What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-23 compared with 2021-02-11 · 513 added, 671 removed, 1774 unchanged (40% of the section changed)

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Management's Report

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Statements of Operations

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Note 19, "Leases"

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MANAGEMENT'S REPORT

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February 23, 2022 February 23, 2022

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Report of Independent Registered Public Accounting Firm

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and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill Impairment Assessments - Europe and North America Reporting Units

As described in Notes 1 and 10 to the consolidated financial statements, the Company’s goodwill balance related to the Europe and North America reporting units as of December 31, 2020 is $0 and $6,151 million, respectively.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment - Americas Reporting Unit

As described in Notes 1 and 10 to the consolidated financial statements, the Company’s goodwill balance related to the Americas reporting unit as of December 31, 2021 is $6,153 million.

The carrying value of goodwill is evaluated for impairment at the reporting unit level at least annually or when an interim triggering event occurs that would indicate that impairment may have taken place.

The Company’s annual impairment tests are performed as of the first day of the fiscal fourth quarter.

As disclosed by management, the evaluation involves comparing each reporting unit’s fair value to its respective carrying value.

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

During the fourth quarter of 2020, it was determined that the carrying value of the Europe reporting unit exceeded its fair value to such an extent that the analysis resulted in the remaining goodwill balance was impaired in its entirety.

A combination of discounted cash flow analyses and market approaches are used to determine the fair value of each reporting unit.

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

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 management’s reporting units 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 management’s immediate and long-range results, (ii) prolonged weakening of economic conditions, or (iii) 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.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments for the Europe and North America reporting units is a critical audit matter are (i) the significant judgment by management when determining the fair value measurement of the reporting unit;

(ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the discount rate, revenue growth rates and market multiples for the Europe reporting unit and the discount rate, revenue growth rates, market multiples and terminal growth rate for the North America reporting unit;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Europe and North America reporting units.

These procedures also included, among others (i) testing management’s process for determining the fair value of the reporting units;

(ii) evaluating the appropriateness of the discounted cash flow analyses and market approaches;

(iii) testing the completeness and accuracy of underlying data used in the discounted cash flow analyses and market approaches;

and (iv) evaluating the significant assumptions used by management related to the discount rate, revenue growth rates and market multiples for the Europe reporting unit and the discount rate, revenue growth rates, market multiple and terminal growth rate for the North America reporting unit.

Evaluating the assumptions related to revenue growth rates involved evaluating whether the assumptions used were reasonable considering (i) the current and past performance of the reporting unit;

(ii) the consistency with external market and industry data;

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of (i) the Company’s discounted cash flow analyses and market approaches and (ii) the discount rate and market multiples assumptions for the Europe reporting unit and the discount rate, market multiples and terminal growth rate assumptions for the North America reporting unit.

Indefinite-Lived Intangible Asset Impairment Assessment - Staropramen (Europe)

As described in Notes 1 and 10 to the consolidated financial statements, the Company’s indefinite-lived intangible asset brands balance as of December 31, 2020 is $8,216 million, inclusive of the Staropramen brand name in Europe.

carrying value of the indefinite-lived intangible asset is evaluated for impairment at least annually or when an interim triggering event occurs that would indicate that impairment may have taken place.

The Company’s annual impairment test is performed as of the first day of the fiscal fourth quarter.

As disclosed by management, an excess earnings approach is used to determine the fair value of the indefinite-lived intangible asset.

As disclosed by management, the evaluation involves comparing the reporting unit’s fair value to its carrying value.

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

A combination of a discounted cash flow analysis and market approach is used to determine the fair value of the reporting unit.

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

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 management’s indefinite-lived intangible may include items such as (i) a decrease in expected future cash flows, specifically, a decrease in sales volume and increase in costs that could significantly impact management’s immediate and long-range results, (ii) prolonged weakening of economic conditions, or (iii) significant unfavorable changes in tax rates, environmental or other regulations, including interpretations thereof, terminal growth rates, and / or weighted average cost of capital utilized in the discounted cash flow analyses.

The principal considerations for our determination that performing procedures relating to the indefinite-lived intangible asset impairment assessment for Staropramen in Europe is a critical audit matter are (i) the significant judgment by management when determining the fair value measurement;

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 the Company’s reporting unit may include (i) as disclosed by management, growth rates for sales, costs and profits, which are based on various long-range financial and operational plans;

(ii) prolonged weakening of economic conditions;

or (iii) 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 analysis.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment for the Americas reporting unit is a critical audit matter are (i) the significant judgment by management when determining the fair value of the Americas reporting unit;

(ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the weighted average cost of capital, growth rates for sales, and market multiples;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s indefinite-lived intangible asset impairment assessment, including controls over the valuation of Staropramen in Europe.

These procedures also included, among others (i) testing management’s process for determining the fair value estimate;

(ii) evaluating the appropriateness of the excess earnings approach;

(iii) testing the completeness and accuracy of underlying data used in the approach;

and (iv) evaluating the significant assumptions used by management related to the discount rate, revenue growth rates and terminal growth rate.

Evaluating the assumptions related to revenue growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the brand;

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Americas reporting unit.

These procedures also included, among others (i) testing management’s process for determining the fair value of the Americas reporting unit;

(ii) evaluating the appropriateness of the discounted cash flow analysis and market approach;

(iii) testing the completeness and accuracy of underlying data used in the discounted cash flow analysis and market approach;

and (iv) evaluating the reasonableness of significant assumptions used by management related to the weighted average cost of capital, growth rates for sales, and market multiples.

Evaluating the significant assumptions related to growth rates for sales involved evaluating whether the assumptions used were reasonable considering (i) the current and past performance of the Americas reporting unit;

(ii) the consistency with external market and industry data;

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of (i) the Company’s excess earnings approach and (ii) the discount rate and terminal growth rate assumptions.

Professionals with specialized skill and knowledge were used to assist in the evaluation of (i) the appropriateness of the Company’s discounted cash flow analysis and market approach and (ii) the reasonableness of the weighted average cost of capital and market multiple significant assumptions.

/s/ PricewaterhouseCoopers LLP

Denver, Colorado

Milwaukee, Wisconsin

February 23, 2022

We have served as the Company’s auditor since 1974.

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MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

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See notes to consolidated financial statements.

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MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

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Foreign currency translation adjustments ( 28.4 ) 113.6 177.6

Reclassification of cumulative translation adjustment to income — — 6.0

Reclassification of cumulative translation adjustment to income (loss) 7.5 — —

Unrealized gain (loss) on derivative instruments 37.4 ( 85.7 ) ( 84.2 )

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See notes to consolidated financial statements.

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MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

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See notes to consolidated financial statements.

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MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

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Net income (loss) including noncontrolling interests $ 1,008.5 $ ( 945.7 ) $ 246.2

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization 786.1 922.0 859.0

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Income tax (paid) received ( 227.0 ) ( 127.0 ) ( 57.0 )

Interest expense, excluding interest amortization 266.0 272.4 304.2

Interest expense, excluding amortization of debt issuance costs and discounts 253.6 266.0 272.4

Interest paid ( 256.2 ) ( 271.9 ) ( 285.0 )

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Other assets and other liabilities ( 40.1 ) 11.6 4.5

Net cash provided by operating activities 1,695.7 1,897.3 2,331.3

Net cash provided by (used in) operating activities 1,573.5 1,695.7 1,897.3

Cash flows from investing activities:

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Other ( 13.3 ) 2.4 44.6

Net cash used in investing activities ( 413.6 ) ( 433.3 ) ( 669.1 )

Net cash provided by (used in) investing activities ( 509.9 ) ( 413.6 ) ( 433.3 )

Cash flows from financing activities:

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See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" for supplementary cash flow data.

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MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

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(IN MILLIONS)

MCBC Stockholders' Equity

Molson Coors Beverage Company Stockholders' Equity

Common stock Exchangeable Accumulated

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Amortization of share-based compensation 8.3 — — — — 8.3 — — — —

Formation of consolidated joint venture 44.3 — — — — 39.4 — — — 4.9

Purchase of noncontrolling interest 0.6 — — — — 0.1 — — — 0.5

Deconsolidation of VIE ( 1.7 ) — — — — — — — — ( 1.7 )

Net income (loss) including noncontrolling interests 246.2 — — — — — 241.7 — — 4.5

Other comprehensive income (loss), net of tax 63.2 — — — — — — 62.6 — 0.6

Adoption of revenue recognition accounting standard ( 27.8 ) — — — — — ( 27.8 ) — — —

Adoption of lease accounting standard 32.0 — — — — — 32.0 — — —

Reclassification of stranded tax effects — — — — — — 74.8 ( 74.8 ) — —

Contributions from noncontrolling interests 34.1 — — — — — — — — 34.1

Distributions and dividends to noncontrolling interests ( 12.7 ) — — — — — — — — ( 12.7 )

Dividends declared and paid - $ 1.64 per share

( 354.2 ) — — — — — ( 354.2 ) — — —

Dividends declared ( 424.4 ) — — — — — ( 424.4 ) — — —

Balance as of December 31, 2019 $ 13,673.1 $ — $ 2.1 $ 102.5 $ 557.8 $ 6,773.6 $ 7,617.0 $ ( 1,162.2 ) $ ( 471.4 ) $ 253.7

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Acquisition of business and purchase of noncontrolling interest ( 0.2 ) — — — — 0.3 — — — ( 0.5 )

Deconsolidation of VIE ( 1.7 ) — — — — — — — — ( 1.7 )

Net income (loss) including noncontrolling interests ( 945.7 ) — — — — — ( 949.0 ) — — 3.3

MCBC Stockholders' Equity

Common stock Exchangeable Accumulated

other Common Stock

issued shares issued Paid-in- Retained comprehensive treasury controlling

Total Class A Class B Class A Class B capital earnings income (loss) Class B interests

Other comprehensive income (loss), net of tax ( 3.4 ) — — — — — — ( 5.6 ) — 2.2

Adoption of lease accounting standard (Note 2) 32.0 — — — — — 32.0 — — —

Reclassification of stranded tax effects (Note 2) — — — — — — 74.8 ( 74.8 ) — —

Contributions from noncontrolling interests 16.3 — — — — — — — — 16.3

Distributions and dividends to noncontrolling interests ( 18.7 ) — — — — — — — — ( 18.7 )

Dividends declared and paid - $ 1.96 per share

( 424.4 ) — — — — — ( 424.4 ) — — —

Dividends declared ( 123.8 ) — — — — — ( 123.8 ) — — —

Balance as of December 31, 2020 $ 12,621.3 $ — $ 2.1 $ 102.3 $ 417.8 $ 6,937.8 $ 6,544.2 $ ( 1,167.8 ) $ ( 471.4 ) $ 256.3

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Amortization of share-based compensation 32.1 — — — — 32.1 — — — —

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Molson Coors Beverage Company Stockholders' Equity

Common stock Exchangeable Accumulated

other Common Stock

issued shares issued Paid-in- Retained comprehensive treasury controlling

Total Class A Class B Class A Class B capital earnings income (loss) Class B interests

Purchase of noncontrolling interest ( 0.2 ) — — — — 0.3 — — — ( 0.5 )

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Distributions and dividends to noncontrolling interests ( 14.3 ) — — — — — — — — ( 14.3 )

Dividends declared - $ 0.57 per share

( 123.8 ) — — — — — ( 123.8 ) — — —

Dividends declared ( 148.4 ) — — — — — ( 148.4 ) — — —

Balance as of December 31, 2021 $ 13,664.1 $ — $ 2.1 $ 102.2 $ 417.8 $ 6,970.9 $ 7,401.5 $ ( 1,006.0 ) $ ( 471.4 ) $ 247.0

See notes to consolidated financial statements.

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MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

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Basis of Presentation and Summary of Significant Accounting Policies

Unless otherwise noted in this report, any description of "we," "us" or "our" includes Molson Coors Beverage Company ("MCBC," "Molson Coors" or the "Company") (formerly known as Molson Coors Brewing Company), principally a holding company, and its operating and non-operating subsidiaries included within our reporting segments.

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

The previous International segment was reconstituted with the Africa and Asia Pacific businesses reporting into the Europe segment and the remaining International business reporting into the North America segment.

Accordingly, effective January 1, 2020, our reporting segments include:

North America (North America segment), operating in the U.S., Canada and various countries in Latin and South America;

and Europe (Europe segment), operating in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries, and certain countries within Africa and Asia Pacific.

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

Unless otherwise indicated, comparisons are to comparable prior periods, and 2020, 2019 and 2018 refers to the 12 months ended December 31, 2020, December 31, 2019, and December 31, 2018, respectively.

Unless otherwise noted in this report, any description of "we," "us" or "our" includes Molson Coors Beverage Company ("MCBC" or the "Company"), principally a holding company, and its operating and non-operating subsidiaries included within our reporting segments.

As of December 31, 2021, we changed the names of our reporting segments to the Americas and EMEA&APAC segments (formerly named the North America segment and Europe segment, respectively) to better reflect the geographic locations encompassed within the reportable segments.

This change to our segment names had no impact on the composition of our segments, our financial position, results of operations, cash flow or segment level results previously reported.

Our Americas segment operates in the U.S., Canada and various countries in the Caribbean, Latin and South America, and our EMEA&APAC segment operates in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries, and certain countries within the Middle East, Africa and Asia Pacific.

Unless otherwise indicated, comparisons are to comparable prior periods, and 2021, 2020 and 2019 refers to the twelve months ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively.

Our consolidated financial statements and related disclosures reflect new accounting pronouncements adopted during the year as discussed in Note 2, "New Accounting Pronouncements."

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Our primary operating currencies, other than USD, include the CAD, the GBP, and our Central European operating currencies such as the EUR, CZK, HRK and RSD.

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.

Coronavirus Global Pandemic

We are actively monitoring the impact of the coronavirus pandemic, which had a material adverse effect on our operations, liquidity, financial condition and results of operations during 2020 due to on-premise closures worldwide.

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

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

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

As part of these voluntary programs, we committed to provide customers with reimbursements for untapped kegs that met certain established return requirements.

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

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

As of December 31, 2020 and December 31, 2019, our aggregate allowance for obsolete inventories was approximately $ 22 million and $ 11 million, respectively.

The actual duration of the coronavirus pandemic, including the length of government-mandated closures or ceased sit-down service limitations at bars and restaurants coupled with the subsequent economic recovery period relative to the assumptions utilized to derive these estimates, could result in further charges due to incremental finished goods keg inventory becoming obsolete in future periods.

Additionally, we continue to monitor the impacts of the coronavirus pandemic on our customers’ liquidity and capital resources and therefore our ability to collect, or the timeliness of collection of our accounts receivable.

Starting at the end of the first quarter of 2020, the coronavirus pandemic has had a material adverse effect on our operations, liquidity, financial condition and results of operations.

In 2021, we saw improvements in the marketplace related to the coronavirus global pandemic as on-premise locations began to re-open around the world at varying degrees, despite setbacks in certain markets related to the outbreak of new variants.

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 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.

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 reflecting estimated sales returns and reimbursements through these keg relief programs.

Further, during 2020, we recognized charges of $ 12.1 million within cost of goods sold related to obsolete finished goods keg inventories that were not expected to be sold within our freshness specifications, as well as the costs to facilitate the above mentioned keg returns.

We continue to monitor the impacts on our customers’ liquidity and capital resources and therefore our ability to collect, or the timeliness of collection of our accounts receivable.

While these receivables are not concentrated in any specific customer and our allowance on these receivables factors in expected credit loss, continued disruption and declines in the global economy could result in difficulties in our ability to collect and require increases to our allowance for doubtful accounts.

As of December 31, 2021 and December 31, 2020, our allowance for trade receivables was approximately $ 19 million and $ 18 million, respectively, and allowance activity was immaterial during the year ended December 31, 2021.

Further, in response to the coronavirus pandemic, various governmental authorities globally have announced relief programs which among other items, provide temporary deferrals of income and non-income based tax payments, which have

positively impacted our operating cash flows in the year ended December 31, 2020.

These temporary deferrals of approximately $ 130 million as of December 31, 2020, are included within accounts payable and other current liabilities and other liabilities on the consolidated balance sheets.

Finally, we continue to protect and support our liquidity position in response to the global economic uncertainty created by the coronavirus pandemic.

In May 2020, our board of directors suspended our regular quarterly dividends on our Class A and Class B common and exchangeable shares.

For considerations of the effects of the coronavirus pandemic and impairment charges taken related to our goodwill and indefinite-lived intangible assets, see Note 10, "Goodwill and Intangible Assets."

In response to the ongoing impacts of the coronavirus pandemic, various governmental authorities globally announced relief programs, which among other items, provided temporary deferrals of non-income based tax payments, which positively impacted our operating cash flows in 2020.

These temporary net tax payment deferrals of approximately $ 25 million and $ 130 million as of December 31, 2021 and December 31, 2020, respectively, were primarily included within accounts payable and other current liabilities on our audited consolidated balance sheets.

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.

We protected and supported our liquidity position in response to the global economic uncertainty created by the coronavirus pandemic.

Beginning with the second quarter of 2020 through the second quarter of 2021, our board of directors suspended our regular quarterly dividends on our Class A and Class B common and exchangeable shares.

A quarterly dividend was reinstated in the third quarter of 2021.

For considerations of the effects of the coronavirus pandemic and related potential impairment risks to our goodwill and indefinite-lived intangible assets, see Note 10, "Goodwill and Intangible Assets."

Revitalization Plan

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

As part of our revitalization plan, we made the determination to establish Chicago, Illinois as our North American operational headquarters, close our office in Denver, Colorado and consolidate certain administrative functions into our other existing office locations.

In connection with these consolidation activities, effective January 1, 2020, we changed our management structure to two segments - North America and Europe.

We began to incur charges related to these restructuring activities during the fourth quarter of 2019 and have been, and will continue to, further recognize charges through fiscal 2021.

We also changed our name from Molson Coors Brewing Company to Molson Coors Beverage Company in January 2020 in order to better reflect our strategic intent to expand beyond beer and into other growth adjacencies in the beverage industry.

See Note 3, "Segment Reporting," Note 7, "Special Items" and Note 10, "Goodwill and Intangible Assets " for further discussion of the impacts of this plan.

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 December 31, 2021, the revitalization plan restructuring charges were substantially complete.

See Note 7, "Special Items" for further discussion of the impacts of this plan.

Principles of Consolidation

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The cost of various programs, such as price promotions, rebates and coupons, are treated as a reduction of sales.

In certain of our markets, we make cash payments to customers such as slotting or listing fees, or payments for other marketing or promotional activities.

In certain of our markets where

legally permitted, we make cash payments to customers such as slotting or listing fees, or payments for other marketing or promotional activities.

These cash payments are recorded as a reduction of revenue unless we receive a distinct good or service.

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Where a distinct good or service is received and fair value can be reasonably estimated, the cost is included as marketing, general and administrative expenses.

The amounts deferred are reassessed regularly for recoverability over the

contract period and are impaired where there is objective evidence that the benefits will not be realized or the asset is otherwise not recoverable.

The amounts deferred are reassessed regularly for recoverability over the contract period and are impaired where there is objective evidence that the benefits will not be realized or the asset is otherwise not recoverable.

Separately, as discussed below, we analyze whether these advance payments contain a significant financing component for potential adjustment to the transaction price.

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The majority of our revenues are generated from brands that we own and brew ourselves, however, we also import or brew and sell certain non-owned partner brands under licensing and related arrangements.

