts the coronavirus pandemic has on the market inputs used in calculating our discount rates, including risk-free rates, equity premiums and our cost of debt, which could result in a meaningful change to our weighted-average cost of capital calculation, as well as the market multiples used in our impairment assessment.

Furthermore, increased volatility in the equity and debt markets or other country specific factors, including, but not limited to, extended or future government intervention in response to the pandemic, could also result in a meaningful change to our weighted-average cost of capital calculation and other inputs used in our impairment assessment.

For example, we continue to monitor the challenges within the beer industry for further weakening or additional systemic structural declines, as well as for adverse changes in macroeconomic conditions such as the coronavirus pandemic and cost inflation that could significantly impact our immediate and long-range results.

The related weakening of economic conditions either as a result of resurgences in the coronavirus pandemic or cost inflation could lead to a material impairment.

Additionally, we are monitoring the impacts that the coronavirus pandemic and cost inflation have on the market inputs used in calculating our discount rates, including risk-free rates, equity premiums and our cost of debt, which could result in a meaningful change to our weighted-average cost of capital calculation, as well as the market multiples used in our impairment assessment.

Furthermore, increased volatility in the equity and debt markets or other country specific factors, including, but not limited to, extended or future government intervention in response to the coronavirus pandemic, could also result in a meaningful change to our weighted-average cost of capital calculation and other inputs used in our impairment assessment.

Separately, the Ontario provincial government in Canada adopted a bill that, if enacted, could adversely impact the existing terms of the beer distribution and retail systems in the province, as further described in Part II—Item 8 Financial Statements and Supplementary Data, Note 18, "Commitments and Contingencies" .

In 2020, the discount rate used in developing our annual fair value estimates for the North America and Europe reporting units was 8.00% and 10.00%, respectively, based on market-specific factors, as compared to 8.50% used across all reporting units as of the October 1, 2019 annual testing date.

The recent interest rate environment has resulted in a decrease to the risk-free rate used in the current year discount rate calculations, which is reflected in the North America lower discount rate.

However, the benefit driven by the recent interest rate environment was more than offset by the unsystematic risk premium included in the market or country specific risk premium for each European geography in which our business is based.

With the exception of the Miller brands in the U.S., the discount rates for the Coors brands in North America and the Staropramen and Carling brands in Europe increased compared to the discount rates used in the prior year analysis, primarily due to increased perceived risk in meeting management’s cash flow projections that was also included in our current year discount rate calculations for the reporting units, including innovations, as noted above.

The discount rate for the Miller brands in the U.S.

decreased compared to prior year driven by a decrease to the risk-free rate used in the current year discount rate calculation.

While there was a risk adjustment made to the discount rate for the Miller brands, it was not as substantial as the other brands because the cash flow projections for this brand included potential ongoing coronavirus impacts assumptions and excluded innovation assumptions.

Current expectations driving our annual impairment testing as of October 1, 2020 have resulted in fair values of our North America reporting unit and indefinite-lived intangible assets in excess of carrying values.

In 2021, the discount rate used in developing our annual fair value estimates for the Americas reporting unit was 8.25%, based on market-specific factors, as compared to 8.00% as of the October 1, 2020 annual testing date.

The recent interest rate environment has resulted in an increase to the risk-free rate used in the current year discount rate calculations, which is reflected in the Americas higher discount rate.

This discount rate also continues to be reflective of an unsystematic risk premium related to projected results of various new and unproven brands and innovations.

The adverse effect of a higher discount rate driven by the recent interest rate environment is offset by improved cash flow projections for the Americas reporting unit.

As we continue to recover from the coronavirus pandemic's impacts to the on-premise channel, the current year along with future projections have improved.

The discount rates for the Miller brands in the U.S., and Coors brands in the Americas decreased compared to

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the discount rates used in the prior year analysis.

For the Coors brands, this is primarily due to a reduction in the discount rate due to a lower risk premium, which was elevated in the prior year related to assumptions surrounding the launch of Coors Seltzer .

Both brands also benefited from decreased perceived risk in meeting management’s cash flow projections as they did not rely on new and unproven brands and innovations included in our current year discount rate calculations for the Americas reporting unit.

The discount rate for the Staropramen brands in EMEA&APAC increased compared to the discount rate used in the prior year analysis, primarily due to increases in the unsystematic risk premium related to risks associated with achieving the forecasted results while still in a global pandemic, particularly in Eastern Europe.

Conversely, the discount rate for the Carling brands in the U.K.

decreased compared to the discount rate used in the prior year analysis, primarily due to a decrease in the unsystematic risk premium as a result of the progressive reopening of the on-premise business throughout Western Europe, and specifically the U.K.

Current expectations driving our annual impairment testing as of October 1, 2021 have resulted in fair values of our Americas reporting unit and indefinite-lived intangible assets in excess of carrying values.

However, if our assumptions are not realized, it is possible that further impairment charges may need to be recorded in the future.