In addition, primarily in the U.K., as well as certain other countries in our Europe segment, we sell other beverage companies' products to on-premise customers to provide them with a full range of products for their retail outlets.

In addition, primarily in the U.K., we sell other beverage companies' products to on-premise customers to provide them with a full range of products for their retail outlets.

We refer to this as the "factored brand business." Sales from this business are included in our net sales and cost of goods sold when ultimately sold.

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We do not have standard terms that permit return of product;

however, in certain markets where returns occur we estimate the amount of returns as variable consideration based on historical return experience and adjust our revenue accordingly.

however, in certain markets where returns occur we estimate the amount of returns as variable consideration based on historical return experience and adjust our revenue

Products that do not meet our high quality standards are returned by the customer or recalled and destroyed and are recorded as a reduction of revenue.

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We estimate the costs required to facilitate product returns and record them in cost of goods sold as required.

During the years ended December 31, 2020 and December 31, 2019, adjustments to revenue from performance obligations satisfied in the prior period due to changes in estimates in variable consideration were immaterial.

For the years ended December 31, 2021 and December 31, 2020, adjustments to revenue from performance obligations satisfied in the prior period due to changes in estimates in variable consideration were immaterial.

Significant Financing Component and Costs to Obtain Contracts

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Production costs of advertising and promotional materials are expensed when the advertising is first run.

Marketing, general and administrative expenses also include integration costs of $ 25.0 million and $ 38.8 million for 2019 and 2018, respectively.

There were no integration costs recorded in 2020 as the activity related to the acquisition of the remaining portion of MillerCoors LLC ("MillerCoors"), which occurred on October 11, 2016 (the "Acquisition"), was completed by the end of 2019.

Included in marketing, general and administrative expenses is total marketing and advertising expenses which were approximately $ 1.1 billion, $ 0.9 billion and $ 1.2 billion in 2021, 2020 and 2019, respectively.

Marketing, general and administrative expenses also included integration costs of $ 25 million in 2019.

There were no integration costs recorded in 2021 or 2020 as the activity related to the acquisition of the remaining portion of MillerCoors, which occurred on October 11, 2016 (the "Acquisition"), was completed by the end of 2019.

This classification also includes general and administrative costs for functions such as finance, legal, human resources and information technology, along with integration costs as noted above.

These costs primarily consist of labor and outside services, as well as bad debt expense related to our allowance for doubtful accounts.

Unless capitalization is allowed or required by U.S.

Unless capitalization is allowed or required

GAAP, legal costs are expensed when incurred.

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Our share-based compensation plan and the awards within it contain provisions that accelerate vesting of awards upon change in control, retirement, disability or death of eligible employees and directors.

Our share-based awards are considered vested when the employee's retention of

the award is no longer contingent on providing service, which for certain awards can result in immediate recognition for awards granted to retirement-eligible individuals or accelerated recognition for awards granted to individuals that will become retirement eligible within the stated vesting period.

Our share-based awards are considered vested when the employee's retention of the award is no longer contingent on providing service, which for certain awards can result in immediate recognition for awards granted to retirement-eligible individuals or accelerated recognition for awards granted to individuals that will become retirement eligible within the stated vesting period.

Also, if less than the stated vesting period, we recognize these costs over the period from the grant date to the date retirement eligibility is achieved.

Special Items

Special Items, net

Our special items represent charges incurred or benefits realized that either we do not believe to be indicative of our core operations, or we believe are significant to our current operating results warranting separate classification;

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• fees on termination of significant operating agreements and gains (losses) on disposal of investments.

The items classified as special items are not necessarily non-recurring, however, they are deemed to be incremental to income earned or costs incurred by the company in conducting normal operations, and therefore are presented separately from other components of operating income.

The items classified as special items are not necessarily non-recurring, however, they are deemed to be incremental to income earned or costs incurred by us in conducting normal operations, and therefore are presented separately from other components of operating income.

Interest Expense, net

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Our other income (expense) classification primarily includes gains and losses associated with activities not directly related to our operations.

For instance, aggregate unrealized and realized foreign exchange gains and losses resulting from the remeasurement and settlement of foreign-denominated monetary assets and liabilities, as well as certain gains or losses on sales of non-operating assets and the mark-to-market activity associated with warrants are classified in this line item.

These gains and losses are reported in the operating segment in which they occur;

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We apply the intraperiod tax allocation rules to allocate our provision for income taxes between continuing operations and other categories of earnings, such as other comprehensive income (loss), when we meet the criteria prescribed by U.S.

When working capital funds are available after satisfying all other business obligations, we may distribute cash from a foreign subsidiary to its U.S.

parent and record the tax impacts associated with these transactions.

However, to the extent current earnings are not otherwise distributed or planned to be distributed, in the current year, they are considered permanently reinvested in our foreign operations.

When cash is available after satisfying working capital needs and all other business obligations, we may distribute such 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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We have no unvested outstanding equity share awards that contain non-forfeitable rights to dividends.

Dividends per share paid to shareholders were $ 0.68 , $ 0.57 and $ 1.96 during the years ended December 31, 2021, 2020 and 2019, respectively.

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

A quarterly dividend was reinstated during the third quarter of 2021.

Cash and Cash Equivalents

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Our cash deposits are maintained with multiple, reputable financial institutions.

Non-Cash Activity

Non-cash activity includes non-cash issuances of share-based awards, as well as non-cash investing activities related to movements in our guarantee of indebtedness of certain equity method investments.

We also had other non-cash activities primarily related to capital expenditures incurred but not yet paid of $ 171.9 million, $ 214.9 million and $ 221.0 million during 2020, 2019 and 2018, respectively.

Additionally, the initial recognition of the warrants discussed in Note 16, “Derivative Instruments and Hedging Activities” represents a non-cash financing activity in 2018.

See Note 4, "Investments" and Note 13 , "Share-Based Payments" for further discussion.

We also had other non-cash activities related to capital expenditures incurred but not yet paid of $ 206.6 million, $ 171.9 million and $ 214.9 million during 2021, 2020 and 2019, respectively.

In June 2021, we rolled forward our July 2021 $ 250.0 million forward starting interest rate swap to May 2022 through a cashless settlement.

The unrealized loss on the 2021 forward starting interest rate swap at the time of the transaction was factored into the effective interest rate assigned to the new May 2022 forward starting interest rate swap.

See Note 16, "Derivative Instruments and Hedging Activities" for further details.

Other than the activity mentioned above and the supplemental non-cash activity related to the recognition of leases discussed in Note 19, "Leases," there was no other significant non-cash activity in 2021, 2020 and 2019.

See Note 4, "Investments," Note 13, "Share-Based Payments," Note 16, “Derivative Instruments and Hedging Activities” and Note 19, "Leases" for further discussion.

Accounts Receivable and Notes Receivable

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Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset (or asset group) may not be recoverable.

Our asset groups are generally identified at the segment level with the exception of certain craft breweries or other locations which may operate on a more stand-alone basis, such as our Truss LP joint venture.

During the year ended December 31, 2021, we did not identify any triggering events related to our asset groups which required performance of an impairment test.

Returnable containers are recorded at acquisition cost and consist of returnable bottles, kegs, pallets and crates that are both in our direct control within our breweries, warehouses and distribution facilities and those that we indirectly control in the market through our agreements with our customers and other brewers and for which a deposit is received.

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Implementation costs incurred in hosting arrangements that are service contracts are capitalized within other assets and are immaterial.

See Note 2, "New Accounting Pronouncements" for further discussion of the changes to the accounting for implementation costs incurred in a hosting arrangement that became effective January 1, 2020.

Properties held under finance lease are depreciated using the straight-line method over the estimated useful life or the lease term, whichever is shorter, and the related depreciation is included in depreciation expense.

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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.

Effective January 1, 2020, we have two reporting units, North America and Europe.

As of the date of the completion of our 2021 impairment testing, we have concluded that we have two reporting units, Americas and EMEA&APAC.

See further discussion in Note 10, "Goodwill and Intangibles."

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Our annual test is performed as of the first day of our fiscal fourth quarter.

We continuously monitor the performance of our other definite-lived intangible assets and evaluate for impairment when evidence exists that certain events

or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

We continuously monitor the performance of our other definite-lived intangible assets and evaluate for impairment when evidence exists that certain events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

Significant judgments and assumptions are required in such impairment evaluations.

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We apply the equity method of accounting to 20% to 50% owned investments where we exercise significant influence or VIEs for which we are not the primary beneficiary.

We use the cumulative earnings approach for determining cash flow presentation of cash distributions received from equity method investees.

We use the cumulative earnings approach for determining cash flow presentation of cash distributions received from equity method investments.

Distributions received are included in our consolidated statements of cash flows as operating activities, unless the cumulative distributions exceed our portion of the cumulative equity in the net earnings of the equity method investment, in which case the excess distributions are deemed to be returns of the investment and are classified as investing activities in our consolidated statements of cash flows.

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Changes in unrealized gains and losses for derivatives not designated in a hedge accounting relationship are recorded directly in earnings each period and are also recorded in the same financial statement line item as the hedged item/forecasted transaction.

Cash flows from the settlement of derivatives, including both economic hedges and those designated in hedge accounting relationships, appear in the consolidated statements of cash flows in the same categories as the cash flows of the hedged item unless the instruments are deemed to contain an other-than-insignificant financing element, in which case the cash flows related to this instrument will be classified as financing activities.

In accordance with authoritative accounting guidance, we do not record the fair value of derivatives for which we have elected the Normal Purchase Normal Sale ("NPNS") exemption.

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We assess whether an arrangement is or contains a lease at inception of the contract.

For all contractual arrangements deemed to be leases (other than short-term leases), as of the lease commencement date, we recognize on the consolidated balance sheet a liability for

our obligation related to the lease and a corresponding asset representing our right to use the underlying asset over the period of use.

For all contractual arrangements deemed to be leases (other than short-term leases), as of the lease commencement date, we recognize on the consolidated balance sheet a liability for our obligation related to the lease and a corresponding asset representing our right to use the underlying asset over the period of use.

For leases that qualify as short-term leases, we have elected, for all classes of underlying assets, to not apply the balance sheet recognition requirements of ASC 842, and instead, we recognize the lease payments in the consolidated statements of operations on a straight-line basis over the lease term.

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Certain of our lease agreements contain options to extend or early terminate the agreement.

The lease term used to calculate the right-of-use asset and lease liability at commencement includes the impacts of options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The lease term used to calculate the right-of-use ("ROU") asset and lease liability at commencement includes the impacts of options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

When determining whether it is reasonably certain that we will exercise an option at commencement, we consider various existing economic factors, including real estate strategies, the nature, length, and terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term.

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The discount rate used to calculate the present value of the future minimum lease payments is the rate implicit in the lease, when readily determinable.

As the rate implicit in the lease is rarely readily determinable, we use our incremental borrowing rate relative to the leased asset.

Certain of our leases include variable lease payments, primarily for items such as property taxes, insurance, maintenance, and other operating expenses associated with leased assets.

As the rate implicit in the lease is rarely readily determinable, we use our incremental borrowing rate relative to the leased asset in all other cases.

Certain of our leases include variable payments, primarily for items such as property taxes, insurance, maintenance, and other operating expenses associated with leased assets.

These variable payments are excluded from the measurement of our lease assets and liabilities and are recognized in the period in which the obligation for those payments is incurred.

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Each plan is managed locally and in accordance with respective local laws and regulations.

Our equity investments, Brewers' Retail Inc.

("BRI") and Brewers' Distributor Ltd.

("BDL"), maintain defined benefit, defined contribution and postretirement benefit plans as well.

Our equity investments, BRI and BDL, maintain defined benefit, defined contribution and OPEB plans as well.

We recognize the underfunded or overfunded status of a defined benefit postretirement plan as an asset or liability in the consolidated balance sheets.

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We employ the corridor approach for determining each plan's potential amortization from AOCI of deferred gains and losses, which occur when actual experience differs from estimates, into our net periodic pension and postretirement benefit cost.

This approach defines the "corridor" as the greater of 10% of the projected benefit obligation or 10% of the market-related value of plan assets and requires amortization of the excess net gain or loss that exceeds the corridor over the average remaining

service periods of active plan participants.

For plans closed to new entrants and the future accrual of benefits, the average remaining life expectancy of all plan participants (including retirees) is used.

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

Subsequent Events

On February 22, 2022, the Board of Directors declared a quarterly dividend of $ 0.38 per share.

On February 17, 2022, the Board of Directors approved a share repurchase program up to an aggregate of $ 200 million of our Company's Class B common stock through March 31, 2026, with repurchases primarily intended to offset annual employee equity award grants.

New Accounting Pronouncements

Adoption of New Accounting Pronouncements and Securities and Exchange Commission Rules

In June 2016, the FASB issued guidance that changes the impairment model used to measure credit losses for most financial instruments.

The new guidance replaces the existing incurred credit loss model, and requires the application of a forward-looking expected credit loss model, which will generally result in earlier recognition of allowances for credit losses for financial instruments that are in scope of the new guidance, including trade receivables.

New Accounting Pronouncements Recently Adopted

In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes.

This guidance eliminated certain exceptions to the general approach to the income tax accounting model and added new guidance to reduce the complexity in accounting for income taxes.

We adopted this guidance in the first quarter of 2021, which did not have a material impact on our financial statements.

In August 2018, the FASB issued authoritative guidance intended to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract.

This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

The guidance also requires presentation of the capitalized implementation costs in the statement of financial position and in the statement of cash flows in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented, and the expense related to the capitalized implementation costs to be presented in the same line item in the statement of operations as the fees associated with the hosting element (service) of the arrangement.

We adopted this guidance prospectively in the first quarter of 2020, which did not have a material impact on our financial statements.

However, the adoption of this guidance resulted in the change in presentation of capitalized implementation costs related to hosting arrangements from properties to other assets on the consolidated balance sheet, as well as the expense related to such costs no longer being classified as depreciation expense and cash flows related to those costs no longer being presented as investing activities beginning in the first quarter of 2020.

In March 2020, the SEC finalized its proposed updates to Rule 3-10 of Regulation S-X, Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant's Securities (the

The Rule simplifies the disclosure requirements for issuers and guarantors of securities that are registered or being registered under the Securities Act of 1933.

The Rule also eliminates the requirement to disclose condensed consolidating financial information within the financial statements for qualifying entities and permits abbreviated disclosures of the guarantor/issuer relationship within Part II, Item 7, Management's Discussion and Analysis .

The Rule is effective on January 4, 2021 and voluntary compliance prior to the effective date is permitted.

We adopted the Rule effective January 1, 2020 and, as such, no longer include condensed consolidating information within Part II, Item 8, Financial Statements.

New Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued authoritative guidance which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and are effective for all entities upon issuance, March 12, 2020 through December 31, 2022, which is a full year after the current expected discontinuation date of LIBOR.

We are currently evaluating the potential impact of this guidance on our financial statements.

In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes.

This guidance eliminates certain exceptions to the general approach to the income tax accounting model, and adds new guidance to reduce the complexity in accounting for income taxes.

This guidance is effective for annual periods beginning after December 15, 2020, including interim periods within those annual periods.

We plan to adopt this guidance in the first quarter of 2021 and do not expect it will have a material impact on our financial statements.

The amendments apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and are effective for all entities upon issuance, March 12, 2020 through December 31, 2022.

The guidance permits a company to elect certain optional expedients and exceptions when affected by the changes in reference rate reform.

We have elected to adopt optional expedients impacting our derivative instruments with maturity dates extending beyond the expected discontinuance date of LIBOR.

In addition, in October 2021, we amended our revolving credit facility to replace LIBOR with designated replacement rates for any future borrowings denominated in EUR or GBP.

The adoption of, and future elections under Accounting Standard Update ("ASU") 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , and ASU 2021-01, Reference Rate Reform (Topic 848):

Scope , did not and are not expected to have a material impact on our accounting policies or consolidated financial statements.

We will continue to evaluate the impact of reference rate reform on our other contracts and assess the impacts of adopting incremental portions of this guidance on our financial statements.

New Accounting Pronouncements Not Yet Adopted

In November 2021, the FASB issued authoritative guidance intended to provide consistent and transparent disclosures around government assistance by requiring disclosures of the type of government assistance, our accounting for the government assistance and the effect on our financial statements.

This guidance is effective for us in our annual report for the year ended December 31, 2022.

We can either adopt the amendments in this guidance prospectively or retrospectively.

We are currently evaluating the impact of this guidance and do not expect it will have a material impact on our financial statements as the guidance impacts disclosures only.

Other than the items noted above, there have been no new accounting pronouncements not yet effective or adopted in the current year that we believe have a significant impact, or potential significant impact, to our consolidated financial statements.

Segment Reporting

Our reporting segments are based on the key geographic regions in which we operate, and previously included the U.S., Canada, Europe and International segments.

As part of our revitalization plan announced in the fourth quarter of 2019, we made the determination to establish Chicago, Illinois as our North American operational headquarters, closed our office in Denver, Colorado and consolidated certain administrative functions into our other existing office locations.

In connection with these consolidation activities, effective January 1, 2020, we changed our management structure from a corporate center and four segments to two segments - North America and Europe.

The North America segment consolidated the United States, Canada and corporate center, with a centralized North American leadership team, integrated North American supply chain network and centralized marketing and support functions, enabling us to move more quickly with an integrated portfolio strategy.

The Europe segment allows for standalone operations, developed and supported by a European-based team, including local leadership, commercial, supply chain and support functions.

The previous International segment was reconstituted to more effectively grow our global brands with the Africa and Asia Pacific businesses reporting into the Europe segment and the remaining International business reporting into the North America segment.

As a result of these structural changes, the review of discrete financial information by our chief operating decision maker, our President and Chief Executive Officer, is now performed only at the consolidated North America and Europe geographic segment level, which is the basis on which our chief operating decision maker evaluates the performance of the business and allocates resources accordingly.

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

Our reporting segments are based on the key geographic regions in which we operate and include the Americas and EMEA&APAC segments.

Our Americas segment operates in the U.S., Canada and various countries in Latin and South America and our EMEA&APAC segment operates in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries and certain countries within the Middle East, Africa and Asia Pacific.

We also have certain activity that is not allocated to our segments, which has been reflected as “Unallocated” below.

Reporting Segments

North America

The North America segment consists of our production, marketing and sales of our brands and other owned and licensed brands in the U.S., Canada and various countries in Latin and South America.

In the U.S., we have an agreement to brew, package and ship products for Pabst Brewing Company, LLC, and in Canada, we contract brew and package certain Labatt brands for the U.S.

We also have an agreement with Heineken N.V.

("Heineken") that grants us the right to import, market, distribute and sell certain Heineken products in Canada.

The North America segment also includes BRI, our joint venture arrangement related to the distribution and retail sale of beer in Ontario, and BDL, our joint venture arrangement related to the distribution of beer in the western provinces.

In the third quarter of 2020, we formed The Yuengling Company LLC ("TYC"), a joint venture owned equally by MCBC and DGY West Holdings, LP ("DGY West") that, pursuant to an operating agreement, formed to expand commercialization of Yuengling's brands with operation currently expected to commence in the second half of 2021.

The Americas segment consists of our production, marketing and sales of our brands and other owned and licensed brands in the U.S., Canada and various countries in Latin and South America.

We have contract brewing agreements to brew, package and ship products for Pabst and TYC, and a contract brewing agreement with Labatt USA Operating Co, LLC to brew and package certain Labatt brands for export.

We have an agreement with Heineken that grants us the right to import, market, distribute and sell certain Heineken products in Canada.

The Americas segment also includes BRI, our joint venture arrangement related to the distribution and retail sale of beer in Ontario, and BDL, our joint venture arrangement related to the distribution of beer in the western provinces.

Additionally, in the third quarter of 2020, we formed TYC, a joint venture equally owned by MCBC and DGY West that, pursuant to an operating agreement, was formed to expand commercialization of Yuengling's brands for any new market expansion outside of Yuengling's then 22 -state footprint and New England in the U.S.

During the third quarter of 2021, TYC commenced retail operations with its first product sales in the state of Texas.

BRI, BDL and TYC are all accounted for as equity method investments.

The Europe segment consists of our production, marketing and sales of our brands as well as a number of smaller regional brands in the U.K., Central Europe and various other European countries, along with certain countries within Africa and Asia Pacific.

Our European business also has licensing agreements and distribution agreements with various other brewers.

We also have certain activity that is not allocated to our segments, which has been reflected as “Unallocated” below.

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

The EMEA&APAC segment consists of our production, marketing and sales of our brands as well as a number of smaller regional brands in the U.K., Central Europe and various other European countries, along with certain countries within the Middle East, Africa and Asia Pacific.

In our EMEA&APAC segment, we also have licensing agreements and distribution agreements with various other brewers.

"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.

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Consolidated net sales represent sales to third-party external customers less excise taxes.

Inter-segment transactions impacting net sales revenues and income (loss) before income taxes eliminate upon consolidation and are primarily related to North America segment sales to, and royalties received from, the Europe segment.

Inter-segment transactions impacting net sales and income (loss) before income taxes eliminate upon consolidation and are primarily related to the Americas segment sales to, and royalties received from, the EMEA&APAC segment.

The following tables represent consolidated net sales, interest expense, interest income and reconciliations of amounts shown as income (loss) before income taxes to income (loss) attributable to MCBC.

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refer to Note 7, "Special Items" for further discussion.

Additionally, integration costs of $ 25.0 million and $ 38.8 million for 2019 and 2018, respectively, were recorded within marketing, general and administrative expenses, primarily within our North America segment.

No integration costs were recorded in the year ended December 31, 2020.

Additionally, integration costs of $ 25 million were recorded within marketing, general and administrative expenses for 2019, primarily within our Americas segment.

No integration costs were recorded in the years ended December 31, 2021 or 2020.

Year ended December 31, 2021

North America Europe (1)

Unallocated (2)

Inter-segment net sales eliminations Consolidated (3)

Americas EMEA&APAC Unallocated Inter-segment net sales eliminations Consolidated

(In millions)

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Net income (loss) attributable to MCBC $ 1,005.7

(1) During the fourth quarter of 2020, we recorded a goodwill impairment loss related to the Europe reporting unit of $ 1,484.3 million, which was recorded as a special item.

See Note 10, "Goodwill and Intangible Assets" for further discussion.

(2) Includes unrealized mark-to-market changes on our commodity hedge positions.

We recorded unrealized gains of $ 107.6 million for the year ended December 31, 2020.

(3) During 2020, the coronavirus pandemic had a material adverse effect on our operations, liquidity, financial condition and results of operations during 2020 due to on-premise closures worldwide.

In 2020, we experienced a reduction in volume as a result of the on-premise closures worldwide and due to the keg relief program, experienced a reduction in net sales and an increase in our inventory allowance for obsolete inventory.

Year ended December 31, 2020

North America (1)

Europe Unallocated (2)

Inter-segment net sales eliminations Consolidated

Americas EMEA&APAC Unallocated Inter-segment net sales eliminations Consolidated

(In millions)

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Net income (loss) attributable to MCBC $ ( 949.0 )

(1) During the third quarter of 2019, we recorded a goodwill impairment loss to our North America reporting unit of $ 668.3 million, which was recorded as a special item.

See Note 10, "Goodwill and Intangible Assets" for further discussion.

During the second quarter of 2019, we completed the sale of our existing Montreal brewery for $ 96.2 million, resulting in a $ 61.3 million gain.

(2) Includes unrealized mark-to-market valuation on our commodity hedge positions.

We recorded unrealized losses of $ 0.8 million for the year ended December 31, 2019.

Year ended December 31, 2019

North America (1)

Europe Unallocated (2)

Inter-segment net sales eliminations Consolidated

Americas EMEA&APAC Unallocated Inter-segment net sales eliminations Consolidated

(In millions)

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Net income (loss) attributable to MCBC $ 241.7

(1) During the first quarter of 2018, we recorded a gain of $ 328.0 million related to the Adjustment Amount as defined and further discussed in Note 7, "Special Items."

(2) Includes unrealized mark-to-market valuation on our commodity hedge positions.

We recorded unrealized losses of $ 166.2 million for the year ended December 31, 2018.

The following table presents total assets and select cash flow information by segment.

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(In millions)

North America $ 23,375.6 $ 23,360.2 $ 743.0 $ 676.9 $ 667.6 $ 461.4 $ 450.7 $ 499.7

Europe 3,955.5 5,499.6 179.0 182.1 189.9 113.4 143.1 152.0

Americas $ 23,653.5 $ 23,375.6 $ 601.4 $ 743.0 $ 676.9 $ 405.0 $ 461.4 $ 450.7

EMEA&APAC 3,965.5 3,955.5 184.7 179.0 182.1 117.6 113.4 143.1

Consolidated $ 27,619.0 $ 27,331.1 $ 786.1 $ 922.0 $ 859.0 $ 522.6 $ 574.8 $ 593.8

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Consolidated net sales $ 10,279.7 $ 9,654.0 $ 10,579.4

(1) Reflects net sales from the individual countries within certain countries in Europe, Latin America, South America, Africa and Asia.

(1) Reflects net sales within certain countries in Europe, Latin America, South America, the Middle East, Africa and Asia.

No individual country has total net sales exceeding 10% of the total consolidated net sales.

The following table presents net properties by geographic location:

The following table presents net properties and operating ROU assets by geographic location.

See Note 19, "Lease" for further information on our operating ROU assets and Note 9, "Properties " for further information on our net properties.

December 31, 2021 December 31, 2020

(In millions)

Net properties:

Net properties and operating ROU assets

United States and its territories $ 2,294.1 $ 2,457.1

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Other foreign countries (1)

Consolidated net properties $ 4,250.3 $ 4,546.5

(1) Reflects net sales from the individual countries within certain countries in Europe, Latin America, South America, Africa and Asia.

No individual country has total net properties exceeding 10 % of the total consolidated net properties.

Consolidated net properties and operating ROU assets $ 4,311.5 $ 4,386.5

(1) Reflects net properties and operating ROU assets within certain countries in Europe, Latin America, South America, Africa and Asia.

No individual country has total net properties or operating ROU assets exceeding 10 % of the total consolidated net properties or operating ROU assets, respectively.

Our investments include both equity method and consolidated investments.

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See below under "Affiliate Transactions" for further details.

In the third quarter of 2020, we formed The Yuengling Company LLC ("TYC") , a joint venture equally owned by MCBC and DGY West that, pursuant to an operating agreement, formed to expand commercialization of Yuengling's brands with operation currently expected to commence in the second half of 2021.

TYC will oversee any new market expansion outside Yuengling's current 22-state footprint and New England.

We have concluded that TYC is a VIE for which we are not the primary beneficiary and will therefore apply the equity method of accounting.

We have an obligation to proportionately fund TYC's operations.

Initial funding of TYC is expected to begin in the first quarter of 2021 and is expected to be immaterial.

Transactions between MCBC and TYC are expected to include billings for product under a supply agreement and fees under a services agreement and will be considered affiliate transactions.

Authoritative guidance related to the consolidation of VIEs requires that we continually reassess whether we are the primary beneficiary of VIEs in which we have an interest.

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Our consolidated VIEs are Cobra Beer Partnership, Ltd.

("Cobra U.K."), Rocky Mountain Metal Container (“RMMC”), Rocky Mountain Bottle Company (“RMBC”) and Truss, as well as other immaterial entities.

Our unconsolidated VIEs are BRI and BDL, as well as other immaterial investments.

("Cobra U.K."), RMMC, RMBC and Truss, as well as other immaterial entities.

Our unconsolidated VIEs are BRI, BDL and TYC, as well as other immaterial investments.

Both BRI and BDL have outstanding third-party debt which is guaranteed by their respective shareholders.

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Equity Method Investments

Brewers' Retail Inc.

BRI is a beer distribution and retail network for the Ontario region of Canada, with majority of the ownership residing with Molson Coors Canada ("MCC"), Labatt Breweries of Canada LP (a subsidiary of ABI) and Sleeman Breweries Ltd.

BRI is a beer distribution and retail network for the Ontario region of Canada, with majority of the ownership residing with Molson Canada 2005, Labatt Breweries of Canada LP (a subsidiary of ABI) and Sleeman Breweries Ltd.

(a subsidiary of Sapporo International).

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We consider BRI an affiliate.

See "Affiliate Transactions" section below summarizing our transactions and balances with affiliates, including BRI.

We have an obligation to proportionately fund BRI's operations.

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As of December 31, 2021 and December 31, 2020, we had a positive equity method investment balance of $ 43.9 million and $ 31.9 million, respectively.

See "Affiliate Transactions" below for BRI affiliate transactions including administrative fees charged to MCBC under the agreement with BRI which are recorded in cost of goods sold, as well as for BRI affiliate due to and due from balances as of December 31, 2020 and December 31, 2019, respectively, related to trade receivables and payables for sales to external customers and costs incurred by BRI offset by administrative fees charged and paid by MCBC (which may be in a payable or receivable position depending on the amount under or over charged).

Brewers' Distributor Ltd.

BDL is a distribution operation owned by MCC and Labatt Breweries of Canada LP (a subsidiary of ABI) that, pursuant to an operating agreement, acts as an agent for the distribution of their products in the western provinces of Canada.

See "Affiliate Transactions" below for BRI affiliate due to and due from balances as of December 31, 2021 and December 31, 2020, respectively, related to trade receivables and payables for sales to external customers and costs incurred by BRI offset by administrative fees charged and paid by MCBC (which may be in a payable or receivable position depending on the amount under or over charged).

BDL is a distribution operation owned by Molson Canada 2005 and Labatt Breweries of Canada LP (a subsidiary of ABI) that, pursuant to an operating agreement, acts as an agent for the distribution of their products in the western provinces of Canada.

The two owners share equal voting control of this business.

We consider BDL an affiliate.

See "Affiliate Transactions" section below summarizing our transactions and balances with affiliates, including BDL.

BDL charges the owners administrative fees that are designed so the entity operates at break-even profit levels.

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Our investment in BDL was $ 33.2 million and $ 27.0 million as of December 31, 2021 and December 31, 2020, respectively.

See "Affiliate Transactions" section below for BDL affiliate transactions including administrative fees charged to MCBC under the agreement with BDL which are recorded in cost of goods sold, as well as for BDL affiliate due to and due from balances as of December 31, 2020 and December 31, 2019, respectively, related to trade receivables and payables for sales to external customers and costs incurred by BDL offset by administrative fees charged and paid by MCBC (which may be in a payable or receivable position depending on the amount under or over charged).

See "Affiliate Transactions" section below for BDL affiliate due to and due from balances as of December 31, 2021 and December 31, 2020, respectively, related to trade receivables and payables for sales to external customers and costs incurred by BDL offset by administrative fees charged and paid by MCBC (which may be in a payable or receivable position depending on the amount under or over charged).

In the third quarter of 2020, we formed TYC, a joint venture equally owned by MCBC and DGY West that, pursuant to an operating agreement, was formed to expand commercialization of Yuengling's brands for any new market expansion outside of Yuengling's then 22 -state footprint and New England in the U.S.

During the third quarter of 2021, TYC commenced retail operations with its first product sales in the state of Texas.

We have concluded that TYC is a VIE for which we are not the primary beneficiary, and therefore is accounted for as an equity method investment.

We have certain other immaterial equity investments we enter into from time to time that align with our organizational strategies and growth initiatives.

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Affiliate Transactions

All transactions with our equity method investments are considered related party transactions and recorded within our affiliate accounts.

The following table summarizes transactions with affiliates:

For the years ended

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

(In millions)

Administrative fees, net charged from BRI $ 87.6 $ 96.8 $ 94.0

Administrative fees, net charged from BDL $ 32.1 $ 35.7 $ 40.2

Amounts due to and due from affiliates as of December 31, 2020 and December 31, 2019, respectively, are as follows:

Amounts due from and due to affiliates as of December 31, 2021 and December 31, 2020, respectively, are as follows:

Amounts due from affiliates Amounts due to affiliates

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The noncontrolling interest is held by the founder of the Cobra beer brand.

We consolidate the results and financial position of Cobra U.K., and it is reported within our Europe operating segment.

We consolidate the results and financial position of Cobra U.K., and it is reported within our EMEA&APAC segment.

On October 4, 2018, a wholly-owned subsidiary within our Canadian business completed the formation of Truss LP, an independent Canadian joint venture with HEXO to pursue opportunities to develop, produce and market non-alcoholic, cannabis-infused beverages in Canada.

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We maintain a 57.5 % controlling interest in Truss, which is a VIE that is consolidated.

In connection with the formation of Truss, HEXO also issued warrants to our Canadian subsidiary, which are further discussed in Note 16, "Derivative Instruments and Hedging Activities." Truss also subleases the location of its production facility in Belleville, Ontario from HEXO.

Truss subleases the location of its production facility in Belleville, Ontario from HEXO.

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

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We therefore reassessed our status as the primary beneficiary of the joint venture and concluded that we were no longer able to exert control over the operations or direction of the joint venture or otherwise influence the activities that most significantly impact the economics of the entity.

As a result, we deconsolidated the joint venture and recorded an aggregate immaterial loss on the deconsolidation and termination of the Grolsch business as a special item in 2019.

As a result, we deconsolidated the joint venture and recorded an aggregate immaterial loss on the deconsolidation and termination of the Grolsch business in special items, net, in the consolidated statements of operations in 2019.

Other Income and Expense

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(In millions)

Gain on sale of non-operating asset $ — $ — $ 11.7

Gain (loss) from other foreign exchange and derivative activity, net $ ( 7.4 ) $ 2.8 $ ( 20.4 )

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(1) During 2019, we received a payment and recorded a gain of CAD 2.0 million, or $ 1.5 million, resulting from a purchase price agreement related to the historical sale of Molson Inc.'s ownership interest in the Montreal Canadiens, which is considered an affiliate of MCBC.

During 2018, we recorded a non-cash gain of CAD 5.8 million, or $ 4.3 million, resulting from the release of our guarantee of the Montreal Canadiens' obligations under a ground lease for the Bell Centre Arena as a result of an independent transaction by the Montreal Canadiens with the lessor.

Our income (loss) before income taxes on which the provision for income taxes was computed is as follows:

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State income taxes, net of federal benefits 4.7 % 57.8 ( 1.7 ) % 11.0 3.4 % 16.4

Effect of foreign tax rates and tax planning 3.5 % ( 22.3 ) ( 21.2 ) % ( 101.8 ) ( 8.1 ) % ( 109.5 )

Effect of foreign tax rates ( 5.5 ) % ( 68.3 ) 3.5 % ( 22.3 ) ( 21.2 ) % ( 101.8 )

Effect of foreign tax law and rate changes 1.6 % 19.6 ( 0.9 ) % 6.0 — % —

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Effective tax rate / Tax (benefit) expense 18.6 % $ 230.5 ( 46.9 ) % $ 301.8 48.7 % $ 233.7

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

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

final hybrid regulations, recorded in the second quarter of 2020.

The increase in the effective tax rate, when compared to the statutory rate, for fiscal year 2019 was primarily driven by the $ 668.3 million goodwill impairment recorded within our North America segment in 2019, increased valuation allowances, and the recognition of other one-time tax expenses.

The decrease in the effective tax rate, when compared to the statutory rate, for fiscal year 2018 was primarily driven by one-time tax benefits.

The decrease to the effective tax rate for fiscal year 2021 when compared to the statutory rate is primarily due to the release of $ 73 million of reserves for unrecognized tax benefit positions recognized in the third quarter of 2021.

The reserve release included amounts for an income tax audit settlement, net of changes in estimates associated with prior period uncertain tax positions, as well as amounts for the expiration of statutes of limitations.

Additionally, during the second quarter of 2021, the U.K.

government enacted, and royal assent was received for, legislation to increase the corporate income tax rate from 19% to 25%.

Remeasurement of our deferred tax liabilities under the higher income tax rate resulted in the recognition of additional discrete tax expense of approximately $ 18 million in the second quarter of 2021.

The decrease to the effective tax rate for fiscal year 2020 when compared to the statutory rate was primarily due to the impact of the $ 1,484.3 million goodwill impairment, recorded within our EMEA&APAC segment in the fourth quarter of 2020,

of which a majority related to nondeductible goodwill.

Additionally, during the second quarter of 2020 we recognized approximately $ 135 million of tax expense following the enactment of the final U.S.

tax hybrid regulations.

The increase in the effective tax rate for fiscal year 2019 when compared to the statutory rate was primarily due to the $ 668.3 million goodwill impairment recorded within our Americas segment in 2019, increased valuation allowances, and the recognition of other one-time tax expenses.

Additionally, our foreign businesses operate in jurisdictions with statutory income tax rates that differ from the U.S.

Federal statutory rate.

Specifically, the statutory income tax rates in the countries in Europe in which we operate range from 9 % to 25 %, and Canada has a statutory income tax rate of approximately 26 %.

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

government enacted legislation to repeal the previously enacted reduction to the U.K.

corporate income tax rate.

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

Specifically, the statutory income tax rates in the countries in Europe in which we operate range from 9 % to 25.8 %, and Canada has a combined federal and provincial statutory income tax rate of approximately 26 %.

December 31, 2021 December 31, 2020

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Partnerships and investments 29.7 19.6

Foreign exchange gain/loss — —

Intangible assets 2,539.7 2,396.9

Derivative instruments 19.5 —

Total non-current deferred tax liabilities $ 3,011.3 $ 2,774.8

Net non-current deferred tax assets — —

Net non-current deferred tax liabilities $ 2,497.7 $ 2,133.9

The overall decrease in net deferred tax liabilities of $ 21.5 million in 2020 is primarily due to an increase in deferred tax assets of $ 143.9 million attributable to additional tax loss carryforwards, tax credits, and future deductible temporary differences generated in 2020, offset by an increase in deferred tax liabilities of $ 122.4 million related to the amortization of goodwill and indefinite-lived intangible assets for U.S.

The overall increase in net deferred tax liabilities of $ 363.8 million in 2021 was due to the $ 236.5 million increase in deferred tax liabilities and the decrease in deferred tax assets of $ 127.3 million.

The increase in deferred tax liabilities was primarily due to the amortization of goodwill and indefinite-lived intangible assets for U.S.

tax purposes due to the Acquisition.

Additionally, our deferred tax balances are also impacted by foreign exchange rates, as a significant amount of our deferred tax assets and liabilities are in foreign jurisdictions.

The decrease in the deferred tax assets was due to changes in our unrealized commodity mark to market and pension temporary differences and decreases in our tax credit carryforwards, partially offset by increases in our tax loss carryforwards and future deductible temporary differences generated in 2021.

Additionally, our deferred tax balances are impacted by foreign exchange rates, as a significant amount of our deferred tax assets and liabilities are denominated in foreign currency.

Our deferred tax valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits on tax loss carryforwards from operations in various jurisdictions.