For example, a 50 basis point increase in our discount rate assumptions, which is within a reasonable range of historical discount rate fluctuations between test dates, would have had the following effects on the fair value cushion in excess of carrying value for the North America reporting unit, as well as the at risk Staropramen brand indefinite-lived intangible asset in Europe, as of the October 1, 2020 test date:

For example, a 50 basis point increase in our discount rate assumptions, which is within a reasonable range of historical discount rate fluctuations between test dates, would have had the following effects on the fair value cushion in excess of carrying value for the Americas reporting unit as of the October 1, 2021 test date:

Impact to the fair value cushion as of October 1, 2021

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% of fair value in excess of carrying value

North America Reporting Unit 7% 3%

Staropramen brand families Indefinite-Lived Intangible Asset, Europe

Post sensitivity, the fair values of the North America reporting unit as well as the Staropramen brand indefinite-lived intangible asset remain in excess of their carrying values.

Americas Reporting Unit 6% 1%

Post sensitivity, the fair value of the Americas reporting unit remains in excess of its carrying values.

The discount rate sensitivity holds all other assumptions and inputs constant.

Regarding definite-lived intangible assets, we continuously monitor the performance of the underlying asset for potential triggering events suggesting an impairment review should be performed.

In the current year, we recognized impairment losses on some of our definite-lived intangible assets related to a few of our regional craft breweries in North America and Europe.

The impairments losses on the Grolsch brand and distribution agreement definite-lived intangible assets and the brand intangible asset related to our India business were recognized in 2019.

Regarding definite-lived intangible assets, we continuously monitor the performance of the underlying assets for potential triggering events suggesting an impairment review should be performed.

In the current year, consistent with our revitalization plan, management made the decision to discontinue select economy SKUs and brands.

It was determined that although these specific brand family line extensions had been discontinued, the brand family itself was still being used and produced.

Additional evaluation was performed on these specific definite-lived brand intangible assets with no triggering events noted at the asset group level and no changes in useful life of the brand intangible assets deemed necessary.

In 2020, we recognized impairment losses on some of our definite-lived intangible assets related to a few of our regional craft breweries in the Americas and EMEA&APAC segments, which were recorded in special items, net in the consolidated statement of operations.

The impairment losses on the Grolsch brand and distribution agreement definite-lived intangible assets and the brand intangible asset related to our India business were recognized in 2019, and recorded in special items, net.

See Part II—Item 8 Financial Statements and Supplementary Data Note 7, "Special Items" for further details on these impairment losses.

No such triggering events resulting in an impairment loss were identified in 2018.

As of December 31, 2020, the carrying values of goodwill and intangible assets were approximately $6.2 billion and $13.6 billion, respectively, inclusive of Staropramen's indefinite-lived intangible asset carrying value of $621.7 million.

As of December 31, 2021, the carrying values of goodwill and intangible assets were approximately $6.2 billion and $13.3 billion, respectively.

If actual performance results differ significantly from our projections or we experience significant fluctuations in our other assumptions, a material impairment loss may occur in the future.

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Our estimated liabilities related to these matters are adjusted in the period in which the uncertain tax position is effectively settled, the statute of limitations for examination expires or when additional information becomes available.

Our liability for unrecognized tax benefits requires the use of assumptions and significant judgment to estimate the exposures associated with our various filing positions.

Our liability for unrecognized tax benefits requires the use of assumptions and significant judgment to estimate the exposures associated with

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our various filing positions.

Although we believe that the judgments and estimates made are reasonable, actual results could differ and resulting adjustments could materially affect our effective tax rate and tax provision.

When working capital funds are available after satisfying all other business obligations, we may distribute cash from a foreign subsidiary to its U.S.

parent and record the tax impacts associated with these transactions.

However, to the extent current earnings exist and are not otherwise distributed or planned to be distributed, they would become accumulated.

As such and due to limitations in annual excess working capital, these accumulated earnings are considered permanently reinvested in our foreign operations.

When cash is available after satisfying working capital needs and all other business obligations, we may distribute cash from a foreign subsidiary to its U.S.

parent and record the tax impact associated with the distribution.

However, to the extent current earnings of our foreign operations exist and are not otherwise distributed or planned to be distributed, such earnings accumulate.

These accumulated earnings are considered permanently reinvested in our foreign operations.

We currently would not expect the aggregate of these permanently reinvested earnings, which are largely in deficit positions for U.S.

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In the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would decrease income tax expense in the period a determination was made.

Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be recorded to income tax expense in the period such determination was made.

Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would increase income tax expense in the period such determination was made.

There are proposed or pending tax law changes in various jurisdictions in which we do business.

For example, as discussed in Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Income Tax" , since 2018, the U.S.

Treasury Department has continued to issue proposed, temporary and final regulations to implement provisions of the 2017 Tax Act.

We recognize the impacts of changes in tax law upon enactment, and therefore, proposed changes in tax law, regulations and rules are not reflected within our tax provision.

As discussed in Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Income Tax" , we recognize the impacts of changes in tax law upon enactment, and therefore, proposed changes in tax law, regulations and rules are not reflected within our tax provision.

As a result, such changes may, upon ultimate enactment, result in material impacts to our financial statements.

3 unchanged sentences

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.

What changed 10-K

Item 7. Management’s Discussion and Analysis