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We have deferred tax assets for U.S.

tax carryforwards that expire between 2021 and 2040 of $ 62.4 million as of December 31, 2020, and that expire between 2020 and 2039 of $ 63.2 million as of December 31, 2019.

tax carryforwards that expire between 2022 and 2041 of $ 71.4 million as of December 31, 2021, and that expired between 2021 and 2040 of $ 62.4 million as of December 31, 2020.

tax losses that may be carried forward indefinitely of $ 14.0 million and $ 19.9 million as of December 31, 2021 and December 31, 2020, respectively.

We have foreign tax loss carryforwards that expire between 2021 and 2040 of $ 283.5 million as of December 31, 2020, and that expire between 2020 and 2039 of $ 233.8 million as of December 31, 2019.

We have foreign tax loss carryforwards that expire between 2022 and 2041 of $ 286.5 million as of December 31, 2021, and that expired between 2021 and 2040 of $ 283.5 million as of December 31, 2020.

We have foreign tax losses that may be carried forward indefinitely of $ 25.4 million and $ 22.0 million as of December 31, 2021 and December 31, 2020, respectively.

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Net non-current deferred tax liabilities $ 2,497.7 $ 2,133.9

The fiscal year 2020 and 2019 amounts above exclude $ 142.1 million and $ 68.4 million, respectively, of unrecognized tax benefits that have been recorded as a reduction of non-current deferred tax assets, which is presented within non-current deferred tax liabilities due to jurisdictional netting on the consolidated balance sheets.

The total foreign non-current deferred tax assets above are presented within other assets on the consolidated balance sheets.

The total domestic and foreign non-current deferred tax liabilities above are presented separately on the consolidated balance sheets.

In addition, the deferred tax liability amounts above as of December 31, 2021 and December 31, 2020, exclude $ 26.7 million and $ 142.1 million, respectively, of unrecognized tax benefits that have been recorded as a reduction of non-current deferred tax assets, which is presented within non-current deferred tax liabilities due to jurisdictional netting on the consolidated balance sheets.

A reconciliation of the beginning and ending amounts of un recognized tax benefits, excluding interest and penalties, is as follows:

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Additions for tax positions of prior years — 132.1 —

Reductions for tax positions related to the current year ( 24.1 ) — —

Reductions for tax positions of prior years ( 48.9 ) ( 1.6 ) —

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however, the amount ultimately paid upon resolution of issues may differ materially from the amount accrued.

Due to anticipated settlements and expected expiration of statutes of limitation, it is reasonably possible that the amount of unrecognized tax benefits may decrease by an amount up to $ 150 million within the next 12 months.

During the third quarter of 2021, an income tax audit settlement, which included the resolution of the impact of the final hybrid regulations recorded in the second quarter of 2020, was reached with taxing authorities.

The settlement, along with changes to other unrecognized positions resulted in the net reduction of our unrecognized tax benefit position by approximately $ 250 million, including interest, in the third quarter of 2021.

The cash tax payment associated with the settlement, after application of available net operating losses, was made in the fourth quarter of 2021 which totaled approximately $ 125 million.

As of the fourth quarter of 2021, we do not anticipate material changes to our remaining unrecognized tax benefit position within the next 12 months.

For the years ended

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Tax years through 2013 are closed in the U.S.

In Canada, tax years through tax year 2014 are closed or have been effectively settled through examination except for issues relating to intercompany cross-border transactions.

In Canada, tax years through 2016 are closed or have been effectively settled through examination except for issues relating to intercompany cross-border transactions.

The statute of limitations for intercompany cross-border transactions is closed through tax year 2012.

Tax years through 2013 are closed for most European jurisdictions in which we operate, with statutes of limitations varying from 3 to 7 years.

When working capital funds are available after satisfying all other business obligations, we may distribute cash from a foreign subsidiary to its U.S.

parent and record the tax impacts associated with these transactions.

However, to the extent current earnings are not otherwise distributed or planned to be distributed, in the current year, they are considered permanently reinvested in our foreign operations.

Tax years through 2013 are closed for most European jurisdictions in which we operate, with statutes of limitations varying from 3 to 7 years for most jurisdictions.

When cash is available after satisfying working capital needs and all other business obligations, we may distribute such 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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Impairments or asset abandonment charges

North America - Asset abandonment (1)

Americas - Asset abandonment (1)

14.6 115.8 38.8

North America - Impairment losses (2)

Europe - Asset abandonment (3)

Europe - Impairment losses (4)

Americas - Impairment losses (2)

EMEA&APAC - Asset abandonment (3)

EMEA&APAC - Impairment losses (4)

13.5 1,516.2 12.2

Termination fees and other (gains) losses

North America (5)

0.4 ( 2.0 ) ( 68.3 )

EMEA&APAC (6)

( 6.3 ) ( 0.7 ) 0.8

Total Special items, net $ 44.5 $ 1,740.2 $ 708.8

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

(1) 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.

Charges associated with the brewery closure for the year ended December 31, 2020 and 2019 totaled $ 117.7 million and $ 15.8 million, respectively, excluding the fourth quarter gain on sale of the brewery of $ 2.1 million.

Charges associated with the brewery closure for the years ended December 31, 2020 and 2019 totaled $ 117.7 million and $ 15.8 million, respectively, excluding the fourth quarter of 2020 gain on sale of the brewery of $ 2.1 million.

The charges for the year ended December 31, 2020 primarily consisted of accelerated depreciation in excess of normal depreciation of $ 96.0 million and employee related costs of retention and severance of $ 16.5 million.

1 unchanged sentence

The charges for fiscal year 2019 primarily consisted of accelerated depreciation in excess of normal depreciation of $ 8.0 million and employee related costs of retention and severance of $ 1.1 million.

In addition to incurring accelerated depreciation for Irwindale, in 2020, 2019 and 2018, we incurred asset abandonment charges, related to the accelerated depreciation in excess of normal depreciation as a result of the Vancouver brewery closure, which occurred in the third quarter of 2019, and the planned Montreal brewery closure, which is currently expected to occur in 2021.

We currently expect to incur additional charges, including estimated accelerated depreciation charges in excess of normal depreciation of approximately CAD 10 million, through the completion of the Montreal brewery closure.

However, due to the uncertainty inherent in our estimates, these estimated future accelerated depreciation charges as well as the timing of the brewery closure are subject to change.

Charges in 2018 also included accelerated depreciation in excess of normal depreciation related to the closure of the Colfax, California cidery, which was completed during the first quarter of 2019, as well as other costs associated with

the previously closed Eden, North Carolina brewery, including net charges associated with the sale of the Eden real property.

(2) Of the $ 39.6 million of impairment losses recognized in the North America segment for the year ended December 31, 2020, we recorded aggregate impairment losses of $ 17.0 million related to certain regional craft brand definite-lived intangible assets during the fourth quarter of 2020.

We incurred asset abandonment charges, related to the accelerated depreciation in excess of normal depreciation for the year ended December 31, 2019 as a result of the Vancouver brewery closure which occurred in the third quarter of 2019.

In addition, during the years ended December 31, 2021, 2020 and 2019, we incurred accelerated depreciation in excess of normal depreciation related to the Montreal brewery closure which occurred during the fourth quarter of 2021.

(2) Of the $ 39.6 million of impairment losses recognized in the Americas segment for the year ended December 31, 2020, we recorded aggregate impairment losses of $ 17.0 million related to certain regional craft brand definite-lived intangible assets during the fourth quarter of 2020.

The estimates and assumptions used to determine the fair value represent Level 3 measurements and additional impairment losses may be recognized in the future.

The remaining $ 22.6 million of impairments recognized in 2020 were related to definite-lived tangible assets associated with these regional craft brands.

Of the $ 671.7 million of impairment losses recognized in the North America segment in fiscal year 2019, we recorded $ 668.3 million of goodwill impairment losses related to the North America reporting unit.

See Note 10, "Goodwill and Intangible Assets" for further discussion.

(3) We incurred asset abandonment charges in our Europe segment in fiscal year 2020 primarily related to the closure of a small brewery in Europe as a result of the ongoing impacts of the coronavirus pandemic.

Further, as a result of our continued strategic review of our European supply chain network, during 2020, 2019 and 2018, we incurred charges consisting primarily of accelerated depreciation in excess of normal depreciation related to the closure of our Burton South brewery and Alton brewery and other associated closure costs.

(4) During the fourth quarter of 2020, we recognized goodwill impairment losses on the Europe reporting unit of $ 1,484.3 million.

Of the $ 671.7 million of impairment losses recognized in the Americas segment in fiscal year 2019, we recorded $ 668.3 million of goodwill impairment losses related to the Americas reporting unit.

See Note 10, "Goodwill and Intangible Assets" for further discussion.

In addition, during the fourth quarter of 2020, we incurred impairment losses as a result of small brewery closures in Europe as a result of the ongoing impact of the coronavirus pandemic.

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

(3) We incurred asset abandonment charges in our EMEA&APAC segment in fiscal year 2021 primarily related to accelerated depreciation in excess of normal depreciation for our Burtonwood and Japan locations.

Asset abandonment charges in our EMEA&APAC segment in fiscal year 2020 primarily related to the closure of a small brewery in Europe as a result of the ongoing impacts of the coronavirus pandemic.

Further, as a result of our continued strategic review of our European supply chain network, during 2020 and 2019, we incurred charges related to the closure of our Burton South brewery and Alton brewery.

(4) During the fourth quarter of 2021, we recognized an impairment loss of $ 13.5 million related to the held for sale classification of the remaining portion of our India business.

The held for sale disposal group was measured at fair value on a nonrecurring basis using Level 3 inputs.

The estimated fair value less cost to sell was determined using a market approach, based upon the expected net sales proceeds of the disposal group.

The remaining carrying value of the disposal group held for sale is presented within other current assets, net on our consolidated balance sheet as of December 31, 2020.

During the fourth quarter of 2020, we recognized goodwill impairment losses on the EMEA&APAC reporting unit of $ 1,484.3 million.

See Note 10, "Goodwill and Intangible Assets" for further discussion.

In addition, during the fourth quarter of 2020, we incurred impairment losses as a result of small brewery closures in Europe as a result of the ongoing impact of the coronavirus pandemic.

During the third quarter of 2019, we recorded goodwill impairment losses within the former India reporting unit of $ 6.1 million.

1 unchanged sentence

See Note 10, "Goodwill and Intangible Assets" for further discussion.

(5) During 2020, we recognized termination fees and other gains of $ 2.0 million, which was primarily due to the gain recorded on the sale of the Irwindale brewery.

(5) During the second quarter of 2019, we completed the sale of the existing Montreal brewery property for $ 96.2 million, and recognized a gain of $ 61.3 million.

See Note 19, "Leases" for further discussion.

During the first quarter of 2018, we received $ 330.0 million from ABI, of which $ 328.0 million constituted a purchase price adjustment (the "Adjustment Amount"), related to the Miller International Business which was acquired in our acquisition of the remaining portion of MillerCoors which occurred on October 11, 2016.

As this settlement occurred following the finalization of purchase accounting, we recorded the settlement proceeds related to the Adjustment Amount as a gain within special items, net in our consolidated statement of operations in the North America segment and within cash provided by operating activities in our consolidated statement of cash flows for the year ended December 31, 2018.

(6) During 2019, we recognized a special charge of $ 0.5 million related to the deconsolidation of the Grolsch joint venture.

Represents charges related to the exit of our China business in 2018, consisting primarily of the reclassification of the associated cumulative foreign currency translation adjustment from AOCI upon substantial liquidation in the fourth quarter of 2018.

(6) During 2021, we recognized a gain of $ 11.4 million related to the sale of land of the former Alton brewery site in the U.K.

In addition, we recognized a loss of $ 2.7 million on the sale of a disposal group within our India business.

The loss included the reclassification of the associated cumulative foreign currency translation adjustment losses from AOCI into special items, net at the time of sale.

See Note 14, "Accumulated Other Comprehensive Income (Loss)" for further details.

Restructuring Activities

On October 28, 2019, as part of our revitalization plan, we made the determination to establish Chicago, Illinois as our North American operational headquarters, close our office in Denver, Colorado and consolidate certain administrative functions into our other existing office locations.

On October 28, 2019, as part of our revitalization plan, we made the determination to establish Chicago, Illinois as our Americas segment operational headquarters, close our office in Denver, Colorado and consolidate certain administrative functions into our other existing office locations.

In connection with these consolidation activities, certain impacted employees were extended an opportunity to continue their employment with MCBC in the new organization and locations and, for those not continuing with MCBC, certain of such employees were asked to provide transition assistance and offered severance and retention packages in connection with their termination of service.

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

After taking into account all changes in each of the business units,

including Europe, the revitalization plan has reduced employment levels, in aggregate, by approximately 600 employees globally.

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

During 2020 and 2019 we recognized severance and retention charges of $ 35.6 million and $ 41.2 million, respectively, and our remaining accrued restructuring balance related to the revitalization plan as of December 31, 2020 was approximately $ 19 million.

Actual severance and retention costs related to this restructuring, which are primarily being recognized ratably over the employees’ required future service period, may differ from original estimates based on actual employee turnover levels prior to achieving severance and retention eligibility requirements.

Employee relocation charges are recognized in the period incurred and totaled $ 11.0 million in 2020.

Additionally, during 2020 and 2019, we recognized aggregate impairment losses of $ 7.6 million and $ 2.1 million, respectively, related to the closure of the office facility in Denver, Colorado, including our lease right-of-use asset, in light of the sublease market outlook as a result of the coronavirus pandemic.

Should our ability to obtain future subtenant occupancy for the office location significantly differ from the estimates and assumptions used to determine its fair value, which represent Level 3 measurements, additional impairment losses may be recognized in the future.

Separately, during the third quarter of 2018, we initiated global restructuring activities primarily in the U.S.

in order to align our cost base with our scale of business.

As a result, we reduced U.S.

employment levels by approximately 300 employees in the fourth quarter of 2018.

Severance costs related to these restructuring activities were recorded as special items in our consolidated statements of operations.

The restructuring actions related to the revitalization plan were substantially complete as of December 31, 2021.

After taking into account all changes in each of the business units, including the EMEA&APAC segment, the revitalization plan has reduced employment levels, in aggregate, by approximately 600 employees globally.

In connection with these consolidation activities, we incurred 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, the majority of which were cash charges that we began recognizing in the fourth quarter of 2019.

During 2021, 2020 and 2019, we recognized severance and retention cash charges of $ 4.0 million, $ 35.6 million and $ 41.2 million, respectively, bringing the aggregate of such charges to approximately $ 81 million in total since the plan was initiated.

Employee relocation charges were recognized in the period incurred and totaled $ 3.4 million and $ 11.0 million in 2021 and 2020, respectively.

No further impairment was recorded in 2021 due to the signing of sublease agreements during the second quarter of 2021.

In addition to our revitalization plan, our restructuring also includes other strategic exit activities such as the disposal or wind down of certain brewery locations.

We continually evaluate our cost structure and seek opportunities for further efficiencies and cost savings as part of ongoing and new initiatives.

As such, we may incur additional restructuring related charges or adjustments to previously recorded charges in the future, however, we are unable to estimate the amount of charges at this time.

As such, we may incur additional restructuring related charges or adjustments to previously recorded charges in the future;

however, we are unable to estimate the amount of charges at this time.

The accrued restructuring balances as of December 31, 2021 represent expected future cash payments required to satisfy our remaining obligations, the majority of which we expect to be paid in the next 12 months.

North America Europe Total

Americas EMEA&APAC Total

(In millions)

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Balance as of December 31, 2020 $ 24.5 $ 2.0 $ 26.5

Charges incurred 63.7 9.5 73.2

Charges incurred and changes in estimates 10.1 1.6 11.7

Payments made ( 23.7 ) ( 2.0 ) ( 25.7 )

Changes in estimates ( 4.6 ) ( 1.0 ) ( 5.6 )

Foreign currency and other adjustments — ( 0.1 ) ( 0.1 )

8 unchanged sentences

Shares issued under equity compensation plans — 0.2 — —

Shares exchanged for common stock — 0.1 — ( 0.1 )

Shares exchanged for Class B exchangeable shares — — ( 0.1 ) 0.1

2 unchanged sentences

Shares exchanged for common stock — 3.7 — ( 3.7 )

Shares exchanged for Class B exchangeable shares — — ( 0.1 ) 0.1

Balance as of December 31, 2020 2.6 209.8 2.7 11.1

Shares issued under equity compensation plans — 0.3 — —

Shares exchanged for common stock — 3.7 — ( 3.7 )

Balance as of December 31, 2021 2.6 210.1 2.7 11.1

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The Class A exchangeable shares and Class B exchangeable shares were issued by Molson Coors Canada Inc.

("MCCI"), a wholly-owned subsidiary of the Company.

("MCCI"), a wholly-owned subsidiary of our Company.

The exchangeable shares are substantially the economic equivalent of the corresponding shares of Class A and Class B common stock that a Molson shareholder would have received in the merger of Adolph Coors Company with Molson Inc.

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Our Class B common stock has fewer voting rights than our Class A common stock and holders of our Class A common stock have the ability to effectively control or have a significant influence over company actions requiring stockholder approval.

Specifically, holders of Class B common stock voting together as a single class have the right to elect three directors of the Molson Coors Board of Directors, as well as the right to vote on certain additional matters as outlined in the Restated Certificate of Incorporation (as amended, the “Certificate”), such as merger agreements that require approval under applicable law, sales of all or substantially all of our assets to unaffiliated third parties, proposals to dissolve MCBC, and certain amendments to the Certificate that require approval under applicable law, each as further described and limited by the Certificate.

Specifically, holders of Class B common stock voting together as a single class have the right to elect three directors of the

Molson Coors Board of Directors, as well as the right to vote on certain additional matters as outlined in the Restated Certificate of Incorporation (as amended, the “Certificate”), such as merger agreements that require approval under applicable law, sales of all or substantially all of our assets to unaffiliated third parties, proposals to dissolve MCBC, and certain amendments to the Certificate that require approval under applicable law, each as further described and limited by the Certificate.

The Certificate also provides that holders of Class A common stock and Class B common stock shall vote together as a single class, on an advisory basis, on any proposal to approve the compensation of MCBC's named executive officers.

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Depreciation expense was $ 568.1 million, $ 702.0 million and $ 637.8 million in 2021, 2020 and 2019, respectively.

The increase in depreciation expense for the year ended December 31, 2020 compared to 2019 was due to the increase in accelerated depreciation recorded as a result of certain facility closures.

The decrease in depreciation expense for the year ended December 31, 2021 compared to 2020 was primarily due to the decrease in accelerated depreciation recorded as a result of certain facility closures as well as assets becoming fully depreciated during the year.

Accelerated depreciation recorded during the years ended December 31, 2021, 2020 and 2019 was $ 15.4 million, $ 112.3 million and $ 31.7 million respectively.

See Note 7, "Special Items" for further discussion.

Loss and breakage expense related to our returnable containers, included in the depreciation expense amounts noted above, was $ 42.6 million, $ 48.8 million and $ 48.4 million in 2020, 2019 and 2018, respectively, and is classified within cost of goods sold in the consolidated statements of operations.

Goodwill and Intangible Assets

North America (1)

Changes in Goodwill:

(In millions)

EMEA&APAC (1)(2)

Changes in Goodwill (In millions)

Balance as of December 31, 2019 $ 6,146.6 $ 1,484.8 $ 7,631.4

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Balance as of December 31, 2020 $ 6,151.0 $ — $ 6,151.0

Impairments — ( 1,484.3 ) ( 1,484.3 )

Foreign currency translation 1.6 — 1.6

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(1) On January 1, 2020, we changed our management structure from four segments and a corporate center to two reportable segments.

Under this new structure we have two reporting units, North America and Europe.

Under this new structure we have two reporting units, Americas and EMEA&APAC.

(2) During 2020, we recognized a goodwill impairment charge of $ 1,484.3 million to the EMEA&APAC reporting unit recorded in special items, net, in the consolidated statements of operations as a result of continued challenges and declines within the European beer industry brought on by the extended impacts of the continued duration of the global coronavirus pandemic and related outlook of recovery.

As of the year ended December 31, 2020, the EMEA&APAC reporting unit was fully impaired.

The gross amount of goodwill totaled approximately $ 8.4 billion as of December 31, 2021.

Accumulated impairment losses as of December 31, 2020 totaled $ 2,264.5 million, and are comprised of impairments taken on both the Europe and North America reporting units as well as our historic India reporting unit, which was fully impaired in 2019.

Accumulated impairment losses as of December 31, 2021 totaled $ 2,217.5 million, and are comprised of impairments taken on both the EMEA&APAC and the Americas reporting units as well as our historic India reporting unit which is classified as held for sale in the consolidated balance sheets as of December 31, 2021.

The following table presents details of our intangible assets, other than goodwill, as of December 31, 2021:

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Total $ 14,762.6 $ ( 1,206.5 ) $ 13,556.1

The changes in the gross carrying amounts of intangible assets from December 31, 2019 to December 31, 2020 are primarily driven by the impact of foreign exchange rates, as a significant amount of intangible assets are denominated in foreign currencies, impairment of definite-lived brand intangible assets and $ 30.0 million of other intangibles disposed of as part of the Irwindale brewery sale as discussed in Note 7, "Special Items."

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

Based on foreign exchange rates as of December 31, 2021, the estimated future amortization expense of intangible assets is as follows:

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Annual 2021 Impairment Assessment

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 concluded 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 goodwill impairment was the result of continued challenges and declines within the European beer industry brought on by the extended impacts and continued duration of the coronavirus pandemic and related outlook of recovery.

The ongoing uncertainty related to the pandemic and related unknown expectations of when the European beer industry will return to normal operating levels have created significant performance headwinds.

Specifically, the discount rate used in developing our fair value estimate for the Europe reporting unit was 10.00 %, as compared to 8.50 % used as of the October 1, 2019 annual testing date.

The recent performance declines and continued challenges within the beer industry and broader economies throughout Europe, including the additional lockdowns and increased restrictions to the on-premise, have had a material adverse impact on the expected future cash flows utilized in the valuation approaches for the Europe reporting unit.

As a result, it was determined that the fair value of the reporting unit was more likely than not reduced below its carrying amount during the fourth quarter of 2020.

Using a combination of discounted cash flow analyses and market-based approaches, it was determined that the carrying value of the Europe reporting unit exceeded its fair value to such an extent that the analysis resulted in the aforementioned goodwill impairment.

We also evaluated the indefinite-lived and definite-lived intangible assets within our European reporting unit, prior to recording the goodwill impairment, and concluded that an insignificant impairment was required for a definite-lived intangible asset but no impairments were required for the indefinite-lived intangible assets;

however, the Staropramen indefinite-lived intangible asset is considered to be at risk of future impairment as further discussed below.

The North America reporting unit did not have an impairment of goodwill but is considered to be at risk of future impairment as further discussed below.

Apart from the Staropramen indefinite-lived intangible asset, none of our other indefinite-lived intangible assets were impaired as a result of the annual review process.

Reporting Units and Goodwill

As of the date of our annual impairment test, October 1, the operations in each of the specific regions within our North America and Europe segments are considered components based on the availability of discrete financial information and the regular review by segment.

We have concluded that the components within the North America segments each meet the criteria of having similar economic characteristics and therefore have aggregated these components into the North America reporting unit.

Additionally, we determined that all of the components within the Europe segment, with the exception of India and the Asia Pacific export and license businesses, meet the criteria for aggregation, and will thus have been aggregated into the Europe reporting unit.

The operations of our India and Asia Pacific export and licensing businesses constitute separate reporting units at the component level.

However, no goodwill exists within these reporting units that require testing.

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.

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, which adversely impacted the results of our impairment testing.

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

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

In North America, 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 the current year, 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.

The 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 considered 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.

We completed our required annual goodwill and indefinite-lived intangible asset impairment testing as of October 1, 2021, the first day of our fourth quarter, and concluded that the fair value of the Americas reporting unit was determined to be in excess of its carrying amount and no goodwill impairment charge was required.

While the Americas reporting unit did not have an impairment of goodwill, it is considered to be at risk for future impairments as further discussed below.

We also evaluated the indefinite-lived and definite-lived intangible assets within our Americas and EMEA&APAC reporting unit, and concluded no impairments were required for our indefinite-lived and no material impairments were required for our definite-lived intangible assets.

The fair value of the Americas reporting unit was estimated at approximately 6 % in excess of carrying amount, as of the October 1, 2021 testing date, and therefore the reporting unit is considered to be at risk of future impairment.

The fair value of the Americas reporting unit 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.

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

Additionally, an increase to the discount rate as a result of the recent interest rate environment adversely affected the results of our impairment testing.

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

In the Americas segment, we continue to build on the strength of our iconic core brands, grow our above premium portfolio, and expand beyond the beer aisle.

While the preliminary results of executing on these strategies are promising, including the increasing proportion of our above premium portfolio in the current year, the growth targets included in management’s forecasted future cash flows are inherently at risk given that the strategies are still in progress.

Further, the uncertainty around the ongoing impacts of the coronavirus 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.

Lastly, cost inflation for certain inputs could put pressure on achieving key margin and cash flow projections into the future.

As of the October 1, 2021 testing date, the fair value of our Americas reporting unit was determined to be in excess of its carrying value, although considered to be at risk of future impairment.

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

Indefinite-Lived Intangible Assets

The fair value of the indefinite-lived Miller brands in the U.S.

is sufficiently in excess of its carrying values as of the annual testing date.

The fair value of the indefinite-lived Coors brands in North America is sufficiently in excess of its carrying value as of the annual testing date.

The fair value of our Carling indefinite-lived intangible assets in Europe continues to be sufficiently in excess of its carrying value as of the annual testing date.

However, the fair value of our Staropramen indefinite-lived intangible assets in Europe is considered to be at risk of future impairment with a fair value estimated to be approximately 9 % in excess of its carrying value as of the annual testing date.

The carrying value of the Staropramen indefinite-lived intangible assets as of December 31, 2020 was $ 621.7 million.

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

and the Staropramen and Carling brands in Europe.

The fair value of the indefinite-lived Miller brands in the U.S., Coors brands in the Americas and Carling brand in the U.K.

are all 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 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 utilized Level 3 fair value measurements in our impairment analysis of certain indefinite-lived intangible brand assets, including the Coors and Miller brands in the Americas 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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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 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, 2021, 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 and beyond the beer aisle 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 related to the coronavirus pandemic as well as 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 analysis.

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 business.

Coronavirus impacts 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 various North American markets, which limit many on-premise locations to operate at full capacity.

Current projections used for our 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 business.

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 increase in costs that could significantly impact our immediate and long-range results, 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 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.

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 and 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 pandemic, could also result in a meaningful change to our weighted-average cost of capital calculation and other inputs used in our impairment assessment.

Separately, the Ontario government in Canada adopted a bill that, if enacted, could adversely impact the existing terms of the beer distribution and retail systems in the province, as further described in Note 18, "Commitments and Contingencies" .

While historical performance and current expectations have resulted in fair values of our reporting units and indefinite-lived intangible assets equal to or in excess of carrying values, if our assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future.

While historical performance and current expectations have resulted in fair values of our Americas reporting unit and indefinite-lived intangible assets equal to or in excess of carrying values, if our assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future.

Annual 2020 Impairment Assessment

We completed our required annual goodwill and indefinite-lived intangible asset impairment analysis as of October 1, 2020, and concluded there were no impairments of goodwill within our Americas reporting unit but it was considered to be at risk for future impairments.

Further, we recognized a goodwill impairment charge of $ 1,484.3 million to the EMEA&APAC reporting unit, recorded in special items, net, in the consolidated statement of operations.

The impairment charge was primarily due to continued challenges and declines within the European beer industry, the largest market of our EMEA&APAC reporting unit, brought on by the extended impacts of the continued duration of the global coronavirus pandemic and related outlook of recovery as well as an increase in the discount rate used for fair value estimation of the reporting unit.

As of the year ended December 31, 2020, the EMEA&APAC reporting unit was fully impaired.

In addition, we also evaluated the indefinite-lived and definite-lived intangible assets within our EMEA&APAC reporting unit, prior to recording the goodwill impairment, and concluded that an insignificant impairment was required for a definite-lived intangible asset but no impairments were required for the indefinite-lived intangible assets;

however, the Staropramen indefinite-lived intangible asset was considered to be at risk of future impairment as of the year ended December 31, 2020.

Reporting Unit Changes and Interim 2020 Impairment Testing

As discussed in 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 previously 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 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.

During 2020, we changed our management structure from a corporate center and four segments to two segments - Americas and EMEA&APAC.

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

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

Further, during 2020, 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 Americas reporting unit immediately after the change, and determined that no impairments existed.

Additionally, as the changes resulted in the combination of our 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 have aggregated our Coors brand indefinite-lived intangible asset in the U.S.

and Canada reporting units into a single Americas 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 the Americas segment, we have aggregated our Coors brand indefinite-lived intangible asset in the U.S.

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

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

During 2020, we completed an interim impairment assessment for each individual indefinite-lived intangible asset immediately prior to aggregation, and determined that no impairments existed.

Definite-Lived Intangible Assets

Regarding definite-lived intangible assets, we continuously monitor the performance of the underlying assets for potential triggering events suggesting an impairment review should be performed.

In the current year, we recognized impairment losses on some of our definite-lived intangible assets related to certain regional craft breweries in North America and Europe.

In 2021, we considered whether any triggering events have occurred related to definite lived intangibles during the current year.

It was noted that in the second quarter of 2021, 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 certain regional craft breweries in the Americas and EMEA&APAC.

Impairment losses on the Grolsch brand and distribution agreement definite-lived intangible assets and the brand intangible asset related to our historical India business were recognized in 2019.

See Note 7, "Special Items" for further details on these impairment losses.

No such triggering events resulting in an impairment loss were identified in 2018.

2019 Impairment Assessment

We identified a triggering event requiring an interim impairment assessment of the goodwill within our former Canada reporting unit, now part of our North America reporting unit, at the end of the third quarter of 2019, which resulted in a goodwill impairment loss of $ 668.3 million.

The goodwill impairment trigger was the result of continued challenges and steepening declines within the Canadian beer industry reflected in the prolonged weakened performance of the Canada reporting unit through the third quarter of 2019.

Separately, during the third quarter of 2019 we also identified an interim triggering event related to goodwill within our former India reporting unit resulting from significant declines in performance in 2019, coupled with the continuation of challenging business conditions, which required us to perform an interim quantitative impairment analysis at the end of the third quarter of 2019.

As a result of this interim analysis, we determined that the carrying value of the former India reporting unit exceeded its fair value, resulting in an aggregate impairment loss of $ 12.2 million related to the goodwill of our India reporting unit and a definite-lived brand intangible asset.

Further we completed our required annual goodwill and indefinite-lived intangible asset impairment testing as of October 1, 2019 and concluded there were no additional impairments of goodwill within any of our reporting units.

Also, there were no impairments of our other indefinite-lived intangible assets as a result of the annual review process.

Debt Obligations

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Long-term debt:

CAD 500 million 2.75 % notes due September 2020 (1)

CAD 500 million 2.84 % notes due July 2023 (1)(2)

$ 395.7 $ 392.9

CAD 500 million 3.44 % notes due July 2026 (1)(2)

$ 500 million 2.25 % notes due March 2020 (3)

$ 1.0 billion 2.1 % notes due July 2021 (3)

1,000.0 1,000.0

$ 500 million 3.5 % notes due May 2022 (4)(5)

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EUR 800 million 1.25 % notes due July 2024 (1)

Finance leases and other 97.8 129.5

Finance leases 67.2 64.0

Other 30.7 33.8

unamortized debt discounts and debt issuance costs ( 44.6 ) ( 50.3 )

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Short-term borrowings:

Short-term borrowings (6)

Current portion of long-term debt 508.0 1,006.1

Current portion of long-term debt and short-term borrowings $ 514.9 $ 1,020.1

(1) Prior to Molson Coors International, L.P., a Delaware limited partnership and wholly-owned subsidiary of MCBC ("Molson Coors International L.P."), issuing our CAD 500 million 2.75 % notes due September 18, 2020 (the "2015 Notes,"), on September 18, 2015, we entered into forward starting interest rate swap agreements to hedge the interest rate volatility for a 10 year period.

We settled these swaps at the time of issuance of the 2015 Notes and are amortizing a portion of the resulting loss from AOCI to interest expense over the remaining term of the 2015 Notes as well as over a portion of the 2016 Notes defined below up to the full 10-year term of the interest rate swap agreements.

During the third quarter of 2020, we repaid the 2015 Notes upon maturity.

The amortizing loss resulted in an increase in our effective cost of borrowing compared to the stated coupon rates by 0.65 % and 0.60 % on each of the CAD 500 million

notes repaid in 2020 and due in 2026, respectively.

See Note 16, "Derivative Instruments and Hedging Activities" for further details on the forward starting interest rate swaps.

(1) On July 7, 2016, MCBC issued approximately $ 5.3 billion senior notes with portions maturing from July 15, 2019 through July 15, 2046 ("2016 USD Notes"), and EUR 800 million senior notes maturing July 15, 2024 ("2016 EUR Notes"), and Molson Coors International L.P., completed a private placement of CAD 1.0 billion senior notes maturing July 15, 2023, and July 15, 2026 ("2016 CAD Notes"), in order to partially fund the financing of the Acquisition (2016 USD Notes, 2016 EUR Notes and 2016 CAD Notes, collectively, the "2016 Notes").

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The 2016 Notes began accruing interest upon issuance, with semi-annual payments due on the 2016 USD Notes and 2016 CAD Notes in January and July beginning in 2017, and annual interest payments due on the 2016 EUR Notes in July beginning in 2017.

During the third quarter of 2019, we repaid the $ 500 million 1.45 % notes which matured in July 2019.

As of December 31, 2020, we have cross currency swaps associated with our $ 1.0 billion 2.1 % senior notes due 2021 in order to hedge a portion of the foreign currency translational impacts of our European investment.

As a result of the swaps, we have economically converted a portion of these notes and associated interest to EUR denominated, which results in a EUR interest rate to be received of 0.71 %.

(2) We entered into forward starting interest rate swap agreements to hedge interest rate volatility for a 10 year period until they were settled on September 18, 2015.

We are amortizing a portion of the resulting loss from AOCI to interest expense over the remaining term of the 2016 CAD Notes, as defined below, up to the full 10-year term of the interest rate swap agreements.

The amortizing loss resulted in an increase in our effective cost of borrowing compared to the stated coupon rates by 0.60 % on the 2016 CAD Notes.

See Note 16, "Derivative Instruments and Hedging Activities" for further details on the forward starting interest rate swaps.

(3) We repaid our $ 1.0 billion 2.1 % notes at maturity on July 15, 2021, using a combination of commercial paper borrowings and cash on hand and also settled the associated cross currency swap.

Prior to settlement in July 2021, the cross currency swaps economically converted a portion of the repaid $ 1.0 billion 2.1 % notes and associated interest to EUR denominated, which resulted in a EUR interest rate received of 0.71 %.

See Note 16, "Derivative Instruments and Hedging Activities" for further details.

(3) On March 15, 2017, MCBC issued approximately $ 1.5 billion of senior notes.

These issuances resulted in total proceeds of approximately $ 1.5 billion, net of underwriting fees and discounts of $ 3.1 million and $ 0.7 million, respectively.

Total debt issuance costs capitalized in connection with these notes, including underwriting fees, discounts and other financing related costs, were $ 6.1 million and were amortized over the respective terms of the notes.

As of December 31, 2020, these notes have been repaid.

(4) On May 3, 2012, we issued approximately $ 1.9 billion of senior notes with portions maturing in 2017, 2022 and 2042.

The issuance resulted in total proceeds, before expenses, of approximately $ 1.9 billion, net of underwriting fees and discounts of $ 14.7 million and $ 4.6 million, respectively.

Total debt issuance costs capitalized in connection with these senior notes, including the underwriting fees and discounts, were approximately $ 18.0 million and are being amortized over the term of the notes.

(4) During 2014, we entered into interest rate swaps to economically convert our fixed rate $ 500 million 3.5 % notes due 2022 ("$ 500 million notes") to floating rate debt.

As a result of fair value hedge accounting, the carrying value of the $ 500 million notes included a cumulative adjustment for the change in fair value of $ 18.1 million at the time of termination of the swaps.

As a result of fair value hedge accounting, the carrying value of the

$ 500 million notes included a cumulative adjustment for the change in fair value of $ 18.1 million at the time of termination of the swaps.

Beginning in the fourth quarter of 2015, we began amortizing this cumulative adjustment to interest expense over the remaining term of the $ 500 million notes and will accordingly decrease the annual effective interest rate for the remaining term by 0.56 %.

The fair value adjustments and subsequent amortization have been excluded from the aggregate principal debt maturities table presented below.

(5) As of December 31, 2020, we had $ 11.0 million in bank overdrafts a n d $ 103.7 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $ 92.7 million.

The balance of the fair value hedges being amortized over the life of the note were $ 0.9 million and $ 3.7 million as of December 31, 2021 and December 31, 2020, respectively.

The balance as of December 31, 2021 was included within the current portion of long-term debt and short-term borrowings of the consolidated balance sheet and the balance as of December 31, 2020 was included within long-term debt of the consolidated balance sheet.

(5) On May 3, 2012, we issued approximately $ 1.9 billion of senior notes with portions maturing in 2017, 2022 and 2042.

The issuance resulted in total proceeds, before expenses, of approximately $ 1.9 billion, net of underwriting fees and discounts of $ 14.7 million and $ 4.6 million, respectively.

(6) As of December 31, 2021, we had $ 3.0 million in bank overdrafts and $ 123.1 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $ 120.1 million.

As of December 31, 2020, we had $ 11.0 million in bank overdrafts and $ 103.7 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $ 92.7 million.

We had total outstanding borrowings of $ 3.9 million and $ 3.0 million under our JPY facilities as of December 31, 2021 and December 31, 2020, respectively.

In addition, we have USD, GBP and CAD overdraft facilities under which we ha d no outstanding borrowings as of December 31, 2020 or December 31, 2019.

In addition, we have CAD, GBP and USD overdraft facilities under which we had no outstanding borrowings as of December 31, 2021 or December 31, 2020.

A summary of our short-term facility availability is presented below.

See Note 18, "Commitments and Contingencies" for further discussion related to letters of credit.

See Note 18, "Commitments and Conti ngencies" for further discussion related to letters of credit.

• JPY 1.3 billion line of credit at Japan TIBOR plus 0.30 %

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Debt Fair Value Measurements

We utilize market approaches to estimate the fair value of certain outstanding borrowings by discounting anticipated future cash flows derived from the contractual terms of the obligations and observable market interest and foreign exchange

As of December 31, 2021 and December 31, 2020, the fair value of our outstanding long-term debt (including current portion of long-term debt) was approximately $ 7.7 billion and $ 9.1 billion, respectively.

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Revolving Credit Facility and Commercial Paper

We maintain a $ 1.5 billion revolving credit facility with a maturity date of July 7, 2024, that also allows us to issue a maximum aggregate amount of $ 1.5 billion in commercial paper or other borrowings at any time at variable interest rates.

We maintain a $ 1.5 billion revolving credit facility with a maturity date of July 7, 2024 that also allows us to issue a maximum aggregate amount of $ 1.5 billion in commercial paper or make other borrowings at any time at variable interest rates.

We use this financing from time to time to leverage cash needs including debt repayments.

During 2020, we utilized borrowings from this facility in order to fund the repayment of debt upon maturity, for working capital and general purposes, as well as a precautionary measure in order to provide enhanced financial flexibility due to uncertain market conditions arising from the impact of the coronavirus pandemic, as further discussed in Note 1, "Basis of Presentation and Summary of Significant Accounting Policies." We had no borrowings drawn on this revolving credit facility and no commercial paper borrowings as of December 31, 2020 and December 31, 2019.

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 below).

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

In connection with the CCFF Program, MCBC U.K.

and MCBC entered into a Dealer Agreement (the “Dealer Agreement”) with Lloyds Bank Corporate Markets PLC (“Lloyds”), as both the arranger and dealer, pursuant to which notes may be issued to Lloyds at such prices and upon such terms as MCBC U.K.

and Lloyds may agree.

The maturities of the notes vary but will not be less than seven days nor greater than 364 days.

The Dealer Agreement contains customary representations, warranties, covenants and indemnification provisions typical for the issuance of commercial paper of this type.

In addition, MCBC entered into a Deed of Guarantee to guarantee the payment of all sums payable from time to time by MCBC U.K.

in respect of the notes to the holders of any notes.

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.

During 2021, we utilized borrowings from this facility in order to fund the repayment of debt upon maturity, for working capital and general purposes.

We had no borrowings drawn on this revolving credit facility and no commercial paper borrowings as of December 31, 2021 and December 31, 2020.

Debt Covenants

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 net debt to EBITDA leverage ratio, as such terms are defined by the amended revolving credit facility agreement, as of December 31, 2020 is 5.25 x net debt to EBITDA, with a 0.50 x reduction to 4.75 x 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 0.25 x to 4.50 x net debt to EBITDA, with a further 0.50 x reduction to 4.00 x net debt to EBITDA as of the last day of the fiscal quarter ending December 31, 2021 through maturity of the credit facility.

On June 19, 2020, we entered into 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 our revolving credit facility agreement as of December 31, 2021 is 4.00 x net debt to EBITDA, through maturity of the credit facility.

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.

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.

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

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(In millions)

2021 $ 1,019.3

Thereafter 2,895.3

Total $ 7,138.6

The aggregate principal debt maturities in the table above excludes finance leases which are disclosed in Note 19, "Leases."

The aggregate principal debt maturities in the table above excludes the present value of finance leases which are disclosed in Note 19, "Leases."

For the years ended

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RSUs, DSUs, PSUs and stock options.

RSU awards are issued based upon the market value equal to the price of our stock at the date of the grant and vest over a period of three years .

RSU awards are issued based upon the market value equal to the price of our stock at the date of the grant and generally vest over a period of three years .

In 2021, 2020 and 2019, we granted 0.6 million, 0.5 million and 0.5 million RSUs, respectively, with a weighted-average market value of $ 45.84 , $ 48.99 and $ 55.03 each, respectively.

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The settlement amount of the PSUs is determined based on market and performance metrics, which include our total shareholder return performance relative to the stock market index defined by each award and specified internal performance metrics designed to drive greater shareholder return.

PSU compensation expense is based on a fair value assigned to the market metric upon grant using a Monte Carlo model, which remains constant throughout the vesting period of three years and a performance multiplier, which will vary due to changing estimates of the performance metric condition.

PSU compensation expense is based on fair values assigned to the market and performance metrics upon grant using a Monte Carlo model, with the market metric remaining constant throughout the vesting period of three years and the performance metric varying based on a multiplier determined based on changing estimates of the performance metric projected attainment.

During 2021, 2020 and 2019, we granted 0.4 million, 0.3 million and 0.3 million PSUs, respectively, each with a weighted-average fair value of $ 45.71 , $ 52.60 and $ 53.31 , respectively.

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During 2021, 2020 and 2019, we granted 0.3 million, 0.4 million and 0.4 million options, respectively, each with a weighted-average fair value of $ 10.06 , $ 6.70 and $ 9.20 , respectively.

Certain RSU and PSU awards granted in 2020 entitle participants to receive dividends upon vesting, subject to the performance, vesting and other conditions, including forfeiture, applicable to the respective awards.

Certain RSU and PSU awards granted in 2020 and beyond entitle participants to receive dividends upon vesting, subject to the performance, vesting and other conditions, including forfeiture, applicable to the respective awards.

The following table presents the pre-tax and after-tax share based compensation expense.

For the years ended

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Pretax share-based compensation expense $ 32.1 $ 24.2 $ 8.5

$ 24.2 $ 8.5 $ 42.6

Tax benefit ( 5.5 ) ( 4.3 ) ( 1.6 )

After-tax share-based compensation expense $ 26.6 $ 19.9 $ 6.9

(1) The decrease in share-based compensation expense in 2019 was primarily driven by the reversal of cumulative compensation expense previously recognized for our 2018 and 2017 PSU awards as the achievement of the performance conditions are no longer deemed probable for the respective performance periods, as well as the impacts of the reversal of expense associated with forfeitures related to the revitalization plan initiated in 2019.

Additionally, our share-based compensation expense in 2018 also includes expense associated with replacement awards issued in connection with the Acquisition.

As of December 31, 2021, there was $ 40.6 million of total unrecognized compensation cost from all share-based compensation arrangements granted under the Incentive Compensation Plan, related to unvested awards.

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Forfeited ( 0.1 ) $ 49.87 ( 0.1 ) $ 49.44

Adjustment for performance results achieved — $ — ( 0.2 ) $ 78.28

Non-vested as of December 31, 2021 1.3 $ 49.23 0.8 $ 49.47

The weighted-average fair value per unit for the non-vested PSUs is $ 32.76 as of December 31, 2020.

The total intrinsic values of RSUs and DSUs vested during 2021, 2020 and 2019 were $ 12.7 million, $ 14.8 million and $ 23.6 million, respectively.

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Exercised ( 0.1 ) $ 44.10

Forfeited ( 0.1 ) $ 60.01

Expired ( 0.1 ) $ 78.49

Outstanding as of December 31, 2021 1.9 $ 63.15 4.8 $ 0.6

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The shares of Class B common stock to be issued under our equity plans are made available from authorized and unissued MCBC Class B common stock.

As of December 31, 2020, there were 2.3 million shares of MCBC Class B common stock available for the issuance under the Incentive Compensation Plan.

As of December 31, 2021, there were 5.0 million shares of MCBC Class B common stock available for issuance under the Incentive Compensation Plan.

The fair value of each option granted in 2021, 2020 and 2019 was determined on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

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The expected term of stock options is estimated based upon observations of historical employee option exercise patterns and trends of those employees granted options in the respective year.

The fair value of the market metric for each PSU granted in 2020, 2019 and 2018 was determined on the date of grant using a Monte Carlo model to simulate total stockholder return for MCBC and peer companies with the following weighted-average assumptions:

The fair values of both the market metric and performance metric for each PSU granted in 2021, 2020 and 2019 was determined on the date of grant using a Monte Carlo model to simulate total stockholder return for MCBC and peer companies with the following weighted-average assumptions.

For the years ended

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Risk-free interest rate 0.24 % 0.84 % 2.49 %

Dividend yield N/A 4.17 % 2.08 %

Dividend yield N/A N/A 4.17 %

Volatility range 23.00 % - 44.71 %

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Foreign currency translation adjustments 129.3 — ( 2.5 ) — 126.8

Reclassification of cumulative translation adjustment to

6.0 — — — 6.0

Gain (loss) on net investment hedges 50.3 — — — 50.3

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Tax benefit (expense) ( 0.1 ) 27.0 ( 2.9 ) 3.8 27.8

Net period other comprehensive income (loss) 179.5 ( 83.7 ) ( 22.6 ) ( 10.6 ) 62.6

Reclassification of stranded tax effects (1)

( 73.3 ) ( 3.8 ) 2.3 — ( 74.8 )

As of December 31, 2019 $ ( 652.5 ) $ ( 87.8 ) $ ( 351.0 ) $ ( 70.9 ) $ ( 1,162.2 )

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Tax benefit (expense) 30.5 27.9 15.4 ( 5.2 ) 68.6

Net period other comprehensive income (loss) 179.5 ( 83.7 ) ( 22.6 ) ( 10.6 ) 62.6

Reclassification of stranded tax effects (2)

( 73.3 ) ( 3.8 ) 2.3 — ( 74.8 )

As of December 31, 2020 $ ( 539.5 ) $ ( 173.9 ) $ ( 397.7 ) $ ( 56.7 ) $ ( 1,167.8 )

Foreign currency translation adjustments ( 85.6 ) — ( 1.2 ) — (86.8)

Reclassification of cumulative translation adjustment to

7.5 — — — 7.5

Gain (loss) on net investment hedges 76.5 — — — 76.5

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Pension and other postretirement benefit adjustments — — 158.6 — 158.6

Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income — — ( 7.6 ) — ( 7.6 )

Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income and settlement — — 7.1 — 7.1

Ownership share of unconsolidated subsidiaries' other comprehensive income (loss) — — — 20.8 20.8

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As of December 31, 2021 $ ( 558.7 ) $ ( 131.0 ) $ ( 275.1 ) $ ( 41.2 ) $ ( 1,006.0 )

(1) As a result of exiting our China business, the associated cumulative foreign currency translation adjustment was reclassified from AOCI and recognized within special items, net upon substantial liquidation.

See Note 7, "Special Items" for further details.

(1) Represents the one-time reclassification of stranded tax effects from AOCI to retained earnings resulting from the change in the U.S.

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This reclassification occurred on January 1, 2019 upon adoption of the associated FASB authoritative guidance.

(2) As a result of the sale of a disposal group within our India business, the associated cumulative foreign currency translation adjustment was reclassified from AOCI and recognized within special items, net.

We have significant levels of net assets denominated in currencies other than the USD due to our operations in foreign countries, and therefore we recognize OCI gains and/or losses when those items are translated to USD.

The foreign currency translation gains recognized during 2020 and 2019 were primarily due to the strengthening of the CAD and GBP versus the USD.

Additionally, the 2020 foreign currency translation adjustment gains were further impacted by the strengthening of other currencies of our Europe operations versus the USD.

The foreign currency translation losses recognized during 2018 were due to the weakening of the CAD, GBP and other currencies of our Europe operations versus the USD.

The foreign currency translation losses recognized during 2021 were primarily due to the weakening of the GBP, EUR and certain other currencies of our Europe operations versus the USD.

The foreign currency translation adjustment gains during 2020 and 2019 were primarily due to the strengthening of the CAD and GBP versus the USD.

Additionally, the 2020 foreign currency translation adjustment gains were further impacted by the strengthening of certain other currencies of our Europe operations versus the USD.

Reclassifications from AOCI to income

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Other reclassifications from AOCI to Income:

China cumulative translation adjustment resulting from substantial liquidation $ — $ — $ ( 6.0 ) Special items, net

India cumulative translation adjustment resulting from sale of disposal group $ ( 7.5 ) $ — $ — Special items, net

Income tax benefit (expense) — — —

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Each plan is managed locally and in accordance with respective local laws and regulations.

We have defined benefit pension plans in the U.S., U.K., Canada and Japan.

Additionally, we offer OPEB plans to a portion of our Canadian, U.S., and Central European employees which are unfunded plans.

We have defined benefit pension plans in the U.S., U.K.

Additionally, we offer OPEB plans to a portion of our Canadian, U.S.

and Central European employees which are unfunded plans.

BRI and BDL maintain defined benefit, defined contribution and postretirement benefit plans as well;

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participates in and makes contributions to multi-employer pension plans.

Contributions to multi-employer pension plans were $ 8.2 million in 2020 and $ 7.9 million for both 2019 and 2018.

Contributions to multi-employer pension plans were $ 7.1 million, $ 8.2 million and $ 7.9 million in 2021, 2020 and 2019, respectively.

Additionally, the U.S.

postretirement health plan qualifies for the federal subsidy under the Medicare Prescription Drug Improvement and Modernization Act of 2003 (“the Act”) because the prescription drug benefits provided under the Company's postretirement health plan for Medicare eligible retirees generally require lower premiums from covered retirees and have lower co-payments and deductibles than the benefits provided in Medicare Part D and, accordingly, are actuarially equivalent to or better than the benefits provided under the Act.

postretirement health plan qualifies for the federal subsidy under the Medicare Prescription Drug Improvement and Modernization Act of 2003 (“the Act”) because the prescription drug benefits provided under our postretirement health plan for Medicare eligible retirees generally require lower premiums from covered retirees and have lower co-payments and deductibles than the benefits provided in Medicare Part D and, accordingly, are actuarially equivalent to or better than the benefits provided under the Act.

The benefits paid, including prescription drugs, were $ 33.8 million, $ 33.0 million and $ 37.6 million in 2021, 2020 and 2019, respectively.

There were immaterial subsidies received in each of 2020, 2019 and 2018.

There were no subsidies received in 2021 and immaterial subsidies received in 2020 and 2019.

Defined Benefit and OPEB Plans

Net Periodic Pension and OPEB Cost (Benefit)

Net Periodic Pension and OPEB (Benefit) Cost

For the years ended

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Net periodic pension and OPEB (benefit) cost $ ( 50.9 ) $ 13.2 $ ( 37.7 ) $ ( 31.4 ) $ 9.8 $ ( 21.6 ) $ ( 10.1 ) $ 18.2 $ 8.1

(1) The pension settlement charge recognized for the year ended December 31, 2021 was due to lump sum distributions allowed for under our U.K.

pension plan being in excess of interest cost for the year ended December 31, 2021.

Lower interest cost was primarily a result of lower interest rates as of December 31, 2020, which were used to establish the 2021 periodic pension cost, compared to prior years.

During the fourth quarter of 2019, we utilized plan assets to purchase buy-out annuity contracts for a portion of our Canadian pension plans and recognized a pension settlement charge of $ 29.8 million.

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Actual employee contributions 0.4 — 0.4 0.4 — 0.4

Actuarial loss (gain) 460.3 43.7 504.0 533.4 7.4 540.8

Actuarial (gain) loss ( 227.4 ) ( 37.3 ) ( 264.7 ) 460.3 43.7 504.0

Plan amendments — — — 0.8 — 0.8

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The accumulated benefit obligation for our defined benefit pension plans was approximately $ 5.1 billion and $ 5.6 billion as of December 31, 2021 and December 31, 2020, respectively.

The $ 11.2 million decrease in the net underfunded status of our aggregate pension and OPEB plans from December 31, 2019 to December 31, 2020, was primarily driven by strong asset returns, partially offset by the impacts of decreased discount rates.

During the fourth quarter of 2019, we purchased buy-out annuity contracts for a portion of our Canadian pension plans resulting in a decrease to our projected benefit obligation and a corresponding reduction to our plan assets in fiscal year 2019.

As of December 31, 2020 and December 31, 2019, our defined benefit pension plan in the U.K.

and certain defined benefit pension plans in the U.S.

and Canada were overfunded as a result of our ongoing de-risking strategy.

The $ 240.8 million improvement in the net underfunded status of our aggregate pension and OPEB plans from December 31, 2020 to December 31, 2021 was primarily due to the increase in discount rates from prior year and favorable asset returns for certain plans.

As of December 31, 2021 and December 31, 2020, certain defined benefit pension plans in the U.S., Canada and the U.K.

were overfunded as a result of our ongoing de-risking strategy.

Information for our defined benefit pension plans that had aggregate accumulated benefit obligations and projected benefit obligations in excess of plan assets is as follows:

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(In millions)

Net actuarial loss (gain) $ 684.6 $ ( 108.6 ) $ 576.0 $ 685.7 $ ( 167.5 ) $ 518.2

Net prior service cost (benefit) 10.5 ( 4.0 ) 6.5 7.1 ( 4.9 ) 2.2

Net actuarial (gain) loss $ 553.4 $ ( 142.3 ) $ 411.1 $ 684.6 $ ( 108.6 ) $ 576.0

Net prior service (benefit) cost 10.1 ( 3.2 ) 6.9 10.5 ( 4.0 ) 6.5

Total not yet recognized $ 563.5 $ ( 145.5 ) $ 418.0 $ 695.1 $ ( 112.6 ) $ 582.5

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(In millions)

Accumulated other comprehensive loss (income) as of December 31, 2018 $ 698.0 $ ( 197.3 ) $ 500.7

Amortization of prior service (costs) benefit ( 1.1 ) 0.7 ( 0.4 )

Amortization of net actuarial (loss) gain ( 10.4 ) 14.1 3.7

Accumulated other comprehensive (income) loss as of December 31, 2019 $ 692.8 $ ( 172.4 ) $ 520.4

Amortization of prior service benefit (costs) ( 0.3 ) 0.7 0.4

Amortization of net actuarial gain (loss) ( 7.3 ) 14.5 7.2

Net prior service cost 0.8 — 0.8

Settlement and curtailment ( 29.8 ) ( 0.2 ) ( 30.0 )

Current year actuarial loss (gain) 38.5 7.4 45.9

Current year actuarial (gain) loss 8.1 44.0 52.1

Foreign currency exchange rate change 1.0 0.6 1.6

Accumulated other comprehensive loss (income) as of December 31, 2019 $ 692.8 $ ( 172.4 ) $ 520.4

Amortization of prior service (costs) benefit ( 0.3 ) 0.7 0.4

Amortization of net actuarial (loss) gain ( 7.3 ) 14.5 7.2

Net prior service cost 0.8 — 0.8

Current year actuarial loss (gain) 8.1 44.0 52.1

Accumulated other comprehensive (income) loss as of December 31, 2020 $ 695.1 $ ( 112.6 ) $ 582.5

Amortization of prior service benefit (costs) ( 0.4 ) 0.7 0.3

Amortization of net actuarial gain (loss) ( 8.7 ) 6.7 ( 2.0 )

Curtailment, settlement or special termination benefit (gain) loss ( 5.4 ) — ( 5.4 )

Current year actuarial (gain) loss ( 121.4 ) ( 37.2 ) ( 158.6 )

Foreign currency exchange rate change 4.3 ( 3.1 ) 1.2

Accumulated other comprehensive loss (income) as of December 31, 2020 $ 695.1 $ ( 112.6 ) $ 582.5

Accumulated other comprehensive (income) loss as of December 31, 2021 $ 563.5 $ ( 145.5 ) $ 418.0

Periodic pension and OPEB cost is actuarially calculated annually for each individual plan based on data available and assumptions made at the beginning of each year.

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We consider our EROA to be a significant management estimate.

Any material changes in the inputs to our methodology used in calculating our EROA could have a significant impact on our reported defined benefit pension plans' expense.

Any material changes in the inputs to our

methodology used in calculating our EROA could have a significant impact on our reported defined benefit pension plans' expense.

Benefit obligations are actuarially calculated annually at the end of each year based on the assumptions detailed in the table below.

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N/A Ranging ratably from 6.00 % in 2021 to 3.57 % in 2040

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

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

Investment Strategy

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All assets are managed by external investment managers with a mandate to either match or outperform their benchmark.

The plans used different asset managers in the U.S., U.K.

The plans use different asset managers in the U.S., U.K.

and Canada and each plan's respective asset allocation could be impacted by a change in asset managers.

Our investment strategies for our defined benefit pension plans also consider the funding status for each plan.

Our investment strategies for our defined benefit pension plans also consider the funded status for each plan.

For defined benefit pension plans that are highly funded, assets are invested primarily in fixed income holdings that have a similar duration to the associated liabilities.

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The following compares target asset allocation percentages with actual asset allocations on a weighted-average asset basis as of December 31, 2021.

While the actual allocations show a temporary shift away from fixed income securities due to the rising rate environment, the actual allocations remain within our Company defined tolerance levels.

allocations Actual

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Government and corporate fixed income securities are generally classified as Level 2 in the fair value hierarchy as they are valued using observable inputs.

Assets included in our collateralized securities include mortgage backed securities and collateralized mortgage obligations, which are considered Level 3 due to the use of the significant unobservable inputs used in deriving these assets' fair values.

• Equities—Includes publicly traded common and other equity-like holdings, primarily publicly traded common stock and real estate investment trusts.

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Buy-in annuities 783.9 — — 783.9

Equity options 6.3 6.3 — —

Repurchase agreements ( 483.5 ) ( 483.5 ) — —

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Private equity funds 77.1

Hedge funds 6.7

Total fair value of plan assets $ 5,958.4

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Expected Cash Flows

Defined benefit pension plan contributions in future years will vary based on a number of factors, including actual plan asset returns and interest rates.

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

We took and continue to take steps to reduce our exposure to our pension obligations.

Such steps include the closure of the U.K.

pension plans to future earnings of service credit, benefit modifications in certain Canada plans and the entering into of buy-in and buy-out contracts for certain plans.

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

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.

In 2022, we expect to make contributions to our defined benefit pension plans of approximately $ 4 million and benefit payments under our OPEB plans of approximately $ 41 million based on foreign exchange rates as of December 31, 2021.

Additionally, we anticipate utilizing approximately $ 5 million of surplus from certain Canadian defined benefit pension plans to fund employer contributions to certain Canadian defined contribution plans.

BRI and BDL contributions to their respective defined benefit pension plans are excluded here, as they are not consolidated in our financial statements.

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The investment strategy for defined contribution plans are determined by each individual participant from the options we have made available as the plan sponsor.

non-union employees are eligible to participate in qualified defined contribution plans which provide for employer contributions ranging from 5 % to 11 % of eligible compensation (certain employees were also eligible for additional employer contributions).

non-union employees are eligible to participate in qualified defined contribution plans which provide

for employer contributions ranging from 5 % to 11 % of eligible compensation (certain employees were also eligible for additional employer contributions).

In addition, U.S.

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The employer contributions to the U.K.

and Canadian plans range from 3 % to 10 % of employee compensation.

Both employee and employer contributions were made in cash in accordance with participant investment elections.

plans can range up to 8 % of employee compensation and in Canada plans range from 4 % to 10 %.

Both employee and employer contributions are made in cash in accordance with participant investment elections.

We recognized costs associated with defined contribution plans of $ 77.8 million, $ 75.5 million and $ 80.0 million in 2021, 2020 and 2019, respectively.

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These assets are invested in publicly traded mutual funds whose performance is expected to closely match changes in the plan liabilities.

As of December 31, 2020, and December 31, 2019, the plan liabilities

were equal to the plan assets and were included in other liabilities and other assets on our consolidated balance sheets, respectively.

As of December 31, 2021, and December 31, 2020, the plan liabilities were equal to the plan assets and were included in other liabilities and other assets on our consolidated balance sheets, respectively.

Derivative Instruments and Hedging Activities

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Derivative Accounting Policies

Our foreign currency forwards and our forward starting interest rate swaps are designated in hedging relationships as cash flow hedges, and our cross currency swaps are designated as net investment hedges.

Prior to settlements discussed below, our interest rate swaps were designated as fair value hedges.

Our foreign currency forwards and our forward starting interest rate swaps are designated in hedging relationships as cash flow hedges.

Prior to settlements discussed below, our interest rate swaps were designated as fair value hedges and our cross currency swaps were designated as net investment hedges.

In certain situations, we may execute derivatives that do not qualify for, or we do not otherwise seek, hedge accounting but are determined to be important for managing risk.

For example, our commodity swaps and commodity options are not designated in hedge accounting relationships.

These outstanding economic

hedges are measured at fair value on our consolidated balance sheets with changes in fair value recorded in earnings.

These outstanding economic hedges are measured at fair value on our consolidated balance sheets with changes in fair value recorded in earnings.

We have historically elected to apply the NPNS exemption to certain contracts, as applicable.

These contracts are typically transacted with our suppliers and include risk management features that allow us to fix the price on specific volumes of purchases for specified delivery periods.

These contracts are typically transacted with our suppliers and include risk management features that allow us to fix the price on specific volumes of purchases for

specified delivery periods.

We also consider whether any provisions in our contracts represent embedded derivative instruments as defined in authoritative accounting guidance and apply the appropriate accounting.

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When we discontinue hedge accounting prospectively, but it continues to be probable that the forecasted transaction will occur in the originally expected period, the existing gain or loss on the derivative remains in AOCI for cash flow hedges and net investment hedges or in the carrying value of the hedged item for fair value hedges and is reclassified into earnings when the forecasted transaction affects earnings.

However, if it is no longer probable that a forecasted transaction will occur by the end of the originally specified time period or within an additional two-month period of time thereafter, the gains and losses in AOCI are recognized immediately in earnings.

However, if it is probable that a forecasted transaction will no longer occur by the end of the originally specified time period or within an additional two-month period of time thereafter, the gains and losses in AOCI are recognized immediately in earnings.

In all situations in which hedge accounting is discontinued and the derivative remains outstanding, we carry the derivative at its fair value on the consolidated balance sheets until maturity, recognizing future changes in the fair value in current period earnings.

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Interest Rate Swaps

In prior years, we entered into interest rate swap agreements to economically convert our fixed rate $ 1.0 billion 2017 USD Notes and $ 500 million 3.5 % notes due in 2022 to floating rate debt.

In prior years, we entered into interest rate swap agreements to economically convert our fixed rate $ 500 million 3.5 % notes due in 2022 to floating rate debt.

These interest rate swap agreements, which were designated as fair value hedges, were previously voluntarily cash settled, at which time we ceased adjusting the carrying value of the notes for the fair value movements.

The cumulative adjustments on the $ 1.0 billion 2017 USD Notes were amortized as a charge to interest expense over the remaining term of each respective note.

The cumulative adjustments on the $ 500 million 3.5 % notes increased the carrying value of the notes and are being amortized as a benefit to interest expense over the expected remaining term of the notes.

Net Investment Hedges

Foreign Denominated Debt

On July 7, 2016, we issued EUR 800 million senior notes maturing July 15, 2024 to partially fund the Acquisition.

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See Note 11, "Debt" for further discussion.

Cross Currency Swaps

Effective March 20, 2019, we entered into cross currency swap agreements having a total notional value of approximately EUR 353 million ($ 400 million upon execution) in order to hedge a portion of the foreign currency translational impacts of our European investment.

As a result of the swaps, we economically converted a portion of our $ 1.0 billion 2.1 % senior notes due 2021 and associated interest to EUR denominated, which results in a EUR interest rate to be received at 0.71 %.

Upon repayment of the $ 1.0 billion 2.1 % senior notes at maturity in July 2021, we settled the associated cross currency swap resulting in a net cash payment of $ 12.7 million, consisting of the final loss on the cross currency swap of $ 17.6 million partially offset by the final interest received.

The settlement of these cross currency swaps were classified as investing activities in our consolidated statement of cash flows.

Separately, effective April 3, 2019, we voluntarily early terminated our $ 500 million cross currency swaps due in 2020 under which we were receiving EUR interest payments at a rate received of 0.85 %, and concurrently entered into new cross currency swap agreements having a total notional of approximately EUR 445 million ($ 500 million upon execution) in order to hedge a portion of the foreign currency translation impacts of our European investment.

As a result of the swaps, we economically converted our $ 500 million 2.25 % senior notes due 2020 and associated interest to EUR denominated, which

resulted in a EUR interest rate to be received of 0.68 %.

The termination of the original $ 500 million cross currency swaps resulted in cash receipts of approximately $ 47 million during the second quarter of 2019.

Upon repayment of the $ 500 million 2.25 % senior notes at maturity in March 2020, we settled the associated cross currency swaps resulting in cash receipts of $ 3.2 million.

The settlement of these cross currency swaps were classified as investing activities in our consolidated statement of cash flows.

We had designated each of these cross currency swaps as net investment hedges and accordingly, recorded changes in fair value due to fluctuations in the spot rate to AOCI.

The changes in fair value of the swaps attributable to changes other than those due to fluctuations in the spot rate were excluded from the assessment of hedge effectiveness and recorded to interest expense over the life of the hedge.

Forward Starting Interest Rate Swaps

Forward starting interest rate swaps are instruments we use to manage our exposure to the volatility of the interest rates associated with future interest payments on a forecasted debt issuance.

During the third quarter of 2018, we entered into forward starting interest rate swaps with notional amounts totaling $ 1.5 billion.

The forward starting interest rate swaps have an effective date of July 2018 and termination dates of July 2021, May 2022 and July 2026, mirroring the terms of the forecasted debt issuances.

Weighted-average interest rates on the swaps are fixed at 3.00 %, 3.01 % and 3.10 % for July 2021, May 2022 and July 2026, respectively.

During the third quarter of 2018, we entered into forward starting interest rate swaps with a notional amount totaling $ 1.5 billion with termination dates of July 2021, May 2022 and July 2026.

The swaps had effective dates mirroring the terms of the forecasted debt issuances.

Under the agreements, we are required to early terminate these swaps at the time we expect to issue the related forecasted debt.

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As a result, the unrealized mark-to-market gains or losses will be recorded to AOCI until termination at which point the realized gain or loss of these swaps at issuance of the hedged debt will be reclassified from AOCI and amortized to interest expense over the term of the hedged debt.

In June 2021, we early terminated our $ 250.0 million forward starting interest rate swap that was originally set to terminate in July 2021.

This forward starting interest rate swap was rolled forward to May 2022 through a cashless settlement.

The new May 2022 forward starting interest rate swap is incremental to our existing May 2022 forward starting interest rate swap that was executed in 2018, both of which are hedging our forecasted debt issuance expected to occur during 2022.

At the time of the transaction, there was approximately $ 33.4 million of unrealized losses recorded in AOCI.

Approximately $ 1.7 million was recorded to interest expense in the second quarter of 2021 when it became probable that one of the forecasted interest payments originally hedged would not occur.

The remaining $ 31.7 million will be amortized to interest expense throughout the term of the respective debt unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the loss will be recorded to interest expense at that time.

The new forward starting interest rate swap has an effective date of June 2021, a termination date of May 2022 and an effective interest rate of approximately 3.22 %.

Cash settlements related to interest rate contracts are generally classified as operating activities on the consolidated statements of cash flows.

However, due to an other-than-insignificant financing element in the May 2022 forward starting interest rate swap that was designated in June 2021, the cash flow related to this contract will be classified as financing activities.

In 2015 we entered into forward starting interest rate swaps with a notional of CAD 600 million in order to manage our exposure to the volatility of the interest rates associated with the future interest payments on the forecasted CAD debt issuances, which ultimately became the 2015 Notes and a portion of the 2016 Notes.

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We had designated these contracts as cash flow hedges and accordingly, a portion of the CAD 39.2 million ($ 29.5 million at settlement) loss on the forward starting interest rate swaps is being reclassified from AOCI and amortized to interest expense over the remaining term of the 2015 Notes, repaid in September 2020, and over a portion of the CAD 500 million notes due in 2026 up to the full 10-year term of the interest rate swap agreements.

Cross Currency Swaps

As a result of the swaps, we economically converted our $ 500 million 2.25 % senior notes due 2020 and associated interest to EUR denominated, which resulted in a EUR interest rate to be received of 0.68 %.

The termination of the original $ 500 million cross currency swaps resulted in cash receipts of approximately $ 47 million during the second quarter of 2019.

Upon repayment of the $ 500 million 2.25 % senior notes at maturity in March 2020, we settled the associated cross currency swaps resulting in cash receipts of $ 3.2 million.

The cash receipts upon settlement of these cross currency swaps were classified as investing activities in our consolidated statement of cash flows.

We have designated each of these cross currency swaps as net investment hedges and accordingly, record changes in fair value due to fluctuations in the spot rate to AOCI.

The changes in fair value of the swaps attributable to changes other than those due to fluctuations in the spot rate are excluded from the assessment of hedge effectiveness and recorded to interest expense over the life of the hedge.

Foreign Currency Forwards

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We hedge forecasted purchases of natural gas, aluminum, corn and diesel each up to 60 months out in the future for use in our supply chain, in line with our risk management policy.

Further, we hedge forecasted purchases of barley based on crop year and physical inventory management.

Further, we hedge forecasted

purchases of barley based on crop year and physical inventory management.

For purposes of measuring segment operating performance, the unrealized changes in fair value of the swaps not designated in hedge accounting relationships are reported in Unallocated outside of the segment specific operating results until such time that the exposure we are managing is realized.

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The fair value of the warrants at issuance of approximately $ 45 million was recorded as a non-current asset and as an adjustment to paid-in capital, net of tax.

On December 23, 2020, HEXO consolidated its issued and

outstanding common shares on the basis of four old shares for one new share that resulted in the adjustment of the strike price to CAD 24.00 per share and a reduction in warrants to 2.9 million.

All changes in the fair value of the warrants subsequent to issuance are recorded in other income (expense), net on the consolidated statements of operations.

On December 23, 2020, HEXO consolidated its issued and outstanding common shares on the basis of four old shares for one new share that resulted in the adjustment of the strike price to CAD 24.00 per share and a reduction in warrants to 2.9 million.

The warrants to acquire common shares of HEXO expired unexercised on October 4, 2021.

All changes in the fair value of the warrants subsequent to issuance were recorded in other income (expense), net on the consolidated statements of operations.

Derivative Fair Value Measurements

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The fair values of our derivatives also include credit risk adjustments to account for our counterparties' credit risk, as well as our own non-performance risk, as appropriate.

The fair value of our warrants to acquire common shares of HEXO is estimated using the Black-Scholes option-pricing model.

The fair value of our warrants to acquire common shares of HEXO prior to expiration were estimated using the Black-Scholes option-pricing model.

The tables below summarize our derivative assets and (liabilities) that were measured at fair value as of December 31, 2021 and December 31, 2020.

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(In millions)

Cross currency swaps $ ( 26.5 ) $ — $ ( 26.5 ) $ —

Interest rate swaps $ ( 170.8 ) $ — $ ( 170.8 ) $ —

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Commodity swaps and options 300.9 — 300.9 —

Warrants 0.3 — 0.3 —

Total $ 128.6 $ — $ 128.6 $ —

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Derivatives designated as hedging instruments:

Cross currency swaps $ 400.0 Other current assets $ — Accounts payable and other current liabilities $ ( 26.5 )

Interest rate swaps $ 1,500.0 Other current assets $ — Accounts payable and other current liabilities $ ( 67.7 )

Other non-current assets — Other liabilities ( 103.1 )

Interest rate swaps $ 1,500.0 Other non-current assets — Accounts payable and other current liabilities ( 47.7 )

Other liabilities ( 173.8 )

Foreign currency forwards $ 170.8 Other current assets 0.5 Accounts payable and other current liabilities ( 2.4 )

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$ 68.2 Other current assets 1.0 Accounts payable and other current liabilities ( 0.9 )

Warrants $ 54.2 Other non-current assets 0.3 Other liabilities —

Total derivatives not designated as hedging instruments $ 303.2 $ ( 2.3 )

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Other non-current assets — Other liabilities —

Interest rate swaps $ 1,500.0 Other non-current assets — Other liabilities ( 111.5 )

Foreign currency forwards $ 237.9 Other current assets 1.9 Accounts payable and other current liabilities ( 0.8 )

Interest rate swaps $ 1,500.0 Other non-current assets — Accounts payable and other current liabilities ( 47.7 )

Other liabilities ( 173.8 )

Foreign currency forwards $ 181.2 Other current assets 0.3 Accounts payable and other liabilities ( 3.0 )

Other non-current assets — Other liabilities ( 2.2 )

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Buy and sell positions are shown gross in the asset and/or liability position, as appropriate.

Items Designated and Qualifying as Hedged Items in Fair Value Hedging Relationships in the Consolidated Balance Sheets (in millions):

Line item in the balance sheet in which the hedged item is included

Carrying amount of the hedged assets/liabilities Cumulative amount of fair value hedging adjustment(s) in the hedged assets/liabilities (1) Increase/(Decrease)

As of December 31, 2020 As of December 31, 2019 As of December 31, 2020 As of December 31, 2019

(In millions)

Current portion of long-term debt and short-term borrowings $ — $ — $ — $ ( 0.2 )

Long-term debt $ — $ — $ 3.7 $ 6.5

(1) Entire balances relate to hedging adjustments on discontinued hedging relationships.

The Pretax Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) (in millions):

The Pretax Effect of Cash Flow Hedge Accounting on Other Comprehensive Income, Accumulated Other Comprehensive Income (Loss), and income (in millions):

Derivatives in cash flow hedge relationships Amount of gain

(loss) recognized

in OCI on derivatives Location of gain (loss)

reclassified from AOCI into

income Amount of gain

(loss) recognized

from AOCI into income on

For the year ended December 31, 2021

Derivatives in cash flow hedge relationships Amount of gain (loss) recognized in OCI on derivative Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized from AOCI on derivative

Forward starting interest rate swaps $ ( 110.0 ) Interest expense $ ( 2.9 )

Forward starting interest rate swaps $ 50.7 Interest income (expense), net $ ( 4.8 )

Foreign currency forwards 0.4 Cost of goods sold ( 3.5 )

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For the year ended December 31, 2020

Derivatives in net investment hedge relationships Amount of gain (loss) recognized in OCI on derivative Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized from AOCI on derivative Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) (1)

Cross currency swaps $ ( 33.2 ) Interest expense $ — Interest expense $ 14.2

Total $ ( 33.2 ) $ — $ 14.2

For the year ended December 31, 2020

Non-derivative financial instruments in net investment hedge relationships Amount of gain (loss) recognized in OCI on derivative Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized from AOCI on derivative Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)

EUR 800 million notes due 2024

$ ( 80.3 ) Other income (expense), net $ — Other income (expense), net $ —

Total $ ( 80.3 ) $ — $ —

For the year ended December 31, 2019

Forward starting interest rate swaps $ ( 99.2 ) Interest expense $ ( 3.0 )

Forward starting interest rate swaps $ ( 110.0 ) Interest income (expense), net $ ( 2.9 )

Foreign currency forwards ( 3.5 ) Cost of goods sold 4.6

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For the year ended December 31, 2019

Cross currency swaps $ 19.8 Interest expense $ — Interest expense $ 23.5

Forward starting interest rate swaps $ ( 99.2 ) Interest income (expense), net $ ( 3.0 )

Foreign currency forwards ( 12.1 ) Cost of goods sold 3.1

Other income (expense), net ( 0.7 )

Total $ ( 111.3 ) $ ( 0.6 )

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

The Pretax Effect of Net Investment Hedge Accounting on Other Comprehensive Income, Accumulated Other Comprehensive Income (Loss) and income (in millions)

Net investment hedge relationships Amount of gain

(loss) recognized

in OCI Location of gain (loss) recognized in income (amount excluded from effectiveness testing) Amount of gain (loss) recognized in income (amount excluded from effectiveness testing)(1)

For the year ended December 31, 2021

EUR 800 million notes due 2024

$ 20.4 Other income (expense), net $ — Other income (expense), net $ —

Cross currency swaps $ 8.8 Interest income (expense), net $ 6.1

EUR 800 million notes due 2024

10.1 Other income (expense), net — Other income (expense), net —

Total $ 30.5 $ — $ —

For the year ended December 31, 2018

Derivatives in cash flow hedge relationships Amount of gain

(loss) recognized

(effective portion) Location of gain (loss) reclassified from AOCI into income

Amount of gain (loss) recognized from AOCI on derivative

Forward starting interest rate swaps $ ( 12.3 ) Interest expense $ ( 3.0 )

Foreign currency forwards 26.8 Cost of goods sold ( 0.2 )

67.7 Other income (expense), net —

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For the year ended December 31, 2020

Cross currency swaps $ 36.5 Interest expense $ — Interest expense $ 10.7

Cross currency swaps $ ( 33.2 ) Interest income (expense), net $ 14.2

EUR 800 million notes due 2024

( 80.3 ) Other income (expense), net —

Total $ ( 113.5 ) $ 14.2

For the year ended December 31, 2019

(loss) recognized

on derivative

excluded from

effectiveness testing) Amount of gain

(loss) recognized

on derivative

excluded from

effectiveness testing)

Cross currency swaps $ 19.8 Interest income (expense), net $ 23.5

EUR 800 million notes due 2024

$ 43.0 Other income (expense), net $ — Other income (expense), net $ —

20.4 Other income (expense), net —

EUR 500 million notes due 2019

26.9 Other income (expense), net — Other income (expense), net —

10.1 Other income (expense), net —

Total $ 50.3 $ 23.5

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

The cumulative translation adjustments related to our net investment hedges remain in AOCI until the respective underlying net investment is sold or liquidated.

During the years ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively, we did not reclassify any amounts related to net investment hedges from AOCI into earnings.

We expect net losses of approximately $ 5 million (pretax) recorded in AOCI as of December 31, 2021 will be reclassified into earnings within the next 12 months.

For derivatives designated in cash flow hedge relationships, the maximum length of time over which forecasted transactions are hedged as of December 31, 2021 is approxim ately 4 yea rs, as well as those related to our forecasted debt issuances in 2022 and 2026.

The Effect of Fair Value and Cash Flow Hedge Accounting on the Consolidated Statements of Operations (in millions) :

For the year ended December 31, 2020

Location and amount of gain (loss) recognized in income on fair value and cash flow hedging relationships (1)

Cost of goods sold Other income (expense), net Interest expense

Total amount of income and expense line items presented in the consolidated statement of operations in which the effects of fair value or cash flow hedges are recorded $ ( 5,885.7 ) $ 6.0 $ ( 274.6 )

Gain (loss) on cash flow hedging relationships:

Forward starting interest rate swaps

Amount of gain (loss) reclassified from AOCI into income $ — $ — $ ( 2.9 )

Foreign currency forwards

Amount of gain (loss) reclassified from AOCI into income $ 4.6 $ ( 1.2 ) $ —

For the year ended December 31, 2019

Location and amount of gain (loss) recognized in income on fair value and cash flow hedging relationships (1)

Cost of goods sold Other income (expense), net Interest expense

Total amount of income and expense line items presented in the consolidated statement of operations in which the effects of fair value or cash flow hedges are recorded $ ( 6,378.2 ) $ ( 14.7 ) $ ( 280.9 )

Gain (loss) on cash flow hedging relationships:

Forward starting interest rate swaps

Amount of gain (loss) reclassified from AOCI into income $ — $ — $ ( 3.0 )

Foreign currency forwards

Amount of gain (loss) reclassified from AOCI into income $ 3.1 $ ( 0.7 ) $ —

For the year ended December 31, 2018

Location and amount of gain (loss) recognized in income on fair value and cash flow hedging relationships (1)

Cost of goods sold Other income (expense), net Interest expense

Total amount of income and expense line items presented in the consolidated statement of operations in which the effects of fair value or cash flow hedges are recorded $ ( 6,584.8 ) $ ( 12.0 ) $ ( 306.2 )

Gain (loss) on cash flow hedging relationships:

Forward starting interest rate swaps

Amount of gain (loss) reclassified from AOCI into income $ — $ — $ ( 3.0 )

Foreign currency forwards

Amount of gain (loss) reclassified from AOCI into income $ ( 0.2 ) $ ( 0.2 ) $ —

(1) We had no outstanding fair value hedges during 2020, 2019 or 2018.

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

For the year ended December 31, 2020

Derivatives not in hedging relationship Location of gain (loss) recognized

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in income on derivative

For the year ended December 31, 2021

Commodity swaps Cost of goods sold $ 403.4

Commodity options Cost of goods sold 0.1

Warrants Other income (expense), net ( 0.3 )

Total $ 403.2

For the year ended December 31, 2020

Derivatives not in hedging relationship Location of gain (loss) recognized

in income on derivative Amount of gain (loss) recognized

in income on derivative

Commodity swaps Cost of goods sold $ 28.5

Warrants Other income (expense), net ( 2.4 )

Total $ ( 44.6 )

For the year ended December 31, 2019

Derivatives not in hedging relationship Location of gain (loss) recognized

in income on derivative Amount of gain (loss) recognized

in income on derivative

Commodity swaps Cost of goods sold $ ( 26.8 )

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Total $ ( 44.6 )

Higher commodity prices relative to our hedged positions in the current year drove the total gain recognized in income related to commodity swaps for the year ended December 31, 2020.

Conversely, lower commodity prices relative to our hedged positions, primarily in aluminum and diesel during 2019 and primarily in aluminum during 2018, drove the total losses recognized in income related to commodity swaps for the years ended December 31, 2019 and December 31, 2018.

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

Accounts Payable and Other Current Liabilities

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Our exposure related to these indemnity claims is capped at the amount of the sales price of the 68 % equity interest of Kaiser, which was $ 68 million.

As a result of these contract provisions, our estimates include not only probability-weighted potential cash outflows associated with indemnity provisions, but also probability-weighted cash inflows that could result from favorable settlements, which could occur through negotiation or settlement programs arising from the federal or any of the various state governments in Brazil.

favorable settlements, which could occur through negotiation or settlement programs arising from the federal or any of the various state governments in Brazil.

The recorded value of the tax, civil and labor indemnity liability was $ 3.0 million as of December 31, 2021, which is classified as non-current.

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Total $ 1,606.8 $ 842.7

Total purchases under our supply and distribution contracts in 2020, 2019 and 2018 were $ 542.6 million and approximately $ 1.0 billion and $ 1.1 billion, respectively.

Total marketing and advertising expense was $ 923.2 million and approximately $ 1.2 billion and $ 1.2 billion in 2020, 2019 and 2018, respectively.

Total purchases under our long-term unconditional, non-cancellable supply and distribution contracts in 2021, 2020 and 2019 were approximately $ 0.4 billion, $ 0.5 billion and $ 1.0 billion, respectively.

Litigation and Other Disputes and Environmental

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Additionally, as noted below, there are certain loss contingencies that we deem reasonably possible for which a range of loss is not estimable at this time;

for all other matters, we believe that any reasonably possible losses in excess of the amounts accrued are immaterial to our consolidated financial statements.

for all other matters, we believe that any reasonably possible losses in excess of the amounts accrued are immaterial to our audited consolidated financial statements.

We are involved in other disputes and legal actions arising in the ordinary course of our business.

While it is not feasible to predict or determine the outcome of these proceedings, in our opinion, based on a review with legal counsel, other than as noted, none of these disputes or legal actions are expected to have a material impact on our business, consolidated financial

position, results of operations or cash flows.

However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business.

On February 12, 2018, Stone Brewing Company filed a trademark infringement lawsuit in federal court in the Southern District of California against MCBC USA alleging that the Keystone brand has “rebranded” itself as “Stone” and is marketing itself in a manner confusingly similar to Stone Brewing Company's registered Stone trademark.

Stone Brewing Company seeks treble damages in the amount of MCBC USA's profit from Keystone sales.

Stone Brewing Company seeks treble damages and disgorgement of MCBC USA's profit from Keystone sales.

MCBC USA subsequently filed an answer and counterclaims against Stone Brewing Company.

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Discovery is closed.

The jury trial scheduled to begin October 13, 2020 was continued by the court and has not yet been reset.

The jury trial scheduled to begin November 8, 2021 was continued by the court and has now been reset to begin on March 7, 2022.

We intend to vigorously assert and defend our rights in this lawsuit.

A range of potential loss is not estimable at this time.

On February 15, 2019, two purported stockholders filed substantially similar putative class action complaints against the Company, Mark R.

Hunter, and Tracey I.

Joubert (the “Defendants”) in the United States District Court for the District of Colorado (the “Colorado District Court”), and in the United States District Court for the Northern District of Illinois (the “Illinois District Court”).

On February 21, 2019, another purported stockholder filed a substantially similar complaint in the Colorado District Court.

The plaintiffs purport to represent a class of the Company’s stockholders and assert that the Defendants violated Sections 10(b) and 20(a) of the Exchange Act by allegedly making false and misleading statements or omissions regarding the Company’s restatement of consolidated financial statements for the years ended December 31, 2016 and December 31, 2017, and that the Company purportedly lacked adequate internal controls over financial reporting.

The plaintiffs seek, among other things, an unspecified amount of damages and attorneys’ fees, expert fees and other costs.

On April 16, 2019, motions to consolidate and appoint a lead plaintiff were filed in each case.

On May 24, 2019, the securities class action suit filed with the Illinois District Court was transferred to the Colorado District Court, and subsequently was voluntarily dismissed on July 25, 2019.

On October 2, 2019, the class action lawsuits originally filed in Colorado District Court were consolidated, and, on October 3, 2019, the court appointed a lead plaintiff and lead counsel for the consolidated case.

On December 9, 2019, the lead plaintiff filed its amended complaint alleging that the Defendants made false statements and material omissions to the market beginning in February 2017 and ending in February 2019, which, it alleges, misled the market as to the strength of our financial condition and internal control processes related to financial accounting.

The amended complaint further alleges that the Company and the Defendants caused the Company to falsely report its financial results by overstating retained earnings, net income, and tax benefits and understating deferred tax liabilities in an effort to inflate the price of our common stock.

We filed a motion to dismiss the amended complaint on January 23, 2020;

the plaintiff subsequently filed an opposition to our motion to dismiss on March 9, 2020;

and we filed our reply brief in support of our motion to dismiss on April 8, 2020.

Oral argument on the motion occurred on October 28, 2020.

On December 2, 2020, the Court granted our motion to dismiss with prejudice and the deadline to appeal has passed.

This case is now fully resolved and closed.

On March 26, 2019, a purported stockholder filed a purported shareholder derivative action in Colorado District Court against the Company’s board of directors and certain officers (the “Individual Defendants”), and the Company as a nominal defendant.

On May 14, 2019, another purported stockholder filed a substantially similar complaint in the Colorado District Court.

On August 12, 2019, a third derivative complaint was filed in Colorado District Court by a purported stockholder.

All three derivative complaints assert claims against the Individual Defendants for breaches of fiduciary duty and unjust enrichment arising out of the Company’s dissemination to shareholders of purportedly materially misleading and inaccurate information in connection with the Company’s restatement of consolidated financial statements for the years ended December 31, 2016 and December 31, 2017.

The complaints further allege that the Company lacked adequate internal controls over financial reporting.

The third derivative complaint filed in August also alleges the Individual Defendants violated Sections 14(a) and 20(a) of the Exchange Act by issuing misleading statements in the Company’s proxy statement.

The relief sought in the complaints include changes to the Company’s corporate governance procedures, unspecified damages, restitution, and attorneys’ fees, expert fees, other costs and such other relief as the court deems proper.

All three derivative actions have been administratively closed.

A range of potential loss is not estimable at this time.

Regulatory Contingencies

In December 2018, the U.S.

Department of Treasury issued a regulation that impacts our ability to claim a refund of certain federal duties, taxes, and fees paid for beer sold between the U.S.

Department of Treasury issued a regulation that impacted our ability to claim a refund of certain federal duties, taxes, and fees paid for beer sold between the U.S.

and certain other countries effective in February 2019.

As a result, based on the terms of the regulation, it is the U.S.

Department of Treasury's position that future claims will no longer be accepted, and we may be further unable to collect previously claimed, but not yet received, refunds.

In January 2020, the United States Court of International Trade issued an opinion and order ruling the challenged portions of this regulation dealing with refunds of certain federal duties, taxes and fees paid with respect to certain imported beer, to the extent of certain

exported beer, to be unlawful.

As a result, based on the terms of the regulation, it was the U.S.

Department of Treasury's position that future claims would no longer be accepted, and we would be further unable to collect previously claimed, but not yet received, refunds.

On April 17, 2020, the U.S.

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Department of Treasury's motion to stay was denied pending appeal and they were ordered to pay on all claims under the accelerated payment program.

As a result, we have collected approximately $ 49 million of previously filed claims during 2020, and have previously claimed, but not yet received, refunds of approximately $ 4 million re corded within other receivables, net on our unaudited condensed consolidated balance sheet as of December 31, 2020.

On July 23, 2020, the U.S.

Department of Treasury filed its opening appellate brief in the United States Court of Appeals for the Federal Circuit.

An opposition/response brief was filed on October 1, 2020 and a final reply brief was submitted on December 11, 2020.

We will continue to monitor this matter including our ability to collect the remainder of our previously claimed refunds, our potential liability to repay refunds received, as well as our ability to claim ongoing refunds as the appeal process progresses.

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

An opposition/response brief was filed on October 1, 2020 and final reply brief was submitted on December 11, 2020.

On August 23, 2021, the Federal Circuit Court of Appeals issued its unanimous written opinion affirming the judgment of the Court of International Trade and, on October 14, 2021, issued its Mandate on the judgment.

All other appellate deadlines have since passed, the judgment is final and litigation has concluded.

As a result, both amounts previously collected on filed claims and the amounts of previously filed claims that have not yet been received are no longer at risk.

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

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

The government has not yet proclaimed the bill as law.

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

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

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 Americas segment.

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

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When we determine it is probable that a liability for environmental matters or other legal actions exists and the amount of the loss is reasonably estimable, an estimate of the future costs is recorded as a liability in the financial statements.

Costs that extend the life, increase the capacity or improve the safety or efficiency of our assets or are incurred to mitigate or prevent future environmental contamination may be capitalized.

Costs that extend the life, increase the capacity or improve the safety or efficiency of our assets or are incurred to mitigate or prevent

future environmental contamination may be capitalized.

Other environmental costs are expensed when incurred.

Total environmental expenditures recognized for 2021, 2020 and 2019 were immaterial to our consolidated financial statements.

North America

Our Canada brewing operations are subject to provincial environmental regulations and local permit requirements.

Our Montréal, Chilliwack and Toronto breweries have water treatment facilities to pre-treat waste water before it goes to the respective local governmental facility for final treatment.

Our Longueuil, Chilliwack and Toronto breweries have water treatment facilities to pre-treat waste water before it goes to the respective local governmental facility for final treatment.

We have environmental programs in Canada including organization, monitoring and verification, regulatory compliance, reporting, education and training, and corrective action.

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We have established provisions for the costs of these remediation programs.

In the United States, we were previously notified that we are or may be a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act or similar state laws for the cleanup of sites where hazardous substances have allegedly been released into the environment.

In the U.S., we were previously notified that we are or may be a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act or similar state laws for the cleanup of sites where hazardous substances have allegedly been released into the environment.

We cannot predict with certainty the total costs of cleanup, our share of the total cost, the extent to which contributions will be available from other parties, the amount of time necessary to complete the cleanups or insurance coverage.

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Montreal Brewery Sale and Leaseback Transaction

In June 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 the year ended December 31, 2019.

In conjunction with the sale, we agreed to lease back the existing property to continue operations on an uninterrupted basis for a period up to 5 years with early termination options at our discretion, while our new brewery in Longueuil, Quebec is being constructed.

Accordingly, in the year ended December 31, 2019, we recorded operating lease right-of-use assets and liabilities of approximately CAD 6 million assuming a lease term that is coterminous with the construction of our new brewery, which is currently expected to be operational in 2021.

In June 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 for the year ended December 31, 2019.

In conjunction with the sale, we agreed to lease back the

existing property to continue operations on an uninterrupted basis for a period up to 5 years with early termination options at our discretion, while our new brewery in Longueuil, Québec was being constructed.

Accordingly, for the year ended December 31, 2019, we recorded operating lease right-of-use assets and liabilities of approximately CAD 6 million assuming a lease term that is coterminous with the construction of our new brewery, which began operations during the fourth quarter of 2021.

However, due to the uncertainty inherent in our estimates, the term of the brewery lease is subject to reassessment.

Once the existing property has been entirely redeveloped by the purchaser, we plan to lease a minor portion of the future space for administrative and other purposes.

We evaluated this transaction pursuant to the accounting guidance for sale and leaseback transactions and concluded that the relevant criteria have been met for full gain recognition upon completion of the transaction in the second quarter of 2019.

We evaluated this transaction pursuant to the accounting guidance for sale and leaseback transactions and concluded that the relevant criteria were met for full gain recognition upon completion of the transaction in the second quarter of 2019.

Lease Financial Information

For the years ended December 31, 2020 and December 31, 2019, lease expense (including immaterial short-term and variable lease costs) was as follows:

Year ended December 31, 2020 Year ended December 31, 2019

For the years ended December 31, 2021, December 31, 2020 and December 31, 2019, lease expense (including immaterial short-term and variable lease costs) was as follows.

For the years ended

December 31, 2021 December 31, 2020 December 31, 2019

(In millions)

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Total lease expense $ 83.6 $ 82.9 $ 83.1

Separately, we recorded impairment losses on certain right-of-use assets, primarily related to our Denver, Colorado office lease, during 2020 and 2019 as discussed in Note 7, "Special Items."

Supplemental cash flow information related to leases for the years ended December 31, 2020 and December 31, 2019 was as follows:

Year ended December 31, 2020 Year ended December 31, 2019

We recorded impairment losses on certain right-of-use assets, primarily related to our Denver, Colorado office lease, during 2020 and 2019 as discussed in Note 7, "Special Items."

Supplemental cash flow information related to leases for the years ended December 31, 2021, December 31, 2020 and December 31, 2019 was as follows.

For the years ended

December 31, 2021 December 31, 2020 December 31, 2019

(In millions)

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2025 14.7 7.8

2026 10.6 11.6

Thereafter 9.6 54.4

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Present value of lease liabilities $ 133.2 $ 67.2

Executed leases that have not yet commenced as of December 31, 2020 are immaterial.

Comparative Period Information Under Historical Lease Accounting Guidance

During the year ended December 31, 2018, non-cash activities related to the recognition of finance leases was $ 15.5 million and total rent expense for the year ended December 31, 2018 was $ 66.1 million.

Executed leases that have not yet commenced as of December 31, 2021 are immaterial except for a railcar lease with total undiscounted payments of $ 27.7 million expected to commence in 2022.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data